INUV 10-K & 10-Q changes, risk factors and insider trading

We have a history of losses. We cannot anticipate with any degree of certainty what our revenues will be in future periods. Our revenues increased approximately 13.4%2.9% in 20242025 as compared to 2023,2024, however, our gross profit margin remaineddecreased levelby at10.1% 85.6%to 74.5% in 2024 and 85.8% in 2023.2025. We reported an operating loss of approximately $5.1 million in 2025 as compared to an operating loss of approximately $5.8 million in 2024 as compared to an operating loss of approximately $10.3 million in 2023.2024. Though we have a credit facility dependent upon receivables, the negative cash flows generated from operating activities introduces potential risk of an interruption to operating activities. As of December 31, 2024,2025, we have approximately $2.5$2.8 million in cash and cash equivalents. Our net working capital deficit was $2.2$5.1 million. We have encountered recurring losses and cash outflows from operations, which historically we have funded through equity offerings and debt facilities. In addition, our investment in internally developed software consists primarily of labor costs which are of a fixed nature. Through December 31, 2024,2025, our accumulated deficit was $173.2$178.3 million. See Liquidity and Capital Resources under ITEM 7. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS for a more thorough discussion.

We rely on onetwo customercustomers for a significant portion of our revenues. A significant portion of our revenue is derived from onetwo customer.customers. During 20242025 thisthese customertwo customers accounted for 64.2% and 19.3% of our revenues, respectively. In 2024, the same two customers accounted for 75.0% ofand our revenues. In 2023, the same customer accounted for 60.4%7.0% of our revenues.revenues, respectively. The amount of revenue we receive from thisthese customercustomers is dependent on a number of factors outside of our control; this includes the amount the customercustomers chargescharge for advertisements, the depth of itstheir available advertisements, and itstheir ability to display relevant ads in response to end user queries and changes in advertising budgets resulting from their own business circumstances. Historically, we have been able to replace lost clients with new clients or by expanding our relationship with existing clients, however, we would likely experience a significant decline in revenue and our business operations could be significantly harmed if we lose material customers or are unable to replace lost clients. The loss of material customers or a material change in the revenue or gross profit they generate would have a material adverse impact on our business, results of operations and financial condition in future periods.

We are dependent upon relationships with and the success of our supply partners. Our supply partnerspartners, including owners and publishers of websites and mobile applications, remain a critical component of our success. Throughout 2024, we have successfully onboarded a significant number of new supply partners, strengthening ourOur ability to generate revenue depends on these partners’ capacity to attract and retain users and deliver high-quality traffic andthat results in engagement forwith ouradvertisements advertisers.we distribute. While turnover within our supply partner network still occurs, it has decreased compared to prior periods. To sustain growth, we must continue to recruit and retain supply partners whoand canhave drivemade trafficprogress effectivelyin stabilizing and expanding our supply network, turnover within our partner base remains inherent to theirour websitesbusiness. and mobile applications, resulting in clicks on advertisements we have delivered. However, supplySupply partners may face challenges in attracting and maintaining users due to competition, rapidly evolving market dynamics, technological advancements, industry consolidation, and shifting consumer preferences.preferences, Althoughwhich ourmay supplyreduce partnertraffic basevolumes hasor expanded,engagement maintaininglevels. strongIn relationshipsaddition, remains a priority. Somesome partners may explorepursue direct relationships with advertisers, considerview us as competitors, or find competingalternative solutions more attractive. Additionally,As whilea weresult, havetraffic made progress in stabilizinglevels and expandingadvertising inventory available through our supply network,network may fluctuate, and there can be no assurance that traffic levels will continue to increase or that all departing partners will be replaced.replaced or that traffic volumes will increase. Any disruptionsdisruption in our ability to sustainmaintain, andreplace, enhanceor effectively scale our supply partnerships could havematerially aadversely material adverse effect onaffect our business, financial position,condition, and results of operations.

