Blueprint
PROSPECTUS SUPPLEMENT
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Filed Pursuant to Rule 424(b)(5)
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(To Prospectus dated September 8, 2017)
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333-220317
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13,750,000
Shares
Inuvo, Inc.
Common Stock
We are
offering 13,750,000 shares of our common stock, par value $0.001
per share, in this offering. Our common stock is traded on the NYSE
American under the symbol “INUV.” On July 9, 2019, the
last reported sale price of our common stock was $0.36 per
share.
The
offering is being underwritten on a firm commitment basis. We have
granted the underwriter an option to buy up to an additional
2,062,500 shares of common stock from it to cover over-allotments.
The underwriter may exercise this option at any time and from time
to time during the 30-day period from the date of this prospectus
supplement.
As of
the date of this prospectus supplement, the aggregate market value
of our outstanding voting and non-voting common equity held by
non-affiliates was $21,810,421 based on 32,634,159 shares of
outstanding common stock, of which 27,608,129 shares were held by
non-affiliates, and the last reported sale price of our common
stock of $0.79 per share on May 30, 2019. Pursuant to General
Instruction I.B.6 of Form S-3, in no event will we sell securities
in a public primary offering with a value exceeding more than
one-third of our public float in any 12-month period so long as our
public float remains below $75,000,000. During the previous 12
calendar months prior to and including the date of this prospectus
supplement, we have not offered any of our securities pursuant to
General Instruction I.B.6 of Form S-3.
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No Exercise of Over-Allotment
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Full Exercise of Over-Allotment
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Public offering
price
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$0.30
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$4,125,000
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$0.30
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$4,743,750
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Underwriting
discounts and commissions (1)
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$0.018
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$247,500
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$0.018
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$284,625
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Proceeds to us,
before expenses
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$0.282
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$3,877,500
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$0.282
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$4,459,125
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(1)
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In
addition, we have agreed to reimburse the underwriter for certain
expenses. See “Underwriting” on page S-13 of this
prospectus supplement for additional information.
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We
estimate the expenses of this offering, excluding underwriting
discounts and commissions, will be approximately
$95,000.
Investing in our securities involves a high degree of risk. See the
section entitled “Risk Factors” appearing on page S-5
of this prospectus supplement and elsewhere in this prospectus
supplement and the accompanying base prospectus for a discussion of
information that should be considered in connection with an
investment in our securities.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus supplement. Any representation to the contrary is a
criminal offense.
The
underwriters expect to deliver the shares of common stock to the
purchasers on or about July 15, 2019.
The
date of this prospectus supplement is July 11, 2019
Roth Capital Partners
TABLE OF CONTENTS
Prospectus Supplement
ABOUT
THIS PROSPECTUS SUPPLEMENT
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S-ii
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CAUTIONARY
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
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S-iii
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PROSPECTUS
SUPPLEMENT SUMMARY
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S-1
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RISK
FACTORS
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S-5
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USE OF
PROCEEDS
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S-13
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DILUTION
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S-13
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DESCRIPTION
OF SECURITIES WE ARE OFFERING
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S-13
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UNDERWRITING
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S-13
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LEGAL
MATTERS
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S-17
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EXPERTS
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S-17
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WHERE
YOU CAN FIND MORE INFORMATION
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S-17
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INFORMATION
INCORPORATED BY REFERENCE
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S-17
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Prospectus
ABOUT
THIS PROSPECTUS
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2
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AVAILABLE
INFORMATION
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2
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OUR
COMPANY
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3
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CAUTIONARY
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
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3
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RISK
FACTORS
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4
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USE OF
PROCEEDS
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5
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DESCRIPTION
OF CAPITAL STOCK
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5
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DESCRIPTION
OF WARRANTS
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6
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MATERIAL
FEDERAL INCOME TAX CONSEQUENCES
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7
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PLAN OF
DISTRIBUTION
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7
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LEGAL
MATTERS
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8
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EXPERTS
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8
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INFORMATION
INCORPORATED BY REFERENCE
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8
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DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
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9
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ABOUT THIS PROSPECTUS SUPPLEMENT
This
document is in two parts, this prospectus supplement and the
accompanying base prospectus, both of which are part of a
registration statement on Form S-3 that we filed with the U.S.
Securities and Exchange Commission (the “SEC”) using a
“shelf” registration process. The first part is the
prospectus supplement, including the documents incorporated by
reference, which describes the specific terms of this offering. The
second part, the accompanying base prospectus, including the
documents incorporated by reference, provides more general
information. Before you invest, you should carefully read this
prospectus supplement, the accompanying base prospectus, all
information incorporated by reference herein and therein, as well
as the additional information described under “Where You Can
Find Additional Information” on page S-17 of this prospectus
supplement. These documents contain information you should consider
when making your investment decision. This prospectus supplement
may add, update or change information contained in the accompanying
base prospectus. To the extent there is a conflict between the
information contained in this prospectus supplement, on the one
hand, and the information contained in the accompanying base
prospectus or any document incorporated by reference therein filed
prior to the date of this prospectus supplement, on the other hand,
you should rely on the information in this prospectus supplement.
If any statement in one of these documents is inconsistent with a
statement in another document having a later date — for
example, a document filed after the date of this prospectus
supplement and incorporated by reference in this prospectus
supplement and the accompanying base prospectus — the
statement in the document having the later date modifies or
supersedes the earlier statement.
You
should rely only on the information contained or incorporated by
reference in this prospectus supplement, the accompanying base
prospectus and in any free writing prospectuses we may provide to
you in connection with this offering. We have not, and Roth Capital
Partners, LLC has not, authorized any other person to provide you
with any information that is different. If anyone provides you with
different or inconsistent information, you should not rely on it.
We are offering to sell, and seeking offers to buy, shares of our
common stock only in jurisdictions where offers and sales are
permitted. The distribution of this prospectus supplement and the
offering of the common stock in certain jurisdictions may be
restricted by law. Persons outside the United States who come into
possession of this prospectus supplement must inform themselves
about, and observe any restrictions relating to, the offering of
the common stock and the distribution of this prospectus supplement
outside the United States. This prospectus supplement does not
constitute, and may not be used in connection with, an offer to
sell, or a solicitation of an offer to buy, any securities offered
by this prospectus supplement by any person in any jurisdiction in
which it is unlawful for such person to make such an offer or
solicitation.
We
further note that the representations, warranties and covenants
made by us in any agreement that is filed as an exhibit to any
document that is incorporated by reference in the accompanying base
prospectus were made solely for the benefit of the parties to such
agreement, including, in some cases, for the purpose of allocating
risk among the parties to such agreements, and should not be deemed
to be a representation, warranty or covenant to you. Moreover, such
representations, warranties or covenants were accurate only as of
the date when made. Accordingly, such representations, warranties
and covenants should not be relied on as accurately representing
the current state of our affairs.
When
used herein, “Inuvo”, “we”,
“us” or “our” refers to Inuvo, Inc., a
Nevada corporation, and our subsidiaries.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING
INFORMATION
The
information included or incorporated by reference into the base
prospectus and this prospectus supplement contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. These forward-looking statements that relate
to future events or our future financial performance and involve
known and unknown risks, uncertainties and other factors that may
cause our actual results, levels of activity, performance or
achievements to differ materially from any future results, levels
of activity, performance or achievements expressed or implied by
these forward-looking statements. Words such as, but not limited
to, “believe,” “expect,”
“anticipate,” “estimate,”
“intend,” “plan,” “targets,”
“likely,” “aim,” “will,”
“would,” “could,” “should,”
“predict,” “potential,”
“continue,” and similar expressions or phrases identify
forward-looking statements. We have based these forward-looking
statements largely on our current expectations and future events
and financial trends that we believe may affect our financial
condition, results of operation, business strategy and financial
needs. Actual results may differ materially from those expressed or
implied in such forward-looking statements as a result of various
factors. We do not undertake, and we disclaim, any obligation to
update any forward-looking statements or to announce any revisions
to any of the forward-looking statements, except as required by
law. Certain factors that could cause results to be materially
different from those projected in the forward-looking statements
include, but are not limited to, statements about:
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our history of
losses, declining revenues and working capital
deficit;
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our reliance on
revenues from a limited number of customers;
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complying with the
covenants and restrictions contained in our grant agreement with
the State of Arkansas;
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seasonality of our
business which impacts our financial results and cash
availability;
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dependence on our
supply partners;
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our ability to
acquire traffic in a profitable manner;
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failure to keep
pace with technology changes;
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impact of possible
interruption in our network infrastructure;
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dependence on our
key personnel;
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regulatory and
legal uncertainties;
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failure to comply
with privacy and data security laws and regulations;
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third party
infringement claims;
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publishers who
could fabricate fraudulent clicks;
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a downturn in the
global economy which could adversely impact our access to credit
and ability to raise capital;
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the impact of
quarterly results on our stock price;
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historic
difficulties in meeting financial covenants in our credit
agreement; and
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dilution to our
stockholders upon the exercise of outstanding stock options,
restricted stock unit grants, and convertible
securities.
We urge
you to consider these factors before investing in our common stock.
The forward-looking statements included in this prospectus
supplement, the accompanying base prospectus and any other offering
material, or in the documents incorporated by reference into this
prospectus supplement, the accompanying base prospectus and any
other offering material, are made only as of the date of the
prospectus supplement, the accompanying base prospectus, any other
offering material or the documents incorporated by reference. For
more detail on these and other risks, please see “Risk
Factors” in this prospectus supplement, our Annual Report on
Form 10-K for our fiscal year ended December 31, 2018, filed with
the SEC on March 15, 2019; our Quarterly Reports on Form 10-Q, for
the three months ended March 31, 2019, as filed with the SEC May
15, 2019, as amended on June 19, 2019.
PROSPECTUS SUPPLEMENT SUMMARY
The following information below is only a summary of more detailed
information included elsewhere in, or incorporated by reference in,
this prospectus supplement and the accompanying base prospectus,
and should be read together with the information contained or
incorporated by reference in other parts of this prospectus
supplement and the accompanying base prospectus. This summary
highlights selected information about us and this offering. This
summary may not contain all of the information that may be
important to you. Before making a decision to invest in our common
stock, you should read carefully all of the information contained
in or incorporated by reference into this prospectus supplement and
the accompanying base prospectus, including the information set
forth under the caption “Risk Factors” in this
prospectus supplement and the accompanying base prospectus as well
as the documents incorporated herein by reference, which are
described under “Where you can Find More Information”
and “Incorporation of Certain Documents by Reference”
in this prospectus supplement.
Our Company
We are
a technology company that provides data-driven platforms that can
automatically identify and message online audiences for any product
or service across devices, channels and formats, including video,
mobile, connected TV, display, social and native. These
capabilities allow our clients to engage with their customers and
prospects in a manner that drives engagement from the first contact
with the consumer. We facilitate over a billion marketing messages
to consumers every single month and counts among its clients
numerous world-renowned names in industries that have included
retail, automotive, insurance, health care, technology,
telecommunications and finance. We count among our many contractual
relationships, three clients who collectively manage over 50% of
all U.S. digital media budgets.
Our
solution incorporates a proprietary form of artificial
intelligence, or AI, branded the IntentKey. This sophisticated
machine learning technology uses interactions with internet content
as a source of information from which to predict consumer intent.
The AI includes a continually updated database of over 500 million
machine profiles which we utilize to deliver highly aligned online
audiences to our clients. We earn revenue when consumers view or
click on our client’s messages. Our business scales through
account management activity with existing clients and by adding new
clients through sales activity.
As part
of our technology strategy, we owns a collection of websites like
alot.com and earnspendlive.com, where we create content in health,
finance, travel, careers, auto, education and living categories.
These sites provide the means to test our technologies, while also
delivering high quality consumers to clients through the
interaction with proprietary content in the form of images, videos,
slideshows and articles.
There
are many barriers to entry to our business that would require
proficiency in large scale data center management, software
development, data products, analytics, artificial intelligence,
integration to the internet of things, or IOT, the relationships
required to execute within the IOT and the ability to process tens
of billions of transactions daily. Inuvo’s intellectual
property is protected by 15 issued and 8 pending
patents.
