Cover
Cover - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 29, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Entity Registrant Name | INUVO, INC. | ||
Entity Central Index Key | 0000829323 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2023 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2023 | ||
Entity Common Stock Shares Outstanding | 139,220,784 | ||
Entity Public Float | $ 27.9 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 001-32442 | ||
Entity Incorporation State Country Code | NV | ||
Entity Tax Identification Number | 87-0450450 | ||
Entity Address Address Line 1 | 500 President Clinton Ave. | ||
Entity Address Address Line 2 | 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 | ||
Icfr Auditor Attestation Flag | false | ||
Auditor Name | EISNERAMPER LLP | ||
Auditor Location | Iselin, New Jersey | ||
Auditor Firm Id | 274 | ||
Local Phone Number | 205-8508 | ||
Security 12b Title | Common Stock | ||
Trading Symbol | INUV | ||
Security Exchange Name | NYSEAMER | ||
Entity Interactive Data Current | Yes |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 4,440,454 | $ 2,931,415 |
Marketable securities - short term | 0 | 1,529,464 |
Accounts receivable, net of allowance for doubtful accounts of $1,645,045 and $1,440,678, respectively | 9,226,956 | 11,119,892 |
Prepaid expenses and other current assets | 1,076,121 | 798,977 |
Total current assets | 14,743,531 | 16,379,748 |
Property and equipment, net | 1,680,788 | 1,668,972 |
Other assets | ||
Right of use assets - operating lease | 805,786 | 310,162 |
Right of use assets - finance lease | 72,560 | 168,750 |
Referral and support services agreement advance | 500,000 | 800,000 |
Marketable securities - long term | 0 | 660,126 |
Intangible assets, net of accumulated amortization | 4,664,791 | 5,649,291 |
Goodwill | 9,853,342 | 9,853,342 |
Other assets | 53,346 | 66,919 |
Total other assets | 15,949,825 | 17,508,590 |
Total assets | 32,374,144 | 35,557,310 |
Current liabilities | ||
Accounts payable | 6,432,120 | 8,044,802 |
Accrued expenses and other current liabilities | 7,926,479 | 5,162,458 |
Lease liability - operating lease | 123,074 | 287,523 |
Lease liability - finance lease | 50,801 | 101,003 |
Total current liabilities | 14,532,474 | 13,595,786 |
Long-term liabilities | ||
Deferred tax liability | 89,238 | 107,000 |
Lease liability - operating lease | 751,821 | 23,878 |
Lease liability - finance lease | 18,209 | 70,597 |
Other long-term liabilities | 216 | 10,733 |
Total long-term liabilities | 859,484 | 212,208 |
Stockholders' equity | ||
Preferred stock, $0.001 par value: Authorized shares - 500,000 - none issued and outstanding | 0 | 0 |
Common stock, $0.001 par value: Authorized shares 200,000,000; issued and outstanding shares 137,983,918 and 120,137,124 respectively; | 137,983 | 120,138 |
Additional paid-in capital | 184,291,414 | 178,771,604 |
Accumulated other comprehensive income | 0 | (84,868) |
Accumulated deficit | (167,447,211) | (157,057,558) |
Total stockholders' equity | 16,982,186 | 21,749,316 |
Total liabilities and stockholders' equity | $ 32,374,144 | $ 35,557,310 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | ||
Allowance for doubtful accounts | $ 1,645,045 | $ 1,440,678 |
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) | 200,000,000 | 200,000,000 |
Common stock shares issued (in shares) | 137,983,918 | 120,137,124 |
Common stock shares outstanding (in shares) | 137,983,918 | 120,137,124 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||
Net revenue | $ 73,911,528 | $ 75,603,745 |
Cost of revenue | 10,477,272 | 30,244,387 |
Gross profit | 63,434,256 | 45,359,358 |
Operating expenses: | ||
Marketing costs | 51,982,572 | 36,921,139 |
Compensation | 13,793,309 | 12,463,095 |
General and administrative | 8,050,890 | 8,624,998 |
Total operating expenses | 73,826,771 | 58,009,232 |
Operating loss | (10,392,515) | (12,649,874) |
Income tax benefit (expense) | 17,764 | 0 |
Financing, other | 29,570 | 21,111 |
Other (expense)/income, net | 14,668 | (435,554) |
Net loss | (10,389,653) | (13,106,539) |
Other comprehensive income | ||
Unrealized (loss)/gain on marketable securities | 84,868 | (138,605) |
Comprehensive loss | $ (10,304,785) | $ (13,245,144) |
Per common share data: Basic and diluted | ||
Net loss, Basic and diluted | $ (0.08) | $ (0.11) |
Weighted average shares: | ||
Basic | 131,116,370 | 119,826,036 |
Diluted | 131,116,370 | 119,826,036 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Total | Common Stock | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Balance, shares at Dec. 31, 2021 | 118,747,447 | ||||
Balance, amount at Dec. 31, 2021 | $ 32,807,995 | $ 118,748 | $ 176,586,529 | $ (143,951,019) | $ 53,737 |
Net loss | (13,106,539) | 0 | 0 | (13,106,539) | 0 |
Unrealized loss on debt securities | (138,605) | 0 | 0 | 0 | (138,605) |
Stock-based compensation | 2,350,314 | $ 0 | 2,350,314 | 0 | 0 |
Stock issued for vested restricted stock awards, shares | 1,389,677 | ||||
Stock issued for vested restricted stock awards, amount | 0 | $ 1,390 | (1,390) | 0 | 0 |
Shares withheld for taxes on vested restricted stock | (196,892) | $ 0 | (196,892) | 0 | 0 |
Stock warrants issued for referral agreement | 33,043 | 33,043 | 0 | ||
Proceeds from sale of common stock, net of expenses, amount | 0 | ||||
Balance, shares at Dec. 31, 2022 | 120,137,124 | ||||
Balance, amount at Dec. 31, 2022 | 21,749,316 | $ 120,138 | 178,771,604 | (157,057,558) | (84,868) |
Net loss | (10,389,653) | 0 | 0 | (10,389,653) | 0 |
Unrealized loss on debt securities | 84,868 | 0 | 0 | 0 | 84,868 |
Stock-based compensation | 1,986,296 | $ 0 | 1,986,296 | 0 | 0 |
Stock issued for vested restricted stock awards, shares | 1,673,236 | ||||
Stock issued for vested restricted stock awards, amount | 0 | $ 1,671 | (1,671) | 0 | 0 |
Proceeds from sale of common stock, net of expenses, shares | 16,000,000 | ||||
Proceeds from sale of common stock, net of expenses, amount | 3,665,000 | $ 16,000 | 3,649,000 | ||
Shares withheld for taxes on vested restricted stock | (166,872) | (166,872) | 0 | 0 | |
AGP Closing of at-the-market sale of common stock, shares | 173,558 | ||||
AGP Closing of at-the-market sale of common stock, amount | 61,136 | $ 174 | 60,962 | ||
Change in fair value of warrants related to vesting | (7,905) | $ 0 | (7,905) | 0 | 0 |
Balance, shares at Dec. 31, 2023 | 137,983,918 | ||||
Balance, amount at Dec. 31, 2023 | $ 16,982,186 | $ 137,983 | $ 184,291,414 | $ (167,447,211) | $ 0 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Operating activities: | ||
Net loss | $ (10,389,653) | $ (13,106,539) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 2,655,368 | 2,598,957 |
Amortization of Right of Use Assets-Finance Leases | 96,190 | 103,926 |
Stock based compensation | 1,986,296 | 2,350,314 |
(Gain) Loss on marketable securities | (14,668) | 435,554 |
Amortization of financing fees | 8,333 | 2,500 |
Provision for doubtful accounts | 786,549 | 1,265,143 |
Stock warrant (income) expense | (7,905) | 33,043 |
Deferred income tax benefit | (17,764) | 0 |
Derecognition of contingencies and grant | 0 | (10,000) |
Change in operating assets and liabilities: | ||
Accounts receivable | 1,106,387 | (3,119,222) |
Referral and support services agreement advance | 300,000 | 300,000 |
Prepaid expenses, other current assets and other assets | (263,569) | 578,009 |
Accounts payable | (1,612,682) | 3,200,086 |
Accrued expenses and other liabilities | 2,813,043 | (205,762) |
Net cash used in operating activities | (2,554,075) | (5,573,991) |
Investing activities: | ||
Purchases of equipment and capitalized development costs | (1,682,683) | (1,689,869) |
Purchase of marketable securities | 0 | (1,693,963) |
Proceeds from the sale of marketable securities | 2,288,873 | 1,717,707 |
Net cash provided by (used in) investing activities | 606,190 | (1,666,125) |
Financing activities: | ||
Gross proceeds from line of credit | 592,868 | 0 |
Repayments on line of credit | (592,868) | 0 |
Proceeds from sale of common stock, net of expenses | 3,665,000 | 0 |
Payments on finance/capital leases | (102,340) | (107,539) |
Net taxes paid on RSU grants exercised | (166,872) | (196,894) |
Proceeds from at-the-market sales | 61,136 | 0 |
Net cash provided by/(used in) financing activities | 3,456,924 | (304,433) |
Net change - cash | 1,509,039 | (7,544,549) |
Cash, beginning of year | 2,931,415 | 10,475,964 |
Cash, end of year | 4,440,454 | 2,931,415 |
Supplemental information: | ||
Interest paid | 105,148 | 18,612 |
Non-cash investing and financing activities: | ||
Assets purchased under finance lease obligations | 0 | 70,774 |
Acquisition of right of use asset for operating lease liability | $ 1,105,148 | $ 0 |
Organization and Business
Organization and Business | 12 Months Ended |
Dec. 31, 2023 | |
Organization and Business | |
