Inuvo Q3 loss widens to $4.96M; revenue falls 69.9%
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
Inuvo, Inc. (INUV) reported third-quarter 2026 revenue of $6,802,036, down 69.9% from $22,570,572 a year earlier, and a net loss of $4,956,436 versus $1,740,564. Gross profit was $2,989,584, compared with $16,568,149. The company attributed the revenue decline chiefly to an approximately 80% drop in Legacy Search; substantially all revenue tied to Google AdSense Desktop ceased in August 2026, and Inuvo does not expect Legacy Search revenue to return to historical levels.
As of September 30, 2026, unrestricted cash was approximately $1.0 million, restricted cash was $6.2 million and the working-capital deficit was $4.4 million. Inuvo said recurring operating losses, the deficit, declining Legacy Search revenue and debt obligations created substantial doubt about its ability to continue as a going concern for one year after issuance; management concluded that doubt had not been alleviated. Third-quarter impairment charges were $2,448,750. In October 2026, Inuvo completed a $450,000 software and advertising-account sale, retaining a perpetual license, and a $1.2 million B Note exchange released $1.2 million of restricted cash. Streeterville may redeem up to $750,000 of A Notes per month beginning March 29, 2027.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- None.
Negative
- Major pointQuarterly revenue fell 69.9% to $6,802,036 year over year.
- Major pointThird-quarter net loss was $4,956,436, versus $1,740,564.
- Major pointGoing-concern substantial doubt remained for the one-year assessment horizon.
- Moderate point. Forward-looking: it has not happened yet and may not happen.Streeterville may redeem up to $750,000 monthly beginning March 29, 2027.
Filing Explained
At September 30, 6,096,769 warrants remained; October’s exchange created an A-2 note with $1.308 million principal in return for the $1.2 million release.
This unaudited quarterly report updates interim financial and liquidity information. The July 1 offering closed; Inuvo issued 1,631,121 common shares, and all 1,337,693 pre-funded warrants were exercised by
The Class A and Class B warrants cover 2,968,814 shares each at
At
On
Key Figures
Key Terms
going concern financial
restricted cash financial
Deposit Account Control Agreement financial
fair value option financial
Level 3 inputs financial
yield maintenance financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were INUV's third-quarter 2026 revenue and net loss?
Why did INUV revenue fall in the third quarter of 2026?
What are the redemption terms for INUV's Streeterville notes?
What caused INUV's third-quarter 2026 impairment charge?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______________________ to ______________________
Commission file number:
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
| (Zip Code) |
(
Registrant's telephone number, including area code
not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
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|
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act: ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Title of Class |
| November 6, 2026 |
Common Stock |
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TABLE OF CONTENTS
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| Page No. |
Part I | |||
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Item 1. | Financial Statements. |
| 4 |
| Condensed Consolidated Balance Sheets |
| 4 |
| Condensed Consolidated Statements of Operations |
| 5 |
| Condensed Consolidated Statements of Stockholders' Equity |
| 6 |
| Condensed Consolidated Statements of Cash Flows |
| 8 |
| Notes to Condensed Consolidated Financial Statements |
| 9 |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations. |
| 24 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
| 30 |
Item 4. | Controls and Procedures. |
| 30 |
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Part II | |||
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Item 1. | Legal Proceedings. |
| 31 |
Item 1A. | Risk Factors. |
| 31 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
| 32 |
Item 3. | Defaults Upon Senior Securities. |
| 32 |
Item 4. | Mine Safety and Disclosures. |
| 32 |
Item 5. | Other Information. |
| 32 |
Item 6. | Exhibits. |
| 33 |
Signatures |
| 34 | |
| 2 |
| Table of Contents |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "will," "should," "intend," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," or "continue," or the negative of such terms or other comparable terminology. This report includes, among others, statements regarding our risks associated with:
| · | a decline in general economic conditions; |
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| · | decreased market demand for our products and services; |
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| · | customer revenue concentration; |
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| · | our ability to meet required redemption or repayment obligations under our outstanding debt instruments; |
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| · | our ability to continue as a going concern and raise additional capital; |
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| · | seasonality impacts on financial results and cash availability; |
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| · | dependence on advertising suppliers; |
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| · | the ability to acquire traffic in a profitable manner; |
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| · | the ability to attract and retain talented employees; |
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| · | failure to keep pace with technological changes; |
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| · | interruptions within our information technology infrastructure; |
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| · | dependence on key personnel; |
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| · | risks associated with customer collections; |
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| · | regulatory and legal uncertainties; |
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| · | failure to comply with privacy and data security laws and regulations; |
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| · | third party infringement claims; |
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| · | publishers who could fabricate fraudulent clicks; |
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| · | the ability to continue to meet the NYSE American listing standards; |
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| · | the impact of quarterly results on our common stock price; |
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| · | dilution to our stockholders upon the vesting of outstanding restricted stock unit grants and warrants; and |
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| · | our ability to identify, finance, complete and successfully integrate future acquisitions. |
These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this report in its entirety, including the risks described in Part II, Item 1A. Risk Factors appearing in this report, together with those appearing in Item 1A. Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the Securities and Exchange Commission ("SEC") on March 5, 2026 and our subsequent filings with the SEC.
Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.
OTHER PERTINENT INFORMATION
Unless specifically set forth to the contrary, when used in this report the terms “Inuvo,” the “Company,” “we,” “us,” “our” and similar terms refer to Inuvo, Inc., a Nevada corporation, and its subsidiaries. When used in this report, “third quarter 2026” means for the three months ended September 30, 2026, “third quarter 2025” means for the three months ended September 30, 2025, “2025” means the fiscal year ended December 31, 2025 and “2026” means the fiscal year ending December 31, 2026. The information which appears on our corporate web site at www.inuvo.com and our various social media platforms are not part of this report.
| 3 |
| Table of Contents |
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INUVO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2026 (Unaudited) and December 31, 2025
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Assets |
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Current assets |
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Cash and cash equivalents |
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Restricted Cash |
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Accounts receivable, net of allowance for credit losses of $ |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Restricted Cash, net of current portion |
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Other assets |
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Goodwill |
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Intangible assets, net of accumulated amortization |
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Right of use assets - operating lease |
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Other assets |
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Total other assets |
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Total assets |
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Liabilities and Stockholders’ Equity |
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Current liabilities |
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Accounts payable |
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Accrued expenses and other current liabilities |
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Lease liability - operating lease |
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Financing agreement |
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Notes payable, current portion, at fair value |
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Total current liabilities |
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Long-term liabilities |
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Deferred tax liability |
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Lease liability - operating lease |
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Notes payable, net of current portion, at fair value |
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Total long-term liabilities |
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Stockholders' equity |
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Preferred stock, $ |
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Authorized shares |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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See accompanying notes to the condensed consolidated financial statements.
| 4 |
| Table of Contents |
INUVO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Net revenue |
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Cost of revenue |
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Gross profit |
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Operating expenses |
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Marketing costs |
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Compensation |
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Impairment of intangible and long-lived assets |
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Total operating expenses |
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Operating loss |
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Financing expense, net |
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Other income (expense), net |
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Income tax expense |
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Net loss |
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Per common share data |
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Basic and diluted: |
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Net loss |
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Weighted average shares |
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Basic |
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Diluted |
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See accompanying notes to the condensed consolidated financial statements.
| 5 |
| Table of Contents |
INUVO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
For the Nine Months Ended September 30,
2026 |
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| Deficit |
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| Total |
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Balance as of December 31, 2025 |
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Net income |
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Stock-based compensation |
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Stock issued for vested restricted stock units net of shares withheld for taxes |
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Balance as of March 31, 2026 |
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Net loss |
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Stock-based compensation |
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Stock issued for vested restricted stock units net of shares withheld for taxes |
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Balance as of June 30, 2026 |
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Net loss |
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Stock-based compensation |
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Stock issued for vested restricted stock units net of shares withheld for taxes |
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Issuance of common stock, pre-funded warrants and common stock purchase warrants in registered direct offering and concurrent private placement, net of offering costs |
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Exercise of pre-funded warrants |
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Balance as of September 30, 2026 |
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| 6 |
| Table of Contents |
2025 | ||||||||||||||||||||
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| Common Stock |
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| Total |
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Balance as of December 31, 2024 |
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Net loss |
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Stock-based compensation |
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Stock issued for vested restricted stock units net of shares withheld for taxes |
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At-the-market sale of common stock, net of issuance costs |
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Balance as of March 31, 2025 |
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Net loss |
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Stock-based compensation |
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Stock issued for vested restricted stock units net of shares withheld for taxes |
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Balance as of June 30, 2025 |
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Net loss |
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Stock issued for vested restricted stock awards |
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Shares withheld for taxes on vested restricted stock |
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At-the-market sale of common stock net of issuance costs |
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Balance as of September 30, 2025 |
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See accompanying notes to the condensed consolidated financial statements.
