What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-29 compared with 2023-03-10 · 275 added, 314 removed, 532 unchanged (53% of the section changed)

29 unchanged sentences

OTHER INFORMATION .

Trading Plans

During the three months ended December 31, 2023, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

20 unchanged sentences

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

Exhibit Description Form Date Filed Number Filed or Furnished Herewith

Exhibit Description

Filed or Furnished Herewith

Agreement and Plan of Merger dated June 5, 2009 between Inuvo, Inc.

and Kowabunga!

8-K 7/24/09 2.4

Agreement and Plan of Merger dated October 16, 2011 between Inuvo, Inc., Anhinga Merger Subsidiary, Inc.

and Vertro, Inc.

8-K 10/17/11 2.5

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

10-KSB 3/1/04 4

3(i).2 Amended to Articles of Incorporation filed March 14, 2005

10-KSB 3/31/06 3.2

3(i).3 Articles of Merger between Inuvo, Inc.

Articles of Incorporation, as amended

Amended to Articles of Incorporation filed March 14, 2005

Articles of Merger between Inuvo, Inc.

and Kowabunga!

8-K 7/24/09 3.4

3(i).4 Certificate of Change Filed Pursuant to NRS 78.209

8-K 12/10/10 3(i).4

3(i).5 Certificate of Merger as filed with the Secretary of State of Nevada on February 29, 2012

10-K 3/29/12 3(i).5

3(i).6 Articles of Amendment to Amended Articles of Incorporation as filed on February 29, 2012

10-K 3/29/12 3(i).6

3(i).7 Articles of Amendment to Articles of Incorporation as filed on October 31, 2019

10-Q 5/15/20 3(i).7

3(i).8 Certificate of Validation of Amendment to Amended Articles of Incorporation as filed October 16, 2020

10-Q 11/9/20 3(i)8

3(i).9 Articles of Amendment to Articles of Incorporation as filed January 7, 2021

10-K 2/11/21 3(i).9

3(i).10 Articles of Amendment to Articles of Incorporation as filed on August 19, 2021

10-Q 11/12/21 3(i).10

3(ii).1 Amended and Restated By-Laws

10-K 3/31/10 3(ii).4

3(ii).2 Bylaw amendment adopted February 29, 2012

8-K 3/6/12 3(ii).1

Certificate of Change Filed Pursuant to NRS 78.209

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

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

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

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

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

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

Amended and Restated By-Laws

Bylaw amendment adopted February 29, 2012

Description of Securities

10-K 2/11/21 4.1

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

Google Services Agreement effective January 1, 2024 by and between Vertro, Inc.

and Google Inc.

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 ***

10-K 3/15/19 10.19

Publisher Network Contract, dated April 4, 2009, as amended with Amendment No.

4 unchanged sentences

5 and Amendment No.

10-Q 5/15/12 10.1

Publisher Network Contract, dated April 4, 2009, as amended.

10-Q/A 12/28/12 10.1

Amendment No.

Publisher Network Contract effective as of September 1, 2013, executed and delivered October 10, 2013 ***

10-Q/A 1/6/14 10.28

Amendment #11 to Yahoo!

Publisher Network Contract, effective January 15, 2016, executed and delivered January 26, 2015

10-K 2/12/16 10.24

Amendment #12 to Yahoo!

Publisher Network Contract, effective March 2, 2016 ***

10-Q 4/27/16 10.25

Amendment #14 to Yahoo!

Publisher Contract dated February 28, 2018

8-K 3/6/18 10.1

Amendment #15 to Yahoo!

Publisher Contract dated May 9, 2018

8-K 5/15/18 10.1

Amendment # 16 dated August 28, 2018 to Yahoo!

Publisher Network Contract ***

10-Q 11/7/18 10.1

Amendment #18 dated January 24, 2019 to Yahoo!

Publisher Contract

10-K 3/15/19 10.6

Amendment #28 to the Yahoo!

Publisher Network Contract #1-19868214, dated as of November 11, 2020***

8-K 11/16/20 10.1

Amendment #32 to the Yahoo!

Publisher Network Contract #1-9868214, dated May 10, 2023.***

Form of Indemnification Agreement with Directors of Inuvo, Inc.

10-Q 11/7/18 10.5

2017 Equity Compensation Plan

DEF14A 4/28/17 A

Amendment No.

1 to the 2017 Equity Compensation Plan

DEF14 9/3/19 B

Amendment No.

2 to the 2017 Equity Compensation Plan

DEF14 5/2/22 A

2017 Equity Compensation Plan Non-Qualified Stock Option Agreement

10-Q 8/15/22 10.2

Quick Action Closing Fund Grant Agreement, dated January 25, 2013, with the Arkansas Economic Development Commission

10-K 3/13/13 10.23

Grant Reimbursement Agreement, dated January 25, 2013, with the Arkansas Economic Development Commission..

10-K 3/13/13 10.24

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

10-K 3/17/21 10.21

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

and Richard K.

8-K 3/6/12 10.2

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

and Wallace D.

8-K 3/6/12 10.4

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

8-K 3/6/12 10.5

Loan and Security Agreement dated February 28, 2020 effective March 12, 2020 by and between Inuvo, Inc.

and its subsidiaries and Hitachi Capital America Corp.

8-K 3/17/20 10.1

Amendment No.

1 to Loan and Security Agreement and Collateral Documents, dated March 1, 2023, by and between Mitsubishi HC Capital, Inc., f/k/a Hitachi Capital America Corp.

and Inuvo, Inc.

and its subsidiaries.

Form of Insider Offering Subscription Agreement

8-K 3/20/20 10.1

Form of Subscription Agreement

8-K 4/01/20 10.1

2017 Equity Compensation Plan Restricted Stock Unit Agreement

10-K 2/11/21 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

Subsidiaries of the Registrant

10-K 2/11/21 21.1

Consent of EisnerAmper LLP, PCAOB FIRM ID 274

3 unchanged sentences

Section 1350 certification of Chief Financial Officer

101.INS XBRL Instance Document Filed

101.SCH XBRL Taxonomy Extension Schema Document Filed

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Filed

101.DEF XBRL Taxonomy Extension Definition Linkbase Document Filed

101.LAB XBRL Taxonomy Extension Label Linkbase Document Filed

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Filed

Clawback Policy

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

The cover page for Inuvo, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2023, formatted in Inline XBRL (included within Exhibit 101 attachments).

