inuv_424b3
Filed
Pursuant to Rule 424(b)(3)
Registration No.
333-239147
PROSPECTUS
SUPPLEMENT
(To the
Prospectus dated June 25, 2020)
20,000,000 Shares
Common Stock
Inuvo, Inc.
We are
offering 20,000,000 shares of our common stock in this offering
pursuant to this prospectus supplement
and the accompanying prospectus.
Our
common stock is listed on the NYSE American under the symbol
“INUV.” On July 21, 2020, the last reported sale price
of our common stock was $0.635 per share.
As of
the date of this prospectus supplement, the aggregate market value
of our outstanding common stock held by non-affiliates was
$70,146,813, based on 75,668,419 shares of outstanding common
stock, of which 65,557,768 shares are held by non-affiliates and
10,110,651 shares are held by affiliates, and a per share price of
$1.07 per share, the closing price of our common stock on June 10,
2020, which is the highest closing sale price of our common stock
on the NYSE American within the prior 60 days. 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”, or approximately
$23,379,932 (the market value of our common stock held by our
non-affiliates) 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 offered and sold $11,033,925 of our securities pursuant to
General Instruction I.B.6 of Form S-3.
Investing in our common stock involves
a high degree of risk. See “Risk
Factors” beginning on
page S-3 of this prospectus supplement and on page 5 of the
accompanying prospectus for a discussion of information that should
be considered in connection with an investment in our common
stock.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
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Public offering
price
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$0.50
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$10,000,000.00
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Underwriting
discounts and commissions (1)
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$0.035
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$700,000.00
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Proceeds, before
expenses, to us
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$0.465
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$9,300,000.00
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(1)
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Please
see “Underwriting” beginning on page
S-9 of this prospectus supplement for a description of the
compensation payable to the underwriters.
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We have
granted the representative of the underwriters an option to
purchase up to an additional 1,500,000 shares of common stock from
us at the public offering price, less the underwriting discounts
and commissions, within 45 days from the date of this prospectus to
cover over-allotments, if any.
The
underwriters expect to deliver the shares of common stock to the
purchasers on or about July 27, 2020.
Sole Book-Running Manager
A.G.P.
The
date of this prospectus supplement is July 23, 2020
TABLE OF CONTENTS
Prospectus Supplement
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S-ii
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S-ii
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S-1
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S-2
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S-3
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S-5
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S-6
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S-7
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S-8
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S-9
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S-13
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S-13
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S-13
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S-13
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Prospectus
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4
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5
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5
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5
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11
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12
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ABOUT THIS PROSPECTUS
SUPPLEMENT
This
document is in two parts. 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 prospectus, including the documents
incorporated by reference, provides more general information.
Before you invest, you should carefully read this prospectus
supplement, the accompanying prospectus, all information
incorporated by reference herein and therein, as well as the
additional information described under “Where You Can Find More
Information” 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 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 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
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
prospectus and in any free writing prospectuses we may provide to
you in connection with this offering. We have not, and A.G.P./Alliance
Global Partners, or
A.G.P., 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
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, the terms “Inuvo,” “we,”
“us, “our” and similar terms refer to Inuvo,
Inc., a Nevada corporation, and our subsidiaries.
CAUTIONARY STATEMENTS REGARDING
FORWARD-LOOKING INFORMATION
The
information included or incorporated by reference into this
prospectus supplement and the accompanying prospectus contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, or Securities Act, and Section
21E of the Securities Exchange Act of 1934, as amended, or Exchange
Act. 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,” 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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management’s
broad discretion as to the use of proceeds from this
offering;
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immediate
dilution to purchasers of shares of our common stock in this
offering;
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risks
for failing to comply with the continued listing standards of the
NYSE American;
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our
history of losses, declining revenues and working capital
deficit;
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our
ability to continue as a going concern;
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the
known and unknown impact of the Covid-19 pandemic on our
company;
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our
ability to maintain our credit facility;
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our
reliance on revenues from a limited number of
customers;
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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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the
impact of quarterly results on our common stock price;
and
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dilution
to our stockholders upon the exercise of outstanding common stock
options and restricted stock unit grants.
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We urge
you to consider these factors before investing in our common stock.
The forward-looking statements included in this prospectus
supplement, the accompanying prospectus and any other offering
material, or in the documents incorporated by reference into this
prospectus supplement, the accompanying prospectus and any other
offering material, are made only as of the date of the prospectus
supplement, the accompanying prospectus, any other offering
material or the incorporated document. For more detail on these and
other risks, please see “Risk Factors” in this prospectus
supplement, the accompanying prospectus, our Annual Report on Form
10-K for our fiscal year ended December 31, 2019, filed with the
SEC on May 12, 2020, as amended on Form 10-K/A as filed with the
SEC on June 22, 2020, our Quarterly Report on Form 10-Q for our
quarter ended March 31, 2020, filed with the SEC on May 15, 2020,
and our other filings with the SEC.
PROSPECTUS SUPPLEMENT
SUMMARY
The following information 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 “Information Incorporated by Reference” in this
prospectus supplement.
Our Company
Inuvo is a technology company that develops and sells information
technology solutions for marketing. These platforms predictively
identify and message online audiences for any product or service
across devices, channels and formats, including video, mobile,
connected TV, display, social and native. These capabilities allow
Inuvo’s clients to engage with their customers and prospects
in a manner that drives engagement from the first contact with the
consumer. Inuvo facilitates the delivery of hundreds of millions of
marketing messages to consumers every single month and counts among
its clients numerous world-renowned names in industries that have
included retail, automotive, insurance, health care, technology,
telecommunications and finance.
Inuvo’s solution incorporates a proprietary form of
artificial intelligence, or AI, branded the IntentKey. This
sophisticated machine learning technology uses interactions with
Internet content as a source of information from which to predict
consumer intent. The AI includes a continually updated database of
over 500 million machine profiles which Inuvo utilizes to deliver
highly aligned online audiences to its clients. Inuvo earns revenue
when consumers view or click on its client’s messages.
Inuvo’s business scales through account management activity
with existing clients and by adding new clients through sales
activity.
As part of Inuvo’s technology strategy, it owns a collection
of websites including alot.com and earnspendlive.com, where Inuvo
creates content in health, finance, travel, careers, auto,
education and living categories. These sites provide the means to
test Inuvo’s technologies, while also delivering high quality
consumers to clients through the interaction with proprietary
content in the form of images, videos, slideshows and
articles.
There are many barriers to entry associated with Inuvo’s
business model, including a proficiency in large scale information
processing, predictive software development, marketing data
products, analytics, artificial intelligence, integration to the
internet of things (IOT), and the relationships required to execute
within the IOT. Inuvo’s intellectual property is protected by
17 issued and eight pending patents.
Please
see our Annual Report on Form 10-K for the fiscal year ended
December 31, 2019 as filed with the SEC on May 12, 2020, as amended
under Form 10-K/A as filed with the SEC on June 22, 2022, and our
other subsequent filings with the SEC for additional information
about our business, operations and financial
condition.