| 7 |
| Table of Contents |
INUVO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| For the Nine Months Ended September 30, |
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| 2025 |
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Operating activities: |
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Net loss |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Change in right of use assets - financing |
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Change in right of use assets - operating lease |
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Stock based compensation |
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Loss on extinguishment of debt – Financing Agreement |
|
|
|
|
|
| ||
Change in fair value of notes payable |
|
| ( | ) |
|
|
| |
Interest accrued Streeterville Notes |
|
|
|
|
|
| ||
Debt issuance costs |
|
|
|
|
|
| ||
Change in fair value of convertible notes |
|
|
|
|
|
| ||
Disposal of property and equipment |
|
|
|
|
|
| ||
Adjustment to expected losses on accounts receivable |
|
| ( | ) |
|
|
| |
Deferred income tax expense |
|
|
|
|
|
| ||
Impairment of intangible and long-lived assets |
|
|
|
|
|
| ||
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
|
|
|
| ||
Prepaid expenses and other current assets and other assets |
|
|
|
|
| ( | ) | |
Accrued expenses and other liabilities |
|
| ( | ) |
|
| ( | ) |
Accounts payable |
|
| ( | ) |
|
| ( | ) |
Lease liability - operating lease |
|
| ( | ) |
|
| ( | ) |
Net cash used in operating activities |
|
| ( | ) |
|
| ( | ) |
Investing activities: |
|
|
|
|
|
|
|
|
Purchases of equipment and capitalized development costs |
|
| ( | ) |
|
| ( | ) |
Net cash used in investing activities |
|
| ( | ) |
|
| ( | ) |
Financing activities: |
|
|
|
|
|
|
|
|
Payments net of proceeds on Financing Agreement |
|
| ( | ) |
|
|
| |
Proceeds from issuance of convertible note |
|
|
|
|
|
| ||
Principal payments of convertible note |
|
| ( | ) |
|
|
| |
Proceeds from issuance of notes payable, net |
|
|
|
|
|
| ||
Payment of debt extinguishment costs-convertible notes |
|
| ( | ) |
|
| |
|
Payment of debt extinguishment costs-Financing Agreement |
|
| ( | ) |
|
| |
|
Proceeds from at-the-market sales |
|
|
|
|
|
| ||
Capital raise, net of issuance costs |
|
|
|
|
|
| ||
Proceeds from exercise of pre-funded warrants |
|
|
|
|
|
| ||
Net taxes paid on restricted stock unit grants exercised |
|
| ( | ) |
|
| ( | ) |
Principal payments on finance lease obligations |
|
|
|
|
| ( | ) | |
Net cash provided by financing activities |
|
|
|
|
|
| ||
Net change in cash, cash equivalents and restricted cash |
|
|
|
|
|
| ||
Cash and cash equivalents and restricted cash, beginning of year |
|
|
|
|
|
| ||
Cash and cash equivalents and restricted cash, end of period |
| $ |
|
| $ |
| ||
Supplemental information: |
|
|
|
|
|
|
|
|
Interest paid |
| $ |
|
| $ |
| ||
Placement agent warrants issued as offering costs (non-cash) |
| $ |
|
|
|
|
| |
See accompanying notes to the condensed consolidated financial statements.
| 8 |
| Table of Contents |
Inuvo, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 – Organization and Business
Company Overview
Inuvo, Inc. (the "Company") provides artificial intelligence-driven solutions for modeling media audiences. We provide AI-driven data and advertising technology solutions and have successfully commercialized a proprietary AI model, built on our issued patents, that identifies and actions the reasons why consumers are interested in products, services, or brands - rather than who they are - offering a high-performance, privacy-by-design solution for the modern advertising landscape.
Intelligence for the Agentic Era. As the industry moves toward "agentic” systems - where autonomous AI agents increasingly handle the planning and execution of media tasks - we believe Inuvo is positioned to serve as a media audience decisioning layer. Unlike legacy systems that rely on static historical data or consumer IDs (cookies), Inuvo’s technology provides real-time, intent-based reasoning designed to support autonomous media planning and activation. Inuvo’s technology is intended to enable brands to move from traditional audience targeting to dynamic model planning and activation.
Inuvo’s core competitive advantage lies in intent discovery. While the programmatic industry has traditionally relied on reaching known users based on past behavior, Inuvo’s AI discovers new, high-value audiences as their motivations form.
This intelligence is delivered through a suite of advanced visualization and compliance tools:
| · | The Company’s flagship proprietary AI, IntentKey®, analyzes live content consumption across the open web, mapping human motivation to a concept graph of over 25 million ideas. This allows Inuvo to predict purchase intent, often identifying emerging audience shifts up to 24 hours before they become competitive in the open market. We believe this delivers targeting leverage that translates to improved supply/demand yields within bid streams. Speed of insight-to-execution is our competitive advantage. IntentKey delivers value from intent signals in-the-moment and is designed to improve ROAS (return on ad spend) by matching high yield ad inventories in the bid stream as consumer intent forms. |
|
|
|
| · | IntentPath: A visualization that allows marketers to see "intent-in-motion,” mapping the real-time journey from initial discovery to final purchasing decision. |
|
|
|
| · | Ranger: An AI-powered quality assurance feature within our Campsight system that ensures ad creatives remain consistent, accurate and compliant across digital networks. In October 2026, we sold certain proprietary software, including Ranger, and retained a perpetual license to use it (see Note 15 – Subsequent Events). |
Inuvo delivers these capabilities through two primary business channels:
| · | Audience Modeling (formerly Agencies and Brands): Managed and self-service offerings that utilize Inuvo’s intelligence layer for precision audience discovery and brand-safe activation across CTV, video, audio, native, and display channels. |
|
|
|
| · | Legacy Search (formerly Platforms): Inuvo provides strategic integrations for large consolidators of advertising demand. This business is optimized to prioritize advertising quality, scalability, and compliance, leveraging AI to align merchant messaging with online content. |
Inuvo’s competitive moat and intellectual property are protected by 15 issued and three pending patent applications with the United States Patent and Trademark Office. Our IP portfolio includes patents, trade secrets and trademarks. We actively seek to protect our IP rights and to deter unauthorized use of our IP and other assets. While our IP rights are important to our success, our business is not significantly dependent on any single patent, trademark, or other IP right.
Liquidity
Our principal sources of liquidity are cash on hand, the release of restricted cash under our Note Purchase Agreement with Streeterville Capital, LLC ("Streeterville"), dated June 29, 2026 (the "Note Purchase Agreement"), and sales of our common stock. Under the Note Purchase Agreement, we issued a Secured Promissory Note A-1 in the original principal amount of $
| 9 |
| Table of Contents |
In connection with entering into the Note Purchase Agreement, we used approximately $
The $
On January 29, 2026, we received gross proceeds of approximately $
On May 7, 2024, we entered into an At The Market Offering Agreement (the "ATM Agreement") with H.C. Wainwright & Co. LLC ("Wainwright"), to sell shares of our common stock, par value $
On June 30, 2026, we entered into a Securities Purchase Agreement with an accredited investor providing for the issuance, in a registered direct offering, of
We have focused our resources behind a plan to market our collective multi-channel advertising capabilities differentiated by our AI technology, the IntentKey, where we have a technological advantage and higher margins. If we are successful in implementing our plan, we expect to return to and maintain positive cash flows from operations. However, there is no assurance that we will be able to achieve this objective.
As of September 30, 2026, we had approximately $
Our recurring operating losses, our working capital deficit of approximately $4.4 million as of September 30, 2026, decline in our Legacy Search revenue, and our contractual debt obligations, including Streeterville's right to redeem up to $750,000 per month under the A Notes (as defined below) beginning March 29, 2027, have resulted in substantial doubt about our ability to continue as a going concern for one year after the date these condensed consolidated financial statements are issued.
Management has implemented several measures to improve liquidity, reduce operating costs, and support the Company's long-term financial position. These measures include reducing headcount from 80 employees as of September 30, 2025, to 47 employees as of September 30, 2026, completing the sale of certain proprietary software and a related advertising account for $450,000 in October 2026, and completing a $1.2 million Note Exchange that resulted in the release of previously restricted cash for general corporate purposes.
| 10 |
| Table of Contents |
In addition, management continues to evaluate opportunities to raise additional capital through equity or debt financing arrangements, implement further cost reductions, and expand revenue within its Audience Modeling business. While these initiatives are intended to strengthen the Company's liquidity position and support its ongoing operations, there can be no assurance that additional financing will be available on acceptable terms, that planned operating improvements will be achieved, or that these measures will generate sufficient liquidity to meet the Company's obligations as they become due.
Accordingly, management has concluded that substantial doubt about the Company's ability to continue as a going concern has not been alleviated. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 2 – Summary of Significant Accounting Policies
Basis of presentation
The condensed consolidated financial statements presented are for Inuvo and its subsidiaries. The accompanying unaudited condensed consolidated financial statements have been prepared based upon SEC rules that permit reduced disclosure for interim periods. Certain information and footnote disclosures have been condensed or omitted in accordance with those rules and regulations. The accompanying condensed consolidated balance sheet as of December 31, 2025, was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States ("GAAP"). In our opinion, these condensed consolidated financial statements reflect all adjustments that are necessary for a fair presentation of results of operations and financial condition for the interim periods shown including normal recurring accruals and other items. The results for the interim periods are not necessarily indicative of results for the full year. For a more complete discussion of significant accounting policies and certain other information, this report should be read in conjunction with the condensed consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 5, 2026.
Use of estimates
The preparation of financial statements, in accordance with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net revenues and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying condensed consolidated financial statements are based upon management’s regular evaluation of the relevant facts and circumstances as of the date of the condensed consolidated financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying condensed consolidated financial statements, and such differences could be material.
Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The Company measures fair value using a three-level hierarchy, based on whether the inputs to the valuation are observable in the market:
| · | Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that are accessible as of the measurement date; |
|
|
|
| · | Level 2 – Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and |
|
|
|
| · | Level 3 – Unobservable inputs reflecting the Company's own assumptions about the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. |
The carrying amounts of cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities approximate fair value because of their short maturities.
Fair Value Option
The Company elected the fair value option under ASC 825-10 for all of its notes payable: the 3i, LP convertible note, until its repayment on June 29, 2026, and the Streeterville A-1 Note and B Note (the “Notes”). The election is irrevocable. The Notes contain redemption rights, a monitoring fee and exchange features that would otherwise require evaluation as embedded derivatives under ASC 815-15. Measuring each note at fair value in its entirety avoids separating those features. The Notes are measured at fair value on a recurring basis using Level 3 inputs (see Note 6 – Debt). No other assets or liabilities were measured at fair value on a recurring basis as of September 30, 2026 or December 31, 2025. Debt issuance costs of $300,000 related to the Notes were expensed.