Our business must keep pace with rapid technological change to remain competitive. Our business operates in a rapidly changing technological landscape, evident with the introductionrapid adoption of AIartificial toolsintelligence liketechnologies ChatGPTand intools, 2022as alongwell withas the deprecation of third-party cookies. To stay competitive, we must swiftly adapt to evolving industry standards, new product releases, and changing customer preferences. Continual improvement of our services'services’ speed, performance, and compatibility across diverse platforms is crucial. Failure to keep pace with these technological shifts could adversely affect our financial position and results of operations. Our increasing use of artificial intelligence and machine learning technologies also exposes us to risks related to data quality, model performance, regulatory scrutiny, and evolving legal standards governing the use of automated decision-making technologies.

In the ordinary course of business, we rely on information technology networks and systems, some of which are provided, hosted or managed by vendors and other third parties, to process, transmit and store electronic information, and to manage or support a variety of businesses. Additionally, we collect and store certain data, including proprietary business information, and have access to confidential or personal information in certain of our businesses that is subject to privacy and cybersecurity laws, regulations and customer-imposed controls. Third parties and threat actors, including organized criminals, nation-state entities, and/or nation-state supported actors, may attempt to gain unauthorized access to our information and operational technology networks and infrastructure, data and other information. Despite our cybersecurity and business continuity counter measures (including employee and third-party training, monitoring of networks and systems, patching, maintenance, and backup of systems and data), our information and operational technology systems, networks and infrastructure are still potentially susceptible to cyber-attack, insider threat, compromise, damage, disruptiondisruption, or shutdown, including as a result of the exploitation of known or unknown hardware or software vulnerabilities in our systems or the systems of our vendors and third-party service providers, the introduction of computer viruses, malware or ransomware, service or cloud provider disruptionsdisruptions, or security breaches, phishing attempts, employee error or malfeasance, power outages, telecommunication or utility failures, systems failures, natural disasters or other catastrophic events. Despite our cybersecurity counter measures, it is possible for security vulnerabilities or a cyberattack to remain undetected for an extended time period and the prioritization of decisions with respect to security measures and remediation of known vulnerabilities that we and the vendors and other third parties upon which we rely make may prove inadequate to protect against these attacks. Any cybersecurity incident or information or operational technology network disruption could result in numerous negative consequences, including the risk of legal claims or proceedings, investigations or enforcement actions by U.S., state, or foreign regulators; liabilities or penalties under applicable laws and regulations, including privacy laws and regulations in the U.S. and other jurisdictions; interference with our operations; the incurrence of remediation costs; loss of intellectual property protection; the loss of customer, supplier or employee relationships; and damage to our reputation, any of which could adversely affect our business. Although we maintain insurance coverage for various cybersecurity and business continuity risks, there can be no guarantee that all costs, damages, expenses or losses incurred will be fully insured.

Regulatory and legal uncertainties could harm our business. While there are currently relativelylimited fewfederal laws or regulations directly applicable to certain aspects of Internet-based commerce or commercial search activity, there is increasing awareness of such activity and interest from state and federal lawmakers in regulating these services. New regulation of activities in which we are involved or the extension of existing laws and regulations to Internet-based services could have a material adverse effect on our business, results of operations and financial position.

Failure to comply with federal, state and international privacy and data security laws and regulations, or the expansion of current or the enactment of new privacy and data security laws or regulations, could adversely affect our business.Abusiness. A variety of federal, state and international laws and regulations govern the collection, use, retention, sharing and security of consumer data. In addition, various federal, state and foreign legislative and regulatory bodies may expand current or enact new laws regarding privacy matters. For example, recently there have been Congressional hearings and increased attention to the capture and use of location-based information relating to users of smartphones and other mobile devices, and internationally the European Union’s General Data Protection Regulation (GDPR) went into effect in May 2018. Additionally, multiple legislative proposals concerning privacy and the protection of user information are being considered by the U.S. Congress and various U.S. state legislatures. Certain U.S. state legislatures have already enacted privacy legislation, one of the strictest and most comprehensive of which is the California Consumer Privacy Act of 2018, which became effective on January 1, 2020 (the “CCPA”). The CCPA provides data privacy rights for California consumers,consumers and restricts the ability to use personal California user. The CCPA also provides consumers with a private right of action for security breaches, as well as provides for statutory damages. We have posted privacy policies and practices concerning the collection, use and disclosure of subscriber data on our websites and applications. The existing and soon to be enacted privacy and data security related laws and regulations are evolving and subject to potentially differing interpretations. Several Internet companies have incurred penalties for failing to abide by the representations made in their privacy policies and practices. In addition, several states have adopted legislation that requires businesses to implement and maintain reasonable security procedures and practices to protect sensitive personal information and to provide notice to consumers in the event of a security breach. Any failure, or perceived failure, by us to comply with our posted privacy policies or with any data-related consent orders, Federal Trade Commission requirements or orders or other federal, state or international privacy or consumer protection-related laws, including the GDPR and CCPA, regulations or industry self-regulatory principles could result in claims, proceedings or actions against us by governmental entities or others or other liabilities, which could adversely affect our business.

