Inuvo(INUV) - 2019 Q3 - Quarterly Report

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].