Contractual interest is recognized in financing expense, net. Other changes in fair value are recognized in “Change in fair value of notes payable” within other income (expense), net. The exception is the portion attributable to instrument-specific credit risk, which is recognized in other comprehensive income (loss) and reclassified to earnings when a note is derecognized. That portion is determined by remeasuring each Note with the prior period’s probability of default and recovery rate, all other inputs updated. Changes attributable to instrument-specific credit risk were not significant for the three and nine months ended September 30, 2026.
| 11 |
| Table of Contents |
Revenue Recognition
We generate revenue by identifying audiences and presenting advertisements on behalf of our customers. We provide our products, technologies and services to agencies and brands (collectively, “Audience Modeling”) along with large consolidators of advertising demand (“Legacy Search”). Currently, revenue from Audience Modeling is primarily through our IntentKey products and services and revenue from Legacy Search is primarily through our Bonfire products and services. Our revenue is derived from the placements of advertisements across advertising channels, browsers, applications and devices. Pricing for those advertisement placements is typically either on a cost per thousand impressions or cost-per-click basis.
Our revenue is a function of the number of advertisements placed combined with the price we obtain (using our technologies) for the placements made on behalf of our clients. We assume the risk of finding placements at a cost below that for which it had been sold.
We recognize revenue when control of the contracted services or product is transferred to our customer, in an amount that reflects the consideration we expect to be entitled to in exchange for those services or products. We determine revenue recognition through (i) identification of a contract with a customer, (ii) identification of the performance obligations in the contract, (iii) determination of the transaction price, (iv) allocation of the transaction price to the performance obligations in the contract, and (v) recognition of revenue when or as the performance obligations are satisfied.
For Audience Modeling, the terms of an agreement are captured in an Insertion Order ("IO") where revenue is recognized upon delivery of services during the period covered by the IO. For Legacy Search, terms are generally captured in multi-year master service agreements and revenue is recognized based on the number of advertisements placed or clicked on in the period they occur. We settle advertisement placement prices with our customers net of any adjustments for quality.
For the three-month period ended September 30, 2026, we generated $
Accounts receivable, net of allowance for credit losses, was $
Customer concentration
For the three- and nine-month periods ended September 30, 2026, revenue and gross accounts receivable concentration by customer were as follows:
|
| % of Revenue |
|
| % of Gross AR |
| ||||||
Customer |
| For the Three Months Ended September 30, 2026 |
|
| For the Nine Months Ended September 30, 2026 |
|
| At September 30, 2026 |
| |||
Customer A |
|
| % |
|
| % |
|
| % | |||
Customer B |
|
| % |
|
| % |
|
| % | |||
Customer C |
|
| % |
|
| % |
|
| % | |||
Customer D |
|
| % |
|
| % |
|
| % | |||
| 12 |
| Table of Contents |
For the three- and nine-month periods ended September 30, 2025, revenue and gross accounts receivable concentration by customer were as follows:
| % of Revenue |
|
| % of Gross AR |
| |||||||
Customer |
| For the Three Months Ended September 30, 2025 |
|
| For the Nine Months Ended September 30, 2025 |
|
At September 30, 2025 | |||||
Customer B |
|
| % |
|
| % |
|
| % | |||
Customer D |
|
| % |
|
| % |
|
| % | |||
Recently Adopted Accounting Standards
In November 2024, the FASB issued ASU No. 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. The Company adopted the ASU on January 1, 2026. Adoption did not have a material effect on the condensed consolidated financial statements.
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU provides a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of current accounts receivable and current contract assets. The Company adopted the ASU on January 1, 2026 and elected the practical expedient. Adoption did not have a material effect on the condensed consolidated financial statements.
Recently Issued Accounting Standards
In September 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which amends the accounting guidance for internal-use software development costs. The amendments eliminate the prescriptive software development stages and clarify that capitalization begins when management authorizes and commits to funding a software project and it is probable that the project will be completed and used for its intended purpose. The amendments also clarify disclosure requirements for capitalized internal-use software costs. The guidance is effective for annual reporting periods beginning after December 15, 2027, including interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU No. 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract, which refines the scope of derivative accounting for certain contracts with underlying variables based on the operations or activities of a party to the contract and clarifies the accounting for share-based noncash consideration received from customers. The amendments are effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, as subsequently clarified by ASU No. 2025-01, issued in January 2025. The amendments require public business entities to disclose additional information regarding certain expense categories included in income statement captions, including employee compensation, depreciation, and intangible asset amortization. The amendments also require disclosure of total selling expenses and additional qualitative information regarding expenses not separately disaggregated. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statement disclosures.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the scope and applicability of interim financial reporting requirements and improves the organization and presentation of interim disclosure guidance. The amendments clarify the requirements for disclosing material events and changes occurring since the most recent annual reporting period. The guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statement disclosures.
In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements, which makes technical corrections, clarifications, and other incremental improvements to various topics within the FASB Accounting Standards Codification. The amendments are effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.
| 13 |
| Table of Contents |
Note 3 – Property and Equipment
The net carrying value of property and equipment was as follows as of:
|
| September 30, 2026 |
|
| December 31, 2025 |
| ||
Furniture and fixtures |
| $ |
|
| $ |
| ||
Equipment |
|
|
|
|
|
| ||
Capitalized internal use and purchased software |
|
|
|
|
|
| ||
Leasehold improvements |
|
|
|
|
|
| ||
Subtotal |
|
|
|
|
|
| ||
Less: accumulated depreciation and amortization |
|
| ( | ) |
|
| ( | ) |
Total |
| $ |
|
| $ |
| ||
During the three months ended September 30, 2026 and September 30, 2025, depreciation and amortization expense was $
Note 4 – Other Intangible Assets and Goodwill
The following is a schedule of intangible assets and goodwill as of September 30, 2026:
|
| Term |
|
| Carrying Value |
|
| Accumulated Amortization and impairment |
|
| Net Carrying Value |
|
| Year-to-date-Amortization |
|
| Year-to-date Impairment |
| ||||||
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Customer list, Google |
|
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
| ||||||
Customer relationships |
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
| ||||||
Trade names, web properties (1) |
|
| - |
|
|
|
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|
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|
|
| |||||
Intangible assets classified as long-term |
|
|
|
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
| ||||
|
|
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|
|
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|
|
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|
|
|
|
|
|
|
|
|
Goodwill, total |
|
| - |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| |||||
| (1) | The trade names related to our web properties have an indefinite life, and as such are not amortized. |
Interim Impairment Evaluation.
In August 2026, substantially all revenue associated with Google AdSense Desktop, which underlies the Company's Google customer list intangible asset, ceased. Management updated its projections for this event and performed interim impairment tests as of September 30, 2026.
Long-lived assets. The carrying amount of the asset group supporting the Legacy Search business exceeded its undiscounted cash flows. The Company measured the impairment as the excess of carrying amount over fair value, estimated using a discounted cash flow approach (Level 3). It recorded impairment charges of $
Goodwill and Indefinite-lived intangible assets. The Company also performed interim impairment tests of its indefinite-lived trade names and its single reporting unit as of September 30, 2026. The fair values exceeded the carrying amounts, and no impairment was recognized.
| 14 |
| Table of Contents |
The impairment charges of $
Amortization expense over the next five years and thereafter is as follows:
2026 (remainder of year) |
| $ |
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 |
|
|
| |
2030 |
|
|
| |
Thereafter |
|
|
| |
Total |
| $ |
|
Note 5 – Restricted Cash
In connection with the Note Purchase Agreement, the $
Completion of a Qualified Equity Offering on or before July 31, 2026 entitled the Company to exchange $
The remaining $
The following table provides a reconciliation of cash and cash equivalents and restricted cash:
|
| September 30, 2026 |
| |
Cash and cash equivalents |
| $ |
| |
Restricted cash, current portion |
|
|
| |
Restricted cash, net of current portion |
|
|
| |
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows |
| $ |
| |
Note 6 – Debt
Credit Facility
We maintained a Financing and Security Agreement with SLR Digital Finance LLC ("SLR"), effective July 30, 2024, providing for borrowings of up to 90% of eligible accounts receivable, up to a $
| 15 |
| Table of Contents |
Convertible Note
On January 14, 2026, we issued a subordinated convertible note with an aggregate principal amount of approximately $
|
| September 30, 2026 |
| |
Balance at January 1, 2026 |
| $ |
| |
Issuance of convertible note at fair value |
| $ |
| |
Principal repayment |
| $ | ( | ) |
Settlement of make-whole payment and early termination fee |
| $ | ( | ) |
Change in fair value |
| $ |
| |
Balance at September 30, 2026 |
| $ |
| |
Streeterville Notes
On June 29, 2026, we entered into a Note Purchase Agreement with Streeterville, pursuant to which we issued the A-1 Note and the B Note (together with the A-1 Note and any additional A Notes, the "Notes"), for aggregate gross proceeds of $
We used a portion of the A-1 Note proceeds to repay and terminate the Financing Agreement and to repay and extinguish the convertible note, each as described above. The $
The Notes are secured by substantially all of our assets, including our intellectual property, and are guaranteed by our subsidiaries. If the A-1 Note is outstanding on December 29, 2026, a monitoring fee of approximately $
Monthly Redemptions demandable within twelve months of September 30, 2026 cover substantially all of the A-1 Note, so its $
| 16 |
| Table of Contents |
Maximum contractual payments, including accrued interest, the monitoring fee and yield maintenance, assuming Monthly Redemptions in full and no Limited Redemptions or further exchanges:
|
| A-1 Note |
|
| B Note |
|
| Total |
| |||
2026 (remainder of year) |
| $ |
|
| $ |
|
| $ |
| |||
2027 |
|
|
| $ |
|
|
| |||||
2028 (contractual maturity) |
|
|
| $ |
|
|
| |||||
Total |
| $ |
|
| $ |
|
| $ |
| |||
At that pace, the A-1 Note would be fully redeemed in October 2027. The October 2026 exchange extends full redemption of the A Notes to approximately December 2027.