Risk Factors
Investing
in our securities involves a high degree of risk. You should
carefully consider all of the information in this prospectus and in
the documents incorporated by reference prior to investing in our
securities. These risks are discussed more fully in the section
titled “Risk Factors” herein and in our Annual Report
on Form 10-K for the year ended December 31, 2019, as amended, and
our Quarterly Report on Form 10-Q for the period ended March 31,
2020, both of which are filed with the SEC and incorporated by
reference in this prospectus. These risks and uncertainties
include, but are not limited to, the following:
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we have
a history of losses, declining revenues, and a working capital
deficit;
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our
ability to continue as a going concern will require us to obtain
additional financing to fund our current operations, which may be
unavailable on acceptable terms, or at all;
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our
business and operations have been adversely impacted by the
Covid-19 pandemic and we are unable to predict its ultimate overall
impact on our company;
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we are
dependent on our ability to maintain our credit facility and our
declining revenues have impacted our availability to access amounts
under the credit facility;
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we rely
on a limited number of customers and the seasonality of our
business impacts our financial results and cash
availability;
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our
revenue is reliant on our third party supply partners to drive
traffic successfully to their websites and mobile applications,
resulting in clicks on advertisements we have
delivered;
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we use
a predictive model to calculate the rate of return for marketing
campaigns on our ALOT-branded websites, and 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; and
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we are
subject to risks from publishers who could fabricate clicks either
manually or technologically. 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.
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Corporate
information
We were
incorporated in Nevada as a corporation on October 29, 1987. 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. We
maintain a corporate website at www.inuvo.com.
Except as specifically set forth herein, the information which
appears on our website at s not part of the prospectus or this
prospectus supplement.
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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.
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Issuer
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Inuvo, Inc.
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Common stock offered by us
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20,000,000
shares
at a purchase price of $0.50 per share.
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Over-allotment option
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We have granted to the representative of the underwriters the
option, exercisable for 45 days from the date of this prospectus
supplement, to purchase up to 1,500,000 additional shares of common
stock to cover over-allotments.
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Common stock to be outstanding after this offering
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96,044,946
shares. If the representative’s
over-allotment option is exercised in full, the total number of
shares of common stock outstanding immediately after this offering
would be 97,544,946 shares.
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NYSE American symbol
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INUV
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Use of proceeds
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We intend to use the next proceeds from this offering for general
working capital. See "Use of
Proceeds" on page
S-5.
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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-3 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 our common stock outstanding before and after
this offering is based on 76,044,946 shares of common stock
outstanding as of July 22, 2020, and excludes 376,527 treasury
shares, 54,030 shares held in the name of one of our subsidiaries
and:
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14,498 shares of our common stock issuable upon the exercise of
outstanding stock options with a weighted average exercise price of
$1.23 per share;
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2,256,659 shares of our common stock underlying outstanding
restricted stock units;
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6,769,072 additional shares of our common stock reserved for future
issuance under our 2017 Equity Compensation Plan (although
effective with this offering we have suspended any future grants of
shares of our common stock under the plan and unreserved such
shares under the plan until such time as determined by the board of
directors); and
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236,776 additional shares of our common stock issuable pursuant to
grants made under our equity director’s plans.
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Investing in our securities involves a high degree of risk. Before
deciding whether to invest in our securities, you should carefully
consider the risk factors we describe in this prospectus supplement
and in any related free writing prospectus that we may authorize to
be provided to you or in any report incorporated by reference into
this prospectus supplement, including our Annual Report on Form
10-K for the year ended December 31, 2019, as amended, or any
Quarterly Report on Form 10-Q that is incorporated by reference
into this prospectus supplement. Although we discuss key risks in
those risk factor descriptions, additional risks not currently
known to us or that we currently deem immaterial also may impair
our business. Our subsequent filings with the SEC may contain
amended and updated discussions of significant risks. We cannot
predict future risks or estimate the extent to which they may
affect our financial performance.
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.
If you purchase shares of our common stock sold in this offering,
you will experience immediate and substantial dilution in the net
tangible book value of your shares. In addition, we may issue
additional shares of common stock in the future which may result in
additional dilution to common shareholders.
After
giving effect to the sale of 20,000,000 shares of our common stock
in this offering at a price of $0.50 per share for aggregate gross
proceeds to us of approximately $10,000,000, and after deducting
commissions and estimated offering expenses payable by us, but
giving no effect to the exercise of the over-allotment option,
purchasers of our common stock in this offering will incur
immediate dilution of $0.44 per share of common stock in the pro
forma as adjusted net tangible book value of the common stock they
acquire. For a more detailed
discussion of the foregoing, please see the section entitled
“Dilution” on page S-6 below. To the extent
outstanding stock options are exercised or restricted stock units
vest, there will be further dilution to new
investors.
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.
We do not anticipate paying dividends in the foreseeable
future.
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 may also 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 your ownership of our 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:
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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;
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technical
difficulties or interruptions in our services;
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changes in privacy
protection and other governmental regulations applicable to our
industry;
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changes in our
pricing policies or the pricing policies of our
competitors;
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the financial
condition and business success of our distribution
partners;
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purchasing and
budgeting cycles of our distribution partners;
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acquisitions of
businesses and products by us or our competitors;
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competition,
including entry into the market by new competitors or new offerings
by existing competitors;
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discounts offered
to advertisers by upstream advertising networks;
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our history of
litigation;
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our ability to
hire, train and retain sufficient sales, client management and
other personnel;
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timing of
development, introduction and market acceptance of new services or
service enhancements by us or our competitors;
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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 22, 2020, we had 2,507,933 shares of our common stock
underling outstanding stock options and restricted stock units. If
outstanding stock options are exercised or restricted stock units
vest, dilution will occur to our stockholders, which may be
significant.
We
estimate that the net proceeds to us from this offering will be
approximately $9.185 million (or approximately $9.883 million if
the underwriters’ option to purchase additional shares is
exercised in full), after deducting underwriting discounts and
commissions and estimated offering expenses payable by
us.
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 presently intend to use the net proceeds from the
sale of our shares of common stock for general working capital. We
reserve the right, however, to use the net proceeds from this
offering for any proper corporate purpose as determined by our
board of directors.
Pending
our use of the net proceeds from this offering, we intend to invest
the net proceeds in a variety of capital preservation investments,
including short-term, investment grade, interest bearing
instruments and U.S. government securities.
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 share and the pro forma as adjusted net book
value per share of our common stock upon the closing of this
offering. Our historical net tangible book value per common share
as of March 31, 2020, was $(9,382,213), or approximately $(0.16)
per share of outstanding common stock, based on 60,353,033 shares
of common stock outstanding as of March 31, 2020. Net tangible book
value per share of our common stock is determined at any date by
subtracting total liabilities from the amount of total tangible
assets, and dividing this amount by the number of shares of common
stock deemed to be outstanding as of that date.