Organization and Business | Note 1 – Organization and Business Company Overview Inuvo is an advertising technology and services business selling information technology solutions to brands, agencies and large consolidators of advertising demand (“Platforms”). Inuvo’s revenue is derived from the placement of digital advertising throughout devices, websites, applications and browsers across social, search and programmatic advertising channels. Inuvo facilitates, and gets paid, to deliver millions of advertising messages monthly and counts among its client's numerous world-renowned companies across industries. Inuvo’s primary mission is to disrupt the advertising industry with its proprietary and patented generative large language artificial intelligence (AI), a technology capable of identifying and targeting audiences without using a consumer’s identity or data. The AI was designed to replace the consumer data, analytics, segmentation and lookalike modeling technologies that have traditionally served the advertising industry as it transitions to a new paradigm where a consumer’s identity and data are no longer available for advertising decisions due to legislative and technological changes. Rather than targeting people, the AI targets the reasons behind why people are interested in products, services and brands. Inuvo’s AI technology solves this challenge and can be consumed by clients both as a managed service and software-as-a-service. For certain clients, Inuvo has also developed various proprietary technology and assets that include digital content, websites, automated campaigns, ad fraud detection, performance reporting and predictive media mix modeling. The Inuvo products and services use analytics, data and artificial intelligence in a manner that optimizes the purchase and placement of advertising in real time. These capabilities are typically sold with services both individually and in combination with each other based on client needs. These products and services include: · IntentKey · Bonfire: There are many barriers to entry associated with the Inuvo business model, including a proficiency in large language model based artificial intelligence, large scale information processing, software development, consumer data products, analytics, IOT (internet of things) integration and the relationships required to execute within the IOT. Inuvo’s intellectual property is protected by 19 issued and eight pending patents. Liquidity Our principal sources of liquidity are the sale of our common stock and our credit facility with Hitachi described in Note 7 to our Consolidated Financial Statements. On January 19, 2021, we raised $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. In March 2021, we contracted with an investment management company to manage our cash in excess of current operating needs. We placed $2 million in cash equivalent accounts and $10 million in an interest-bearing account. At December 31, 2022, our funds with the investment management company were approximately $2 million and were invested in cash equivalent accounts and marketable debt and equity securities. A detail of the activity is described in Note 3 to our Consolidated Financial Statements. On May 28, 2021, we entered into a Sales Agreement (the "Sales Agreement") with A.G.P./Alliance Global Partners, as sales agent (the "Sales Agent"), pursuant to which we may offer and sell through or to the Sales Agent shares of our common stock (the "ATM Program") up to an aggregate amount of gross proceeds of $35,000,000. During the year ended December 31, 2023, we sold 173,558 shares of common stock for gross proceeds totaling $63,136 under the ATM Program and paid the Sales Agent a commission of $1,902, all of which occurred during the second quarter of 2023. Any shares of common stock offered and sold in the ATM Program will be issued pursuant to our universal shelf registration statement on Form S-3 (the “Shelf Registration Statement”). The ATM Program will terminate upon (a) the election of the Sales Agent upon the occurrence of certain adverse events, (b) 10 days’ advance notice from one party to the other, or (c) the sale of the balance available under our Shelf Registration Statement. Under the terms of the Sales Agreement, the Sales Agent is entitled to a commission at a fixed rate of 3.0% of the gross proceeds from each sale of shares under the Sales Agreement. On May 30, 2023, we raised $4.0 million in gross proceeds in a registered direct offering, before expenses, through the sale of an aggregate of 16,000,000 shares of our common stock. The shares were offered pursuant to an effective shelf registration statement on Form S-3 (the “Shelf Registration Statement”) and a prospectus supplement relating to the offering was filed with the SEC on May 26, 2023. 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 a positive cash flow from operations. However, there is no assurance that we will be able to achieve this objective. As of December 31, 2023, we have approximately $4.4 million in cash, and cash equivalents. Our net working capital was $211.1 thousand. We have encountered recurring losses and cash outflows from operations, which historically we have funded through equity offerings and debt facilities. For the year ended December 31, 2023 we had a net loss of $10.3 million and net cash outflows from operations of $2.6 million. In addition, our investment in internally developed software consists primarily of labor costs which are of a fixed nature and amounted to approximately $1.7 million for the year ended December 31, 2023. Through December 31, 2023, our accumulated deficit was $167.4 million. Management plans to support the Company’s future operations and capital expenditures primarily through cash raised through the sale of stock in May 2023, cash generated from future operations and borrowings from the credit facility until reaching profitability. The credit facility is due upon demand and therefore there can be no assurances that sufficient borrowings will be available to support future operations until profitability is reached. Our collection period is less than 30 days and can also be used to meet accrued obligations. We believe our current cash position and credit facility will be sufficient to sustain operations for at least the 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Basis of presentation Cash and cash equivalents Investments Revenue recognition Our revenue is a function of the number of advertisements placed combined with the price we obtain (using our technologies) for the placements made on behalf of our clients. We assume the risk associated of finding placements at a cost below that for which it had been sold. We recognize revenue when control of the contracted services or product is transferred to our customer, in an amount that reflects the consideration we expect to be entitled to in exchange for those services or products. We determine revenue recognition through (i) identification of a contract with a customer, (ii) identification of the performance obligations in the contract, (iii) determination of the transaction price, (iv) allocation of the transaction price to the performance obligations in the contract, and (v) recognition of revenue when or as the performance obligations are satisfied. For Agencies and Brands, the terms of an agreement are captured in an Insertion Order ("IO") where revenue is recognized upon delivery of services during the period covered by the IO. For Platforms, terms are generally captured in multi-year master service agreements and revenue is recognized based on the number of advertisements placed or clicked on in the period they occur. We settle advertisement placement prices with our customers net of any adjustments for quality. In the year ended December 31, 2023, we generated $73,911,528 in revenue of which 79.1% was from Platforms, 20.9% from Agencies and Brands. In the year ended December 31, 2022, we generated $75,603,745 in revenue of which 51.7% was from Platforms, 48.3% from Agencies and Brands. Accounts receivable Accounts receivable consist of trade receivables from customers. We record accounts receivable at its net realizable value, recognizing an allowance for doubtful accounts based on our best estimate of expected credit losses on our existing accounts receivable. Balances are written off against the allowance after all means of collection have been exhausted and the possibility of recovery is considered remote. The current expected credit loss (CECL) model under Accounting Standards Update (ASU) 2016-13 requires an estimation of expected credit losses over the life of a financial instrument, taking into consideration historical experience, current conditions, and reasonable and supportable forecasts. Management has reviewed comprehensive historical data, any relevant economic indicator, and estimated our estimated credit loss based off these probabilities. In the year ended December 31, 2023, 2022, and 2021, we recorded accounts receivable, net allowance for doubtful accounts of, $9,226,956, $11,119,892, and $9,265,813 respectively For the twelve months ended December 31, 2023 2022 2021 Balance at the end of the year $ 9,226,956 $ 11,119,892 $ 9,265,813 Cost of revenue Marketing costs Property and equipment Property and equipment are depreciated on a straight-line basis over three years for equipment, five to seven years for furniture and fixtures and two to three years for software. Leasehold improvements are amortized over the lesser of the estimated useful life of the asset or the remaining term of the lease. Depreciation expense was $1,670,868 and $1,527,663, respectively, for the years ended December 31, 2023 and 2022. Capitalized Software Costs ASC 350-40 Internal-Use Software Goodwill We generally determine the fair value of our reporting unit using the income approach methodology of valuation that includes the undiscounted cash flow method as well as other generally accepted valuation methodologies. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the amount it exceeds fair value is equivalent to the amount of impairment loss. We determined there was no impairment of goodwill during 2023 and 2022. See Note 6, Intangible Assets and Goodwill, for more information. Intangible Assets We recorded no impairment of intangible assets during 2023 or 2022. See Note 6, Intangible Assets and Goodwill, for more information. Income taxes ASC 740 Income Taxes We have adopted certain provisions of ASC 740. This statement clarifies the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company’s financial statements. ASC 740 prescribes a recognition threshold of more likely than not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order to be recognized in the financial statements. We recognize interest and penalties related to income taxes in income tax expense. We have incurred no penalties or interest for the years ended December 31, 2023 and 2022. Impairment of long-lived assets ASC 360 Property, Plant and Equipment Stock-based compensation ASC 718 Compensation – Stock Compensation, The fair value of restricted stock awards is based on the market price of our common stock on the date of the grant. To value stock option awards, we use the Black-Scholes-Merton option pricing model. This model involves assumptions including the expected life of the option, stock price volatility, risk-free interest rate, dividend yield and exercise price. We recognize compensation expense in earnings over the requisite service period, applying a forfeiture rate to account for expected forfeitures of awards. See Note 11, Stock-Based Compensation, for further details on our stock awards. Government Grant As of December 31, 2023, there were 43 full-time employees in Arkansas, seven employees under the required 50. As such, we recorded a contingent liability of $35,000. As of December 31, 2022, there were 48 full-time employees in Arkansas, two employees under the required 50. As such, we recorded a contingent liability of $10,000. Earnings per share Operating segments ASC 280 - Segment reporting Concentration of credit risk Customer concentrations In 2022, we had three individual customers with revenue concentration greater than 10% of our total revenue accounting for 29.1%, 24.1%, and 12.9%, respectively. At December 31, 2022, we had two customers greater than 10% of our total accounts receivable balance accounting for 50.6% and 12.7%, respectively. Vendor concentrations In 2022, we had four individual vendors with cost of revenue concentration greater than 10% of our total cost of revenue accounting for 33.8%, 30.4%, 14.5% and 11.1%, of the total cost of revenue, respectively. Use of estimates Litigation and settlement costs ASC 450 Contingencies Recently Adopted Accounting Pronouncements On January 1, 2023, we adopted Accounting Standards Code (ASC) No. 326, Financial Instruments-Credit Losses. ASC 326 requires a financial asset (loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financials assets not excluded from scope) measured at amortized cost basis to be presented at the net amount expected to be collected. The adoption of this new standard did not have a material impact on our consolidated financial statements and primarily resulted in enhanced disclosures only. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | Note 3 – Fair Value Measurements The carrying amounts reported in the balance sheet for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value based on the short-term nature of these items. In accordance with accounting principles generally accepted in the United States, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level hierarchy prioritizes the inputs used to measure fair value as follows: Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 – Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. The following table summarizes our cash equivalents and marketable securities measured at fair value. Certain marketable securities consist of investments in debt and equity securities. We classify our cash equivalents and marketable securities within Level 1 because we use observable inputs that reflect quoted market prices for identical assets in active markets to determine their fair value. We have classified debt securities as available for sale securities with unrealized gains and losses recorded as other comprehensive income. We have classified equity securities as trading and are marked to market with changes recorded as other income on the income statement. Any interest income or dividends are recorded within financing expense, net on the income statement. The cost, gross unrealized gains (losses) and fair value of marketable securities by major security type as of December 31, 2023 and 2022 were as follows: Investment Assets at Fair Value Investment Assets at Fair Value As of December 31, 2023 As of December 31, 2022 Level 1 Total Level 1 Total Debt securities $ — $ — $ 936,563 $ 936,563 Equity securities — — 1,253,027 1,253,027 Cash equivalents 69,291 69,291 801 801 Total Investments at Fair Value $ 69,291 $ 69,291 $ 2,190,391 $ 2,190,391 As of December 31, 2023 As of December 31, 2022 Cost Unrealized Gain (Loss) Fair Value Cost Unrealized Gain (Loss) Fair Value Marketable securities Debt securities $ — $ — $ — $ 1,021,431 $ (84,868 ) $ 936,563 Equity securities — — — 1,776,773 (523,746 ) 1,253,027 Total marketable securities $ — $ 2,189,590 The realized loss on the securities for the year ended December 31, 2023 was approximately $510,000. |
Allowance for Credit Losses
Allowance for Credit Losses | 12 Months Ended |
Dec. 31, 2023 | |
Allowance for Credit Losses | |
Allowance for Credit Losses | N ote 4 – Allowance for Credit Losses The activity in the allowance for doubtful accounts was as follows during the years ended December 31, 2023 and 2022: 2023 2022 Balance at the beginning of the year $ 1,440,678 $ 202,904 Provision for bad debts 786,549 1,265,143 Charge-offs (582,189 ) (27,369 ) Recoveries 7 — Balance at the end of the year $ 1,645,045 $ 1,440,678 The allowance for doubtful accounts at December 31, 2023 was $1,645,045, an increase of $204,367 from December 31, 2022. During 2022, we expanded our business in part by acquiring new customers with whom we contract directly. These customers typically require longer credit terms than traditional CPC based customers. One of these customers was a significant portion, 24.1% of our total 2022 revenue, and has stretched its payments to 120 days and beyond. Ultimately, we agreed to extended payments from the customer through September 2024. All amounts due from this customer have been fully reserved as of December 31, 2023. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2023 | |
Property and Equipment | |
Property and Equipment | Note 5– Property and Equipment The net carrying value of property and equipment at December 31, 2023 and 2022 was as follows: 2023 2022 Furniture and fixtures $ 293,152 $ 293,152 Equipment 1,292,528 1,265,752 Capitalized software development costs 16,159,517 14,503,608 Leasehold improvements 458,885 458,885 Subtotal 18,204,082 16,521,397 Less: accumulated depreciation and amortization (16,523,294 ) (14,852,425 ) Total $ 1,680,788 $ 1,668,972 Depreciation expense was $1,670,868 and $1,527,663, respectively, for the years ended December 31, 2023 and 2022. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2023 | |
Intangible Assets and Goodwill | |
Intangible Assets and Goodwill | Note 6 – Intangible Assets and Goodwill The following is a schedule of intangible assets and goodwill as of December 31, 2023: Term Carrying Value Accumulated Amortization and Impairment Net Carrying Value 2023 Amortization Customer list, Google 20 years $ 8,820,000 $ (5,218,500 ) $ 3,601,500 $ 441,000 Technology 5 years 3,600,000 (3,600,000 ) — — Customer list, ReTargeter 5 years 1,931,250 (1,705,938 ) 225,312 386,250 Customer list, all other 10 years 1,610,000 (1,610,000 ) — — Brand name, ReTargeter 5 years 643,750 (568,646 ) 75,104 128,750 Customer relationships 20 years 570,000 (197,125 ) 372,875 28,500 Trade names, web properties - 390,000 — 390,000 — Intangible assets classified as long-term $ 17,565,000 $ (12,900,209 ) $ 4,664,791 $ 984,500 Goodwill, total $ 9,853,342 $ — $ 9,853,342 $ — The following is a schedule of intangible assets and goodwill as of December 31, 2022: Term Carrying Value Accumulated Amortization Net Carrying Value 2022 Amortization Customer list, Google 20 years $ 8,820,000 $ (4,777,500 ) $ 4,042,500 $ 441,000 Technology 5 years 3,600,000 (3,600,000 ) — 60,000 Customer list, ReTargeter 5 years 1,931,250 (1,319,688 ) 611,562 386,250 Customer list, all other 10 years 1,610,000 (1,610,000 ) — 26,794 Brand name, ReTargeter 5 years 643,750 (439,896 ) 203,854 128,750 Customer relationships 20 years 570,000 (168,625 ) 401,375 28,500 Trade names, web properties (1) - 390,000 — 390,000 — Intangible assets classified as long-term $ 17,565,000 $ (11,915,709 ) $ 5,649,291 $ 1,071,294 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. Our amortization expense over the next five years and thereafter is as follows: 2024 $ 769,917 2025 469,500 2026 469,500 2027 469,500 2028 469,500 Thereafter 1,626,874 Total $ 4,274,791 |
Bank Debt
Bank Debt | 12 Months Ended |
Dec. 31, 2023 | |
Bank Debt | |
