10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

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: 001-32442

Inuvo, Inc.

(Exact name of registrant as specified in its charter)

Nevada	87-0450450
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer  Identification No.)
500 President Clinton Ave., Suite 300 Little Rock, AR	72201
(Address of principal executive offices)	(Zip Code)

(501) 205-8508

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
Common stock	INUV	NYSE American

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.     Yes    ☒    No   ☐

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). Yes    ☒    No   ☐

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	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

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  ☐ No  ☒

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	May 12, 2021
Common Stock	118,518,445

TABLE OF CONTENTS

		Page No.
Part I
Item 1.	Financial Statements.	5
	Consolidated Balance Sheets	5
	Consolidated Statements of Operations	6
	Consolidated Statements of Cash Flows	7
	Consolidated Statements of Stockholders' Equity	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	21
Item 4.	Controls and Procedures.	21
Part II
Item 1.	Legal Proceedings.	22
Item 1A.	Risk Factors.	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	23
Item 3.	Defaults upon Senior Securities.	23
Item 4.	Mine Safety and Disclosures.	23
Item 5.	Other Information.	23
Item 6.	Exhibits.	24
Signatures		25

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This report contains forward-looking statements within the meaning of the 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:

•our history of losses and declining revenues;

•the on-going impact of the COVID-19 pandemic on our Company;

•our reliance on revenues from a limited number of customers;

•seasonality of our business which impacts our financial results and cash availability;

•dependence on our supply partners;

•our ability to acquire traffic in a profitable manner;

•failure to keep pace with technology changes;

•impact of possible interruption in our network infrastructure;

•dependence on our key personnel;

•regulatory and legal uncertainties;

•failure to comply with privacy and data security laws and regulations;

•third party infringement claims;

•publishers who could fabricate fraudulent clicks;

•our ability to continue to meet the NYSE American listing standards;

•the impact of quarterly results on our common stock price;

•dilution to our stockholders upon the exercise of outstanding restricted stock unit grants; and

•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, 2020 as filed with the Securities and Exchange Commission ("SEC") on February 11, 2021, as amended on Form 10-K/A as filed with the SEC on March 10, 2021 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, "first quarter 2021" means for the three months ended March 31, 2021, "first quarter 2020" means for the three months ended March 31, 2020, “2020” means the fiscal year ended December 31, 2020 and "2021" means the fiscal year ending December 31, 2021. 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.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INUVO, INC.

CONSOLIDATED BALANCE SHEETS

March 31, 2021 (Unaudited) and December 31, 2020

	March 31, 2021		December 31, 2020
Assets
Current assets
Cash and cash equivalent	$	17,805,324	$	7,890,665
Accounts receivable, net of allowance for doubtful accounts of $191,667 and $209,667, respectively.	5,749,261		6,227,610
Prepaid expenses and other current assets	534,471		413,435
Total current assets	24,089,056		14,531,710
Property and equipment, net	1,292,933		1,187,061
Other assets
Goodwill	9,853,342		9,853,342
Intangible assets, net of accumulated amortization	8,119,713		8,586,089
Right of use assets - operating lease	843,573		606,573
Right of use assets - finance lease	315,793		395,910
Other assets	35,185		20,886
Total other assets	19,167,606		19,462,800
Total assets	$	44,549,595	$	35,181,571
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	2,790,432	$	4,048,260
Accrued expenses and other current liabilities	4,006,124		4,216,448
Lease liability - operating lease	305,637		217,671
Lease liability - finance lease	197,100		246,793
Total current liabilities	7,299,293		8,729,172
Long-term liabilities
Deferred tax liability	107,000		107,000
Lease liability - operating lease	537,936		388,902
Lease liability - finance lease	83,900		93,426
Other long-term liabilities	6,925		573,957
Total long-term liabilities	735,761		1,163,285
Stockholders’ equity
Preferred stock, $0.001 par value:
Authorized shares 500,000, none issued and outstanding	—		—
Common stock, $0.001 par value:
Authorized shares 150,000,000 and 100,000,000, respectively; issued and outstanding shares 118,518,445 and 98,035,829, respectively.	118,519		98,036
Additional paid-in capital	174,893,660		161,541,448
Accumulated deficit	(138,497,638)		(136,350,370)
Total stockholders' equity	36,514,541		25,289,114
Total liabilities and stockholders' equity	$	44,549,595	$	35,181,571

             See accompanying notes to the consolidated financial statements.

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INUVO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended March 31,
	2021		2020
Net revenue	$	10,617,809	$	14,932,983
Cost of revenue	1,444,059		3,439,501
Gross profit	9,173,750		11,493,482
Operating expenses
Marketing costs (traffic acquisition costs or TAC)	7,305,784		9,622,823
Compensation	2,737,867		2,344,235
Selling, general and administrative	1,724,978		2,058,842
Total operating expenses	11,768,629		14,025,900
Operating loss	(2,594,879)		(2,532,418)
Interest expense, net	(22,389)		(152,511)
Other income (expense), net	470,000		(140,307)
Net loss	$	(2,147,268)	$	(2,825,236)
Per common share data
Basic and diluted:
Net loss	$	(0.02)	$	(0.05)
Weighted average shares
Basic	114,430,201		53,642,787
Diluted	114,430,201		53,642,787

See accompanying notes to the consolidated financial statements.

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INUVO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Three Months Ended March 31,
	2021		2020
Operating activities:
Net loss	$	(2,147,268)	(2,825,236)
Adjustments to reconcile net loss to net cash (used in)/provided by operating activities:
Third party rights agreement termination	(420,000)		—
Derecognition of contingencies	(110,000)		—
Depreciation and amortization	771,904		835,748
Depreciation-Right of Use Assets	80,117		105,678
Stock based compensation	394,870		208,897
Amortization of financing fees	1,250		10,198
Provision for doubtful accounts	(18,000)		—
Amortization of debt discount	—		14,982
Amortization of OID interest expense	—		10,787
Mark to market fair value of derivative	—		71,550
Loss on extinguishment of convertible debt	—		68,757
Change in operating assets and liabilities:
Accounts receivable	496,349		1,737,568
Prepaid expenses, unbilled revenue and other current assets	(136,586)		(120,360)
Accrued expenses and other liabilities	(97,455)		108,172
Accounts payable	(1,257,828)		594,759
Net cash (used in)/provided by operating activities	(2,442,647)		821,500
Investing activities:
Purchases of equipment and capitalized development costs	(411,400)		(310,853)
Net cash used in investing activities	(411,400)		(310,853)
Financing activities:
Proceeds from sale of common stock, net	13,137,500		1,206,788
Proceeds from ValidClick licensing agreement	—		500,000
Net payments on line of credit	—		(1,878,217)
Payments on finance lease obligations	(59,219)		(220,216)
Proceeds from exercise of options	1,569		—
SBA loan repayment	(149,900)		—
Net taxes paid on restricted stock unit grants exercised	(161,244)		(21,184)
Net cash provided by/(used in) financing activities	12,768,706		(412,829)
Net change – cash	9,914,659		97,818
Cash and cash equivalent, beginning of year	7,890,665		372,989
Cash and cash equivalent, end of period	$	17,805,324	$	470,807
Supplemental information:
Interest paid	$	21,656	$	126,236
Non cash investing and financing activities:
Conversion of Debt and derecognition of derivative and discounts to common stock	$	—	$	468,667
Assets purchased under finance lease obligations	$	—	$	364,545
Assets purchased under operating lease obligations	$	303,031	$	—

See accompanying notes to the consolidated financial statements.

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INUVO, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited)

For the Three Months Ended March 31,

2021
	Common Stock		Additional Paid in Capital		Accumulated Deficit		Total
	Shares	Stock
Balance as of December 31, 2020	98,035,829	$98,036	$	161,541,448	$	(136,350,370)	$	25,289,114
Net loss					(2,147,268)		(2,147,268)
Stock-based compensation			394,870				394,870
Stock issued for vested restricted stock awards	1,467,465	1,467	(1,467)				—
Shares withheld for taxes on vested restricted stock			(161,244)				(161,244)
Proceeds from exercise of options			1,569				1,569
Sale of common stock, net	19,015,151	19,016	13,118,484				13,137,500
Balance as of March 31, 2021	118,518,445	$118,519	$	174,893,660	$	(138,497,638)	$	36,514,541

2020
	Common Stock		Additional Paid in Capital		Accumulated Deficit		Treasury Stock		Total
	Shares	Stock
Balance as of December 31, 2019	51,846,011	$52,223	$	144,843,687	$	(129,045,801)	$	(1,396,559)	$	14,453,550
Net loss					(2,825,236)				(2,825,236)
Stock-based compensation			208,897						208,897
Stock issued for vested restricted stock awards	260,719	261	(261)						—
Shares withheld for taxes on vested restricted stock			(21,184)						(21,184)
Convertible Note Conversion	1,200,000	1,200	467,467						468,667
Sale of common stock, net	7,046,429	7,046	1,199,742						1,206,788
Balance as of March 31, 2020	60,353,159	$60,730	$	146,698,348	$	(131,871,037)	$	(1,396,559)	13,491,482

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Inuvo, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 – Organization and Business

Company Overview

Inuvo is a technology company that develops and sells information technology solutions for marketing and advertising. These platforms predictively identify and message online audiences for any product or service across devices, channels and formats, including video, mobile, connected TV, display, social and native. These capabilities allow Inuvo’s clients to engage with their customers and prospects in a manner that drives engagement from the first contact with the consumer. Inuvo facilitates the delivery of hundreds of millions of marketing messages to consumers every single month and counts among its clients numerous world- renowned names in industries that have included retail, automotive, insurance, health care, technology, telecommunications and finance.

The Inuvo solution incorporates a proprietary form of artificial intelligence, or AI, branded the IntentKey. This sophisticated machine learning technology uses interactions with Internet content as a source of information from which to predict consumer intent. The AI includes a continually updated database of over 500 million machine profiles which Inuvo utilizes to deliver highly aligned online audiences to its clients. Inuvo earns revenue when consumers view or click on its client’s messages.

The Inuvo business scales through account management activity with existing clients and by adding new clients through sales activity.

As part of the Inuvo technology strategy, it owns a collection of websites including alot.com and earnspendlive.com, where Inuvo creates content in health, finance, travel, careers, auto, education and living categories. These sites provide the means to test the Inuvo technologies, while also delivering high quality consumers to clients through the interaction with proprietary content in the form of images, videos, slideshows and articles.

There are many barriers to entry associated with the Inuvo business model, including a proficiency in large scale information processing, predictive software development, marketing data products, analytics, artificial intelligence, integration to the internet of things ("IOT"), and the relationships required to execute within the IOT. Inuvo’s intellectual property is protected by 18 issued and seven pending patents.

Liquidity

Throughout 2020 and the first quarter of 2021, we raised capital reversing an historical net working capital deficit. Our principal sources of liquidity come as a result of the sale of common stock and use of a credit facility through Hitachi Capital America Corp. (“Hitachi”) described in Note 5.

On March 20, 2020, we sold an aggregate of 3,931,428 shares of our common stock to the five members of our Board of Directors in a private placement exempt from registration under Section 4(a)(2) and Rule 506(b) of Regulation D under the Securities Act of 1933, as amended. We received proceeds of $688,000 in this offering. On March 27, 2020, we closed on the first tranche of a registered direct offering in which we sold 3,115,001 shares of our common stock for gross proceeds of $545,125. On April 2, 2020, we closed on a second tranche of the registered direct offering in which we sold 1,400,285 shares of our common stock for gross proceeds of $245,050.

On April 10, 2020, we obtained an unsecured $1.1 million loan under the Paycheck Protection Program (the “PPP Loan”) pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and which is administered by the United States Small Business Administration ("SBA"). In accordance with the requirements of the CARES Act, proceeds from the PPP Loan were used for payroll costs. The PPP Loan was fully forgiven on November 2, 2020. On May 15, 2020, we received a COVID-19 Economic Injury Disaster Loan ("EIDL") from the SBA for $149,900. We repaid the EIDL in full on January 28, 2021.

On June 8, 2020, we closed an additional registered direct offering of an aggregate of 12,222,222 shares of our common stock for gross proceeds of $5.5 million. On July 27, 2020, we closed a firm commitment underwritten follow-on public offering of an aggregate of 21,500,000 shares of our common stock for gross proceeds of $10.75 million. On January 19, 2021, we raised $8.0 million in gross proceeds in a registered direct offering, before expenses, through the sale of an aggregate of 13,333,334 shares of our common stock, and on January 22, 2021, we raised an additional $6.25 million in gross proceeds in a registered direct offering, before expenses, through the sale of an aggregate of 5,681,817 shares of our common stock.

