Revenue Performance - Net revenue for Q3 2019 was $13.79 million, a decrease of 17.9% compared to Q3 2018, and for the nine months ended September 30, 2019, revenue was $43.30 million, down 23.1% year-over-year [97]. - The IntentKey business generated approximately $2.6 million in revenue for Q3 2019, representing a 61.6% increase compared to the same period last year, partially offsetting declines in other operations [99]. Operating Expenses - Operating expenses for the nine months ended September 30, 2019, decreased by 14.1% to $32.42 million compared to the same period in 2018 [100]. - Marketing costs decreased by 16.2% in Q3 2019 and by 20.0% for the nine months ended September 30, 2019, due to adjustments in traffic acquisition campaigns [101]. Net Loss and Cash Flow - The company reported a net loss of approximately $6.23 million for the nine months ended September 30, 2019, which included $1 million in merger-related costs [108]. - Net cash used in operating activities was $4.64 million for the nine months ended September 30, 2019, compared to $0.28 million in the same period of 2018 [114]. - The company expects to return to positive cash flow by the second half of 2020, focusing on growing the IntentKey technology [109]. Working Capital and Other Income - As of September 30, 2019, the company's net working capital was negative $8.1 million, compared to negative $6.9 million at the end of 2018 [107]. - Other income for the nine months ended September 30, 2019, was $3.3 million, primarily from a one-time gain related to the CPT Merger Termination fee [105]. Market Overview - The U.S. digital advertising market is projected to grow 19% in 2019, reaching $129 billion, with Facebook and Google capturing nearly 60% of the investment [94]. Financing Activities - Net cash provided by financing activities was $6,020,718 during the nine months ended September 30, 2019, primarily from proceeds from the sale of common stock and Convertible Promissory Notes [117]. - Net cash provided by financing activities was $1,689,889 during the nine months ended September 30, 2018, primarily from proceeds of the secondary public offering in May 2018 [117]. Off-Balance Sheet Arrangements - As of September 30, 2019, the company does not have any off-balance sheet arrangements that are material to investors [118].

Financial Data and Key Metrics Changes - For Q2 2019, the company reported revenue of $14 million, down from $15.5 million in Q1 2019 and $19 million in Q2 2018 [7] - For the first half of 2019, revenue was $29.5 million, compared to $39.5 million in the same period of 2018 [34] - Gross margins for Q2 2019 were 59.6%, a decrease from 63.2% in Q2 2018 [37] - Adjusted EBITDA loss was approximately $850,000 in Q2 2019 [17] Business Line Data and Key Metrics Changes - The IntentKey revenue for Q2 2019 was $2 million, with the media component generating over $900,000 in June alone, up from approximately $95,000 in January [18][61] - The ValidClick business experienced a revenue decline due to slow adaptation to pricing fluctuations and reduced emphasis on the supply side, resulting in a revenue decrease of $963,000 in Q2 2019 compared to the same quarter last year [36] Market Data and Key Metrics Changes - The IntentKey has seen a greater than 200% increase in the number of RFPs it is competing for year-over-year through July 2019, with a win rate increasing from 38% in 2018 to over 55% in 2019 [24] - The largest client, a major insurance provider, is spending an average of $150,000 per month with the IntentKey, with $400,000 spent in June [26] Company Strategy and Development Direction - The company is focusing resources and investments towards scaling the IntentKey while ensuring a stable ValidClick business [51] - The IntentKey is viewed as a unique and powerful data product for the 21st century, with plans to challenge existing marketing information providers [50] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the Q2 results are not indicative of the larger opportunity ahead, citing the impact of the terminated merger and product defocusing [8][9] - The company expects the IntentKey business to contribute positively to cash flow in 2020 and be a major contributor thereafter [30] Other Important Information - The company raised $4.4 million in July 2019 to fund working capital and IntentKey growth, primarily through hiring additional sales professionals [32] - The balance sheet at June 30, 2019, showed cash and cash equivalents of $995,000, with outstanding bank debt of $2.9 million and notes of $2.5 million [42] Q&A Session Summary Question: Has anyone new been hired in the sales force? - No new hires have occurred yet, but plans include hiring one in August and a total of roughly 14 salespeople by mid-2020 [53] Question: Can progress on IntentKey leverage ValidClick? - The focus will be on IntentKey due to its higher growth and margin potential, rather than leveraging ValidClick [54] Question: What was the IntentKey contribution in the first quarter? - The IntentKey contributed $2 million in Q2, with a materially lower contribution in Q1 [61] Question: What is the expected cash position post-capital raise? - Pro forma cash is approximately $2.5 million, with roughly $5 million in debt [76]

[Front Matter](index=1&type=section&id=Front%20Matter) [Filing Information](index=1&type=section&id=Filing%20Information) Details Inuvo, Inc.'s Form 10-Q filing, registrant identification, and common stock information - Registrant: **Inuvo, Inc.**, a Nevada corporation, with Commission file number **001-32442**[2](index=2&type=chunk) - Filing Type: Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the period ended **June 30, 2019**[2](index=2&type=chunk) Common Stock Outstanding as of August 9, 2019 | Title of Class | August 9, 2019 | | :------------- | :------------- | | Common Stock | 48,500,689 | [Cautionary Statement Regarding Forward-Looking Information](index=4&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Information) Warns that forward-looking statements are subject to risks and uncertainties, potentially altering actual results - Forward-looking statements are identified by terms such as 'will,' 'should,' 'intend,' 'expect,' 'plan,' 'anticipate,' 'believe,' 'estimate,' 'predict,' 'potential,' or 'continue,' or their negatives[12](index=12&type=chunk) - Key risks include: history of losses, declining revenues, working capital deficit, ability to continue as a going concern, reliance on limited customers, seasonality, dependence on supply partners, ability to acquire profitable traffic, technology changes, network infrastructure interruption, dependence on key personnel, regulatory/legal uncertainties, privacy/data security compliance, third-party infringement claims, fraudulent clicks, global economy downturn, impact of quarterly results on stock price, difficulties in meeting credit agreement covenants, and dilution from stock options/RSUs[16](index=16&type=chunk) - The company undertakes no obligation to publicly release revisions to forward-looking statements or report unanticipated events, except as required by Federal securities laws[14](index=14&type=chunk) [PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Presents Inuvo, Inc.'s unaudited consolidated financial statements, including balance sheets, operations, cash flows, and equity, with detailed notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights | Metric | June 30, 2019 (Unaudited) | December 31, 2018 | | :---------------------- | :------------------------ | :---------------- | | Cash | $995,467 | $228,956 | | Total Current Assets | $6,274,831 | $7,212,017 | | Total Assets | $27,644,127 | $28,665,882 | | Total Current Liabilities | $15,667,269 | $14,099,228 | | Total Long-Term Liabilities | $5,222,781 | $3,532,839 | | Total Stockholders' Equity | $6,754,077 | $11,033,815 | - Cash increased significantly from **$228,956** at December 31, 2018, to **$995,467** at June 30, 2019[18](index=18&type=chunk) - Total stockholders' equity decreased from **$11,033,815** at December 31, 2018, to **$6,754,077** at June 30, 2019[18](index=18&type=chunk) [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights | Metric (Unaudited) | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Revenue | $14,047,907 | $19,004,851 | $29,512,476 | $39,508,836 | | Gross Profit | $8,373,547 | $12,013,547 | $17,157,488 | $23,738,938 | | Operating Loss | $(2,103,785) | $(739,121) | $(4,049,470) | $(2,053,901) | | Net Loss | $(1,954,993) | $(832,697) | $(4,417,386) | $(2,240,721) | | Basic and Diluted EPS | $(0.06) | $(0.03) | $(0.14) | $(0.08) | - Net revenue decreased by **26.1%** for the three months ended June 30, 2019, and by **25.3%** for the six months ended June 30, 2019, compared to the respective prior year periods[21](index=21&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) - Net loss more than doubled for both the three-month and six-month periods ended June 30, 