What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-17 compared with 2021-02-11 · 327 added, 345 removed, 569 unchanged (54% of the section changed)

9 unchanged sentences

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.

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.

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Changes in Internal Control over Financial Reporting

Except for the remediation procedures related to ASC 740 (see Note 19), which were completed in our most recent fiscal quarter, there were no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION .

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

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8-K 10/17/11 2.5

2.3 Agreement and Plan of Merger by and among ConversionPoint Technologies, Inc., ConversionPoint Holdings, Inc., CPT Merger Sub, Inc., Inuvo, Inc., and CPT Cigar Merger Sub, Inc., dated November 2, 2018.*

8-K 11/5/18 2.1

2.4 Securities Purchase Agreement, by and between Inuvo, Inc.

and CPT Investments, LLC, dated November 1, 2018.

8-K 11/5/18 2.2

2.5 10% Senior Unsecured Subordinated Convertible Promissory Note, executed by the Company in favor of CPT Investments, LLC, dated November 1, 2018.

8-K 11/5/18 2.3

2.6 Registration Rights Agreement, by and between Inuvo, Inc.

and CPT Investments, LLC, dated November 1, 2018.

8-K 11/5/18 2.4

2.7 Form of 10% Promissory Note, executed by Inuvo, Inc.

in favor of certain affiliates of Inuvo, Inc., dated November 1, 2018.

8-K 11/5/18 2.5

2.8 First Amendment to Agreement and Plan of Merger dated March 1, 2019, by and among Inuvo, Inc., a Nevada corporation, ConversionPoint Technologies Inc., a Delaware corporation, ConversionPoint Holdings, Inc., a Delaware corporation, CPT Merger Sub, Inc., a Delaware corporation and CPT Cigar Merger Sub, Inc., a Nevada corporation.

8-K/A 3/5/19 2.1

2.9 Agreement and Plan of Merger Termination Agreement dated June 20, 2019 by and among ConversionPoint Technologies, Inc., ConversionPoint Holdings, Inc., CPT Merger Sub, Inc., Inuvo, Inc.

and CPT Cigar Merger Sub, Inc.

8-K 6/21/19 2.1

3(i).1 Articles of Incorporation, as amended

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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

3 unchanged sentences

4.1 Description of Securities

10-K 2/11/21 4.1

10.1 Google Services Agreement effective March 1, 2017 by and between Vertro, Inc.

1 unchanged sentence

8-K/A 6/7/17 10.27

10.2 Google Services Agreement by and between Vertro, Inc.

and Google LLC, dated as of February 24, 2021 and effective as of March 1, 2021*

8-K 3/1/21 10.1

10.3 Amendment Number One to Google Services Agreement effective March 1, 2019 ***

33 unchanged sentences

8-K 11/16/20 10.1

10.13 Form of Indemnification Agreement with Direc tors of Inuvo, Inc.

10.14 Form of Indemnification Agreement with Directors of Inuvo, Inc.

10-Q 11/7/18 10.5

10.14 Form of Securities Purchase Agreement dated June 4, 2020 by and between Inuvo, Inc, and the purchasers listed therein

10.15 Form of Securities Purchase Agreement, dated January 14, 2021 by and between Inuvo, 2019.Inc, and the purchasers listed therein

8-K 1/14/21 10.1

10.16 Form of Securities Purchase Agreement dated January 20, 2021 by and between Inuvo, Inc, and the purchasers listed therein

8-K 1/20/21 10.1

10.15 2010 Equity Compensation Plan

12 unchanged sentences

10-K 3/13/13 10.24

10.21 Amendment to Grant Reimbursement Agreement, dated March 2021, with the Arkansas Economic Development Commission.

10.22 Employment Agreement dated March 1, 2012 between Inuvo, Inc.

14 unchanged sentences

10.28 2017 Equity Compensation Plan Restricted Stock Unit Agreement

10-K 2/11/21 10.29

10.29 Sales Agreement, dated May 28, 2021 by and between A.G.P./Alliance Global Partners and Inuvo, Inc.

8-K 5/28/21 1.1

16.1 Letter of Mayer Hoffman McCann P.C.

dated November 23, 2021

8-K 11/24/21 16.1

21.1 Subsidiaries of the Registrant

23.1 Consent of Mayer Hoffman McCann P.C

10-K 2/11/21 21.1

23.1 Consent of E isnerA mper LL P , PCAOB FIRM ID 274

23.2 Consent of Mayer Hoffman McCann P.C ., PCAOB FIRM ID 199

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

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The Company will furnish a copy of any omitted schedule or similar attachment to the SEC upon request.

*** Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission under Rule 24b-2.

The omitted confidential material has been filed separately.

Certain portions of this exhibit have also been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

The omitted information is (i) not material and (ii) would likely cause competitive harm to Inuvo if publicly disclosed.

The location of the omitted confidential information is indicated in the exhibit with asterisks (***).

Form 10-K Summary

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Pursuant to the requirements of Section 13 or 15(d) 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.

February 11, 2021 By:

March 17, 2022 By:

/s/ Wallace D.

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/s/ Richard K.

Howe Chairman of the Board of Directors, Chief Executive Officer, and principal executive officer February 11, 2021

Howe Chairman of the Board of Directors, Chief Executive Officer, and principal executive officer March 17, 2022

/s/ Wallace D.

Ruiz Chief Financial Officer, principal financial and accounting officer February 11, 2021

Kent Burnett Director February 11, 2021

Ruiz Chief Financial Officer, principal financial and accounting officer March 17, 2022

Kent Burnett Director March 17, 2022

/s/ Gordon J.

Cameron Director February 11, 2021

Cameron Director March 17, 2022

/s/ Charles D.

Morgan Director February 11, 2021

Morgan Director March 17, 2022

CONSOLIDATED FINANCIAL STATEMENTS

4 unchanged sentences

Consolidated Balance Sheets 4

Consolidated Statements of Operations 3

Consolidated Statements of Operations and Comprehensive Loss 6

Consolidated Statements of Stockholders’ Equity 7

2 unchanged sentences

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Inuvo, Inc.:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Inuvo, Inc.

(the “Company”) as of December 31, 2021, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Capitalized software development costs

As described in Note 2 to financial statements, the Company capitalizes certain labor costs related to internally developed software.

Management determines the amount of internal software costs to be capitalized based on the amount of time spent by developers on projects in the application stage of development.

There is judgment involved in estimating time allocated to a particular project in the application stage.

The gross balance of capitalized software development costs was $12.9 million as of December 31, 2021.

Related accumulated amortization and the net carrying amount of capitalized software was approximately $11.5 million and $1.4 million, respectively, as of December 31, 2021.

We identified the estimate of time and related costs eligible for capitalization as capitalized software development costs as a critical audit matter due the significant judgment by management when determining the amount of time to capitalize for projects.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s determination of capitalized costs and management’s judgment related to the amount of time incurred by developers on projects in the application stage.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included gaining an understanding of the controls relating to capitalized software development costs, testing management’s process for determining the time and related costs eligible for capitalization in the current year, evaluating whether the time and related costs were eligible for capitalization, testing the completeness and accuracy of underlying data used in management’s estimate of eligible time and related costs, and evaluating the reasonableness of significant assumptions used by management in estimating eligible time and related costs.

Evaluating management’s assumptions related to eligible software development time for capitalization involved performing inquiries with management and with a sample of individual software developers regarding the nature, timing and extent of time worked on development activities.

/s/ EisnerAmper, LLP

We have served as the Company’s auditor since 2021.

March 17, 2022

Report of Independent Registered Public Accounting Firm

To the Board of Directors and

1 unchanged sentence

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Inuvo, Inc.

(the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of Inuvo, Inc.

(the “Company”) as of December 31, 2020, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

5 unchanged sentences

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Adoption of New Accounting Standard

As discussed in Notes 2 and 16 to the consolidated financial statements, the Company changed its method of accounting for leases as a result of the adoption of Accounting Standards Codification Topic 842, Leases effective January 1, 2019, under the modified retrospective method.