We are subject to the continued listing standards of the NYSE American and our failure to satisfy these criteria may result in delisting of our common stock. Our common stock is listed on the NYSE American. In order to maintain this listing, we must maintain a certain share price, financial and share distribution targets, including maintaining a minimum amount of shareholders’ equity and a minimum numbermarket value of publicpublicly shareholders.held shares. In addition to these objective standards, the NYSE American may delist the securities of any issuer (i) if, in its opinion, the issuer’s financial condition and/or operating results appear unsatisfactory; (ii) if it appears that the extent of public distribution or the aggregate market value of the security has become so reduced as to make continued listing on the NYSE American inadvisable; (iii) if the issuer sells or disposes of principal operating assets or ceases to be an operating company; (iv) if an issuer fails to comply with the NYSE American’s listing requirements; (v) if an issuer’s securities sell at what the NYSE American considers a “low selling price” which the exchange generally considers $0.20 per share and the issuer fails to correct this via a reverse split of shares after notification by the NYSE American; or (vi) if any other event occurs or any condition exists which makes continued listing on the NYSE American, in its opinion, inadvisable. There are no assurances how the market price of our common stock will be impacted in future periods as a result of the general uncertainties in the capital markets. If the NYSE American delists our common stock, investors may face material adverse consequences, including, but not limited to, a lack of trading market for our common stock, reduced liquidity, decreased analyst coverage of our common stock, and an inability for us to obtain any additional financing to fund our operations that we may need.

Our financial condition may be adversely affected if we are unable to identify and complete future acquisitions, fail to successfully integrate acquired assets or businesses, or are unable to obtain financing for acquisitions on acceptable terms.Theterms. The acquisition of assets or businesses that we believe to be complementary to our business is an important component of our strategy. We believe that acquisition opportunities may arise from time to time, and that any such acquisitions could be significant. At any given time, discussions with one or more potential sellers may be at different stages. However, any such discussions may not result in the consummation of an acquisition transaction, and we may not be able to identify or complete any acquisitions. We cannot predict the effect, if any, that any announcement or consummation of an acquisition would have on the trading price of our ordinary shares. Our business is capital intensive and any such transactions could involve the payment by us of a substantial amount of cash and/or equity securities. We may need to raise additional capital through public or private debt or equity financings to execute our growth strategy and to fund acquisitions. Adequate sources of capital may not be available when needed on favorable terms. If we raise additional capital by issuing additional equity securities or use equity securities for acquisitions, existing shareholders may be diluted. If our capital resources are insufficient at any time in the future, we may be unable to fund acquisitions, take advantage of business opportunities or respond to competitive pressures, any of which could harm our business. Any usage of capital to fund an acquisition could lead to a decrease in liquidity.

On July 30, 2024, we entered into a Financing and Security Agreement and Collateral Documents (“Financing Agreement”) with SLR Digital Finance LLC (“SLR”). Under the terms of the Financing Agreement, SLR has provided us with a $10,000,000 line of credit commitment. We are permitted to borrow up to 90% of eligible accounts receivable under the Financing Agreement, up to the maximum credit commitment of $10,000,000. We will pay SLR monthly interest at the rate of 1.0% in excess of the Prime Rate but not less than 7%. The Financing Agreement has a three year term. The Financing Agreement contains certain affirmative and negative covenants to which we are also subject. We agreed to pay SLR an annual facility fee of 0.80% of the maximum credit commitment. We also agreed to pay a minimum utilization amount of the interest rate multiplied by difference between $500,000 and the average daily outstanding loan during a month. We are obligated to pay SLR a monthly service fee of 0.15% on of the average net amount of outstanding loans during each month. If we terminate the Financing Agreement prior to the second anniversary of the effective date, an amount equal to 1.0% of the maximum credit commitment will be due as an early termination payment and if we terminate after the second anniversary of the effective date but prior to the end of the term, an amount equal to 0.25% of the maximum credit commitment will be due. Repayment of the Financing Agreement will be made through collections from eligible accounts receivable. At December 31, 20242025 there were nothe outstanding balances duebalance under the Financing Agreement.Agreement at that date was $3,288,100.