4 unchanged sentences

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.

March 9, 2023 By:

February 29, 2024

/s/ Wallace D.

1 unchanged sentence

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

/s/ Richard K.

Howe Chairman of the Board of Directors, Chief Executive Officer, and principal executive officer March 9, 2023

Chairman of the Board of Directors and Chief Executive Officer (principal executive officer)

February 29, 2024

/s/ Wallace D.

Ruiz Chief Financial Officer, principal financial and accounting officer March 9, 2023

/s/ Jonathon Bond Director March 9, 2023

Chief Financial Officer (principal financial and accounting officer)

February 29, 2024

/s/ Jonathon Bond

February 29, 2024

Jonathon Bond

/s/ Gordon J.

Cameron Director March 9, 2023

/s/ Kenneth Lee Director March 9, 2023

February 29, 2024

/s/ Kenneth Lee

February 29, 2024

/s/ Charles D.

Morgan Director March 9, 2023

February 29, 2024

CONSOLIDATED FINANCIAL STATEMENTS

9 unchanged sentences

Report of Independent Registered Public Accounting Firm

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

To the Board of Directors and Stockholders of

Opinion on the Financial Statements

1 unchanged sentence

(the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years then ended, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate 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 matters 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 matters or on the accounts or disclosures to which it relates.

Revenue recognition

As described in Note 2 to the financial statements, the Company recognizes revenue when services are provided to a customer in an amount that reflects the consideration the Company expects to receive in exchange for those services.

The Company evaluated the need to perform a reassessment of the consideration it expects to receive from a customer representing approximately $18 million in revenue for the year ended December 31, 2022 and approximately $6.7 million as of December 31, 2022.

We have identified the Company’s evaluation of the need to perform a reassessment of collectability of amounts due from a customer during the performance of services as a critical audit matter.

This in turn led to a high degree of auditor judgement, subjectivity and effort in performing procedures for evaluating management’s analysis and conclusion of whether or not changes in facts and circumstances of the customer were so significant to require reassessment of collectability.

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

These procedures included gaining an understanding of the controls relating to revenue

recognition and gaining an understanding of management’s process for monitoring and evaluating the collectability of amounts under contracts with customers.

We also tested management’s judgement that a reassessment of collectability was not required by evaluating the results from accounts receivable confirmation procedures, communications between the customer and management, cash receipts received by the company during and subsequent to the customer relationship period, and limited inquiry of the underlying customer financial information.

Goodwill impairment analysis

As described in Note 2 to financial statements, the Company performs an impairment test of Goodwill annually by comparing fair value of the Company’s reporting unit to its carrying value.

Fair value is determined using various accepted valuation methodologies.

These valuation methodologies utilize growth rates, market multiples and management projections of financial information, which involved significant assumptions and judgment from management relative to expected performance of the Company.

Fair value of the reporting unit was estimated using a market approach that incorporated guideline public company multiples and normalized forecasted operating results for the reporting unit.

Management’s assumptions in estimating fair value include projected revenues, gross margins, marketing, selling and administrative expenses, capital expenditures, earnings, working capital assumptions, growth rates and market multiples.

The gross balance of goodwill was $9.8 million as of December 31, 2022 and no impairments were identified as a result of the Company’s impairment analysis.

We have identified the goodwill impairment analysis as a critical audit matter due to the significant judgment by management when developing the fair value estimate of their reporting unit.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures for evaluating management’s significant assumptions related to projected revenue, gross margins, marketing, selling and administrative expenses, capital expenditures, earnings, working capital assumptions, growth rates and market multiples;

and audit effort involved the use of professionals with specialized skill and knowledge.

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

These procedures included gaining an understanding of the controls relating to management’s goodwill impairment analysis, including controls over the valuation of its reporting unit, testing management’s process for developing the fair value estimate of its reporting unit, evaluating whether the market approach for valuation was appropriate, testing the completeness and accuracy of underlying data used in management’s estimates, and evaluating the reasonableness of significant assumptions used by management related to the projected financial information, growth rates and market multiples of its reporting unit.

Evaluating the reasonableness of management’s significant assumptions involved performing inquiries of management, considering current economic conditions, industry trends, and recent operating results of the reporting unit and determining whether the assumptions used by management were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s valuation models utilized and for the evaluation of the reasonableness of management’s significant assumptions related to working capital assumption, growth rates, and market multiples, as applicable.

As discussed in Note 1 to the consolidated financial statements, the Company has incurred a net loss of $13.1 million and net cash outflows from operations of $5.6 million for the year ended December 31, 2022.

At December 31, 2022, the Company believes its cash and cash equivalents and marketable investment securities will be sufficient to fund the Company’s planned operations for at least a year beyond the date of the issuance of the consolidated financial statements.

We identified liquidity as a critical audit matter due to the subjective judgments required of management in developing its business plan with forecasted cash flows and the contemplation of additional long-term financing arrangements to meet its liquidity needs for a year beyond the date of the issuance of the consolidated financial statements.

This in turn led to a high degree of auditor subjectivity and judgment to evaluate the evidence supporting the cash flow forecasts and assess the reasonableness of the estimates and assumptions in supporting the liquidity conclusion.

Additionally, the relevance of management's liquidity conclusion to the users of the consolidated financial statements also impacted our assessment of these circumstances as a critical audit matter.

Critical Audit Matter

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.

Allowance for credit losses

As discussed in Note 2 to the consolidated financial statements, the Company estimates an allowance for expected credit losses on accounts receivable by reviewing comprehensive historical data and taking into consideration current conditions of the Company and the impact of relevant current and projected economic conditions on their ability to collect accounts receivable balances.