Our opinion is not modified with respect to this adoption.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

1 unchanged sentence

We determined that there are no critical audit matters.

We have served as the Company’s auditors since 2009.

/s/ Mayer Hoffman McCann P.C.

We have served as the Company’s auditor since 2009.

February 11, 2021

3 unchanged sentences

Current assets

Cash $ 7,890,665 $ 372,989

Cash and cash equivalents $ 10,475,964 $ 7,890,665

Marketable securities - short term 1,927,979 —

Accounts receivable, net of allowance for doubtful accounts of $ 202,904 and $ 209,667 , respectively

3 unchanged sentences

Property and equipment, net 1,506,766 1,187,061

Goodwill 9,853,342 9,853,342

Intangible assets, net of accumulated amortization 8,586,089 10,451,593

Right of use assets - operating lease 641,306 606,573

Right of use assets - finance lease 201,902 395,910

Referral and support services agreement advance 1,100,000 —

Marketable securities - long term 859,512 —

Intangible assets, net of accumulated amortization 6,720,585 8,586,089

Goodwill 9,853,342 9,853,342

Other assets 35,720 20,886

7 unchanged sentences

Lease liability - finance lease 102,954 246,793

Derivative liability $ — 182,250

Convertible promissory notes, current portion (net) $ — $ 536,806

Financed receivables $ — $ 3,381,364

Total current liabilities $ 10,662,539 $ 8,729,172

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Common stock, $ 0.001 par value:

Authorized shares 100,000,000 ;

issued and outstanding shares 98,035,829 and 52,222,538 respectively;

Authorized shares 200,000,000 and 100,000,000 , respectively;

issued and outstanding shares 118,747,447 and 98,035,829 respectively;

1 unchanged sentence

Additional paid-in capital 176,586,529 161,541,448

Accumulated other comprehensive income 53,737 —

Accumulated deficit ( 143,951,019 ) ( 136,350,370 )

Treasury stock, at cost - — and 376,527 shares, respectively

— ( 1,396,559 )

Total stockholders' equity $ 32,807,995 $ 25,289,114

1 unchanged sentence

See accompanying report of independent registered public accounting firm and notes to the consolidated financial statements.

Consolidated Statements of Operations

Consolidated Statements of Operations and Comprehensive Loss

For the Years Ended December 31,

3 unchanged sentences

Operating expenses:

Marketing costs (Traffic Acquisition Costs-TAC) 27,410,284 30,135,991

Marketing costs 33,096,000 27,410,284

Compensation 11,381,279 9,350,831

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Other income, net $ 256,975 $ 997,517

Loss from continuing operations before taxes ( 7,304,569 ) ( 4,822,501 )

Income tax benefit — 334,394

Net loss $ ( 7,600,649 ) $ ( 7,304,569 )

Other comprehensive income

Unrealized gain on marketable securities 53,737 —

Comprehensive loss $ ( 7,546,912 ) $ ( 7,304,569 )

Per common share data:

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Common Stock Additional Paid in Capital

Accumulated Deficit Treasury Stock Total

Accumulated Deficit Treasury Stock Accumulated Other Comprehensive Income Total

Balances as of December 31, 2019 51,846,011 $ 52,223 $ 144,843,687 $ ( 129,045,801 ) $ ( 1,396,559 ) — $ 14,453,550

1 unchanged sentence

Stock-based compensation — — 858,683 — — — 858,683

Cancellation of treasury stock — ( 376 ) ( 1,396,183 ) — 1,396,559 — —

Stock issued for vested restricted stock awards 1,020,882 1,020 ( 1,020 ) — — — —

Sale of common stock 15,812,500 15,812 4,398,311 — — 4,414,123

Sale of common stock, net of issuance cost 42,168,936 42,169 16,390,021 — — — 16,432,190

Shares withheld for taxes on vested restricted stock — — ( 74,550 ) — — — ( 74,550 )

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Net loss — — — ( 7,600,649 ) — — ( 7,600,649 )

Unrealized gain on debt securities — — — — — 53,737 53,737

Stock-based compensation — — 2,179,254 — — — 2,179,254

Cancellation of treasury stock — ( 376 ) ( 1,396,183 ) — 1,396,559 —

Stock issued for vested restricted stock awards 1,696,467 1,696 ( 1,696 ) — — — —

Shares withheld for taxes on vested restricted stock — — ( 272,049 ) — — — ( 272,049 )

Convertible Note Conversion 3,000,000 3,000 920,810 — 923,810

Sale of common stock 42,168,936 $ 42,169 $ 16,390,021 $ — $ — 16,432,190

Proceeds from exercise of options — — 1,569 — — — 1,569

Sale of common stock, net of issuance cost 19,015,151 19,016 13,118,484 — — — 13,137,500

Stock warrants issued for referral agreement — — 19,519 — — — 19,519

Balances as of December 31, 2021 118,747,447 $ 118,748 $ 176,586,529 $ ( 143,951,019 ) $ — $ 53,737 $ 32,807,995

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Adjustments to reconcile net loss to net cash used in operating activities:

PPP loan forgiveness ( 1,109,000 ) —

Contract cancellation ( 1,260,978 ) —

Gain on merger termination — ( 3,766,667 )

Loss on extinguishment of convertible debt 65,700 193,179

Deferred income taxes — ( 334,394 )

Depreciation and amortization 3,143,168 3,237,930

Amortization of Right of Use Assets 322,746 367,981

Mark to market fair value of derivative 102,664 ( 78,913 )

Stock based compensation 2,179,254 858,683

Loss on marketable securities 266,762 —

Amortization of financing fees 12,500 11,092

(Recovery)/Provision for doubtful accounts ( 15,333 ) 161,273

Provision for doubtful accounts 7,487 135,000

Third party rights agreement termination ( 420,000 ) —

Derecognition of contingencies ( 110,000 ) —

PPP loan forgiveness — ( 1,109,000 )

Contract cancellation — ( 1,260,978 )

Loss on extinguishment of convertible debt — 65,700

Mark to market fair value of derivative — 102,664

Amortization of OID interest expense — 13,167

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Accounts receivable ( 3,045,690 ) 1,167,175

Referral and support services agreement advance ( 1,100,000 ) —

Prepaid expenses, unbilled revenue and other assets ( 992,978 ) ( 175,702 )

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Purchases of equipment and capitalized development costs ( 1,597,369 ) ( 1,185,335 )

Purchase of marketable securities ( 3,143,000 ) —

Proceeds from the sale of marketable securities 142,484 —

Net cash used in investing activities ( 4,597,885 ) ( 1,185,335 )

3 unchanged sentences

Proceeds from ValidClick licensing agreement — 500,000

Proceeds from financed receivables — 1,521,511

Proceeds from convertible promissory note — 1,200,000

Payments on note payable — ( 250,000 )

Net proceeds on revolving line of credit ( 3,381,364 ) —

SBA loan repayment ( 149,900 ) —

Payments net of proceeds on revolving line of credit — ( 3,381,364 )

Payments on finance/capital leases ( 257,679 ) ( 432,830 )

Net taxes paid on RSU grants exercised ( 272,049 ) ( 74,550 )

Prepaid financing fees — ( 24,529 )

Shareholder settlement — 125,000

Proceeds from exercise of options 1,569 —

Net cash provided by financing activities

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Assets purchased under operating lease obligations $ 344,311 $ 249,595

Debt conversion and related activities $ — $ 837,170

Adoption of ASC 842-old capital leases $ — $ 263,580

Adoption of ASC 842 $ — $ 1,173,946

ReTargeter assets $ — $ 2,575,000

Conversion of debt to common stock $ — $ 765,000

Derecognition of derivative in exchange for common stock $ — $ 72,170

See accompanying report of independent registered public accounting firm and notes to the consolidated financial statements.