Products and Services
The
Inuvo Exchange is digital marketplace that allows advertisers and
publishers the opportunity to buy and sell advertising space in
real time. The Inuvo Exchange includes the following products and
services:
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ValidClick: A
software as a service and delivery platform for publishers that
offers a pay-per-click solution where advertisements are targeted
to consumers based on content and behaviors.
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Digital Publishing:
Branded web properties like ALOT.com, earnspendlive.com,
search4answers.com and many more with content developed, edited and
published by Inuvo in categories like health, finance, travel,
entertainment, careers, education, lifestyle and automotive. The
information on the foregoing websites are not part of this
prospectus supplement
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Visual Monetization
Platform ("VMP"): A Supply Side Platform ("SSP") that offers
publishers numerous forms of monetization both visually (images and
video) and within or surrounding content.
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IntentKey: A
consumer intent recognition system designed to reach highly
targeted mobile and desktop In-Market audiences with
precision.
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Audience Delivery
Solutions: Inuvo’s audience delivery solution is a campaign
management and optimization service for advertisers that uses the
IntentKey and our proprietary Demand Side Platform
(“DSP”).
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MYAP: A proprietary
online affiliate management solution that provides advertisers with
the ability to sign up, manage and track the activities of
publishers through a privately-branded platform with full data
transparency. Typically, each MYAP customer is supported by a
customized software implementation.
Recent Developments
Preliminary Second Quarter Results-Three Months Ended June 30,
2019
We have
yet to complete our normal quarterly review procedures for the
three months ended June 30, 2019, and our independent registered
public accounting firm has not completed its review of our results
for the second quarter. Set forth below are certain preliminary
estimates that we expect to report for our second quarter.
Our actual results may differ materially from these estimates due
to the completion of our financing closing procedures, final
adjustments and other developments that may arise between now and
the time financial results for our second quarter are finalized.
These estimates should not be viewed as a substitute for full
interim financial statements prepared in accordance with U.S.
generally accepted accounting principles (“GAAP”). In
addition, these preliminary results of operations for the three
months ended June 30, 2019, are not necessarily indicative of the
results to be achieved for the remainder of 2019 or any future
period.
For the
three months ended June 30, 2019, we expect to report revenue in
the range of $13.5 to $13.7 million compared to $15.5 million and
$19.0 million for the three months ended March 31, 2019 and June
30, 2018, respectively. For the six months ended June
30, 2019, we expect to report revenue in the range of $29.0 million
to $29.2 million compared to $39.5 million for the six months ended
June 30, 2018. The last 14-day average daily revenue ending
June 30, 2019 was approximately $170,000 per day. IntentKey revenue
for the three months ended June 30, 2019 is expected to be
approximately $1.8 million, up 40% over the three months ended
March 31, 2019. For the six months ended June 30, 2019, revenue for
our deemphasized Supply Side Platform is expected to be
$1.2 million as compared to $3.7 million for the six months ended
June 30, 2018. Second quarter sequential seasonal revenue decline
has averaged 6% over the prior three fiscal years.
For the
three months ended June 30, 2019 we expect to report gross margin
of 54% compared to 57% for the three months ended March 31, 2019
and for the comparable period in 2018. The difference in
year-over-year in gross margin can be attributed to the lower
revenue that caused us to participate in a lower revenue share tier
with our search partners.
Legal Proceedings
On
November 2, 2018, Inuvo entered into an Agreement and Plan of
Merger (the “Merger Agreement”) with ConversionPoint
Technologies, Inc. (“ConversionPoint”), ConversionPoint
Holdings, Inc., (“Parent”), CPT Merger Sub, Inc., a
wholly-owned subsidiary of Parent (“CPT Merger Sub”),
and CPT Cigar Merger Sub, Inc., a wholly-owned subsidiary of Parent
(“Inuvo Merger Sub”), pursuant to which, among other
things, Inuvo would merge with and into Inuvo Merger Sub and become
a wholly-owned subsidiary of Parent, and ConversionPoint would
merge with and into CPT Merger Sub and become a wholly-owned
subsidiary of Parent (collectively, the “Merger
Transactions”). On June 20, 2019, the parties to the Merger
Agreement terminated the Merger Agreement pursuant to an Agreement
and Plan of Merger Termination Agreement. Prior to June 20, 2019,
Inuvo and ConversionPoint were subject to litigation (as described
below) related to the Merger Transactions.
On
December 19, 2018 and December 20, 2018, respectively, Peter
D’Arcy and Morris Akerman, both of whom claim to be
stockholders of Inuvo, filed separate putative class action
lawsuits, captioned D’Arcy v. Inuvo, Inc. et al.,
No. 1:18-cv-02023-UNA, in the United States District Court for the
District of Delaware; and Akerman v. Inuvo, Inc. et al., No.
2:18-cv-02407, in the United States District Court for the District
of Nevada. The two lawsuits each named Inuvo and the members of
Inuvo’s board of directors as defendants.
The D’Arcy action also named
ConversionPoint and various entities created to effect the Merger
Transaction as defendants.
On
December 21, 2018, Domenic Spagnolo, another purported stockholder
of Inuvo, filed a substantially similar lawsuit,
captioned Spagnolo v. Inuvo,
Inc. et al., No. 1:18-cv-12099, in the United States
District Court for the Southern District of New York. This lawsuit
also challenged the adequacy of disclosure under the same sections
of the Exchange Act against Inuvo and its directors.
Each of
the foregoing lawsuits sought, among other relief, an injunction
preventing the parties from consummating the Merger Transactions,
damages in the event the Merger Transactions were consummated, and
an award of attorneys’ fees. In the Akerman action, following the
filing of Parent’s amended S-4 Registration Statement on
March 15, 2019, Plaintiff Akerman filed a stipulation of dismissal,
dismissing the entire action, except with respect to a fee and
expense request. In the Spagnolo action, the plaintiff
withdrew his motion for preliminary injunction following
Parent’s filing of its amended S-4 Registration Statement on
March 15, 2019 and the court dismissed the Spagnolo action as moot.
On
January 4, 2019 and January 8, 2019, respectively, two more
purported stockholders of Inuvo, Adam Franchi and Les Thomas,
commenced substantially similar putative class action lawsuits
under Nevada state law, captioned Franchi v. Inuvo, Inc. et al., No.
A-19-787021-C and Thomas v.
Inuvo, Inc. et al., No. T19-57, in the District Court of the
State of Nevada in the County of Clark. These complaints named
Inuvo and the members of Inuvo’s board of directors as
defendants. The Franchi action also named
ConversionPoint and various entities created to effect the Merger
Transactions as defendants. Both complaints sought an injunction
preventing the parties from consummating the Merger Transactions,
damages in the event the Merger Transactions were consummated and
an award of attorneys’ fees. Following the filing of
Parent’s amended S-4 Registration Statement on March 15,
2019, Plaintiff Thomas filed a stipulation of dismissal, dismissing
the action. On April 11, 2019, Plaintiff Franchi filed a notice of
voluntary dismissal.
On
June 20, 2019, Inuvo entered into a certain Confidential Settlement
Agreement resolving outstanding litigation (including
attorneys’ fees claims) against Inuvo and ConversionPoint so
long as Inuvo pays a settlement fee by September 30, 2019. Should
Inuvo not pay the settlement fee on or before September 30, 2019,
the plaintiffs may pursue claims for attorneys’ fees against
Inuvo.
Additional Information
See our
Annual Report on Form 10-K for our fiscal year ended December 31,
2018, filed with the SEC on March 15, 2019; our Quarterly Reports
on Form 10-Q, for the three months ended March 31, 2019, as filed
with the SEC May 15, 2019, as amended on June 19,
2019.
Risk Factors
An
investment in our common stock involves risk. Before deciding
whether to enroll and participate in this offering, you should
carefully consider the risk factors beginning on page S-5 of this
prospectus supplement and the risk factors contained in the
documents incorporated by reference in this prospectus supplement
and the accompanying base prospectus.
Corporate information
We are
incorporated in Nevada. Our principal executive offices are located
at 500 President Clinton Boulevard, Suite 300, Little Rock, AR
72210, and our telephone number is (501) 205-8508. Our fiscal year
end is December 31. Except as specifically set forth herein, the
information which appears on our website at www.inuvo.com is not
part of the prospectus or this prospectus supplement.
The Offering
The
following summary contains basic information about this offering.
The summary is not intended to be complete. You should read the
full text and more specific details contained elsewhere in this
prospectus supplement.
Issuer
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Inuvo,
Inc.
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Common stock offered by us
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13,750,000
shares
at a purchase price of $0.30 per share.
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Option to purchase additional shares
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We
have granted the underwriter an over-allotment option for a period
of thirty (30) days to purchase up to an aggregate of 2,062,500
additional shares of common stock at a purchase price of $0.30 per
share to cover over-allotments, if any, of the shares offered by
this prospectus supplement. See “Underwriting” on page
S-13.
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Common stock outstanding prior to the offering
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32,634,159
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Common stock to be outstanding after this offering
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46,384,159
shares, or
48,446,659 shares if the over-allotment option is exercised in
full.
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Trading symbol
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INUV
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Use of proceeds
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We
intend to use the net proceeds from the offering for general
corporate purposes, including working capital and investment in our
IntentKeyTM technology. See
“Use of Proceeds.”
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Risk factors
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This
investment involves a high degree of risk. See “Risk
Factors” and other information included or incorporated by
reference in this prospectus supplement beginning on page S-5 and
the accompanying base prospectus beginning on page 5 for a
discussion of certain factors you should carefully consider before
deciding to invest in shares of our common stock.
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The
number of shares of common stock to be outstanding after this
offering excludes the following as of July 10, 2019:
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28,246 shares
issuable upon the exercise of outstanding stock
options;
●
1,366,517 shares
issuable upon the vesting of granted restricted stock
units;
●
2,064,988 shares
reserved for future issuances under our equity compensation plans;
and
●
3,000,000 shares
required to be reserved for future issuance in accordance with the
terms and conditions of the $1,440,000 Original Issue Discount
Unsecured Subordinated Convertible Notes due September 1, 2020 (the
“Convertible Notes”); provided, however, that the
Convertible Notes may be convertible into a greater or lesser
number of shares depending on the then current conversion price of
the Convertible Notes and the amount to be converted.
RISK FACTORS
Investing in our securities involves a high degree of risk. You
should carefully consider and evaluate all of the information
contained in this prospectus supplement, the accompanying base
prospectus and in the documents we incorporate by reference into
this prospectus supplement and the accompanying base prospectus
before you decide to purchase our securities. In particular, you
should carefully consider and evaluate the risks and uncertainties
described under the heading “Risk Factors” in this
prospectus supplement and the accompanying base prospectus. Any of
the risks and uncertainties set forth in this prospectus supplement
and the accompanying base prospectus, as updated by annual,
quarterly and other reports and documents that we file, or we are
deemed to have filed, with the SEC and incorporate by reference
into this prospectus supplement or the accompanying base prospectus
could materially and adversely affect our business, results of
operations and financial condition, which in turn could materially
and adversely affect the value of our common stock. As a result,
you could lose all or part of your investment.
Risks Related to this Offering of Securities
We have broad discretion in determining how to use the proceeds
from this offering and we cannot assure you that we will be
successful in spending the proceeds in ways which increase our
profitability or market value, or otherwise yield favorable
returns.
We plan
to utilize net proceeds of this offering for general working
capital. Nevertheless, we will have broad discretion in determining
specific expenditures. You will be entrusting your funds to our
management, upon whose judgment you must depend, with limited
information concerning the purposes to which the funds will
ultimately be applied. We may not be successful in spending the
proceeds of this offering in ways which increase our profitability
or market value, or otherwise yield favorable returns.
Fluctuations in the price of our common stock, including as a
result of actual or anticipated sales of shares by stockholders,
may make our common stock more difficult to resell.
The
market price and trading volume of our common stock have been and
may continue to be subject to significant fluctuations due not only
to general stock market conditions, but also to a change in
sentiment in the market regarding the industry in which we operate,
our operations, business prospects or liquidity or this offering.