Bank Debt | Note 7 - Bank Debt On March 12, 2020, we closed on the Loan and Security Agreement dated February 28, 2020 with Hitachi. We've undergone several amendments to this agreement. On March 1, 2023, we entered into Amendment No. 1 to Loan and Security Agreement and Collateral Documents (“Agreement”) with Mitsubishi HC Capital America, Inc., f/k/a/ Hitachi Capital America Corp. (“MHCA”). Under the terms of the Agreement, MHCA has provided us with a $5,000,000 line of credit commitment. We are permitted to borrow up to 80% of the aggregate Eligible Accounts Receivable (which may increase to 85% if certain conditions are met), up to the maximum credit commitment of $5,000,000. We will pay MHCA monthly interest at the rate of 1.75% in excess of the Wall Street Journal Prime Rate. The principal and all accrued but unpaid interest are due on demand. In the event of a default under the terms of the Loan and Security Agreement, the interest rate increases to 6% greater than the interest rate in effect from time to time prior to a default. The Agreement contains certain affirmative and negative covenants to which we are also subject. We agreed to pay MHCA an amendment fee of $10,000 on issuance of the Agreement, and thereafter an annual commitment fee of $10,000. We are also obligated to pay MHCA a quarterly service fee of 0.20% on the monthly unused amount of the maximum credit line. If we terminate the Agreement (i) before February 28, 2024, we are obligated to pay MHCA an exit fee of $50,000, or (ii) after February 28, 2024 but before February 28, 2025, we are obligated to pay MHCA an exit fee of $25,000. The Loan and Security Agreement continues for an indefinite term. At December 31, 2023 and 2022, there were no outstanding balances due under the Loan and Security Agreement. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2023 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | Note 8 – Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following at December 31, 2023 and 2022: 2023 2022 Accrued marketing costs $ 5,717,983 $ 3,321,598 Accrued expenses and other 622,960 1,044,664 Accrued commissions and payroll 1,544,460 782,441 Arkansas grant contingency 35,000 10,000 Accrued taxes, current portion 6,076 3,755 Total $ 7,926,479 $ 5,162,458 |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2023 | |
Commitments | |
Commitments | Note 9 - Commitments On September 17, 2021, we signed a multi-year agreement with a business development partner to provide referral and support services to us. The agreement required an advance fee of $1.5 million with $300,000 recorded as a current asset. The advance is being amortized as marketing expenses over five years. As of December 31, 2023, $700,000 has been amortized and the total current and non-current balance is $800,000. As part of the agreement, we granted a warrant exercisable into 300,000 shares of our common stock, which vests over two years upon achieving certain performance metrics (see Note 12 - Stockholders' Equity). Additionally, we agreed to pay quarterly support fees upon reaching certain levels of operational activity. In April 2022, we agreed to Amendment No. 2 to the agreement. The amendment replaced the quarterly support fees with a commission on quarterly cumulative programmatic revenue. The amendment also revised the cumulative target media spend and the associated commission. In addition, effective September 26, 2023, Inuvo and the business development partner entered into an Offset Agreement whereby the parties agreed that the commission due to the partner be offset against the outstanding receivable balances due to Inuvo. We offset approximately $960,852 in commissions due to the partner against the outstanding receivable of $642,202. The total amount of commission recognized, net of the $67K commission adjustment per our offset agreement, for the year ended December 31, 2023 was approximately $52K. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Income Taxes | Note 10 - Income Taxes The provision for income taxes consists of the following at December 31, 2023 and 2022: 2023 2022 Current tax provision $ — $ — Deferred tax benefit 17,764 — Total tax benefit $ 17,764 $ — A reconciliation of the expected Federal statutory rate to our actual rate as reported for each of the periods presented is as follows: 2023 2022 Federal statutory rate 21 % 21 % State income tax rate, net of federal benefit 1 % 3 % Permanent differences 4 % — % Change in valuation allowance (26 %) (24 %) — % — % Deferred Income Taxes Deferred income taxes are the result of temporary differences between book and tax basis of certain assets and liabilities, timing of income and expense recognition of certain items and net operating loss carry-forwards. For the year ended December 31, 2023, we recognized a deferred tax benefit of approximately $17.8 thousand. When required, we record a liability for unrecognized tax positions, defined as the aggregate tax effect of differences between positions taken on tax returns and the benefits recognized in the financial statements. Tax positions are measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. No tax benefits are recognized for positions that do not meet this threshold. We have no uncertain tax positions that require us to record a liability. Our federal income tax returns are subject to examination by the IRS, generally for three years after they are filed. We assess temporary differences resulting from different treatments of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are recorded in the consolidated balance sheets. We evaluate the realizability of our deferred tax assets on a regular basis, an exercise that requires significant judgment. In the course of this evaluation, we considered our recent history of tax losses, the economic conditions in which we operate, recent organizational changes and our forecasts and projections. 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 for a significant portion of the net deferred tax assets that may not be realized as of December 31, 2023 and 2022. The following is a schedule of the deferred tax assets and liabilities as of December 31, 2023 and 2022: 2023 2022 Deferred tax assets: Net operating loss carry forward $ 38,860,119 $ 36,506,618 Intangible assets 1,011,900 543,000 Accrued liabilities 541,200 287,600 Deferred rent 19,200 3,000 Allowance for doubtful accounts 461,000 403,800 Stock compensation expense 587,900 869,900 Unrecognized Income/Loss — 122,100 Other 403,500 373,100 Subtotal 41,884,819 39,109,118 Less valuation allowance (40,619,657 ) (37,976,018 ) Total 1,265,162 1,133,100 Deferred tax liabilities: Intangible assets and property and equipment 826,300 1,242,200 Other 528,100 (2,100 ) Total 1,354,400 1,240,100 Net deferred tax liabilities $ (89,238 ) $ (107,000 ) The net operating losses amounted to approximately $107,908,005 and expire beginning 2024 through 2037. Included in the federal net operating loss carryforwards are $30.7 million generated from 2018 to 2023 that will not expire and are limited to offset 80% of our taxable income for years beginning after December 31, 2020. As of December 31, 2023, the Company has a net deferred tax liability of $89,238. The net deferred tax liability is due to goodwill that is amortized for tax purposes and a trade name that has an indefinite life, of which both are not being amortized for book purposes. The deferred tax liability relating to goodwill can only be offset up to 80% by NOLs generated in tax years ending December 31, 2018 and beyond, as well as NOLs available after consideration of IRC Section 382 limitation. The remaining portion that cannot be used remains as a liability. In future years, if the deferred tax assets are determined by management to be “more likely than not” to be realized, the recognized tax benefits relating to the reversal of the valuation allowance as of December 31, 2023 will be recorded. Under the provisions of the Internal Revenue Code, the net operating loss carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study. If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the net operating loss carryforwards would be subject to an annual limitation under Section 382, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the net operating loss carryforwards before utilization. Further, until a study is completed by the Company and any limitation is known, no amounts are being presented as an uncertain tax position. The Company remains open to examination by the Internal Revenue Service for the years ending December 31, 2019 through 2022. Carryforward attributes generated in all years since inception remain subject to adjustment. Our state income tax returns are open to audit under the statute of limitations for the same periods. |
StockBased Compensation
StockBased Compensation | 12 Months Ended |
Dec. 31, 2023 | |
StockBased Compensation | |
Stock-Based Compensation | 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 2023 and 2022 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, 2022, in accordance with the plan provisions, the number of shares available for issuance under the 2017 ECP was increased by 150,000 shares. On June 16, 2022, our stockholders approved an amendment to the 2017 ECP increasing the number of shares of our common stock reserved for issuance by 15,000,000 shares. As of December 31, 2023, the total number of shares of our common stock reserved for issuance under the 2017 ECP was 24,550,000. Compensation Expense We recorded stock-based compensation expense for all equity incentive plans of $1,986,296 and $2,350,314 for the years ended December 31, 2023 and 2022, respectively. Total compensation cost not yet recognized at December 31, 2023 was $1,571,436 to be recognized over a weighted-average recognition period of one year. The following table summarizes the stock grants outstanding under our 2017 ECP plan as of December 31, 2023: Options Outstanding RSUs Outstanding Options and RSUs Exercised Available Shares Total Total — 7,010,016 6,634,121 10,905,863 24,550,000 The fair value of restricted stock units is determined using market value of the common stock on the date of the grant. The fair value of stock options is determined using the Black-Scholes-Merton valuation model. The use of this valuation model involves assumptions that are judgmental and highly sensitive in the determination of compensation expense and include the expected life of the option, stock price volatility, risk-free interest rate, dividend yield, exercise