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On January 7, 2021, we filed the Articles of Amendment to our Articles of Incorporation in the state of Nevada increasing the number of authorized shares from 100,000,000 to 150,000,000.

Though we believe our current cash position and credit facility will be sufficient to sustain operations for the next twelve

months, if our plan to grow the IntentKey business is unsuccessful, we may need to fund operations through private or public

sales of securities, debt financings or partnering/licensing transactions.

Customer concentration

Our three largest customers are Google, Proper Media and Yahoo! and all are clients of the ValidClick platform. The percentages of overall Inuvo revenue associated with these clients is noted below:

	For the Three Months Ended March 31,
	2021	2020
Google	40.0%	18.4	%
Proper Media	19.2%	—	%
Yahoo!	16.5%	51.4	%
Total	75.7%	69.8	%

As of March 31, 2021, Google, Proper Media and Yahoo! accounted for 64.5% of our gross accounts receivable balance. As of December 31, 2020, the same three customers accounted for 38.4% of our gross accounts receivable balance.

We still source the majority of our ValidClick revenue through these relationships where we have access to advertiser budgets indirectly. While this strategy creates a concentration risk, we believe that it also provides upside opportunities including; access to hundreds of thousands of advertisers across geographies; the ability to scale our business across verticals; an avoidance of the sales costs associated with a large direct to advertisers’ sales force; access to innovation; overall media budget market insights; attractive payment terms; and low risk on receivables.

Impact of COVID-19 Pandemic

First identified in late 2019 and known now as COVID-19, the outbreak has impacted millions of individuals and businesses worldwide. In response, many countries have implemented measures to combat the outbreak which has had an unprecedented economic consequence. We did not experience an impact from COVID-19 through the end of fiscal year 2019 and had only minor impact from COVID-19 in the first quarter of 2020. Because we operate in the digital advertising industry, unlike a brick and mortar-based company, predicting the impact of the coronavirus pandemic on our company is difficult. Beginning in late April 2020, we experienced a significant reduction in marketing budgets and a decrease in monetization rates which impacted ValidClick more severely than IntentKey. This resulted in a significant reduction in our overall revenue run rates during 2020 with the low point occurring during May 2020.

In response to COVID-19, we curtailed expenses, including compensation and travel throughout 2020, in addition to other actions. Additionally, in April 2020, we obtained an unsecured PPP Loan under the CARES Act of $1.1 million which we used primarily for payroll costs. The loan was fully forgiven by the SBA on November 2, 2020.

Beginning mid-June 2020, we began to experience an improvement in overall daily revenue. Though there has been a steady month by month improvement in the revenue run rates, by the end of the first quarter 2021 we still have not reached pre-pandemic levels. Due to the unprecedented sustainability of COVID-19 on our business, we were unable to predict with any certainty how our clients will adapt their business strategies within the context of COVID-19 and therefore how our revenue run rate would change as a result. We, therefore, were focusing our resources on areas we believe could have more immediate revenue potential, attempting to reduce expenses and raising additional capital so as to mitigate operating disruptions while the impact of COVID-19 abates. Since the start of the year with the roll out of vaccinations, we see an increase in client’s willingness to spend on advertising and thereby an improvement in our revenue run rates.

Our net working capital was a positive $16.8 million as of March 31, 2021. During January 2021, we raised approximately $14.3 million, before expenses, through the sale of our securities in two offerings. During the second and third quarters of 2020, we raised approximately $16.5 million, before expenses, through the sale of our securities and in April 2020, we obtained a $1.1 million PPP Loan. With the reduction in our revenue run rate, there is an increased need for working capital to fund our operations. There is no assurance that we will be successful in obtaining additional funding to continue operations, particularly

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in light of the current impact of COVID-19 on the U.S. capital markets, but believe we have sufficient capital to operate during the next twelve months.

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Note 2 – Summary of Significant Accounting Policies

Basis of presentation

The consolidated financial statements presented are for Inuvo and its consolidated subsidiaries. The accompanying unaudited 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 consolidated balance sheet as of December 31, 2020, 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 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 consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on February 11, 2021, as amended on Form 10-K/A as filed with the SEC on March 10, 2021.

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 consolidated financial statements are based upon management’s regular evaluation of the relevant facts and circumstances as of the date of the consolidated financial statements. We regularly evaluate estimates and assumptions related to goodwill and purchased intangible asset valuations and income tax valuation allowance. Actual results may differ from the estimates and assumptions used in preparing the accompanying consolidated financial statements, and such differences could be material.

Revenue Recognition

Most of our revenue is generated through clicks on advertisements presented on our properties or those of our partners. We

recognize revenue from clicks in the period in which the click occurs. Payments to partners who display advertisements on our behalf are recognized as cost of revenue. Revenue from data sales and commissions is recognized in the period in which the

transaction occurs and the other revenue recognition criteria are met. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We also recognize revenue from serving impressions when we complete all or a part of an order from an advertiser. The revenue is recognized in the period that the impression is served.

The below table is the proportion of revenue that is generated through advertisements on our ValidClick and IntentKey platforms:

	For the Three Months Ended March 31,
	2021				2020
ValidClick Platform	$	8,484,813	79.9	%	$	13,076,990	87.6	%
IntentKey Platform	2,132,996		20.1	%	1,855,993		12.4	%
Total	$	10,617,809	100.0	%	$	14,932,983	100.0	%

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, (FASB) issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model which will result in earlier recognition of credit losses. On November 15, 2019, the FASB delayed the effective date for certain small public companies and other private companies. As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC’s definition, as well as private companies and not-for-profit entities.

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Note 3 – Property and Equipment

The net carrying value of property and equipment was as follows as of:

	March 31, 2021		December 31, 2020
Furniture and fixtures	$	293,152	$	293,152
Equipment	1,108,686		1,052,199
Capitalized internal use and purchased software	11,798,641		11,475,683
Leasehold improvements	445,080		421,016
Subtotal	13,645,559		13,242,050
Less: accumulated depreciation and amortization	(12,352,626)		(12,054,989)
Total	$	1,292,933	$	1,187,061

During the three months ended March 31, 2021 and March 31, 2020, depreciation expense was $305,528 and $369,372, respectively.

Note 4 – Other Intangible Assets and Goodwill

The following is a schedule of intangible assets and goodwill as of March 31, 2021:

	Term	Carrying Value		Accumulated Amortization and Impairment		Net Carrying Value		Year-to-date Amortization
Customer list, Google	20 years	$	8,820,000	$	(4,005,751)	$	4,814,249	$	110,250
Technology	5 years	3,600,000		(3,000,000)		$	600,000	180,000
Customer list, ReTargeter	5 years	1,931,250		(643,750)		$	1,287,500	96,562
Customer list, all other	10 years	1,610,000		(1,462,453)		$	147,547	40,251
Brand name, ReTargeter	5 years	643,750		(214,583)		$	429,167	32,188
Customer relationships	20 years	570,000		(118,750)		$	451,250	7,125
Trade names, web properties (1)	-	390,000		—		$	390,000	—
Intangible assets classified as long-term		$	17,565,000	$	(9,445,287)	$	8,119,713	$	466,376
Goodwill, total	-	$	9,853,342	$	—	$	9,853,342	$	—

(1)    The trade names related to our web properties have an indefinite life, and as such are not amortized.

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

 

2021	$	1,399,128
2022	1,071,294
2023	984,500
2024	769,917
2025	469,500
Thereafter	3,035,374
Total	$	7,729,713

Note 5 – Bank Debt

On March 1, 2012 we entered into a Business Financing Agreement with Bridge Bank, which is now owned by Western Alliance Bank. The agreement provided us with a revolving credit line of up to $10 million which we used to help satisfy our working capital needs. On October 11, 2018, we entered into the Amended and Restated Financing Agreement with Western Alliance Bank which superseded the Business Financing Agreement, as amended. All obligations under the Amended and

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Restated Financing Agreement, as amended, with Western Alliance Bank have been met and all agreements with Western Alliance Bank have been terminated.

On March 12, 2020, we closed on the Loan and Security Agreement dated February 28, 2020 with Hitachi. Under the terms of the Loan and Security Agreement, Hitachi has provided us with a $5,000,000 line of credit commitment. We are permitted to borrow (i) 90% of the aggregate Eligible Accounts Receivable, plus (ii) the lesser of (A) 75% of the aggregate Unbilled Accounts Receivable or (B) 50% of the amount available to borrow under (i), up to the maximum credit commitment. On March 12, 2020 we drew $5,000,000 under this agreement, using $2,959,573 of these proceeds to satisfy all of our obligations under the Western Alliance Bank credit agreement and the balance was used for working capital. We pay Hitachi a monthly interest at the rate of 2% in excess of the Wall Street Journal Prime Rate, with a minimum rate of 6.75% per annum, on outstanding amounts. The principal and all accrued but unpaid interest are due on demand.

We agreed to pay Hitachi a commitment fee of $50,000, with one half due upon the execution of the agreement and the balance due six months thereafter. Thereafter, we are obligated to pay Hitachi a commitment fee of $15,000 annually. We are also obligated to pay Hitachi a quarterly service fee of 0.30% on the monthly unused amount of the maximum credit line. In addition to a $2,000 document fee we have paid to Hitachi, if we exit our relationship with Hitachi before March 1, 2022, we are obligated to pay Hitachi an exit fee of $50,000. At March 31, 2021, there were no outstanding balances due under the Loan and Security Agreement with Hitachi.

Note 6 – Accrued Expenses and Other Current Liabilities

The accrued expenses and other current liabilities consist of the following as of:

	March 31, 2021		December 31, 2020
Accrued marketing costs (TAC)	$	2,989,778	$	3,234,192
Accrued expenses and other	571,676		440,578
Accrued payroll and commission liabilities	436,573		423,373
Accrued taxes	8,097		8,305
Arkansas grant contingency	—		60,000
Accrued sales allowance	—		50,000
Total	$	4,006,124	$	4,216,448

Note 7 – Convertible Promissory Notes

On March 1, 2019, Inuvo entered into a Securities Purchase Agreement with three accredited investors for the purchase and sale of an aggregate of $1,440,000 of principal of Original Issue Discount Unsecured Subordinated Convertible Notes due September 1, 2020 (the “Calvary Notes”) to fund working capital and additional expenses resulting from the delay in closing of certain planned, and since terminated, mergers with ConversionPoint Technologies Inc. and ConversionPoint Holdings Inc. The initial conversion price of the Calvary Notes was $1.08 per share which would have made the Calvary Notes then convertible into 1,333,333 unregistered shares of Inuvo’s common stock upon conversion. The Calvary Notes were issued in a private placement and the shares of common stock issuable upon conversion are restricted, subject to resale under Rule 144. The proceeds to Inuvo from the offering were $1,200,000. Inuvo did not pay any commissions or finders fees in connection with the sale of the Calvary Notes and Inuvo utilized the proceeds for working capital.

On November 11, 2019 we entered into Note Modification and Release Agreements with the holders of $1,080,000 principal amount of the Calvary Notes. Under the terms of the Note Modification and Release Agreement, the parties agreed that in consideration of such noteholder’s agreement to convert a minimum of 50% of the outstanding amount of the note (the “First Conversion Amount”) that the conversion price for the First Conversion Amount would be $0.265 per share and that the conversion price for any remaining amount due under the note would be $0.30 per share, subject to future adjustments under the terms of the note including dilutive issuances at a price below $0.30 per share, subject to a floor of $0.23 per share. The agreement contains mutual general releases. These holders converted an aggregate of $765,000 due under the Calvary Notes into 2,886,792 shares of our common stock.

In January 2020, a noteholder of a $360,000 principal amount Calvary note converted the note into 1,200,000 shares of our common stock. On April 21, 2020, a noteholder converted $200,000 principal amount due under the Calvary Notes into 1,142,857 shares of our common stock. On May 5, 2020, a noteholder converted the final $115,000 principal amount due under

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the Calvary Notes into 657,143 shares of our common stock, thereby satisfying the Calvary Notes in full and completing the extinguishment of the Calvary Notes.

Note 8 – Other Long-Term Liabilities

The lease liabilities and other long-term liabilities consist of the following as of:

	March 31, 2021		December 31, 2020
Deferred rent	6,925		4,057
Deferred revenue	—		420,000
SBA loan	—		149,900
Total	$	6,925	$	573,957

Note 9 – Commitments    

In March 2020, we entered into an agreement to allow a third party to license and use ValidClick technology. The agreement required a nonrefundable fee of $500,000 in March with subsequent fees as earned in later quarters. The $500,000 fee was recorded as deferred revenue in March 2020. Effective March 1, 2021, the agreement was canceled and the remaining deferred revenue balance of $420,000 was recognized as other income.