In addition to the risk factors discussed in our periodic reports
and in this prospectus supplement, the price and volume volatility
of our common stock may be affected by actual or anticipated sales
of common stock by existing stockholders, including of shares
purchased in this offering, whether in the market or in subsequent
public offerings. Stock markets in general may experience extreme
volatility that is unrelated to the operating performance of listed
companies. These broad market fluctuations may adversely affect the
trading price of our common stock, regardless of our operating
results. As a result, these fluctuations in the market price and
trading volume of our common stock may make it difficult to predict
the market price of our common stock in the future, cause the value
of your investment to decline and make it more difficult to resell
our common stock.
If we are not able to comply with the applicable continued listing
requirements or standards of the NYSE American, NYSE Regulation
could delist our common stock.
Our
common stock is currently listed on the NYSE American. In order to
maintain that listing, we must satisfy minimum financial and other
continued listing requirements and standards, including those
regarding director independence and independent committee
requirements, minimum stockholders’ equity, minimum share
price, and certain corporate governance requirements. There can be
no assurances that we will be able to continue to comply with the
applicable listing standards. If we are unable to maintain
compliance with these NYSE American requirements, our common stock
will be delisted from the NYSE American. In that event, and if our
common stock is not then eligible for quotation on another market
or exchange, trading of our common stock could be conducted in the
over-the-counter market or on an electronic bulletin board
established for unlisted securities such as the OTCPink. In such
event, it could become more difficult to dispose of, or obtain
accurate price quotations for, our common stock, and there would
likely also be a reduction in our coverage by securities analysts
and the news media, which could cause the price of our common stock
to decline further. Also, it may be difficult for us to raise
additional capital if we are not listed on an
exchange.
Investors will incur immediate and substantial dilution as a result
of this offering.
Investors
purchasing securities in this offering will incur immediate and
substantial dilution in net tangible book value per share. Based on
the per share common stock offering price of $0.30, purchasers of
the shares will effectively incur dilution of approximately $0.27
per share in the net tangible book value of their purchased shares
of common stock, or approximately 10% at the offering price of the
shares. In addition, purchasers of the shares in this offering will
have contributed approximately 2.6% of the aggregate price paid by
all purchasers of our common stock and will own approximately 29.6%
of our common stock outstanding after this offering. Furthermore,
you may experience further dilution to the extent that shares of
our common stock are issued upon the exercise of outstanding stock
options, unvested restricted stock units, or the conversion of the
Convertible Notes. See “Dilution.”
We do not anticipate paying dividends in the foreseeable future;
you should not buy our stock if you expect dividends.
We have
never paid a dividend on our common stock. The determination of
whether to pay dividends on our common stock in the future will
depend on several factors, including without limitation, our
earnings, financial condition and other business and economic
factors affecting us at such time as our board of directors may
consider relevant. If we do not pay dividends, our
common stock may be less valuable because a return on your
investment will only occur if our stock price appreciates. We
currently intend to retain our future earnings to support
operations and to finance expansion and, therefore, we do not
anticipate paying any cash dividends on our common stock in the
foreseeable future.
We could issue “blank check” preferred stock without
stockholder approval with the effect of diluting then current
stockholder interests and impairing their voting rights; and
provisions in our charter documents could discourage a takeover
that stockholders may consider favorable.
Our
articles of incorporation, as amended, authorizes the issuance of
up to 500,000 shares of “blank check”
preferred stock with designations, rights and preferences as
may be determined from time to time by our board of
directors. Our board of directors is empowered, without
stockholder approval, to issue a series of preferred stock with
dividend, liquidation, conversion, voting or other rights which
could dilute the interest of, or impair the voting power of, our
common stockholders. The issuance of a series of preferred
stock could be used as a method of discouraging, delaying or
preventing a change in control. For example, it would be
possible for our board of directors to issue preferred stock with
voting or other rights or preferences that could impede the success
of any attempt to change control of our company.
Sales of a significant number of shares of our common stock in the
public markets or significant short sales of our common stock, or
the perception that such sales could occur, could depress the
market price of our common stock and impair our ability to raise
capital.
Sales
of a substantial number of shares of our common stock or other
equity-related securities in the public markets, could depress the
market price of our common stock. If there are significant short
sales of our common stock, the price decline that could result from
this activity may cause the share price to decline more so, which,
in turn, may cause long holders of the common stock to sell their
shares, thereby contributing to sales of common stock in the
market. Such sales also may impair our ability to raise capital
through the sale of additional equity securities in the future at a
time and price that our management deems acceptable, if at
all.
We may seek to raise additional funds, finance acquisitions or
develop strategic relationships by issuing securities that would
dilute the ownership of the common stock. Depending on the terms
available to us, if these activities result in significant
dilution, it may negatively impact the trading price of our shares
of common stock.
We have
financed our acquisitions and the development of strategic
relationships by issuing equity securities and may continue to do
so in the future, which could significantly reduce the percentage
ownership of our existing stockholders. Further, any additional
financing that we secure may require the granting of rights,
preferences or privileges senior to, or pari passu with, those of
our common stock. Any issuances by us of equity securities may be
at or below the prevailing market price of our common stock and in
any event may have a dilutive impact on your ownership interest,
which could cause the market price of our common stock to decline.
We may also raise additional funds through the incurrence of debt
or the issuance or sale of other securities or instruments senior
to our shares of common stock. The holders of any securities or
instruments we may issue may have rights superior to the rights of
our common stockholders. If we experience dilution from issuance of
additional securities and we grant superior rights to new
securities over common stockholders, it may negatively impact the
trading price of our shares of common stock.
If securities or industry analysts do not publish or cease
publishing research or reports about us, our business or our
market, or if they change their recommendations regarding our
common stock adversely, our common stock price and trading volume
could decline.
The
trading market for our shares of common stock will be influenced by
many factors, including without limitation, the research and
reports that industry or securities analysts may publish about us,
our business, our market or our competitors. If any of the analysts
who may cover us change their recommendation regarding our common
stock adversely, or provide more favorable relative recommendations
about our competitors, our share price would likely decline. If any
analyst who may cover us were to cease coverage of our company or
fail to regularly publish reports on us, we could lose visibility
in the financial markets, which in turn could cause our common
stock price or trading volume to decline.
Our quarterly operating results can be difficult to predict and can
fluctuate substantially, which could result in volatility in the
price of our common stock.
Our
quarterly revenues and other operating results have varied in the
past and are likely to continue to vary significantly from quarter
to quarter. Our agreements with distribution partners and key
customers do not require minimum levels of usage or payments, and
our revenues therefore fluctuate based on the actual usage of our
service each quarter by existing and new distribution partners.
Quarterly fluctuations in our operating results also might be due
to numerous other factors, including:
●
our ability to
attract new distribution partners, including the length of our
sales cycles, or to sell increased usage of our service to existing
distribution partners;
●
technical
difficulties or interruptions in our services;
●
changes in privacy
protection and other governmental regulations applicable to our
industry;
●
changes in our
pricing policies or the pricing policies of our
competitors;
●
the financial
condition and business success of our distribution
partners;
●
purchasing and
budgeting cycles of our distribution partners;
●
acquisitions of
businesses and products by us or our competitors;
●
competition,
including entry into the market by new competitors or new offerings
by existing competitors;
●
discounts offered
to advertisers by upstream advertising networks;
●
our history of
litigation;
●
our ability to
hire, train and retain sufficient sales, client management and
other personnel;
●
timing of
development, introduction and market acceptance of new services or
service enhancements by us or our competitors;
●
concentration of
marketing expenses for activities such as trade shows and
advertising campaigns;
●
expenses related to
any new or expanded data centers; and
●
general economic
and financial market conditions.
Significant dilution will occur if outstanding options are
exercised, restricted stock unit grants vest, or convertible notes
are converted.
As of July 10, 2019, we had stock
options outstanding to purchase a total of 28,246 shares and
1,366,517 restricted stock units outstanding. If outstanding stock
options are exercised or restricted stock units vest, dilution will
occur to our stockholders, which may be significant. In addition,
we have $1,440,000 of Convertible Notes, that have an
initial conversion price of $1.08 per share (such price, referred
to as the initial conversion price), which, if converted as such
price, would make the Convertible Notes convertible into 1,333,333
unregistered shares of Inuvo common stock. The initial conversion
price is subject to downward adjustment to $0.44 per share if we
are in default under the Convertible Notes. In addition, if, at any
time, for so long as the Convertible Notes remain outstanding, we
sell or grant any option to purchase shares of common stock,
including pursuant to this offering, at an effective price per
share that is lower than the initial conversion price (such price,
referred to as the base conversion price), then, subject to our
right to repay the Convertible Notes, the initial conversion price
will immediately be reduced to such base conversion price, which
base conversion price may not be lower than $0.23 per share.
If the Convertible Notes
are converted at a per share price of $0.30, then the holders of
the Convertible Notes shall receive 4,800,000 shares of our common
stock. As of July 11, 2019, the holders of the convertible notes
have not elected to convert their convertible notes into shares of
our common stock.
Our insiders and affiliated parties beneficially own a significant
portion of our stock.
As of
the date of this prospectus supplement, our executive officers,
directors, and affiliated parties beneficially own approximately
15.4% of our common stock. As a result, our executive officers,
directors and affiliated parties will have significant influence
to:
Elect or defeat the
election of our directors;
●
Elect or defeat the
election of our directors;
●
Amend or prevent
amendment of our articles of incorporation, as amended, or
by-laws;
●
Effect or prevent a
merger, sale of assets or other corporate transaction;
and
●
Affect the outcome
of any other matter submitted to the stockholders for
vote.
In
addition, any sale of a significant amount of our common stock held
by our directors and executive officers, or the possibility of such
sales, could adversely affect the market price of our common stock.
Management’s stock ownership may discourage a potential
acquirer from making a tender offer or otherwise attempting to
obtain control of us, which in turn could reduce our stock price or
prevent our stockholders from realizing any gains from our common
stock.
If and when a larger trading market for our common stock develops,
the market price of our common stock is still likely to be highly
volatile and subject to wide fluctuations, and you may be unable to
resell our shares at or above the price at which you acquired
them.
The
market price of our common stock may be highly volatile and could
be subject to wide fluctuations in response to a number of factors
that are beyond our control, including, but not limited
to:
●
Variations in our
revenues and operating expenses;
●
Actual or
anticipated changes in the estimates of our operating results or
changes in stock market analyst recommendations regarding our
common stock, other comparable companies or our industry
generally;
●
Market conditions
in our industry, the industries of our customers and the economy as
a whole;
●
Actual or expected
changes in our growth rates or our competitors’ growth
rates;
●
Developments in the
financial markets and worldwide or regional
economies;
●
Announcements of
innovations or new products or services by us or our
competitors;
●
Announcements by
the government relating to regulations that govern our
industry;
●
Sales of our common
stock or other securities by us or in the open market;
and
●
Changes in the
market valuations of other comparable
companies.
In
addition, if the market for technology stocks or the stock market
in general experiences loss of investor confidence, the trading
price of our common stock could decline for reasons unrelated to
our business, financial condition or operating results. The trading
price of our shares might also decline in reaction to events that
affect other companies in our industry, even if these events do not
directly affect us. Each of these factors, among others, could harm
the value of your investment in our common stock. In the past,
following periods of volatility in the market, securities
class-action litigation has often been instituted against
companies. Such litigation, if instituted against us, could result
in substantial costs and diversion of management’s attention
and resources, which could materially and adversely affect our
business, operating results and financial
condition.
In making your investment decision, you should understand that we
and the underwriter have not authorized any other party to provide
you with information concerning us or this offering.
You
should carefully evaluate all of the information in this prospectus
supplement before investing in our company. We may receive media
coverage regarding our company, including coverage that is not
directly attributable to statements made by our officers, that
incorrectly reports on statements made by our officers or
employees, or that is misleading as a result of omitting
information provided by us, our officers or employees. We and the
underwriter have not authorized any other party to provide you with
information concerning us or this offering, and you should not rely
on this information in making an investment decision.
Financial Industry Regulatory Authority (“FINRA”) sales
practice requirements may limit a stockholder’s ability to
buy and sell our common stock.
FINRA
has adopted rules that require that in recommending an investment
to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior
to recommending speculative low-priced securities to their
non-institutional customers, broker-dealers must make reasonable
efforts to obtain information about the customer’s financial
status, tax status, investment objectives and other information.
Under interpretations of these rules, FINRA believes that there is
a high probability that speculative low priced securities will not
be suitable for certain customers. FINRA requirements will likely
make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may have the effect of
reducing the level of trading activity in our common stock. As a
result, fewer broker-dealers may be willing to make a market in our
common stock, reducing a stockholder’s ability to resell
shares of our common stock.
The requirements of being a U.S. public company may strain our
resources and divert management’s attention.
As a
U.S. public company, we are subject to the reporting requirements
of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act,
the listing requirements of NYSE American, and other applicable
securities rules and regulations. Compliance with these rules and
regulations will increase our legal and financial compliance costs,
make some activities more difficult, time-consuming, or costly, and
increase demand on our systems and resources. The Exchange Act
requires, among other things, that we file annual and current
reports with respect to our business and operating
results.
As a
result of disclosure of information in this prospectus supplement
and the accompanying base prospectus and in filings required of a
public company, our business and financial condition is more
visible, which we believe may result in threatened or actual
litigation, including by competitors and other third parties. If
such claims are successful, our business and operating results
could be harmed, and even if the claims do not result in litigation
or are resolved in our favor, these claims, and the time and
resources necessary to resolve them, could divert resources of our
management and harm our business and operating
results.
An active, liquid trading market for our common stock may not
develop, which may cause our common stock to trade at a discount
from the initial offering price and make it difficult for you to
sell the common stock you purchase.
Our
common stock is currently listed on the NYSE American. However,
there can be no assurance that there will be an active market for
our common stock either now or in the future. If an active and
liquid trading market does not develop or if developed cannot be
sustained, you may have difficulty selling any of our common stock
that you purchase. The market price of our common stock may decline
below the initial offering price, and you may not be able to sell
your shares of our common stock at or above the price you paid, or
at all.
Risks Related to our Business
We rely on two customers for a significant portion of our
revenues.
We are
reliant upon Yahoo! and Google for most of our revenue. During the
first quarter of 2019, Yahoo! accounted for 73.6% and Google
accounted for 11.7% of our revenues, respectively, and during the
same period in 2018, 70.5% and 9.5%, respectively. The amount of
revenue we receive from these customers is dependent on a number of
factors outside of our control, including the amount they charge
for advertisements, the depth of advertisements available from
them, and their ability to display relevant ads in response to
end-user queries.
We
would likely experience a significant decline in revenue and our
business operations could be significantly harmed if these
customers do not approve our new websites and applications, or if
we violate their guidelines or they change their guidelines. In
addition, if any of these preceding circumstances were to occur, we
may not be able to find a suitable alternate paid search results
provider or otherwise replace the lost revenues. The loss of any of
these 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.
Failure to comply with the covenants and restrictions in our credit
facility could impact our ability to access capital as
needed.
We have
a credit facility with Western Alliance Bank, the parent company of
Bridge Bank, N.A. its original lender, expired in October 2018.
Effective October 11, 2018, we entered into a new agreement with
Western Alliance Bank which superseded the expiring facility. The
new agreement may be terminated by either party at any time and has
a sub-limit provision that expired on April 30, 2019. On April 30,
2019, Western Alliance Bank agreed to extend the $2.5 million
sub-limit provision of uninvoiced eligible receivables until May
31, 2019. Effective May 31, 2019, Western Alliance agreed to
continue to finance unbilled receivables after May 31, 2019 in its
discretion and may terminate financing of unbilled receivables upon
written notice to us. While we believe that we will be able
to renew with substantially similar terms and conditions, there are
no assurances that we will be able to renew. In that event, our
liquidity in future periods would be materially adversely impacted.
In addition, the credit facility contains a number of covenants
that requires us to, among other things:
●
pay of fees to the
lender associated with the credit facility;
●
maintain
Inuvo’s corporate existence in good standing;
●
grant the lender a
security interest in our assets;
●
provide financial
information to the lender; and
●
refrain from any
transfer of any of our business or property, subject to customary
exceptions
A
breach in our covenants could result in a default under the credit
facility, and in such event Western Alliance Bank could elect to
declare all borrowings outstanding, if any, to be due and payable.
If this occurs and we have outstanding obligations and are not able
to repay, Western Alliance Bank could require us to apply all of
our available cash to repay the debt amounts and could then proceed
against the underlying collateral. Should this occur, we cannot
assure you that our assets would be sufficient to repay our debt in
full, that we would be able to borrow sufficient funds to refinance
the debt, or that we would be able to obtain a waiver to cure any
such default. In such an event, our ability to conduct our business
as it is currently conducted would be in
jeopardy.
We have a history of losses, and our revenues declined in 2018 from
2017 and we cannot anticipate with any degree of certainty what our
revenues will be in future periods. Our working capital deficit has
increased substantially at December 31, 2018 as compared to
December 31, 2017.
We
reported a net loss of approximately $5.9 million in 2018 as
compared to a net loss of approximately $3.1 million in 2017. At
December 31, 2018, we had a cash balance of approximately $229,000
and a working capital deficit of approximately $6.9 million as
compared to a cash balance of approximately $4.1 million and a
working capital deficit of approximately $6.2 million at December
31, 2017. As described elsewhere in this report, our industry is
currently in a consolidation phase and our strategic decisions to
discontinue certain non-strategic technologies in response to our
changing industry involved the short- term loss of revenue and
margin in anticipation of future growth and margins starting in
2019. We estimate that the revenue loss associated with this
decision was $7.2 million in 2018. Since our credit facility is
dependent upon receivables, and we do not know when, if ever, that
our revenues will return to historic levels or if we will be able
to replace those lost revenues with revenues from other sources,
the combination of lower credit availability and recent negative
cash flows generated from operating activities introduces potential
risk of losing operation without interruption.
Failure to comply with the covenants and restrictions in our grant
agreement with the State of Arkansas could result in the repayment
of a portion of the grant, which we may not be able to repay or
finance on favorable terms.
In
January 2013, we entered into an agreement with the State of
Arkansas whereby we were granted $1,750,000 for the relocation of
the Company to Arkansas and for the purchase of equipment. The
grant was contingent upon us having at least 50 full-time
equivalent permanent positions within four years, maintaining at
least 50 full-time equivalent permanent positions for the following
six years and paying those positions an average total compensation
of $90,000 per year. As of June 30, 2019, we had 35 full- time
employees located in Arkansas. Failure to meet the requirements of
the grant after the initial four-year period, may require us to
repay a portion of the grant, up to but not to exceed the full
amount of the grant. At June 30, 2019, we accrued a contingent
liability of $50,000 for the lower than required employment. Should
the lower than required employment continue, we cannot assure you
that our assets would be sufficient to repay our grant in full, we
would be able to borrow sufficient funds to refinance the grant, or
that we would be able to obtain a waiver to cure any such default.
In such an event, our ability to conduct our business as it is
currently conducted would be in jeopardy.
Our business is seasonal and our financial results may vary
significantly from period to period.
Our
future results of operations may vary significantly from quarter to
quarter and year to year because of numerous factors, including
seasonality. Historically, in the later part of the fourth quarter
and the earlier part of the first quarter we experience lower
Revenue Per Click (“RPC”) due to a decline in demand
for inventory on website and app space and the recalibrating of
advertiser’s marketing budgets after the holiday selling
season. If we are not able to appropriately adjust to seasonal or
other factors, it could have a material adverse effect on our
financial results.
We are dependent upon relationships with and the success of our
supply partners.
Our
supply partners are very important to our success. We must recruit
and maintain partners who are able to drive traffic successfully to
their websites and mobile applications, resulting in clicks on
advertisements we have delivered. These partners may experience
difficulty in attracting and maintaining users for a number of
reasons, including competition, rapidly changing markets and
technology, industry consolidation and changing consumer
preferences. Further, we may not be able to further develop and
maintain relationships with distribution partners. They may be able
to make their own deals directly with advertisers, may view us as
competitors or may find our competitors offerings more desirable.
Any of these potential events could have a material adverse effect
on our business, financial position and results of
operations.
The success of our owned sites is dependent on our ability to
acquire traffic in a profitable manner.
Our
ALOT-branded websites are dependent on our ability to attract
traffic in a profitable manner. We use a predictive model to
calculate the rate of return for marketing campaigns, which
includes estimates and assumptions. If these estimates and
assumptions are not accurate, we may not be able to effectively
manage our marketing decisions and could acquire traffic in an
unprofitable manner. In addition, we may not be able to maintain
and grow our traffic for a number of reasons, including, but not
limited to, acceptance of our websites by consumers, the
availability of advertising to promote our websites, competition,
and sufficiency of capital to purchase advertising. We advertise on
search engine websites to drive traffic to our owned and operated
websites. Our keyword advertising is done primarily with Google and
Facebook, but also with Yahoo! and Bing. If we are unable to
maintain and grow traffic to our sites in a profitable manner, it
could have a material adverse effect on our business, financial
condition, and results of operations.
Our business must keep pace with rapid technological change to
remain competitive.
Our
business operates in a market characterized by rapidly changing
technology, evolving industry standards, frequent new product and
service announcements, enhancements, and changing customer demands.
We must adapt to rapidly changing technologies and industry
standards and continually improve the speed, performance, features,
ease of use and reliability of our services. This includes making
our products and services compatible and maintaining compatibility
with multiple operating systems, desktop and mobile devices, and
evolving network infrastructure. If we fail to do this, our results
of operations and financial position could be adversely
affected.
Our services may be interrupted if we experience problems with our
network infrastructure.
The
performance of our network infrastructure is critical to our
business and reputation. Because our services are delivered solely
through the internet, our network infrastructure could be disrupted
by a number of factors, including, but not limited to:
●
unexpected
increases in usage of our services;
●
computer viruses
and other security issues;
●
interruption or
other loss of connectivity provided by third-party internet service
providers;
●
natural disasters
or other catastrophic events; and
●
server failures or
other hardware problems.
While
we have data centers in multiple, geographically dispersed
locations and active back-up and disaster recovery plans, we cannot
assure you that serious interruptions will not occur in the future.
If our services were to be interrupted, it could cause loss of
users, customers and business partners, which could have a material
adverse effect on our results of operations and financial
position.
We depend on key personnel, the loss of whom could harm our
business.
Our
success depends in part on the retention of personnel critical to
our business operations. Loss of key personnel may result in
disruption of operations, loss of key business relationships or
expertise, additional recruiting and training costs, and diminished
anticipated benefits of acquisitions. Our future success is
substantially dependent on the continued service of our key senior
management. We have experienced difficulty from time to time in
attracting or retaining the personnel necessary to support the
growth of our business, and we may experience similar difficulties
in the future.
Regulatory and legal uncertainties could harm our
business.
While
there are currently relatively few laws or regulations directly
applicable to 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.
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 new General Data Protection Regulation
(GDPR) went into effect in May 2018. 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, FTC requirements or orders or
other federal, state or international privacy or consumer
protection-related laws, including the GDPR, 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 may face third party intellectual property infringement claims
that could be costly to defend and result in the loss of
significant rights.
From
time to time third parties have asserted infringement claims
against us including copyright, trademark and patent infringement,
among other things. While we believe that we have defenses to these
types of claims under appropriate trademark laws, we may not
prevail in our defenses to any intellectual property infringement
claims. In addition, we may not be adequately insured for any
judgments awarded in connection with any litigation. Any such
claims and resulting litigation could subject us to significant
liability for damages or result in the invalidation of our
proprietary rights, which would have a material adverse effect on
our business, financial condition, and results of operations. Even
if we were to prevail, these claims could be time-consuming,
expensive to defend, and could result in the diversion of
management's time and attention.
We are subject to risks from publishers who could fabricate clicks
either manually or technologically.
Our
business involves the establishment of relationships with website
owners and publishers. In exchange for their consumer traffic, we
provide an advertising placement service and share a portion of the
revenue we collect with that website publisher. Although we have
click fraud detection software in place, we cannot guarantee that
we will identify all fraudulent clicks or be able to recover funds
distributed for fabricated clicks. This risk could materially
impact our ability to borrow, our cash flow and the stability of
our business.
A downturn or uncertainty in global economic conditions may have a
significant negative effect on our access to credit and our ability
to raise capital and may impact our business, operating results or
financial condition.
A
future downturn or uncertainty in global economic conditions, may
result in significant reductions in, and heightened credit quality
standards for, available capital and liquidity from banks and other
providers of credit and substantial reductions and/or fluctuations
in equity and currency values worldwide, which may make it
difficult for us to raise additional capital or obtain additional
credit, when needed, on acceptable terms or at all. Moreover,
deteriorated economic conditions, or the threat of a prolonged
recessionary period, may cause disruptions and volatility in global
financial markets, increased rates of default and bankruptcy and
have a negative impact on the levels of consumer spending. These
macroeconomic developments could negatively affect our business,
operating results or financial condition in a number of ways. For
example, current or potential customers, such as advertisers, may
delay or decrease spending with us or may not pay us or may delay
paying us for previously performed services. In addition, if
consumer spending decreases, this may result in fewer clicks on our
advertisers’ ads displayed on our or our partner
websites.
Our quarterly operating results can be difficult to predict and can
fluctuate substantially, which could result in volatility in the
price of our common stock.
Our
quarterly revenues and other operating results have varied in the
past and are likely to continue to vary significantly from quarter
to quarter. Our agreements with distribution partners and key
customers do not require minimum levels of usage or payments, and
our revenues therefore fluctuate based on the actual usage of our
service each quarter by existing and new distribution partners.
Quarterly fluctuations in our operating results also might be due
to numerous other factors, including:
●
our ability to
attract new distribution partners, including the length of our
sales cycles, or to sell increased usage of our service to existing
distribution partners;
●
technical
difficulties or interruptions in our services;
●
changes in privacy
protection and other governmental regulations applicable to our
industry;
●
changes in our
pricing policies or the pricing policies of our
competitors;
●
the financial
condition and business success of our distribution
partners;
●
purchasing and
budgeting cycles of our distribution
partners;
●
acquisitions of
businesses and products by us or our
competitors;
●
competition,
including entry into the market by new competitors or new offerings
by existing competitors;
●
discounts offered
to advertisers by upstream advertising
networks;
●
our history of
litigation;
●
our ability to
hire, train and retain sufficient sales, client management and
other personnel;
●
timing of
development, introduction and market acceptance of new services or
service enhancements by us or our
competitors;
●
concentration of
marketing expenses for activities such as trade shows and
advertising campaigns;
●
expenses related to
any new or expanded data centers;
and
●
general economic
and financial market conditions.
If we do not comply with the terms of a certain Confidential
Settlement Agreement resolving outstanding litigation including
attorneys’ fees claim against us, plaintiffs may pursue
claims for attorneys’ fees against us.
On June
20, 2019, Inuvo entered into a certain Confidential Settlement
Agreement resolving outstanding litigation (including
attorneys’ fees claims) against Inuvo conditioned on Inuvo
paying a settlement fee by September 30, 2019. The litigation was
related to certain claims made in connection with Inuvo’s
Agreement and Plan of Merger (or Merger Agreement) with
ConversionPoint Technologies, Inc., ConversionPoint Holdings, Inc.,
CPT Merger Sub, Inc., and CPT Cigar Merger Sub, Inc., which Merger
Agreement was terminated by the parties thereto. If Inuvo fails to
pay the settlement fee by September 30, 2019, the plaintiffs
involved in the litigation could pursue attorneys’ fees
claims against us, which could adversely affect our results of
operation and financial position.
USE OF PROCEEDS
We will
have broad discretion in the use of the net proceeds from the sale
of the shares of common stock offered under this prospectus
supplement. We intend to use the net proceeds from the sale of our
shares of common stock for general corporate purposes, including
working capital and investment in our IntentKeyTM
technology.
DILUTION
A
purchaser of our shares of our common stock in this offering will
be diluted immediately to the extent of the difference between the
offering price per shares and the as adjusted net book value per
share of our common stock upon closing of this offering. Our
historical net book value as of March 31, 2019, was $8,668,293, or
approximately $0.27 per share of outstanding common stock, based on
32,567,321 shares of common stock outstanding as of March 31, 2019.
Net book value per share of our common stock is determined at any
date by subtracting total liabilities from the amount of total
assets, and dividing this amount by the number of shares of common
stock deemed to be outstanding as of that date.
After
giving effect to the sale of 13,750,000 shares of our common stock
at the offering price of $0.30 share to this offering, our as
adjusted net book value as of March 31, 2019 would have been
approximately $12.5 million, or approximately $0.27 per share of
outstanding common stock. This amount represents net book value of
$0.27 per share of our common stock to our existing stockholders
and an immediate dilution of $0.03 per share of our common stock to
new investors purchasing securities in this offering, as
illustrated in the following table:
Public offering
price per share
|
|
$0.30
|
Net book value per
share as of March 31, 2019
|
$0.27
|
|
Increase in net
book value per share attributable to new investors in this
offering
|
$0.00
|
|
|
|
|
Adjusted net book
value per share as of March 31, 2019
|
|
$0.27
|
Dilution per share
to new investors
|
|
$0.03
|
The
foregoing table does not take into account further dilution to new
investors that could occur upon the exercise of outstanding options
having a per share exercise price less than the per share offering
price to the public in this offering.
The
foregoing table excludes the following as of July 10,
2019:
●
28,246 shares
issuable upon the exercise of outstanding stock
options;
●
1,366,517 shares
issuable upon the vesting of granted restricted stock
units;
●
2,064,988 shares
reserved for future issuances under our equity compensation plans;
and
●
3,000,000 shares
required to be reserved for future issuance in accordance with the
terms and conditions of the Convertible Notes;
●
provided, however
that the Convertible Notes may be convertible into a greater or
lesser number of shares depending on the then current conversion
proce of the Convertible Notes and the amount to be
converted.
DESCRIPTION OF SECURITIES WE ARE OFFERING
In this
offering, we are offering a maximum of 15,812,500 shares of our
common stock. On June 19, 2019, we amended our Articles of
Incorporation to increase the authorized share amount of the
Company from 40,000,000 to 60,000,000 shares of common stock. The
material terms and provisions of our common stock are described
under the caption “Description of Capital Stock”
starting on page 5 of the accompanying base
prospectus.
UNDERWRITING
We have
entered into an underwriting agreement with the Roth Capital
Partners, LLC as the underwriter. Subject to the terms and
conditions of the underwriting agreement, we have agreed to sell to
the underwriter, and the underwriter has agreed to purchase from
us, shares of our common stock. Our common stock trades on the NYSE
American under the symbol
‘‘INUV.’’
Pursuant to the
terms and subject to the conditions contained in the underwriting
agreement, we have agreed to sell to the underwriter named below,
and the underwriter has agreed to purchase from us, the number of
shares of common stock set forth below:
Underwriter
|
|
Roth Capital
Partners, LLC
|
13,750,000
|
Total
|
13,750,000
|
The
underwriting agreement provides that the obligation of the
underwriter to purchase the shares of common stock offered by this
prospectus supplement and the accompanying base prospectus is
subject to certain conditions. The underwriter is obligated to
purchase all of the shares of common stock offered hereby if any of
the shares are purchased.
We have
granted the underwriter an option to buy up to an additional
2,062,500 shares of common stock from us at the public offering
price, less the underwriting discounts and commissions, to cover
over-allotments, if any. The underwriter may exercise this option
at any time, in whole or in part, during the 30-day period after
the date of this prospectus supplement; however, the underwriter
may only exercise the option once.
Discounts, Commissions and Expenses
The
underwriter proposes to offer to the shares of common stock
purchased pursuant to the underwriting agreement to the public at
the public offering price set forth on the cover page of this
prospectus supplement and to certain dealers at that price less a
concession not in excess of $0.009 per share. After this offering,
the public offering price and concession may be changed by the
underwriter. No such change shall change the amount of proceeds to
be received by us as set forth on the cover page of this prospectus
supplement.
In
connection with the sale of the common stock to be purchased by the
underwriter, the underwriter will be deemed to have received
compensation in the form of underwriting commissions and discounts.
The underwriter’s commissions and discounts will be six
percent (6%)% of the gross proceeds of this offering, or $0.018 per
share of common stock, based on the public offering price per share
set forth on the cover page of this prospectus
supplement.
We have
also agreed to reimburse Roth Capital Partners at closing for its
expenses, including legal fees, incurred by it in connection with
the offering up to a maximum of $45,000.
The
following table shows the underwriting discounts and commissions
payable to the underwriter by us in connection with this offering
(assuming both the exercise and non-exercise of the over-allotment
option to purchase additional shares of common stock we have
granted to the underwriter):
|
|
|
|
|
|
|
|
Public offering
price
|
$0.30
|
$0.30
|
$4,125,000
|
$4,743,750
|
Underwriting
discounts and commissions paid by us
|
$0.018
|
$0.018
|
$247,500
|
$284,625
|
Right of First Refusal
From
the date hereof until August 3, 2019, if we or any of our
subsidiaries raises funds by means of a public offering or a
private placement of equity securities using an underwriter or
placement agent, then the underwriter shall have an irrevocable
right of first refusal to participate as sole book running and/or
sole placement agent with respect to any such transaction with
underwriting fees or placement agent fees equivalent to at least
thirty-five percent (35%) of the aggregate fees paid to the
underwriter or placement agent for such transaction.
Indemnification
Pursuant to the
underwriting agreement, we have agreed to indemnify the underwriter
against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the underwriter
or such other indemnified parties may be required to make in
respect of those liabilities.
Lock-Up Agreements
We have
agreed not to (i) offer, pledge, issue, sell, contract to
sell, purchase, contract to purchase, lend or otherwise transfer or
dispose of, directly or indirectly, any shares of our common stock
or any securities convertible into or exercisable or exchangeable
for our common stock; (ii) enter into any swap or other
arrangement that transfers, in whole or in part, any of the
economic consequences of ownership of shares of common stock,
whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of common stock or such other
securities, in cash or otherwise; or (iii) file any
registration statement with the SEC relating to the offering of any
shares of our common stock or any securities convertible into or
exercisable or exchangeable for shares of our common stock, without
the prior written consent of Roth Capital Partners for a period of
ninety (90) days following the date of this prospectus
supplement (the "Lock-up Period"). This consent may be given at any
time without public notice. These restrictions on future issuances
are subject to exceptions for (i) the issuance of shares of
our common stock sold in this offering, (ii) the issuance of
shares of our common stock upon the exercise of outstanding options
or warrants and the vesting of restricted stock awards or units and
(iii) the issuance of employee stock options not exercisable
during the Lock-up Period and the grant, redemption or forfeiture
of restricted stock awards or restricted stock units pursuant to
our equity incentive plans or as new employee inducement
grants.
In
addition, each of our directors and executive officers has entered
into a lock-up agreement with the underwriter. Under the lock-up
agreements, the directors and executive officers may not, directly
or indirectly, sell, offer to sell, contract or agree to sell, or
grant any option for the sale (including any short sale), grant any
security interest in, pledge, hypothecate, hedge, establish an open
"put equivalent position" (within the meaning of Rule 16a-1(h)
under the Securities Exchange Act of 1934, as amended, or the
Exchange Act), or otherwise dispose of, or enter into any
transaction which is designed to or could be expected to result in
the disposition of, any shares of our common stock or securities
convertible into or exchangeable for shares of our common stock, or
publicly announce any intention to do any of the foregoing, without
the prior written consent of Roth Capital Partners, for a period of
90 days from the closing date of this offering. This consent
may be given at any time without public notice. These restrictions
on future dispositions by our directors and executive officers are
subject to exceptions for (i) one or more bona fide gift
transfers of securities to immediate family members (as defined in
Item 404(a) of Regulation S-K under the Exchange Act) who agree to
be bound by these restrictions and (ii) transfers of
securities to one or more trusts for bona fide estate planning
purposes. Each officer and director shall be immediately and
automatically released from all restrictions and obligations under
the lock up agreement in the event that he or she ceases to be a
director or officer of our company and has no further reporting
obligations under Section 16 of the Exchange Act.
Electronic Distribution
This
prospectus supplement and the accompanying base prospectus may be
made available in electronic format on websites or through other
online services maintained by the underwriter or by its affiliates.
In those cases, prospective investors may view offering terms
online and prospective investors may be allowed to place orders
online. Other than this prospectus supplement and the accompanying
base prospectus in electronic format, the information on the
underwriter’s websites or our website and any information
contained in any other websites maintained by the underwriter or by
us is not part of this prospectus supplement, the accompanying base
prospectus or the registration statement of which this prospectus
supplement and the accompanying base prospectus forms a part,
has not been approved and/or endorsed by us or the underwriter in
its capacity as underwriter, and should not be relied upon by
investors.
Price Stabilization, Short Positions and Penalty Bids
In
connection with the offering the underwriter may engage in
stabilizing transactions, over-allotment transactions, syndicate
covering transactions and penalty bids in accordance with
Regulation M under the Exchange Act:
●
Stabilizing
transactions permit bids to purchase the underlying security so
long as the stabilizing bids do not exceed a specified
maximum.
●
Over-allotment
involves sales by the underwriter of shares in excess of the number
of shares the underwriter is obligated to purchase, which creates a
syndicate short position. The short position may be either a
covered short position or a naked short position. In a covered
short position, the number of shares over-allotted by the
underwriter is not greater than the number of shares that they may
purchase in the over-allotment option. In a naked short position,
the number of shares involved is greater than the number of shares
in the over-allotment option. The underwriter may close out any
covered short position by either exercising their over-allotment
option and/or purchasing shares in the open market.
●
Syndicate
covering transactions involve purchases of the common stock in the
open market after the distribution has been completed in order to
cover syndicate short positions. In determining the source of
shares to close out the short position, the underwriter will
consider, among other things, the price of shares available for
purchase in the open market as compared to the price at which they
may purchase shares through the over-allotment option. A naked
short position occurs if the underwriter sells more shares than
could be covered by the over-allotment option. This position can
only be closed out by buying shares in the open market. A naked
short position is more likely to be created if the underwriter is
concerned that there could be downward pressure on the price of the
shares in the open market after pricing that could adversely affect
investors who purchase in the offering.
●
Penalty
bids permit the underwriter to reclaim a selling concession from a
syndicate member when the common stock originally sold by the
syndicate member is purchased in a stabilizing or syndicate
covering transaction to cover syndicate short
positions.
These
stabilizing transactions, syndicate covering transactions and
penalty bids may have the effect of raising or maintaining the
market price of our common stock or preventing or retarding a
decline in the market price of the common stock. As a result, the
price of our common stock may be higher than the price that might
otherwise exist in the open market. These transactions may be
discontinued at any time.
Neither
we nor the underwriter makes any representation or prediction as to
the direction or magnitude of any effect that the transactions
described above may have on the price of our shares of common
stock. In addition, neither we nor the underwriter makes any
representation that the underwriter will engage in these
transactions or that any transaction, if commenced, will not be
discontinued without notice
Selling Restrictions
European Economic Area
This
prospectus supplement and the accompanying base prospectus does not
constitute an approved prospectus under Directive 2003/71/EC and no
such prospectus is intended to be prepared and approved in
connection with this offering. Accordingly, in relation to each
Member State of the European Economic Area which has implemented
Directive 2003/71/EC (each, a "Relevant Member State") an offer to
the public of any shares of common stock which are the subject of
the offering contemplated by this prospectus supplement and the
accompanying base prospectus may not be made in that Relevant
Member State except that an offer to the public in that Relevant
Member State of any shares of common stock may be made at any time
under the following exemptions under the Prospectus Directive, if
and to the extent that they have been implemented in that Relevant
Member State:
(a)
to any legal entity which is a qualified investor as defined in the
Prospectus Directive;
(b)
to fewer than 100 or, if the Relevant Member State has implemented
the relevant provision of the 2010 PD Amending Directive, 150,
natural or legal persons (other than qualified investors as defined
in the Prospectus Directive), subject to obtaining the prior
consent of the representatives of the underwriter for any such
offer; or
(c)
in any other circumstances which do not require any person to
publish a prospectus pursuant to Article 3 of the Prospectus
Directive.
For the
purposes of this provision, the expression an "offer to the public"
in relation to any shares of common stock in any Relevant Member
State means the communication in any form and by any means of
sufficient information on the terms of the offer and any shares of
common stock to be offered so as to enable an investor to decide to
purchase any shares of common stock, as the expression may be
varied in that Member State by any measure implementing the
Prospectus Directive in that Member State and the expression
"Prospectus Directive" means Directive 2003/71/EC (and any
amendments thereto including the 2010 PD Amending Directive to the
extent implemented in each Relevant Member State) and includes any
relevant implementing measure in each Relevant Member State and the
expression "2010 PD Amending Directive" means Directive
2010/73/EU.
United Kingdom
This
prospectus supplement and the accompanying base prospectus are not
an approved prospectus for purposes of the UK Prospectus Rules, as
implemented under the EU Prospectus Directive (2003/71/EC), and
have not been approved under section 21 of the Financial
Services and Markets Act 2000 (as amended) (the "FSMA") by a person
authorized under FSMA. The financial promotions contained in this
prospectus supplement and the accompanying base prospectus are
directed at, and this prospectus supplement and the accompanying
base prospectus are only being distributed to, (1) persons who
receive this prospectus supplement and the accompanying base
prospectus outside of the United Kingdom, and (2) persons in
the United Kingdom who fall within the exemptions under
articles 19 (investment professionals) and 49(2)(a) to
(d) (high net worth companies, unincorporated associations,
etc.) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (all such persons together being referred to
as "Relevant Persons"). This prospectus supplement and the
accompanying base prospectus must not be acted upon or relied upon
by any person who is not a Relevant Person. Any investment or
investment activity to which this prospectus supplement and the
accompanying base prospectus relate is available only to Relevant
Persons and will be engaged in only with Relevant Persons. This
prospectus supplement and the accompanying base prospectus and
their contents are confidential and should not be distributed,
published or reproduced (in whole or in part) or disclosed by
recipients to any other person that is not a Relevant
Person.
The
underwriter has represented, warranted and agreed
that:
(a)
it has only communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning of
section 21 of the FSMA in connection with the issue or sale of
any of the shares of common stock in circumstances in which
section 21(1) of the FSMA does not apply to the issuer;
and
(b)
it has complied with and will comply with all applicable provisions
of the FSMA with respect to anything done by it in relation to the
shares of common stock in, from or otherwise involving the United
Kingdom.
NYSE American listing
The
shares of our common stock are listed on NYSE American under the
symbol “INUV.”
Transfer Agent
Our
transfer agent is Colonial Stock Transfer Company, 66 Exchange
Place, Suite 100, Salt Lake City, UT 84111, and its telephone
number is (801) 355-5740.
LEGAL MATTERS
Pearlman Law Group
LLP, Ft. Lauderdale, Florida, will provide us with an opinion as to
certain legal matters in connection with the shares of common stock
offered hereby. Sullivan & Worcester LLP, New York, NY is
representing the underwriter.
EXPERTS
Our
audited consolidated balance sheets as of December 31, 2018 and
2017, and the related consolidated statements of income,
stockholders’ equity and cash flows for the years ended
December 31, 2018 and 2017 incorporated by reference in the
registration statement of which this prospectus is a part have been
audited by Mayer Hoffman McCann P.C., independent registered public
accounting firm, as indicated in their report with respect thereto,
and have been so included in reliance upon the report of such firm
given on their authority as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file
annual, quarterly and other reports, proxy statements and other
information with the SEC. The SEC also maintains a website at
www.sec.gov that
contains reports, proxy and information statements, and other
information regarding issuers such as our company that file
electronically with the SEC.
Our
website address is www.inuvo.com and information
on our corporate website is not incorporated by reference in this
prospectus or any prospectus supplement and you should not consider
it a part of this prospectus or any accompanying prospectus
supplement. We make available free of charge, through the Investor
section of our website, annual reports on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K and amendments
to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Exchange Act as soon as reasonably practicable after
we electronically file such material with, or furnish it to, the
SEC.
INFORMATION INCORPORATED BY REFERENCE
The SEC
allows us to “incorporate by reference” the information
we file with them, which means that we can disclose important
information to you by referring you to those documents. The
information incorporated by reference is considered to be part of
this prospectus, and later information filed with the Securities
and Exchange Commission will update and supersede this information.
We incorporate by reference the documents listed below, any of such
documents filed since the date this registration statement was
filed and any future filings with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Exchange Act until the termination of the
offering of securities covered by this prospectus:
●
|
our
Annual Report on Form 10-K for the year ended December 31, 2018 as
filed on March 15, 2019;
|
|
|
●
|
our
Quarterly Reports on Form 10-Q, for the period ending March 31,
2019 as filed on May 15, 2019, as amended on June 19,
2019;
|
|
|
●
|
our
Current Reports on Form 8-K filed January 14, 2019, January 28,
2019, February 6, 2019, February 19, 2019; March 5, 2019, as
amended on March 5, 2019, March 18, 2019, April 10, 2019, April 15,
2019, April 26, 2019, May 6, 2019, May 9, 2019, June 12, 2019, June
21, 2019, and July 11, 2019.
|
We will
provide without charge to any person to whom this prospectus is
delivered, on the written or oral request of such person, a copy of
any or all of the foregoing documents incorporated by reference,
excluding exhibits, unless we have specifically incorporated an
exhibit in the incorporated document. Written requests should be
directed to: Corporate Secretary, Inuvo, Inc., 500 President
Clinton Boulevard, Suite 300, Little Rock, AR 72201.
Each
document or report subsequently filed by us pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof
and prior to the termination of the offering of the securities
shall be deemed to be incorporated by reference into this
prospectus and to be a part of this prospectus from the date of
filing of such document, unless otherwise provided in the relevant
document. Any statement contained herein, or in a document all or a
portion of which is incorporated or deemed to be incorporated by
reference herein, shall be deemed to be modified or superseded for
purposes of the registration statement and this prospectus to the
extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a
part of the registration statement or this prospectus.
The
information relating to our company contained in this prospectus
and the accompanying base prospectus supplement is not
comprehensive, and you should read it together with the information
contained in the incorporated documents.
PROSPECTUS
$15,000,000
Inuvo, Inc.
COMMON STOCK
PREFERRED STOCK
WARRANTS
UNITS
We may
offer and sell, from time to time in one or more offerings, any
combination of common stock, preferred stock, warrants or units
having a maximum aggregate offering price of $15,000,000. When we
decide to sell particular class or series of securities, we will
provide specific terms of the offered securities in a prospectus
supplement.
The
prospectus supplement may also add, update or change information
contained in or incorporated by reference into this prospectus.
However, no prospectus supplement shall offer a security that is
not registered and described in this prospectus at the time of its
effectiveness. You should read this prospectus and any prospectus
supplement, as well as the documents incorporated by reference or
deemed to be incorporated by reference into this prospectus,
carefully before you invest.
This
prospectus may not be used to offer or sell our securities unless
accompanied by a prospectus supplement relating to the offered
securities.
Our
common stock is listed on the NYSE American under the symbol
“INUV.” The last reported sale price of our common
stock on August 29, 2017 was $1.03 per share.
The
aggregate market value of our outstanding common stock held by
non-affiliates is $27,366,115 based on 28,643,960 shares of common
stock outstanding, of which 24,005,364 shares are held by
non-affiliates, and a per share value of $1.14 based on the closing
price of our common stock on the NYSE American on July 28, 2017. We
have not offered any securities pursuant to General Instruction
I.B.6 of Form S-3 during the prior 12 calendar month period that
ends on and includes the date of this prospectus.
These
securities may be sold directly by us, through dealers or agents
designated from time to time, to or through underwriters or through
a combination of these methods. See “Plan of Distribution” beginning
on page 6. We may also describe the plan of distribution for any
particular offering of our securities in a prospectus supplement.
If any agents, underwriters or dealers are involved in the sale of
any securities in respect of which this prospectus is being
delivered, we will disclose their names and the nature of our
arrangements with them in a prospectus supplement. The net proceeds
we expect to receive from any such sale will also be included in a
prospectus supplement.
Investing in our
securities involves various risks. See “Risk Factors” on page 4 for more
information on these risks. Additional risks, if any, will be
described in the prospectus supplement related to a potential
offering under the heading “Risk Factors”. You should
review that section of the related prospectus supplement for a
discussion of matters that investors in such securities should
consider.
Neither
the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or
passed upon the adequacy or accuracy of this prospectus or any
accompanying prospectus supplement. Any representation to the
contrary is a criminal offense.
The
date of this prospectus is September 8, 2017
ABOUT THIS PROSPECTUS
This
prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission utilizing a
“shelf” registration, or continuous offering, process.
Under the shelf registration process, we may issue and sell any
combination of the securities described in this prospectus in one
or more offerings with a maximum offering price of up to
$15,000,000.
This
prospectus provides you with a general description of the
securities we may offer. Each time we sell securities under this
shelf registration, we will provide a prospectus supplement that
will contain certain specific information about the terms of that
offering, including a description of any risks related to the
offering, if those terms and risks are not described in this
prospectus. A prospectus supplement may also add, update or change
information contained in this prospectus. If there is any
inconsistency between the information in this prospectus and the
applicable prospectus supplement, you should rely on the
information in the prospectus supplement. The registration
statement we filed with the Securities and Exchange Commission
includes exhibits that provide more details on the matters
discussed in this prospectus. You should read this prospectus and
the related exhibits filed with the Securities and Exchange
Commission and the accompanying prospectus supplement together with
additional information described under the headings
“Available
Information” and “Information Incorporated by
Reference” before investing in any of the securities
offered.
We may
sell securities to or through underwriters or dealers, and also may
sell securities directly to other purchasers or through agents. To
the extent not described in this prospectus, the names of any
underwriters, dealers or agents employed by us in the sale of the
securities covered by this prospectus, the principal amounts or
number of shares or other securities, if any, to be purchased by
such underwriters or dealers and the compensation, if any, of such
underwriters, dealers or agents will be set forth in the
accompanying prospectus supplement.
The
information in this prospectus is accurate as of the date on the
front cover. Information incorporated by reference into this
prospectus is accurate as of the date of the document from which
the information is incorporated. You should not assume that the
information contained in this prospectus is accurate as of any
other date.
When
used herein, “Inuvo”, “we”,
“us” or “our” refers to Inuvo, Inc., a
Nevada corporation, and our subsidiaries. Additionally, when used
herein, "2016" refers to the year ended December 31, 2016, "2015"
refers to the year ended December 31, 2015, and "2017" refers to
the year ending December 31, 2017.
AVAILABLE INFORMATION
We file
annual, quarterly and other reports, proxy statements and other
information with the Securities and Exchange Commission. You may
read and copy any materials that we file at the Securities and
Exchange Commission’s Public Reference Room, 100 F Street,
N.E., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the Securities
and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission also maintains a website at www.sec.gov that
contains reports, proxy and information statements, and other
information regarding issuers such as our company that file
electronically with the Securities and Exchange
Commission.
We have
filed a registration statement under the Securities Act of 1933
with the Securities and Exchange Commission with respect to the
securities to be sold by pursuant to this prospectus. This
prospectus has been filed as part of the registration statement.
This prospectus does not contain all of the information set forth
in the registration statement because certain parts of the
registration statement are omitted in accordance with the rules and
regulations of the Securities and Exchange Commission. You should
refer to the registration statement, including the exhibits, for
further information about us and the securities being offered
pursuant to this prospectus. Statements in this prospectus
regarding the provisions of certain documents filed with, or
incorporated by reference in, the registration statement are not
necessarily complete and each statement is qualified in all
respects by that reference. You may:
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inspect
a copy of the registration statement, including the exhibits and
schedules, without charge at the Securities and Exchange
Commission’s Public Reference Room;
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obtain
a copy from the Securities and Exchange Commission upon payment of
the fees prescribed by the Securities and Exchange Commission;
or
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obtain
a copy from the Securities and Exchange Commission’s website
at www.sec.gov.
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Our
Internet address is www.inuvo.com. We make available free of
charge, through the investor relations section of our website,
annual reports on Form 10-K, quarterly reports on Form 10-Q and
current reports on Form 8-K and amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the
Securities and Exchange Commission.
OUR COMPANY
We
develop technology that connects advertisers with consumers through
interactions with Inuvo ad-units on websites and apps across
devices. The Inuvo MarketPlace provides the means to interact with
tens of thousands of advertisers (Demand) and tens of thousands of
online publishers (Supply). We interact with Demand/Supply
constituents directly and indirectly. We serve ads within content,
video and images. We target ads to consumers using our proprietary
ConceptGraph machine learning technology that includes a database
of 800 million machine profiles. We earn revenue when consumers
view and click on our ads. We touch 90% of all US households
weekly. Our business scales as we add Demand and Supply
relationships with many barriers to entry including the ability to
process hundreds of thousands of transactions per
second.
Intellectual
property is protected by eleven issued and eight pending patents.
We count among our many contractual relationships, three clients
who collectively manage over 50% of all US digital advertising
budgets. Included within our Supply portfolio is a collection of
owned websites such as alot.com and earnspendlive.com where we
create content in health, finance, travel, careers, auto, education
and living categories. These sites provide the means to test
ad-tech, while also delivering high quality consumers to
advertisers through interaction with proprietary content in the
form of images, videos, slideshows and the written
word.
We are
focused on growth and expect to generate a positive cash flow for
the long term. We expect to continue to make strategic investments
principally in these areas: marketing technology that helps drive
traffic to our owned websites; ad-units that perform better for
publishers; demand technology that optimizes advertiser choices;
supply technology that optimizes publisher yield; and audience
targeting technology that improves the alignment of advertising
with consumer and yield.
Corporate information
We were
incorporated under the laws of the State of Nevada in October 1987
under the name North Star Petroleum, Inc. In May 1990, we changed
our name to Gemstar Enterprises, Inc. In October 1998 we changed
our name to CGI Holding Corp. In March 2006 we changed our name to
Think Partnership Inc. and in September 2008 we changed our name to
Kowabunga! Inc. Lastly, in July 2009 we changed our name to Inuvo,
Inc.
Our
principal executive offices are located at 500 President Clinton
Boulevard, Suite 300, Little Rock, AR 72201. Our telephone number
at this location is (501) 205-8508. The information which appears
on our website at www.inuvo.com is not part of this
prospectus.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING
INFORMATION
This
prospectus contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, or the
"Securities Act", and Section 21E of the Securities Exchange Act of
1934, as amended, or the "Exchange Act". These forward-looking
statements are subject to known and unknown risks, uncertainties
and other factors which may cause actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as
“will,” “should,” “intend,”
“expect,” “plan,” “anticipate,”
“believe,” “estimate,”
“predict,” “potential,” or
“continue,” or the negative of such terms or other
comparable terminology. These factors include, but are not limited
to our:
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material
dependence on our relationships with Yahoo! and
Google;
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dependence
on relationships with distribution partners, and on the
introduction of new products and services, which require
significant investment;
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dependence
on our financing arrangements with Western Alliance Bank, which is
collateralized by our assets;
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dependence
on our ability to effectively market and attract
traffic;
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need to
keep pace with technology changes;
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fluctuations
of quarterly financial results and the trading price of our common
stock;
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vulnerability
to interruptions of services;
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dependence
on key personnel;
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vulnerability
to regulatory and legal uncertainties and our ability to comply
with applicable laws and regulations;
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need to
protect our intellectual property;
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vulnerability
to publishers who could fabricate clicks;
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vulnerability
to a downturn and to uncertainty in global economic
conditions;
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integration
of our recent NetSeer asset acquisition;
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requirement
to adhere to the covenants and restrictions in our grant agreement
with the state of Arkansas;
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the
dilutive impact to our stockholders from outstanding restricted
stock grants, warrants and options; and
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the
seasonality of our business.
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These
forward-looking statements were based on various factors and were
derived utilizing numerous assumptions and other factors that could
cause our actual results to differ materially from those in the
forward-looking statements. Most of these factors are difficult to
predict accurately and are generally beyond our control. You should
consider the areas of risk described in connection with any
forward-looking statements that may be made herein. Readers are
cautioned not to place undue reliance on these forward-looking
statements and readers should carefully review this prospectus in
its entirety, including the risks described in Item 1A - Risk
Factors in our Annual Report on Form 10-K for the year ended
December 31, 2016 as filed with the Securities and Exchange
Commission on February 16, 2017.
Except
for our ongoing obligations to disclose material information under
the Federal securities laws, we undertake no obligation to release
publicly any revisions to any forward-looking statements, to report
events or to report the occurrence of unanticipated events. These
forward-looking statements speak only as of the date of this
prospectus, and you should not rely on these statements without
also considering the risks and uncertainties associated with these
statements and our business.
RISK FACTORS
An
investment in our securities involves a high degree of risk. The
prospectus supplement applicable to each offering of our securities
will contain a discussion of the risks applicable to an investment
in Inuvo and to the particular types of securities that we are
offering under that prospectus supplement. Prior to making a
decision about investing in our securities, you should carefully
consider the specific factors discussed under the heading
“Risk Factors” in the applicable prospectus supplement,
together with all of the other information contained or
incorporated by reference in the prospectus supplement or appearing
or incorporated by reference in this prospectus. You should also
consider the risks, uncertainties and assumptions discussed under
the heading “Risk Factors” included in our most recent
Annual Report on Form 10-K, as revised or supplemented by our most
recent Quarterly Report on Form 10-Q, each of which are on
file with the SEC and are incorporated herein by reference, and
which may be amended, supplemented or superseded from time to time
by other reports we file with the SEC in the future. Additional
risks not presently known to us or that we currently believe to be
immaterial may also adversely affect our business, operating
results and financial condition and the value of an investment in
our securities.
USE OF PROCEEDS
Unless
otherwise indicated in an accompanying prospectus supplement, the
net proceeds from the sale of the securities offered hereby will be
used for general corporate purposes, which may include working
capital, capital expenditures, and development costs. We have not
allocated any portion of the net proceeds for any particular use at
this time. The net proceeds may be invested temporarily until they
are used for their stated purpose. Specific information concerning
the use of proceeds from the sale of any securities will be
included in the prospectus supplement relating to such
securities.
DESCRIPTION OF CAPITAL STOCK
Our
authorized capital stock consists of 40,000,000 shares of common
stock, par value $0.001 per share, 500,000 shares of preferred
stock, par value $0.001 per share. The following description of our
common stock and our preferred stock is a summary. You should refer
to our articles of incorporation for the actual terms of our
capital stock.
Common stock
As of
August 24, 2017 there were 28,643,960 outstanding shares of our
common stock. Holders of shares of common stock are entitled to one
vote for each share on all matters to be voted on by the
stockholders. Holders of common stock do not have cumulative voting
rights. Holders of common stock are entitled to share ratably in
dividends, if any, as may be declared from time to time by the
board of directors in its discretion from funds legally available
therefor. In the event of a liquidation, dissolution or winding up
of our company, the holders of common stock are entitled to share
pro rata all assets remaining after payment in full of all
liabilities. All of the outstanding shares of common stock are
fully paid and non-assessable. Holders of common stock have no
preemptive rights to purchase our common stock. There are no
conversion or redemption rights or sinking fund provisions with
respect to the common stock.
Preferred stock
The
board of directors is authorized to provide for the issuance of
shares of preferred stock in series and, by filing an amendment
pursuant to the applicable laws of Nevada, to establish from time
to time the number of shares to be included in each such series,
and to fix the designation, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or
restrictions thereof without any further vote or action by the
stockholders. Any shares of preferred stock so issued would have
priority over the common stock with respect to dividend or
liquidation rights.
Any
future issuance of preferred stock may have the effect of delaying,
deferring or preventing a change in control of our company without
further action by the stockholders and may adversely affect the
voting and other rights of the holders of common stock. In
addition, the issuance of shares of preferred stock, or the
issuance of rights to purchase such shares, could be used to
discourage an unsolicited acquisition proposal. For instance, the
issuance of a series of preferred stock might impede a business
combination by including class voting rights that would enable the
holder to block such a transaction, or facilitate a business
combination by including voting rights that would provide a
required percentage vote of the stockholders. In addition, under
certain circumstances, the issuance of preferred stock could
adversely affect the voting power of the holders of the common
stock. Although the board of directors is required to make any
determination to issue such stock based on its judgment as to the
best interests of our stockholders, the board of directors could
act in a manner that would discourage an acquisition attempt or
other transaction that some, or a majority, of the stockholders
might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then
market price of such stock. The board of directors does not at
present intend to seek stockholder approval prior to any issuance
of currently authorized stock, unless otherwise required by law or
stock exchange rules.
Transfer agent
Our
transfer agent is Colonial Stock Transfer Company, 66 Exchange
Place, Suite 100, Salt Lake City, UT 84111, and its telephone
number is (801) 355-5740.
DESCRIPTION OF WARRANTS
We may
issue warrants for the purchase of preferred stock or common stock,
or any combination of these securities. Warrants may be issued
independently or together with other securities and may be attached
to or separate from any offered securities. Each series of warrants
will be issued under a separate warrant agreement. The following
outlines some of the general terms and provisions of the warrants
that we may issue from time to time. Additional terms of the
warrants and the applicable warrant agreement will be set forth in
the applicable prospectus supplement.
The
following descriptions, and any description of the warrants
included in a prospectus supplement, may not be complete and is
subject to and qualified in its entirety by reference to the terms
and provisions of the applicable warrant agreement, which we will
file with the Securities and Exchange Commission in connection with
any offering of warrants.
General
The
prospectus supplement relating to a particular issue of warrants
will describe the terms of the warrants, including the
following:
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the
title of the warrants;
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the
offering price for the warrants, if any;
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the
aggregate number of the warrants;
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the
terms of the security that may be purchased upon exercise of the
warrants;
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if
applicable, the designation and terms of the securities that the
warrants are issued with and the number of warrants issued with
each security;
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if
applicable, the date from and after which the warrants and any
securities issued with the warrants will be separately
transferable;
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the
dates on which the right to exercise the warrants commence and
expire;
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if
applicable, the minimum or maximum amount of the warrants that may
be exercised at any one time;
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if
applicable, a discussion of material United States federal income
tax considerations;
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anti-dilution
provisions of the warrants, if any;
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redemption
or call provisions, if any, applicable to the warrants;
and
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any
additional terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the
warrants.
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Exercise of warrants
Each
warrant will entitle the holder of the warrant to purchase the
securities that we specify in the applicable prospectus supplement
at the exercise price that we describe in the applicable prospectus
supplement. Holders may exercise warrants at any time up to the
close of business on the expiration date set forth in the
applicable prospectus supplement. After the close of business on
the expiration date, unexercised warrants will be void. Holders may
exercise warrants as set forth in the prospectus supplement
relating to the warrants being offered. Until a holder exercises
the warrants to purchase any securities underlying the warrants,
the holder will not have any rights as a holder of the underlying
securities by virtue of ownership of warrants.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
A
summary of any material United States federal income tax
consequences to persons investing in the securities offered by this
prospectus will be set forth in any applicable prospectus
supplement. The summary will be presented for informational
purposes only, however, and will not be intended as legal or tax
advice to prospective purchasers. Prospective purchasers of
securities are urged to consult their own tax advisors prior to any
purchase of securities.
PLAN OF DISTRIBUTION
We may
sell the securities from time to time pursuant to underwritten
public offerings, "at-the-market" offerings, negotiated
transactions, block trades, or a combination of these methods. We
may sell the securities in one or more of the following ways from
time to time:
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to or
through underwriters or dealers;
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directly
to one or more purchasers; or
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through
agents.
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The
prospectus supplement (and any related free writing prospectuses
that we may authorize) will describe the terms of such offering,
including:
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the
name or names of any underwriters, dealers or agents;
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the
purchase price of the offered securities and the proceeds to Inuvo
from the sale;
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any
over-allotment options under which underwriters may purchase
additional securities from us
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any
underwriting discounts and commissions or agency fees and other
items constituting underwriters' or agents' compensation;
and
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any
initial public offering price, any discounts or concessions allowed
or reallowed or paid to dealers and any securities exchanges on
which such offered securities may be listed.
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Any
initial public offering prices, discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to
time.
If
underwriters are used in the sale, the underwriters will acquire
the offered securities for their own account and may resell them
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale. The offered securities may be
offered either to the public through underwriting syndicates
represented by one or more managing underwriters or by one or more
underwriters without a syndicate. Unless otherwise set forth in a
prospectus supplement, the obligations of the underwriters to
purchase any series of securities will be subject to certain
conditions precedent, and the underwriters will be obligated to
purchase all of such series of securities, if any are purchased
(other than securities subject to any over-allotment
option).
In
connection with underwritten offerings of the offered securities
and in accordance with applicable law and industry practice,
underwriters may over-allot or effect transactions that stabilize,
maintain or otherwise affect the market price of the offered
securities at levels above those that might otherwise prevail in
the open market, including by entering stabilizing bids, effecting
syndicate covering transactions or imposing penalty bids, each of
which is described below:
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a
stabilizing bid means the placing of any bid, or the effecting of
any purchase, for the purpose of pegging, fixing or maintaining the
price of a security;
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a
syndicate covering transaction means the placing of any bid on
behalf of the underwriting syndicate or the effecting of any
purchase to reduce a short position created in connection with the
offering; or
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a
penalty bid means an arrangement that permits the managing
underwriter to reclaim a selling concession from a syndicate member
in connection with the offering when offered securities originally
sold by the syndicate member are purchased in syndicate covering
transactions.
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These
transactions may be effected on the NYSE American, in the
over-the-counter market, or otherwise. Underwriters are not
required to engage in any of these activities, or to continue such
activities if commenced.
If a
dealer is used in the sale, Inuvo will sell such offered securities
to the dealer, as principal. The dealer may then resell the offered
securities to the public at varying prices to be determined by that
dealer at the time for resale. The names of the dealers and the
terms of the transaction will be set forth in the prospectus
supplement relating to that transaction.
Offered
securities may be sold directly by Inuvo to one or more
institutional purchasers, or through agents designated by us from
time to time, at a fixed price or prices, which may be changed, or
at varying prices determined at the time of sale. Any agent
involved in the offer or sale of the offered securities in respect
of which this prospectus is delivered will be named, and any
commissions payable by Inuvo to that agent will be set forth, in
the prospectus supplement relating to that offering. Unless
otherwise indicated in such prospectus supplement, any such agent
will be acting on a best efforts basis for the period of its
appointment.
Underwriters,
dealers and agents may be entitled under agreements entered into
with us to indemnification by us against certain civil liabilities,
including liabilities under the Securities Act, or to contribution
with respect to payments that the underwriters, dealers or agents
may be required to make in respect thereof. Underwriters, dealers
and agents may be customers of, engage in transactions with, or
perform services for us and our affiliates in the ordinary course
of business.
Other
than our common stock, which is listed on the NYSE American, each
of the securities issued hereunder will be a new issue of
securities, will have no prior trading market, and may or may not
be listed on a national securities exchange. Any common stock sold
pursuant to a prospectus supplement will be listed on the NYSE
American, subject to official notice of issuance. Any underwriters
to whom we sell securities for public offering and sale may make a
market in the securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any
time without notice. We cannot assure you that there will be a
market for the offered securities.
LEGAL MATTERS
The
validity of the securities offered by this prospectus will be
passed upon for us by Pearlman Law Group LLP, 200 South Andrews
Avenue, Suite 901, Fort Lauderdale, FL 33301.
EXPERTS
Our
audited consolidated balance sheets as of December 31, 2016 and
2015, and the related consolidated statements of income,
stockholders’ equity and cash flows for the years ended
December 31, 2016 and 2015 incorporated by reference in the
registration statement of which this prospectus is a part have been
audited by Mayer Hoffman McCann P.C., independent registered public
accounting firm, as indicated in their report with respect thereto,
and have been so included in reliance upon the report of such firm
given on their authority as experts in accounting and
auditing.
INFORMATION INCORPORATED BY REFERENCE
The
Securities and Exchange Commission allows us to “incorporate
by reference” the information we file with them, which means
that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information
filed with the Securities and Exchange Commission will update and
supersede this information. We incorporate by reference the
documents listed below, any of such documents filed since the date
this registration statement was filed and any future filings with
the Securities and Exchange Commission under Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 until the
termination of the offering of securities covered by this
prospectus:
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Annual
Report on Form 10-K for the year ended December 31, 2016 filed
February 16, 2017;
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Quarterly
Report on Form 10-Q for the period ended June 30, 2017 filed August
8, 2017; and
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Current
Reports on Form 8-K (including 8-K/A) as filed on February 27,
2017, March 30, 2017, April 17, 2017, June 7, 2017 and June 19,
2017.
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We will
provide without charge to any person to whom this prospectus is
delivered, on the written or oral request of such person, a copy of
any or all of the foregoing documents incorporated by reference,
excluding exhibits, unless we have specifically incorporated an
exhibit in the incorporated document. Written requests should be
directed to: Corporate Secretary, Inuvo, Inc., 500 President
Clinton Boulevard, Suite 300, Little Rock, AR 72201.
Each
document or report subsequently filed by us pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
after the date hereof and prior to the termination of the offering
of the securities shall be deemed to be incorporated by reference
into this prospectus and to be a part of this prospectus from the
date of filing of such document, unless otherwise provided in the
relevant document. Any statement contained herein, or in a document
all or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of the registration statement and this
prospectus to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a
part of the registration statement or this prospectus.
The
information relating to our company contained in this prospectus
and the accompanying prospectus supplement is not comprehensive,
and you should read it together with the information contained in
the incorporated documents.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Under
our Articles of Incorporation, our directors are not liable for
monetary damages for breach of fiduciary duty, except in connection
with:
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a
breach of the director's duty of loyalty to us or our
stockholders;
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acts
or omissions not in good faith or which involve intentional
misconduct, fraud or a knowing violation of law;
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a
transaction from which our director received an improper benefit;
or
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an act
or omission for which the liability of a director is expressly
provided under Nevada law.
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In
addition, our bylaws provide that we must indemnify our officers
and directors to the fullest extent permitted by Nevada law for all
expenses incurred in the settlement of any actions against such
persons in connection with their having served as officers or
directors.
Insofar
as the limitation of, or indemnification for, liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers, or persons controlling us pursuant to the foregoing, or
otherwise, we have been advised that, in the opinion of the
Securities and Exchange Commission, such limitation or
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore,
unenforceable.
TABLE OF CONTENTS
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Page
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About
this Prospectus
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2
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Available
Information
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2
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$15,000,000
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Our
Company
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3
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Cautionary
Statements Regarding Forward-Looking Information
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3
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Risks
Factors
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4
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Use of
Proceeds
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5
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Description
of Capital Stock
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5
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Description
of Warrants
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6
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COMMON
STOCK, PREFERRED STOCK,
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Material
Federal Income Tax Consequences
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7
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WARRANTS
OR UNITS
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Plan
of Distribution
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7
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Legal
Matters
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8
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PROSPECTUS
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Experts
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8
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Information
Incorporated By Reference
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8
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September
8, 2017
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Disclosure
of Commission Position on Indemnification for Securities Act
Liabilities
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9
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