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Company Overview

Inuvo is a technology company that develops and sells information technology solutions for marketing.

These platforms predictively identify and message online audiences for any product or service across devices, channels and formats, including video, mobile, connected TV, display, social and native.

These capabilities allow Inuvo's clients to engage with their customers and prospects in a manner that drives engagement from the first contact with the consumer.

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 in industries that have included retail, automotive, insurance, health care, technology, telecommunications and finance.

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 or service 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 customers and prospects 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 sophisticated machine learning technology uses interactions with Internet content as a source of information from which to predict consumer intent.

The AI includes a continually updated database of over 500 million machine profiles which Inuvo utilizes to deliver highly aligned online audiences to its clients.

Inuvo earns revenue when consumers view or click on its client’s messages.

The Inuvo business scales through account management activity with existing clients and by adding new clients through sales activity.

As part of the Inuvo technology strategy, it owns a collection of websites including alot.com and earnspendlive.com, where Inuvo creates content in health, finance, travel, careers, auto, education and living categories.

These sites provide the means to test the Inuvo technologies, while also delivering high quality consumers to clients through the interaction with proprietary content in the form of images, videos, slideshows and articles.

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 who those consumers are.

In this regard, the technology is designed for a privacy conscious future and 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 propriety 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.

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 18 issued and seven pending patents.

Mergers Termination

On June 20, 2019, Inuvo entered into an Agreement and Plan of Merger Termination Agreement (the “Merger Termination Agreement”) with ConversionPoint Technologies Inc., a Delaware corporation (“CPT”), ConversionPoint Holdings, Inc., a Delaware corporation (“Parent”), CPT Merger Sub, Inc., a Delaware corporation, (“CPT Merger Sub”), and CPT Cigar Merger Sub, Inc., a Nevada corporation (“Inuvo Merger Sub”), which, among other things, (1) terminated the Agreement and Plan of Merger, dated November 2, 2018, by and among Inuvo, CPT, Parent, CPT Merger Sub, and Inuvo Merger Sub, as amended (the “Merger Agreement”), pursuant to which Inuvo would have merged with and into Inuvo Merger Sub and become a wholly-owned subsidiary of Parent, and CPT would have merged with and into CPT Merger Sub and become a wholly-owned subsidiary of Parent (the “Mergers”), and (2) terminated each of the Support Agreements that were entered into by certain officers and directors of Inuvo and the parties to the Merger Agreement.

The Merger Agreement was terminated as a result of Parent’s inability to fulfill the closing condition of the Mergers that Parent raise $ 36,000,000 in gross proceeds from an equity, debt, or equity-linked offering of its securities which no longer obligated Inuvo to consummate the Mergers contemplated by the Merger Agreement.

Concurrently with the execution of the Merger Termination Agreement, CPT Investments, LLC, a California limited liability company and an affiliate of CPT (“CPT Investments”), and Inuvo entered into a certain Inuvo Note Termination Agreement (the “Note Termination Agreement”) and agreed to (1) terminate and cancel the 10 % Senior Unsecured Subordinated Convertible Promissory Note, dated November 1, 2018, executed by Inuvo in favor of CPT Investments (the “CPTI Note”), which as of June 20, 2019, had $ 1,063,288 in accrued principal and interest outstanding (the “Outstanding Indebtedness”) by July 20, 2019, (2) effective immediately, terminate all conversion rights under the CPTI Note to convert amounts outstanding into shares of Inuvo’s common stock, (3) terminate the Securities Purchase Agreement, dated November 1, 2018, by and between Inuvo and CPT Investments, and (4) terminate the Registration Rights Agreement, dated November 1, 2018, by and between Inuvo and CPT Investments.

The Merger Termination Agreement provided that the termination fee of $ 2,800,000 to be paid to Inuvo (the “Termination Fee”) for failure to fulfill the Financing Condition would be satisfied as follows:

(1) $ 1,063,288 of the Termination Fee was satisfied in consideration of the termination and cancellation of the Outstanding Indebtedness pursuant to the CPTI Note Termination Agreement that was approved by CPT’s senior lenders Montage Capital II, L.P.

and Partners for Growth IV, L.P.

and CPT’s issuance of a replacement note to CPT Investments that was entered into in July 2019;

(2) $ 1,611,712 of the Termination Fee was satisfied by CPT transferring all of the assets related to CPT’s programmatic and RTB advertising solutions business conducted through managed services and a proprietary SaaS solution free and clear of all liabilities, encumbrances, or liens, to Inuvo.

The enterprise valuation of the ReTargeter Business was determined to be $ 2.57 million.

(3) CPT paid $ 125,000 to Inuvo on September 15, 2019 to be contributed to the settlement of ongoing litigation with respect to the Mergers.

On September 30, 2019, Inuvo paid its obligation of $ 250,000 under a confidential settlement agreement that it entered into on June 20, 2019 resolving certain outstanding litigation related to the Mergers.

Under the Merger Termination Agreement, CPT and Inuvo agreed to mutually release all claims that each party had against the other, as well as certain affiliated entities of each.

Inuvo, however, will be able to pursue any claims against CPT and its affiliates for breaches of the Merger Termination Agreement.

The change in operating assets and liabilities during 2020 was a use of cash of $ 5,599,335 primarily due to a net loss of $ 7,304,569 , a decrease in the accounts payable balance by $ 2,271,578 , partially offset with the decrease in the accounts receivable balance of $ 1,317,508 and the increase in accrued expenses and other liabilities balance by $ 623,576 .

Our terms are such that we generally collect receivables prior to paying trade payables.

Media sales typically have slower payment terms than the terms of related payables.

Our principal sources of liquidity are the sale of our common stock, our borrowings under our credit facility with Hitachi, described in Note 6, and borrowings from non-bank financial institutions (see Note 7).

During March 2020 and April 2020, we raised approximately $ 1.5 million in gross proceeds, before expenses, through sales of our common stock and in April 2020 we received a $ 1.1 million PPP Loan.

On June 8, 2020, we raised an additional $ 5.5 million in gross proceeds, before expenses, through the sale of our common stock and on July 27, 2020, we raised an additional $ 10.75 million in gross proceeds, before expenses, through sales of our common stock.

On January 19, 2021, we raised an additional $ 8.0 million in gross proceeds, before expenses, through the sale of our common stock, and on January 22, 2021, we raised an additional $ 6.25 million in gross proceeds, before expenses, through sales of our common stock.

In April 2020, the Company experienced a significant reduction in advertiser marketing budgets across both the ValidClick and IntentKey platforms as a direct consequence of COVID-19.

These reductions have adversely impacted our overall revenue throughout 2020.

We are unable at this time to quantify the ultimate long-term impact on our company.

As a result, in May 2020 and June 2020 we implemented a temporary compensation change for senior officers and employees.

Certain employees with salaries in excess of $ 100,000 per year had forgone a percentage of their salary.

We have curtailed expenses, including compensation and travel for the months of May and June, and we issued a work from home policy to protect our employees and their families from virus transmission associated with co-workers.

As a result of this uncertainty we are focusing our resources on areas we believe have immediate revenue potential and attempting to reduce expenses where necessary with as little disruption on our daily operations as possible.

Should revenues continue to turn downwards or fail to return to historical levels, we may not be able to offset expenses quickly enough.

On October 7, 2020, we held a Special Meeting of Stockholders for the purpose of approving and adopting the ratification and validation of the amendment to our articles of incorporation to increase the number of authorized shares of common stock that we may issue from 60,000,000 to 100,000,000 .

The proposal was approved.

On December 16, 2020, stockholders approved an amendment to our articles of incorporation increasing the number of authorized shares of common stock, $ 0.001 par value per share from 100,000,000 to 150,000,000 .

Revisions of Previously Issued Consolidated Financial Statements

During the second quarter of 2020, the Company identified an error in the accounting for deferred tax asset valuation allowance originating in 2012 and continuing in its previously issued 2019 annual consolidated financial statements and the first quarter of 2020.

