Inuvo(INUV) - 2023 Q3 - Quarterly Report

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION The report contains forward-looking statements subject to various risks and uncertainties that may cause actual results to differ materially - The report contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[12] - Readers are cautioned not to place undue reliance on forward-looking statements and should review risk factors in Part II, Item 1A and the Annual Report on Form 10-K[13] - The Company undertakes no obligation to publicly release revisions to forward-looking statements or report unanticipated events, and these statements speak only as of the report date[14] - Key risks include declining economic conditions, decreased market demand, customer revenue concentration, seasonality, dependence on advertising suppliers, technological changes, IT infrastructure interruptions, key personnel dependence, regulatory uncertainties, privacy compliance, third-party infringement claims, fraudulent clicks, NYSE American listing standards, stock price impact, dilution, COVID-19 impact, and acquisition integration[16] OTHER PERTINENT INFORMATION This section defines key company terms and specifies the reporting periods used throughout the financial statements - Terms like 'Inuvo,' 'Company,' 'we,' 'us,' and 'our' refer to Inuvo, Inc. and its subsidiaries[16] - Specific reporting periods are defined: 'third quarter 2023' (three months ended Sep 30, 2023), 'third quarter 2022' (three months ended Sep 30, 2022), '2022' (fiscal year ended Dec 31, 2022), and '2023' (fiscal year ending Dec 31, 2023)[16] PART I - FINANCIAL INFORMATION This part presents the company's unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations Financial Statements This section provides the unaudited consolidated financial statements, including the balance sheets, statements of operations and comprehensive loss, statements of cash flows, and statements of stockholders' equity, along with detailed notes explaining the accounting policies and specific financial items Consolidated Balance Sheets This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at period-end Consolidated Balance Sheet Highlights Consolidated Balance Sheet Highlights (in USD): | Item | Sep 30, 2023 | Dec 31, 2022 | Change | % Change | | :--------------------------------- | :----------- | :----------- | :------- | :------- | | Cash and cash equivalents | $6,978,481 | $2,931,415 | $4,047,066 | 138.1% | | Accounts receivable, net | $10,159,727 | $11,119,892 | $(960,165) | -8.6% | | Total current assets | $18,097,245 | $16,379,748 | $1,717,497 | 10.5% | | Total assets | $36,175,654 | $35,557,310 | $618,344 | 1.7% | | Total current liabilities | $16,440,450 | $13,595,786 | $2,844,664 | 20.9% | | Total long-term liabilities | $866,526 | $212,208 | $654,318 | 308.3% | | Total stockholders' equity | $18,868,678 | $21,749,316 | $(2,880,638) | -13.2% | Consolidated Statements of Operations and Comprehensive Loss This statement details the company's revenues, expenses, and net loss over the reporting periods, reflecting operational performance Consolidated Statements of Operations and Comprehensive Loss Highlights Consolidated Statements of Operations and Comprehensive Loss Highlights (in USD): | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | YoY Change (3M) | % Change (3M) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | YoY Change (9M) | % Change (9M) | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------- | :-------------- | :-------------------------- | :-------------------------- | :-------------- | :-------------- | | Net revenue | $24,570,588 | $17,072,189 | $7,498,399 | 43.9% | $53,069,433 | $58,332,859 | $(5,263,426) | -9.0% | | Gross profit | $22,295,962 | $10,290,142 | $12,005,820 | 116.7% | $45,235,704 | $33,615,716 | $11,619,988 | 34.6% | | Operating loss | $(1,191,082) | $(3,773,552) | $2,582,470 | -68.4% | $(7,965,537) | $(8,717,342) | $751,805 | -8.6% | | Net loss | $(1,170,980) | $(3,810,562) | $2,639,582 | -69.3% | $(7,988,323) | $(9,129,756) | $1,141,433 | -12.5% | | Basic and diluted net loss per share | $(0.01) | $(0.03) | $0.02 | -66.7% | $(0.06) | $(0.08) | $0.02 | -25.0% | Consolidated Statements of Cash Flows This statement summarizes cash generated and used across operating, investing, and financing activities for the reporting periods Consolidated Statements of Cash Flows Highlights Consolidated Statements of Cash Flows Highlights (in USD): | Activity | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change | | :--------------------------------- | :-------------------------- | :-------------------------- | :------- | | Net cash used in operating activities | $(457,716) | $(2,820,344) | $2,362,628 | | Net