Our pro
forma net tangible book value as of March 31, 2020 was
$(3,637,172), or approximately $(0.05) per share of common stock,
based upon 76,044,946 shares outstanding after giving effect to the
issuance and sale of an additional 15,691,788 shares of our common
stock that were issued subsequent to March 31, 2020 which includes
(i) the issuance and sale of 1,400,285 shares of our common stock
in April 2020 resulting in gross proceeds to us of approximately
$245,050; (ii) the issuances in April 2020 and May 2020 of an
aggregate of 1,800,000 shares of our common stock upon the
conversion of an aggregate of $315,000 of convertible notes; (iii)
the issuance and sale in June 2020 of 12,222,222 shares of our
common stock resulting in gross proceeds to us of approximately
$5,500,000; and (iv) the vesting of restricted stock units of
269,281 shares. After giving effect to (x) these pro forma
issuances, and (y) the sale of 20,000,000 shares of our common
stock at the offering price of $0.50 per share in this offering
(giving no effect to the over-allotment option), our pro forma as
adjusted net tangible book value of our common stock as of March
31, 2020 would have been approximately $5,547,828, or approximately
$0.06 per share of outstanding common stock. This amount represents
an immediate increase in net tangible book value of $0.11 per share
of our common stock to our existing common shareholders and an
immediate dilution of $0.44 per share of our common stock to new
investors purchasing common stock in this offering, as illustrated
in the following table:
Public
offering price per common share
|
$0.50
|
Historical
net tangible book value per share as of March 31, 2020
|
$(0.16)
|
Increase
in net tangible book value per share attributable to pro forma
adjustments
|
$0.11
|
Pro
forma net tangible book value per share of common stock before this
offering as of March 31, 2020
|
$(0.05)
|
Increase
in pro forma net tangible book value per share of common stock
attributable to this offering
|
$0.11
|
Pro
forma as adjusted net tangible book value per share of common stock
after giving effect to this offering
|
$0.06
|
Dilution
per share of common stock to new investors in this
offering
|
$0.44
|
The
foregoing table does not take into account the exercise of
outstanding options having a per share exercise price less than the
per common share offering price to the public in this offering, or
the vesting of outstanding restricted stock units.
The
foregoing table is based on 60,353,033 shares of common stock
outstanding as of March 31, 2020, excluding 376,527 treasury shares
and 54,030 shares held by a subsidiary, and excludes the following
additional shares:
●
|
14,498 shares of our common stock issuable upon the exercise of
outstanding stock options with a weighted average exercise price of
$1.23 per share;
|
|
●
|
2,256,659 shares of our common stock underlying outstanding
restricted stock units;
|
|
●
|
6,769,072 additional shares of our common stock reserved for future
issuance under our 2017 Equity Compensation Plan (although
effective with this offering we have suspended any future grants of
shares of our common stock under the plan and unreserved such
shares under the plan until such time as determined by the board of
directors);
|
|
●
|
236,776 additional shares of our common stock issuable pursuant to
grants made under our equity director’s plans;
and
|
|
|
●
|
1,800,000 shares of our common stock required which were then
reserved for future issuance in accordance with the terms and
conditions of convertible notes which were subsequently converted
in April 2020 and May 2020.
|
The following table sets forth our capitalization as of March 31,
2020:
●
|
on an
actual basis;
|
●
|
on a
pro forma basis to give effect to (i) the issuance and sale of
1,400,285 shares of our common stock in April 2020 resulting in
gross proceeds to us of $245,050; (ii) the issuances in April 2020
and May 2020 of an aggregate of 1,800,000 shares of our common
stock upon the conversion of an aggregate of $315,000 of
convertible notes; (iii) the issuance and sale in June 2020 of
12,222,222 shares of our common stock resulting in gross proceeds
to us of $5,500,000; and (iv) the vesting of restricted stock units
of 269,281 shares, and
|
●
|
on a pro forma as adjusted basis to give effect to the sale of
20,000,000 shares of common stock in this offering at the public
offering price of $0.50 per share, after deducting underwriting
discounts and commissions and other estimated offering expenses
payable by us, but giving no effect to the exercise of the
over-allotment option.
|
This capitalization table should be read in conjunction with
Management’s Discussion and Analysis of Financial Condition
and Results of Operations and our consolidated financial statements
and related notes included in our Quarterly Report on Form 10-Q for
the period ended March 31, 2020 as filed with the SEC on May 15,
2020, and other financial information included and incorporated by
reference in this prospectus supplement.
|
|
|
|
|
Pro Forma As
Adjusted
(unaudited)
|
Cash and cash
equivalents
|
$470,807
|
$5,734,333
|
$14,919,383
|
|
|
|
|
Preferred stock,
authorized 500,000 shares, $0.001 par value; no shares issued and
outstanding
|
-
|
-
|
-
|
Common stock,
authorized 100,000,000 shares, $0.001 par value; 60,729,560 shares
issued and 60,353,033 shares outstanding, 76,421,348 shares issued
and 76,044,821 shares outstanding, and shares issued and shares
outstanding, respectively
|
60,730
|
76,422
|
96,422
|
Additional paid-in
capital
|
146,698,348
|
151,946,183
|
161,111,232
|
Accumulated
deficit
|
(133,783,237)
|
(133,783,237)
|
(133,783,237)
|
Treasury stock at
cost – 376,527 shares
|
1,396,559
|
1,396,559
|
1,396,559
|
Total
stockholders’ equity
|
11,579,282
|
16,842,809
|
26,027,858
|
Total
capitalization
|
$11,579,282
|
$16,842,809
|
$26,027,858
|
————————
The
foregoing table is based on 60,353,033 shares of common stock
outstanding as of March 31, 2020, excluding 376,527 treasury shares
and 54,030 shares held by a subsidiary, and excludes the following
shares:
●
|
14,498 shares of our common stock issuable upon the exercise of
outstanding stock options with a weighted average exercise price of
$1.23 per share;
|
|
●
|
2,256,659 shares of our common stock underlying outstanding
restricted stock units;
|
|
●
|
6,769,072 additional shares of our common stock reserved for future
issuance under our 2017 Equity Compensation Plan (although
effective with this offering we have suspended any future grants of
shares of our common stock under the plan and unreserved such
shares under the plan until such time as determined by the board of
directors);and
|
|
●
|
236,776 additional shares of our common stock issuable pursuant to
grants made under our equity director’s plans.
|
|
|
●
|
1,800,000 shares of our common stock required which were then
reserved for future issuance in accordance with the terms and
conditions of convertible notes which were subsequently converted
in April 2020 and May 2020.
|
|
|
We
have not declared or paid cash dividends on our common stock since
our inception. Under Nevada law, we are prohibited from paying
dividends if the distribution would result in our company not being
able to pay its debts as they become due in the normal course of
business if our total assets would be less than the sum of our
total liabilities plus the amount that would be needed to pay the
dividends, or if we were to be dissolved at the time of
distribution to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights are superior to those
receiving the distribution. Our board of directors has complete
discretion on whether to pay dividends subject to compliance with
applicable Nevada law. Even if our board of directors decides to
pay dividends, the form, the frequency, and the amount will depend
upon our future operations and earnings, capital requirements and
surplus, general financial condition, contractual restrictions and
other factors that the board of directors may deem relevant. While
our board of directors will make any future decisions regarding
dividends, as circumstances surrounding us change, it currently
does not anticipate that we will pay any cash dividends in the
foreseeable future.
We have entered into an underwriting agreement dated July 23, 2020
with A.G.P./Alliance Global Partners (“AGP”), as
representative of the several underwriters, with respect to the
securities being offered hereby. 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,
at the public offering price less the underwriting discounts and
commissions set forth on the cover page of this prospectus
supplement, shares of our common stock.