Although the Company assessed the materiality of the error and concluded that the error was not material to the previously issued annual or interim financial statements, the Company is revised its previously issued 2019 annual balance sheet to correct for the error in connection with the filing of its Quarterly Report on Form 10-Q for the period ended June 30, 2020.

Additionally, in connection with the filing of this Annual Report on Form 10-K, the Company has disclosed the impact of the revision to the consolidated balance sheet to correct for the impact of the error.

See Note 19, "Revisions of Previously Issued Consolidated Year-end Financial Statements" for reconciliations between as reported and as revised amounts as of and for the period ended December 31, 2019 and 2018.

Inuvo’s intellectual property is protected by 17 issued and eight pending patents.

As of December 31, 2021, we have approximately $ 13.3 million in cash, cash equivalents and marketable securities.

Our net working capital was $ 12.4 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 December 31, 2021, our accumulated deficit was $ 144.0 million.

Our principal sources of liquidity are the sale of our common stock and our credit facility with Hitachi described in Note 7 to

our Consolidated Financial Statements.

During March 2020 and April 2020, we raised approximately $ 1.5 million in gross

proceeds, before expenses, through sales of our common stock and in April 2020 we received a $ 1.1 million PPP Loan.

8, 2020, we raised an additional $ 5.5 million in gross proceeds, before expenses, through the sale of our common stock and on

July 27, 2020, we raised an additional $ 10.75 million in gross proceeds, before expenses, through sales of our common stock.

On January 19, 2021, we raised an additional $ 8 million in gross proceeds, before expenses, through the sale of our common

stock, and on January 22, 2021, we raised an additional $ 6.25 million in gross proceeds, before expenses, through sales of our

common stock.

In March 2021, we contracted with an investment management company to manage our cash in excess of current operating

We placed $ 2 million in cash equivalent accounts and $ 10 million in an interest-bearing account.

At December 31, 2021,

our funds with the investment management company were approximately $ 8 million and were invested in cash equivalent accounts and marketable debt and equity securities.

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 .

During the year ended December 31, 2021, 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 grow 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.

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.

In April 2020, the Company experienced a significant reduction in advertiser marketing budgets across both the ValidClick and

IntentKey platforms as a direct consequence of COVID-19.

These reductions adversely impacted our overall revenue

throughout 2020.

As a result, in May 2020 and June 2020 we implemented a temporary compensation change for senior

officers and employees.

Certain employees with salaries in excess of $ 100,000 per year had forgone a percentage of the cash portion of their salary and instead received an equivalent restricted stock grant.

We curtailed expenses, including compensation and travel and issued a work from home policy to protect our employees and their families from virus transmission associated with co-workers.

Though we continue to monitor the pandemic and related government guidelines and regulations, we have returned to a hybrid working model where employees are working partially from the office and partially from home.

Note 2 – Summary of Significant Accounting Policies

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Cash and cash equivalents - Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less.

Revenue recognition - Most of our revenue is generated through clicks on advertisements presented on our properties or those of our partners.

We recognize revenue from clicks in the period in which the click occurs.

Payments to partners who display advertisements on our behalf are recognized as cost of revenue.

Revenue from data sales and commissions is recognized in the period in which the transaction occurs and the other revenue recognition criteria are met.

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

Investments - We have classified debt securities as available for sale securities with unrealized gains and losses recorded as other comprehensive income.

Equity securities are marked to market with changes recorded as other income on the income statement.

Any interest income or dividends are recorded as interest income on the income statement.

Revenue recognition - Both of our platforms generate revenue from ad placements and clicks on advertisements on websites, some of which we own.

We recognize revenue from ad placements and clicks 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.

The below table is the proportion of revenue that is generated through advertisements on our ValidClick and IntentKey platforms:

The Company subsequently settles these transactions with it business partners at which time adjustments for invalid traffic may impact the amount collected.

Payments to publishers who display advertisements on our behalf and payments to ad exchanges are recognized as cost of revenue.

The below table shows the revenue and the proportion of revenue that is generated through advertisements on our ValidClick and IntentKey platforms:

For the Years Ended December 31,

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Balances are written off against the allowance after all means of collection have been exhausted and the possibility of recovery is considered remote.

Marketing costs - Marketing costs or Traffic Acquisition Costs ("TAC") include the purchase of sponsored listings from search engines and is our primary method of attracting consumers to our owned and operated applications and websites.

Marketing costs - Marketing costs are predominately traffic acquisition costs and include those expenses required to attract an audience to our owned and operated applications and websites.

We expense these costs as incurred and present them as a separate line item in operating expenses in the consolidated statements of operations.

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Depreciation expense was $ 1,277,664 and $ 1,372,426 , respectively, for the years ended December 31, 2021 and 2020.

Capitalized Software Costs - We capitalize certain costs related to internally developed software and amortize these costs using the straight-line method over the estimated useful life of the software, generally two years .

Capitalized Software Costs - We capitalize certain labor costs related to internally developed software and amortize these costs using the straight-line method over the estimated useful life of the software, generally two years .

We do not sell internally developed software.

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Goodwill - Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired.

ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the requirement to compare the implied fair value of goodwill with its carrying amount as part of step two of the goodwill impairment test referenced in Accounting Standards Codification (“ASC”) 350, Intangibles - Goodwill and Other (“ASC 350”).

We perform an impairment test annually as of December 31, 2021.

As a result, we perform our annual goodwill impairment test by comparing the fair value of our reporting unit with its carrying amount.

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We recorded no impairment of intangible assets during 2021 or 2020.

In 2019, we recorded $ 2.57 million in intangible assets from the CPT Merger Termination Agreement.

An independent valuation of the assets was performed to determine the carrying value of the assets listed above.

See Note 1 - Organization and Business.

See Note 6, Intangible Assets and Goodwill, for more information.

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ASC 740 prescribes a recognition threshold of more likely than not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order to be recognized in the financial statements.

We recognize interest and penalties related to income taxes in income tax expense.

We have incurred no penalties and interest for the years ended December 31, 2021 and 2020

Impairment of long-lived assets - In accordance with ASC 360 , Property, Plant and Equipment , long-lived assets, such as property and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds the fair value.

Stock-based compensation - We value stock compensation based on the fair value recognition provisions ASC 718 , Compensation – Stock Compensation, which establishes accounting for stock-based awards exchanged for employee services and requires companies to expense the estimated grant date fair value of stock awards over the requisite employee service period.

Stock-based compensation - We recognize stock compensation based on the recognition provisions ASC 718 , Compensation – Stock Compensation, which establishes accounting for stock-based awards exchanged for employee and non-employee services and requires companies to expense the estimated grant date fair value of stock awards over the requisite employee service period.

The fair value of restricted stock awards is based on the market price of our common stock on the date of the grant.

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We deferred grant funds related to capitalized costs and classified them as current or long-term liabilities on the balance sheet according to the classification of the associated asset.

As of December 31, 2020, there were 38 employees in Arkansas, twelve employees under the required 50 .

As of December 31, 2021, there were 41 employees in Arkansas, two employees under the required 43 .

As such, we recorded a contingent liability $ 10,000 .

As of December 31, 2019, there were 33 employees in Arkansas, seventeen employees under the required 50 .

As of December 31, 2020, there were 38 employees in Arkansas, twelve employees under the required 50 .

As such, we recorded a contingent liability $ 60,000 .

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Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance.

The Company’s chief operating decision maker, its chief executive officer, reviews financial information presented on a consolidated basis and no expense or operating income is evaluated at a segment level.

Given the consolidated level of review by the Company’s chief executive officer, the Company operates as one reportable segment.

Our chief operating decision maker, our chief executive officer, reviews financial information presented on a consolidated basis and no expense or operating income is evaluated at a segment level.

Given the consolidated level of review by the our chief executive officer, we operate as one reportable segment.