As part of that process, management identified specific risks related to customers where changes in payment experience occurred.

The evaluation of expected losses for these specific customers required further judgement.

At December 31, 2023, the Company recorded an allowance for credit losses of

We identified the estimate of allowance for credit losses as a critical audit matter due to the subjective judgments required of management in evaluating risk characteristics for those specific customer accounts receivables where changes in payment experiences have occurred and in developing its estimate of expected losses on those accounts.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures for evaluating management’s significant assumptions related to these judgements.

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

The procedures we performed included testing the existence of the total liquid assets at December 31, 2022;

evaluating the reasonableness of the amounts and timing of revenue forecasted;

evaluating the reasonableness of the amounts and timing of payments of forecasted cost of revenue, marketing costs, compensation and general and administrative expenses;

reconsidering certain prior management forecasted amounts to evaluate whether those forecasted amounts approximated the ultimate actual results;

understanding the nature and the terms and conditions of existing and planned

financing arrangements, and evaluating the adequacy of the Company’s disclosure of these circumstances in the consolidated financial statements.

The procedures we performed included gaining an understanding of the controls relating to management’s estimate of allowance for credit losses, testing management’s process for developing the estimate, including evaluating management’s process for identifying risk characteristics for customers.

Our procedures included examination of payment terms and agreements with the customers, testing payments in accordance with those agreements and evaluation of payments subsequent to the Company’s reporting date.

In addition, evaluating the reasonableness of management’s judgements included performing inquiries of management and examination of other information related to the intent and ability of the customers to make payment.

/s/ EisnerAmper LLP

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

March 9, 2023

EISNERAMPER LLP

Iselin, New Jersey

February 29, 2024

Consolidated Balance Sheets

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Accounts receivable, net of allowance for doubtful accounts of $ 1,645,045 and $ 1,440,678 , respectively

11,119,892 9,265,813

Prepaid expenses and other current assets

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Intangible assets, net of accumulated amortization

Goodwill 9,853,342 9,853,342

Other assets 66,919 35,720

Total other assets

Total assets $ 35,557,310 $ 43,997,074

Liabilities and Stockholders’ Equity

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issued and outstanding shares 137,983,918 and 120,137,124 respectively;

120,138 118,748

Additional paid-in capital

1 unchanged sentence

Accumulated deficit

( 167,447,211 )

( 157,057,558 )

Total stockholders' equity

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For the Years Ended December 31,

Net revenue $ 75,603,745 $ 59,830,688

Cost of revenue

Gross profit 45,359,358 43,904,851

Operating expenses:

Marketing costs

Compensation 12,463,095 11,381,279

General and administrative

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Operating loss

( 10,392,515 )

( 12,649,874 )

Income tax benefit (expense)

Financing, other

Other (expense)/income, net

Net loss $ ( 13,106,539 ) $ ( 7,600,649 )

$ ( 10,389,653 )

$ ( 13,106,539 )

Other comprehensive income

1 unchanged sentence

Comprehensive loss

$ ( 10,304,785 )

$ ( 13,245,144 )

Per common share data:

Basic and diluted

Net loss $ ( 0.11 ) $ ( 0.06 )

Weighted average shares:

Basic 119,826,036 117,613,845

Diluted 119,826,036 117,613,845

See accompanying notes to the consolidated financial statements.

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For the Years Ended December 31, 2023 and 2022

Common Stock Additional Paid in Capital

Accumulated Deficit Accumulated Other Comprehensive Income Total

Additional Paid

Accumulated Other Comprehensive

Balances as of December 31, 2021

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

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

$ 176,586,529

$ ( 143,951,019 )

( 13,106,539 )

Unrealized loss on debt securities

Stock-based compensation

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

Stock issued for vested restricted stock awards

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

Shares withheld for taxes on vested restricted stock

1 unchanged sentence

Balances as of December 31, 2022

Net loss — — — ( 13,106,539 ) — ( 13,106,539 )

Unrealized loss on debt securities — — — — ( 138,605 ) ( 138,605 )

( 157,057,558 )

( 10,389,653 )

Unrealized gain on debt securities

Stock-based compensation

Stock issued for vested restricted stock awards

Proceeds from sale of common stock, net of expenses

Shares withheld for taxes on vested restricted stock

Stock warrants issued for referral agreement — — 33,043 — — 33,043

AGP Closing of at-the-market sale of common stock

Change in fair value of warrants related to vesting

Balances as of December 31, 2023

$ 184,291,414

$ ( 167,447,211 )

See accompanying notes to the consolidated financial statements.

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Operating activities:

Net loss $ ( 13,106,539 ) $ ( 7,600,649 )

$ ( 10,389,653 )

$ ( 13,106,539 )

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

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Stock based compensation

Loss on marketable securities 435,554 266,762

(Gain) Loss on marketable securities

Amortization of financing fees

Provision for doubtful accounts

Stock warrant expense 33,043 —

Derecognition of contingencies ( 10,000 ) ( 110,000 )

Third party rights agreement termination — ( 420,000 )

Stock warrant (income) expense

Deferred income tax benefit

Derecognition of contingencies and grant

Change in operating assets and liabilities:

Accounts receivable

( 3,119,222 )

Referral and support services agreement advance

Prepaid expenses, unbilled revenue and other assets 578,009 ( 992,978 )

Prepaid expenses, other current assets and other assets

Accounts payable

( 1,612,682 )

Accrued expenses and other liabilities

Net cash used in operating activities

( 2,554,075 )

( 5,573,991 )

Investing activities:

Purchases of equipment and capitalized development costs

( 1,682,683 )

( 1,689,869 )

Purchase of marketable securities

( 1,693,963 )

Proceeds from the sale of marketable securities

Net cash used in investing activities ( 1,666,125 ) ( 4,597,885 )

Net cash provided by (used in) investing activities

( 1,666,125 )

Financing activities:

Gross proceeds from line of credit

Repayments on line of credit

Proceeds from sale of common stock, net of expenses

1 unchanged sentence

Net taxes paid on RSU grants exercised

Proceeds from exercise of options — 1,569

SBA loan repayment — ( 149,900 )

Net cash (used in)/provided by financing activities

( 304,433 ) 12,459,441

Proceeds from at-the-market sales

Net cash provided by/(used in) financing activities

Net change – cash

( 7,544,549 )

Cash, beginning of year

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Assets purchased under finance lease obligations

Assets purchased under operating lease obligations $ — $ 344,311

Acquisition of right of use asset for operating lease liability

See accompanying 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 and advertising.