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 opposite
its name below:
|
|
A.G.P./Alliance
Global Partners
|
20,000,000
|
Total
|
|
The underwriting agreement provides that the obligation of the
underwriter to purchase the shares of common stock offered by this
prospectus supplement 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.
Underwriting Discounts, Commissions and Expenses
We have agreed to sell the shares to the underwriter at the
offering price of $0.465 per share of common stock, which
represents the public offering price of the shares set forth on the
cover page of this prospectus supplement, less the applicable 7%
underwriting discount.
The underwriter has advised us that it proposes to offer the shares
of common stock 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 $0.175 per share of common
stock. After this offering, the public offering price and
concession to dealers may be changed by the representative. 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. The
shares of common stock are offered by the underwriter as stated
herein, subject to receipt and acceptance by them and subject to
its right to reject any order in whole or in part. The underwriter
has informed us that it does not intend to confirm sales to any
accounts over which they exercise discretionary
authority.
We have also agreed to reimburse the underwriter for accountable
legal expenses not to exceed $50,000 and non-accountable expenses
not to exceed $15,000. We estimate that expenses payable by us in
connection with this offering, including reimbursement of the
underwriter’s out-of-pocket expenses, but excluding the
underwriting discount referred to above, will be approximately
$115,000.
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):
|
|
Total
Without Over-Allotment
|
Total
With Over-Allotment
|
Public
offering price
|
$0.50
|
$10,000,000
|
$10,750,000
|
Underwriting
discounts and commissions
|
$0.035
|
$700,000
|
$752,500
|
Proceeds,
before expenses, to us
|
$0.465
|
$9,300,000
|
$9,997,500
|
Over-allotment Option
Pursuant to the underwriting agreement, we have granted the
underwriter an option, exercisable for up to 45 days from the date
of this prospectus supplement, to purchase up to additional
1,500,000 shares of common stock at the public offering price set
forth on the cover page hereto, less the underwriting discounts and
commissions. The underwriter may
exercise the option solely to cover over-allotments, if any, made
in connection with this offering. If any additional shares of common stock are
purchased pursuant to the over-allotment option, the underwriter
will offer these shares of common stock on the same terms as those
on which the other shares are being offered.
Indemnification
We have agreed to indemnify the underwriter against certain
liabilities, including liabilities under the Securities Act and
liabilities arising from breaches of representations and warranties
contained in the underwriting agreement, or to contribute to
payments that the underwriter may be required to make in respect of
those liabilities.
Lock-up Agreements
In connection with this offering, we, along with our directors and
executive officers have agreed with the underwriter that for a
90-day “lock-up” period, commencing from the date of
this prospectus supplement, subject to specified exceptions,
without the prior written consent of the underwriter, we and they
will not offer, sell, pledge or otherwise dispose of these
securities without the prior written consent of the
underwriter.
Price Stabilization, Short Positions and Penalty Bids
Rules
of the SEC may limit the ability of the underwriter to bid for or
purchase securities before the distribution of the securities is
completed. However, the underwriter may engage in the following
activities in accordance with the rules:
●
Stabilizing
transactions: The
representative may make bids or purchases for the purpose of
pegging, fixing or maintaining the price of the shares of common
stock, so long as stabilizing bids do not exceed a specified
maximum.
●
Syndicate covering
transactions: The underwriter
may sell more shares of common stock in connection with this
offering than the number of shares of common stock that they have
committed to purchase. This over-allotment creates a short position
for the underwriter. This short sales position may involve either
“covered” short sales or “naked” short
sales. Covered short sales are short sales made in an amount not
greater than the underwriter’s over-allotment option to
purchase additional shares of common stock, if applicable. The
underwriter may close out any covered short position either by
exercising its over-allotment option, if applicable, or by
purchasing shares in the open market. To determine how it will
close the covered short position, the underwriter will consider,
among other things, the price of shares of common stock available
for purchase in the open market, as compared to the price at which
it may purchase shares of common stock through the over-allotment
option, if applicable. Naked short sales are short sales in excess
of the over-allotment option, if applicable. The underwriter must
close out any naked short position by purchasing shares in the open
market. A naked short position is more likely to be created if the
underwriter is concerned that, in the open market after pricing,
there may be downward pressure on the price of the shares of common
stock that could adversely affect investors who purchase shares of
common stock in this offering.
●
Penalty
bids: If the underwriter
purchases shares of common stock in the open market in a
stabilizing transaction or syndicate covering transaction, it may
reclaim a selling concession from the underwriter and selling group
members who sold those shares of common stock as part of this
offering.
Similar to other purchase transactions, the underwriter’s
purchases to cover the syndicate short sales or to stabilize the
market price of our shares of common stock may have the effect of
raising or maintaining the market price of our shares of common
stock or preventing or mitigating a decline in the market price of
our shares of common stock. As a result, the price of the shares of
our common stock may be higher than the price that might otherwise
exist in the open market. The imposition of a penalty bid might
also have an effect on the price of the shares of common stock if
it discourages resales of the shares.
Passive Market Making
In connection with this offering, the underwriter and any selling
group members may engage in passive market making transactions in
our common stock on Nasdaq in accordance with Rule 103 of
Regulation M under the Securities Exchange Act of 1934, as amended,
during a period before the commencement of offers or sales of
common stock and extending through the completion of the
distribution. A passive market maker must display its bid at a
price not in excess of the highest independent bid of that
security. However, if all independent bids are lowered below the
passive market maker’s bid that bid must then be lowered when
specified purchase limits are exceeded.
Electronic Distribution
This prospectus supplement in electronic format may be made
available on websites or through other online services maintained
by the underwriter, or by its affiliates. Other than this
prospectus supplement in electronic format, the information on the
underwriter’s website and any information contained in any
other website maintained by the underwriter is not part of this
prospectus supplement or the registration statement of which this
prospectus supplement 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.
Other
From time to time, the underwriter and/or its affiliates have
provided, and may in the future provide, various investment banking
and other financial services for us for which services they have
received and, may in the future receive, customary fees. In the
course of their businesses, the underwriter and its affiliates may
actively trade our securities or loans for its own account or for
the accounts of customers, and, accordingly, the underwriter and
its affiliates may at any time hold long or short positions in such
securities or loans. In the 180 days prior to the date of this
prospectus supplement, we have paid the underwriter $385,000 in
cash in compensation and reimbursed the underwriter $65,000 for
certain expenses, in each case in connection with our June 2020
offering of common stock.
Selling Restrictions
This prospectus supplement does not constitute an offer to sell to,
or a solicitation of an offer to buy from, anyone in any country or
jurisdiction (i) in which such an offer or solicitation is not
authorized, (ii) in which any person making such offer or
solicitation is not qualified to do so or (iii) in which any such
offer or solicitation would otherwise be unlawful. No action has
been taken that would, or is intended to, permit a public offer of
the securities or possession or distribution of this prospectus
supplement or any other offering or publicity material relating to
the securities in any country or jurisdiction (other than the
United States) where any such action for that purpose is required.