Concentration of credit risk - We are exposed to concentrations of risk primarily in cash and accounts receivable, which are generally not collateralized.

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We maintain allowances for potential credit losses.

Customer concentrations - At December 31, 2020, we had two individual customers with accounts receivable balances greater than 10% of the gross accounts receivable.

These customers combined owed approximately 35.4 % of our gross accounts receivable balance as of December 31, 2020.

The same two customers accounted for 60.5 % of our revenue for the year ended December 31, 2020.

In 2019, we had two individual customers with accounts receivable balances greater than 10% of the gross accounts receivable.

These customers combined owed approximately 60.0 % of our gross accounts receivable balance as of December 31, 2019.

The same two customers accounted for 78.5 % of our revenue for the year ended and December 31, 2019.

Customer concentrations - At December 31, 2021, we had three individual customers with revenue concentration greater than 10% of the our total revenue.

These customers combined accounted for 62.9 % of our total revenue as of December 31, 2021.

In 2020, we had two individual customers with revenue concentration greater than 10% of our total revenue.

These customers combined accounted for 60.5 % of our revenue for the year ended and December 31, 2020.

Use of estimates - The preparation of financial statements, in accordance with accounting principles generally accepted in the United States ("U.S.

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 allowances for doubtful accounts, goodwill and purchased intangible asset valuations, valuation of long-lived assets, income tax valuation allowance and derivative liability.

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 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.

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(i) information available prior to issuance of the consolidated financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred as of the date of the consolidated financial statements and (ii) the range of loss can be reasonably estimated.

Additional accounting pronouncements

In February 2016, the FASB issued Accounting Standards Update ("ASU") No.

2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of- use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.

We adopted the new standard effective January 1, 2019 on a modified retrospective basis and did not restate comparative periods.

We elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward our historical lease classification, our assessment on whether a contract is or contains a lease, and our initial direct costs for any leases that exist prior to adoption of the new standard.

We also elected to combine lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term.

Based on the present value of the lease payments for the remaining lease term of the Company's existing leases, the Company recognized right-of-use assets and lease liabilities for operating leases of approximately $ 1.2 million and finance leases of approximately $ 265,000 , respectively, on January 1, 2019.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment (“ASU 2017-04”).

As a result, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value.

However, the impairment loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, including any interim impairment tests within those annual periods, with early application permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

In January 2019, we elected to early adopt ASU 2017-04, and the adoption had no impact on our consolidated financial statements.

We will perform future goodwill impairment tests according to ASU 2017-04.

Recent Accounting Pronouncements Not Yet Adopted

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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.

Reclassifications

Certain amounts previously presented for prior periods have been reclassified to conform to the current presentation.

The reclassifications had no effect on net loss, working capital or equity previously reported.

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.

Debt securities are classified as available for sale securities.

We classify our cash equivalents and marketable securities within Level 1 because we use quoted market prices models utilizing market observable inputs to determine their fair value.

The cost, gross unrealized gains (losses) and fair value of marketable securities by major security type as of December 31, 2021 were as follows:

Cost Unrealized Gain (Loss) Fair Value

Cash and cash equivalents:

Cash $ 5,253,205 $ — $ 5,253,205

Cash equivalents 5,222,759 — 5,222,759

Total cash and cash equivalents $ 10,475,964 $ — $ 10,475,964

Marketable securities

Debt securities $ 905,470 $ 53,737 $ 959,207

Equity securities 2,100,305 ( 272,021 ) 1,828,284

Total marketable securities 2,787,491

Total cash and cash equivalents and marketable securities $ 13,263,455

The gross unrealized losses and realized gains on our marketable securities were approximately $ 272 thousand and $ 5 thousand, respectively, for the twelve months ended December 31, 2021.

N ote 4 – Allowance for Doubtful Accounts

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Charge-offs ( 16,154 ) ( 150,333 )

Recoveries 1,904 —

Balance at the end of the year $ 202,904 $ 209,667

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Equipment 1,164,671 1,052,199

Software 11,475,683 10,309,298

Capitalized labor 12,914,820 11,475,683

Leasehold improvements 458,885 421,016

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Total $ 1,506,766 $ 1,187,061

Depreciation expense was $ 1,277,664 and $ 1,372,426 , respectively, for the years ended December 31, 2021 and 2020.

Note 6 – Intangible Assets and Goodwill

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(1) The trade names related to our web properties have an indefinite life, and as such are not amortized.

(2) We recorded $ 2.57 million in intangible assets from the CPT Merger Termination Agreement.

An independent valuation of the assets was performed to determine the carrying value of the assets listed above.

See Note 1 - Organization and Business.

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

2022 $ 1,071,294

2022 1,071,294

Thereafter 2,565,875

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Note 7 - Bank Debt

The following table summarizes our outstanding bank debt balances:

December 31, 2020 December 31, 2019

Financed receivables - 5.75 percent at December 31, 2019 (prime plus 1 percent) on invoice receivables;

6.75 percent at December 31, 2019 (prime plus 2 percent) on uninvoiced receivables

Total $ — $ 3,381,364

On March 1, 2012, we entered into a Business Financing Agreement with Bridge Bank, which is now owned by Western Alliance Bank.

The agreement provided us with a revolving credit line of up to $ 10 million which we used to help satisfy our working capital needs.

On October 11, 2018, we entered into the Amended and Restated Financing Agreement with Western Alliance Bank which superseded the Business Financing Agreement, as amended.

The material terms of the Amended and Restated Financing Agreement included financing eligible invoiced receivables at an advance rate of 85 % and an interest rate of prime plus 1 % and a sub-limit of up to $ 2.5 million of uninvoiced eligible receivables at an advance rate of 75 % and an interest rate of prime plus 2 %.

The sub-limit provision expired at the end of April 2019.

The Amended and Restated Financing Agreement included certain fees;

a facility fee of $ 11,765 due at closing;

an annual facility fee of 0.25 % of the account balance due beginning on April 20, 2019;

a monthly maintenance fee of 0.125 % of the ending daily account balance;

a $ 30,000 fee in lieu of a warrant;

and $ 80,000 due upon termination of the agreement or repayment of our obligations under the agreement.

The Amended and Restated Financing Agreement was secured by all of our assets.

On April 30, 2019, under the terms of the Second Amendment, Western Alliance Bank agreed to extend the $ 2.5 million sub-limit provision of uninvoiced eligible receivables until the earlier of May 31, 2019 or three days after the closing of the Mergers, among other terms.

On June 6, 2019, we entered into the Third Amendment to the Amended and Restated Financing.

The Third Amendment provided that with respect to the eligible unbilled receivable sublimit of $ 2,500,000 , which expired May 31, 2019 under the Amended and Restated Financing Agreement, that:

(i) lender had no obligation to finance unbilled receivables but may do so in its discretion;

and (ii) lender may terminate financing of unbilled receivables upon written notice.

The Third Amendment also imposed an amendment fee of $ 2,000 .

The Business Financing Agreement expired and at December 31, 2020 there were no outstanding balances due.

On March 12, 2020, we closed on the Loan and Security Agreement dated February 28, 2020 with Hitachi.

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We are permitted to borrow (i) 90 % of the aggregate Eligible Accounts Receivable, plus (i) the lesser of 75 % of the aggregate Unbilled Accounts Receivable or 50 % of the amount available to borrow under (i), up to the maximum credit commitment.

On March 12, 2020, we drew $ 5,000,000 under this agreement, using $ 2,959,573 of these proceeds to satisfy all of our obligations under the Western Alliance Bank credit agreement and the balance was used for working capital.

Following the satisfaction of our obligations to Western Alliance Bank, all agreements with that entity have been terminated.

We pay Hitachi a monthly interest at the rate of 2 % in excess of the Wall Street Journal Prime Rate, with a minimum rate of 6.75 % per annum, on outstanding amounts.

The interest rate of 2 % in excess of the Wall Street Journal Prime Rate, with a minimum rate of 6.75 % per annum, on outstanding amounts.