cash provided by/(used in) investing activities | $1,029,656 | $(1,601,996) | $2,631,652 | | Net cash provided by/(used in) financing activities | $3,475,126 | $(272,742) | $3,747,868 | | Net change – cash | $4,047,066 | $(4,695,082) | $8,742,148 | | Cash and cash equivalent, end of period | $6,978,481 | $5,780,882 | $1,197,599 | Consolidated Statements of Stockholders' Equity This statement outlines changes in the company's equity accounts, including capital raises and accumulated deficit, over the reporting periods - Total stockholders' equity decreased from $21,749,316 at December 31, 2022, to $18,868,678 at September 30, 2023[24] - The accumulated deficit increased from $(157,057,558) at December 31, 2022, to $(165,045,881) at September 30, 2023, primarily due to net losses[24] - Additional paid-in capital increased significantly from $178,771,604 to $183,776,576, driven by a capital raise of $3,665,000 and stock-based compensation[24] - The company raised $3,665,000 net of issuance costs from a capital raise of 16,000,000 shares during the nine months ended September 30, 2023[24] Notes to Consolidated Financial Statements These notes provide detailed explanations of accounting policies, significant estimates, and specific financial statement line items Note 1 – Organization and Business This note describes Inuvo's business, its AI-driven marketing solutions, and its current financial position and liquidity - Inuvo develops and sells information technology solutions for marketing and advertising, utilizing its proprietary AI-branded IntentKey technology[28][29] - The IntentKey AI predicts and actions audiences based on consumer interest, designed for a privacy-conscious future[29] - As of September 30, 2023, cash and cash equivalents were approximately $7.0 million, with net working capital of $1.7 million, and an accumulated deficit of $165.0 million[32] - The company raised $4.0 million in gross proceeds from a registered direct offering of 16,000,000 common shares on May 30, 2023[34] - Three customers accounted for 87.2% of overall revenue for the three months ended September 30, 2023 (75.0%, 10.0%, and 2.2%) and 79.8% for the nine months ended September 30, 2023 (57.6%, 15.6%, and 6.7%)[41] Note 2 – Summary of Significant Accounting Policies This note details the significant accounting policies and critical estimates used in preparing the consolidated financial statements - The unaudited consolidated financial statements are prepared based on SEC rules permitting reduced disclosure for interim periods and reflect all necessary adjustments for fair presentation[42] - Management makes estimates and assumptions for financial statements, particularly for allowance for doubtful accounts, capitalized labor, goodwill, purchased intangible asset valuations, and income tax valuation allowance[43] - Revenue is generated by identifying audiences and presenting advertisements, charged on a cents per thousand (CPM) basis, cost per click (CPC) basis, or as a specific dollar charge[44] Revenue by Customer Type Revenue by Customer Type (in USD): | Customer Type | 3 Months Ended Sep 30, 2023 | % of Total (3M) | 3 Months Ended Sep 30, 2022 | % of Total (3M) | 9 Months Ended Sep 30, 2023 | % of Total (9M) | 9 Months Ended Sep 30, 2022 | % of Total (9M) | | :---------------- | :-------------------------- | :-------------- | :-------------------------- | :-------------- | :-------------------------- | :-------------- | :-------------------------- | :-------------- | | Direct Customers | $2,981,145 | 12.1% | $7,746,866 | 45.4% | $10,207,707 | 19.2% | $30,032,885 | 51.5% | | Indirect Customers | $21,567,138 | 87.8% | $9,310,562 | 54.5% | $42,798,227 | 80.6% | $28,195,887 | 48.3% | | Consulting | $22,305 | 0.1% | $14,761 | 0.1% | $63,499 | 0.2% | $104,087 | 0.2% | | Total | $24,570,588 | 100% | $17,072,189 | 100% | $53,069,433 | 100% | $58,332,859 | 100% | Note 3 – Fair Value Measurements This note describes the methodology for fair value measurements, particularly for financial assets and liabilities - Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between market participants[50] - Cash equivalents and marketable securities are classified within Level 1 of the fair value hierarchy, using observable inputs from quoted market prices[53] Investment Assets at Fair Value (Level 1) Investment Assets at Fair Value (Level 1, in USD): | Item | As of Sep 30, 2023 | As of Dec 31, 2022 | | :----------------- | :----------------- | :----------------- | | Debt securities | $0 | $936,563 | | Equity securities | $0 | $1,253,027 | | Cash equivalents | $68,474 | $801 | | Total Investments | $68,474 | $2,190,391 | - The realized loss on securities as of September 30, 2023, was approximately $510,000[54] Note 