2019, compared to the same periods in 2018[21](index=21&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Activity | 2019 | 2018 | | :------------------- | :------------ | :------------ | | Net cash used in operating activities | $(709,846) | $(154,238) | | Net cash used in investing activities | $(581,839) | $(941,636) | | Net cash provided by financing activities | $2,058,196 | $1,128,576 | | Net change – cash | $766,511 | $32,702 | | Cash, end of period | $995,467 | $4,117,388 | - Net cash used in operating activities increased significantly in 2019, primarily due to a higher net loss, partially offset by changes in working capital[23](index=23&type=chunk)[100](index=100&type=chunk) - Net cash provided by financing activities increased in 2019, driven by proceeds from convertible promissory notes[23](index=23&type=chunk)[103](index=103&type=chunk) [Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' Equity Changes (Six Months Ended June 30, 2019) | Metric | Balance as of Dec 31, 2018 | Net Loss | Stock-based Compensation | Stock Issued for Vested RSUs | Shares Withheld for Taxes | Balance as of June 30, 2019 | | :---------------------- | :------------------------- | :------------ | :----------------------- | :--------------------------- | :------------------------ | :-------------------------- | | Common Stock (Shares) | 32,381,290 | — | — | 233,244 | — | 32,614,534 | | Common Stock (Value) | $32,759 | — | — | $233 | — | $32,992 | | Additional Paid-in Capital | $138,867,509 | — | $146,693 | $(233) | $(9,045) | $139,004,924 | | Accumulated Deficit | $(126,469,894) | $(4,417,386) | — | — | — | $(130,887,280) | | Treasury Stock | $(1,396,559) | — | — | — | — | $(1,396,559) | | Total Equity | $11,033,815 | $(4,417,386) | $146,693 | — | $(9,045) | $6,754,077 | - The accumulated deficit increased by **$4,417,386** during the six months ended June 30, 2019, primarily due to the net loss[25](index=25&type=chunk) - Stock-based compensation added **$146,693** to additional paid-in capital during the six months ended June 30, 2019[25](index=25&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Note 1 – Organization and Business](index=10&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Business) - Inuvo is a technology company providing data-driven platforms that use proprietary AI (**IntentKey**) to identify and message online audiences across various channels, facilitating over a **billion marketing messages monthly**[28](index=28&type=chunk)[29](index=29&type=chunk) - The company terminated its Merger Agreement with ConversionPoint Technologies Inc. on **June 20, 2019**, due to the acquirer's inability to fulfill the **$36 million** financing condition, resulting in a **$2.8 million** termination fee, partially satisfied by the cancellation of the CPTI Note[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[41](index=41&type=chunk) - Liquidity concerns exist due to a **25.3% revenue decline** for the six months ended June 30, 2019, a **$4.4 million net loss**, lower credit availability, and negative cash flows from operations, raising doubt about the company's ability to continue as a going concern[41](index=41&type=chunk)[42](index=42&type=chunk) Customer Revenue Concentration | Customer | Q2 2019 Revenue % | Q2 2018 Revenue % | H1 2019 Revenue % | H1 2018 Revenue % | | :------- | :---------------- | :---------------- | :---------------- | :---------------- | | Yahoo! | 69.7% | 73.1% | 71.8% | 71.7% | | Google | 11.3% | 9.0% | 11.5% | 9.2% | | Total | 81.0% | 82.1% | 83.3% | 80.9% | [Note 2 – Summary of Significant Accounting Policies](index=13&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) - The financial statements are unaudited and prepared under SEC rules for interim periods, with certain disclosures condensed or omitted[45](index=45&type=chunk) - Revenue recognition follows Topic 606, recognizing revenue when control of promised goods/services is transferred, with most revenue generated from clicks on advertisements[47](index=47&type=chunk)[48](index=48&type=chunk) Revenue Disaggregation by Source | Source | Q2 2019 Revenue | Q2 2019 % | Q2 2018 Revenue | Q2 2018 % | H1 2019 Revenue | H1 2019 % | H1 2018 Revenue | H1 2018 % | | :------- | :-------------- | :-------- | :-------------- | :-------- | :-------------- | :-------- | :-------------- | :-------- | | Partners | $10,478,313 | 74.6% | $13,542,270 | 71.3% | $21,976,771 | 74.5% | $27,448,202 | 69.5% | | O&O | $3,569,594 | 25.4% | $5,462,581 | 28.7% | $7,535,705 | 25.5% | $12,060,634 | 30.5% | | Total | $14,047,907 | 100.0% | $19,004,851 | 100.0% | $29,512,476 | 100.0% | $39,508,836 | 100.0% | Revenue Disaggregation by Channel | Channel | Q2 2019 Revenue | Q2 2018 Revenue | H1 2019 Revenue | H1 2018 Revenue | | :------ | :-------------- | :-------------- | :-------------- | :-------------- | | Mobile | $8,823,577 | $12,946,533 | $19,370,199 | $27,268,202 | | Desktop | $4,935,654 | $5,693,452 | $9,530,276 | $11,657,328 | | Other | $288,676 | $364,866 | $612,001 | $583,306 | | Total | $14,047,907 | $19,004,851 | $29,512,476 | $39,508,836 | - The company adopted ASC 842 (Leases) effective **January 1, 2019**, on a modified retrospective basis, recognizing operating and finance lease liabilities and corresponding right-of-use assets[51](index=51&type=chunk)[52](index=52&type=chunk) [Note 3 – Property and Equipment](index=14&type=section&id=Note%203%20%E2%80%93%20Property%20and%20Equipment) Net Carrying Value of Property and Equipment | Category | June 30, 2019 | December 31, 2018 | | :-------------------------------------- | :------------ | :---------------- | | Furniture and fixtures | $293,152 | $293,152 | | Equipment | $1,004,022 | $1,527,054 | | Capitalized internal use and purchased software | $9,718,308 | $9,142,075 | | Leasehold improvements | $421,016 | $421,016 | | Less: accumulated depreciation and amortization | $(9,867,993) | $(9,259,625) | | Total | $1,568,505 | $2,123,672 | - Depreciation expense was **$873,426** for the six months ended June 30, 2019, a slight decrease from **$885,975** in the prior year period[53](index=53&type=chunk) [Note 4 – Other Intangible Assets and Goodwill](index=14&type=section&id=Note%204%20%E2%80%93%20Other%20Intangible%20Assets%20and%20Goodwill) Intangible Assets and Goodwill as of June 30, 2019 | Asset Category | Term | Carrying Value | Accumulated Amortization and Impairment | Net Carrying Value | Year-to-date Amortization | | :-------------------- | :------- | :------------- | :-------------------------------------- | :----------------- | :------------------------ | | Customer list, Google | 20 years | $8,820,000 | $(3,234,000) | $5,586,000 | $220,500 | | Technology | 5 years | $3,600,000 | $(1,740,000) | $1,860,000 | $360,000 | | Customer list, all other | 10 years | $1,610,000 | $(1,180,696) | $429,304 | $80,502 | | Customer relationships | 20 years | $570,000 | $(68,875) | $501,125 | $14,250 | | Trade names, web properties | Indefinite | $390,000 | — | $390,000 | — | | Total Intangible Assets | | $14,990,000 | $(6,223,571) | $8,766,429 | $675,252 | | Goodwill | Indefinite | $9,853,342 | — | $9,853,342 | — | Amortization Expense Schedule | Year | Amortization Expense | | :-------- | :------------------- | | 2019 | $675,252 | | 2020 | $1,350,504 | | 2021 | $1,350,504 | | 2022 | $556,294 | | 2023 | $469,500 | | Thereafter | $3,974,375 | | Total | $8,376,429 | [Note 5 - Bank Debt](index=15&type=section&id=Note%205%20-%20Bank%20Debt) Bank Debt (Financed Receivables) | Metric | June 30, 2019 | December 31, 2018 | | :---------------------- | :------------ | :---------------- | | Financed receivables | $2,856,428 | $1,859,853 | - The Amended and Restated Business Financing Agreement with Western Alliance Bank, secured by all company assets, provides a revolving credit line with an advance rate of **85%** on invoiced receivables (prime plus **1%** interest) and a sub-limit on uninvoiced receivables (prime plus **2%** interest)[57](index=57&type=chunk) - Amendments in May and June 2019 extended and then modified the **$2.5 million** sub-limit for uninvoiced eligible receivables, granting the lender discretion and the right to terminate financing upon notice[57](index=57&type=chunk)[58](index=58&type=chunk) [Note 6 - Notes Payable](index=16&type=section&id=Note%206%20-%20Notes%20Payable) - Four directors of the Company lent an aggregate of **$250,000** under **10% Promissory Notes** on **November 2, 2018**, to cover merger-related costs, with these unsecured notes due **November 2, 2019**[60](index=60&type=chunk) [Note 7 – Accrued Expenses and Other Current Liabilities](index=16&type=section&id=Note%207%20%E2%80%93%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued Expenses and Other Current Liabilities | Category | June 30, 2019 | December 31, 2018 | | :-------------------------------- | :------------ | :---------------- | | Accrued marketing costs (TAC) | $1,453,827 | $1,509,843 | | Accrued expenses and other | $791,301 | $461,823 | | Operating lease liability | $433,908 | $198,769 | | Financing lease liability | $174,815 | — | | Accrued payroll and commission liabilities | $73,126 | $200,290 | | Arkansas grant contingency | $50,000 | $55,000 | | Accrued sales allowance | $50,000 | $50,000 | | Accrued taxes | $8,840 | $14,109 | | Total | $3,035,817 | $2,489,834 | - Total accrued expenses and other current liabilities increased from **$2,489,834** at December 31, 2018, to **$3,035,817** at June 30, 2019, primarily due to increases in accrued expenses and other, and operating/financing lease liabilities[61](index=61&type=chunk) [Note 8 - Convertible Promissory Notes](index=16&type=section&id=Note%208%20-%20Convertible%20Promissory%20Notes) - In March 2019, Inuvo issued **$1,440,000** principal of Original Issue Discount Unsecured Subordinated Convertible Notes (Calvary Notes) in a private placement, receiving **$1,200,000** in proceeds for working capital[62](index=62&type=chunk) - The CPTI Note (**$1,000,000** principal) issued to CPT Investments in November 2018 was terminated and cancelled on **June 20, 2019**, as partial satisfaction of the merger termination fee[63](index=63&type=chunk) [Note 9 – Other Long-Term Liabilities](index=17&type=section&id=Note%209%20%E2%80%93%20Other%20Long-Term%20Liabilities) Other Long-Term Liabilities | Category | June 30, 2019 | December 31, 2018 | | :---------------------------- | :------------ | :---------------- | | Capital leases, less current portion | — | $80,969 | | Deferred rent | $79,628 | $98,276 | | Accrued taxes, less current portion | $13,762 | $13,762 | | Total | $93,390 | $193,007 | - Total other long-term liabilities decreased from **$193,007** at December 31, 2018, to **$93,390** at June 30, 2019, primarily due to the elimination of capital leases[65](index=65&type=chunk) [Note 10 – Income Taxes](index=17&type=section&id=Note%2010%20%E2%80%93%20Income%20Taxes) - The company has a deferred tax liability of **$2,339,832** as of June 30, 2019, and December 31, 2018, related to acquired intangible assets[66](index=66&type=chunk) - A valuation allowance has been recorded for the net deferred tax assets of approximately **$32,663,706**, as it is deemed unlikely that these assets will be realized[66](index=66&type=chunk) [Note 11 - Stock-Based Compensation](index=17&type=section&id=Note%2011%20-%20Stock-Based%20Compensation) Stock-Based Compensation Expense | Period | 2019 | 2018 | | :----------------------------------- | :------------ | :------------ | | Three months ended June 30 | $49,823 | $289,950 | | Six months ended June 30 | $146,693 | $667,797 | - Total compensation cost not yet recognized at June 30, 2019, was **$866,528**, to be recognized over a weighted-average period of **1.44 years**[68](index=68&type=chunk) Unvested RSUs Activity (Three Months Ended June 30, 2019) | Activity | Number of Shares | Weighted Average Grant Date Fair Value | | :---------------------------- | :--------------- | :------------------------------------- | | Unvested as of December 31, 2018 | 1,571,864 | $0.79 | | Granted | 112,773 | $1.40 | | Vested | 254,782 | $0.86 | | Forfeited | 40,688 | $0.93 | | Unvested as of June 30, 2019 | 1,389,167 | $0.83 | [Note 12 - Earnings per Share](index=18&type=section&id=Note%2012%20-%20Earnings%20per%20Share) - Due to a net loss from continuing operations for the three and six months ended June 30, 2019 and 2018, all shares are considered anti-dilutive[71](index=71&type=chunk) [Note 13 - Leases](index=18&type=section&id=Note%2013%20-%20Leases) - Upon adoption of ASC 842 on **January 1, 2019**, the company recognized approximately **$1.2 million** in right-of-use assets and lease liabilities for operating leases, and **$265,000** for finance leases[72](index=72&type=chunk) - For the six months ended June 30, 2019, total lease costs were approximately **$309 thousand**, comprising **$204 thousand** in operating lease costs and **$105 thousand** in finance lease costs[72](index=72&type=chunk) Operating Lease Liabilities Information (Six Months Ended June 30, 2019) | Metric | Value | | :------------------------------ | :---------- | | Cash paid for operating lease liabilities | $219,534 | | Weighted-average remaining lease term | 2.6 years | | Weighted-average discount rate | 6.25% | | Total lease liabilities | $970,016 | Financed Lease Liabilities Information (Six Months Ended June 30, 2019) | Metric | Value | | :------------------------------ | :---------- | | Cash paid for finance lease liabilities | $136,539 | | Weighted-average remaining lease term | 1.1 years | | Weighted-average discount rate | 6.25% | | Total lease liabilities | $174,933 | [Note 14 - Related Party Transactions](index=19&type=section&id=Note%2014%20-%20Related%20Party%20Transactions) - In June 2019, the company entered into a six-month office space lease agreement with First Orion Corp., partially owned by two directors, for **$60,000** (prepaid)[76](index=76&type=chunk) - Four directors provided **$250,000** in **10% Promissory Notes** on **November 2, 2018**, to cover merger-related costs[77](index=77&type=chunk) [Note 15 - Subsequent Events](index=19&type=section&id=Note%2015%20-%20Subsequent%20Events) - On **July 15, 2019**, the company closed an underwritten public offering of **15,812,500 shares** of common stock at **$0.30 per share**, generating approximately **$4.7 million** in gross proceeds[78](index=78&type=chunk) - The conversion price of the Calvary Notes was adjusted from **$1.08** to **$0.30 per share** on **July 15, 2019**, to match the equity offering price[79](index=79&type=chunk) - On **July 23, 2019**, the CPTI Note was officially cancelled and terminated, extinguishing all related obligations[80](index=80&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=20&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on Inuvo's financial performance and condition, detailing business operations, industry trends, critical accounting policies, and a comprehensive analysis of results of operations, liquidity, and cash flows for the reported periods [Company Overview](index=20&type=section&id=Company%20Overview_MD%26A) - Inuvo is a technology company that uses data-driven platforms and its proprietary AI (**IntentKey**) to identify and message online audiences across various digital channels[81](index=81&type=chunk)[82](index=82&type=chunk) - The company owns websites (e.g., alot.com, earnspendlive.com) to test technologies and deliver high-quality consumers through proprietary content[83](index=83&type=chunk) - Inuvo's intellectual property is protected by **15 issued** and **eight pending patents**, creating significant barriers to entry[84](index=84&type=chunk) [Industry Trends](index=20&type=section&id=Industry%20Trends) - The U.S. digital advertising market is projected to grow **19%** to **$129 billion** in 2019, with Facebook and Google capturing nearly **60%** of the investment[85](index=85&type=chunk) - Mobile advertising spend is expected to increase from **$71 billion** in 2018 to **$87 billion** in 2019[85](index=85&type=chunk) - Programmatic display advertising spend is forecasted to exceed **$59 billion** in 2019, growing to **$81 billion** by 2021[85](index=85&type=chunk) [Critical Accounting Policies and Estimates](index=20&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Key accounting estimates include revenue recognition, allowances for doubtful accounts, goodwill and intangible asset valuations, long-lived asset valuation, deferred income tax asset valuation allowances, contingent liabilities, and stock compensation[86](index=86&type=chunk)[87](index=87&type=chunk) - Management regularly evaluates these estimates and assumptions, with historical differences between estimates and actual results being immaterial[87](index=87&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Key Financial Results (YoY Change) | Metric | Q2 2019 | Q2 2018 | Q2 Change | Q2 % Change | H1 2019 | H1 2018 | H1 Change | H1 % Change | | :-------------- | :----------- | :----------- | :----------- | :---------- | :----------- | :----------- | :----------- | :---------- | | Net Revenue | $14,047,907 | $19,004,851 | $(4,956,944) | (26.1%) | $29,512,476 | $39,508,836 | $(9,996,360) | (25.3%) | | Cost of Revenue | $5,674,360 | $6,991,304 | $(1,316,944) | (18.8%) | $12,354,988 | $15,769,898 | $(3,414,910) | (21.7%) | | Gross Profit | $8,373,547 | $12,013,547 | $(3,640,000) | (30.3%) | $17,157,488 | $23,738,938 | $(6,581,450) | (27.7%) | - Net revenue declined due to a strategic reduction in focus on non-strategic publisher-side technologies and reduced monetization from advertising inventory sold to largest Demand partners, partly influenced by the terminated merger[89](index=89&type=chunk) Operating Expenses (YoY Change) | Expense Category | Q2 2019 | Q2 2018 | Q2 Change | Q2 % Change | H1 2019 | H1 2018 | H1 Change | H1 % Change | | :------------------------ | :----------- | :----------- | :----------- | :---------- | :----------- | :----------- | :----------- | :---------- | | Marketing costs (TAC) | $6,528,336 | $8,446,163 | $(1,917,827) | (22.7%) | $13,072,345 | $16,740,457 | $(3,668,112) | (21.9%) | | Compensation | $1,735,489 | $2,323,654 | $(588,165) | (25.3%) | $3,544,045 | $4,943,169 | $(1,399,124) | (28.3%) | | Selling, general and administrative | $2,213,507 | $1,982,851 | $230,656 | 11.6% | $4,590,568 | $4,109,213 | $481,355 | 11.7% | | Total Operating Expenses | $10,477,332 | $12,752,668 | $(2,275,336) | (17.8%) | $21,206,958 | $25,792,839 | $(4,585,881) | (17.8%) | - Selling, general and administrative costs increased due to **$887 thousand** in merger-related professional fees for the first six months of 2019[94](index=94&type=chunk) - Interest expense, net, was lower for Q2 2019 due to the derivative liability associated with the Calvary Notes reducing to **$0**, but higher for H1 2019 due to higher interest rates on financed receivables[95](index=95&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) - The company's liquidity is impacted by a **25.3% revenue decline** and a **$4.4 million net loss** for the six months ended June 30, 2019, leading to lower credit availability and negative cash flows from operations[99](index=99&type=chunk) - The termination of the Merger Agreement resulted in a **$2.8 million** termination fee, partially satisfied by the cancellation of the CPTI Note[99](index=99&type=chunk) - Recent financing activities include **$1.2 million** in proceeds from Calvary Notes in March 2019 and an additional **$4.7 million** (gross) from a public offering of common stock in July 2019[99](index=99&type=chunk) - Given current conditions, there is doubt about the company's ability to continue as a going concern without additional credit or substantial reductions in operating expenses[99](index=99&type=chunk) [Cash Flows - Operating](index=23&type=section&id=Cash%20Flows%20-%20Operating) - Net cash used in operating activities was **$709,846** for the six months ended June 30, 2019, compared to **$154,238** in the prior year period[100](index=100&type=chunk)[101](index=101&type=chunk) - The net loss of **$4,417,386** was partially offset by non-cash expenses (depreciation, amortization, stock-based compensation) totaling approximately **$1.99 million**[100](index=100&type=chunk) - Changes in operating assets and liabilities provided **$1,656,973** in cash, primarily due to a decrease in accounts receivable[100](index=100&type=chunk) [Cash Flows - Investing](index=23&type=section&id=Cash%20Flows%20-%20Investing) - Net cash used in investing activities was **$581,839** for the six months ended June 30, 2019, primarily for capitalized internal development costs[102](index=102&type=chunk) [Cash Flows - Financing](index=23&type=section&id=Cash%20Flows%20-%20Financing) - Net cash provided by financing activities was **$2,058,196** for the six months ended June 30, 2019, mainly from proceeds of the Calvary Notes[103](index=103&type=chunk) - In the comparable 2018 period, net cash provided by financing activities was **$1,128,576**, primarily from a secondary public offering[103](index=103&type=chunk) [Off Balance Sheet Arrangements](index=23&type=section&id=Off%20Balance%20Sheet%20Arrangements) - As of June 30, 2019, Inuvo had no material off-balance sheet arrangements that would significantly affect its financial condition or results of operations[104](index=104&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.](index=23&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) This section states that quantitative and qualitative disclosures about market risk are not applicable to Inuvo, Inc. as it qualifies as a smaller reporting company - This item is not applicable to a smaller reporting company[105](index=105&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES.](index=23&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES.) This section addresses the effectiveness of the company's disclosure controls and procedures and confirms that there have been no material changes in internal control over financial reporting during the period [Evaluation of Disclosure Controls and Procedures](index=23&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, including the CEO and CFO, concluded that Inuvo's disclosure controls and procedures were effective as of **June 30, 2019**, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[106](index=106&type=chunk)[109](index=109&type=chunk) - The company acknowledges that no control system can provide absolute assurance against all errors and fraud due to inherent limitations like resource constraints, human judgment, and potential circumvention[107](index=107&type=chunk)[108](index=108&type=chunk) [Changes in Internal Control over Financial Reporting](index=24&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There were no changes in internal control over financial reporting during the period ended **June 30, 2019**, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[110](index=110&type=chunk) [PART II](index=24&type=section&id=PART%20II) [Item 1 - Legal Proceedings](index=24&type=section&id=Item%201%20-%20Legal%20Proceedings) This section details several class action lawsuits filed against Inuvo and its directors related to the terminated merger, and their subsequent resolution through dismissal or confidential settlement - Multiple putative class action lawsuits were filed by stockholders in late 2018 and early 2019, challenging the Merger Transactions and adequacy of disclosures[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk) - Most lawsuits were dismissed following the filing of Parent's amended S-4 Registration Statement or voluntary dismissal by plaintiffs[115](index=115&type=chunk)[117](index=117&type=chunk) - On **June 20, 2019**, Inuvo entered into a Confidential Settlement Agreement resolving outstanding litigation, contingent on Inuvo paying a settlement fee by **September 30, 2019**[118](index=118&type=chunk) [ITEM 1A. RISK FACTORS](index=25&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section highlights key risks, including the adverse effects of the terminated merger, significant customer concentration, and potential impacts of non-compliance with credit facility covenants, supplementing the risks disclosed in the annual report - The termination of the Mergers on **June 20, 2019**, has had continuing adverse effects, including a decline in stock price, impaired business operations due to pending restrictions, and negative impacts on relationships with employees, suppliers, and partners[120](index=120&type=chunk) Customer Revenue Concentration Risk | Customer | Q2 2019 Revenue % | Q2 2018 Revenue % | | :------- | :---------------- | :---------------- | | Yahoo! | 69.7% | 73.1% | | Google | 11.3% | 9.0% | - A significant decline in revenue and harm to business operations could occur if key customers (**Yahoo!** and **Google**) do not approve new websites/applications, if guidelines are violated, or if guidelines change, and suitable alternatives cannot be found[122](index=122&type=chunk) - Failure to comply with covenants in the credit facility with Western Alliance Bank could lead to a default, acceleration of outstanding borrowings, and potential seizure of collateral, jeopardizing the company's ability to conduct business[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.](index=26&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) This section states that there were no unregistered sales of equity securities or use of proceeds to report, except as previously disclosed - No unregistered sales of equity securities or use of proceeds, except as previously disclosed[126](index=126&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES.](index=26&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) This section reports that there were no defaults upon senior securities during the period - No defaults upon senior securities[127](index=127&type=chunk) [ITEM 4. MINE SAFETY AND DISCLOSURES.](index=26&type=section&id=ITEM%204.%20MINE%20SAFETY%20AND%20DISCLOSURES.) This section states that mine safety and disclosures are not applicable to the company - Not applicable[128](index=128&type=chunk) [ITEM 5. OTHER INFORMATION.](index=26&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) This section details resolutions adopted by the Nominating, Corporate Governance and Compensation Committee regarding the vesting of outstanding restricted stock unit (RSU) grants, aimed at employee attraction and retention - On **August 14, 2019**, the Committee resolved that performance criteria for **319,198 performance-based RSU grants** were met, making them vested as of **June 30, 2019**[129](index=129&type=chunk) - Additionally, **1,122,724 service-based RSU grants** will vest in three equal installments: **August 19, 2019**, **January 1, 2020**, and **July 1, 2020**[129](index=129&type=chunk) [ITEM 6. EXHIBITS](index=27&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed as part of the Form 10-Q, including various agreements, corporate documents, and certifications - Exhibits include the Underwriting Agreement, Merger Termination Agreement, Inuvo Note Termination Agreement, Articles of Incorporation, Amended and Restated By-Laws, Business Financing Modification Agreement, and certifications from the CEO and CFO[130](index=130&type=chunk) [SIGNATURES](index=28&type=section&id=SIGNATURES) This section contains the official signatures of the company's principal executive and financial officers, certifying the accuracy and completeness of the Form 10-Q report - The report was signed on **August 14, 2019**, by **Richard K. Howe**, Chief Executive Officer, and **Wallace D. Ruiz**, Chief Financial Officer[133](index=133&type=chunk)