The principal and all accrued but unpaid interest are due on demand.

The Agreement contains certain affirmative and negative covenants to which we are subject.

As of December 31, 2020, we were in compliance or obtained a waiver for these covenants.

We agreed to pay Hitachi a commitment fee of $ 50,000 , with one half due upon the execution of the agreement and the balance due six months thereafter.

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In addition to a $ 2,000 document fee we have paid to Hitachi, if we exit our relationship with Hitachi before March 1, 2022, we are obligated to pay Hitachi an exit fee of $ 50,000 .

At December 31, 2020 there were no outstanding balances due under the Loan and Security Agreement.

On March 12, 2020, we drew $ 5,000,000 under this agreement, using $ 2,959,573 of these proceeds to satisfy existing debt obligations and the balance was used for working capital.

At December 31, 2021 and 2020, there were no outstanding balances due under the Loan and Security Agreement.

Note 8 - Convertible Promissory Note

On March 1, 2019, Inuvo entered into a Securities Purchase Agreement with three accredited investors for the purchase and sale of an aggregate of $ 1,440,000 of principal of Original Issue Discount Unsecured Subordinated Convertible Notes due September 1, 2020 (the “Calvary Notes”) to fund working capital and additional expenses resulting from the delay in closing of the Mergers associated with the government shut down.

The initial conversion price of the Calvary Notes was $ 1.08 per share which would have made the Calvary Notes then convertible into 1,333,333 unregistered shares of Inuvo’s common stock upon conversion.

The Calvary Notes were issued in a private placement and the shares of common stock issuable upon conversion are restricted, subject to resale under Rule 144.

The proceeds to Inuvo from the offering were $ 1,200,000 .

Inuvo did not pay any commissions or finders fees in connection with the sale of the Calvary Notes and Inuvo utilized the proceeds for working capital.

The Calvary Notes are reported net of unamortized original issue discounts and initial value attributed to the bifurcated embedded conversion feature.

Effective April 20, 2020, the Company and the holder of the remaining Calvary Notes due September 1, 2020 in the principal amount of $ 315,000 as modified under that certain Note Modification and Release Agreement effective November 11, 2019, agreed to amend the note to extend the maturity date to December 31, 2020 and reduce the conversion price to $ 0.175 per share.

On April 21, 2020, the noteholder converted $ 200,000 principal amount due under the note into 1,142,857 shares of our common stock.

On May 5, 2020, the noteholder converted the final $ 115,000 principal amount due under the note into 657,143 shares of our common stock, thereby satisfying the note in full.

Consideration of Down Round Price Adjustment

The Calvary Notes contained certain triggers that created adjustments to the conversion ratio, which provided down round protection to the holders.

Because the conversion feature has been bifurcated as an embedded derivative and is marked to fair value at each reporting period, the actual occurrence of a trigger and the resulting adjustment to the conversion rate did not require any additional accounting treatment at the time of the price adjustment.

Rather, the next fair value computation reflects the new terms of the conversion feature.

On July 15, 2019, we closed on an underwritten public offering of 13,750,000 shares at an offering price of $ 0.30 per share.

As a result, this triggered a corresponding adjustment to the conversion ratio in the Calvary Notes to $ 0.30 .

The fair value of the embedded derivative reflected these terms at December 31, 2019.

Modifications/Extinguishment

On November 11, 2019 we entered into Note Modification and Release Agreements with the holders of $ 1,080,000 principal amount of the Calvary Notes.

Under the terms of the Note Modification and Release Agreement, the parties agreed that in consideration of such noteholder’s agreement to convert a minimum of 50 % of the outstanding amount of the note (the “First Conversion Amount”) that the conversion price for the First Conversion Amount would be $ 0.265 per share and that the conversion price for any remaining amount due under the note would be $ 0.30 per share, subject to future adjustments under the terms of the note including dilutive issuances at a price below $ 0.30 per share, subject to a floor of $ 0.23 per share.

The agreement contains mutual general releases.

These holders converted an aggregate of $ 765,000 due under the Calvary Notes into 2,886,792 shares of our common stock.

Immediately prior to the conversion, the carrying value of the derivative was marked-to-market.

Upon converting, the issued shares were recorded at their fair value of $ 0.29 per share.

This resulted in a loss on extinguishment.

Both the loss due to the marking to market and the loss on extinguishment totaling approximately $ 193,000 were recorded to other income, net.

In January 2020, a noteholder of a $ 360,000 principal amount Calvary note converted the note into 1,200,000 shares of our common stock.

The carrying value of the bifurcated derivative was marked-to-market immediately prior to the conversion.

Upon conversion, the issued shares were recorded at their fair value.

Both the loss due to the marked-to-market and loss on extinguishment of approximately $ 69,000 were recorded to other income, net.

Upon the April 2020 conversion, we relieved a proportional amount ($ 200,000 of $ 315,000 or 63.49 %) of the adjusted carrying values of bifurcated conversion option and the debt host, and recorded the issued shares at their fair value of $ 0.22 per share.

This resulted in a gain on extinguishment of $ 9,258 and was recorded to other income, net.

Upon the May 2020 conversion, we relieved the remaining amount ($ 115,000 of $ 115,000 or 100 %) of the adjusted carrying values of bifurcated conversion option and the debt host, and recorded the issued shares at their fair value of $ 0.31 per share.

This resulted in a loss on extinguishment of $ 6,201 other income, net.

Note 8 - Derivative Liability

Derivative contracts are recorded at fair value under ASC 820 using quoted market prices and significant other observable inputs.

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.

The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value hierarchy are described below:

Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities in markets that are not active;

inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates);

and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3—Inputs that are both significant to the fair value measurement and unobservable.

At December 31, 2019, we recorded a derivative liability of $ 182,250 related to the modification and extinguishment of the convertible promissory note discussed in Note 7 - Convertible Promissory Note.

In accordance with the guidance above, the fair value of the derivative liability is considered "Level 3."

On March 1, 2019, Inuvo entered into a Securities Purchase Agreement with three accredited investors for the purchase and sale

of an aggregate of $ 1,440,000 of principal of Original Issue Discount Unsecured Subordinated Convertible Notes due

September 1, 2020 (the "Calvary Notes") to fund working capital and additional expenses resulting from the delay in closing of

certain planned, and since terminated, mergers with ConversionPoint Technologies Inc.

and ConversionPoint Holdings Inc.

initial conversion price of the Calvary Notes was $ 1.08 per share which would have made the Calvary Notes then convertible

into 1,333,333 unregistered shares of Inuvo’s common stock upon conversion.

The Calvary Notes were issued in a private

placement and the shares of common stock issuable upon conversion are restricted, subject to resale under Rule 144.

proceeds to Inuvo from the offering were $ 1,200,000 .

Inuvo did not pay any commissions or finders fees in connection with

the sale of the Calvary Notes and Inuvo utilized the proceeds for working capital.

On November 11, 2019, we entered into Note Modification and Release Agreements with the holders of $ 1,080,000 principal

amount of the Calvary Notes.

Under the terms of the Note Modification and Release Agreement, the parties agreed that in

consideration of such noteholder’s agreement to convert a minimum of 50 % of the outstanding amount of the note (the "First

Conversion Amount") that the conversion price for the First Conversion Amount would be $ 0.265 per share and that the

conversion price for any remaining amount due under the note would be $ 0.30 per share, subject to future adjustments under the

terms of the note including dilutive issuances at a price below $ 0.30 per share, subject to a floor of $ 0.23 per share.

agreement contains mutual general releases.

These holders converted an aggregate of $ 765,000 due under the Calvary Notes

into 2,886,792 shares of our common stock.

In January 2020, a noteholder of a $ 360,000 principal amount Calvary note converted the note into 1,200,000 shares of our

common stock.

On April 21, 2020, a noteholder converted $ 200,000 principal amount due under the Calvary Notes into

1,142,857 shares of our common stock.