Fair Value Measurements
Our notes payable are measured at fair value on a recurring basis using significant unobservable inputs (Level 3).
|
| September 30, 2026 |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total Fair Value |
| ||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Notes payable, current portion, at fair value |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Notes payable, net of current portion, at fair value |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Total Liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
We had no liabilities measured at fair value on a recurring basis at December 31, 2025. There were no transfers between levels of the fair value hierarchy during the three and nine months ended September 30, 2026.
We determined the fair value of the Streeterville Notes using a Monte Carlo simulation model. The model projects the Notes’ cash flows across scenarios for our stock price, Monthly and Limited Redemptions, the monitoring fee and default. It then discounts principal, accrued interest and yield maintenance at credit-adjusted rates reflecting our credit profile and market conditions at the measurement date. We determined the fair value of the convertible note using a Monte Carlo simulation model incorporating a probability-weighted scenario analysis. The significant unobservable inputs for the Streeterville Notes at September 30, 2026 were:
Significant Unobservable Input |
| September 30, 2026 |
| |
Discount rate – A-1 Note |
|
| % | |
Discount rate – B Note |
|
| % | |
Volatility |
|
| % | |
Probability of default |
|
| % | |
Recovery rate |
|
| % | |
Changes in Level 3 liabilities for the nine months ended September 30, 2026 were as follows:
|
| Convertible note |
|
| Streeterville Notes |
|
| Total |
| |||
Balance, December 31, 2025 |
| $ |
|
| $ |
|
| $ |
| |||
Issuances |
|
|
|
|
|
|
|
|
| |||
Interest Accrued |
|
|
|
|
|
|
|
|
| |||
Change in fair value included in earnings |
|
|
|
|
| ( | ) |
|
|
| ||
Repayments |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Balance, September 30, 2026 |
| $ |
|
| $ |
|
| $ |
| |||
| 17 |
| Table of Contents |
At September 30, 2026, the aggregate fair value of the Streeterville Notes was $
Note 7 – Accrued Expenses and Other Current Liabilities
The accrued expenses and other current liabilities consist of the following as of:
|
| September 30, 2026 |
|
| December 31, 2025 |
| ||
Accrued marketing costs |
| $ |
|
| $ |
| ||
Accrued compensation |
|
|
|
|
|
| ||
Accrued professional fees and other |
|
|
|
|
|
| ||
Accrued taxes, current portion |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total |
| $ |
|
| $ |
| ||
Note 8 – Stock-Based Compensation
We maintain a stock-based compensation program intended to attract, retain and provide incentives for talented employees and directors and align stockholder and employee interests. On March 21, 2025, the Board of Directors adopted the 2025 Omnibus Equity Compensation Plan (the "2025 Plan"), which was approved by stockholders at the annual meeting held on May 22, 2025. The 2025 Plan replaced the 2017 Equity Compensation Plan ("2017 ECP") for new awards. Outstanding awards granted under the 2017 ECP remain subject to their original terms. During the nine months ended September 30, 2026 we granted restricted stock units ("RSUs") under the 2025 Plan. During the nine months ended September 30, 2025, we granted RSUs under the 2017 ECP and 2025 Plan. RSU vesting periods are generally up to three years and/or based upon achieving certain financial targets.
At September 30, 2026, shares subject to outstanding awards under the 2017 ECP and 2025 Plan were
Compensation Expense
For the three months ended September 30, 2026 and September 30, 2025, we recorded stock-based compensation expense for all equity incentive plans of $
The following table summarizes outstanding stock-based awards as of September 30, 2026:
| Options Outstanding |
| RSUs Outstanding |
| Options and RSUs Exercised/Vested |
| Available Shares |
| Total Awards (Outstanding + Available) |
Total | |
| |
| |
| |
| |
The fair value of restricted stock units is determined using market value of the common stock on the date of the grant.
| 18 |
| Table of Contents |
The following table summarizes the stock grants outstanding under 2017 ECP and 2025 Plan as of September 30, 2026:
|
| RSUs |
| |||||
|
| Number of Shares |
|
| Weighted Average Grant Date Fair Value |
| ||
Outstanding, December 31, 2025 |
|
|
|
| $ |
| ||
Granted |
|
|
|
| $ |
| ||
Vested |
|
| ( | ) |
| $ |
| |
Cancelled |
|
| ( | ) |
| $ |
| |
Outstanding, September 30, 2026 |
|
|
|
| $ |
| ||
Note 9 – Stockholders' Equity
Sales of Common Stock Under At-the-Market Offering
On May 7, 2024, we entered into an At-the-Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC, pursuant to which we may offer and sell shares of our common stock, par value $
Warrants
On September 17, 2021, we signed an agreement with a marketing platform and consulting company to provide referral and support services to us for a period of
On June 30, 2026, we entered into a Securities Purchase Agreement with an accredited investor providing for the issuance, in a registered direct offering, of
The Company evaluated the pre-funded, Class A and Class B warrants under ASC 480 and ASC 815-40 and concluded that each qualifies for equity classification. The placement agent warrants are a fully vested nonemployee award under ASC 718 and are also classified in equity. Gross proceeds of the Offerings were allocated among the common stock, pre-funded warrants and Class A and Class B warrants based on relative fair value, and issuance costs were allocated on the same basis. The warrants were valued using the Black-Scholes option pricing model with the following assumptions: a stock price of $
| 19 |
| Table of Contents |
Warrant activity for the nine months ended September 30, 2026 was as follows:
|
| Number of warrants |
|
| Weighted-average exercise price |
| ||
Outstanding, December 31, 2025 |
|
|
|
| $ |
| ||
Issued |
|
|
|
| $ |
| ||
Exercised |
|
| ( | ) |
| $ |
| |
Outstanding, September 30, 2026 |
|
|
|
| $ |
| ||
Exercisable, September 30, 2026 |
|
|
|
| $ |
| ||
Earnings per Share
The following table sets forth the computation of basic and diluted earnings (loss) per share (in dollars, except share data):
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2026 |
|
| 2025 |
|
| 2026 |
|
| 2025 |
| ||||
Net (loss) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Weighted average shares, basic |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Dilutive effect of restricted stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Weighted average shares, diluted |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic earnings (loss) per share |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Diluted earnings (loss) per share |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
For the three and nine months ended September 30, 2026 and 2025, we generated a net loss and as a result, all potentially dilutive securities were excluded from diluted net loss per share because their effect would have been antidilutive.
Pre-funded warrants to purchase
As of September 30, 2026, the following potentially dilutive securities were excluded from the computation of diluted net loss per share because their effect would have been antidilutive:
Warrant |
| Shares |
|
| Exercise price |
|
| Exercisable from |
| Expiration | |||
Class A |
|
|
|
| $ |
|
|
| |||||
Class B |
|
|
|
| $ |
|
|
| |||||
Placement agent |
|
|
|
| $ |
|
|
| |||||
Consultant (2021), vested |
|
|
|
| $ |
|
| Vested |
| ||||
Total outstanding |
|
|
|
|
|
|
|
|
|
|
| ||
Note 10 – Segment Reporting
The Company operates as a single reportable segment that places digital advertising throughout devices, websites, applications and browsers across social, search and programmatic advertising channels, facilitating the delivery of millions of advertising messages monthly. The Chief Operating Decision Maker ("CODM"), identified as the Chief Executive Officer, evaluates the Company's financial performance and makes resource allocation decisions based on consolidated financial information.
| 20 |
| Table of Contents |
Measure of Segment Profit or Loss
The CODM evaluates performance and allocates resources based on contribution margin, which is calculated as revenue after deducting marketing expenses, exchange fees, and publisher payments. Exchange fees and publisher payments are classified as cost of revenue. The resulting contribution margin covers the Company's fixed costs and profit.
Significant Segment Expenses
The Company reports total revenue and significant expenses provided to the CODM, which include cost of revenue, marketing, and compensation expenses. These expenses are regularly reviewed to assess operating performance. The following table presents these expenses:
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2026 |
|
| 2025 |
|
| 2026 |
|
| 2025 |
| ||||
Revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Cost of Revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Marketing |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Professional Fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
IT Costs |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Reversal of provision (recovery) for bad debts |
|
|
|
|
|
|
|
| ( | ) |
|
|
| |||
Depreciation and Amortization |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Impairment of intangible and long-lived assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Compensation |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Segment Operating Profit (Loss) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Other segment expenses include facilities costs, travel and entertainment expenses and various other corporate expenses.
Geographic Information
The Company's operations are based in the United States, and substantially all revenue is derived from U.S. clients.
Note 11 – Leases
As of September 30, 2026 and December 31, 2025, operating lease right-of-use assets were $
For the nine months ended September 30, 2026 and 2025, we recorded $
Rent expense related to operating leases was $
Cash paid for operating leases presented below includes payments for operating lease obligations as well as certain other lease-related charges, including common area maintenance charges, that are not included in rent expense.
Information related to our operating leases for the periods ended 2026 are as follows:
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||
Cash paid for operating leases |
| $ |
|
| $ |
| ||
Weighted-average remaining lease term |
|
|
|
|
|
| ||
Weighted-average discount rate |
|
|
|
|
|
| % | |
| 21 |
| Table of Contents |
Minimum future lease payments ended September 30, 2026 |
|
|
| |
2026 (remainder of year) |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 |
|
|
| |
|
|
|
| |
Less imputed interest |
|
| ( | ) |
Total lease liabilities |
| $ |
| |
Current portion |
| $ |
| |
Long-term portion |
| $ |
| |
Note 12 – Allowance for Credit Losses
The activity in the allowance for credit losses was as follows during the nine-month period ended September 30, 2026 and the year ended December 31, 2025:
|
| 2026 |
|
| 2025 |
| ||
Balance at the beginning of the year |
| $ |
|
| $ |
| ||
Provision/(reversal of provision) for bad debts |
|
| ( | ) |
|
| ( | ) |
Recoveries |
|
|
|
|
|
| ||
Ending Balance |
| $ |
|
| $ |
| ||
The allowance for credit losses at September 30, 2026 was $
driven by improved collections experience and a reduction in aged receivables during the period.