price, and forfeiture rate. Forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period. The forfeiture rate, which is estimated at a weighted average of 0% of unvested options outstanding, is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate. The following table summarizes our stock option activity during 2023: Options Weighted Average Exercise Price Outstanding, beginning of year 100,000 $ 0.52 Stock options, granted — $ — Stock options exercised — $ — Stock options canceled 100,000 $ 0.52 Outstanding, end of year — $ — Exercisable, end of year — $ — Expected volatility is based on the historical volatility of our common stock over the period commensurate with or longer than the expected life of the options. The expected life of the options is based on the vesting schedule of the option in relation to the overall term of the option. The risk free interest rate is based on the market yield of the U.S. Treasury Bill with a term equal to the expected term of the option awarded. We do not anticipate paying any dividends so the dividend yield in the model is zero. The following table summarizes the weighted average assumptions for our granted options and RSUs. There were no options granted in the period ended December 31, 2023. The following table summarizes our restricted stock unit activity for 2023: Restricted Stock Unit Weighted Average Fair Value Outstanding, beginning of year 4,913,339 $ 0.79 Granted 4,220,000 $ 0.31 Vested (2,073,322 ) $ 0.86 Forfeited (50,001 ) $ 0.55 Outstanding, end of year 7,010,016 $ 0.48 |
Stockholders Equity
Stockholders Equity | 12 Months Ended |
Dec. 31, 2023 | |
Stockholders Equity | |
Stockholders' Equity | Note 12 – Stockholders' Equity Common Stock On May 30, 2023, we raised $4.0 million in gross proceeds in a registered direct offering, before expenses, through the sale of an aggregate of 16,000,000 shares of our common stock. Warrants On September 17, 2021, we signed an agreement with a marketing platform and consulting company to provide referral and support services to us for a period of five years (see Note 9 - Commitments). As part of that agreement, we granted a warrant exercisable into 300,000 shares of our common stock, which vests in two tranches when certain performance metrics are achieved. The warrant was valued using the Black Scholes option pricing model at a total of $149,551 based on a seven-year term, an implied volatility of 100%, a risk-free equivalent yield of 1.17%, and a stock price of $0.71. The warrant is classified as equity and will be expensed on a ratable basis over the vesting period of each tranche. On August 31, 2022, 85,862 shares vested in accordance with the contracted performance criteria. On August 31, 2023, 21,136 shares vested. For the second tranche, we reversed approximately $7.9 thousand for the year ended December 31, 2023 due to a change in the probability of performance criteria being achieved. In accordance with our agreement, after the second anniversary of the Original Issue Date, any interests in Warrant shares that have not vested pursuant to the terms and conditions of the agreement shall be deemed forfeited and shall never become exercisable. At the period ended December 31, 2023, approximately 193 thousand shares have been forfeited. Earnings per Share During the 2023 and 2022, we generated a net loss from continuing operations and as a result, all of our shares are anti-dilutive. |
Retirement Plan Costs
Retirement Plan Costs | 12 Months Ended |
Dec. 31, 2023 | |
Retirement Plan Costs | |
Retirement Plan Costs | Note 13 – Retirement Plan Costs We provide a 401(k) plan to help our employees prepare for retirement where we matched each employee's contributions to the plan up to the first four of the employee's annual salary. The matching contribution for the years ended 2023 and 2022 was $370,782 and $292,825, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
Leases | Note 14 – Leases We have entered into operating and finance leases primarily for real estate and equipment rental. These leases have terms which range from three years to six 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 our consolidated balance sheets and represent our right to use the underlying asset for the lease term. Our obligations to make lease payments are also listed as separate line items on our consolidated balance sheets. As of December 31, 2023 and December 31, 2022, total operating and financed right-of-use assets were $805,786 and $72,560, and $310,162 and $168,750, respectively. For the years-ended December 31, 2023 and 2022, we recorded $96,190 and $103,926 in amortization expense related to finance leases. For the years-ended December 31, 2023 and 2022, we recorded $358,667 and $377,020, respectively, in rent expense related to operating leases. In May 2023, we entered into an agreement to lease 4,128 square feet of office space in San Jose, CA commencing on September 1, 2023. The lease has a term of sixty-five months with an abatement period of five months and will cost approximately $208,000 during its first year. Thereafter, the lease payments increase by 3%. Because the rate implicit in each lease is not readily determinable, we use our incremental borrowing rate to determine the present value of the lease payments. Information related to our operating lease liabilities for are as follows: December 31, 2023 Cash paid for operating lease liabilities $ 338,497 Weighted-average remaining lease term 3.75 years Weighted-average discount rate 10.5 % Minimum future lease payments ended December 31, 2023 2024 $ 207,351 2025 219,608 2026 222,387 2027 226,834 2028 233,727 2029 19,526 1,129,433 Less imputed interest (254,537 ) Total lease liabilities $ 874,896 Information related to our financed lease liabilities are as follows: December 31, 2023 Cash paid for finance lease liabilities $ 117,369 Weighted-average remaining lease term 1.31 years Weighted-average discount rate 6.25 % Minimum future lease payments ended December 31, 2023 2024 52,626 2025 18,491 71,117 Less imputed interest (2,107 ) Total lease liabilities $ 69,010 |
Related Parties
Related Parties | 12 Months Ended |
Dec. 31, 2023 | |
Related Parties | |
Related Parties | Note 15 - Related Parties A board member of the Company is employed by the investment company that is the financial advisor and custodian of the Company’s marketable securities. Marketable securities were $0 and $2,189,590 as of December 31, 2023 and 2022, respectively. The fees paid to the financial advisor were not material. In addition, a board member of the Company is also a minority shareholder and consultant to one of the Company’s largest customers during 2022. Revenue from this customer was approximately $0 and $18.3 million for the years ended December 31, 2023 and 2022, respectively, and accounts receivable was approximately $1.2 million as of December 31, 2023. During August 2023, we entered into a referral agreement with a board member of the Company. An initial fee of $15,000 was agreed upon, payable upon the execution of the agreement. Subsequently, a monthly retainer of $5,000, paid in advance, was established, starting from September 1, 2023. Either party has the right to terminate this agreement at any time and for any reason. Termination requires fourteen (14) days written notice to be provided to the other party. For the twelve months ended December 31, 2023, we recognized approximately $35,000 in expense. |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Event | |
Subsequent Event | Note 16 - Subsequent Event On January 11, 2024, we amended and renewed our lease at our corporate headquarters in Little Rock, Arkansas. The lease was extended for thirty-six months commencing on February 1, 2024 and expiring on January 31, 2027 and will cost approximately $127,000 during its first year. Thereafter, the lease payments increase by 2% annually. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Basis of presentation | Basis of presentation |
Cash and cash equivalents | Cash and cash equivalents |
Investments | Investments |
Revenue recognition | Revenue recognition Our revenue is a function of the number of advertisements placed combined with the price we obtain (using our technologies) for the placements made on behalf of our clients. We assume the risk associated of finding placements at a cost below that for which it had been sold. We recognize revenue when control of the contracted services or product is transferred to our customer, in an amount that reflects the consideration we expect to be entitled to in exchange for those services or products. We determine revenue recognition through (i) identification of a contract with a customer, (ii) identification of the performance obligations in the contract, (iii) determination of the transaction price, (iv) allocation of the transaction price to the performance obligations in the contract, and (v) recognition of revenue when or as the performance obligations are satisfied. For Agencies and Brands, the terms of an agreement are captured in an Insertion Order ("IO") where revenue is recognized upon delivery of services during the period covered by the IO. For Platforms, terms are generally captured in multi-year master service agreements and revenue is recognized based on the number of advertisements placed or clicked on in the period they occur. We settle advertisement placement prices with our customers net of any adjustments for quality. In the year ended December 31, 2023, we generated $73,911,528 in revenue of which 79.1% was from Platforms, 20.9% from Agencies and Brands. In the year ended December 31, 2022, we generated $75,603,745 in revenue of which 51.7% was from Platforms, 48.3% from Agencies and Brands. |