Part I - Financial Information [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited consolidated financial statements for Inuvo, Inc. for the quarterly period ended March 31, 2019, including balance sheets, statements of operations, cash flows, and detailed notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2019, total assets slightly increased to **$28.7 million**, while rising liabilities to **$20.0 million** reduced stockholders' equity from **$11.0 million** to **$8.7 million** Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Total current assets | $6,672,396 | $7,212,017 | | Total assets | $28,686,088 | $28,665,882 | | **Liabilities & Equity** | | | | Total current liabilities | $14,582,477 | $14,099,228 | | Total long-term liabilities | $5,435,318 | $3,532,839 | | Total stockholders' equity | $8,668,293 | $11,033,815 | | Total liabilities and stockholders' equity | $28,686,088 | $28,665,882 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) For Q1 2019, net loss increased to **$2.46 million** from **$1.41 million** in Q1 2018, driven by a **24.6% revenue decline** to **$15.5 million** and a **25.1% gross profit decrease** Q1 2019 vs Q1 2018 Statement of Operations (Unaudited) | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net revenue | $15,464,569 | $20,503,985 | | Gross profit | $8,783,941 | $11,725,391 | | Operating loss | ($1,945,685) | ($1,314,780) | | Net loss | ($2,462,393) | ($1,408,024) | | Net loss per share (Basic & Diluted) | ($0.08) | ($0.05) | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Q1 2019 saw **$1.05 million** net cash used in operations, a shift from **$0.63 million** provided in Q1 2018, with financing activities providing **$1.38 million** resulting in a net cash increase of **$19,441** Q1 2019 vs Q1 2018 Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($1,047,835) | $629,096 | | Net cash used in investing activities | ($310,221) | ($514,065) | | Net cash provided by (used in) financing activities | $1,377,497 | ($53,839) | | **Net change – cash** | **$19,441** | **$61,192** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the pending merger with CPT, significant liquidity concerns raising going concern doubt, high revenue concentration with Yahoo! and Google, and the adoption of new lease accounting standards - The company entered into a merger agreement with ConversionPoint Technologies (CPT) on November 2, 2018; stockholders approved the merger on May 8, 2019[32](index=32&type=chunk)[41](index=41&type=chunk) - Due to a **24.6%** revenue decline in Q1 2019, a **$2.5 million** net loss, and reliance on credit facilities, there is substantial doubt about the Company's ability to continue as a going concern[43](index=43&type=chunk)[44](index=44&type=chunk) Customer Revenue Concentration | Customer | Q1 2019 Revenue % | Q1 2018 Revenue % | | :--- | :--- | :--- | | Yahoo! | 73.6% | 70.5% | | Google | 11.7% | 9.5% | | **Total** | **85.3%** | **80.0%** | - In March 2019, the company sold **$1,440,000** of Original Issue Discount Unsecured Subordinated Convertible Notes and received **$1,200,000** in proceeds for working capital[63](index=63&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management attributes the **24.6% revenue decline** to strategic shifts and lower monetization, while operating expenses decreased **17.7%** despite merger costs, leading to significant going concern doubt Q1 2019 vs Q1 2018 Performance | Metric | 2019 | 2018 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $15,464,569 | $20,503,985 | $(5,039,416) | (24.6%) | | Gross Profit | $8,783,941 | $11,725,391 | $(2,941,450) | (25.1%) | - The revenue decline was caused by a strategy to reduce focus on non-strategic publisher technologies and reduced monetization from largest Demand partners[103](index=103&type=chunk) - Compensation expense decreased **31.0%** due to a reduction in headcount from **91** at March 31, 2018 to **66** at March 31, 2019[107](index=107&type=chunk) - Selling, general and administrative costs increased by **11.8%**, which included **$501,000** in costs related to the pending merger[107](index=107&type=chunk) - The company's financial condition has raised substantial doubt about its ability to continue as a going concern, necessitating reliance on financing and the successful closing of the merger[110](index=110&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This section is not applicable as Inuvo, Inc. qualifies as a smaller reporting company - Disclosure is not applicable to a smaller reporting company[118](index=118&type=chunk) [Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded disclosure controls and procedures were effective as of March 31, 2019, with no material changes to internal control over financial reporting during the quarter - As of March 31, 2019, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[121](index=121&type=chunk) - No changes in internal control over financial reporting occurred during the period that have materially affected, or are reasonably likely to materially affect, internal controls[122](index=122&type=chunk) Part II - Other Information [Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings.) The company and its board faced putative class action lawsuits challenging merger disclosures, which the company believes are without merit and were mooted by an amended S-4 filing - Multiple putative class action lawsuits were filed by stockholders in December 2018 and January 2019, challenging the adequacy of disclosures related to the merger transactions[124](index=124&type=chunk)[126](index=126&type=chunk)[129](index=129&type=chunk) - The company believes the claims are without merit and that the allegations were mooted by the filing of an amended S-4 Registration Statement on March 15, 2019[127](index=127&type=chunk)[130](index=130&type=chunk) [Risk Factors](index=24&type=page&id=Item%201A.%20Risk%20Factors.) Key risks include potential merger delays or failure, significant revenue concentration with Yahoo! and Google, and the risk of non-compliance with credit facility covenants impacting liquidity - The merger is subject to closing conditions that, if not satisfied, could delay or prevent its completion, potentially causing the stock price to decline and impacting business relationships[133](index=133&type=chunk) - The company relies on Yahoo! and Google for a significant portion of its revenue (**85.3%** combined in Q1 2019), and the loss of either would have a material adverse impact[134](index=134&type=chunk)[135](index=135&type=chunk) - Failure to comply with covenants in the credit facility with Western Alliance Bank could result in a default, jeopardizing the company's ability to access capital and conduct business[136](index=136&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) None, except as previously disclosed in other reports - None, except as previously disclosed[137](index=137&type=chunk) [Defaults upon Senior Securities](index=26&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities.) The company reported no defaults upon senior securities - None[138](index=138&type=chunk) [Mine Safety and Disclosures](index=26&type=section&id=Item%204.%20Mine%20Safety%20and%20Disclosures.) This item is not applicable to the company - Not applicable[139](index=139&type=chunk) [Other Information](index=26&type=section&id=Item%205.%20Other%20Information.) None, except as previously reported - None, except as previously reported[140](index=140&type=chunk) [Exhibits](index=27&type=section&id=Item%206.%20Exhibits.) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, financing agreements, and CEO/CFO certifications - Lists exhibits filed with the report, including financing agreements, corporate documents, and required certifications[142](index=142&type=chunk)