Note 13 – Commitments and Contingencies
The Company is from time to time subject to legal proceedings and claims that arise in the ordinary course of business.
On January 29, 2026, Carambolico LTD commenced a lawsuit, captioned Carambolico LTD v. Alot, Inc., No. 04CV-26-458 (Ark. Cir. filed Jan. 29, 2026), in the Circuit Court of Benton County, Arkansas, naming Alot, Inc., a wholly owned subsidiary of the Company, as defendant. The complaint asserts breach of contract and related claims under a services agreement and seeks $
In April 2026, AEM Days Ltd. commenced a lawsuit, captioned AEM Days Ltd. v. Alot, Inc., No. 60CV-26-3363 (Ark. Cir. filed Apr. 2026), in the Circuit Court of Pulaski County, Arkansas, naming Alot, Inc., a wholly owned subsidiary of the Company, as defendant. The complaint asserts claims related to a services agreement and seeks approximately $
In each of the above matters, the Company is currently unable to predict the outcome or estimate a range of reasonably possible loss, if any. No liability has been accrued as of September 30, 2026.
As previously disclosed, on January 29, 2026, the Company received approximately $
| 22 |
| Table of Contents |
Note 14 – Related Party Transactions
There was no related party activity for the three and nine months ended September 30, 2026.
During the nine months ended September 30, 2025, Gabriel Court Consortium, LLC, a company in which one of our directors holds a significant interest, provided services to the Company. Expense from the transaction amounted to approximately $
During the nine months ended September 30, 2025, the Company provided services to First Orion Corp., a company in which one of our former directors holds a significant interest. Revenue from the transaction amounted to approximately $
During the nine months ended September 30, 2025, the Company provided services to James & James, a company in which one of our former directors holds a significant interest. Revenue from the transaction amounted to approximately $
Note 15 – Subsequent Events
Asset Purchase Agreement
On July 24, 2026, the Company entered into an Asset Purchase Agreement with an unaffiliated third party for the sale of certain proprietary software, including Ranger, and a related advertising account for total consideration of $
Note Exchange
On October 27, 2026, the Company completed the $
Leases
On November 5, 2026, we entered into a lease for approximately 3,755 square feet of office space in Conway, Arkansas, to replace our Little Rock headquarters. The lease has a one-year term beginning January 1, 2027, with an option to extend for one additional year, and requires monthly payments of approximately $
| 23 |
| Table of Contents |
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Company Overview
Inuvo provides artificial intelligence-driven solutions for modeling media audiences. As a provider of AI-driven data and advertising technology solutions, we have successfully commercialized a proprietary AI model, built on our issued patents, that identifies and actions the reasons why consumers are interested in products, services, or brands - rather than who they are - offering a high-performance, privacy-by-design solution for the modern advertising landscape.
Intelligence for the Agentic Era. As the industry moves toward "agentic” systems - where autonomous AI agents increasingly handle the planning and execution of media tasks - we believe Inuvo is positioned to serve as a media audience decisioning layer. Unlike legacy systems that rely on static historical data or consumer IDs (cookies), Inuvo’s technology provides real-time, intent-based reasoning designed to support autonomous media planning and activation. Inuvo’s technology is intended to enable brands to move from traditional audience targeting to dynamic model planning & activation.
Inuvo’s core competitive advantage lies in intent discovery. While the programmatic industry has traditionally relied on reaching known users based on past behavior, Inuvo’s AI discovers new, high-value audiences as their motivations form.
This intelligence is delivered through a suite of advanced visualization and compliance tools:
| · | The Company’s flagship proprietary AI, IntentKey®, analyzes live content consumption across the open web, mapping human motivation to a concept graph of over 25 million ideas. This allows Inuvo to predict purchase intent, often identifying emerging audience shifts up to 24 hours before they become competitive in the open market. We believe this delivers targeting leverage that translates to improved supply/demand yields within bid streams. Speed of insight-to-execution is our competitive advantage. IntentKey delivers value from intent signals in-the-moment and is designed to improve ROAS (return on ad spend) by matching high yield ad inventories in the bid stream as consumer intent forms. |
|
|
|
| · | IntentPath: A visualization that allows marketers to see "intent-in-motion,” mapping the real-time journey from initial discovery to final purchasing decision. |
|
|
|
| · | Ranger: An AI-powered quality assurance feature within our Campsight system that ensures ad creatives remain consistent, accurate and compliant across digital networks. In October 2026, we sold certain proprietary software, including Ranger, and retained a perpetual license to use it (see Note 15 — Subsequent Events). |
Inuvo delivers these capabilities through two primary business channels:
| · | Audience Modeling (formerly Agencies and Brands): Managed and self-service offerings that utilize Inuvo’s intelligence layer for precision audience discovery and brand-safe activation across CTV, Video, Audio, Native, and Display channels. |
|
|
|
| · | Legacy Search (formerly Platforms): Inuvo provides strategic integrations for large consolidators of advertising demand. This business is optimized to prioritize advertising quality, scalability, and compliance, leveraging AI to align merchant messaging with online content. |
Inuvo’s competitive moat and intellectual property are protected by 15 issued and three pending patent applications with the United States Patent and Trademark Office. Our IP portfolio includes patents, trade secrets and trademarks. We actively seek to protect our IP rights and to deter unauthorized use of our IP and other assets. While our IP rights are important to our success, our business is not significantly dependent on any single patent, trademark, or other IP right.
| 24 |
| Table of Contents |
Significant Business Trends
Our business results have been, or are expected to be, impacted by several trends and strategic activities, which are described below. We expect that the trends described below may continue to impact our results of operations, cash flows, and financial position.
Forces Impacting the Industry
The digital advertising industry in which we operate is experiencing structural change driven by privacy-related regulation, browser and platform policy changes, and changing consumer and advertiser behaviors, particularly as it relates to consumer use of artificial intelligence in information-gathering. These factors have, among other things, led to a wider distribution of consumer intent signals across media platforms and has reduced availability and utility of third-party cookies and other persistent identifiers that are used by legacy advertising technology platforms to ensure advertising alignment and yield a return on investment for advertisers. As a result, there has been an adverse impact on the entire search ecosystem.
Likewise, as consumers, publishers, and media platforms demand greater privacy regulation, some media platforms have moved to block or otherwise restrain advertising technologies that do not comply with internal privacy rules. Still others have sought to leverage their own proprietary data to create their own advertising ecosystems, which is further fragmenting advertising inventory and the digital advertising industry generally. These developments, and others like them, indicate that the technological infrastructure previously used by the adtech industry is rapidly becoming obsolete, and other technologies will be needed for advertisers to achieve their goals.
In addition, the industry has experienced an increase in sophisticated technologies, often nefarious, that have allowed lower quality traffic to masquerade as legitimate, high-intent consumer demand. This has further driven technology companies that control search engines, browsers, and other technologies, to strengthen compliance requirements for their digital advertising partners to improve the integrity of online traffic.
Inuvo Response
In response to the systemic industry changes above, Inuvo has taken the following actions:
Bonfire platform reset. In response to more stringent compliance requirements, including changes in the Google ecosystem which have suppressed revenue per click (RPC), and as a result of the detection of lower quality traffic on our systems, we developed and deployed an AI compliance system (“Ranger”) to not only enforce our partners’ stricter standards, but to reveal quality differences that had previously been difficult to detect at scale. While this allowed us to take action against bad actors, it also necessitated that we intentionally constrain Bonfire-related revenue in order to have clearer visibility and insight into traffic quality (“Bonfire Reset”). As a result, revenue from our Legacy Search business has been lower year over year since late in the fourth quarter of 2025. It declined further in the third quarter of 2026, to approximately $3.9 million from approximately $18.7 million in the third quarter of 2025. In August 2026, a component of Legacy Search revenue ceased. We do not expect Legacy Search revenue to return to historical levels, and it may decline further.
Because Legacy Search generates a higher gross margin and lower operating margin than Audience Modeling, lower Legacy Search revenue has also reduced our consolidated gross margin. In response to these declines, we reduced costs, including headcount, and Legacy Search revenue now approximately covers its direct operating costs. Our total full- and part-time employment declined 41%, from 80 at September 30, 2025 to 47 at September 30, 2026. In the third quarter of 2026, we also recorded impairment charges of $2.4 million on long-lived and intangible assets, principally those supporting the Legacy Search business. See Note 4 – Other Intangible Assets and Goodwill.
| 25 |
| Table of Contents |
Investment focus on IntentKey. We believe IntentKey is positioned to benefit from the aforementioned industry shifts for several reasons. First, because it is designed to operate as a privacy-safe decisioning layer that does not rely on cookies or persistent identifiers, it is not subject to the same rules and regulations that have penalized other legacy technologies that rely on identity-based advertising. Likewise, because IntentKey operates outside of the identity-based advertising platforms, including those platforms, such as walled gardens, that rely on captive, limited audiences, it has the ability to capture net-new customers more efficiently and overcome other inherent limitations presented by industry fragmentation. We further believe that the adoption of autonomous and AI-enabled workflows may increase demand for algorithmic software, like IntentKey, that can translate intent signals into real-time activation across programmatic environments. As a result, we are focused on development, marketing, sales, and other efforts aimed at driving growth of the IntentKey product. As part of these efforts, we replaced most of our IntentKey sales team to support our new go-to-market strategy. The majority of these new sales representatives were hired in early summer 2026. Because of these changes and the length of time it takes to move a sale from prospect to revenue, new revenue generation was temporarily lower in the third quarter and is expected to remain low until the first part of 2027, when the summer new hires have completed a full sales cycle. To the extent we are successful in accelerating IntentKey revenue and that IntentKey becomes a larger portion of our overall revenue mix, we expect that direct operating margins will also increase, as Audience Modeling has historically yielded higher direct operating margins than our Legacy Search business.