Cost of revenue is primarily composed of payments to website publishers and app developers that host advertisements. To a lesser extent, cost of revenue includes payments to advertising exchanges that provide access to digital inventory where we serve advertisements. To a lesser extent, cost of revenue includes payments to website publishers and app developers that host advertisements. The increase in cost of revenue for the year ended December 31, 2024,2025, compared to the same time period in 20232024 was primarily related to higherthe change in mix within Platform revenue. As mentioned above, revenue withinfrom a Platformnew clientproduct thisintroduced year.in Grossthe marginfourth quarter of 85.6%2024 accounted for the increase in cost of revenue. The change in gross margin in the current year ended December 31, 20242025, was nearly level as74.5% compared to 85.8%85.6% in the priorsame yearperiod period.of 2024 was primarily due to a change in the revenue mix.

Marketing costs consist mostlyprimarily of mediatraffic acquisition, or media, costs and include expenses incurred onto behalfattract ofand clients.direct audience traffic to various web properties. Marketing costs for the year ended December 31, 20242025 compared to the same period in 20232024 was 14.8%13.0% higherlower due primarily to higherlower revenue in 2025 from the Platform advertisersclient mentioned in theNet comparableRevenue periods.section Marketingabove costsand in 2024 include theto fully amortizedamortizing the remaining balance of $500,000$600,000 of the referral and support services asset in the third quarter of 2024 (see Note 8 – CommitmentsBusiness Development Agreement to our Consolidated Financial Statements).

Compensation expense was lowerflat for the year ended December 31, 20242025, compared to the same time period in 2023 due primarily to lower incentive, commission, and stock-based compensation expense.2024. Our total employment, both full and part-time, was 79 at December 31, 2025 compared to 81 at December 31, 2024 compared to 93 at December 31, 2023.2024.

General and administrative costsexpenses were lowerincreased for the year ended December 31, 20242025 compared to the same time period in 20232024 primarily due primarily to ana adjustment$1.4 million reduction in the reserve for expected credit losses. During 2024, we made an adjustment to the allowance for expected credit losses forrecorded in 2024 related to a balance due from a former clientclient. in 2022. TheThat client has sincesubsequently paid off their fullits outstanding balance in full and had no longerremaining has any obligationobligations to usthe Company as of December 31, 2024.2025.

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, (the “Shares”), having an aggregate sales price of up to $15,000,000, from time to time, through an “at the market offering” program under which Wainwright will act as sales agent. The sales of the Shares made under the ATM Agreement will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The CompanyWe will pay Wainwright a commission rate of up to 3.0% of the aggregate gross proceeds from each sale of Shares. For the year ended December 31, 2024, thewe Company hasdid not soldsell any shares of common stock under the ATM Agreement. During the year ended December 31, 2025, we utilized the ATM Agreement and sold 165,641 shares of common stock for gross proceeds of $1,184,740, before deducting commissions and other offering-related costs.

On July 31, 2024, we entered into a Financing and Security Agreement (the "“Financing Agreement”) with SLR Digital Finance LLC ("“SLR”), effective July 30, 2024. Pursuant to the terms of the Financing Agreement, SLR will finance up to $10 million dependentsubject uponto availability based on the amount of eligible accounts receivable. Eligibility is determined by criteria such as geographic location of the customer and aging of receivables. Availability asAs of December 31, 20242025, equaledour accounts receivable, net of allowance for credit losses, were $5,887,884, of which a substantial portion qualified as eligible under the maximumFinancing creditAgreement. commitmentAt ofDecember $10,000,000.31, 2025, the outstanding balance due under the Financing Agreement was $3,288,100. See Note 6 – Bank Debt to our Consolidated Financial Statements.