Accordingly, the underwriter has undertaken that it will not,
directly or indirectly, offer or sell any securities or have in its
possession, distribute or publish any prospectus supplement, form
of application, advertisement or other document or information in
any country or jurisdiction except under circumstances that will,
to the best of its knowledge and belief, result in compliance with
any applicable laws and regulations and all offers and sales of
securities by it will be made on the same terms.
European Economic Area
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a
“Relevant Member State”) an offer to the public of any
securities may not be made in that Relevant Member State, except
that an offer to the public in that Relevant Member State of any
securities may be made at any time under the following exemptions
under the Prospectus Directive, if they have been implemented in
that Relevant Member State:
●
to legal entities which are qualified
investors as defined under the Prospectus Directive;
●
by the underwriters
to fewer than 150, natural or legal persons (other than qualified
investors as defined in the Prospectus Directive), as permitted
under the Prospectus Directive, subject to obtaining the prior
consent of the representatives of the underwriters for any such
offer; or
●
in any other
circumstances falling within Article 3(2) of the Prospectus
Directive,
provided
that no such offer of our common stock shall result in a
requirement for us or any underwriter to publish a prospectus
pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, (1) the expression an
“offer of common stock to the public” in relation to
any 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 securities to be
offered so as to enable an investor to decide to purchase or
subscribe for the common stock, as the same may be varied in that
Relevant Member State by any measure implementing the Prospectus
Directive in that Relevant Member State, (2) the expression
“Prospectus Directive” means Directive 2003/71/EC (and
amendments thereto, including the 2010 PD Amending Directive), and
includes any relevant implementing measure in each Relevant Member
State and (3) the expression “2010 PD Amending
Directive” means Directive 2010/73/EU.
United Kingdom
This prospectus supplement has only been communicated or caused to
have been communicated and will only be communicated or caused to
be communicated as an invitation or inducement to engage in
investment activity (within the meaning of Section 21 of the
Financial Services and Markets Act of 2000 (the
“FSMA”)) as received in connection with the issue or
sale of the common stock in circumstances in which Section 21(1) of
the FSMA does not apply to us. All applicable provisions of the
FSMA will be complied with in respect to anything done in relation
to the common stock in, from or otherwise involving the United
Kingdom.
Canada
The securities may be sold only to purchasers purchasing, or deemed
to be purchasing, as principal that are accredited investors, as
defined in National Instrument 45-106 Prospectus Exemptions or
subsection 73.3(1) of the Securities Act (Ontario), and are
permitted clients, as defined in National Instrument 31-103
Registration Requirements, Exemptions and Ongoing Registrant
Obligations. Any resale of the securities must be made in
accordance with an exemption from, or in a transaction not subject
to, the prospectus requirements of applicable securities
laws.
Securities legislation in certain provinces or territories of
Canada may provide a purchaser with remedies for rescission or
damages if this prospectus supplement (including any amendment
thereto) contains a misrepresentation, provided that the remedies
for rescission or damages are exercised by the purchaser within the
time limit prescribed by the securities legislation of the
purchaser’s province or territory. The purchaser should refer
to any applicable provisions of the securities legislation of the
purchaser’s province or territory for particulars of these
rights or consult with a legal advisor.
Pursuant to section 3A.3 of National Instrument 33-105 Underwriting
Conflicts (NI 33-105), the underwriters are not required to comply
with the disclosure requirements of NI 33-105 regarding underwriter
conflicts of interest in connection with this
offering.
Australia
No placement document, prospectus, product disclosure statement or
other disclosure document has been lodged with the Australian
Securities and Investments Commission in relation to the offering.
This prospectus supplement does not constitute a prospectus,
product disclosure statement or other disclosure document under the
Corporations Act 2001, or the Corporations Act, and does not
purport to include the information required for a prospectus,
product disclosure statement or other disclosure document under the
Corporations Act.
Any offer in Australia of the securities may only be made to
persons, or the Exempt Investors, who are “sophisticated
investors” (within the meaning of section 708(8) of the
Corporations Act), “professional investors” (within the
meaning of section 708(11) of the Corporations Act) or otherwise
pursuant to one or more exemptions contained in section 708 of the
Corporations Act so that it is lawful to offer the securities
without disclosure to investors under Chapter 6D of the
Corporations Act.
The securities applied for by Exempt Investors in Australia must
not be offered for sale in Australia in the period of 12 months
after the date of allotment under the offering, except in
circumstances where disclosure to investors under Chapter 6D of the
Corporations Act would not be required pursuant to an exemption
under section 708 of the Corporations Act or otherwise or where the
offer is pursuant to a disclosure document which complies with
Chapter 6D of the Corporations Act. Any person acquiring securities
must observe such Australian on-sale restrictions.
This prospectus supplement contains general information only and
does not take account of the investment objectives, financial
situation or needs of any particular person. It does not contain
any securities recommendations or financial product advice. Before
making an investment decision, investors need to consider whether
the information in this prospectus supplement is appropriate to
their needs, objectives and circumstances and, if necessary, seek
expert advice on those matters.
Switzerland
The securities may not be publicly offered in Switzerland and will
not be listed on the SIX Swiss Exchange, or SIX, or on any other
stock exchange or regulated trading facility in Switzerland. This
document has been prepared without regard to the disclosure
standards for issuance prospectuses under art. 652a or art. 1156 of
the Swiss Code of Obligations or the disclosure standards for
listing prospectuses under art. 27 ff. of the SIX Listing Rules or
the listing rules of any other stock exchange or regulated trading
facility in Switzerland. Neither this document nor any other
offering or marketing material relating to the securities or the
offering may be publicly distributed or otherwise made publicly
available in Switzerland.
Neither this document nor any other offering or marketing material
relating to the offering, or the securities have been or will be
filed with or approved by any Swiss regulatory authority. This
document will not be filed with, and the offer of securities will
not be supervised by, the Swiss Financial Market Supervisory
Authority FINMA, and the offer of securities has not been and will
not be authorized under the Swiss Federal Act on Collective
Investment Schemes, or CISA. The investor protection afforded to
acquirers of interests in collective investment schemes under the
CISA does not extend to acquirers of securities.
Dubai International Financial Centre
This prospectus supplement relates to an Exempt Offer in accordance
with the Offered Securities Rules of the Dubai Financial Services
Authority, or DFSA. This prospectus supplement is intended for
distribution only to persons of a type specified in the Offered
Securities Rules of the DFSA. It must not be delivered to, or
relied on by, any other person. The DFSA has no responsibility for
reviewing or verifying any documents relating to Exempt Offers. The
DFSA has not approved this prospectus supplement nor taken steps to
verify the information set forth herein and has no responsibility
for the prospectus supplement. The securities to which this
prospectus supplement relates may be illiquid and/or subject to
restrictions on their resale. Prospective purchasers of the
securities offered should conduct their own due diligence on the
securities. If you do not understand the contents of this
prospectus supplement, you should consult an authorized financial
advisor.