Results of Operations
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||||||||||||||||||
|
| 2026 |
|
| 2025 |
|
| Change |
|
| % Change |
|
| 2026 |
|
| 2025 |
|
| Change |
|
| % Change |
| ||||||||
Net Revenue |
| $ | 6,802,036 |
|
| $ | 22,570,572 |
|
| $ | (15,768,536 | ) |
|
| (69.9 | )% |
| $ | 22,264,645 |
|
| $ | 71,949,937 |
|
| $ | (49,685,292 | ) |
|
| (69.1 | )% |
Cost of Revenue |
|
| 3,812,452 |
|
|
| 6,002,423 |
|
|
| (2,189,971 | ) |
|
| (36.5 | )% |
|
| 12,283,084 |
|
|
| 17,199,909 |
|
|
| (4,916,825 | ) |
|
| (28.6 | )% |
Gross Profit |
| $ | 2,989,584 |
|
| $ | 16,568,149 |
|
| $ | (13,578,565 | ) |
|
| (82.0 | )% |
| $ | 9,981,561 |
|
| $ | 54,750,028 |
|
| $ | (44,768,467 | ) |
|
| (81.8 | )% |
Net Revenue
Revenue for the three-month period ended September 30, 2026, decreased 69.9% and revenue for the nine-month period ended September 30, 2026, decreased 69.1% as compared to the same periods in 2025. The decreases were driven by declines of approximately 80% in Legacy Search revenue in both periods, resulting from the Bonfire Reset and the Forces Impacting the Industry described in Significant Business Trends above. Audience Modeling revenue was essentially flat for the nine months, at approximately $9.9 million in each period, but declined in the third quarter of 2026 compared with the third quarter of 2025. The decline was due to a temporary reduction in a key client’s campaign budget and lower new revenue as our new sales team works through the sales cycle, as discussed in Investment Focus on IntentKey in Significant Business Trends above. The client has since increased its budget, but not yet to the level before the reduction, and there can be no assurance that it will return to that level.
Cost of Revenue
Cost of revenue is composed of payments to website publishers and app developers that host advertisement as well as payments to advertising exchanges that provide access to digital inventory where we serve advertisements. The decrease in cost of revenue for the nine-month period ended September 30, 2026, compared to the same time period in 2025 was driven by a decrease in revenue from our Legacy Search clients. The resulting change in revenue mix drove gross margin lower to 44.8% compared to 76.1% in the same period last year. Our Legacy Search business historically carries higher gross margins as a lower proportion of its costs are recorded in cost of revenue, with a greater portion reflected in marketing and other operating expenses.
| 26 |
| Table of Contents |
Operating Expenses
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||||||||||||||||||
|
| 2026 |
|
| 2025 |
|
| Change |
|
| % Change |
|
| 2026 |
|
| 2025 |
|
| Change |
|
| % Change |
| ||||||||
Marketing costs |
| $ | 1,410,615 |
|
| $ | 13,375,136 |
|
| $ | (11,964,521 | ) |
| (89.5 | %) |
| $ | 4,896,380 |
|
| $ | 45,026,458 |
|
| $ | (40,130,078 | ) |
| (89.1 | %) | ||
Compensation |
|
| 2,049,736 |
|
|
| 3,145,125 |
|
|
| (1,095,389 | ) |
| (34.8 | %) |
|
| 8,604,340 |
|
|
| 9,945,452 |
|
|
| (1,341,112 | ) |
| (13.5 | %) | ||
General and administrative |
|
| 1,885,285 |
|
|
| 1,717,591 |
|
|
| 167,694 |
|
|
| 9.8 | % |
|
| 5,760,073 |
|
|
| 5,261,165 |
|
|
| 498,908 |
|
|
| 9.5 | % |
Impairment of intangible and long-lived assets |
|
| 2,448,750 |
|
| $ | — |
|
|
| 2,448,750 |
|
| NM |
|
|
| 2,448,750 |
|
| $ | — |
|
|
| 2,448,750 |
|
| NM |
| ||
Operating expenses |
| $ | 7,794,386 |
|
| $ | 18,237,852 |
|
| $ | (10,443,466 | ) |
| (57.3 | %) |
| $ | 21,709,543 |
|
| $ | 60,233,075 |
|
| $ | (38,523,532 | ) |
| (64.0 | %) | ||
Marketing costs consist mostly of traffic acquisition (i.e., media) costs and include those expenses required to attract audiences to various web properties. Marketing costs for the three and nine months periods ended September 30, 2026, decreased compared to the same periods in 2025 due to the decline in revenue from Legacy Search.
Compensation expense decreased approximately $1.1 million and $1.3 million for the three and nine months periods ended September 30, 2026, compared to the same time periods in 2025. The decreases were primarily due to lower payroll from the cost-saving measures described in Significant Business Trends and lower incentive and commission accruals. They were partially offset by lower capitalized labor. Compensation expense included severance of $54 thousand and $1.4 million for the three and nine month periods ended September 30, 2026, respectively. Our total employment, both full- and part-time, was 47 at September 30, 2026, compared to 80 at September 30, 2025.
General and administrative costs for the three and nine months ended September 30, 2026 increased $0.2 million and $0.5 million, respectively, compared to the same period in 2025, primarily due to higher professional fees associated with our 2026 financing transactions.
In the third quarter of 2026, we recorded impairment charges of $2.4 million, consisting of $2,388,750 on the customer list, which has no remaining carrying value, and $60,000 on capitalized internal-use software. The charges resulted from the cessation in August 2026 of revenue from the customer relationship underlying the customer list. No goodwill impairment was recognized. See Note 4.
Financing expense, net
Financing expense, net, for the three and nine months ended September 30, 2026, was approximately $426 thousand and $931 thousand, respectively. The expense, net for the three months ended September 30, 2026 consisted of $178 thousand of contractual interest on the Streeterville Notes and $300 thousand of debt issuance costs related to the Notes, which were expensed under the fair value option, partially offset by $52 thousand of interest income. For the nine months ended September 30, 2026, financing expense, net included approximately $426 thousand of expenses related to the convertible note, which was repaid in June 2026. See Note 6 – Debt.
Finance expense, net, for the three and nine months ended September 30, 2025, was approximately $113,633 and $159,259, respectively.
Other income (loss), net
Other income (loss) was $279,700 and $5,569,472 for the three and nine months ended September 30, 2026, respectively.
Other income (loss) for the three months ended September 30, 2026, consisted primarily of a $278 thousand gain from the change in fair value of the Streeterville Notes. See Note 6 – Debt. The gain reflects a decrease in the estimated fair value of the Notes, driven primarily by the decline in our stock price. Other income (loss) for the nine months ended September 30, 2026 was due primarily to a $6.2 million class action settlement received in January 2026, representing a one-time, non-recurring cash inflow, partially offset by a combined $852 thousand charge related to the retirement of prior debts, as mentioned above.
Other income was $48,124 and $1,148,686 for the three and nine months ended September 30, 2025. During the nine months ended September 30, 2025, the Company received payments totaling $1,216,508 from the Internal Revenue Service ("IRS") in connection with amended filings submitted in May 2023 for Employee Retention Credits ("ERC") related to the first and second quarters of 2021. In March 2025, the Company received $610,352, of which $533,093 was recognized in Other income and $77,259 of interest was recorded in Financing expense, net. In June 2025, the Company received an additional $606,156, of which $525,085 was recognized in Other income and $81,071 of interest was recorded in Financing expense, net. In total, the Company recognized $1,058,178 in Other income and $158,330 in interest income related to the ERC payments during the nine months ended September 30, 2025.
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Liquidity and Capital Resources
Our principal sources of liquidity are cash on hand, the release of restricted cash under our Note Purchase Agreement with Streeterville, and sales of our common stock.
In connection with entering into the Note Purchase Agreement, we used approximately $3.8 million of the A-1 Note proceeds to retire our outstanding convertible promissory note, including accrued interest, and we terminated our Financing Agreement with SLR.
The $6.2 million of B Note proceeds were deposited into an account at Lakeside Bank held by our wholly owned subsidiary, INUV Holdings, LLC, under a Deposit Account Control Agreement (the "DACA") with Streeterville and Lakeside Bank. Funds held under the DACA are not available for general corporate purposes and are released only in connection with a permitted Note Exchange. The July 1, 2026 Offering satisfied the Qualified Equity Offering condition and entitled us to a $1.2 million Note Exchange and a corresponding release from the DACA. We completed this Note Exchange on October 27, 2026, and $1.2 million was released to our operating account the subsequent day. As of September 30, 2026, $6.2 million remained subject to the DACA. Of that, $1.2 million is classified as current restricted cash and $5.0 million as non-current restricted cash.
On January 29, 2026, we received gross proceeds of approximately $6.2 million in connection with a class action settlement. These proceeds represented a one-time, non-recurring source of liquidity and are not expected to recur in future periods.
On May 7, 2024, we entered into the ATM Agreement with Wainwright to sell shares of our common stock, par value $0.001 per share, having an aggregate sales price of up to $15 million, from time to time, through an "at the market offering" program under which Wainwright acts as sales agent. We will pay Wainwright a commission rate of up to 3.0% of the aggregate gross proceeds from each sale. For the nine-month period ended September 30, 2026, we have not sold any shares of common stock under the ATM Agreement. As of September 30, 2026, approximately $13.8 million remained available for issuance under the ATM Agreement, based on cumulative gross sales of shares under the program to date. We suspended the ATM Agreement and terminated the continuous offering by us under the associated prospectus supplement. We will not make any sales of Common Shares pursuant to the ATM Agreement, unless and until a new prospectus is filed and the expiration of a 180-day lockup period following completion of the Offerings.