4 – Property and Equipment This note provides a breakdown of the company's property and equipment, along with related depreciation and amortization expenses Net Carrying Value of Property and Equipment Net Carrying Value of Property and Equipment (in USD): | Item | Sep 30, 2023 | Dec 31, 2022 | | :---------------------------------- | :----------- | :----------- | | Furniture and fixtures | $293,152 | $293,152 | | Equipment | $1,287,925 | $1,265,752 | | Capitalized internal use and purchased software | $15,740,652 | $14,503,608 | | Leasehold improvements | $458,885 | $458,885 | | Less: accumulated depreciation and amortization | $(16,098,187) | $(14,852,425) | | Total | $1,682,427 | $1,668,972 | Depreciation Expense Depreciation Expense (in USD): | Period | 2023 | 2022 | | :--------------------------------- | :--------- | :--------- | | Three months ended September 30 | $420,808 | $394,942 | | Nine months ended September 30 | $1,245,762 | $1,124,674 | Note 5 – Intangible Assets and Goodwill This note presents the carrying values and amortization schedules for the company's intangible assets and goodwill Intangible Assets and Goodwill (Sep 30, 2023) Intangible Assets and Goodwill (in USD, as of Sep 30, 2023): | Item | Carrying Value | Accumulated Amortization and Impairment | Net Carrying Value | Year-to-date Amortization | | :--------------------------------- | :------------- | :-------------------------------------- | :----------------- | :------------------------ | | Customer list, Google | $8,820,000 | $(5,108,250) | $3,711,750 | $330,750 | | Technology | $3,600,000 | $(3,600,000) | $0 | $0 | | Customer list, ReTargeter | $1,931,250 | $(1,609,375) | $321,875 | $289,687 | | Customer list, all other | $1,610,000 | $(1,610,000) | $0 | $0 | | Brand name, ReTargeter | $643,750 | $(536,459) | $107,291 | $96,563 | | Customer relationships | $570,000 | $(190,000) | $380,000 | $21,375 | | Trade names, web properties (indefinite life) | $390,000 | $0 | $390,000 | $0 | | Total Intangible assets | $17,565,000 | $(12,654,084) | $4,910,916 | $738,375 | | Goodwill, total | $9,853,342 | $0 | $9,853,342 | $0 | Amortization Expense Schedule Amortization Expense Schedule (in USD): | Year | Amount | | :----------------------- | :--------- | | 2023 (remainder of year) | $246,125 | | 2024 | $769,917 | | 2025 | $469,500 | | 2026 | $469,500 | | 2027 | $469,500 | | Thereafter | $2,096,374 | | Total | $4,520,916 | Note 6 – Bank Debt This note outlines the terms of the company's credit facility and its outstanding debt balances - On March 1, 2023, Inuvo entered into an Amendment No. 1 to Loan and Security Agreement with Mitsubishi HC Capital America, Inc., providing a $5,000,000 line of credit commitment[59] - Borrowing is permitted up to 80% of eligible accounts receivable (potentially 85% under certain conditions), with a maximum credit commitment of $5,000,000[59] - Interest is paid monthly at 1.75% in excess of the Wall Street Journal Prime Rate, and principal and accrued interest are due on demand[59] - As of September 30, 2023, there were no outstanding balances under the Loan and Security Agreement[59] Note 7 – Accrued Expenses and Other Current Liabilities This note provides a breakdown of accrued expenses and other current liabilities at period-end Accrued Expenses and Other Current Liabilities Accrued Expenses and Other Current Liabilities (in USD): | Item | Sep 30, 2023 | Dec 31, 2022 | | :--------------------------------- | :----------- | :----------- | | Accrued marketing costs | $7,054,416 | $3,321,598 | | Accrued payroll and commission liabilities | $1,096,895 | $782,441 | | Accrued expenses and other | $272,229 | $1,044,664 | | Arkansas grant contingency | $10,000 | $10,000 | | Accrued taxes, current portion | $7,224 | $3,755 | | Total | $8,440,764 | $5,162,458 | Note 8 – Commitments This note describes the company's significant contractual commitments, including referral agreements and related warrants - Inuvo has a multi-year agreement with a business development partner for referral and support services, which included a $1.5 million advance fee amortized over five years[62] - A warrant exercisable into 300,000 shares of common stock was granted, vesting over two years upon achieving performance metrics[62] - An Offset Agreement was entered into on September 26, 2023, to offset commissions due to the partner against approximately $700,000 in outstanding receivables due to Inuvo, reducing 2023 commission expense by $67,000[63] - Commission expense for the nine months ended September 30, 2023, was approximately $49,000, a significant decrease from $493,000 in the same period of 2022[63] Note 9 – Income Taxes This note explains the company's income tax position, including deferred tax