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

These solutions allow Inuvo’s clients to engage with their audiences in a manner that drives responsiveness.

Inuvo facilitates the delivery of hundreds of millions of marketing messages to consumers every single month and counts among its clients numerous world-renowned names across industries.

The Inuvo solution incorporates a proprietary form of artificial intelligence, or AI, branded the IntentKey.

This patented machine learning technology uses interactions with Internet content as a source of information from which to predict consumer intent.

The AI can identify and advertise to the reasons why consumers are purchasing products and services not to who those consumers are.

In this regard, the technology is designed for a privacy conscious future and is focused on the components of the advertising value chain most responsible for return on advertising spend, the intelligence behind the advertising decision.

Inuvo technology can be consumed both as a managed service and software-as-a-service.

For clients, Inuvo has also developed a collection of proprietary websites collectively branded as Bonfire Publishing where content is created specifically to attract qualified consumer traffic for clients through the publication of information across a wide range of topics including health, finance, travel, careers, auto, education and lifestyle.

These sites also provide the means to market test various Inuvo advertising technologies.

Further, Inuvo also provides Search and Social advertising services through a proprietary set of technologies branded as CampSight.

There are many barriers to entry associated with the Inuvo business model, including a proficiency in large scale information processing, predictive software development, marketing data products, analytics, artificial intelligence, integration to the internet of things ("IOT"), and the relationships required to execute within the IOT.

Inuvo is an advertising technology and services business selling information technology solutions to brands, agencies and large consolidators of advertising demand (“Platforms”).

Inuvo’s revenue is derived from the placement of digital advertising throughout devices, websites, applications and browsers across social, search and programmatic advertising channels.

Inuvo facilitates, and gets paid, to deliver millions of advertising messages monthly and counts among its client's numerous world-renowned companies across industries.

Inuvo’s primary mission is to disrupt the advertising industry with its proprietary and patented generative large language artificial intelligence (AI), a technology capable of identifying and targeting audiences without using a consumer’s identity or data.

The AI was designed to replace the consumer data, analytics, segmentation and lookalike modeling technologies that have traditionally served the advertising industry as it transitions to a new paradigm where a consumer’s identity and data are no longer available for advertising decisions due to legislative and technological changes.

Rather than targeting people, the AI targets the reasons behind why people are interested in products, services and brands.

Inuvo’s AI technology solves this challenge and can be consumed by clients both as a managed service and software-as-a-service.

For certain clients, Inuvo has also developed various proprietary technology and assets that include digital content, websites, automated campaigns, ad fraud detection, performance reporting and predictive media mix modeling.

The Inuvo products and services use analytics, data and artificial intelligence in a manner that optimizes the purchase and placement of advertising in real time.

These capabilities are typically sold with services both individually and in combination with each other based on client needs.

These products and services include:

An artificial intelligence-based consumer intent recognition system designed to reach highly targeted mobile and desktop In-Market audiences with precision;

A marketing and advertising solution which can be provided directly to brands and where a collection of data, analytics, software and publishing is used to align advertising messages with consumers across websites online.

There are many barriers to entry associated with the Inuvo business model, including a proficiency in large language model based artificial intelligence, large scale information processing, software development, consumer data products, analytics, IOT (internet of things) integration and the relationships required to execute within the IOT.

Inuvo’s intellectual property is protected by 19 issued and eight pending patents.

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.

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.

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 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

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

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

At December 31, 2022,

our funds with the investment management company were approximately $ 2 million and were invested in cash equivalent accounts and marketable debt and equity securities.

At December 31, 2022, our funds with the investment management company were approximately $2 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, 2022, we did not issue any shares of common stock or receive any aggregate proceeds from the ATM Program, and we did not pay any commissions to the Sales Agent.

During the year ended December 31, 2023, we sold 173,558 shares of common stock for gross proceeds totaling $63,136 under the ATM Program and paid the Sales Agent a commission of $1,902, all of which occurred during the second quarter of 2023.

Any shares of common stock offered and sold in the ATM Program will be issued pursuant to our universal shelf registration statement on Form S-3 (the “Shelf Registration Statement”).

1 unchanged sentence

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 technological advantage and higher margins.

If we are successful in implementing our plan, we expect to return to a positive cash flow from operations.

On May 30, 2023, we raised $4.0 million in gross proceeds in a registered direct offering, before expenses, through the sale of an aggregate of 16,000,000 shares of our common stock.

The shares were offered pursuant to an effective shelf registration statement on Form S-3 (the “Shelf Registration Statement”) and a prospectus supplement relating to the offering was filed with the SEC on May 26, 2023.

We have focused our resources behind a plan to market our collective multi-channel advertising capabilities differentiated by our AI technology, the IntentKey, where we have a technological advantage and higher margins.

If we are successful in

implementing our plan, we expect to return to a positive cash flow from operations.

However, there is no assurance that we will be able to achieve this objective.

As of December 31, 2022, we have approximately $ 4.5 million in cash, cash equivalents and short-term marketable securities.

Our net working capital was $ 2.8 million.

As of December 31, 2023, we have approximately $ 4.4 million in cash, and cash equivalents.

Our net working capital was $ 211.1 thousand.

We have encountered recurring losses and cash outflows from operations, which historically we have funded through equity offerings and debt facilities.

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Through December 31, 2023, our accumulated deficit was $ 167.4 million.

Management plans to support the Company’s future operations and capital expenditures primarily through borrowings from the Hitachi credit facility, until reaching profitability.