On June 30, 2026, we entered into a Securities Purchase Agreement with an accredited investor providing for the issuance, in a registered direct offering, of 1,631,121 shares of common stock and pre-funded warrants exercisable for up to 1,337,693 shares of common stock. In a concurrent private placement, we also agreed to issue Class A and Class B common stock purchase warrants exercisable for an aggregate of up to 5,937,628 shares of common stock. The Class A and Class B warrants have an exercise price of $1.28 per share, become exercisable six months after issuance, and expire five years and one year after issuance, respectively. We also issued placement agent warrants to purchase 148,441 shares of common stock at an exercise price of $1.25 per share. The placement agent warrants become exercisable six months after issuance and expire three years from the commencement of sales pursuant to the offerings.
The Offerings closed on July 1, 2026, for aggregate gross proceeds of approximately $3.0 million, before deducting placement agent fees and offering expenses of $0.3 million. In connection with the Offerings, we suspended the ATM Agreement and terminated the continuous offering by us under the associated prospectus supplement. We will not make any sales of Common Shares pursuant to the ATM Agreement, unless and until a new prospectus is filed and the expiration of a 180-day lockup period following completion of the Offerings.
We have focused our resources behind a plan to market our collective multi-channel advertising capabilities differentiated by our AI technology, the IntentKey, where we have a technological advantage and higher margins. If we are successful in implementing our plan, we expect to return to and maintain positive cash flows from operations. However, there is no assurance that we will be able to achieve this objective.
As of September 30, 2026, we have over $1.0 million in unrestricted cash and cash equivalents and $6.2 million in restricted cash held pursuant to the DACA described above, for total cash, cash equivalents, and restricted cash of approximately $7.3 million. Our net working capital deficit was approximately $4.4 million. Our investing activities totaled $0.8 million for the nine-month period ended September 30, 2026, primarily consisting of internally developed software costs, largely comprised of fixed labor costs, along with other capitalized expenditures. We have encountered recurring losses and cash outflows from operations, which historically we have funded through equity offerings and debt facilities. Through September 30, 2026, our accumulated deficit was $185.4 million.
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Our recurring operating losses, our working capital deficit of approximately $4.4 million as of September 30, 2026, decline in Legacy Search revenue, and contractual debt obligations, including Streeterville's right to redeem up to $750,000 per month under the A Notes beginning March 29, 2027, have resulted in substantial doubt about our ability to continue as a going concern for one year after the date these condensed consolidated financial statements are issued.
Management has implemented several measures to improve liquidity, reduce operating costs, and support the Company's long-term financial position. These measures include reducing headcount from 80 employees as of September 30, 2025, to 47 employees as of September 30, 2026, completing the sale of certain proprietary software and a related advertising account for $450,000 in October 2026, and completing a $1.2 million Note Exchange that resulted in the release of previously restricted cash for general corporate purposes.
In addition, management continues to evaluate opportunities to raise additional capital through equity or debt financing arrangements, implement further cost reductions, and expand revenue within its Audience Modeling business. While these initiatives are intended to strengthen the Company's liquidity position and support its ongoing operations, there can be no assurance that additional financing will be available on acceptable terms, that planned operating improvements will be achieved, or that these measures will generate sufficient liquidity to meet the Company's obligations as they become due.
Accordingly, management has concluded that substantial doubt about the Company's ability to continue as a going concern has not been alleviated. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Cash Flows
The table below sets forth a summary of our cash flows for the nine months ended September 30, 2026 and 2025:
|
| For the Nine Months Ended September 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
Net cash used in operating activities |
| $ | (2,943,115 | ) |
| $ | (1,807,308 | ) |
Net cash used in investing activities |
| $ | (818,840 | ) |
| $ | (1,240,992 | ) |
Net cash provided by financing activities |
| $ | 8,179,738 |
|
| $ | 3,968,636 |
|
Cash Flows - Operating
Net cash used in operating activities was $2,943,115 during the nine months ended September 30, 2026. We reported a net loss of $7,100,695, which included the receipt of approximately $6.2 million in non-recurring settlement proceeds during the period, non-cash charges for impairment of $2,448,750, depreciation and amortization expense of $1,544,889 and stock-based compensation expense of $800,878. The change in operating assets and liabilities during the nine months ended September 30, 2026 was a net use of cash of $1,862,016 primarily due to a decrease in accounts payable of $3,014,815 and a decrease of accrued liabilities and other liabilities of $412,300, partially offset by a decrease in accounts receivable of $1,781,261. Our Legacy Search terms are such that we generally collect receivables prior to paying trade payables. However, our Media sales arrangements typically have slower payment terms than the terms of related payables.
During the comparable nine-month period in 2025, cash used in operating activities was $1,807,308 from a net loss of $4,501,648 and included non-cash expenses of depreciation and amortization expense of $1,685,756 and stock-based compensation expense of $842,887. The change in operating assets and liabilities during the nine months ended September 30, 2025 was a net use of cash of $48,874 primarily due to a decrease in accounts receivable of $2,611,148 offset by a decrease in accounts payable of $765,360, and a decrease of accrued liabilities and other liabilities of $1,636,113 .
Cash Flows - Investing
Net cash used in investing activities was $818,840 for the nine months ended September 30, 2026, and consisted primarily of capitalized internal development costs.
Net cash used in investing activities was $1,240,992 for the nine months ended September 30, 2025, and consisted primarily of capitalized internal development costs.
Cash Flows - Financing
Net cash provided by financing activities was $8,179,738 during the nine months ended September 30, 2026, and was primarily from the proceeds from the Note Purchase Agreement as discussed in Note 6 - Debt.
Net cash provided by financing activities during the nine months ended September 30, 2025 was $3,968,636, and was primarily due to the utilization of our Financing Agreement as discussed in Note 6 - Debt.
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Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported periods. The estimates and assumptions that management makes affect the reported amounts of assets, liabilities, net revenues and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used are based upon management’s regular evaluation of the relevant facts and circumstances as of the date of the condensed consolidated financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying condensed consolidated financial statements, and such differences could be material. Our significant accounting policies related to Revenue Recognition, Equity-Based Compensation, Capitalized Software Costs, Goodwill, Long-lived Assets and others are described in Note 2 – of this report and in our Annual Report on Form 10-K for the year ended December 31, 2025.
Impairment of goodwill and long-lived assets. We test goodwill for impairment annually as of December 31, and between annual tests when events indicate that the fair value of our single reporting unit may be below its carrying amount. We test long-lived assets when events indicate their carrying amounts may not be recoverable. Because of the decline in Legacy Search revenue, including the cessation in August 2026 of revenue from the customer relationship underlying the customer list, we performed interim tests as of September 30, 2026. We recorded $2.4 million of impairment charges on long-lived and intangible assets and no goodwill impairment. We estimated the reporting unit’s fair value using the guideline public company method of the market approach and a 20% control premium. Fair value exceeded the $16.2 million carrying amount by approximately 26%. A decline in our share price to approximately $0.34, about 39% below the September 30, 2026 price of $0.56, would eliminate this excess.
Fair value of notes payable. We elected the fair value option for the Streeterville Notes and estimate their fair value using a Monte Carlo simulation model that incorporates significant unobservable inputs, including discount rates, probability of default, recovery rates, stock price volatility, and the expected timing of redemptions. Changes in these assumptions may materially affect the estimated fair value of the Notes. Changes in fair value are recognized in other income (expense), net, except for changes attributable to instrument-specific credit risk, which are recognized in other comprehensive income.
Off Balance Sheet Arrangements
As of September 30, 2026, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to a smaller reporting company.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Disclosure controls and procedures are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this report, is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and to reasonably assure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Our management does not expect that our disclosure controls will prevent all errors and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. The design of any systems of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of September 30, 2026, the end of the period covered by this report, our management concluded their evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. As of the evaluation date, our Chief Executive Officer and Chief Financial Officer concluded that we maintain disclosure controls and procedures that are effective in providing reasonable assurance that information required to be disclosed in our reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II
Item 1 - LEGAL PROCEEDINGS
On January 29, 2026, Carambolico LTD commenced a lawsuit, captioned Carambolico LTD v. Alot, Inc., No. 04CV-26-458 (Ark. Cir. filed Jan. 29, 2026), in the Circuit Court of Benton County, Arkansas, naming Alot, Inc., a wholly owned subsidiary of Inuvo, Inc., as defendant. The complaint asserts breach of contract and related claims under a services agreement and seeks $1.5 million in damages. The Company believes the claims are without merit and intends to vigorously defend the matter.
In April 2026, AEM Days Ltd. commenced a lawsuit, captioned AEM Days Ltd. v. Alot, Inc., No. 60CV-26-3363 (Ark. Cir. filed Apr. 2026), in the Circuit Court of Pulaski County, Arkansas, naming Alot, Inc., a wholly owned subsidiary of Inuvo, Inc., as defendant. The complaint asserts claims related to a services agreement and seeks approximately $766,000 in unpaid invoices. The Company believes the claims are without merit and intends to vigorously defend the matter.
As previously disclosed, on January 29, 2026, pursuant to a class action settlement agreement, the Company received approximately $6.2 million in proceeds as a claimant in such class action lawsuit.
ITEM 1A. RISK FACTORS-UPDATE
We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Accordingly, we incorporate by reference the risk factors disclosed in Part I, Item 1A of our Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 5, 2026 and our subsequent filings with the SEC, subject to the new or modified risk factors appearing below that should be read in conjunction with the risk factors disclosed in such Form 10-K and our subsequent filings.