Note 10 – Income Taxes

We have a deferred tax assets of $37,693,100. We believe it is more likely than not that essentially none of our deferred tax assets will be realized, and we have recorded a valuation allowance of $35,848,400 for the deferred tax assets that may not be realized as of March 31, 2021 and December 31, 2020. We also have deferred tax liabilities totaling $1,951,700 as of March 31, 2021, related to intangible assets acquired in March 2012. These balances are presented as a net deferred tax liability of $107,000 composed of indefinite lived intangible assets.

Note 11 – 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. During the 2021 and 2020 periods, we granted restricted stock units ("RSUs") from the 2017 Equity Compensation Plan, as amended (“2017 ECP”). RSU vesting periods are generally up to three years and/or achieving certain financial targets.

On January 1, 2021, in accordance with the plan provisions, the number of shares available for issuance under the 2017 ECP plan was increased by 150,000 shares.

Compensation Expense

For the three months ended March 31, 2021 and 2020, we recorded stock-based compensation expense for all equity incentive plans of $394,870 and $208,897, respectively. Total compensation cost not yet recognized at March 31, 2021 was $5,634,951 to be recognized over a weighted-average recognition period of approximately two years.

The following table summarizes the stock grants outstanding under the 2017 ECP and the 2010 Equity Compensation Plan (“2010 ECP”), which expired on its terms in April 2020, for the three months ended March 31, 2021:

	Options Outstanding	RSUs Outstanding	Options and RSUs Exercised	Available Shares	Total
2017 ECP	—	4,376,667	2,367,472	2,655,861	9,400,000
2010 ECP (*)	1,500	—	5,011,511	—	5,013,011
Total	1,500	4,376,667	7,378,983	2,655,861	14,413,011

(*) Expired April 2020

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The following table summarizes the activity of stock option awards under the 2010 ECP for the three months ended March 31, 2021:

	Shares Subject to Options Outstanding
	Number of Shares	Weighted Average Exercise Price
Balance as of December 31, 2020	9,500	$	0.56
Stock options exercised	4,750	$	0.56
Stock options canceled	3,250	$	0.56
Balance as of March 31, 2021	1,500	0.56
Stock options exercisable as of March 31, 2021	1,500	0.56

The following table summarizes the activities for our unvested RSUs for the three months ended March 31, 2021:

	Unvested RSUs
	Number of Shares	Weighted Average Grant Date Fair Value
Unvested as of December 31, 2020	1,930,526	$	0.28
Granted	4,310,000	$	1.40
Vested	1,804,665	$	0.28
Forfeited	59,194	$	0.29
Unvested as of March 31, 2021	4,376,667	$	1.38

Note 12 – Stockholders Equity

Earnings per Share

For the three months ended March 31, 2021 and 2020, we generated a net loss from continuing operations and as a result, all of our shares are anti-dilutive.

Note 13 – Leases

The Company has entered into operating and finance leases primarily for real estate and equipment rental. These leases have terms which range from two years to four years, and often include one or more options to renew or in the case of equipment rental, to purchase the equipment. These operating and finance leases are listed as separate line items on the Company's consolidated balance sheets and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligation to make lease payments are also listed as separate line items on the Company's consolidated balance sheets. As of March 31, 2021 and December 31, 2020, total operating and financed right-of-use assets were $843,573 and $315,793, and $606,573 and $395,910, respectively.

As of March 31, 2021 and 2020, the Company recorded $80,117 and $105,678, respectively, in amortization expense related to finance leases.

Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments.

Information related to the Company's operating lease liabilities are as follows:

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	For the Three Months Ended March 31,
Cash paid for operating lease liabilities	$	182,807
Weighted-average remaining lease term	2.4 years
Weighted-average discount rate	6.25		%

Minimum future lease payments ended March 31, 2021
2021	285,922
2022	378,339
2023	295,778
2024	10,983
	971,022
Less imputed interest	(127,449)
Total lease liabilities	$	843,573

Information related to the Company's financed lease liabilities are as follows:

	For the Three Months Ended March 31,
Cash paid for finance lease liabilities	$	69,291
Weighted-average remaining lease term	2.3 years
Weighted-average discount rate	6.25		%

Minimum future lease payments ended March 31, 2021
2021	$	200,518
2022	72,982
2023	37,658
	311,158
Less imputed interest	(30,158)
Total lease liabilities	$	281,000

Note 14 – Related Party Transactions

On March 20, 2020, we sold an aggregate of 3,931,428 shares of our common stock at a purchase price of $0.175 per share to the five members of our Board of Directors in a private placement exempt from registration under Section 4(a)(2) and Rule 506(b) of Regulation D under the Securities Act of 1933, as amended. We received proceeds of $688,000 in this offering. The purchase price of the shares of our common stock sold in the offering exceeded the closing market price of our common stock on March 19, 2020, the trading day immediately preceding the day the binding Insider Subscription Agreements were executed by the purchasers. The purchasers were all accredited investors. We did not pay any commissions or finder’s fees, and we used the proceeds for general working capital.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Company Overview

Inuvo is a technology company that develops and sells information technology solutions for marketing. These platforms predictively identify and message online audiences for any product or service across devices, channels and formats, including video, mobile, connected TV, display, social and native. These capabilities allow Inuvo’s clients to engage with their customers and prospects in a manner that drives engagement from the first contact with the consumer. Inuvo facilitates the delivery of hundreds of millions of marketing messages to consumers every single month and counts among its clients numerous world-

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renowned names in industries that have included retail, automotive, insurance, health care, technology, telecommunications and finance.

The Inuvo solution incorporates a proprietary form of artificial intelligence, or AI, branded the IntentKey. This sophisticated machine learning technology uses interactions with Internet content as a source of information from which to predict consumer intent. The AI includes a continually updated database of over 500 million machine profiles which Inuvo utilizes to deliver highly aligned online audiences to its clients. Inuvo earns revenue when consumers view or click on its client’s messages.

The Inuvo business scales through account management activity with existing clients and by adding new clients through sales activity.

As part of the Inuvo technology strategy, it owns a collection of websites including alot.com and earnspendlive.com, where Inuvo creates content in health, finance, travel, careers, auto, education and living categories. These sites provide the means to test the Inuvo technologies, while also delivering high quality consumers to clients through the interaction with proprietary content in the form of images, videos, slideshows and articles.

There are many barriers to entry associated with the Inuvo business model, including a proficiency in large scale information processing, predictive software development, marketing data products, analytics, artificial intelligence, integration to the internet of things ("IOT"), and the relationships required to execute within the IOT. Inuvo’s intellectual property is protected by 18 issued and seven pending patents.

Impact of COVID-19 Pandemic

First identified in late 2019 and known now as COVID-19, the outbreak has impacted millions of individuals and businesses worldwide. In response, many countries have implemented measures to combat the outbreak which has had an unprecedented economic consequence. We did not experience an impact from COVID-19 through the end of fiscal year 2019 and had only minor impact from COVID-19 in the first quarter of 2020. Because we operate in the digital advertising industry, unlike a brick and mortar-based company, predicting the impact of the coronavirus pandemic on our company is difficult.

Beginning in late April 2020, we experienced a significant reduction in marketing budgets and a decrease in monetization rates which impacted ValidClick more severely than IntentKey. This resulted in a significant reduction in our overall revenue run rates during 2020 with the low point occurring during May 2020.

In response to COVID-19, we curtailed expenses, including compensation and travel throughout 2020in addition to other actions. Additionally, in April 2020, we obtained the $1.1 million PPP Loan which we used primarily for payroll costs. The PPP Loan was fully forgiven by the SBA on November 2, 2020.

Beginning mid-June 2020, we began to experience an improvement in overall daily revenue. Though there has been a steady month by month improvement in the revenue run rates, by the end of the first quarter 2021 we still have not reached pre-pandemic levels. Due to the unprecedented sustainability of COVID-19 on our business, we were unable to predict with any certainty how our clients will adapt their business strategies within the context of COVID-19 and therefore how our revenue run rate would change as a result. We, therefore, were focusing our resources on areas we believe could have more immediate revenue potential, attempting to reduce expenses and raising additional capital so as to mitigate operating disruptions while the impact of COVID-19 abates. Since the start of the year with the roll out of vaccinations, we see an increase in client’s willingness to spend on advertising and thereby an improvement in our revenue run rates.

Our net working capital was a positive $16.8 million as of March 31, 2021. During January 2021, we raised approximately $14.3 million, before expenses, through the sale of our securities in two offerings. During the second and third quarters of 2020, we raised approximately $16.5 million, before expenses, through the sale of our securities and in April 2020, we obtained a $1.1 million PPP Loan. With the reduction in our revenue run rate, there is an increased need for working capital to fund our operations. There is no assurance that we will be successful in obtaining additional funding to continue operations, particularly in light of the current impact of COVID-19 on the U.S. capital markets, but believe we have sufficient capital to operate during the next twelve months.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with 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 more critical accounting estimates include estimates related to revenue recognition and accounts receivable allowances. We also have other key accounting policies, which involve the use of

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estimates, judgments and assumptions that are significant to understanding our results, which are described in Note 2 to our audited consolidated financial statements for 2020 appearing in our Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the SEC on February 11, 2021, as amended on Form 10-K/A as filed with the SEC on March 10, 2021. 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 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 consolidated financial statements. We regularly evaluate estimates and assumptions related to goodwill and purchased intangible asset valuations and valuation allowance. Actual results may differ from the estimates and assumptions used in preparing the accompanying consolidated financial statements, and such differences could be material.

Results of Operations

	For the Three Months Ended March 31,
	2021		2020		Change		% Change
Net Revenue	$	10,617,809	$	14,932,983	$	(4,315,174)	(28.9)	%
Cost of Revenue	1,444,059		3,439,501		(1,995,442)		(58.0)	%
Gross Profit	$	9,173,750	$	11,493,482	$	(2,319,732)	(20.2)	%

Net Revenue

We experienced lower year over year revenue for the three months ended March 31, 2021 as compared to the same period in 2020. Revenue declined within the ValidClick platform where COVID-19 had a material impact on advertising budgets beginning in April of 2020. The renegotiation of payment terms and conditions with marketing partners in the quarter ended June 30, 2020 also contributed to the lower ValidClick revenue as a trade-off for higher gross margins. Since the low revenue month in May of 2020, ValidClick has had a 9% monthly compounded growth rate through the end of March 2021. The IntentKey platform grew 15% for the three months ended March 31, 2021 over the prior year quarter due primarily to the acquisition of new customers.

Cost of Revenue

Cost of revenue in the 2021 period is primarily generated by payments to ad exchanges that provide access to a supply of advertising inventory where we serve advertisements using information predicted by the IntentKey and to lesser extent, payments to website publishers and app developers that host advertisements we serve through ValidClick. Cost of revenue in the 2020 period was primarily generated by payments to website publishers and app developers that host advertisements we serve through ValidClick. The components of the cost of revenue have shifted, as the IntentKey platform revenue becomes a greater percentage of Net Revenue and as the ValidClick business has continued to expand its owned and operated publishing assets. The decrease in the cost of revenue for the quarter ended March 31, 2021 compared to the same quarter in 2020 was due primarily to the decline in ValidClick revenue as described in the Net Revenue section and the decision to reduce certain historically outsourced campaign management tasks.

Operating Expenses

	For the Three Months Ended March 31,
	2021		2020		Change		% Change
Marketing costs (TAC)	$	7,305,784	$	9,622,823	$	(2,317,039)	(24.1	%)
Compensation	2,737,867		2,344,235		393,632		16.8	%
Selling, general and administrative	1,724,978		2,058,842		(333,864)		(16.2	%)
Operating expenses	$	11,768,629	$	14,025,900	$	(2,257,271)	(16.1	%)

Marketing costs or traffic acquisition costs ("TAC") include those expenses required to attract an audience to the ValidClick platform. The decrease in marketing costs for the three-month period ended March 31, 2021 compared to the same period in 2020 was due primarily to the decline in revenue as described in the Net Revenue section.

Compensation expense was higher for the three-month period ended March 31, 2021 compared to the same time period in 2020 due primarily to higher employee salary expense, and stock-based compensation. Our total employment, both full and part-time,

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was 77 at March 31, 2021 compared to 69 at March 31, 2020. The higher headcount this year over last year is primarily due to hiring additional sales and sales support personnel for the IntentKey.

Selling, general and administrative costs were lower for the three-month period ended March 31, 2021 compared to the same time period in 2020 due primarily to $197 thousand in lower IT costs, $56 thousand in lower travel and entertainment corporate expense, $87 thousand lower depreciation and amortization expense and to the $60 thousand reversal of a reserve for a liability that had been satisfied.