assets, liabilities, and valuation allowances - The company has no current income tax expense, incurring only minimum state taxes included in operating expenses[64] - Deferred tax assets total $41,453,068 as of September 30, 2023[64] - A valuation allowance of $40,042,968 has been recorded against deferred tax assets, as their realization is considered unlikely[64] - Net deferred tax liability is $107,000, composed of indefinite-lived intangible assets[64] Note 10 – Stock-Based Compensation This note outlines the company's stock-based compensation plans, related expenses, and RSU activity - The 2017 Equity Compensation Plan (ECP) was amended to increase authorized shares by 15,000,000, bringing the total to 24,550,000 as of September 30, 2023[66][69] Stock-Based Compensation Expense Stock-Based Compensation Expense (in USD): | Period | 2023 | 2022 | | :--------------------------------- | :--------- | :--------- | | Three months ended September 30 | $536,538 | $535,457 | | Nine months ended September 30 | $1,471,683 | $1,890,991 | - Total unrecognized compensation cost at September 30, 2023, was $2,051,862, to be recognized over a weighted-average period of approximately three years[67] RSU Activity (9 Months Ended Sep 30, 2023) RSU Activity (9 Months Ended Sep 30, 2023): | Item | Number of Shares | Weighted Average Grant Date Fair Value | | :-------------------------- | :--------------- | :----------------------------------- | | Outstanding, beginning of period | 4,913,339 | $0.79 | | Granted | 4,070,000 | $0.31 | | Vested | (2,073,322) | $0.86 | | Cancelled | (50,001) | $0.54 | | Outstanding, end of period | 6,860,016 | $0.49 | Note 11 – Stockholders' Equity This note provides further details on changes in stockholders' equity, including capital raises and anti-dilutive shares - On May 30, 2023, Inuvo raised $4.0 million in gross proceeds from a registered direct offering by selling 16,000,000 shares of common stock[71] - A seven-year warrant exercisable into 300,000 common shares at $0.72 per share was granted as part of a referral agreement, vesting in tranches upon performance metrics[72] - As of September 30, 2023, approximately 193,000 warrant shares have been forfeited due to unmet performance criteria[73] - Due to net losses for the three-month periods ended September 30, 2023 and 2022, any potential common shares are considered anti-dilutive for earnings per share calculations[74] Note 12 – Leases This note describes the company's operating and finance leases, including right-of-use assets and lease liabilities - Inuvo has operating and finance leases for real estate and equipment, with terms ranging from three to six years, often including renewal or purchase options[75] Right-of-Use Assets (in USD) Right-of-Use Assets (in USD): | Lease Type | Sep 30, 2023 | Dec 31, 2022 | | :------------------------ | :----------- | :----------- | | Operating lease | $882,919 | $310,162 | | Finance lease | $94,266 | $168,750 | | Total | $977,185 | $478,912 | Operating Lease Liabilities Information (9 Months Ended Sep 30, 2023) Operating Lease Liabilities Information (9 Months Ended Sep 30, 2023): | Metric | Value | | :--------------------------------- | :---------- | | Cash paid for operating lease liabilities | $85,960 | | Weighted-average remaining lease term | 3.88 years | | Weighted-average discount rate | 10.5 % | | Total lease liabilities (after imputed interest) | $887,410 | Finance Lease Liabilities Information (9 Months Ended Sep 30, 2023) Finance Lease Liabilities Information (9 Months Ended Sep 30, 2023): | Metric | Value | | :--------------------------------- | :---------- | | Cash paid for finance lease liabilities | $22,683 | | Weighted-average remaining lease term | 1.47 years | | Weighted-average discount rate | 6.25 % | | Total lease liabilities (after imputed interest) | $87,462 | Note 13 – Allowance for Doubtful Accounts This note explains the allowance for doubtful accounts, highlighting the impact of extended payment terms from a key customer - The allowance for doubtful accounts increased by $747,772 to $2,188,450 as of September 30, 2023, from $1,440,678 at December 31, 2022[18][79] - The increase is primarily due to extended payment terms from a significant Direct customer, which represented 24.1% of total 2022 revenue and has payments stretching beyond 120 days[79] Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Inuvo's financial performance and condition, detailing the company's business model, critical accounting policies, and a comprehensive analysis of its results of operations, liquidity, and cash flows for the periods presented Company Overview This section provides an overview of Inuvo's AI-driven marketing solutions, proprietary technology, and intellectual