The credit facility is due upon demand and therefore there can be no assurances that sufficient borrowings will be available to support future operations until profitability is reached.We believe our current cash position and credit facility will be sufficient to sustain operations for at least the next twelve months from the date of this filing.

Management plans to support the Company’s future operations and capital expenditures primarily through cash raised through the sale of stock in May 2023, cash generated from future operations and borrowings from the credit facility until reaching profitability.

The credit facility is due upon demand and therefore there can be no assurances that sufficient borrowings will be available to support future operations until profitability is reached.

Our collection period is less than 30 days and can also be used to meet accrued obligations.

We believe our current cash position and credit facility will be sufficient to sustain operations for at least the 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.

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Revenue recognition - We generate revenue by identifying audiences and presenting advertisements on behalf of our customers.

We may contract directly with a brand, a Direct Customer or we may serve a brand through a contract with an agency, an Indirect Customer.

Revenue is recognized when services are provided to a customer in an amount that reflects the consideration the Company expects to receive in exchange for those services.

We charge our customers on a cents per thousand (CPM) basis, CPC basis, or as a specific dollar charge.

Revenue billed as CPM is generally programmatic digital advertising and is performed under a contract known as an Insertion Order (“IO”).

Programmatic digital advertising revenue is recognized in part or fully in the period the IO is partially or fully executed.

Revenue earned from placing an ad or an impression on websites, some of which we own, may be on a CPM or CPC basis.

We recognize revenue from ad placement and serving impressions in the period in which they occur.

The Company settles ad placement and CPC transactions with its customers net of any adjustments for poor traffic quality.

Payments to advertising exchanges that provide access to digital inventory and to a lesser extent, payments to website publishers and app developers that host advertisements we serve are recognized as cost of revenue.

For the twelve months ended December 31,

Direct customers $ 36,226,223 $ 20,922,750

Indirect customers 39,248,224 38,492,280

Consulting Services and other 129,298 415,658

Total $ 75,603,745 $ 59,830,688

Accounts receivable - Accounts receivable consists of trade receivables from customers.

We record accounts receivable at its net realizable value, recognizing an allowance for doubtful accounts based on our best estimate of probable credit losses on our existing accounts receivable.

We provide our products, technologies and services to Agencies & Brands and Platforms (large consolidators of advertising demand).

Currently, revenue from our IntentKey products and services are primarily from Agencies & Brands, and revenue from our Bonfire products and services are primarily from platforms.

Our revenue is derived from the placements of advertisements across advertising channels, browsers, applications and devices.

Pricing for those advertisement placements is typically either on a cost-per-click or cost per thousand impressions basis.

Our revenue is a function of the number of advertisements placed combined with the price we obtain (using our technologies) for the placements made on behalf of our clients.

We assume the risk associated of finding placements at a cost below that for which it had been sold.

We recognize revenue when control of the contracted services or product is transferred to our customer, in an amount that reflects the consideration we expect to be entitled to in exchange for those services or products.

We determine revenue recognition through (i) identification of a contract with a customer, (ii) identification of the performance obligations in the contract, (iii) determination of the transaction price, (iv) allocation of the transaction price to the performance obligations in the contract, and (v) recognition of revenue when or as the performance obligations are satisfied.

For Agencies and Brands, the terms of an agreement are captured in an Insertion Order ("IO") where revenue is recognized upon delivery of services during the period covered by the IO.

For Platforms, terms are generally captured in multi-year master service agreements and revenue is recognized based on the number of advertisements placed or clicked on in the period they occur.

We settle advertisement placement prices with our customers net of any adjustments for quality.

In the year ended December 31, 2023, we generated $ 73,911,528 in revenue of which 79.1% was from Platforms, 20.9% from Agencies and Brands.

In the year ended December 31, 2022, we generated $ 75,603,745 in revenue of which 51.7% was from Platforms, 48.3% from Agencies and Brands.

Accounts receivable - Accounts receivable consist of trade receivables from customers.

We record accounts receivable at its net realizable value, recognizing an allowance for doubtful accounts based on our best estimate of expected credit losses on our existing accounts receivable.

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

The current expected credit loss (CECL) model under Accounting Standards Update (ASU) 2016-13 requires an estimation of expected credit losses over the life of a financial instrument, taking into consideration historical experience, current conditions, and reasonable and supportable forecasts.

Management has reviewed comprehensive historical data, any relevant economic indicator, and estimated our estimated credit loss based off these probabilities.

In the year ended December 31, 2023, 2022, and 2021, we recorded accounts receivable, net allowance for doubtful accounts of, $ 9,226,956 , $ 11,119,892 , and $ 9,265,813 respectively .

For the twelve months ended December 31,

Balance at the end of the year

Cost of revenue - Cost of revenue is primarily composed of payments to advertising exchanges that provide access to digital inventory where we serve advertisements primarily for Agencies and Brands.

To a lesser extent, cost of revenue includes payments to website publishers and app developers that host advertisements.

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.

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Property and equipment - Property and equipment are stated at cost, net of accumulated depreciation and amortization.

Major renewals and improvements are capitalized while maintenance and repairs which do not improve or extend the life of the

respective assets are expensed as incurred.

Major renewals and improvements are capitalized while maintenance and repairs which do not improve or extend the life of the respective assets are expensed as incurred.

Costs of assets sold or retired and the related accumulated depreciation are eliminated from accounts and the net gain or loss is reflected as an operating expense in the consolidated statements of operations.

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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, 2022 and 2021

We have incurred no penalties or interest for the years ended December 31, 2023 and 2022.

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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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, 2022, there were 48 employees in Arkansas, two employees under the required 50 .

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

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, 2023, there were 43 full-time employees in Arkansas, seven employees under the required 50 .

As such, we recorded a contingent liability of $ 35,000 .

As of December 31, 2022, there were 48 full-time employees in Arkansas, two employees under the required 50 .

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

Earnings per share - During the periods presented, we had securities that could potentially dilute basic earnings per share in the future, but were excluded from the computation of diluted net loss per share, as their effect would have been anti-dilutive.