Cost of revenue | Cost of revenue |
Accounts receivable | Accounts receivable Accounts receivable consist of trade receivables from customers. We record accounts receivable at its net realizable value, recognizing an allowance for doubtful accounts based on our best estimate of expected credit losses on our existing accounts receivable. Balances are written off against the allowance after all means of collection have been exhausted and the possibility of recovery is considered remote. The current expected credit loss (CECL) model under Accounting Standards Update (ASU) 2016-13 requires an estimation of expected credit losses over the life of a financial instrument, taking into consideration historical experience, current conditions, and reasonable and supportable forecasts. Management has reviewed comprehensive historical data, any relevant economic indicator, and estimated our estimated credit loss based off these probabilities. In the year ended December 31, 2023, 2022, and 2021, we recorded accounts receivable, net allowance for doubtful accounts of, $9,226,956, $11,119,892, and $9,265,813 respectively |
Marketing costs | Marketing costs |
Property and equipment | Property and equipment Property and equipment are depreciated on a straight-line basis over three years for equipment, five to seven years for furniture and fixtures and two to three years for software. Leasehold improvements are amortized over the lesser of the estimated useful life of the asset or the remaining term of the lease. Depreciation expense was $1,670,868 and $1,527,663, respectively, for the years ended December 31, 2023 and 2022. |
Capitalized Software Costs | Capitalized Software Costs ASC 350-40 Internal-Use Software |
Goodwill | Goodwill We generally determine the fair value of our reporting unit using the income approach methodology of valuation that includes the undiscounted cash flow method as well as other generally accepted valuation methodologies. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the amount it exceeds fair value is equivalent to the amount of impairment loss. We determined there was no impairment of goodwill during 2023 and 2022. See Note 6, Intangible Assets and Goodwill, for more information. |
Intangible Assets | Intangible Assets We recorded no impairment of intangible assets during 2023 or 2022. See Note 6, Intangible Assets and Goodwill, for more information. |
Income taxes | Income taxes ASC 740 Income Taxes We have adopted certain provisions of ASC 740. This statement clarifies the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company’s financial statements. ASC 740 prescribes a recognition threshold of more likely than not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order to be recognized in the financial statements. We recognize interest and penalties related to income taxes in income tax expense. We have incurred no penalties or interest for the years ended December 31, 2023 and 2022. |
Impairment of long-lived assets | Impairment of long-lived assets ASC 360 Property, Plant and Equipment |
Stock-based compensation | Stock-based compensation ASC 718 Compensation – Stock Compensation, The fair value of restricted stock awards is based on the market price of our common stock on the date of the grant. To value stock option awards, we use the Black-Scholes-Merton option pricing model. This model involves assumptions including the expected life of the option, stock price volatility, risk-free interest rate, dividend yield and exercise price. We recognize compensation expense in earnings over the requisite service period, applying a forfeiture rate to account for expected forfeitures of awards. See Note 11, Stock-Based Compensation, for further details on our stock awards. |
Government Grant | Government Grant As of December 31, 2023, there were 43 full-time employees in Arkansas, seven employees under the required 50. As such, we recorded a contingent liability of $35,000. As of December 31, 2022, there were 48 full-time employees in Arkansas, two employees under the required 50. As such, we recorded a contingent liability of $10,000. |
Earnings per share | Earnings per share |
Operating segments | Operating segments ASC 280 - Segment reporting |
Concentration of credit risk | Concentration of credit risk |
Customer concentrations | Customer concentrations In 2022, we had three individual customers with revenue concentration greater than 10% of our total revenue accounting for 29.1%, 24.1%, and 12.9%, respectively. At December 31, 2022, we had two customers greater than 10% of our total accounts receivable balance accounting for 50.6% and 12.7%, respectively. |
Vendor concentrations | Vendor concentrations In 2022, we had four individual vendors with cost of revenue concentration greater than 10% of our total cost of revenue accounting for 33.8%, 30.4%, 14.5% and 11.1%, of the total cost of revenue, respectively. |
Litigation and settlement costs | Litigation and settlement costs ASC 450 Contingencies |
Use of estimates | Use of estimates |
Recently Adopted Accounting Pronouncements | On January 1, 2023, we adopted Accounting Standards Code (ASC) No. 326, Financial Instruments-Credit Losses. ASC 326 requires a financial asset (loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financials assets not excluded from scope) measured at amortized cost basis to be presented at the net amount expected to be collected. The adoption of this new standard did not have a material impact on our consolidated financial statements and primarily resulted in enhanced disclosures only. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Account Receivable | For the twelve months ended December 31, 2023 2022 2021 Balance at the end of the year $ 9,226,956 $ 11,119,892 $ 9,265,813 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Measurements | |
Schedule of Investments and Assets at Fair Value | Investment Assets at Fair Value Investment Assets at Fair Value As of December 31, 2023 As of December 31, 2022 Level 1 Total Level 1 Total Debt securities $ — $ — $ 936,563 $ 936,563 Equity securities — — 1,253,027 1,253,027 Cash equivalents 69,291 69,291 801 801 Total Investments at Fair Value $ 69,291 $ 69,291 $ 2,190,391 $ 2,190,391 As of December 31, 2023 As of December 31, 2022 Cost Unrealized Gain (Loss) Fair Value Cost Unrealized Gain (Loss) Fair Value Marketable securities Debt securities $ — $ — $ — $ 1,021,431 $ (84,868 ) $ 936,563 Equity securities — — — 1,776,773 (523,746 ) 1,253,027 Total marketable securities $ — $ 2,189,590 |
Allowance for Credit Losses (Ta
Allowance for Credit Losses (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Allowance for Credit Losses | |
Schedule of doubtful accounts | 2023 2022 Balance at the beginning of the year $ 1,440,678 $ 202,904 Provision for bad debts 786,549 1,265,143 Charge-offs (582,189 ) (27,369 ) Recoveries 7 — Balance at the end of the year $ 1,645,045 $ 1,440,678 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property and Equipment | |
Net Carrying Value of Property and Equipment | 2023 2022 Furniture and fixtures $ 293,152 $ 293,152 Equipment 1,292,528 1,265,752 Capitalized software development costs 16,159,517 14,503,608 Leasehold improvements 458,885 458,885 Subtotal 18,204,082 16,521,397 Less: accumulated depreciation and amortization (16,523,294 ) (14,852,425 ) Total $ 1,680,788 $ 1,668,972 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Intangible Assets and Goodwill | |
Schedule of Intangible Assets from Continuing Operations | Term Carrying Value Accumulated Amortization and Impairment Net Carrying Value 2023 Amortization Customer list, Google 20 years $ 8,820,000 $ (5,218,500 ) $ 3,601,500 $ 441,000 Technology 5 years 3,600,000 (3,600,000 ) — — Customer list, ReTargeter 5 years 1,931,250 (1,705,938 ) 225,312 386,250 Customer list, all other 10 years 1,610,000 (1,610,000 ) — — Brand name, ReTargeter 5 years 643,750 (568,646 ) 75,104 128,750 Customer relationships 20 years 570,000 (197,125 ) 372,875 28,500 Trade names, web properties - 390,000 — 390,000 — Intangible assets classified as long-term $ 17,565,000 $ (12,900,209 ) $ 4,664,791 $ 984,500 Goodwill, total $ 9,853,342 $ — $ 9,853,342 $ — Term Carrying Value Accumulated Amortization Net Carrying Value 2022 Amortization Customer list, Google 20 years $ 8,820,000 $ (4,777,500 ) $ 4,042,500 $ 441,000 Technology 5 years 3,600,000 (3,600,000 ) — 60,000 Customer list, ReTargeter 5 years 1,931,250 (1,319,688 ) 611,562 386,250 Customer list, all other 10 years 1,610,000 (1,610,000 ) — 26,794 Brand name, ReTargeter 5 years 643,750 (439,896 ) 203,854 128,750 Customer relationships 20 years 570,000 (168,625 ) 401,375 28,500 Trade names, web properties (1) - 390,000 — 390,000 — Intangible assets classified as long-term $ 17,565,000 $ (11,915,709 ) $ 5,649,291 $ 1,071,294 Goodwill, total $ 9,853,342 $ — $ 9,853,342 $ — |
Schedule of Amortization Expense | 2024 $ 769,917 2025 469,500 2026 469,500 2027 469,500 2028 469,500 Thereafter 1,626,874 Total $ 4,274,791 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of Accrued Expenses and Other Current Liabilities | 2023 2022 Accrued marketing costs $ 5,717,983 $ 3,321,598 Accrued expenses and other 622,960 1,044,664 Accrued commissions and payroll 1,544,460 782,441 Arkansas grant contingency 35,000 10,000 Accrued taxes, current portion 6,076 3,755 Total $ 7,926,479 $ 5,162,458 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Schedule of Components of Income Tax Expense (Benefit) | 2023 2022 Current tax provision $ — $ — Deferred tax benefit 17,764 — Total tax benefit $ 17,764 $ — |