property - Inuvo is a technology company providing AI-driven marketing and advertising solutions, leveraging its patented IntentKey technology[80][81] - The IntentKey AI uses a model of human language to predict and action audiences based on consumer interest, designed for a privacy-conscious future[81] - Solutions are offered as managed services and software-as-a-service, and the company also develops proprietary digital properties (Bonfire Publishing) for content and market testing[82] - Inuvo's intellectual property is protected by 19 issued and eight pending patents, creating significant barriers to entry[83] Critical Accounting Policies and Estimates This section highlights the critical accounting policies and estimates that require significant management judgment - Key accounting estimates include revenue recognition, accounts receivable allowances, capitalized software costs, goodwill, and stock-based compensation[85] - Management regularly evaluates these estimates and assumptions, but actual results may differ materially[85] Results of Operations This section analyzes the company's net revenue, gross profit, and operating expenses for the reported periods Net Revenue and Gross Profit Performance Net Revenue and Gross Profit Performance (in USD): | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change (3M) | % Change (3M) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (9M) | % Change (9M) | | :----------------- | :-------------------------- | :-------------------------- | :---------- | :------------ | :-------------------------- | :-------------------------- | :---------- | :------------ | | Net Revenue | $24,570,588 | $17,072,189 | $7,498,399 | 43.9% | $53,069,433 | $58,332,859 | $(5,263,426) | -9.0% | | Gross Profit | $22,295,962 | $10,290,142 | $12,005,820 | 116.7% | $45,235,704 | $33,615,716 | $11,619,988 | 34.6% | | Gross Margin | 90.7% | 60.3% | 30.4 pp | 50.4% | 85.2% | 57.6% | 27.6 pp | 47.9% | - The increase in three-month revenue was primarily due to an increased focus on Indirect channels and customers, which typically have higher gross margins[87][88] - Year-to-date revenue decreased due to the loss of Direct clients in Q4 2022[87] Operating Expenses Performance Operating Expenses Performance (in USD): | Expense Category | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change (3M) | % Change (3M) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (9M) | % Change (9M) | | :----------------------- | :-------------------------- | :-------------------------- | :---------- | :------------ | :-------------------------- | :-------------------------- | :---------- | :------------ | | Marketing costs | $17,625,806 | $8,620,161 | $9,005,645 | 104.5% | $36,769,972 | $26,778,020 | $9,991,952 | 37.3% | | Compensation | $3,525,943 | $3,237,414 | $288,529 | 8.9% | $10,202,200 | $9,611,011 | $591,189 | 6.2% | | General and administrative | $2,335,295 | $2,206,119 | $129,176 | 5.9% | $6,229,069 | $5,944,027 | $285,042 | 4.8% | | Total Operating expenses | $23,487,044 | $14,063,694 | $9,423,350 | 67.0% | $53,201,241 | $42,333,058 | $10,868,183 | 25.7% | - Marketing costs increased significantly due to higher spending focused on Indirect Customers[89] - An agreement with an advertising network in September 2023 resulted in extinguishing related liabilities and reversing marketing costs, following invalid advertising clicks identified in Q2 2022[90] - Financing expense shifted from an expense to income for the three months ended September 30, 2023, due to decreased line of credit utilization and increased bank interest income[93] Liquidity and Capital Resources This section assesses the company's liquidity, capital resources, and plans to support future operations - As of September 30, 2023, cash and cash equivalents were approximately $7.0 million, with net working capital of $1.7 million[95] - The accumulated deficit reached $165.0 million through September 30, 2023, due to recurring losses and cash outflows[95] - Principal liquidity sources are common stock sales and a $5.0 million credit facility[96] - A registered direct offering on May 30, 2023, raised $4.0 million in gross proceeds[96] - Management plans to support future operations through cash from the May 2023 stock sale, future operations, and credit facility borrowings, with the goal of returning to positive cash flow from operations by focusing on the IntentKey product[100][101] Cash Flows This section provides a detailed analysis of cash flows from operating, investing, and financing activities Summary of Cash Flows Summary of Cash Flows (in USD): | Activity | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(457,716) | $(2,820,344) | | Net cash provided by/(used in) investing activities | $1,029,656 | $(1,601,996) | | Net cash provided by/(used in) financing activities | $3,475,126 | $(272,742) | - Net cash used in operating activities decreased significantly due to a net use of cash of $3,265,938 from changes in operating assets and liabilities, primarily an increase in accrued liabilities[103] - Investing activities provided cash, mainly from the sale of marketable securities, a shift from cash usage in the prior year[105] - Financing activities provided substantial cash, primarily from the capital raise[106] Off Balance Sheet Arrangements This section confirms the absence of material off-balance sheet arrangements as of the reporting date - As of September 30, 2023, Inuvo has no material off-balance sheet arrangements[109] Quantitative and Qualitative Disclosures About Market Risk This section states that quantitative and qualitative disclosures about market risk are not applicable to Inuvo, Inc. as it is a smaller reporting company - This item is not applicable to Inuvo, Inc. as it is a smaller reporting company[110] Controls and Procedures This section details the company's disclosure controls and procedures, confirming their effectiveness as of September 30, 2023, in providing reasonable assurance that required information is recorded, processed, summarized, and reported timely. It also states that there were no material changes in internal control over financial reporting during the quarter Evaluation of Disclosure Controls and Procedures This section evaluates the effectiveness of the company's disclosure controls and procedures as of the reporting period - Disclosure controls and procedures are designed to reasonably assure timely and accurate reporting of information required under the Securities Exchange Act of 1934[111] - Management concluded that disclosure controls and procedures were effective as of September 30, 2023, providing reasonable assurance for information disclosure[113] - Control systems provide only reasonable, not absolute, assurance and can be subject to inherent limitations like faulty judgments, errors, or circumvention[112] Changes in Internal Control over Financial Reporting This section reports on any material changes in the company's internal control over financial reporting during the quarter - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2023[114] PART II This part addresses legal proceedings, risk factors, equity sales, defaults, and other pertinent information Legal Proceedings Inuvo, Inc. reported no legal proceedings for the period - There are no legal proceedings to report[115] Risk Factors This section updates the risk factors, specifically highlighting the company's significant reliance on three customers for a substantial portion of its revenues. The loss of any of these customers or their failure to pay timely would have a material adverse impact on the business - The company relies heavily on three customers, which accounted for 87.2% of revenues during the third quarter of 2023 (75.0%, 10.0%, and 2.2% respectively)[118] - The amount of revenue from these customers is dependent on factors outside the company's control, including advertising budgets, financial resources, and general economic conditions[118] - The loss of any of these key customers or their failure to pay timely would have a material adverse impact on Inuvo's business, results of operations, and financial condition[118] Unregistered Sales of Equity Securities and Use of Proceeds Inuvo, Inc. reported no unregistered sales of equity securities or use of proceeds for the period - There were no unregistered sales of equity securities or use of proceeds to report[119] Defaults upon Senior Securities Inuvo, Inc. reported no defaults upon senior securities for the period - There were no defaults upon senior securities to report[120] Mine Safety and Disclosures This item is not applicable to Inuvo, Inc - This item is not applicable to Inuvo, Inc[121] Other Information Inuvo, Inc. reported no other information for the period - There is no other information to report[122] Exhibits This section lists all exhibits filed as part of the Form 10-Q, including articles of incorporation, by-laws, Google Services Agreement amendments, and certifications - The report includes various exhibits such as Articles of Incorporation, Amended and Restated By-Laws, Extension Amendments to Google Services Agreement, and certifications from the CEO and CFO[123] Signatures This section contains the required signatures of Inuvo, Inc.'s Chief Executive Officer and Chief Financial Officer, certifying the report's submission on November 13, 2023 - The report is signed by Richard K. Howe, Chief Executive Officer, and Wallace D. Ruiz, Chief Financial Officer, on November 13, 2023[128]