Hong Kong
The securities have not been offered or sold and will not be
offered or sold in Hong Kong, by means of any document, other than
(a) to “professional investors” as defined in the
Securities and Futures Ordinance (Cap. 571) of Hong Kong and any
rules made under that Ordinance or (b) in other circumstances which
do not result in the document being a “prospectus” as
defined in the Companies Ordinance (Cap. 32) of Hong Kong or which
do not constitute an offer to the public within the meaning of that
Ordinance. No advertisement, invitation or document relating to the
securities has been or may be issued or has been or may be in the
possession of any person for the purposes of issue, whether in Hong
Kong or elsewhere, which is directed at, or the contents of which
are likely to be accessed or read by, the public of Hong Kong
(except if permitted to do so under the securities laws of Hong
Kong) other than with respect to securities which are or are
intended to be disposed of only to persons outside Hong Kong or
only to “professional investors” as defined in the
Securities and Futures Ordinance and any rules made under that
Ordinance.
Japan
The securities have not been and will not be registered under the
Financial Instruments and Exchange Law of Japan (Law No. 25 of
1948, as amended) and, accordingly, will not be offered or sold,
directly or indirectly, in Japan, or for the benefit of any
Japanese Person or to others for re-offering or resale, directly or
indirectly, in Japan or to any Japanese Person, except in
compliance with all applicable laws, regulations and ministerial
guidelines promulgated by relevant Japanese governmental or
regulatory authorities in effect at the relevant time. For the
purposes of this paragraph, “Japanese Person” shall
mean any person resident in Japan, including any corporation or
other entity organized under the laws of Japan.
Pearlman
Law Group LLP, Fort Lauderdale, Florida will provide us with an
opinion as to certain legal matters in connection with the shares
of common stock offered hereby. The representative of the
underwriters is being represented by Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., New York, New York.
Our
audited consolidated balance sheets as of December 31, 2019 and
2018, and the related consolidated statements of income,
stockholders’ equity and cash flows for the years ended
December 31, 2019 and 2018 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 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
corporate website address is www.inuvo.com.
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 supplement, and later information filed with the
SEC will update and supersede this information. We incorporate by
reference the documents listed below that we have previously filed
with the SEC, except that information furnished under Item 2.02 or
Item 7.01 of our Current Reports on Form 8-K or any other filing
where we indicate that such information is being furnished and not
filed under the Exchange Act, is not deemed to be filed and not
incorporated by reference herein:
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our
Annual Report on Form 10-K for the year ended December 31, 2019 as
filed with the SEC on May 12, 2020, as amended on Form 10-K/A as
filed with the SEC on June 22, 2020;
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our
Quarterly Report on Form 10-Q for the period ended March 31, 2020
as filed with the SEC on May 15, 2020;
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our
Current Reports on Form 8-K as filed with the SEC on March 17,
2020, March 20, 2020, March 26, 2020, March 27, 2020, March 30,
2020, April 1, 2020, April 2, 2020, May 1, 2020, June 4, 2020, June
8, 2020, July 1, 2020 and July 23, 2020; and
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the
description of our common stock contained in the registration
statement on Form 8-A as filed with the SEC on February 28,
2005.
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We also incorporate by reference into this prospectus supplement
additional documents that we may file with the SEC under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
completion or termination of the offering, including all such
documents we may file with the SEC after the date of the initial
registration statement and prior to the effectiveness of the
registration statement, but excluding any information deemed
furnished and not filed with the SEC. Any statements contained in a
previously filed document incorporated by reference into this
prospectus supplement is deemed to be modified or superseded for
purposes of this prospectus supplement to the extent that a
statement contained in this prospectus supplement, or in a
subsequently filed document also incorporated by reference herein,
modifies or supersedes that statement.
This prospectus supplement may contain information that updates,
modifies or is contrary to information in one or more of the
documents incorporated by reference in this prospectus supplement.
You should rely only on the information incorporated by reference
or provided in this prospectus supplement. We have not authorized
anyone else to provide you with different information. You should
not assume that the information in this prospectus supplement is
accurate as of any date other than the date of this prospectus
supplement or the date of the documents incorporated by reference
in this prospectus supplement.
We will provide to each person, including any beneficial owner, to
whom this prospectus supplement is delivered, upon written or oral
request, at no cost to the requester, a copy of any and all of the
information that is incorporated by reference in this prospectus
supplement. You may request a copy of these filings, at no cost to
you, by telephoning us at (501) 205-8508 or by writing us at the
following address:
Inuvo,
Inc.
500
President Clinton Boulevard
Suite
300
Little
Rock, Arkansas 72201
Attention:
Investor Relations
You
may also access the documents incorporated by reference in this
prospectus supplement through our website at www.inuvo.com. The
reference to our website is an inactive textual reference only and,
except for the specific incorporated documents listed above, no
information available on or through our website shall be deemed to
be incorporated in this prospectus supplement, the accompanying
prospectus or the registration statement of which it forms a
part.
PROSPECTUS
$25,000,000
Inuvo, Inc.
COMMON STOCK
PREFERRED STOCK
WARRANTS
UNITS
We may
offer and sell up to $25,000,000 in the aggregate of any
combination of the securities identified above from time to time in
one or more offerings. This prospectus provides you with a general
description of the securities.
Each
time we offer and sell securities, we will provide a supplement to
this prospectus that contains specific information about the
offering and the amounts, prices and terms of the securities. The
supplement may also add, update or change information contained in
this prospectus with respect to that offering. You should carefully
read this prospectus and the applicable prospectus supplement and
any related free writing prospectus before you invest in any of our
securities.
We may
offer and sell the securities described in this prospectus and any
prospectus supplement to or through one or more underwriters,
dealers and agents, or directly to purchasers, or through a
combination of these methods. If any underwriters, dealers or
agents are involved in the sale of any of the securities, their
names and any applicable purchase price, fee, commission or
discount arrangement between or among them will be set forth, or
will be calculable from the information set forth, in the
applicable prospectus supplement. See the sections of this
prospectus entitled “About this Prospectus” and
“Plan of Distribution” for more information. No
securities may be sold without delivery of this prospectus and the
applicable prospectus supplement describing the method and terms of
the offering of such securities.
Our
common stock is listed on the NYSE American LLC under the symbol
“INUV.” The last reported sale price of our common
stock on June 11, 2020 was $0.82 per share.
The
aggregate market value of our outstanding common stock held by
non-affiliates is $68,216,930 based on 75,399,139 shares of common
stock outstanding, of which 63,754,140 shares are held by
non-affiliates, and a per share value of $1.07 based on the closing
price of our common stock on the NYSE American on June 10, 2020.
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, we have offered and sold $11,824,100 of
our securities pursuant to General Instruction I.B.6 of Form
S-3.
Investing
in our securities involves various risks. See the “Risk
Factors” section of our
filings with the Securities and Exchange Commission and the
applicable prospectus supplement.
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 June 25, 2020
TABLE OF CONTENTS
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You
should rely only on the information we have provided or
incorporated by reference in this prospectus or in any prospectus
supplement. We have not authorized anyone to provide you with
information different from that contained or incorporated by
reference in this prospectus or in any prospectus supplement. This
prospectus and any prospectus supplement is an offer to sell only
the securities offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. You should assume that
the information contained in this prospectus and in any prospectus
supplement is accurate only as of their respective dates and that
any information we have incorporated by reference is accurate only
as of the date of the document incorporated by reference,
regardless of the time of delivery of this prospectus or any
prospective supplement or any sale of securities. The registration
statement, including the exhibits and the documents incorporated
herein by reference, can be read on the website of the Securities
and Exchange Commission, or “SEC,” or on our corporate
website at www.inuvo.com
as set forth under the heading “Where You Can Find More
Information.”