PART I [ITEM 1. BUSINESS.](index=5&type=section&id=Item%201.%20Business.) Inuvo provides data-driven platforms using proprietary AI, IntentKey, for online audience engagement, with a pending merger and seasonal revenue patterns - Inuvo provides data-driven platforms utilizing **proprietary AI, IntentKey**, to identify and message online audiences across various channels [19](index=19&type=chunk)[20](index=20&type=chunk) - The company's intellectual property is protected by **15 issued and 8 pending patents**, creating barriers to entry [22](index=22&type=chunk) - On November 2, 2018, Inuvo entered a Merger Agreement with ConversionPoint Technologies (CPT), forming ConversionPoint Holdings, Inc. (Parent) [23](index=23&type=chunk) - Merger consideration for Inuvo stockholders includes **$0.45 in cash** and **0.18877 shares of Parent common stock** per share [24](index=24&type=chunk) - Key products include ValidClick (pay-per-click), IntentKey (consumer intent recognition), and Digital Publishing (branded web properties) [31](index=31&type=chunk) - Inuvo maintains long-standing relationships with Yahoo!, Google, and Microsoft Online, collectively accounting for **92.9% of total revenue in 2018** [32](index=32&type=chunk) - The business is subject to seasonality, with lower revenue in late Q4 and early Q1 due to declining demand and advertiser budget recalibrations [50](index=50&type=chunk) [ITEM 1A. RISK FACTORS.](index=9&type=section&id=Item%201A.%20Risk%20Factors.) Inuvo faces significant risks from merger uncertainties, a history of losses, declining revenues, liquidity issues, customer concentration, and regulatory challenges - The pending Merger is subject to closing conditions, and failure or delay could adversely affect Inuvo's business and stock price [56](index=56&type=chunk) - Inuvo reported a net loss of **$5.9 million in 2018** and a working capital deficit of **$6.9 million** at December 31, 2018 [57](index=57&type=chunk) - A strategic decision to discontinue non-strategic technologies resulted in an estimated revenue loss of **$7.2 million in 2018** [57](index=57&type=chunk) Revenue Concentration by Key Customer (2018 vs. 2017) | Customer | 2018 Revenue % | 2017 Revenue % | | :--------- | :------------- | :------------- | | Yahoo! | 71.8% | 66.7% | | Google | 10.1% | 10.4% | | Microsoft Online | 5.5% | N/A (OpenX 9.4%) | - Failure to comply with credit facility covenants could impact access to capital, potentially leading to default and debt acceleration [63](index=63&type=chunk) - As of December 31, 2018, Inuvo had **39 full-time employees** in Arkansas, falling short of the **50 required by a grant agreement**, resulting in a contingent liability of **$55,000** [76](index=76&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS.](index=13&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) This item is not applicable to Inuvo as it is a smaller reporting company - This item is not applicable to Inuvo as it is a smaller reporting company [78](index=78&type=chunk) [ITEM 2. PROPERTIES.](index=13&type=section&id=Item%202.%20Properties.) Inuvo's corporate headquarters are in Little Rock, Arkansas, with additional office space in San Jose, California, and third-party data centers - Inuvo's corporate headquarters are in Little Rock, Arkansas, occupying **12,245 sq ft** under a **5-year lease** from October 1, 2015 [79](index=79&type=chunk) - The company also leases **4,801 sq ft** of office space in San Jose, CA, under a **five-year agreement** from June 2017 [79](index=79&type=chunk) - Data center operations are maintained in third-party collocation facilities in Little Rock, AR, and San Jose, CA [79](index=79&type=chunk) [ITEM 3. LEGAL PROCEEDINGS.](index=13&type=section&id=Item%203.%20Legal%20Proceedings.) Inuvo faces multiple class action lawsuits challenging merger disclosures and alleging fiduciary duty breaches, which the company intends to vigorously contest - Multiple putative class action lawsuits were filed by stockholders in late 2018 and early 2019, challenging merger disclosures and alleging breach of fiduciary duties [80](index=80&type=chunk)[81](index=81&type=chunk)[84](index=84&type=chunk) - The lawsuits seek injunctions preventing the merger, damages if consummated, and attorneys' fees [82](index=82&type=chunk)[84](index=84&type=chunk) - Inuvo believes the claims lack merit and intends to vigorously contest them, having filed motions to dismiss and responded to preliminary injunctions [82](index=82&type=chunk)[85](index=85&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES.](index=14&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to Inuvo - This item is not applicable to Inuvo [86](index=86&type=chunk) PART II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.](index=14&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) Inuvo's common stock is listed on NYSE American, with **32.35 million shares outstanding** as of March 2019, and no cash dividends paid or anticipated - Inuvo's common stock is listed on the NYSE American under the symbol **"INUV"** [88](index=88&type=chunk) - As of March 8, 2019, there were **32,350,906 shares of common stock outstanding** and approximately **407 stockholders of record** [5](index=5&type=chunk)[88](index=88&type=chunk) - The company has not declared or paid cash dividends since inception and does not anticipate paying any in the foreseeable future [89](index=89&type=chunk) - There have been no recent sales of unregistered securities or purchases of equity securities by the issuer or affiliated purchasers [90](index=90&type=chunk)[91](index=91&type=chunk) [ITEM 6. SELECTED FINANCIAL DATA.](index=15&type=section&id=Item%206.%20Selected%20Financial%20Data.) This item is not applicable to Inuvo as it is a smaller reporting company - This item is not applicable to Inuvo as it is a smaller reporting company [92](index=92&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.](index=15&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Inuvo's 2018 operations focused on AI integration, resulting in a **$7.2 million revenue loss** from discontinued technologies and a **$5.9 million net loss**, impacting liquidity and requiring capital raises - In 2018, Inuvo focused on integrating **artificial intelligence** into digital marketing and expanding marketing technology following the NetSeer acquisition [97](index=97&type=chunk) - The strategic decision to discontinue non-strategic technologies resulted in an estimated revenue loss of **$7.2 million in 2018** and eliminated approximately **20 full-time employees** [99](index=99&type=chunk) - In January 2019, Inuvo integrated its **IntentKey AI** into AppNexus, a major digital advertising marketplace, to improve competitive positioning and client results [100](index=100&type=chunk) Key Financial Results (2018 vs. 2017) | Metric | 2018 (USD) | 2017 (USD) | Change (USD) | % Change | | :----------------------------------- | :--------- | :--------- | :----------- | :------- | | Net Revenue | 73,330,642 | 79,554,493 | (6,223,851) | (7.8%) | | Cost of Revenue | 29,921,482 | 36,669,543 | (6,748,061) | (18.4%) | | Gross Profit | 43,409,160 | 42,884,950 | 524,210 | 1.2% | | Marketing Cost (TAC) | 31,852,190 | 28,578,401 | 3,273,789 | 11.5% | | Gross Profit adjusted for Marketing Cost (TAC) | 11,556,970 | 14,306,549 | (2,749,579) | (19.2%) | | Operating Loss | (5,470,380)| (4,236,474)| (1,233,906) | 29.1% | | Net Loss | (5,890,832)| (3,057,700)| (2,833,132) | 92.6% | - Net cash used in operating activities was **$2.1 million in 2018**, an increase from **$1.1 million in 2017**, primarily due to net loss and changes in operating assets and liabilities [118](index=118&type=chunk)[119](index=119&type=chunk) - Inuvo's cash balance decreased significantly to **$228,956** at December 31, 2018, from **$4.1 million** in 2017, and the working capital deficit increased to **$6.9 million** from **$6.2 million** [57](index=57&type=chunk)[250](index=250&type=chunk) - The company raised approximately **$2.0 million (net)** from a public offering, borrowed **$1 million** from a CPT affiliate, and **$250,000** from directors in 2018 to fund working capital and merger costs [116](index=116&type=chunk)[117](index=117&type=chunk)[121](index=121&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.](index=19&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This item is not applicable to Inuvo as it is a smaller reporting company - This item is not applicable to Inuvo as it is a smaller reporting company [124](index=124&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.](index=19&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) The consolidated financial statements and supplementary data for Inuvo, Inc. are presented starting on page F-1 of this annual report - The consolidated financial statements and Report of Independent Registered Public Accounting Firm are listed in the "Index to Financial Statements and Schedules" beginning on **page F-1** [229](index=229&type=chunk) [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.](index=19&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) Inuvo reported no changes in or disagreements with its accountants on accounting and financial disclosure matters - There were no changes in or disagreements with accountants on accounting and financial disclosure [126](index=126&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES.](index=19&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Inuvo's management concluded that its disclosure controls and internal control over financial reporting were effective as of December 31, 2018, with no material changes - As of December 31, 2018, Inuvo's management concluded its disclosure controls and procedures were effective for timely and accurate reporting [130](index=130&type=chunk) - Management assessed and concluded that internal control over financial reporting was effective as of December 31, 2018, based on the **COSO 2013 framework** [133](index=133&type=chunk) - No material changes in internal control over financial reporting occurred during the year ended December 31, 2018 [134](index=134&type=chunk) [ITEM 9B. OTHER INFORMATION.](index=20&type=section&id=Item%209B.