Interest expense, net

Interest expense, net, for the three months ended March 31, 2021 and 2020 was approximately $22 thousand and $152 thousand, respectively, and primarily represents interest expense on finance lease obligations and the Hitachi Loan and Security Agreement.

Other income/(expense), net

Other income, net, for the three months ended March 31, 2021 was $470 thousand and included the reversal of the deferred revenue from the contract cancellation discussed in Note 9 and the reversal of the accrued sales reserve of $50 thousand.

Other expense, net, for the three months ended March 31, 2020, was approximately $140 thousand and was related to the conversion of promissory notes.

Liquidity and Capital Resources

Our principal sources of liquidity are the sale of our common stock and our credit facility with Hitachi described in Note 5.

During March 2020 and April 2020, we raised approximately $1.5 million in gross proceeds, before expenses, through sales of our common stock and in April 2020 we received a $1.1 million PPP Loan. On June 8, 2020, we raised an additional $5.5 million in gross proceeds, before expenses, through the sale of our common stock and on July 27, 2020, we raised an additional $10.75 million in gross proceeds, before expenses, through sales of our common stock. On January 19, 2021, we raised an additional $8 million in gross proceeds, before expenses, through the sale of our common stock, and on January 22, 2021, we raised an additional $6.25 million in gross proceeds, before expenses, through sales of our common stock.

We have focused our resources behind a plan to grow our AI technology, the IntentKey, where we have a technology advantage

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

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

Though we believe our current cash position and credit facility will be sufficient to sustain operations for the next twelve

months, if our plan to grow the IntentKey business is unsuccessful, we may need to fund operations through private or public

sales of securities, debt financings or partnering/licensing transactions.

In April 2020, the Company experienced a significant reduction in advertiser marketing budgets across both the ValidClick and IntentKey platforms as a direct consequence of COVID-19. These reductions adversely impacted our overall revenue throughout 2020. As a result, in May 2020 and June 2020 we implemented a temporary compensation change for senior officers and employees. Certain employees with salaries in excess of $100,000 per year had forgone a percentage of their salary. We curtailed expenses, including compensation and travel for the months of May and June, and issued a work from home policy to protect our employees and their families from virus transmission associated with co-workers. As a result of this uncertainty, we continue to focus our resources on areas we believe have immediate revenue potential while concurrently reducing expenses where necessary with an objective to minimize daily operating disruptions.

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Cash Flows

The table below sets forth a summary of our cash flows for the three months ended March 31, 2021 and 2020:

	For the Three Months Ended March 31,
	2021	2020
Net cash (used in)/provided by operating activities	$(2,442,647)	$821,500
Net cash used in investing activities	$(411,400)	$(310,853)
Net cash provided by/(used in) financing activities	$12,768,706	$(412,829)

Cash Flows - Operating

Net cash used in operating activities was $2,442,647 during the three months ended March 31, 2021. We reported a net loss of $2,147,268, which included non-cash expenses; depreciation and amortization expense of $771,904, other depreciation expense of $80,117 and stock-based compensation expense of $394,870; partially offset by the reversal of $420,000 in deferred revenue. The change in operating assets and liabilities during the three months ended March 31, 2021 was a net use of cash of $995,520 primarily due to a decrease in the accounts payable balance of $1,257,828, partially offset by a decrease in the accounts receivable balance by $496,349. Our terms are such that we generally collect receivables prior to paying trade payables. Media sales typically have slower payment terms than the terms of related payables.

During the comparable three-month period in 2020, cash provided by operating activities was $821,500 from a net loss of $2,825,236, which included several non-cash expenses; depreciation and amortization of $835,748 and stock-based compensation of $208,897.

Cash Flows - Investing

Net cash used in investing activities was $411,400 and $310,853 for the three months ended March 31, 2021 and 2020, respectively, and primarily consisted of capitalized internal development costs.

Cash Flows - Financing

Net cash provided by financing activities was $12,768,706 during the three months ended March 31, 2021 primarily from proceeds from the sale of common stock.

Net cash used in financing activities was $412,829 during the three months ended March 31, 2020 was predominately due to the change in our credit facility and the satisfaction of our obligations to Western Alliance Bank, offset by proceeds from the sale of common stock and ValidClick licensing agreement.

Off Balance Sheet Arrangements

As of March 31, 2021, 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

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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 March 31, 2021, 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 period ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1 - Legal Proceedings

None.

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, 2020, as filed with the Securities and Exchange Commission ("SEC") on February 11, 2021, as amended on Form 10-K/A filed with the SEC on March 10, 2021 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 three customers for a significant portion of our revenues. We are reliant upon Google, Proper Media and Yahoo! for most of our revenue. During the first quarter of 2021, Google accounted for 40.0%, Proper Media 19.17%, and Yahoo! 16.5% of our revenues, respectively, and during the same period in 2020, Yahoo! 51.4% and Google 18.4%, respectively. The amount of revenue we receive from these customers is dependent on a number of factors outside of our control, including the amount they charge for advertisements, the depth of advertisements available from them, and their ability to display relevant ads in response to end-user queries. We would likely experience a significant decline in revenue and our business operations could be significantly harmed if these customers do not approve our new websites and applications, or if we violate their guidelines or they change their guidelines. In addition, if any of these preceding circumstances were to occur, we may not be able to find a suitable alternate paid search results provider or otherwise replace the lost revenues. The loss of any of these

22

customers or a material change in the revenue or gross profit they generate would have a material adverse impact on our business, results of operations and financial condition in future periods.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.  MINE SAFETY AND DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

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ITEM 6. EXHIBITS-UPDATE

 

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	3/1/2004
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).8	Articles of Amendment to Articles of Incorporation as filed January 7, 2021	10-K	2/11/21	3(i)9
3(ii).1	Amended and Restated By-Laws	10-K	3/31/10	3(ii).4
3(ii).2	Bylaw amendment adopted February 29, 2012	8-K	3/6/12	3(ii).1
10.1	Form of Securities Purchase Agreement, dated January 14, 2021, by and between Inuvo, Inc., and the purchasers therein.	8-K	1/14/21	10.1
10.2	Form of Securities Purchase Agreement, dated January 20, 2021, by and between Inuvo, Inc., and the purchasers therein.	8-K	1/20/21	10.1
10.3	Google Services Agreement by and between Vertro, Inc. and Google LLC, dated as of February 24, 2021 and effective as of March 1, 2021 *	8-K	3/1/21	10.1
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 Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer				Filed
32.1	Section 1350 certification of Chief Executive Officer				Filed
32.2	Section 1350 certification of Chief Financial Officer				Filed
101.INS	XBRL Instance Document				Filed
101.SCH	XBRL Taxonomy Extension Schema Document				Filed
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document				Filed
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				Filed
101.LAB	XBRL Taxonomy Extension Label Linkbase Document				Filed
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document				Filed
101.PRE	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 March 31, 2021, formatted in Inline XBRL (included with Exhibit 101 attachments).				Filed
*	Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The omitted information is (i) not material and (ii) would likely cause competitive harm to Inuvo if publicly disclosed. Schedules, exhibits and similar attachments to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Inuvo agrees to furnish copies of such omitted materials supplementally upon request by the Securities and Exchange Commission.

24

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.
May 13, 2021	By:	/s/ Richard K. Howe
		Richard K. Howe,
		Chief Executive Officer, principal executive officer
May 13, 2021	By:	/s/ Wallace D. Ruiz
		Wallace D. Ruiz,
		Chief Financial Officer, principal financial and accounting officer

25

EX-31.1

EXHIBIT 31.1

Rule 13a-14(a)/15d-14(a) Certification

I, Richard K. Howe, certify that:

1.I have reviewed this annual report on Form 10-Q of Inuvo, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 13, 2021

/s/ Richard K. Howe

Richard K. Howe

Chief Executive Officer, principal executive officer

EX-31.2

EXHIBIT 31.2

Rule 13a-14(a)/15d-14(a) Certification

I, Wallace D. Ruiz, certify that:

1.I have reviewed this annual report on Form 10-Q of Inuvo, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 13, 2021

/s/ Wallace D. Ruiz

Wallace D. Ruiz

Chief Financial Officer, principal financial and accounting officer

EX-32.1

EXHIBIT 32.1

Section 1350 Certification

In connection with the Quarterly Report of Inuvo, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2021 as filed with the Securities and Exchange Commission (the “Report”), I, Richard K. Howe, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2.The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company.

Date: May 13, 2021

/s/ Richard K. Howe

Richard K. Howe

Chief Executive Officer, principal executive officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

Section 1350 Certification

In connection with the Quarterly Report of Inuvo, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2021 as filed with the Securities and Exchange Commission (the “Report”), I, Wallace D. Ruiz, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2.The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company.

Date: May 13, 2021

 /s/ Wallace D. Ruiz

Wallace D. Ruiz

Chief Financial Officer, principal financial and accounting officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover Page - shares	3 Months Ended
	Mar. 31, 2021	May 12, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2021
Document Transition Report	false
Entity File Number	001-32442
Entity Registrant Name	Inuvo, Inc.
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	87-0450450
Entity Address, Address Line One	500 President Clinton Ave.,
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	Little Rock
Entity Address, State or Province	AR
Entity Address, Postal Zip Code	72201
City Area Code	501
Local Phone Number	205-8508
Title of 12(b) Security	Common stock
Trading Symbol	INUV
Security Exchange Name	NYSEAMER
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		118,518,445
Entity Central Index Key	0000829323
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Current assets
Cash and cash equivalent	$ 17,805,324	$ 7,890,665
Accounts receivable, net of allowance for doubtful accounts of $191,667 and $209,667, respectively.	5,749,261	6,227,610
Prepaid expenses and other current assets	534,471	413,435
Total current assets	24,089,056	14,531,710
Property and equipment, net	1,292,933	1,187,061
Other assets
Goodwill	9,853,342	9,853,342
Intangible assets, net of accumulated amortization	8,119,713	8,586,089
Right of use assets - operating lease	843,573	606,573
Right of use assets - finance lease	315,793	395,910
Other assets	35,185	20,886
Total other assets	19,167,606	19,462,800
Total assets	44,549,595	35,181,571
Current liabilities
Accounts payable	2,790,432	4,048,260
Accrued expenses and other current liabilities	4,006,124	4,216,448
Lease liability - operating lease	305,637	217,671
Lease liability - finance lease	197,100	246,793
Total current liabilities	7,299,293	8,729,172
Long-term liabilities
Deferred tax liability	107,000	107,000
Lease liability - operating lease	537,936	388,902
Lease liability - finance lease	83,900	93,426
Other long-term liabilities	6,925	573,957
Total long-term liabilities	735,761	1,163,285
Preferred stock, $0.001 par value:
Authorized shares 500,000, none issued and outstanding	0	0
Common stock, $0.001 par value:
Authorized shares 150,000,000 and 100,000,000, respectively; issued and outstanding shares 118,518,445 and 98,035,829, respectively.	118,519	98,036
Additional paid-in capital	174,893,660	161,541,448
Accumulated deficit	(138,497,638)	(136,350,370)
Total stockholders' equity	36,514,541	25,289,114
Total liabilities and stockholders' equity	$ 44,549,595	$ 35,181,571

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 191,667	$ 209,667
Preferred stock, par or stated value per share (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	500,000	500,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par or stated value per share (in dollars per share)	$ 0.001	$ 0.001
Common stock shares authorized (in shares)	150,000,000	100,000,000
Common stock shares issued (in shares)	118,518,445	98,035,829
Common stock shares outstanding (in shares)	118,518,445	98,035,829

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Income Statement [Abstract]
Net revenue	$ 10,617,809	$ 14,932,983
Cost of revenue	1,444,059	3,439,501
Gross profit	9,173,750	11,493,482
Operating expenses
Marketing costs (traffic acquisition costs or TAC)	7,305,784	9,622,823
Compensation	2,737,867	2,344,235
Selling, general and administrative	1,724,978	2,058,842
Total operating expenses	11,768,629	14,025,900
Operating loss	(2,594,879)	(2,532,418)
Interest expense, net	(22,389)	(152,511)
Other income (expense), net	470,000	(140,307)
Net loss	$ (2,147,268)	$ (2,825,236)
Per common share data: Basic and diluted
Net loss (in dollars per share)	$ (0.02)	$ (0.05)
Weighted average shares
Basic (in shares)	114,430,201	53,642,787
Diluted (in shares)	114,430,201	53,642,787