On May 5, 2020, a noteholder converted the final $ 115,000 principal amount due under

the Calvary Notes into 657,143 shares of our common stock, thereby satisfying the Calvary Notes in full and completing the

extinguishment of the Calvary Notes.

Note 9 – Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following at December 31, 2021 and 2020:

Accrued marketing costs (TAC) $ 3,234,192 $ 2,200,014

Accrued marketing costs $ 4,267,980 $ 3,234,192

Accrued expenses and other 956,998 440,578

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Arkansas grant contingency 10,000 60,000

Accrued sales allowance 50,000 50,000

Accrued taxes, current portion 17,880 8,305

Accrued sales allowance — 50,000

Total $ 5,374,391 $ 4,216,448

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Other long-term liabilities consist of the following at December 31, 2021 and 2020:

Deferred rent 13,302 4,057

Deferred revenue — 420,000

SBA loan — 149,900

Deferred rent 4,057 57,162

Total $ 13,302 $ 573,957

In April 2020, we obtained the $ 1.1 million PPP Loan which we used primarily for payroll costs.

The PPP Loan was fully forgiven by the SBA on November 2, 2020.

On May 15, 2020, we received a COVID-19 Economic Injury Disaster Loan ("EIDL") from the SBA for $ 149,900 .

We repaid the EIDL in full on January 28, 2021.

Note 11 - 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 and was recorded as an asset to be amortized as marketing expenses over five years .

As of December 31, 2021, $ 100,000 has been amortized.

As part of the agreement, we granted a warrant exercisable into 300,000 shares of our common stock, which vest over two years upon achieving certain performance metrics (see Note 14 - Stockholders' Equity).

Additionally, we agreed to pay quarterly support fees upon reaching certain levels of operational activity.

In March 2020, we entered into an agreement to allow a third party to license and use ValidClick technology.

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The $ 500,000 fee was recorded as deferred revenue in March 2020.

We are committed to paying a monthly development royalty and marketing services fee when certain adjusted gross profit targets are achieved.

For the year ended December 31, 2020, approximately $ 79,000 has been recognized as other income and approximately $ 420,000 as deferred revenue.

Effective March 1, 2021, the agreement was canceled and the remaining deferred revenue balance of $ 420,000 was recognized as other income.

Note 12 - Income Taxes

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Deferred income taxes are the result of temporary differences between book and tax basis of certain assets and liabilities, timing of income and expense recognition of certain items and net operating loss carry-forwards.

When required, the Company records a liability for unrecognized tax positions, defined as the aggregate tax effect of differences between positions taken on tax returns and the benefits recognized in the financial statements.

Tax positions are measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

When required, we record a liability for unrecognized tax positions, defined as the aggregate tax effect of differences between positions taken on tax returns and the benefits recognized in the financial statements.

Tax positions are measured at the largest

amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

No tax benefits are recognized for positions that do not meet this threshold.

The Company has no uncertain tax positions that

require the Company to record a liability.

The federal income tax returns of the Company are subject to examination by the IRS, generally for three years after they are filed.

We have no uncertain tax positions that require the us to record a liability.

Our federal income tax returns are subject to examination by the IRS, generally for three years after they are filed.

We assess temporary differences resulting from different treatments of items for tax and accounting purposes.

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Allowance for doubtful accounts 56,900 58,800

Stock compensation expense 610,900 —

Other 351,500 472,500

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The net operating losses amounted to approximately $ 99,454,160 and expire beginning 2022 through 2037.

Pursuant to Internal Revenue Service Code Section 382, the use of certain of the Company’s net operating loss carry forwards are limited due to a cumulative change in ownership.

We are currently open to audit under the statute of limitations by the Internal Revenue Service for the years ending December 31, 2017 through 2019.

Included in the federal net operating loss carryforwards are $ 23.1 million generated from 2018 to 2021 that will not expire and are limited to offset 80% of our taxable income for years beginning after December 31, 2020.

As of December 31, 2021, the Company has a net deferred tax liability of $ 107,000 , due to having goodwill that is amortized for tax purposes but not for financial reporting.

The deferred tax liability relating to goodwill can only be offset up to 80% by NOLs generated in tax years ending December 31, 2018 and beyond, as well as NOLs available after consideration of IRC Section 382 limitation.

The remaining portion that cannot be used remains as a liability.

In future years, if the deferred tax assets are determined by management to be “more likely than not” to be realized, the recognized tax benefits relating to the reversal of the valuation allowance as of December 31, 2021 will be recorded.

Under the provisions of the Internal Revenue Code, the net operating loss carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities.

Net operating loss carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions.

This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities.

The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change.

Subsequent ownership changes may further affect the limitation in future years.

The Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study.

If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the net operating loss carryforwards would be subject to an annual limitation under Section 382, which is determined by first multiplying the value of the

Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required.

Any limitation may result in expiration of a portion of the net operating loss carryforwards before utilization.

Further, until a study is completed by the Company and any limitation is known, no amounts are being presented as an uncertain tax position.

The Company remains open to examination by the Internal Revenue Service for the years ending December 31, 2018 through 2021.

Carryforward attributes generated in all years since inception remain subject to adjustment.

Our state income tax returns are open to audit under the statute of limitations for the same periods.

We recognize interest and penalties related to income taxes in income tax expense.

We have incurred no penalties and interest for the years ended December 31, 2020 and 2019.

Note 13 - 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 2020 and 2019 periods, we granted options and restricted stock units ("RSUs") from the 2010 Equity Compensation Plan (“2010 ECP”) and the 2017 Equity Compensation Plan (“2017 ECP”).

The 2010 ECP expired by its terms in April 2020.

Option and RSUs vesting periods are generally up to three years and/ or achieving certain financial targets.

During the 2021 and 2020 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 achieving certain financial targets.

On January 4, 2021, in accordance with the plan provisions, the number of shares available for issuance under the 2017 ECP plan was increased by 150,000 shares.

Compensation Expense

We recorded stock-based compensation expense for all equity incentive plans of $ 2,179,254 and $ 858,683 for the years ended December 31, 2021 and 2020, respectively.

Total compensation cost not yet recognized at December 31, 2020 was $ 20,122 to be recognized over a weighted-average recognition period of less than one year .

Award Information and Activity

On August 14, 2019, the Inuvo Nominating, Corporate Governance and Compensation Committee approved modifications to the outstanding RSU grants under the 2010 and 2017 ECP plans.

The modifications include deeming the performance criteria for the performance based RSU grants with a measurement period based on June 30, 2019 as met and vested.

In addition, any remaining RSU grants outstanding were modified to vest in three equal parts on August 19, 2019, January 1, 2020 and July 1, 2020 as long as the grantee is employed by Inuvo on the vesting date.

On August 21, 2019 our board of directors adopted, subject to stockholder approval, an amendment to our 2017 ECP to increase in the number of shares reserved for issuance upon grants made under the plan by an additional 6,800,000 shares of our common stock.

The stockholders approved the amendment to our 2017 ECP at the annual stockholders meeting on October 4, 2019.

On January 1, 2020, in accordance with the plan provisions, the number of shares available for issuance under the 2017 and 2010 ECP plans were increased by 150,000 and 250,000 shares, respectively.

The following table summarizes the stock grants outstanding under our 2010 ECP and 2017 ECP plans as of December 31, 2020:

Total compensation cost not yet recognized at December 31, 2021 was $ 3,595,258 to be recognized over a weighted-average recognition period of one year .

The following table summarizes the stock grants outstanding under our 2010 Employee Compensation Plan ("2010 ECP") and 2017 ECP plans as of December 31, 2021:

Options Outstanding RSUs Outstanding Options and RSUs Exercised Available Shares Total

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Total 1,500 3,960,001 7,745,649 2,705,861 14,413,011

(*) Expired April 2020

(*) 2010 ECP Expired April 2020

The fair value of restricted stock units is determined using market value of the common stock on the date of the grant.