This
prospectus is part of a registration statement on Form S-3 that we
filed with the SEC 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 $25,000,000.
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 SEC 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 SEC
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.
THIS
PROSPECTUS MAY NOT BE USED TO CONSUMMATE A SALE OF SECURITIES
UNLESS IT IS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
Neither we, nor any agent, underwriter or dealer has authorized any
person to give any information or to make any representation other
than those contained or incorporated by reference in this
prospectus, any applicable prospectus supplement or any related
free writing prospectus prepared by or on behalf of us or to which
we have referred you. This prospectus, any applicable supplement to
this prospectus or any related free writing prospectus does not
constitute an offer to sell or the solicitation of an offer to buy
any securities other than the registered securities to which they
relate, nor does this prospectus, any applicable supplement to this
prospectus or any related free writing prospectus constitute an
offer to sell or the solicitation of an offer to buy securities in
any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction.
You should not assume that the information contained in this
prospectus, any applicable prospectus supplement or any related
free writing prospectus is accurate on any date subsequent to the
date set forth on the front of the document or that any information
we have incorporated by reference is correct on any date subsequent
to the date of the document incorporated by reference, even though
this prospectus, any applicable prospectus supplement or any
related free writing prospectus is delivered, or securities are
sold, on a later date.
This
prospectus contains summaries of certain provisions contained in
some of the documents described herein, but reference is made to
the actual documents for complete information. All of the summaries
are qualified in their entirety by the actual documents. Copies of
some of the documents referred to herein have been filed, will be
filed or will be incorporated by reference as exhibits to the
registration statement of which this prospectus is a part, and you
may obtain copies of those documents as described below under the
section entitled “Where You Can Find More
Information.”
Unless the context otherwise indicates, when used
herein, the terms “Inuvo” “we,”
“us”, “our” and similar terms refer to
Inuvo, Inc., a Nevada corporation, and our subsidiaries. In
addition, “2018” refers to the year ended December 31,
2018, "2019" refers to the year ended December 31, 2019, and "2020"
refers to the year ending December 31, 2020.
We file annual, quarterly and other reports, proxy
statements and other information with the SEC. You may read our
filings on the SEC’s website at www.sec.gov
or on our corporate website at
www.inuvo.com.
The information on our corporate website is not incorporated by
reference into and is not made a part of this
prospectus.
We
have filed a registration statement under the Securities Act of
1933, as amended, or the “Securities Act,” with the SEC
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 SEC. 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.
Our
corporate website is located at www.inuvo.com. 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 Securities
Exchange Act of 1934 as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the
SEC.
Our Company
Inuvo
is a technology company that develops and sells information
technology solutions for marketing. These platforms predictively
identify and message online audiences for any product or service
across devices, channels and formats, including video, mobile,
connected TV, display, social and native. These capabilities allow
Inuvo’s clients to engage with their customers and prospects
in a manner that drives engagement from the first contact with the
consumer. Inuvo facilitates the delivery of hundreds of millions of
marketing messages to consumers every single month and counts among
its clients numerous world-renowned names in industries that have
included retail, automotive, insurance, health care, technology,
telecommunications and finance. Inuvo has contractual relationships
with three clients who collectively manage over 50% of all U.S.
digital advertising spend.
Inuvo’s
solution incorporates a proprietary form of artificial
intelligence, or AI, branded the IntentKey. This sophisticated
machine learning technology uses interactions with Internet content
as a source of information from which to predict consumer intent.
The AI includes a continually updated database of over 500 million
machine profiles which Inuvo utilizes to deliver highly aligned
online audiences to its clients. Inuvo earns revenue when consumers
view or click on its client’s messages. Inuvo’s
business scales through account management activity with existing
clients and by adding new clients through sales
activity.
As
part of Inuvo’s technology strategy, it owns a collection of
websites including alot.com and earnspendlive.com, where Inuvo
creates content in health, finance, travel, careers, auto,
education and living categories. These sites provide the means to
test Inuvo’s technologies, while also delivering high quality
consumers to clients through the interaction with proprietary
content in the form of images, videos, slideshows and
articles.
There
are many barriers to entry associated with Inuvo’s business
model, including a proficiency in large scale information
processing, predictive software development, marketing data
products, analytics, artificial intelligence, integration to the
internet of things (IOT), and the relationships required to execute
within the IOT. Inuvo’s intellectual property is protected by
17 issued and eight pending patents.
Corporate information
We were
incorporated in Nevada as a corporation on October 29, 1987. 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. We
maintain a corporate website at www.inuvo.com .
Except as specifically set forth herein, the information which
appears on our website at s not part of the prospectus or this
prospectus supplement.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING INFORMATION
The
information included or incorporated by reference into this
prospectus contains forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the
Exchange Act. 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:
●
our history of
losses, declining revenues and working capital
deficit;
●
our ability to
continue as a going concern;
●
the known and
unknown impact of the Covid-19 pandemic on our
company;
●
our ability to
maintain our credit facility;
●
our reliance on
revenues from a limited number of customers;
●
seasonality of our
business which impacts our financial results and cash
availability;
●
dependence on our
supply partners;
●
our ability to
acquire traffic in a profitable manner;
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failure to keep
pace with technology changes;
●
impact of possible
interruption in our network infrastructure;
●
dependence on our
key personnel;
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regulatory and
legal uncertainties;
●
failure to comply
with privacy and data security laws and regulations;
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third party
infringement claims;
●
publishers who
could fabricate fraudulent clicks;
●
our ability to
continue to meet the NYSE American continued listing
standards;
●
the impact of
quarterly results on our common stock price; and
●
dilution to our
stockholders upon the exercise of outstanding common stock options
and restricted stock unit grants.
We urge
you to consider these factors before investing in our common stock.
You should not place undue reliance on
these forward-looking statements, which speak only as of the date
of this prospectus. These forward-looking statements are based on
our current expectations and are subject to a number of risks and
uncertainties, including those set forth above. Although we believe
that the expectations reflected in these forward-looking statements
are reasonable, our actual results could differ materially from
those expressed in these forward-looking statements, and any events
anticipated in the forward-looking statements may not actually
occur. Except as required by law, we undertake no duty to update
any forward-looking statements after the date of this prospectus to
conform those statements to actual results or to reflect the
occurrence of unanticipated events. We qualify all forward-looking
statements contained or incorporated by reference in this
prospectus by the foregoing cautionary
statements.