%20Other%20Information.) Inuvo reported no other information required under this item - No other information was reported under this item [135](index=135&type=chunk) PART III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.](index=20&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance.) This section details Inuvo's executive officers and directors, corporate governance, board oversight, ethics codes, director compensation, and audit committee functions Directors and Executive Officers | Name | Age | Positions | | :-------------------- | :-- | :--------------------------------------------- | | Richard K. Howe | 56 | Executive Chairman of the Board and CEO | | Wallace D. Ruiz | 67 | Chief Financial Officer, Secretary | | John B. Pisaris, Esq. | 53 | General Counsel | | Don Walker "Trey" Barrett III | 54 | Chief Operating Officer | | Charles D. Morgan | 76 | Class III director | | Gordon J. Cameron | 54 | Class I director | | G. Kent Burnett | 74 | Class II director | | Patrick Terrell | 64 | Class III director | - Inuvo maintains a Code of Conduct and Business Code of Ethics for all directors, officers, and employees, and a Whistleblower Notice for reporting improper activities [147](index=147&type=chunk) - The board's leadership structure includes **Richard K. Howe** as Executive Chairman and CEO, and **Charles D. Morgan** as Lead Independent Director, providing independent oversight [151](index=151&type=chunk)[152](index=152&type=chunk) - The Audit Committee, composed of independent directors, oversees financial statement integrity, regulatory compliance, and auditor independence; **Mr. Terrell and Mr. Cameron** qualify as "audit committee financial experts" [154](index=154&type=chunk) - Independent directors receive a **$30,000 annual retainer** and **$30,000 in restricted stock units** [177](index=177&type=chunk) 2018 Director Compensation | Name | Fees earned or paid in cash ($) | Stock awards ($) | Total ($) | | :-------------- | :------------------------------ | :--------------- | :-------- | | Charles D. Morgan | 30,000 | 27,060 | 57,060 | | Charles L. Pope | 22,500 | 8,557 | 31,057 | | Patrick Terrell | 30,000 | 27,060 | 57,060 | | Gordon J. Cameron | 30,000 | 27,060 | 57,060 | | G. Kent Burnett | 30,000 | 27,060 | 57,060 | - No officer, director, or **10% or greater stockholder** failed to file required reports under **Section 16(a) of the Exchange Act** on a timely basis during 2018 [181](index=181&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION.](index=28&type=section&id=Item%2011.%20Executive%20Compensation.) Inuvo's executive compensation aims to attract and retain officers through base salary, equity awards, and benefits, with no cash bonuses paid in 2018 due to unmet performance targets - The executive compensation program aims to attract, retain, and motivate executives, aligning their interests with stockholders through equity awards and performance-based compensation [182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) - The 2018 compensation program included base salary, a cash bonus plan, **2010 and 2017 Equity Compensation Plan awards**, and other fringe benefits [185](index=185&type=chunk) - No cash bonuses were paid to executive officers for 2018 because the targets under the **2018 Management Incentive Program** were not met [192](index=192&type=chunk) - The company's **401(k) plan** employer match, previously up to **4% of annual earnings**, was suspended in November 2018 [197](index=197&type=chunk) Summary Compensation Table (2018 vs. 2017) | Name and principal position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Total ($) | | :-------------------------- | :--- | :--------- | :-------- | :--------------- | :-------- | | Richard K. Howe, Chairman and Chief Executive Officer | 2018 | 425,000 | — | 272,897 | 708,897 | | | 2017 | 420,000 | 245,000 | 442,175 | 1,117,975 | | Wallace D. Ruiz, Chief Financial Officer | 2018 | 275,000 | — | 97,463 | 383,463 | | | 2017 | 275,000 | 105,000 | 157,919 | 548,719 | | Don (Trey) Barrett III, Chief Operating Officer | 2018 | 250,000 | — | 129,951 | 386,171 | | | 2017 | 250,000 | 140,000 | 210,560 | 603,560 | - Employment agreements for Messrs. Howe and Ruiz provide for minimum annual base salaries (**$425,000** and **$275,000**, respectively) and specific compensation/benefits upon termination [201](index=201&type=chunk)[202](index=202&type=chunk) Outstanding Equity Awards at December 31, 2018 | Name | Options exercisable () | Stock that have not vested () | Market value of unvested stock ($) | | :-------------------- | :---------------------- | :----------------------------- | :--------------------------------- | | Richard K. Howe | 120,000 | 126,000 | 134,820 | | Wallace D. Ruiz | 43,000 | 45,000 | 48,150 | | Don (Trey) Barrett III | 40,000 | 60,000 | 64,200 | [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.](index=32&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters.) As of March 1, 2019, Inuvo had **32.76 million shares** outstanding, with this section detailing beneficial ownership by principal stockholders, directors, and executive officers, and equity compensation plans - As of March 1, 2019, Inuvo had **32,757,817 shares of common stock** issued and outstanding [210](index=210&type=chunk) Beneficial Ownership of Common Stock (as of March 1, 2019) | Name of Beneficial Owner | No. of Shares Beneficially Owned | % of Class | | :----------------------- | :------------------------------- | :--------- | | Charles Morgan | 2,061,200 | 6.4% | | Richard K. Howe | 1,094,808 | 3.4% | | Patrick Terrell | 684,694 | 2.1% | | Wallace D. Ruiz | 373,483 | 1.2% | | John B. Pisaris | 320,855 | 1% | | Don Walker "Trey" Barrett III | 359,290 | 1.1% | | G. Kent Burnett | 173,685 | 0.5% | | Gordon J. Cameron | 120,815 | 0.4% | | All named executive officers, directors and director nominees as a group (eight persons) | 5,188,800 | 15.9% | | Onset V L.P. | 2,559,691 | 7.9% | | Ingalls & Snyder, LLC | 2,349,471 | 7.9% | | Renaissance Technologies LLC | 1,633,390 | 5% | Securities Authorized for Issuance under Equity Compensation Plans (as of December 31, 2018) | Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) (1) | Weighted average exercise price of outstanding options, warrants and rights (a) (2) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | :---------------------------- | :------------------------------------------------------------------------------------------------ | :---------------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------------------------------------------------ | | Plans approved by our stockholders: | | | | | 2005 Long-Term Incentive Plan | 13,748 | $ 2.97 | — | | 2010 Equity Compensation Plan | 1,088,862 | $ 2.83 | 612,237 | | 2017 Equity Compensation Plan | 733,500 | $ — | 1,524,836 | | Plans not approved by stockholders | — | $ — | — | [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.](index=34&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence.) Inuvo engaged in related party transactions, including IT services from First Orion Corp. and **$250,000** in loans from directors, while confirming the independence of certain board members - Inuvo received **$31,500 in 2018** and **$117,385 in 2017** from First Orion Corp. for IT services, a company partially owned by two Inuvo directors and shareholders [217](index=217&type=chunk) - On November 2, 2018, four directors lent Inuvo an aggregate of **$250,000** through **10% Promissory Notes** to cover costs associated with the pending Merger [218](index=218&type=chunk) - Messrs. Morgan, Terrell, Cameron, and Burnett are considered independent directors as defined by the **NYSE American Company Guide** [220](index=220&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.](index=34&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services.) Fees paid to Mayer Hoffman McCann P.C. for audit and other services decreased from **$331,711 in 2017** to **$294,000 in 2018**, with all fees pre-approved Principal Accounting Fees and Services (2018 vs. 