As of December 31, 2024,2025, we have approximately $2.5$2.8 million in cash and cash equivalents. Our net working capital deficit was $2.2$5.1 million. 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, 20242025 we had a net loss of $5.8$5.1 million and the net cash flowused fromin operations ofwas $0.2$1.8 million. Additionally, our investment in investing activities totaled approximately $1.9$1.6 million for the year ended December 31, 2024.2025. This amount primarily consists of internally developed software costs, which are largely comprised of fixed labor costs, along with other capitalized expenditures. Through December 31, 2024,2025, our accumulated deficit was $173.2$178.3 million.

Management plans to support the Company’s future operations and capital expenditures primarily through cash generated from its credit facility until such time as we reach 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. We believe our current cash positionposition, andtogether with availability under our credit facility and proceeds received subsequent to December 31, 2025 from the $6.2 million class action settlement and the subordinated convertible note issued in January 2026, 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.

Net cash providedused byin operating activities was $229,554$1,786,301 during 2024.2025. We reported a net loss of $5,761,801,$5,095,518, which included non-cash expenses: depreciation and amortization of $2,515,177,$2,234,749 and stock-based compensation of $1,501,444, $800,000 for the impairment and amortization of a referral and support services agreement, and amortization of right of use assets of $54,356; partially offset by an adjustment to expect losses on accounts receivable of $1,442,533.$1,144,773. The change in operating assets and liabilities was a net provisionuse of cash of $2,342,255$303,348 primarily due to increasesa decrease in the accounts receivable balance of $6,703,509, offset by decreases in accrued expenses and other liabilities of $2,329,295$5,565,487 and accounts payable balance of $1,990,231 partially offset by an increase in the accounts receivable balance by $1,876,282.$1,331,567. Our terms are such that we generally collect receivables prior to paying trade payables. However, our Mediamedia sales arrangements typically have slower payment terms than the terms of related payables.

During 2023,2024, cash usedprovided inby operating activities was $2,554,075.$229,554. We reported a net loss of $10,389,653$5,761,801 which included the non-cash expenses of depreciation and amortization of $2,655,368,$2,515,177, stock-based compensation expenses of $1,501,444, $800,000 for the impairment and amortization of a referral and support services agreement, and amortization of right of use assets $96,190 and stock-based compensation expenses of $1,986,296.$54,356. The change in operating assets and liabilities was a net provision of cash of $1,433,655.$2,342,255.

Net cash used in investing activities was $1,857,375$1,601,903 for 20242025 and consisted primarily of capitalized internal development costs. Net cash providedused byin investing activities in 20232024 was $606,190$1,857,375 and consisted primarily of proceeds from the sale of marketable securities partially offset by capitalized internal development costs.

Net cash used in financing activities was $353,388 during 2024, primarily due to the election of certain participants to have the Company withhold the issuance of shares pursuant to vesting restricted stock units in consideration of the Company’s payment of taxes on behalf of such participants.

We rely on twofour customers for a significant portion of our revenues. We are reliant upon twofour customers for most of our revenue. DuringFor the firstthree-month quarterperiod ending June 30, 2026, four customers accounted for 13.7%, 15.5%, 20.5%, and 30.5% of our overall revenue and for the six-month period ended June 30, 2026, these13.4%, 19.4%, 17.1% and 31.3% of our overall revenue, respectively. For the three-month period ending June 30, 2025, two Legacy Search customers accounted for 32.1%66.5% and 23.2%19.8% of our revenues,overall respectively.revenue, Duringrespectively and for the samesix-month period inended June 30, 2025, those Legacy Search customers accounted 17.4%68.8% and 70.8%18.5% of our revenues.overall revenue, respectively. The amount of revenue we receive from these customers is dependent on a number of factors outside of our control, including changes in the respective customer’scustomer's advertising budget, both in terms of allocated dollars and media mix, financial resources of the customers, as well as general economic conditions. We would likely experience a significant decline in revenue and our business operations could be significantly harmed if these customers do not continue to utilize our services. Additionally, our business operations and financial condition could be significantly harmed if these customers do not pay for our services on a timely basis. The loss of any of these customers or a material change in the revenue or gross profit they generate or their failure to timely pay us for our services would have a material adverse impact on our business, results of operations and financial condition in future periods.

Our Legacy Search business has experienced significant revenue declines, and we may not be successful in restoring historical revenue levels or profitability. DuringFor the fourththree-month quarterperiod ended June 30, 2026, we generated $7,535,055 in revenue of 2025which and52.4% continuingwas into the first quarter of 2026,from Legacy Search revenueand declined47.6% significantlyfrom comparedAudience toModeling. For the priorthree-month yearperiod periodsended June 30, 2025, we generated $22,671,333 in revenue of which 86.7% was from Legacy Search and represented13.3% approximatelyfrom 71.8%Audience Modeling. For the six-month period ended June 30, 2026, we generated $15,462,609 in revenue of which 54.8% was from Legacy Search and 57.1%,45.2% respectivelyfrom Audience Modeling. For the six-month period ended June 30, 2025, we generated $49,379,365 in revenue of ourwhich total87.8% revenue,was comparedfrom toLegacy approximately 81.1%Search and 88.7%,12.2% respectivelyfrom duringAudience the prior year periods.Modeling. The decline was primarily driven by changes in the search marketplace, including evolving compliance requirements, traffic quality standards and monetization dynamics associated with third-party advertising platforms. While we have implemented operational, compliance and cost-reduction initiatives intended to adapt to these changing market conditions, there can be no assurance that these efforts will successfully restore revenue, margins or profitability within our Legacy Search business, or at all. If monetization rates decline further, traffic volumes continue to decrease, or third-party platform requirements continue to evolve in ways that adversely impact our business model, our revenue, operating results and cash flows could continue to be negatively affected. In addition, if Legacy Search revenue does not improve, we may be required to implement additional cost reduction measures, including reductions in operating expenses and personnel, which could adversely affect our financial condition.

Bonfire platform reset. In response to more stringent compliance requirements, including changes in the Google ecosystem which have suppressed revenue per click (RPC), and as a result of the detection of lower quality traffic on our systems, we developed and deployed an AI compliance system (“Ranger”) to not only enforce our partners’ stricter standards, but to reveal quality differences that had previously been difficult to detect at scale. While this allowed us to take action against bad actors, it also necessitated that we intentionally constrain Bonfire-related revenue in order to have clearer visibility and insight into traffic quality (“Bonfire Reset”). As a result, revenue from our Legacy Search business was lower year-over-year beginning in late fourth quarter 2025 and continuedcontinues to be lower year-over-year infor thesix-month firstperiod quarterended ofJune 30, 2026. As our Legacy Search business generates a higher gross margin and lower operating margin compared to the Audience Modeling business, lower revenue from Legacy Search has also constrained our consolidated gross margins. We have taken, and continue to take, steps to lower costs in our Legacy Search business, including reducing headcount. We currently expect this business to recoverimprove gradually as the year progresses, but there can be no guarantees that it will fully recover. Consistent with these actions, our total employment, both full- and part-time, declined from 82 at June 30, 2025 to 51 at June 30, 2026, a 38% reduction, reflecting our continued discipline in aligning our cost structure with lower levels of revenue generation.

Investment focus on IntentKey. We believe IntentKey is positioned to benefit from the aforementioned industry shifts because it is designed to operate as a privacy-safe decisioning layer that does not rely on cookies or persistent identifiers. We further believe that the adoption of autonomous and AI-enabled workflows may increase demand for algorithmic software, like IntentKey, that can translate intent signals into real-time activation across programmatic environments. As a result, we are focused on growing and enhancing the IntentKey AI product. To the extent we are successful in accelerating IntentKey revenue and that IntentKey becomes a larger portion of our overall revenue mix, we expect that direct operating margins will also increase, as Audience Modeling has historically yielded higher direct operating margins than our Legacy Search business. Reflecting this strategic focus, Audience Modeling revenue grew 16% for the six months ended June 30, 2026, compared to the same period in 2025, resulting from the Bonfire Reset and Forces Impacting the Industry described above.