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Operating activities:
Net loss	$ (2,147,268)	$ (2,825,236)
Adjustments to reconcile net loss to net cash (used in)/provided by operating activities:
Third party rights agreement termination	(420,000)	0
Derecognition of contingencies	(110,000)	0
Depreciation and amortization	771,904	835,748
Depreciation-Right of Use Assets	80,117	105,678
Stock based compensation	394,870	208,897
Amortization of financing fees	1,250	10,198
Provision for doubtful accounts	(18,000)	0
Amortization of debt discount	0	14,982
Amortization of OID interest expense	0	10,787
Mark to market fair value of derivative	0	71,550
Loss on extinguishment of convertible debt	0	68,757
Change in operating assets and liabilities:
Accounts receivable	496,349	1,737,568
Prepaid expenses, unbilled revenue and other current assets	(136,586)	(120,360)
Accrued expenses and other liabilities	(97,455)	108,172
Accounts payable	(1,257,828)	594,759
Net cash (used in)/provided by operating activities	(2,442,647)	821,500
Investing activities:
Purchases of equipment and capitalized development costs	(411,400)	(310,853)
Net cash used in investing activities	(411,400)	(310,853)
Financing activities:
Proceeds from sale of common stock, net	13,137,500	1,206,788
Proceeds from ValidClick licensing agreement	0	500,000
Net payments on line of credit	0	(1,878,217)
Payments on finance lease obligations	(59,219)	(220,216)
Proceeds from exercise of options	1,569	0
SBA loan repayment	(149,900)	0
Net taxes paid on restricted stock unit grants exercised	(161,244)	(21,184)
Net cash provided by/(used in) financing activities	12,768,706	(412,829)
Net change – cash	9,914,659	97,818
Cash and cash equivalent, beginning of year	7,890,665	372,989
Cash and cash equivalent, end of period	17,805,324	470,807
Supplemental information:
Interest paid	21,656	126,236
Non cash investing and financing activities:
Conversion of Debt and derecognition of derivative and discounts to common stock	0	468,667
Assets purchased under finance lease obligations	0	364,545
Assets purchased under operating lease obligations	$ 303,031	$ 0

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)	Total	Common Stock	Additional Paid in Capital	Accumulated Deficit	Treasury Stock
Beginning balance (in shares) at Dec. 31, 2019		51,846,011
Beginning balance at Dec. 31, 2019	$ 14,453,550	$ 52,223	$ 144,843,687	$ (129,045,801)	$ (1,396,559)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(2,825,236)			(2,825,236)
Stock-based compensation	208,897		208,897
Stock issued for vested restricted stock awards (in shares)		260,719
Stock issued for vested restricted stock awards	0	$ 261	(261)
Shares withheld for taxes on vest restricted stock	(21,184)		(21,184)
Convertible Note Conversion (in shares)		1,200,000
Convertible Note Conversion	468,667	$ 1,200	467,467
Sale of common stock, net (in shares)		7,046,429
Sale of common stock, net	1,206,788	$ 7,046	1,199,742
Ending balance (in shares) at Mar. 31, 2020		60,353,159
Ending balance at Mar. 31, 2020	13,491,482	$ 60,730	146,698,348	(131,871,037)	$ (1,396,559)
Beginning balance (in shares) at Dec. 31, 2020		98,035,829
Beginning balance at Dec. 31, 2020	25,289,114	$ 98,036	161,541,448	(136,350,370)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(2,147,268)			(2,147,268)
Stock-based compensation	394,870		394,870
Stock issued for vested restricted stock awards (in shares)		1,467,465
Stock issued for vested restricted stock awards	0	$ 1,467	(1,467)
Shares withheld for taxes on vest restricted stock	(161,244)		(161,244)
Sale of common stock, net (in shares)		19,015,151
Proceeds from exercise of options	1,569		1,569
Sale of common stock, net	13,137,500	$ 19,016	13,118,484
Ending balance (in shares) at Mar. 31, 2021		118,518,445
Ending balance at Mar. 31, 2021	$ 36,514,541	$ 118,519	$ 174,893,660	$ (138,497,638)

XML

Organization and Business

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Business

Organization and Business

Company Overview

Inuvo is a technology company that develops and sells information technology solutions for marketing and advertising. These platforms predictively identify and message online audiences for any product or service across devices, channels and formats, including video, mobile, connected TV, display, social and native. These capabilities allow Inuvo’s clients to engage with their customers and prospects in a manner that drives engagement from the first contact with the consumer. Inuvo facilitates the delivery of hundreds of millions of marketing messages to consumers every single month and counts among its clients numerous world- renowned names in industries that have included retail, automotive, insurance, health care, technology, telecommunications and finance.

The Inuvo solution incorporates a proprietary form of artificial intelligence, or AI, branded the IntentKey. This sophisticated machine learning technology uses interactions with Internet content as a source of information from which to predict consumer intent. The AI includes a continually updated database of over 500 million machine profiles which Inuvo utilizes to deliver highly aligned online audiences to its clients. Inuvo earns revenue when consumers view or click on its client’s messages.

The Inuvo business scales through account management activity with existing clients and by adding new clients through sales activity.

As part of the Inuvo technology strategy, it owns a collection of websites including alot.com and earnspendlive.com, where Inuvo creates content in health, finance, travel, careers, auto, education and living categories. These sites provide the means to test the Inuvo technologies, while also delivering high quality consumers to clients through the interaction with proprietary content in the form of images, videos, slideshows and articles.

There are many barriers to entry associated with the Inuvo business model, including a proficiency in large scale information processing, predictive software development, marketing data products, analytics, artificial intelligence, integration to the internet of things ("IOT"), and the relationships required to execute within the IOT. Inuvo’s intellectual property is protected by 18 issued and seven pending patents.

Liquidity

Throughout 2020 and the first quarter of 2021, we raised capital reversing an historical net working capital deficit. Our principal sources of liquidity come as a result of the sale of common stock and use of a credit facility through Hitachi Capital America Corp. (“Hitachi”) described in Note 5.

On March 20, 2020, we sold an aggregate of 3,931,428 shares of our common stock to the five members of our Board of Directors in a private placement exempt from registration under Section 4(a)(2) and Rule 506(b) of Regulation D under the Securities Act of 1933, as amended. We received proceeds of $688,000 in this offering. On March 27, 2020, we closed on the first tranche of a registered direct offering in which we sold 3,115,001 shares of our common stock for gross proceeds of $545,125. On April 2, 2020, we closed on a second tranche of the registered direct offering in which we sold 1,400,285 shares of our common stock for gross proceeds of $245,050.

On April 10, 2020, we obtained an unsecured $1.1 million loan under the Paycheck Protection Program (the “PPP Loan”) pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and which is administered by the United States Small Business Administration ("SBA"). In accordance with the requirements of the CARES Act, proceeds from the PPP Loan were used for payroll costs. The PPP Loan was fully forgiven on November 2, 2020. On May 15, 2020, we received a COVID-19 Economic Injury Disaster Loan ("EIDL") from the SBA for $149,900. We repaid the EIDL in full on January 28, 2021.

On June 8, 2020, we closed an additional registered direct offering of an aggregate of 12,222,222 shares of our common stock for gross proceeds of $5.5 million. On July 27, 2020, we closed a firm commitment underwritten follow-on public offering of an aggregate of 21,500,000 shares of our common stock for gross proceeds of $10.75 million. On January 19, 2021, we raised $8.0 million in gross proceeds in a registered direct offering, before expenses, through the sale of an aggregate of 13,333,334 shares of our common stock, and on January 22, 2021, we raised an additional $6.25 million in gross proceeds in a registered direct offering, before expenses, through the sale of an aggregate of 5,681,817 shares of our common stock.

On January 7, 2021, we filed the Articles of Amendment to our Articles of Incorporation in the state of Nevada increasing the number of authorized shares from 100,000,000 to 150,000,000.

Though we believe our current cash position and credit facility will be sufficient to sustain operations for the next twelve

months, if our plan to grow the IntentKey business is unsuccessful, we may need to fund operations through private or public

sales of securities, debt financings or partnering/licensing transactions.

Customer concentration

Our three largest customers are Google, Proper Media and Yahoo! and all are clients of the ValidClick platform. The percentages of overall Inuvo revenue associated with these clients is noted below:

	For the Three Months Ended March 31,
	2021	2020
Google	40.0%	18.4	%
Proper Media	19.2%	—	%
Yahoo!	16.5%	51.4	%
Total	75.7%	69.8	%

As of March 31, 2021, Google, Proper Media and Yahoo! accounted for 64.5% of our gross accounts receivable balance. As of December 31, 2020, the same three customers accounted for 38.4% of our gross accounts receivable balance.

We still source the majority of our ValidClick revenue through these relationships where we have access to advertiser budgets indirectly. While this strategy creates a concentration risk, we believe that it also provides upside opportunities including; access to hundreds of thousands of advertisers across geographies; the ability to scale our business across verticals; an avoidance of the sales costs associated with a large direct to advertisers’ sales force; access to innovation; overall media budget market insights; attractive payment terms; and low risk on receivables.

Impact of COVID-19 Pandemic

First identified in late 2019 and known now as COVID-19, the outbreak has impacted millions of individuals and businesses worldwide. In response, many countries have implemented measures to combat the outbreak which has had an unprecedented economic consequence. We did not experience an impact from COVID-19 through the end of fiscal year 2019 and had only minor impact from COVID-19 in the first quarter of 2020. Because we operate in the digital advertising industry, unlike a brick and mortar-based company, predicting the impact of the coronavirus pandemic on our company is difficult. Beginning in late April 2020, we experienced a significant reduction in marketing budgets and a decrease in monetization rates which impacted ValidClick more severely than IntentKey. This resulted in a significant reduction in our overall revenue run rates during 2020 with the low point occurring during May 2020.

In response to COVID-19, we curtailed expenses, including compensation and travel throughout 2020, in addition to other actions. Additionally, in April 2020, we obtained an unsecured PPP Loan under the CARES Act of $1.1 million which we used primarily for payroll costs. The loan was fully forgiven by the SBA on November 2, 2020.

Beginning mid-June 2020, we began to experience an improvement in overall daily revenue. Though there has been a steady month by month improvement in the revenue run rates, by the end of the first quarter 2021 we still have not reached pre-pandemic levels. Due to the unprecedented sustainability of COVID-19 on our business, we were unable to predict with any certainty how our clients will adapt their business strategies within the context of COVID-19 and therefore how our revenue run rate would change as a result. We, therefore, were focusing our resources on areas we believe could have more immediate revenue potential, attempting to reduce expenses and raising additional capital so as to mitigate operating disruptions while the impact of COVID-19 abates. Since the start of the year with the roll out of vaccinations, we see an increase in client’s willingness to spend on advertising and thereby an improvement in our revenue run rates.

Our net working capital was a positive $16.8 million as of March 31, 2021. During January 2021, we raised approximately $14.3 million, before expenses, through the sale of our securities in two offerings. During the second and third quarters of 2020, we raised approximately $16.5 million, before expenses, through the sale of our securities and in April 2020, we obtained a $1.1 million PPP Loan. With the reduction in our revenue run rate, there is an increased need for working capital to fund our operations. There is no assurance that we will be successful in obtaining additional funding to continue operations, particularly

in light of the current impact of COVID-19 on the U.S. capital markets, but believe we have sufficient capital to operate during the next twelve months.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of presentation

The consolidated financial statements presented are for Inuvo and its consolidated subsidiaries. The accompanying unaudited 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 consolidated balance sheet as of December 31, 2020, 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 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 consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on February 11, 2021, as amended on Form 10-K/A as filed with the SEC on March 10, 2021.

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 consolidated financial statements are based upon management’s regular evaluation of the relevant facts and circumstances as of the date of the consolidated financial statements. We regularly evaluate estimates and assumptions related to goodwill and purchased intangible asset valuations and income tax valuation allowance. Actual results may differ from the estimates and assumptions used in preparing the accompanying consolidated financial statements, and such differences could be material.

Revenue Recognition

Most of our revenue is generated through clicks on advertisements presented on our properties or those of our partners. We

recognize revenue from clicks in the period in which the click occurs. Payments to partners who display advertisements on our behalf are recognized as cost of revenue. Revenue from data sales and commissions is recognized in the period in which the

transaction occurs and the other revenue recognition criteria are met. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We also recognize revenue from serving impressions when we complete all or a part of an order from an advertiser. The revenue is recognized in the period that the impression is served.

The below table is the proportion of revenue that is generated through advertisements on our ValidClick and IntentKey platforms:

	For the Three Months Ended March 31,
	2021				2020
ValidClick Platform	$	8,484,813	79.9	%	$	13,076,990	87.6	%
IntentKey Platform	2,132,996		20.1	%	1,855,993		12.4	%
Total	$	10,617,809	100.0	%	$	14,932,983	100.0	%

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, (FASB) issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model which will result in earlier recognition of credit losses. On November 15, 2019, the FASB delayed the effective date for certain small public companies and other private companies. As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC’s definition, as well as private companies and not-for-profit entities.

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Property and Equipment

3 Months Ended

Mar. 31, 2021

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

The net carrying value of property and equipment was as follows as of:

	March 31, 2021		December 31, 2020
Furniture and fixtures	$	293,152	$	293,152
Equipment	1,108,686		1,052,199
Capitalized internal use and purchased software	11,798,641		11,475,683
Leasehold improvements	445,080		421,016
Subtotal	13,645,559		13,242,050
Less: accumulated depreciation and amortization	(12,352,626)		(12,054,989)
Total	$	1,292,933	$	1,187,061

During the three months ended March 31, 2021 and March 31, 2020, depreciation expense was $305,528 and $369,372, respectively.

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Other Intangible Assets and Goodwill

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Other Intangible Assets and Goodwill

Other Intangible Assets and Goodwill

The following is a schedule of intangible assets and goodwill as of March 31, 2021:

	Term	Carrying Value		Accumulated Amortization and Impairment		Net Carrying Value		Year-to-date Amortization
Customer list, Google	20 years	$	8,820,000	$	(4,005,751)	$	4,814,249	$	110,250
Technology	5 years	3,600,000		(3,000,000)		$	600,000	180,000
Customer list, ReTargeter	5 years	1,931,250		(643,750)		$	1,287,500	96,562
Customer list, all other	10 years	1,610,000		(1,462,453)		$	147,547	40,251
Brand name, ReTargeter	5 years	643,750		(214,583)		$	429,167	32,188
Customer relationships	20 years	570,000		(118,750)		$	451,250	7,125
Trade names, web properties (1)	-	390,000		—		$	390,000	—
Intangible assets classified as long-term		$	17,565,000	$	(9,445,287)	$	8,119,713	$	466,376
Goodwill, total	-	$	9,853,342	$	—	$	9,853,342	$	—

(1)    The trade names related to our web properties have an indefinite life, and as such are not amortized.

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

 

2021	$	1,399,128
2022	1,071,294
2023	984,500
2024	769,917
2025	469,500
Thereafter	3,035,374
Total	$	7,729,713

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Bank Debt

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Bank Debt

Bank Debt

On March 1, 2012 we entered into a Business Financing Agreement with Bridge Bank, which is now owned by Western Alliance Bank. The agreement provided us with a revolving credit line of up to $10 million which we used to help satisfy our working capital needs. On October 11, 2018, we entered into the Amended and Restated Financing Agreement with Western Alliance Bank which superseded the Business Financing Agreement, as amended. All obligations under the Amended and

Restated Financing Agreement, as amended, with Western Alliance Bank have been met and all agreements with Western Alliance Bank have been terminated.

On March 12, 2020, we closed on the Loan and Security Agreement dated February 28, 2020 with Hitachi. Under the terms of the Loan and Security Agreement, Hitachi has provided us with a $5,000,000 line of credit commitment. We are permitted to borrow (i) 90% of the aggregate Eligible Accounts Receivable, plus (ii) the lesser of (A) 75% of the aggregate Unbilled Accounts Receivable or (B) 50% of the amount available to borrow under (i), up to the maximum credit commitment. On March 12, 2020 we drew $5,000,000 under this agreement, using $2,959,573 of these proceeds to satisfy all of our obligations under the Western Alliance Bank credit agreement and the balance was used for working capital. We pay Hitachi a monthly interest at the rate of 2% in excess of the Wall Street Journal Prime Rate, with a minimum rate of 6.75% per annum, on outstanding amounts. The principal and all accrued but unpaid interest are due on demand.

We agreed to pay Hitachi a commitment fee of $50,000, with one half due upon the execution of the agreement and the balance due six months thereafter. Thereafter, we are obligated to pay Hitachi a commitment fee of $15,000 annually. We are also obligated to pay Hitachi a quarterly service fee of 0.30% on the monthly unused amount of the maximum credit line. In addition to a $2,000 document fee we have paid to Hitachi, if we exit our relationship with Hitachi before March 1, 2022, we are obligated to pay Hitachi an exit fee of $50,000. At March 31, 2021, there were no outstanding balances due under the Loan and Security Agreement with Hitachi.

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Accrued Expenses and Other Current Liabilities

3 Months Ended

Mar. 31, 2021

Payables and Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current LiabilitiesThe accrued expenses and other current liabilities consist of the following as of:

	March 31, 2021		December 31, 2020
Accrued marketing costs (TAC)	$	2,989,778	$	3,234,192
Accrued expenses and other	571,676		440,578
Accrued payroll and commission liabilities	436,573		423,373
Accrued taxes	8,097		8,305
Arkansas grant contingency	—		60,000
Accrued sales allowance	—		50,000
Total	$	4,006,124	$	4,216,448

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Convertible Promissory Notes

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Convertible Promissory Notes

Convertible Promissory Notes

On March 1, 2019, Inuvo entered into a Securities Purchase Agreement with three accredited investors for the purchase and sale of an aggregate of $1,440,000 of principal of Original Issue Discount Unsecured Subordinated Convertible Notes due September 1, 2020 (the “Calvary Notes”) to fund working capital and additional expenses resulting from the delay in closing of certain planned, and since terminated, mergers with ConversionPoint Technologies Inc. and ConversionPoint Holdings Inc. The initial conversion price of the Calvary Notes was $1.08 per share which would have made the Calvary Notes then convertible into 1,333,333 unregistered shares of Inuvo’s common stock upon conversion. The Calvary Notes were issued in a private placement and the shares of common stock issuable upon conversion are restricted, subject to resale under Rule 144. The proceeds to Inuvo from the offering were $1,200,000. Inuvo did not pay any commissions or finders fees in connection with the sale of the Calvary Notes and Inuvo utilized the proceeds for working capital.

On November 11, 2019 we entered into Note Modification and Release Agreements with the holders of $1,080,000 principal amount of the Calvary Notes. Under the terms of the Note Modification and Release Agreement, the parties agreed that in consideration of such noteholder’s agreement to convert a minimum of 50% of the outstanding amount of the note (the “First Conversion Amount”) that the conversion price for the First Conversion Amount would be $0.265 per share and that the conversion price for any remaining amount due under the note would be $0.30 per share, subject to future adjustments under the terms of the note including dilutive issuances at a price below $0.30 per share, subject to a floor of $0.23 per share. The agreement contains mutual general releases. These holders converted an aggregate of $765,000 due under the Calvary Notes into 2,886,792 shares of our common stock.

In January 2020, a noteholder of a $360,000 principal amount Calvary note converted the note into 1,200,000 shares of our common stock. On April 21, 2020, a noteholder converted $200,000 principal amount due under the Calvary Notes into 1,142,857 shares of our common stock. On May 5, 2020, a noteholder converted the final $115,000 principal amount due under

the Calvary Notes into 657,143 shares of our common stock, thereby satisfying the Calvary Notes in full and completing the extinguishment of the Calvary Notes.

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Other Long-Term Liabilities

3 Months Ended

Mar. 31, 2021

Other Liabilities Disclosure [Abstract]

Other Long-Term Liabilities

Other Long-Term LiabilitiesThe lease liabilities and other long-term liabilities consist of the following as of:

	March 31, 2021		December 31, 2020
Deferred rent	6,925		4,057
Deferred revenue	—		420,000
SBA loan	—		149,900
Total	$	6,925	$	573,957

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Commitments	3 Months Ended
	Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Commitments	Commitments    In March 2020, we entered into an agreement to allow a third party to license and use ValidClick technology. The agreement required a nonrefundable fee of $500,000 in March with subsequent fees as earned in later quarters. The $500,000 fee was recorded as deferred revenue in March 2020. Effective March 1, 2021, the agreement was canceled and the remaining deferred revenue balance of $420,000 was recognized as other income.

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Income Taxes	3 Months Ended
	Mar. 31, 2021
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesWe have a deferred tax assets of $37,693,100. We believe it is more likely than not that essentially none of our deferred tax assets will be realized, and we have recorded a valuation allowance of $35,848,400 for the deferred tax assets that may not be realized as of March 31, 2021 and December 31, 2020. We also have deferred tax liabilities totaling $1,951,700 as of March 31, 2021, related to intangible assets acquired in March 2012. These balances are presented as a net deferred tax liability of $107,000 composed of indefinite lived intangible assets.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

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. During the 2021 and 2020 periods, we granted restricted stock units ("RSUs") from the 2017 Equity Compensation Plan, as amended (“2017 ECP”). RSU vesting periods are generally up to three years and/or achieving certain financial targets.

On January 1, 2021, in accordance with the plan provisions, the number of shares available for issuance under the 2017 ECP plan was increased by 150,000 shares.

Compensation Expense

For the three months ended March 31, 2021 and 2020, we recorded stock-based compensation expense for all equity incentive plans of $394,870 and $208,897, respectively. Total compensation cost not yet recognized at March 31, 2021 was $5,634,951 to be recognized over a weighted-average recognition period of approximately two years.

The following table summarizes the stock grants outstanding under the 2017 ECP and the 2010 Equity Compensation Plan (“2010 ECP”), which expired on its terms in April 2020, for the three months ended March 31, 2021:

	Options Outstanding	RSUs Outstanding	Options and RSUs Exercised	Available Shares	Total
2017 ECP	—	4,376,667	2,367,472	2,655,861	9,400,000
2010 ECP (*)	1,500	—	5,011,511	—	5,013,011
Total	1,500	4,376,667	7,378,983	2,655,861	14,413,011

(*) Expired April 2020

The following table summarizes the activity of stock option awards under the 2010 ECP for the three months ended March 31, 2021:

	Shares Subject to Options Outstanding
	Number of Shares	Weighted Average Exercise Price
Balance as of December 31, 2020	9,500	$	0.56
Stock options exercised	4,750	$	0.56
Stock options canceled	3,250	$	0.56
Balance as of March 31, 2021	1,500	0.56
Stock options exercisable as of March 31, 2021	1,500	0.56

The following table summarizes the activities for our unvested RSUs for the three months ended March 31, 2021:

	Unvested RSUs
	Number of Shares	Weighted Average Grant Date Fair Value
Unvested as of December 31, 2020	1,930,526	$	0.28
Granted	4,310,000	$	1.40
Vested	1,804,665	$	0.28
Forfeited	59,194	$	0.29
Unvested as of March 31, 2021	4,376,667	$	1.38

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Stockholders Equity

3 Months Ended

Mar. 31, 2021

Equity [Abstract]

Stockholders Equity

Stockholders Equity

Earnings per Share

For the three months ended March 31, 2021 and 2020, we generated a net loss from continuing operations and as a result, all of our shares are anti-dilutive.

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Leases

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

Leases

Leases

The Company has entered into operating and finance leases primarily for real estate and equipment rental. These leases have terms which range from two years to four years, and often include one or more options to renew or in the case of equipment rental, to purchase the equipment. These operating and finance leases are listed as separate line items on the Company's consolidated balance sheets and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligation to make lease payments are also listed as separate line items on the Company's consolidated balance sheets. As of March 31, 2021 and December 31, 2020, total operating and financed right-of-use assets were $843,573 and $315,793, and $606,573 and $395,910, respectively.

As of March 31, 2021 and 2020, the Company recorded $80,117 and $105,678, respectively, in amortization expense related to finance leases.

Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments.

Information related to the Company's operating lease liabilities are as follows:

	For the Three Months Ended March 31,
Cash paid for operating lease liabilities	$	182,807
Weighted-average remaining lease term	2.4 years
Weighted-average discount rate	6.25		%

Minimum future lease payments ended March 31, 2021
2021	285,922
2022	378,339
2023	295,778
2024	10,983
	971,022
Less imputed interest	(127,449)
Total lease liabilities	$	843,573

Information related to the Company's financed lease liabilities are as follows:

	For the Three Months Ended March 31,
Cash paid for finance lease liabilities	$	69,291
Weighted-average remaining lease term	2.3 years
Weighted-average discount rate	6.25		%

Minimum future lease payments ended March 31, 2021
2021	$	200,518
2022	72,982
2023	37,658
	311,158
Less imputed interest	(30,158)
Total lease liabilities	$	281,000

Leases

Leases

The Company has entered into operating and finance leases primarily for real estate and equipment rental. These leases have terms which range from two years to four years, and often include one or more options to renew or in the case of equipment rental, to purchase the equipment. These operating and finance leases are listed as separate line items on the Company's consolidated balance sheets and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligation to make lease payments are also listed as separate line items on the Company's consolidated balance sheets. As of March 31, 2021 and December 31, 2020, total operating and financed right-of-use assets were $843,573 and $315,793, and $606,573 and $395,910, respectively.

As of March 31, 2021 and 2020, the Company recorded $80,117 and $105,678, respectively, in amortization expense related to finance leases.

Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments.

Information related to the Company's operating lease liabilities are as follows:

	For the Three Months Ended March 31,
Cash paid for operating lease liabilities	$	182,807
Weighted-average remaining lease term	2.4 years
Weighted-average discount rate	6.25		%

Minimum future lease payments ended March 31, 2021
2021	285,922
2022	378,339
2023	295,778
2024	10,983
	971,022
Less imputed interest	(127,449)
Total lease liabilities	$	843,573

Information related to the Company's financed lease liabilities are as follows:

	For the Three Months Ended March 31,
Cash paid for finance lease liabilities	$	69,291
Weighted-average remaining lease term	2.3 years
Weighted-average discount rate	6.25		%

Minimum future lease payments ended March 31, 2021
2021	$	200,518
2022	72,982
2023	37,658
	311,158
Less imputed interest	(30,158)
Total lease liabilities	$	281,000

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Related Party Transactions	3 Months Ended
	Mar. 31, 2021
Related Party Transactions [Abstract]
Related Party Transactions	Related Party TransactionsOn March 20, 2020, we sold an aggregate of 3,931,428 shares of our common stock at a purchase price of $0.175 per share to the five members of our Board of Directors in a private placement exempt from registration under Section 4(a)(2) and Rule 506(b) of Regulation D under the Securities Act of 1933, as amended. We received proceeds of $688,000 in this offering. The purchase price of the shares of our common stock sold in the offering exceeded the closing market price of our common stock on March 19, 2020, the trading day immediately preceding the day the binding Insider Subscription Agreements were executed by the purchasers. The purchasers were all accredited investors. We did not pay any commissions or finder’s fees, and we used the proceeds for general working capital.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of presentation

The consolidated financial statements presented are for Inuvo and its consolidated subsidiaries. The accompanying unaudited 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 consolidated balance sheet as of December 31, 2020, 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 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 consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on February 11, 2021, as amended on Form 10-K/A as filed with the SEC on March 10, 2021.

Use of Estimates

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 consolidated financial statements are based upon management’s regular evaluation of the relevant facts and circumstances as of the date of the consolidated financial statements. We regularly evaluate estimates and assumptions related to goodwill and purchased intangible asset valuations and income tax valuation allowance. Actual results may differ from the estimates and assumptions used in preparing the accompanying consolidated financial statements, and such differences could be material.

Revenue Recognition

Revenue Recognition

Most of our revenue is generated through clicks on advertisements presented on our properties or those of our partners. We

recognize revenue from clicks in the period in which the click occurs. Payments to partners who display advertisements on our behalf are recognized as cost of revenue. Revenue from data sales and commissions is recognized in the period in which the

transaction occurs and the other revenue recognition criteria are met. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We also recognize revenue from serving impressions when we complete all or a part of an order from an advertiser. The revenue is recognized in the period that the impression is served.

Recent Accounting Pronouncements Not Yet Adopted

Recent Accounting Pronouncements Not Yet AdoptedIn June 2016, (FASB) issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model which will result in earlier recognition of credit losses. On November 15, 2019, the FASB delayed the effective date for certain small public companies and other private companies. As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC’s definition, as well as private companies and not-for-profit entities.

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Organization and Business (Tables)

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Customer Concentration

The percentages of overall Inuvo revenue associated with these clients is noted below:

	For the Three Months Ended March 31,
	2021	2020
Google	40.0%	18.4	%
Proper Media	19.2%	—	%
Yahoo!	16.5%	51.4	%
Total	75.7%	69.8	%

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Summary of Revenue from Products and Services

The below table is the proportion of revenue that is generated through advertisements on our ValidClick and IntentKey platforms:

	For the Three Months Ended March 31,
	2021				2020
ValidClick Platform	$	8,484,813	79.9	%	$	13,076,990	87.6	%
IntentKey Platform	2,132,996		20.1	%	1,855,993		12.4	%
Total	$	10,617,809	100.0	%	$	14,932,983	100.0	%

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Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2021

Property, Plant and Equipment [Abstract]

Net Carrying Value of Property and Equipment

The net carrying value of property and equipment was as follows as of:

	March 31, 2021		December 31, 2020
Furniture and fixtures	$	293,152	$	293,152
Equipment	1,108,686		1,052,199
Capitalized internal use and purchased software	11,798,641		11,475,683
Leasehold improvements	445,080		421,016
Subtotal	13,645,559		13,242,050
Less: accumulated depreciation and amortization	(12,352,626)		(12,054,989)
Total	$	1,292,933	$	1,187,061

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Other Intangible Assets and Goodwill (Tables)

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets from Continuing Operations

The following is a schedule of intangible assets and goodwill as of March 31, 2021:

	Term	Carrying Value		Accumulated Amortization and Impairment		Net Carrying Value		Year-to-date Amortization
Customer list, Google	20 years	$	8,820,000	$	(4,005,751)	$	4,814,249	$	110,250
Technology	5 years	3,600,000		(3,000,000)		$	600,000	180,000
Customer list, ReTargeter	5 years	1,931,250		(643,750)		$	1,287,500	96,562
Customer list, all other	10 years	1,610,000		(1,462,453)		$	147,547	40,251
Brand name, ReTargeter	5 years	643,750		(214,583)		$	429,167	32,188
Customer relationships	20 years	570,000		(118,750)		$	451,250	7,125
Trade names, web properties (1)	-	390,000		—		$	390,000	—
Intangible assets classified as long-term		$	17,565,000	$	(9,445,287)	$	8,119,713	$	466,376
Goodwill, total	-	$	9,853,342	$	—	$	9,853,342	$	—

(1)    The trade names related to our web properties have an indefinite life, and as such are not amortized.

Schedule of Amortization Expense

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

 

2021	$	1,399,128
2022	1,071,294
2023	984,500
2024	769,917
2025	469,500
Thereafter	3,035,374
Total	$	7,729,713

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Accrued Expenses and Other Current Liabilities (Tables)

3 Months Ended

Mar. 31, 2021

Payables and Accruals [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

The accrued expenses and other current liabilities consist of the following as of:

	March 31, 2021		December 31, 2020
Accrued marketing costs (TAC)	$	2,989,778	$	3,234,192
Accrued expenses and other	571,676		440,578
Accrued payroll and commission liabilities	436,573		423,373
Accrued taxes	8,097		8,305
Arkansas grant contingency	—		60,000
Accrued sales allowance	—		50,000
Total	$	4,006,124	$	4,216,448

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Other Long-Term Liabilities (Tables)

3 Months Ended

Mar. 31, 2021

Other Liabilities Disclosure [Abstract]

Schedule of Other Long-Term Liabilities

The lease liabilities and other long-term liabilities consist of the following as of:

	March 31, 2021		December 31, 2020
Deferred rent	6,925		4,057
Deferred revenue	—		420,000
SBA loan	—		149,900
Total	$	6,925	$	573,957

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Schedule of Stock Grants Outstanding

The following table summarizes the stock grants outstanding under the 2017 ECP and the 2010 Equity Compensation Plan (“2010 ECP”), which expired on its terms in April 2020, for the three months ended March 31, 2021:

	Options Outstanding	RSUs Outstanding	Options and RSUs Exercised	Available Shares	Total
2017 ECP	—	4,376,667	2,367,472	2,655,861	9,400,000
2010 ECP (*)	1,500	—	5,011,511	—	5,013,011
Total	1,500	4,376,667	7,378,983	2,655,861	14,413,011

(*) Expired April 2020

Schedule of Stock Option Award Activity

The following table summarizes the activity of stock option awards under the 2010 ECP for the three months ended March 31, 2021:

	Shares Subject to Options Outstanding
	Number of Shares	Weighted Average Exercise Price
Balance as of December 31, 2020	9,500	$	0.56
Stock options exercised	4,750	$	0.56
Stock options canceled	3,250	$	0.56
Balance as of March 31, 2021	1,500	0.56
Stock options exercisable as of March 31, 2021	1,500	0.56

Schedule of Nonvested Restricted Stock Units Activity

The following table summarizes the activities for our unvested RSUs for the three months ended March 31, 2021:

	Unvested RSUs
	Number of Shares	Weighted Average Grant Date Fair Value
Unvested as of December 31, 2020	1,930,526	$	0.28
Granted	4,310,000	$	1.40
Vested	1,804,665	$	0.28
Forfeited	59,194	$	0.29
Unvested as of March 31, 2021	4,376,667	$	1.38

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Leases (Tables)

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

Schedule of Information Relating to Leases

Information related to the Company's operating lease liabilities are as follows:

	For the Three Months Ended March 31,
Cash paid for operating lease liabilities	$	182,807
Weighted-average remaining lease term	2.4 years
Weighted-average discount rate	6.25		%

Information related to the Company's financed lease liabilities are as follows:

	For the Three Months Ended March 31,
Cash paid for finance lease liabilities	$	69,291
Weighted-average remaining lease term	2.3 years
Weighted-average discount rate	6.25		%

Schedule of Operating Lease Maturity

Minimum future lease payments ended March 31, 2021
2021	285,922
2022	378,339
2023	295,778
2024	10,983
	971,022
Less imputed interest	(127,449)
Total lease liabilities	$	843,573

Schedule of Finance Lease Liability

Minimum future lease payments ended March 31, 2021
2021	$	200,518
2022	72,982
2023	37,658
	311,158
Less imputed interest	(30,158)
Total lease liabilities	$	281,000

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Organization and Business - Narrative (Details)										1 Months Ended	3 Months Ended		6 Months Ended	12 Months Ended
	Jan. 22, 2021 USD ($) shares	Jan. 19, 2021 USD ($) shares	Jul. 27, 2020 USD ($) shares	Jun. 08, 2020 USD ($) shares	May 15, 2020 USD ($)	Apr. 10, 2020 USD ($)	Apr. 02, 2020 USD ($) shares	Mar. 27, 2020 USD ($) shares	Mar. 20, 2020 USD ($) shares	Jan. 31, 2021 USD ($)	Mar. 31, 2021 USD ($) patent machineProfile shares	Mar. 31, 2020 USD ($)	Sep. 30, 2020 USD ($)	Dec. 31, 2020 shares	Jan. 07, 2021 shares	Jan. 06, 2021 shares
Debt Instrument [Line Items]
Number of machine profiles | machineProfile											500,000,000
Number of issued patents | patent											18
Number of pending patents | patent											7
Shares authorized amount (in shares) | shares	5,681,817	13,333,334	21,500,000	12,222,222			1,400,285	3,115,001	3,931,428
Sale of stock, consideration received on transaction	$ 6,250,000	$ 8,000,000.0	$ 10,750,000	$ 5,500,000			$ 245,050	$ 545,125	$ 688,000
Common stock shares authorized (in shares) | shares											150,000,000			100,000,000	150,000,000	100,000,000
Net working capital											$ 16,800,000
Proceeds from sale of common stock, net										$ 14,300,000	$ 13,137,500	$ 1,206,788	$ 16,500,000
Paycheck Protection Program Loan
Debt Instrument [Line Items]
Proceeds from PPP and SBA loans						$ 1,100,000
Economic Injury Disaster Loan
Debt Instrument [Line Items]
Proceeds from PPP and SBA loans					$ 149,900
Accounts Receivable | Customer Concentration Risk | Yahoo, Proper Media and Google
Debt Instrument [Line Items]
Percentage of concentration risk											64.50%			38.40%

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Organization and Business - Customer Concentration (Details) - Customer Concentration Risk - Net Revenue	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Yahoo, Proper Media and Google
Concentration Risk [Line Items]
Percentage of concentration risk	75.70%	69.80%
Google
Concentration Risk [Line Items]
Percentage of concentration risk	40.00%	18.40%
Proper Media
Concentration Risk [Line Items]
Percentage of concentration risk	19.20%	0.00%
Yahoo!
Concentration Risk [Line Items]
Percentage of concentration risk	16.50%	51.40%

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Summary of Significant Accounting Policies - Summary of Revenue from Products and Services (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Disaggregation of Revenue [Line Items]
Net revenue	$ 10,617,809	$ 14,932,983
Percentage of total revenue	100.00%	100.00%
ValidClick Platform
Disaggregation of Revenue [Line Items]
Net revenue	$ 8,484,813	$ 13,076,990
Percentage of total revenue	79.90%	87.60%
IntentKey Platform
Disaggregation of Revenue [Line Items]
Net revenue	$ 2,132,996	$ 1,855,993
Percentage of total revenue	20.10%	12.40%

XML

Property and Equipment (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 13,645,559		$ 13,242,050
Less: accumulated depreciation and amortization	(12,352,626)		(12,054,989)
Total	1,292,933		1,187,061
Depreciation expense	305,528	$ 369,372
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	293,152		293,152
Equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	1,108,686		1,052,199
Capitalized internal use and purchased software
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	11,798,641		11,475,683
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 445,080		$ 421,016

XML

Other Intangible Assets and Goodwill - Schedule of Goodwill and Intangible Assets (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items]
Net Carrying Value	$ 7,729,713
Year-to-date Amortization	466,376
Indefinite-lived Intangible Assets (Excluding Goodwill)	390,000
Intangible assets classified as long-term
Carrying Value	17,565,000
Accumulated Amortization and Impairment	(9,445,287)
Net Carrying Value	8,119,713	$ 8,586,089
Goodwill, Impaired, Accumulated Impairment Loss
Carrying Value	9,853,342
Net Carrying Value	$ 9,853,342	$ 9,853,342
Customer list, Google
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items]
Term	20 years
Carrying Value	$ 8,820,000
Accumulated Amortization and Impairment	(4,005,751)
Net Carrying Value	4,814,249
Year-to-date Amortization	$ 110,250
Technology
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items]
Term	5 years
Carrying Value	$ 3,600,000
Accumulated Amortization and Impairment	(3,000,000)
Net Carrying Value	600,000
Year-to-date Amortization	$ 180,000
Customer list, ReTargeter
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items]
Term	5 years
Carrying Value	$ 1,931,250
Accumulated Amortization and Impairment	(643,750)
Net Carrying Value	1,287,500
Year-to-date Amortization	$ 96,562
Customer list, all other
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items]
Term	10 years
Carrying Value	$ 1,610,000
Accumulated Amortization and Impairment	(1,462,453)
Net Carrying Value	147,547
Year-to-date Amortization	$ 40,251
Brand name, ReTargeter
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items]
Term	5 years
Carrying Value	$ 643,750
Accumulated Amortization and Impairment	(214,583)
Net Carrying Value	429,167
Year-to-date Amortization	$ 32,188
Customer relationships
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items]
Term	20 years
Carrying Value	$ 570,000
Accumulated Amortization and Impairment	(118,750)
Net Carrying Value	451,250
Year-to-date Amortization	$ 7,125

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Other Intangible Assets and Goodwill - Amortization Expense (Details)	Mar. 31, 2021 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2021	$ 1,399,128
2022	1,071,294
2023	984,500
2024	769,917
2025	469,500
Thereafter	3,035,374
Net Carrying Value	$ 7,729,713

XML

Bank Debt (Details) - USD ($)	Mar. 12, 2020	Feb. 28, 2020	Mar. 31, 2021	Mar. 01, 2012
Hitachi Capital America Corp.
Debt Instrument [Line Items]
Commitment fee		$ 50,000
Percentage due upon execution of agreement	50.00%
Balance due, term		6 months
Annual commitment fee amount		$ 15,000
Quarterly service fee (as a percentage)		0.30%
Amendment fee		$ 2,000
Exit fee		50,000
Outstanding balance			$ 0
Loan And Security Agreement | Hitachi Capital America Corp.
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity		$ 5,000,000
Percentage of aggregate eligible accounts receivable		90.00%
Percentage of aggregate unbilled accounts receivable		75.00%
Percentage of amount available to borrow under maximum credit commitment		50.00%
Stated interest rate		6.75%
Credit Agreement | Western Alliance Bank
Debt Instrument [Line Items]
Extinguishment of debt		$ 2,959,573
Monthly Interest | Loan And Security Agreement | Hitachi Capital America Corp.
Debt Instrument [Line Items]
Stated interest rate		2.00%
Revolving Credit Facility | Line of Credit | Bridge Bank, N.A. | Bridge Bank – Revolving Credit Line - March 1, 2012
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity				$ 10,000,000

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Accrued Expenses and Other Current Liabilities (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Payables and Accruals [Abstract]
Accrued marketing costs (TAC)	$ 2,989,778	$ 3,234,192
Accrued expenses and other	571,676	440,578
Accrued payroll and commission liabilities	436,573	423,373
Accrued taxes	8,097	8,305
Arkansas grant contingency	0	60,000
Accrued sales allowance	0	50,000
Total	$ 4,006,124	$ 4,216,448

XML

Convertible Promissory Notes (Details)					1 Months Ended	3 Months Ended
	May 05, 2020 USD ($) shares	Apr. 21, 2020 USD ($) shares	Nov. 11, 2019 USD ($) $ / shares shares	Mar. 01, 2019 USD ($) accreditedInvestor shares $ / shares	Jan. 31, 2020 USD ($) shares	Mar. 31, 2021 USD ($)	Mar. 31, 2020 USD ($)
Debt Instrument [Line Items]
Conversion of Debt and derecognition of derivative and discounts to common stock						$ 0	$ 468,667
Convertible Debt
Debt Instrument [Line Items]
Proceeds from convertible promissory notes				$ 1,200,000
Conversion of Debt and derecognition of derivative and discounts to common stock	$ 115,000	$ 200,000			$ 360,000
Conversion of stock, common stock issued (in shares) | shares	657,143	1,142,857			1,200,000
Convertible Debt | Original Issue Discount Unsecured Subordinated Convertible Notes
Debt Instrument [Line Items]
Number of accredited investors | accreditedInvestor				3
Gross proceeds				$ 1,440,000
Number of shares convertible (in shares) | shares				1,333,333
Convertible Debt | Original Issue Discount Unsecured Subordinated Convertible Notes | Initial Conversion
Debt Instrument [Line Items]
Conversion price (in usd per share) | $ / shares				$ 1.08
Convertible Debt | Note Modification and Release Agreement
Debt Instrument [Line Items]
Gross proceeds			$ 1,080,000
Conversion amount (as a percentage)			50.00%
Conversion of Debt and derecognition of derivative and discounts to common stock			$ 765,000
Conversion of stock, common stock issued (in shares) | shares			2,886,792
Convertible Debt | Note Modification and Release Agreement | Initial Conversion
Debt Instrument [Line Items]
Conversion price (in usd per share) | $ / shares			$ 0.265
Convertible Debt | Note Modification and Release Agreement | Remaining conversions after initial
Debt Instrument [Line Items]
Conversion price (in usd per share) | $ / shares			0.30
Convertible Debt | Note Modification and Release Agreement | Remaining conversions after initial | Maximum
Debt Instrument [Line Items]
Conversion price (in usd per share) | $ / shares			0.30
Convertible Debt | Note Modification and Release Agreement | Remaining conversions after initial | Minimum
Debt Instrument [Line Items]
Conversion price (in usd per share) | $ / shares			$ 0.23

XML

Other Long-Term Liabilities (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Other Liabilities Disclosure [Abstract]
Deferred rent	$ 6,925	$ 4,057
Deferred revenue	0	420,000
SBA loan	0	149,900
Other long-term liabilities	$ 6,925	$ 573,957

XML

Commitments (Details) - USD ($)	1 Months Ended	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Other Commitments [Line Items]
Other income (expense), net		$ 470,000	$ (140,307)
Licensing of ValidClick Technology
Other Commitments [Line Items]
Other income (expense), net	$ 500,000	$ 420,000

XML

Income Taxes (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Deferred tax asset	$ 37,693,100	$ 37,693,100
Valuation allowance	35,848,400	$ 35,848,400
Deferred tax liability	1,951,700
Net deferred tax liability composed of indefinite lived intangible assets	$ 107,000

XML

Stock-Based Compensation - Narrative (Details) - USD ($)		3 Months Ended
	Jan. 01, 2021	Mar. 31, 2021	Mar. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option and restricted stock unit vesting period (up to)		3 years
Stock based compensation		$ 394,870	$ 208,897
Compensation cost related to non vested awards not yet recognized		$ 5,634,951
Average remaining expense recognition period		2 years
2010 ECP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increase in shares of common stock reserved for grants (in shares)	150,000

XML

Stock-Based Compensation - Schedule of Grants (Details) - shares	Mar. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding (in shares)	1,500	9,500
RSUs Outstanding (in shares)	4,376,667
Options and RSUs Exercised (in shares)	7,378,983
Available Shares (in shares)	2,655,861
Total (in shares)	14,413,011
2017 ECP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding (in shares)	0
RSUs Outstanding (in shares)	4,376,667
Options and RSUs Exercised (in shares)	2,367,472
Available Shares (in shares)	2,655,861
Total (in shares)	9,400,000
2010 ECP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding (in shares)	1,500
RSUs Outstanding (in shares)	0
Options and RSUs Exercised (in shares)	5,011,511
Available Shares (in shares)	0
Total (in shares)	5,013,011

XML

Stock-Based Compensation - Schedule of Outstanding Options (Details)	3 Months Ended
	Mar. 31, 2021 $ / shares shares
Number of Shares
Beginning balance (in shares) | shares	9,500
Stock options exercised (in shares) | shares	4,750
Stock options canceled (in shares) | shares	3,250
Ending balance (in shares) | shares	1,500
Stock options exercisable (in shares) | shares	1,500
Weighted Average Exercise Price
Beginning balance (in usd per share) | $ / shares	$ 0.56
Stock options exercised (in usd per share) | $ / shares	0.56
Stock options canceled (in usd per share) | $ / shares	0.56
Ending balance (in usd per share) | $ / shares	0.56
Stock options exercisable (in usd per share) | $ / shares	$ 0.56

XML

Stock-Based Compensation - Schedule of Unvested RSU (Details)	3 Months Ended
	Mar. 31, 2021 $ / shares shares
Number of Shares
Unvested as of end of period (in shares)	4,376,667
Restricted Stock Units
Number of Shares
Unvested as of beginning of period (in shares)	1,930,526
Granted (in shares)	4,310,000
Vested (in shares)	1,804,665
Forfeited (in shares)	59,194
Unvested as of end of period (in shares)	4,376,667
Weighted Average Grant Date Fair Value
Unvested as of beginning of period (in usd per share) | $ / shares	$ 0.28
Grants (in usd per share) | $ / shares	1.40
Vested (in usd per share) | $ / shares	0.28
Forfeited (in usd per share) | $ / shares	0.29
Unvested as of end of period (in usd per share) | $ / shares	$ 1.38

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Leases - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Lessee, Lease, Description [Line Items]
Right of use assets - operating lease	$ 843,573		$ 606,573
Right of use assets - finance lease	315,793		$ 395,910
Finance lease amortization expense	$ 80,117	$ 105,678
Minimum
Lessee, Lease, Description [Line Items]
Term of contract	2 years
Maximum
Lessee, Lease, Description [Line Items]
Term of contract	4 years

XML

Leases - Operating Leases (Details)	3 Months Ended
	Mar. 31, 2021 USD ($)
Leases [Abstract]
Cash paid for operating lease liabilities	$ 182,807
Weighted-average remaining lease term	2 years 4 months 24 days
Weighted-average discount rate	6.25%
Minimum future lease payments ended March 31, 2021
2021	$ 285,922
2022	378,339
2023	295,778
2024	10,983
Payments due	971,022
Less imputed interest	(127,449)
Total lease liabilities	$ 843,573

XML

Leases - Finance Leases (Details)	3 Months Ended
	Mar. 31, 2021 USD ($)
Leases [Abstract]
Cash paid for finance lease liabilities	$ 69,291
Weighted-average remaining lease term	2 years 3 months 18 days
Weighted-average discount rate	6.25%
Minimum future lease payments ended March 31, 2021
2021	$ 200,518
2022	72,982
2023	37,658
Payments due	311,158
Less imputed interest	(30,158)
Total lease liabilities	$ 281,000

XML

Related Party Transactions (Details) - USD ($)	Jan. 22, 2021	Jan. 19, 2021	Jul. 27, 2020	Jun. 08, 2020	Apr. 02, 2020	Mar. 27, 2020	Mar. 20, 2020
Related Party Transactions [Abstract]
Shares authorized amount (in shares)	5,681,817	13,333,334	21,500,000	12,222,222	1,400,285	3,115,001	3,931,428
Sale of stock, price per share (in usd per share)							$ 0.175
Sale of stock, consideration received on transaction	$ 6,250,000	$ 8,000,000.0	$ 10,750,000	$ 5,500,000	$ 245,050	$ 545,125	$ 688,000