2017) | Category | 2018 (USD) | 2017 (USD) | | :---------------- | :--------- | :--------- | | Audit Fees | 262,000 | 331,711 | | Audit-Related Fees | 32,000 | — | | Tax Fees | — | — | | All Other Fees | — | — | | Total | 294,000 | 331,711 | - The Audit Committee pre-approves all fees charged by the independent registered public accounting firm, and the 2018 audit fees were pre-approved [226](index=226&type=chunk) PART IV [ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.](index=37&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules.) This section lists the financial statements, schedules, and exhibits included in the Form 10-K report, with some portions omitted due to confidential treatment - The consolidated financial statements and Report of Independent Registered Public Accounting Firm are listed in the "Index to Financial Statements and Schedules" beginning on **page F-1** [229](index=229&type=chunk) - All financial statement schedules are either not required, not applicable, or their disclosures are contained in the consolidated financial statements [230](index=230&type=chunk) - The exhibits include various agreements, corporate documents, and certifications, such as the Merger Agreement and Rule 13a-14(a) certifications [232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) - Portions of some exhibits have been omitted pursuant to requests for confidential treatment filed with the SEC [231](index=231&type=chunk)[234](index=234&type=chunk) [Item 16. Form 10-K Summary](index=39&type=section&id=Item%2016.%20Form%2010-K%20Summary) Inuvo, Inc. has elected not to provide the optional Form 10-K Summary information - The Company has elected not to provide this optional information [236](index=236&type=chunk) FINANCIAL STATEMENTS [Report of Independent Registered Public Accounting Firm](index=43&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Mayer Hoffman McCann P.C. issued an unqualified opinion on Inuvo's consolidated financial statements for 2018 and 2017, affirming fair presentation in conformity with U.S. GAAP - Mayer Hoffman McCann P.C. audited Inuvo, Inc.'s consolidated financial statements for the years ended **December 31, 2018 and 2017** [244](index=244&type=chunk) - The auditors issued an **unqualified opinion**, stating the financial statements present fairly Inuvo's financial position, results of operations, and cash flows in conformity with **U.S. GAAP** [244](index=244&type=chunk) - Mayer Hoffman McCann P.C. has served as the Company's auditor since **2009** [248](index=248&type=chunk) [Consolidated Balance Sheets](index=44&type=section&id=Consolidated%20Balance%20Sheets) Inuvo's balance sheets show cash declined from **$4.1 million to $229,000** and total current assets from **$15.2 million to $7.2 million** from 2017 to 2018, with total equity decreasing to **$11.0 million** Consolidated Balance Sheet Highlights (as of December 31) | Metric | 2018 (USD) | 2017 (USD) | | :-------------------------- | :----------- | :----------- | | Cash | 228,956 | 4,084,686 | | Accounts receivable, net | 6,711,595 | 10,759,250 | | Total current assets | 7,212,017 | 15,244,127 | | Total assets | 28,665,882 | 38,247,836 | | Accounts payable | 9,499,541 | 13,614,053 | | Revolving line of credit | — | 4,900,000 | | Total current liabilities | 14,099,228 | 21,401,869 | | Convertible promissory note | 1,000,000 | — | | Total liabilities | 17,632,067 | 24,160,494 | | Total stockholders' equity | 11,033,815 | 14,087,342 | [Consolidated Statements of Operations](index=45&type=section&id=Consolidated%20Statements%20of%20Operations) Inuvo's consolidated statements of operations show a **7.8% decrease in net revenue** to **$73.3 million in 2018**, a **1.2% increase in gross profit** to **$43.4 million**, and a wider net loss of **$5.9 million** in 2018 compared to **$3.1 million in 2017** Consolidated Statements of Operations Highlights (Years Ended December 31) | Metric | 2018 (USD) | 2017 (USD) | | :-------------------------- | :----------- | :----------- | | Net revenue | 73,330,642 | 79,554,493 | | Cost of revenue | 29,921,482 | 36,669,543 | | Gross profit | 43,409,160 | 42,884,950 | | Marketing costs (TAC) | 31,852,190 | 28,578,401 | | Compensation | 8,524,476 | 10,200,117 | | Selling, general and administrative | 8,502,874 | 8,342,906 | | Total operating expenses | 48,879,540 | 47,121,424 | | Operating loss | (5,470,380) | (4,236,474) | | Net loss | (5,890,832) | (3,057,700) | | Basic and diluted net loss per share | (0.19) | (0.11) | [Consolidated Statements of Stockholders' Equity](index=46&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Inuvo's total stockholders' equity decreased from **$14.1 million in 2017** to **$11.0 million in 2018**, primarily due to a **$5.9 million net loss**, partially offset by **$2.0 million** from common stock sales and **$915,469** in stock-based compensation Changes in Stockholders' Equity (Years Ended December 31) | Metric | 2018 (USD) | 2017 (USD) | | :-------------------------- | :------------ | :------------ | | Balances as of Dec 31 | 11,033,815 | 14,087,342 | | Net loss | (5,890,832) | (3,057,700) | | Stock-based compensation | 915,469 | 1,279,807 | | Stock issued for vested restricted stock awards | — | 22,509 | | Sale of common stock | 2,000,583 | — | | 2017 asset acquisition | — | 4,459,244 | - The number of common stock shares outstanding increased from **28,618,454** at December 31, 2017, to **32,381,290** at December 31, 2018 [254](index=254&type=chunk) [Consolidated Statements of Cash Flows](index=47&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Inuvo's cash flows show a net outflow from operating activities of **$2.1 million in 2018**, an increase from **$1.1 million in 2017**, with overall cash decreasing by **$3.8 million** in 2018 to **$228,956** at year-end Consolidated Statements of Cash Flows Highlights (Years Ended December 31) | Cash Flow Category | 2018 (USD) | 2017 (USD) | | :-------------------------- | :------------ | :------------ | | Net cash used in operating activities | (2,100,167) | (1,148,281) | | Net cash used in investing activities | (1,634,919) | (1,322,930) | | Net cash (used in) provided by financing activities | (120,644) | 2,609,093 | | Net change – cash | (3,855,730) | 137,882 | | Cash, end of year | 228,956 | 4,084,686 | - Key financing activities in 2018 included **$2.0 million net proceeds** from common stock sale, **$1.9 million** from financed receivables, **$1.0 million** from a convertible promissory note, and **$250,000** from notes payable, offset by **$4.9 million** in net repayments on the revolving line of credit [121](index=121&type=chunk)[257](index=257&type=chunk) - Interest paid increased to **$388,757 in 2018** from **$268,960 in 2017** [257](index=257&type=chunk) [Notes to Consolidated Financial Statements](index=48&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The Notes provide detailed information on Inuvo's accounting policies, financial instruments, liquidity challenges, capital raises, the pending merger, and changes in assets and liabilities - Inuvo adopted **Accounting Standards Update No. 2014-09 (Topic 606)** "Revenue from Contracts with Customers" on **January 1, 2018**, using the modified retrospective approach [268](index=268&type=chunk) - The company's liquidity is challenged by declining revenues and negative cash flows, necessitating capital raises including a **$1 million convertible promissory note** from a CPT affiliate and **$250,000** from directors in 2018, and an additional **$1.2 million** from convertible notes in March 2019 [265](index=265&type=chunk)[266](index=266&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk)[359](index=359&type=chunk) - The Amended and Restated Business Financing Agreement with **Western Alliance Bank** (October 11, 2018) is secured by all assets and includes a sub-limit provision for uninvoiced receivables expiring in **April 2019** [263](index=263&type=chunk)[312](index=312&type=chunk) - Goodwill and intangible assets, including an **$8.82 million Google customer list (20-year useful life)** and **$3.6 million NetSeer technology (5-year useful life)**, are tested for impairment annually, with no impairment recorded in 2018 or 2017 [276](index=276&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk)[304](index=304&type=chunk)[305](index=305&type=chunk) - Inuvo recorded stock-based compensation expense of **$915,469 in 2018** (vs. **$1,279,807 in 2017**), with **$944,426** of unrecognized cost remaining at year-end 2018 [325](index=325&type=chunk) - The Merger Agreement with **ConversionPoint Technologies** (November 2, 2018) outlines merger consideration, conditions (including **$36 million financing**), and termination rights, with subsequent amendments extending deadlines and permitting additional share issuances [348](index=348&type=chunk)[349](index=349&type=chunk)[352](index=352&type=chunk)[353](index=353&type=chunk)[360](index=360&type=chunk)