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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.

At December 31, 2020, the 2010 ECP plan had 9,500 outstanding options and all were exercisable with an aggregate intrinsic value of $ 0 , a weighted average exercise price of $ 0.56 and a weighted average remaining contractual term of 1.5 years.

At December 31, 2021, the 2010 ECP plan had 1,500 outstanding options and all were exercisable with an aggregate intrinsic value of $ 0 , a weighted average exercise price of $ 0.56 and a weighted average remaining contractual term of less than a year.

The following table summarizes our stock option activity under the 2010 ECP plan during 2021:

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Outstanding, beginning of year 9,500 $ 0.56

Granted — $ —

Forfeited, expired or cancelled 8,748 $ 3.01

Exercised — $ —

Stock options exercised 4,750 $ 0.56

Stock options canceled 3,250 $ 0.56

Outstanding, end of year 1,500 $ 0.56

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Granted 4,610,000 $ 1.36

Exercised 1,202,933 $ 0.31

Vested ( 2,171,331 ) $ 0.47

Forfeited ( 409,194 ) $ 1.23

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Note 14 – Stockholders Equity

On March 20, 2020, we sold an aggregate of 3,931,428 shares of our common stock to the five members of our Board of

Directors in a private placement exempt from registration under Section 4(a)(2) and Rule 506(b) of Regulation D under the

Securities Act of 1933, as amended.

We received proceeds of $ 688,000 in this offering.

On March 27, 2020, we closed on the

first tranche of a registered direct offering in which we sold 3,115,001 shares of our common stock for gross proceeds of

On April 2, 2020, we closed on a second tranche of the registered direct offering in which we sold 1,400,285 shares

of our common stock for gross proceeds of $ 245,050 .

On June 8, 2020, we raised $ 5.5 million in gross proceeds, before expenses, through the sale of our common stock and on July 27, 2020, we raised $ 10.75 million in gross proceeds, before expenses, through sales of our common stock.

On January 19, 2021, we raised $ 8 million in gross proceeds, before expenses, through the sale of our common stock, and on January 22, 2021, we raised $ 6.25 million in gross proceeds, before expenses, through sales of our common stock.

In 2020, our convertible promissory notes were converted into $ 3 million of common stock.

See Note 8 - Convertible Promissory Note for details.

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 11 - Commitments).

As part of that agreement, we granted a warrant exercisable into 300,000 shares of our common stock, 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 on a ratable basis over the vesting period of each tranche.

For the twelve months ended December 31, 2021, we recognized approximately $ 20 thousand in expense and $ 130 thousand is unrealized.

Earnings per Share

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We provide a 401(k) plan to help our employees prepare for retirement where we matched each employee's contributions to the plan up to the first four of the employee's annual salary.

The matching contribution for the year ended 2020 was $ 186,483 .

The employer match was suspended for 2019.

The matching contribution for the years ended 2021 and 2020 was $ 260,540 and $ 186,483 , respectively.

Note 16 – Leases

The Company has entered into operating and finance leases primarily for real estate and equipment rental.

These leases have

terms ranging from two to four years , and often include one or more options to renew or in the case of equipment rental, to

We have entered into operating and finance leases primarily for real estate and equipment rental.

These leases have terms which

range from two years to four 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 the Company's December 31, 2020 and 2019 consolidated balance sheets and represent the Company’s right to use the underlying asset for the lease term.

The Company’s obligations to make lease payments are also listed as a separate line items on the Company's December 31, 2020 and 2019 consolidated balance sheets.

Operating lease right-of-use assets and liabilities commencing after January 1, 2019 are recognized at commencement date based on the present value of lease payments over the lease term.

As of December 31, 2020, total operating and financed right-of-use assets were $ 606,573 and $ 395,910 , respectively.

As of December 31, 2019, total operating and financed right-of-use assets were $ 756,115 and $ 88,178 , respectively.

As of December 31, 2019 the Company has entered into a short-term finance lease for equipment with a remaining term of twelve months or less and is included in the "Accrued expense and other current liabilities" section of the 2019 consolidated balance sheet.

All operating lease expense is recognized on a straight-line basis over the lease term.

For the years-ended December 31, 2020 and 2019, the Company recorded $ 367,981 and $ 177,193 in amortization expense related to finance leases.

Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to

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 obligations to make lease payments are also listed as

separate line items on our consolidated balance sheets.

As of December 31, 2021 and December 31, 2020, total operating and financed right-of-use assets were $ 641,306 and $ 201,902 , and $ 606,573 and $ 395,910 , respectively.

For the years-ended December 31, 2021 and 2020, we recorded $ 322,747 and $ 367,981 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 the Company's operating lease liabilities for are as follows:

Information related to our operating lease liabilities for are as follows:

December 31, 2021

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Weighted-average discount rate 6.25 %

December 31, 2019

Cash paid for operating lease liabilities

Weighted-average remaining lease term

Weighted-average discount rate

Minimum future lease payments ended December 31, 2021

2022 $ 114,865

Less imputed interest ( 21,648 )

Total lease liabilities $ 208,365

Information related to the Company's financed lease liabilities are as follows:

Information related to our financed lease liabilities are as follows:

December 31, 2021

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Weighted-average discount rate 6.25 %

December 31, 2019

Cash paid for finance lease liabilities

Weighted-average remaining lease term

Less than one year

Weighted-average discount rate

Minimum future lease payments ended December 31, 2021

2022 $ 380,482

Less imputed interest ( 53,441 )

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We did not pay any commissions or finder’s fees, and we used the proceeds for general working capital.

In June 2019, the Company entered into an agreement with First Orion Corp., which is partially owned by two directors and

shareholders of Inuvo, to provide office space.

The lease is for six-months commencing on July 1, 2019 and cost $ 60,000

which was prepaid in June 2019.

Note 18 - Subsequent Events

On January 7, 2021, we filed the Articles of Amendment to our Articles of Incorporation in the sate of Nevada increasing the number of authorized shares from 100,000,000 to 150,000,000 .

On January 19, 2021, we closed a registered direct offering of an aggregate of 13,333,334 shares of our common stock, at a price of $ 0.60 per share, for gross proceeds of $ 8,000,000 , before deducting placement agent fees and other offering expenses.

On January 22, 2021, we closed a registered direct offering of an aggregate of 5,681,817 shares of our common stock, at a price of $ 1.10 per share, for gross proceeds of $ 6,250,000 , before deducting placement agent fees and commission and other offering expenses.

On January 28, 2021, we paid off the SBA loan and related interest of $ 153,930 .

On February 1, 2021, our Little Rock, Arkansas lease was amended reducing the total office space to 7,831 square feet and adding an additional three years to the lease term.

The lease is considered a lease modification under ASC Topic 842 - Leases and will be recorded in the first quarter of 2021.

Note 19 - Revisions of Previously Issued Consolidated Year-End Financial Statements

As described in Note 1, "Organization and Business," the following table sets forth the impact of an error correction on the Company’s consolidated financial statements as of and for the period ended December 31, 2019 by financial statement line item.

Most of the deferred tax liabilities arose from the acquisition in 2012.

The tax assets with definite lives should have been netted against the tax liabilities with definite lives as required by ASC 740 when evaluating the valuation allowance.

Instead, both the tax assets and liabilities were maintained on a gross basis on the balance sheet and the tax assets were entirely offset with a valuation allowance.

The effect of the error was deemed immaterial.

December 31, 2019

Consolidated Balance Sheet Line Item As Previously Reported Adjustments As Revised

Deferred tax liability $ 2,019,200 $ 1,912,200 $ 107,000

Accumulated deficit $ 130,958,001 $ ( 1,912,200 ) $ 129,045,801

December 31, 2018

Consolidated Balance Sheet Line Item As Previously Reported Adjustments As Revised

Accumulated deficit $ 126,469,894 $ ( 1,912,200 ) $ 124,557,694

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures