Note 1 – Organization and Business

Company Overview

Inuvo, Inc. (the "Company") operates in the generative artificial intelligence market for modeling media audiences. We provide AI-driven data and advertising technology solutions and have successfully commercialized a proprietary, patented large language model ("LLM”) that identifies and actions the reasons why consumers are interested in products, services, or brands - rather than who they are - offering a high-performance, privacy-by-design solution for the modern advertising landscape.

Intelligence for the Agentic Era. As the industry moves toward "agentic” systems - where autonomous AI agents increasingly handle the planning and execution of media tasks - Inuvo is positioned as a critical, media audience decisioning layer. Unlike legacy systems that rely on static historical data or consumer IDs (cookies), Inuvo’s technology provides the real-time, intent-based reasoning required for autonomous media planning and activation. By serving as the neural network for these adaptive systems, Inuvo enables brands to move from traditional audience targeting to dynamic model planning and activation.

Inuvo’s core competitive advantage lies in intent discovery. While the programmatic industry has traditionally relied on reaching known users based on past behavior, Inuvo’s AI discovers new, high-value audiences as their motivations form.

This intelligence is delivered through a suite of advanced visualization and compliance tools:

Inuvo delivers these capabilities through two primary business channels:

Inuvo’s competitive moat and intellectual property are protected by 15 issued and three pending patents issued by the United States Patent and Trademark Office. Our IP portfolio includes patents, trade secrets and trademarks. We actively seek to protect our IP rights and to deter unauthorized use of our IP and other assets. While our IP rights are important to our success, our business is not significantly dependent on any single patent, trademark, or other IP right.

Liquidity

Our principal sources of liquidity are the sale of our common stock and our Note Purchase Agreement with Streeterville Capital, LLC ("Streeterville"), dated June 29, 2026 (the "Note Purchase Agreement"), pursuant to which we issued a Secured Promissory Note A-1 in the original principal amount of $4.1 million (the "A-1 Note") and a Secured Promissory Note B in the original principal amount of $6.2 million (the "B Note"), each discussed in Note 6 – Debt.

In connection with entering into the Note Purchase Agreement, we used approximately $3.8 million of the A-1 Note proceeds to retire our outstanding convertible promissory note, including accrued interest, and we terminated our Financing and Security Agreement with SLR Digital Finance LLC ("SLR"), (the "Financing Agreement"). As of June 30, 2026, we had no outstanding convertible debt and no amounts outstanding under our prior receivables-based credit facility. See Note 6 – Debt.

Of the $6.2 million in gross proceeds from the B Note, funds were deposited into a deposit account at Lakeside Bank held by our newly formed wholly-owned subsidiary, INUV Holdings, LLC, pursuant to a Deposit Account Control Agreement (the "DACA") among INUV Holdings, LLC, Streeterville, and Lakeside Bank. Amounts held in the DACA are not available for our general working capital or corporate purposes and will be released to us only in connection with a permitted Note Exchange, as further discussed in Note 6 – Debt. As of June 30, 2026, $6.2 million remained subject to the DACA and was classified as restricted cash on our condensed consolidated balance sheet.

On January 29, 2026, we received gross proceeds of approximately $6.2 million in connection with a class action settlement. These proceeds represented a one-time, non-recurring source of liquidity and are not expected to recur in future periods.

On May 7, 2024, we entered into an At The Market Offering Agreement (the "ATM Agreement") with H.C. Wainwright & Co. LLC ("Wainwright"), to sell shares of our common stock, par value $0.001 per share, having an aggregate sales price of up to $15 million, from time to time, through an "at the market offering" program under which Wainwright acts as sales agent. We will pay Wainwright a commission rate of up to 3.0% of the aggregate gross proceeds from each sale. For the six-month period ended June 30, 2026, we have not sold any shares of common stock under the ATM Agreement. As of June 30, 2026, approximately $13.8 million remained available for issuance under the ATM Agreement, based on cumulative gross sales of shares under the program to date.

On June 30, 2026, we entered into a Securities Purchase Agreement with an accredited investor providing for the issuance, in a registered direct offering, of 1,631,121 shares of common stock and pre-funded warrants exercisable for up to 1,337,693 shares of common stock. In a concurrent private placement, we also agreed to issue Class A and Class B common stock purchase warrants exercisable for an aggregate of up to 5,937,628 shares of common stock. The Class A and Class B warrants have an exercise price of $1.28 per share, become exercisable six months after issuance, and expire five years and one year after issuance, respectively. We also issued placement agent warrants to purchase 148,441 shares of common stock at an exercise price of $1.25 per share. The placement agent warrants become exercisable six months after issuance and expire three years from the commencement of sales pursuant to the offerings. The offerings (the “Offerings”) closed on July 1, 2026, subsequent to quarter end, generating gross proceeds of approximately $3.0 million, before deducting placement agent fees and offering expenses of $0.6 million. See Note 15 – Subsequent Events. In connection with the Offerings, we suspended the ATM Agreement and terminated the continuous offering by us under the associated prospectus supplement. We will not make any sales of Common Shares pursuant to the ATM Agreement, unless and until a new prospectus is filed and the expiration of a 180-day lockup period following completion of the Offerings. 

We have focused our resources behind a plan to market our collective multi-channel advertising capabilities differentiated by our AI technology, the IntentKey, where we have a technological advantage and higher margins. If we are successful in implementing our plan, we expect to return to and maintain positive cash flows from operations. However, there is no assurance that we will be able to achieve this objective.

As of June 30, 2026,we had approximately $0.9 million in unrestricted cash and cash equivalents and $6.2 million in restricted cash held pursuant to the DACA described above, for total cash, cash equivalents, and restricted cash of approximately $7.1 million. Cash of $1.2 million that was held pursuant to the DACA was released from restrictions on July 1, 2026. Our net working capital deficit was approximately $4.8 million. Our investing activities totaled $0.6 million for the six-month period ended June 30, 2026, primarily consisting of internally developed software costs, largely comprised of fixed labor costs, along with other capitalized expenditures. We have encountered recurring losses and cash outflows from operations, which historically we have funded through equity offerings and debt facilities. Through June 30, 2026, our accumulated deficit was $180.4 million.

Management plans to support the Company's future operations and capital expenditures primarily through cash flows from operations, availability under the Note Purchase Agreement, proceeds from the Securities Purchase Agreement that closed on July 1, 2026 and other available financing sources until such time as we generate sufficient positive cash flow from operations to support our ongoing liquidity needs. The A-1 Note and the B Note are subject to redemption rights in favor of Streeterville as described in Note 6 – Debt, and therefore there can be no assurance that sufficient funds will remain available to support future operations until profitability is reached. We believe our current cash position and the Note Purchase Agreement exclusive of $5M in long-term restricted cash, together with proceeds from the Securities Purchase Agreement and expected cash flows from operations, will be sufficient to sustain operations for at least the next twelve months from the date of this filing. If our plan to grow the IntentKey product is unsuccessful, we may need to fund operations through private or public sales of securities, debt financings or partnering/licensing transactions over the long term.