We rely on four customers for a significant portion of our revenues. We are reliant upon four customers for most of our revenue. For the three-month period ending September 30, 2026, four customers accounted for 15.4%, 12.6%, 17.2%, and 37.7% of our overall revenue and for the nine-month period ended September 30, 2026, 14.1%, 17.3%, 17.1% and 33.3% of our overall revenue, respectively. For the three-month period ending September 30, 2025, two Legacy Search customers accounted for 62.8% and 19.6% of our overall revenue, respectively and for the nine-month period ended September 30, 2025, 66.9% and 18.8% of our overall revenue, respectively. The amount of revenue we receive from these customers is dependent on a number of factors outside of our control, including changes in the respective customer's advertising budget, both in terms of allocated dollars and media mix, financial resources of the customers, as well as general economic conditions. We would likely experience a significant decline in revenue and our business operations could be significantly harmed if these customers do not continue to utilize our services. Additionally, our business operations and financial condition could be significantly harmed if these customers do not pay for our services on a timely basis. The loss of any of these customers or a material change in the revenue or gross profit they generate or their failure to timely pay us for our services would have a material adverse impact on our business, results of operations and financial condition in future periods.
Our Legacy Search business has experienced significant revenue declines, and we may not be successful in restoring historical revenue levels or profitability. Our Legacy Search business has experienced significant revenue declines resulting primarily from changes in the search marketplace, including evolving compliance requirements, traffic quality standards, and monetization dynamics associated with third-party advertising platforms. For the three months ended September 30, 2026, total revenue decreased to $6.8 million from $22.6 million for the comparable period in 2025, with Legacy Search representing 56.6% and 82.8% of total revenue, respectively. For the nine months ended September 30, 2026, total revenue decreased to $22.3 million from $71.9 million for the comparable period in 2025, with Legacy Search representing 55.3% and 86.2% of total revenue, respectively.
Although Audience Modeling represents an increasing percentage of our overall revenue mix, there can be no assurance that growth in this business will be sufficient to offset any further declines in Legacy Search revenue. We have implemented operational, compliance, and cost-reduction initiatives intended to adapt to changing market conditions; however, these measures may not be sufficient to restore historical revenue levels, margins, or profitability.
If monetization rates decline further, traffic volumes continue to decrease, or third-party platform requirements evolve in ways that adversely affect our business model, our revenue, operating results, and cash flows could continue to be negatively impacted. Additionally, continued declines in Legacy Search revenue may require further reductions in operating expenses, personnel, or other operational adjustments, which could adversely affect our financial condition and ability to execute our business strategy.
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We may be required to make substantial redemption payments under our Notes, and our failure to satisfy those obligations could have a material adverse effect on our liquidity and financial condition. Beginning March 29, 2027, Streeterville may redeem up to $750,000 of our A Notes per month at its discretion. Beginning December 29, 2026, it may also redeem amounts under any of our Notes if our stock trades above a specified price. Each redemption includes yield maintenance equal to interest through maturity. If any A Note balance remains outstanding on December 29, 2026, a monitoring fee of approximately 17.6%, or about $1.0 million in total, will be added to the A Notes. A portion of our cash is restricted under a deposit account control agreement in favor of Streeterville and is not available to fund these payments. If our operating cash flow and unrestricted cash are insufficient to meet redemption demands, we could default under the Notes. That would allow Streeterville to accelerate them and enforce its security interest in substantially all of our assets. See Note 6 – Debt.
There is substantial doubt about our ability to continue as a going concern. We have incurred significant operating losses and negative operating cash flows, and our Legacy Search revenue has declined substantially and is not expected to recover to its historical rates. As described in Note 1, these conditions, together with our obligations under the Notes, raise substantial doubt about our ability to continue as a going concern, and our plans do not alleviate that doubt. Without additional financing, our cash may be insufficient to fund operations within the next twelve months. This uncertainty may make financing more difficult or costly to obtain, and any equity financing may be substantially dilutive. It may also cause customers, partners and vendors to lose confidence in us. A failure to make required payments under the Notes would permit Streeterville to accelerate the Notes and enforce its security interest in substantially all of our assets. A delisting of our common stock would also be a trigger event under the Notes. If we cannot continue as a going concern, stockholders could lose all or part of their investment.
We may not be able to maintain the listing of our common stock on the NYSE American. Our common stock has traded below $1.00 per share. The NYSE American may immediately suspend trading and begin delisting proceedings if our stock trades at levels it views as abnormally low, generally below $0.10 per share. Beginning July 1, 2027, it will also do so if our stock closes below $0.25 per share on any trading day, with no cure period. Its rules also limit our ability to use reverse stock splits to regain compliance. In addition, our stockholders’ equity of $6.3 million at September 30, 2026 is only slightly above the $6.0 million minimum that applies to companies with losses in each of their five most recent fiscal years, and continued losses could cause us to fall below it. Delisting would be a trigger event under the Notes, permitting Streeterville to accelerate the Notes and enforce its security interest in substantially all of our assets, and could also reduce the liquidity and price of our common stock and limit our ability to raise capital.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On July 1, 2026, in a private placement concurrent with our registered direct offering, we issued Class A and Class B common stock purchase warrants to purchase an aggregate of 5,937,628 shares of common stock and placement agent warrants to purchase 148,441 shares of common stock. The information required by Item 701 of Regulation S-K for these issuances was previously reported in Item 3.02 of our Current Report on Form 8-K filed with the SEC on July 1, 2026. There were no other unregistered sales of equity securities during the quarter ended September 30, 2026.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY AND DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
Trading Plans
During the three months ended September 30, 2026, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
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| Table of Contents |
ITEM 6. EXHIBITS
No. |
| Exhibit Description |
| Form |
| Date Filed |
| Number |
| Filed or Furnished Herewith |
3(i).1 |
| Articles of Incorporation, as amended |
| 10-KSB |
| 3/1/04 |
| 4 |
|
|
3(i).2 |
| Amended to Articles of Incorporation filed March 14, 2005 |
| 10-KSB |
| 3/31/06 |
| 3.2 |
|
|
3(i).3 |
| Articles of Merger between Inuvo, Inc. and Kowabunga! Inc. |
| 8-K |
| 7/24/09 |
| 3.4 |
|
|
3(i).4 |
| Certificate of Change Filed Pursuant to NRS 78.209 |
| 8-K |
| 12/10/10 |
| 3(i).4 |
|
|
3(i).5 |
| Certificate of Merger as filed with the Secretary of State of Nevada on February 29, 2012 |
| 10-K |
| 3/29/12 |
| 3(i).5 |
|
|
3(i).6 |
| Articles of Amendment to Amended Articles of Incorporation as filed on February 29, 2012 |
| 10-K |
| 3/29/12 |
| 3(i).6 |
|
|
3(i).7 |
| Articles of Amendment to Amended Articles of Incorporation as filed on October 31, 2019 |
| 10-Q |
| 5/15/20 |
| 3(i).7 |
|
|
3(i).8 |
| Certificate of Validation of Amendment to Amended Articles of Incorporation as filed October 16, 2020. |
| 10-Q |
| 11/9/20 |
| 3(i).8 |
|
|
3(i).9 |
| Articles of Amendment to Articles of Incorporation as filed January 7, 2021 |
| 10-K |
| 2/11/21 |
| 3(i).9 |
|
|
3(i).10 |
| Articles of Amendment to Articles of Incorporation as filed on August 19, 2021 |
| 10-Q |
| 11/12/21 |
| 3(i).10 |
|
|
3(ii).1 |
| Second Amended and Restated By-Laws |
| 8-K |
| 5/22/23 |
| 3(ii).1 |
|
|
4.1 |
| Form of Class A Common Warrant |
| 8-K |
| 7/1/26 |
| 4.1 |
|
|
4.2 |
| Form of Class B Common Warrant |
| 8-K |
| 7/1/26 |
| 4.2 |
|
|
4.3 |
| Form of Pre-Funded Warrant |
| 8-K |
| 7/1/26 |
| 4.3 |
|
|
4.4 |
| Form of Placement Agent Warrant |
| 8-K |
| 7/1/26 |
| 4.4 |
|
|
10.1 |
| Consulting Agreement, dated August 16, 2026, between Inuvo, Inc. and Wallace D. Ruiz |
| 8-K |
| 8/11/26 |
| 10.1 |
|
|
10.2 |
| Employment Agreement, dated August 10, 2026, between Inuvo, Inc. and Derric Ciccone |
| 8-K |
| 8/11/26 |
| 10.2 |
|
|
31.1 |
| Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer |
|
|
|
|
|
|
| Filed |
31.2 |
| Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer |
|
|
|
|
|
|
| Filed |
32.1 |
| Section 1350 certification of Chief Executive Officer |
|
|
|
|
|
|
| Furnished |
32.2 |
| Section 1350 certification of Chief Financial Officer |
|
|
|
|
|
|
| Furnished |
101.INS |
| Inline XBRL Instance Document |
|
|
|
|
|
|
| Filed |
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document |
|
|
|
|
|
|
| Filed |
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
|
|
|
| Filed |
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
|
|
|
| Filed |
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
|
|
|
| Filed |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
|
|
|
| Filed |
104 |
| The cover page for Inuvo, Inc.’s quarterly report on Form 10-Q for the period ended September 30, 2026, formatted in Inline XBRL (included with Exhibit 101 attachments). |
|
|
|
|
|
|
| Filed |
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| Table of Contents |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Inuvo, Inc. |
| |
|
|
|
|
November 13, 2026 | By: | /s/ Robert C. Buchner |
|
|
| Robert C. Buchner, |
|
|
| Chief Executive Officer (principal executive officer) |
|
|
|
|
|
November 13, 2026 | By: | /s/ Derric Ciccone |
|
|
| Derric Ciccone, |
|
|
| President, Chief Financial Officer and Secretary (principal financial officer) |
|
November 13, 2026 | By: | /s/ Aleesha Parris |
|
|
| Aleesha Parris, |
|
|
| Chief Accounting Officer (principal accounting officer) |
|
34 |