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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.

Given the consolidated level of review by 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 - In 2022, we had three individual customers with revenue concentration greater than 10% of our total revenue combining for 66.1 % of the total revenue.

At December 31, 2022, we had two customers greater than 10% of our total accounts receivable balance combing for a total of 63.3 %.

In 2021, we had three individual customers with revenue concentration greater than 10% of our total revenue combining for 62.9 % of the total revenue.

At December 31, 2021, we had four customers greater than 10% of our total accounts receivable balance combining for a total of 56.7 %.

Customer concentrations - In 2023, we had two individual customers with revenue concentration greater than 10 % of our total revenues accounting for 60.4 % and 12.8 %, respectively.

At December 31, 2023, we had one customer greater than 10% of our total accounts receivable balance accounting for 50.5%.

In 2022, we had three individual customers with revenue concentration greater than 10 % of our total revenue accounting for 29.1 %, 24.1 %, and 12.9 %, respectively.

At December 31, 2022, we had two customers greater than 10% of our total accounts receivable balance accounting for 50.6% and 12.7%, respectively.

Vendor concentrations - In 2023, we had two individual vendors with cost of revenue concentration greater than 10% of our total cost of revenue accounting for 67.6 % and 15.3 % of the total cost of revenue, respectively.

In 2022, we had four individual vendors with cost of revenue concentration greater than 10% of our total cost of revenue accounting for 33.8%, 30.4%, 14.5% and 11.1%, of the total cost of revenue, respectively.

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

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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.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, (FASB) issued ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

ASU 2016-13 replaces the existing incurred loss impairment model with a forward- looking expected credit loss model which will result in earlier recognition of credit losses.

On November 15, 2019, the FASB delayed the effective date certain small public companies and other private companies.

As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC’s definition, as well as private companies and not-for-profit entities.

Recently Adopted Accounting Pronouncements

On January 1, 2023, we adopted Accounting Standards Code (ASC) No.

326, Financial Instruments-Credit Losses.

ASC 326 requires a financial asset (loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financials assets not excluded from scope) measured at amortized cost basis to be presented at the net amount expected to be collected.

The adoption of this new standard did not have a material impact on our consolidated financial statements and primarily resulted in enhanced disclosures only.

Note 3 – Fair Value Measurements

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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.

Certain marketable securities consist of investments in debt and equity securities.

We classify our cash equivalents and marketable securities within Level 1 because we use observable inputs that reflect quoted market prices for identical assets in active markets to determine their fair value.

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The cost, gross unrealized gains (losses) and fair value of marketable securities by major security type as of December 31, 2023 and 2022 were as follows:

Investment Assets at Fair Value Investment Assets at Fair Value

As of December 31, 2022 As of December 31, 2021

Level 1 Total Level 1 Total

Investment Assets at Fair Value

As of December 31, 2023

As of December 31, 2022

Debt securities

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Total Investments at Fair Value

As of December 31, 2022 As of December 31, 2021

Cost Unrealized Gain (Loss) Fair Value Cost Unrealized Gain (Loss) Fair Value

As of December 31, 2023

As of December 31, 2022

Marketable securities

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Total marketable securities

The realized loss on the securities as of December 31, 2022 was approximately $ 181,000 .

N ote 4 – Allowance for Doubtful Accounts

The realized loss on the securities for the year ended December 31, 2023 was approximately $ 510,000 .

N ote 4 – Allowance for Credit Losses

The activity in the allowance for doubtful accounts was as follows during the years ended December 31, 2023 and 2022:

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Provision for bad debts

Charge-offs ( 27,369 ) ( 16,154 )

Recoveries — 1,904

Balance at the end of the year

During 2022, we expanded our Direct customer business by 73 % due in part by acquiring new customers (see Note 2).

The allowance for doubtful accounts at December 31, 2023 was $ 1,645,045 , an increase of $ 204,367 from December 31, 2022.

During 2022, we expanded our business in part by acquiring new customers with whom we contract directly.

These customers typically require longer credit terms than traditional CPC based customers.

One of these Direct customers was a significant portion, 24.1 % of our total revenue, and has stretched its payments to 120 days and beyond.

Though the customer is paying amounts due and has significantly reduced the balance since year end, management believed it to be prudent to increase the allowance for doubtful accounts.

One of these customers was a significant portion, 24.1 % of our total 2022 revenue, and has stretched its payments to 120 days and beyond.

Ultimately, we agreed to extended payments from the customer through September 2024.

All amounts due from this customer have been fully reserved as of December 31, 2023.

Note 5– Property and Equipment

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Furniture and fixtures

Equipment 1,265,752 1,164,671

Capitalized labor 14,503,608 12,914,820

Capitalized software development costs

Leasehold improvements

Subtotal 16,521,397 14,831,528

accumulated depreciation and amortization

Total $ 1,668,972 $ 1,506,766

( 16,523,294 )

( 14,852,425 )

Depreciation expense was $ 1,670,868 and $ 1,527,663 , respectively, for the years ended December 31, 2023 and 2022.

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The following is a schedule of intangible assets and goodwill as of December 31, 2023:

Term Carrying

Value Accumulated Amortization and Impairment Net Carrying Value 2022

Customer list, Google 20 years $ 8,820,000 $ ( 4,777,500 ) $ 4,042,500 $ 441,000

Technology 5 years 3,600,000 ( 3,600,000 ) — 60,000

Customer list, ReTargeter 5 years 1,931,250 ( 1,319,688 ) 611,562 386,250

Customer list, all other 10 years 1,610,000 ( 1,610,000 ) — 26,794

Brand name, ReTargeter 5 years 643,750 ( 439,896 ) 203,854 128,750

Customer relationships 20 years 570,000 ( 168,625 ) 401,375 28,500

Accumulated Amortization and Impairment

Net Carrying Value

Customer list, Google

$ ( 5,218,500 )

( 3,600,000 )

Customer list, ReTargeter

( 1,705,938 )

Customer list, all other

( 1,610,000 )