Schedule of Effective Income Tax Rate Reconciliation | 2023 2022 Federal statutory rate 21 % 21 % State income tax rate, net of federal benefit 1 % 3 % Permanent differences 4 % — % Change in valuation allowance (26 %) (24 %) — % — % |
Schedule of Deferred Tax Assets and Liabilities | 2023 2022 Deferred tax assets: Net operating loss carry forward $ 38,860,119 $ 36,506,618 Intangible assets 1,011,900 543,000 Accrued liabilities 541,200 287,600 Deferred rent 19,200 3,000 Allowance for doubtful accounts 461,000 403,800 Stock compensation expense 587,900 869,900 Unrecognized Income/Loss — 122,100 Other 403,500 373,100 Subtotal 41,884,819 39,109,118 Less valuation allowance (40,619,657 ) (37,976,018 ) Total 1,265,162 1,133,100 Deferred tax liabilities: Intangible assets and property and equipment 826,300 1,242,200 Other 528,100 (2,100 ) Total 1,354,400 1,240,100 Net deferred tax liabilities $ (89,238 ) $ (107,000 ) |
StockBased Compensation (Tables
StockBased Compensation (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
StockBased Compensation | |
Schedule of Stock Grants Outstanding | Options Outstanding RSUs Outstanding Options and RSUs Exercised Available Shares Total Total — 7,010,016 6,634,121 10,905,863 24,550,000 |
Schedule of Stock Option Award Activity | Options Weighted Average Exercise Price Outstanding, beginning of year 100,000 $ 0.52 Stock options, granted — $ — Stock options exercised — $ — Stock options canceled 100,000 $ 0.52 Outstanding, end of year — $ — Exercisable, end of year — $ — |
Schedule of Nonvested Restricted Stock Units Activity | Restricted Stock Unit Weighted Average Fair Value Outstanding, beginning of year 4,913,339 $ 0.79 Granted 4,220,000 $ 0.31 Vested (2,073,322 ) $ 0.86 Forfeited (50,001 ) $ 0.55 Outstanding, end of year 7,010,016 $ 0.48 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
Schedule of Information Relating to Leases | December 31, 2023 Cash paid for operating lease liabilities $ 338,497 Weighted-average remaining lease term 3.75 years Weighted-average discount rate 10.5 % |
Schedule of Operating Lease Maturity | Minimum future lease payments ended December 31, 2023 2024 $ 207,351 2025 219,608 2026 222,387 2027 226,834 2028 233,727 2029 19,526 1,129,433 Less imputed interest (254,537 ) Total lease liabilities $ 874,896 Minimum future lease payments ended December 31, 2023 2024 52,626 2025 18,491 71,117 Less imputed interest (2,107 ) Total lease liabilities $ 69,010 |
Schedule of Finance Lease Liability | December 31, 2023 Cash paid for finance lease liabilities $ 117,369 Weighted-average remaining lease term 1.31 years Weighted-average discount rate 6.25 % |
Organization and Business (Deta
Organization and Business (Details Narrative) | 1 Months Ended | 12 Months Ended | ||||
May 28, 2021 | Mar. 31, 2021 USD ($) | Jan. 22, 2021 USD ($) | Jan. 19, 2021 USD ($) | Dec. 31, 2023 USD ($) integer | May 21, 2021 USD ($) | |
Patents Issued | integer | 19 | |||||
Pending Patents | integer | 8 | |||||
Consideration received on transaction | $ 6,250,000 | $ 8,000,000 | ||||
Payments to Acquire Investments | $ 2,000,000 | |||||
Cash Deposited, Interest-Bearing | $ 10,000,000 | |||||
Cash, cash equivalents, and short-term marketable securities | $ 4,400,000 | |||||
Net working capital | 211,100 | |||||
Net loss | (10,300,000) | |||||
Net cash used in operating activities | (2,600,000) | |||||
Capitalized computer software, Net | 1,700,000 | |||||
Accumulated deficit | $ (167,400,000) | |||||
Sales Agreement [Member] | ||||||
Sale of stock, consideration received on transaction, authorized amount | $ 35,000,000 | |||||
Period for which advance notice is due to terminate agreement (days) | 10 years | |||||
Commission fee, percent | 3% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Summary of Significant Accounting Policies | |||
Accounts receivable, net of allowance for doubtful accounts | $ 9,226,956 | $ 11,119,892 | $ 9,265,813 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Narrative) | 12 Months Ended | ||
Dec. 31, 2023 USD ($) integer | Dec. 31, 2022 USD ($) integer | Dec. 31, 2021 USD ($) | |
Net revenue | $ | $ 73,911,528 | $ 75,603,745 | |
Depreciation expense | $ | 1,670,868 | 1,527,663 | |
Accounts receivable, net of allowance for doubtful accounts | $ | $ 9,226,956 | $ 11,119,892 | $ 9,265,813 |
Employees employed under grant | integer | 48 | 48 | |
Employees required to be employed | integer | 2 | 2 | |
Number Of Employees Required To Be Employed Under Grant | integer | 50 | 50 | |
Contingent liability | $ | $ 35,000 | $ 10,000 | |
Number of Reportable Segments | integer | 1 | ||
Cost of Revenue Net [Member] | |||
Cost Of Revenue, Percentage | 67.60% | 15.30% | |
Customer Concentration Risk [Member] | |||
Concentration Risk, Percentage | 60.40% | 29.10% | |
Sales Revenue Net [Member] | |||
Concentration Risk, Percentage | 10% | 10% | |
second customer Concentration Risk [Member] | |||
Concentration Risk, Percentage | 12.80% | 24.10% | 12.90% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair Value, Recurring - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Debt securities | $ 0 | $ 936,563 |
Equity securities | 0 | 1,253,027 |
Cash equivalents | 69,291 | 801 |
Total Investments at Fair Value | 69,291 | 2,190,391 |
Level 1 | ||
Debt securities | 0 | 936,563 |
Equity securities | 0 | 1,253,027 |
Cash equivalents | 69,291 | 801 |
Total Investments at Fair Value | $ 69,291 | $ 2,190,391 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details 1) - Fair Value, Recurring - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Debt securities, fair value | $ 0 | $ 936,563 |
Equity securities, fair value | 0 | 1,253,027 |
Level 1 | ||
Debt securities, cost | 0 | 1,021,431 |
Debt securities, unrealized gain (loss) | 0 | (84,868) |
Debt securities, fair value | 0 | 936,563 |
Equity securities, cost | 0 | 1,776,773 |
Equity securities, unrealized gain (loss) | 0 | 523,746 |
Equity securities, fair value | $ 0 | 1,253,027 |
Total marketable securities | $ 2,189,590 |
Fair Value Measurements Narrati
Fair Value Measurements Narrative (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Fair Value Measurements | |
Realized loss on marketable securities | $ 510,000 |
Allowance for Credit Losses (De
Allowance for Credit Losses (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Allowance for Credit Losses | ||
Balance at the beginning of the year | $ 1,440,678 | $ 202,904 |
Provision for bad debts | 786,549 | 1,265,143 |
Charge-offs | (582,189) | (27,369) |
Recoveries | 7 | 0 |
Balance at the end of the year | $ 1,645,045 | $ 1,440,678 |
Allowance for Credit Losses (_2
Allowance for Credit Losses (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Allowance for Credit Losses | |||
Concentration risk, percentage | 24.10% | ||
Allowance for doubtful accounts | $ 1,645,045 | $ 1,440,678 | $ 202,904 |
Increase Allowance for doubtful accounts | $ 204,367 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Subtotal | $ 18,204,082 | $ 16,521,397 |
Less: accumulated depreciation and amortization | (16,523,294) | (14,852,425) |
Total | 1,680,788 | 1,668,972 |
Depreciation expense | 1,670,868 | 1,527,663 |
Furniture and fixtures | ||
Subtotal | 293,152 | 293,152 |
Equipment | ||
Subtotal | 1,292,528 | 1,265,752 |
Capitalized internal use and purchased software | ||
Subtotal | 16,159,517 | 14,503,608 |
Leasehold improvements | ||
Subtotal | $ 458,885 | $ 458,885 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property and Equipment | ||
Depreciation expense | $ 1,670,868 | $ 1,527,663 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Goodwill total, Carrying Value | $ 9,853,342 | $ 9,853,342 |
Goodwill total, Net Carrying Value | 9,853,342 | 9,853,342 |
Intangible assets classified as long-term | ||
Carrying Value | 17,565,000 | 17,565,000 |
Accumulated Amortization and Impairment | (12,900,209) | (11,915,709) |
Net Carrying Value | 4,664,791 | 5,649,291 |
Net Carrying Value | 4,274,791 | |
Trade names, web properties | ||
Intangible assets classified as long-term | ||
Amortization of Intangible Assets | 0 | 0 |
Carrying Value | 390,000 | 390,000 |
Accumulated Amortization and Impairment | 0 | 0 |
Net Carrying Value | 390,000 | 390,000 |
Customer list, Google | ||
Intangible assets classified as long-term | ||
Amortization of Intangible Assets | $ 441,000 | $ 441,000 |
Term | 20 years | 20 years |
Carrying Value | $ 8,820,000 | $ 8,820,000 |
Accumulated Amortization and Impairment | (5,218,500) | (4,777,500) |
Net Carrying Value | 3,601,500 | 4,042,500 |
Technology | ||
Intangible assets classified as long-term | ||
Amortization of Intangible Assets | $ 0 | $ 60,000 |
Term | 5 years | 5 years |
Carrying Value | $ 3,600,000 | $ 3,600,000 |
Accumulated Amortization and Impairment | (3,600,000) | (3,600,000) |
Net Carrying Value | 0 | 0 |
Customer list, ReTargeter | ||
Intangible assets classified as long-term | ||
Amortization of Intangible Assets | $ 386,250 | $ 386,250 |
Term | 5 years | 5 years |
Carrying Value | $ 1,931,250 | $ 1,931,250 |
Accumulated Amortization and Impairment | (1,705,938) | (1,319,688) |
Net Carrying Value | $ 225,312 | 611,562 |
Customer list, all other | ||
Intangible assets classified as long-term | ||
Amortization of Intangible Assets | $ 26,794 | |
Term | 10 years | 10 years |
Carrying Value | $ 1,610,000 | $ 1,610,000 |
Accumulated Amortization and Impairment | (1,610,000) | (1,610,000) |
Net Carrying Value | 0 | 0 |
Brand name, ReTargeter | ||
Intangible assets classified as long-term | ||
Amortization of Intangible Assets | $ 128,750 | $ 128,750 |
Term | 5 years | 5 years |
Carrying Value | $ 643,750 | $ 643,750 |
Accumulated Amortization and Impairment | (568,646) | (439,896) |