Revenue for the three-month period ended MarchJune 31,30, 2026, decreased by66.8% 70.3%and revenue for the six-month period ended June 30, 2026, decreased 68.7% as compared to the same time periodperiods in 2025.2025, Thisrespectively. The decrease for the three-month and six-month periods ended June 30, 2026 was driven by 81%80% decline in revenue from Legacy Search resulting from the Bonfire Reset and Forces Impacting the Industry described in Significant Business Trends above. ThisThe decrease was partially offset by a 13%19% and 16% increase in revenue from Audience Modeling in each period, respectively as we continue to grow our IntentKey platform.

Cost of revenue is composed of payments to website publishers and app developers that host advertisement as well as payments to advertising exchanges that provide access to digital inventory where we serve advertisements. The decrease in cost of revenue for the six-month period ended MarchJune 31,30, 2026, compared to the same time period in 2025 was driven by a decrease in revenue from our Legacy Search clients. The resulting change in revenue mix drove gross margin lower to 46.2%45.2% compared to 79.0%77.3% in the same quarterperiod last year. Our Legacy Search business historically carries higher gross margins as a lower proportion of its costs are recorded in cost of revenue, with a greater portion reflected in marketing and other operating expenses.

Marketing costs consist mostly of traffic acquisition (i.e., media) costs and include those expenses required to attract audiences to various web properties. Marketing costs for the three-monththree and six months period ended MarchJune 31,30, 2026 decreased compared to the same periodperiods in 2025 due to the decline in revenue from Legacy Search discussed above in Significant Business Trends.

Compensation expense was higherapproximately $337 thousand lower for the three-monththree periodmonths ended Marchand 31,approximately $246 thousand lower for the six months ended June 30, 2026, compared to the same time periodperiods in 2025,2025 primarily due primarily to alower one-timepayrolls severanceand accruallower ofincentive $914,000and substantiallycommissions of which relates to the separation agreement of a former executive officer,accruals partially offset by lowera salaryreduction expensein resultingcapitalized fromlabor reduced headcount.costs. Compensation expense includes $470 thousand and $1.4 million in severance accruals for the three-monththree periodmonth and six month periods ended MarchJune 31,30, 20252026, included a one-time accrual of an employee benefit of $335,000.respectively. Our total employment, both full- and part-time, was 6451 at MarchJune 31,30, 2026 compared to 8182 at MarchJune 31,30, 2025.

General and administrative costs for the three and six months ended MarchJune 31,30, 2026,2026 increased 1%$314 thousand compared to the same period in 2025.2025 and increased $331 thousand compared to the same period in 2025, respectively primarily due to higher professional fees.

Financing expense, net of interest income,net, for the three and six months ended MarchJune 31,30, 2026, was $398,439approximately compared$107 tothousand $27,929and in$505 thethousand, samerespectively. quarter last year. FinancingThe expense, net thisfor yearthe three and six months ended June 30, 2026 included $359,000approximately of$67 interestthousand and financing$426 feesthousand expense, respectively, related to the issuance of a subordinated convertible notenote. discussed inSee Note 56 – Debt.

Other income,income (loss), net

Other income was approximately $6.2 million$559,991 and $540,571$1,100,562 for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively.2025. In January 2026, we received gross proceeds of approximately $6.2 million in connection with a class action settlement. The settlement proceeds represent a one-time, non-recurring cash inflow. During March 2025, wethe Company received a payment from the Internal Revenue Service ("IRS") totaling $610,352 in connection with an amended form filed in May 2023 for the Employee Retention Credit ("ERC") related to the first quarter of 2021. Of thethis total payment,amount, $533,093 was recognized in Other income,Income, whileand $77,259 of interest was recorded in Financing expense, net. In June 2025, the Company received an additional ERC payment from the IRS related to the second quarter of 2021, totaling $606,156. Of this amount, $525,085 was recognized in Other Income, and $81,071 of interest was recorded in Financing expense, net.

Our principal sources of liquidity are the sale of our common stock and our FinancingNote Purchase Agreement with SLRStreeterville, (thepursuant “Financing Agreement”),to which iswe issued the A-1 Note and the B Note, each discussed in Note 56 – Debt.

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 anthe At The Market OfferingATM Agreement (the “ATM Agreement”) with H.C. Wainwright & Co. LLC (“Wainwright”), to sell shares of our common stock, par value $0.001 per share, (the “Shares”), having an aggregate sales price of up to $15 million, from time to time, through an “"at the market offering”" program under which Wainwright will actacts as sales agent. The sales of the Shares made under the ATM Agreement will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. We will pay Wainwright a commission rate of up to 3.0% of the aggregate gross proceeds from each sale of Shares.sale. For the three-monthsix-month period ended MarchJune 31,30, 2026, thewe Company hashave not sold any additional shares of common stock under the ATM Agreement. During the three-month period ended March 31, 2025, we utilized the ATM Agreement and sold 159,431 shares of common stock for gross proceeds of $1.2 million. As of MarchJune 31,30, 2026, approximately $13.8 million remained available for issuance under the ATM Agreement, based on cumulative gross sales of shares under the program to date. We suspended the ATM Agreement and terminated the continuous offering by us under the associated prospectus supplement. We will not make any sales of Common Shares pursuant to the ATM Agreement, unless and until a new prospectus is filed and the expiration of a 180-day lockup period following completion of the Offerings.

During the fourth quarter of 2025, we deliberately slowed growth in our Legacy Search business in order to better align with more rigorous compliance standards required by our partners. As a result, since that time, revenue has been constrained in our Legacy Search business and this, in turn, has negatively impacted our margins, net income, and cash generation. In response, we have taken steps to contain costs until the Legacy Search business returns to profitability. In addition, weWe 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.

Management plans to support the Company’sCompany's future operations and capital expenditures primarily through cash generatedflows from operations andoperations, availability under itsthe FinancingNote Purchase Agreement, proceeds from the Securities Purchase Agreement that closed on July 1, 2026 and other available financing sources until such time as we reachgenerate profitability.sufficient positive cash flow from operations to support our ongoing liquidity needs. The creditA-1 facilityNote isand duethe uponB demandNote are subject to redemption rights in favor of Streeterville as described in Note 6 – Debt, and therefore there can be no assurancesassurance that sufficient borrowingsfunds will beremain available to support future operations until profitability is reached. We believe our current cash position and creditthe facility,Note Purchase Agreement, 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.

The table below sets forth a summary of our cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025:

Net cash providedused byin operating activities was $1,589,931$717,262 during the threesix months ended MarchJune 31,30, 2026. We reported a net incomeloss of $1,895,655,$2,144,259, which included the receipt of approximately $6.2 million in non-recurring settlement proceeds during the current period, non-cash expenses of depreciation and amortization expense of $538,786$1,057,370 and stock-based compensation expense of $302,719.$543,147. The change in operating assets and liabilities during the threesix months ended MarchJune 31,30, 2026 was a net use of cash of $1,134,034$1,119,704 primarily due to a decrease in the accounts payable balance of $2,988,808, partially$2,904,122 offset by thea decrease in accounts receivable balance of $1,625,443$1,433,270 and an increase inof accrued expensesliabilities and other current liabilities of $431,591.$707,822. Our Legacy Search terms are such that we generally collect receivables prior to paying trade payables;payables. however,However, our Media sales arrangements typically have slower payment terms than the terms of related payables.

During the comparable three-monthsix-month period in 2025, cash used in operating activities was $366,912$223,257 from a net loss of $1,259,821$2,761,084 thatand included several non-cash expenses of depreciation and amortization expense of $568,042 depreciation of right of use assets of $6,090,$1,130,600 and stock-based compensation expense of $304,284.$596,073. The change in operating assets and liabilities during the threesix months ended MarchJune 31,30, 2025,2025 was a net useprovision of cash of $79,752.$692,028 primarily due to a decrease in accounts receivable of $2,825,264 and an increase in accounts payable of $382,182, offset by a decrease of accrued liabilities and other liabilities of $2,358,189 .

Net cash used byin investing activities was $358,944$598,197 for the threesix months ended MarchJune 31,30, 2026, and consisted primarily of capitalized internal development costs.

Net cash used in investing activities was $451,729$858,441 for the threesix months ended MarchJune 31,30, 2025, and consisted primarily of capitalized internal development costs.

Net cash provided by financing activities was $921,389$5,562,832 during the threesix months ended MarchJune 31,30, 2025,2026, and was primarily from the proceeds from the ATMNote Purchase Agreement as discussed in Note 1 – Organization and Business.

As of MarchJune 31,30, 2026, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “"off-balance sheet arrangement”" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.