Brand name, ReTargeter

Customer relationships

Trade names, web properties

Intangible assets classified as long-term

$ ( 12,900,209 )

Goodwill, total

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

Term Carrying

Value Accumulated Amortization Net Carrying Value 2021

Customer list, Google 20 years $ 8,820,000 $ ( 4,336,500 ) $ 4,483,500 $ 441,000

Technology 5 years 3,600,000 ( 3,540,000 ) 60,000 720,000

Customer list, ReTargeter 5 years 1,931,250 ( 933,438 ) 997,812 386,250

Customer list, all other 10 years 1,610,000 ( 1,583,206 ) 26,794 161,004

Brand name, ReTargeter 5 years 643,750 ( 311,146 ) 332,604 128,750

Customer relationships 20 years 570,000 ( 140,125 ) 429,875 28,500

Tradenames, web properties (1) - 390,000 — 390,000 —

Accumulated Amortization

Net Carrying Value

Customer list, Google

$ ( 4,777,500 )

( 3,600,000 )

Customer list, ReTargeter

( 1,319,688 )

Customer list, all other

( 1,610,000 )

Brand name, ReTargeter

Customer relationships

Trade names, web properties (1)

Intangible assets classified as long-term

$ ( 11,915,709 )

Goodwill, total

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

2023 $ 984,500

Thereafter 2,096,374

Total $ 5,259,291

Note 7 - Bank Debt

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

Under the terms of the Loan and Security Agreement, Hitachi has provided us with a $ 5,000,000 line of credit commitment.

We are permitted to borrow (i) 90 % of the aggregate Eligible Accounts Receivable, plus (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.

The amount available to borrow as of December 31, 2022 was approximately $ 4.8 million.

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.

We've undergone several amendments to this agreement.

On March 1, 2023, we entered into Amendment No.

1 to Loan and Security Agreement and Collateral Documents (“Agreement”) with Mitsubishi HC Capital America, Inc., f/k/a/ Hitachi Capital America Corp.

Under the terms of the Agreement, MHCA has provided us with a $ 5,000,000 line of credit commitment.

We are permitted to borrow up to 80 % of the aggregate Eligible Accounts Receivable (which may increase to 85 % if certain conditions are met), up to the maximum credit commitment of $5,000,000.

We will pay MHCA monthly interest at the rate of 1.75 % in excess of the Wall Street Journal Prime Rate.

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

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.

Thereafter, we are obligated to pay Hitachi a commitment fee of $ 15,000 annually.

We are also obligated to pay Hitachi a quarterly service fee of 0.30 % on the monthly unused amount of the maximum credit line.

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

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.

In the event of a default under the terms of the Loan and Security Agreement, the interest rate increases to 6 % greater than the interest rate in effect from time to time prior to a default.

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

We agreed to pay MHCA an amendment fee of $ 10,000 on issuance of the Agreement, and thereafter an annual commitment fee of $ 10,000 .

We are also obligated to pay MHCA a quarterly service fee of 0.20 % on the monthly unused amount of the maximum credit line.

If we terminate the Agreement (i) before February 28, 2024, we are obligated to pay MHCA an exit fee of $ 50,000 , or (ii) after February 28, 2024 but before February 28, 2025, we are obligated to pay MHCA an exit fee of $ 25,000 .

The Loan and Security Agreement continues for an indefinite term.

At December 31, 2023 and 2022, there were no outstanding balances due under the Loan and Security Agreement.

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Accrued taxes, current portion

Total $ 5,162,458 $ 5,374,391

Note 9 - Commitments

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The advance is being amortized as marketing expenses over five years.

As of December 31, 2022, $ 400,000 has been amortized and the balance is $ 800,000 .

As of December 31, 2023, $ 700,000 has been amortized and the total current and non-current balance is $ 800,000 .

As part of the agreement, we granted a warrant exercisable into 300,000 shares of our common stock, which vests over two years upon achieving certain performance metrics (see Note 12 - Stockholders' Equity).

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The amendment also revised the cumulative target media spend and the associated commission.

The total amount of commission recognized for the year ended December 31, 2022 was approximately $ 645,000 .

In addition, effective September 26, 2023, Inuvo and the business development partner entered into an Offset Agreement whereby the parties agreed that the commission due to the partner be offset against the outstanding receivable balances due to Inuvo.

We offset approximately $ 960,852 in commissions due to the partner against the outstanding receivable of $ 642,202 .

The total amount of commission recognized, net of the $ 67 K commission adjustment per our offset agreement, for the year ended December 31, 2023 was approximately $ 52 K.

Note 10 - 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.

For the year ended December 31, 2023, we recognized a deferred tax benefit of approximately $ 17.8 thousand.

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.

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

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

We have no uncertain tax positions that require 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.

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Intangible assets

Accrued expense 287,600 239,800

Accrued liabilities

Deferred rent

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Unrecognized Income/Loss

Other 373,100 351,500

Subtotal 39,109,118 35,576,360

Less valuation allowance

Total 1,133,100 1,587,600

( 40,619,657 )

( 37,976,018 )

Deferred tax liabilities:

Intangible assets and property and equipment

Other ( 2,100 ) 321,300

Total 1,240,100 1,694,600

Total deferred tax liabilities $ ( 107,000 ) $ ( 107,000 )

Net deferred tax liabilities

$ ( 107,000 )

The net operating losses amounted to approximately $ 107,908,005 and expire beginning 2024 through 2037 .

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The following table summarizes the stock grants outstanding under our 2017 ECP plan as of December 31, 2023:

Options Outstanding RSUs Outstanding Options and RSUs Exercised Available Shares Total

Total 100,000 4,913,339 4,560,799 14,975,862 24,550,000

Options Outstanding

RSUs Outstanding

Options and RSUs Exercised

Available Shares

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 following table summarizes our stock option activity during 2023:

Options Weighted Average Exercise Price

Weighted Average Exercise Price

Outstanding, beginning of year

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The following table summarizes the weighted average assumptions for our granted options and RSUs.