Net Carrying Value | 75,104 | 203,854 |
Customer relationships | ||
Intangible assets classified as long-term | ||
Amortization of Intangible Assets | $ 28,500 | $ 28,500 |
Term | 20 years | 20 years |
Carrying Value | $ 570,000 | $ 570,000 |
Accumulated Amortization and Impairment | (197,125) | (168,625) |
Net Carrying Value | $ 372,875 | $ 401,375 |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill (Details 1) | Dec. 31, 2023 USD ($) |
Intangible Assets and Goodwill | |
2024 | $ 769,917 |
2025 | 469,500 |
2026 | 469,500 |
2027 | 469,500 |
2028 | 469,500 |
Thereafter | 1,626,874 |
Net Carrying Value | $ 4,274,791 |
Bank Debt (Details Narrative)
Bank Debt (Details Narrative) - Hitachi Capital America Corp. - USD ($) | Mar. 01, 2023 | Dec. 31, 2023 |
Amendment fee | $ 10,000 | |
Annual commitment fee amount | $ 10,000 | |
Quarterly service fee (as a percentage) | 0.20% | |
Outstanding balance | $ 0 | |
Loan and Security Agreement | ||
Line of credit facility, maximum borrowing capacity | $ 5,000,000 | |
Percentage of aggregate eligible accounts receivable | 80% | |
Stated interest rate | 1.75% | |
Debt instrument, default interest rate | 6% | |
Loan and Security Agreement | Maximum | ||
Percentage of aggregate eligible accounts receivable | 85% | |
Debt Covenant Period One | ||
Exit fee | $ 50,000 | |
Debt Covenant Period Two | ||
Exit fee | $ 25,000 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Accrued Expenses and Other Current Liabilities | ||
Accrued marketing costs | $ 5,717,983 | $ 3,321,598 |
Accrued expenses and other | 622,960 | 1,044,664 |
Accrued payroll and commission liabilities | 1,544,460 | 782,441 |
Arkansas grant contingency | 35,000 | 10,000 |
Accrued taxes, current portion | 6,076 | 3,755 |
Total | $ 7,926,479 | $ 5,162,458 |
Commitments (Details Narrative)
Commitments (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Sep. 17, 2021 | Sep. 17, 2021 | Sep. 26, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Referral and support services agreement advance | $ 1,500,000 | $ 1,500,000 | $ 642,202 | $ 800,000 | |
Referral and support services agreement advance | 500,000 | $ 800,000 | |||
Referral agreement term | 5 years | 5 years | |||
Amortization of referral agreement as marketing expense | 700,000 | ||||
Number of securities called by each warrant or right (in shares) | 300,000 | 300,000 | |||
Vesting period | 2 years | ||||
Reduction in commission expense | 67,000 | ||||
Commission expense | $ 960,852,000 | $ 52,000 | |||
Other Current Assets | |||||
Referral and support services agreement advance | $ 300,000 | $ 300,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Taxes | ||
Deferred tax benefit | $ 17,764 | $ 0 |
Current tax provision | 0 | 0 |
Total tax benefit | $ 17,764 | $ 0 |
Income Taxes (Details 1)
Income Taxes (Details 1) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Taxes | ||
Federal statutory rate | 21% | 21% |
Permanent differences | 4% | |
State income tax rate, net of federal benefit | 1% | 3% |
Change in valuation allowance | (26.00%) | (24.00%) |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Net operating loss carry forward | $ 38,860,119 | $ 36,506,618 |
Intangible assets | 1,011,900 | 543,000 |
Accrued liabilities | 541,200 | 287,600 |
Deferred rent | 19,200 | 3,000 |
Allowance for doubtful accounts | 461,000 | 403,800 |
Stock compensation expense | 587,900 | 869,900 |
Unrecognized Income/Loss | 0 | 122,100 |
Other | 403,500 | 373,100 |
Subtotal | 41,884,819 | 39,109,118 |
Less valuation allowance | 40,619,657 | 37,976,018 |
Total | 1,265,162 | 1,133,100 |
Deferred tax liabilities: | ||
Intangible assets and property and equipment | 826,300 | 1,242,200 |
Other | 528,100 | 2,100 |
Total | 1,354,400 | 1,240,100 |
Net deferred tax liabilities | $ (89,238) | $ (107,000) |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Taxes | ||
Operating loss carryforwards | $ 107,908,005 | |
Federal net operating loss carryforwards | $ 30,700,000 | |
Federal net operating loss carryforwards, percentage rate | 80% | |
Net operating losses expired period | expire beginning 2024 through 2037 | |
Deferred tax liability relating to goodwill offset percenatge | 80% | |
Net deferred tax liabilities | $ 89,238 | $ 107,000 |
Deferred tax benefit | $ 17,800 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - shares | Dec. 31, 2023 | Sep. 30, 2023 | Dec. 31, 2022 |
StockBased Compensation | |||
Options Outstanding | 100,000 | 0 | 100,000 |
RSUs Outstanding | 7,010,016 | ||
Options and RSUs Exercised | 6,634,121 | ||
Available Shares | 10,905,863 | ||
Total Awards Authorized | 24,550,000 |
Stock Based Compensation (Det_2
Stock Based Compensation (Details 1) - $ / shares | Dec. 31, 2023 | Sep. 30, 2023 |
StockBased Compensation | ||
Outstanding beginning balance | 0 | 100,000 |
Outstanding ending balance | 100,000 | 0 |
Outstanding beginning balance | $ 0 | $ 0.52 |
Outstanding ending balance | $ 0.52 | $ 0 |
Stock Based Compensation (Det_3
Stock Based Compensation (Details 2) | 12 Months Ended |
Dec. 31, 2023 $ / shares shares | |
Forfeited | (193,000) |
Outstanding, end of period | 7,010,016 |
Restricted Stock Units | |
Outstanding, beginning of period | 4,913,339 |
Granted | 4,220,000 |
Vested | (2,073,322) |
Forfeited | (50,001) |
Outstanding, end of period | 7,010,016 |
Weighted Average Grant Date Fair Value | |
Weighted Average Fair Value, Outstanding, beginning of year | $ / shares | $ 0.79 |
Weighted Average Fair Value, Granted | $ / shares | 0.31 |
Weighted Average Fair Value, Vested | $ / shares | 0.86 |
Weighted Average Fair Value, Forfeited | $ / shares | 0.55 |
Weighted Average Fair Value, Outstanding, end of year | $ / shares | $ 0.48 |
Stock Based Compensation (Det_4
Stock Based Compensation (Details Narrative) | 12 Months Ended | |
Dec. 31, 2023 USD ($) shares | Dec. 31, 2022 USD ($) | |
StockBased Compensation | ||
Option and restricted stock unit vesting period (up to) | 3 years | |
Number of shares reserved for issuance (in shares) | shares | 24,550,000 | |
Stock based compensation | $ 1,986,296 | $ 2,350,314 |
Compensation cost related to non vested awards not yet recognized | $ 1,571,436 | |
Average remaining expense recognition period | 3 years | |
Weighted average forfeiture rate | 0 |
Stockholders Equity (Details Na
Stockholders Equity (Details Narrative) - USD ($) | 12 Months Ended | ||||
Aug. 31, 2023 | Aug. 31, 2022 | Sep. 17, 2021 | Sep. 17, 2021 | Dec. 31, 2023 | |
Referral agreement term | 5 years | 5 years | |||
Class of warrant or right, granted in period (in shares) | 300,000 | ||||
Exercise price of warrant (in usd per share) | $ 0.71 | $ 0.71 | |||
Warrants outstanding (in shares) | $ 149,551 | $ 149,551 | |||
Warrants outstanding, term | 7 years | ||||
Shares vested (in shares) | 21,136 | 85,862 | |||
Stock warrant credit | $ (7,900) | ||||
Forfeited (in shares) | 193,000 | ||||
Maximum | |||||
Referral agreement term | 5 years | ||||
Measurement Input, Implied Volatility | |||||
Warrants outstanding, measurement input | 100% | 100% | |||
Measurement Input, Risk-free Yield | |||||
Warrants outstanding, measurement input | 1.17% | 1.17% | |||
Measurement Input, Share Price | |||||
Warrants outstanding, measurement input | $ 0.71 | $ 0.71 |
Retirement Plan Costs (Details
Retirement Plan Costs (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Retirement Plan Costs | ||
Employer matching contribution amount | $ 370,782 | $ 292,825 |
Maximum annual contribution per employee, percent | 4% |
Leases Operating Leases (Detail
Leases Operating Leases (Details) | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Operating lease liabilities [Member] | |
Cash paid for operating lease liabilities | $ 338,497 |
Weighted-average remaining lease term | 3 years 9 months |
Weighted-average discount rate | 10.50% |
Finance lease liabilities [Member] | |
Cash paid for operating lease liabilities | $ 117,369 |
Weighted-average remaining lease term | 1 year 3 months 21 days |
Weighted-average discount rate | 6.25% |
Minimum future lease payments ended December 31, 2023 One | |
2024 | $ 52,626 |
2025 | 18,491 |
Payments due | 71,117 |
Less imputed interest | (2,107) |
Total lease liabilities | 69,010 |
Minimum future lease payments ended December 31, 2023 | |
2024 | 207,351 |
2025 | 219,608 |
2026 | 222,387 |
2027 | 226,834 |
2028 | 233,727 |
2029 | 19,526 |
Payments due | 1,129,433 |
Less imputed interest | (254,537) |
Total lease liabilities | $ 874,896 |
Leases Narrative (Details Narra
Leases Narrative (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Sep. 01, 2023 | |
Right of use assets - operating lease | $ 805,786 | $ 310,162 | |
Right of use assets - finance lease | 72,560 | 168,750 | |
Expected lease expense for first year | $ 208,000 | ||
Annual percentage increase in lease payments | 3% | ||
Rent expense related to operating leases | 358,667 | 377,020 | |
Amortization expense related to finance leases | $ 96,190 | $ 103,926 | |
Maximum | |||
Term of contract | 6 years | ||
Minimum | |||
Term of contract | 3 years |
Related Parties (Details Narrat
Related Parties (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Paid in advance | $ 1,076,121 | $ 798,977 |
Board Members [Member] | ||
Marketable securities | 0 | 2,189,590 |
Revenue from customers | 0 | $ 18,300,000 |
Accounts receivable | 1,200,000 | |
Initial fee expense | 15,000 | |
Expense | 35,000 | |
Paid in advance | $ 5,000 |
Subsequent Event (Details Narra
Subsequent Event (Details Narrative) - Subsequent Event [Member] | Jan. 11, 2024 USD ($) |
Lease cost | $ 127,000 |
Lease payments percentage increased | 2% |
Lease period expired | commencing on February 1, 2024 and expiring on January 31, 2027 |