Award/Strike Price $ 0.52 $ —

Market Price $ 0.52 $ 0.41

Volatility 107 % — %

Dividend Yield — % — %

Expected Life 5.5 years 0 years

Risk Free Rate 3 % — %

There were no options granted in the period ended December 31, 2023.

The following table summarizes our restricted stock unit activity for 2023:

Restricted Stock Unit Weighted Average Fair Value

Restricted Stock Unit

Weighted Average Fair Value

Outstanding, beginning of year

Granted 2,960,000 $ 0.41

Vested ( 1,826,661 ) $ 1.34

Forfeited ( 180,001 ) $ 0.95

( 2,073,322 )

Outstanding, end of year

Note 12 – Stockholders' Equity

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.

On May 30, 2023, we raised $4.0 million in gross proceeds in a registered direct offering, before expenses, through the sale of an aggregate of 16,000,000 shares of our common stock.

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 9 - Commitments).

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On August 31, 2022, 85,862 shares vested in accordance with the contracted performance criteria.

For the twelve months ended December 31, 2022, we recognized approximately $ 33 thousand in expense.

On August 31, 2023, 21,136 shares vested.

For the second tranche, we reversed approximately $ 7.9 thousand for the year ended December 31, 2023 due to a change in the probability of performance criteria being achieved.

In accordance with our agreement, after the second anniversary of the Original Issue Date, any interests in Warrant shares that have not vested pursuant to the terms and conditions of the agreement shall be deemed forfeited and shall never become exercisable.

At the period ended December 31, 2023, approximately 193 thousand shares have been forfeited.

Earnings per Share

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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 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.

These leases have terms which range from three years to six years, and often include one or more options to renew or in the case of equipment rental, to purchase the equipment.

These operating and finance leases are listed as separate line items on our consolidated balance sheets and represent our right to use the underlying asset for the lease term.

Our obligations to make lease payments are also listed as separate line items on our consolidated balance sheets.

As of December 31, 2023 and December 31, 2022, total operating and financed right-of-use assets were $ 805,786 and $ 72,560 , and $ 310,162 and $ 168,750 , respectively.

For the years-ended December 31, 2023 and 2022, we recorded $ 96,190 and $ 103,926 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.

For the years-ended December 31, 2023 and 2022, we recorded $ 358,667 and $ 377,020 , respectively, in rent expense related to operating leases.

In May 2023, we entered into an agreement to lease 4,128 square feet of office space in San Jose, CA commencing on September 1, 2023.

The lease has a term of sixty-five months with an abatement period of five months and will cost approximately $ 208,000 during its first year.

Thereafter, the lease payments increase by 3 %.

Because the rate implicit in each lease is not readily determinable, we use our incremental borrowing rate to determine the present value of the lease payments.

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

December 31, 2022

Cash paid for operating lease liabilities

Weighted-average remaining lease term 2.97 years

Weighted-average remaining lease term

Weighted-average discount rate

Minimum future lease payments ended December 31, 2023

2023 $ 303,172

Less imputed interest

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Information related to our financed lease liabilities are as follows:

December 31, 2022

Cash paid for finance lease liabilities

Weighted-average remaining lease term 2.0 years

Weighted-average remaining lease term

Weighted-average discount rate

Minimum future lease payments ended December 31, 2023

2023 $ 105,655

Less imputed interest

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In addition, a board member of the Company is also a minority shareholder and consultant to one of the Company’s largest customers during 2022.

Revenue from this customer was approximately $ 18.3 million and $ 5.7 million for the years ended December 31, 2022 and 2021, respectively, and accounts receivable was approximately $ 6.7 million as of December 31, 2022.

Revenue from this customer was approximately $ 0 and $ 18.3 million for the years ended December 31, 2023 and 2022, respectively, and accounts receivable was approximately $ 1.2 million as of December 31, 2023.

During August 2023, we entered into a referral agreement with a board member of the Company.

An initial fee of $ 15,000 was agreed upon, payable upon the execution of the agreement.

Subsequently, a monthly retainer of $ 5,000 , paid in advance, was established, starting from September 1, 2023.

Either party has the right to terminate this agreement at any time and for any reason.

Termination requires fourteen (14) days written notice to be provided to the other party.

For the twelve months ended December 31, 2023, we recognized approximately $ 35,000 in expense.

Note 16 - Subsequent Event

On March 1, 2023, Inuvo, Inc.

(“Inuvo”) entered into Amendment No.

1 to Loan and Security Agreement and Collateral Documents (hereinafter referred to, as amended, as the “Agreement”) with Mitsubishi HC Capital America, Inc., f/k/a/ Hitachi Capital America Corp.

Under the terms of the Agreement, MHCA has provided us with a $ 5,000,000 line of credit commitment.

We are permitted to borrow up to 80 % of the aggregate Eligible Accounts Receivable (which may increase to 85 % if certain conditions are met), up to the maximum credit commitment of $ 5,000,000 .

We will pay Hitachi monthly interest at the rate of 1.75 % in excess of the Wall Street Journal Prime Rate.

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

In the event of a default under the terms of the Loan and Security Agreement, the interest rate increases to 6 % greater than the interest rate in effect from time to time prior to a default.

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

We agreed to pay MHCA an amendment fee of $ 10,000 on issuance of the Agreement, and thereafter an annual commitment fee of $ 10,000 .

We are also obligated to pay MHCA a quarterly service fee of 0.20 % on the monthly unused amount of the maximum credit line.

If we should repay the amounts due under the Agreement (i) before February 28, 2024, we are obligated to pay MHCA an exit fee of $ 50,000 , or (ii) after February 28, 2024 but before February 28, 2025, we are obligated to pay MHCA an exit fee of $ 25,000 .

On January 11, 2024, we amended and renewed our lease at our corporate headquarters in Little Rock, Arkansas.

The lease was extended for thirty-six months commencing on February 1, 2024 and expiring on January 31, 2027 and will cost approximately $ 127,000 during its first year.

Thereafter, the lease payments increase by 2 % annually.

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