Investing in our
securities involves a high degree of risk. Before deciding whether
to invest in our securities, you should consider carefully the
risks and uncertainties described under the heading “Risk
Factors” contained in the applicable prospectus supplement
and any related free writing prospectus, and discussed under the
section entitled “Risk Factors” contained in our most
recent Annual Report on Form 10-K, as may be updated by subsequent annual,
quarterly and other reports that are incorporated by reference into
this prospectus in their entirety. The risks described in
these documents are not the only ones we face, but those that we
consider to be material. There may be other unknown or
unpredictable economic, business, competitive, regulatory or other
factors that could have material adverse effects on our future
results. Past financial performance may not be a reliable indicator
of future performance, and historical trends should not be used to
anticipate results or trends in future periods. If any of these
risks actually occurs, our business, financial condition, results
of operations or cash flow could be seriously harmed. Our business, financial position, results of
operations, liquidity or prospects could also be adversely affected
by any continuing adverse impact of the Covid-19 pandemic on our
company which we are presently unable to predict. These
risks could cause the trading price of our common stock to
decline, resulting in a loss of all or part of your investment.
Please also read carefully the section below entitled
“Cautionary Note Regarding Forward-Looking
Information.”
We
intend to use the net proceeds, if any, from the sales of
securities offered by this prospectus for working capital and
general corporate purposes. As of the date of this prospectus, we
cannot specify with certainty all of the particular uses for the
net proceeds to be received from this offering. The amounts and
timing of our actual expenditures will depend on numerous factors
including our results of operations in future periods. Accordingly,
our management will have broad discretion in the application of the
net proceeds, and investors will be relying on the judgment of
management regarding the application of the net proceeds from the
offering. Pending such uses set forth above, we plan to invest the
net proceeds in government securities and other short-term
investment grade, marketable securities.
We have
not declared or paid cash dividends on our common stock since our
inception. Under Nevada law, we are prohibited from paying
dividends if the distribution would result in our company not being
able to pay its debts as they become due in the normal course of
business if our total assets would be less than the sum of our
total liabilities plus the amount that would be needed to pay the
dividends, or if we were to be dissolved at the time of
distribution to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights are superior to those
receiving the distribution. Our board of directors has complete
discretion on whether to pay dividends subject to compliance with
applicable Nevada law. Even if our board of directors decides to
pay dividends, the form, the frequency, and the amount will depend
upon our future operations and earnings, capital requirements and
surplus, general financial condition, contractual restrictions and
other factors that the board of directors may deem relevant. While
our board of directors will make any future decisions regarding
dividends, as circumstances surrounding us change, it currently
does not anticipate that we will pay any cash dividends in the
foreseeable future.
DESCRIPTION OF CAPITAL
STOCK
Our authorized capital is 100,000,000 shares of
common stock, par value $0.001 per share, and 500,000 shares of
blank check preferred stock, par value $0.001 per share. At June
11, 2020, there were 75,399,139 shares of common stock and no
shares of preferred stock issued and outstanding. The number of
outstanding shares of our common stock at June 9, 2020
excludes 376,527 treasury shares and 54,030 shares held in
the name of one of our subsidiaries.
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.
Options and restricted stock units
At June
11, 2020 awards for 2,414,246 shares of our common stock were
outstanding, including 14,498 shares
of our common stock issuable upon the exercise of outstanding stock
options with a weighted average exercise price of $1.23 per share
and 2,399,748 shares of our common stock underlying outstanding
restricted stock units.
Transfer agent
The transfer agent and registrar for our
common stock is Colonial Stock Transfer Company, 66 Exchange Place,
Suite 100, Salt Lake City, UT 84111, and its telephone number is
(801) 355-5740.
The
transfer agent and registrar for any series or class of preferred
stock will be set forth in the applicable prospectus
supplement.
NYSE American LLC listing
Our
common stock is listed on the NYSE American LLC under the symbol
“INUV.”
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.
We may
issue units consisting of any combination of our common stock,
preferred stock and warrants. We will issue each unit so that the
holder of the unit is also the holder of each security included in
the unit. As a result, the holder of a unit will have the rights
and obligations of a holder of each included security. The unit
agreement under which a unit is issued may provide that the
securities included in the unit may not be held or transferred
separately, at any time or at any time before a specified
date.
The
summary below and that contained in any prospectus supplement is
qualified in its entirety by reference to all of the provisions of
the unit agreement and/or unit certificate, and depositary
arrangements, if applicable. We urge you to read the applicable
prospectus supplements and any related free writing prospectuses
related to the units that we may offer under this prospectus, as
well as the complete unit agreement and/or unit certificate, and
depositary arrangements, as applicable, that contain the terms of
the units.
The
applicable prospectus supplement, information incorporated by
reference or free writing prospectus may describe:
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the
designation and terms of the units and of the securities comprising
the units, including whether and under what circumstances those
securities may be held or transferred separately;
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any
provisions for the issuance, payment, settlement, transfer, or
exchange of the units or of the securities composing the
units;
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whether
the units will be issued in fully registered or global form;
and
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any
other terms of the units.
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The
applicable provisions described in this section, as well as those
described under “Description of Our Capital Stock” and
“Description of Warrants” above will apply to each unit
and to each security included in each unit,
respectively.
LEGAL OWNERSHIP OF
SECURITIES
We can
issue securities in registered form or in the form of one or more
global securities. We describe global securities in greater detail
below. We refer to those persons who have securities registered in
their own names on the books that we or any applicable trustee,
depositary or warrant agent maintain for this purpose as the
“holders” of those securities. These persons are the
legal holders of the securities. We refer to those persons who,
indirectly through others, own beneficial interests in securities
that are not registered in their own names, as “indirect
holders” of those securities. As we discuss below, indirect
holders are not legal holders, and investors in securities issued
in book-entry form or in street name will be indirect
holders.
Book-Entry Holders
We may
issue securities in book-entry form only, as we will specify in any
applicable prospectus supplement. This means securities may be
represented by one or more global securities registered in the name
of a financial institution that holds them as depositary on behalf
of other financial institutions that participate in the
depositary’s book-entry system. These participating
institutions, which are referred to as participants, in turn, hold
beneficial interests in the securities on behalf of themselves or
their customers.
Only
the person in whose name a security is registered is recognized as
the holder of that security. Securities issued in global form will
be registered in the name of the depositary or its participants.
Consequently, for securities issued in global form, we will
recognize only the depositary as the holder of the securities, and
we will make all payments on the securities to the depositary. The
depositary passes along the payments it receives to its
participants, which in turn pass the payments along to their
customers who are the beneficial owners. The depositary and its
participants do so under agreements they have made with one another
or with their customers; they are not obligated to do so under the
terms of the securities.
As a
result, investors in a global security will not own securities
directly. Instead, they will own beneficial interests in a global
security, through a bank, broker or other financial institution
that participates in the depositary’s book-entry system or
holds an interest through a participant. As long as the securities
are issued in global form, investors will be indirect holders, and
not legal holders, of the securities.
Street Name Holders
We may
terminate a global security or issue securities in non-global form.
In these cases, investors may choose to hold their securities in
their own names or in “street name.” Securities held by
an investor in street name would be registered in the name of a
bank, broker or other financial institution that the investor
chooses, and the investor would hold only a beneficial interest in
those securities through an account he or she maintains at that
institution.
For
securities held in street name, we or any applicable trustee or
depositary will recognize only the intermediary banks, brokers and
other financial institutions in whose names the securities are
registered as the holders of those securities, and we or any
applicable trustee or depositary will make all payments on those
securities to them. These institutions pass along the payments they
receive to their customers who are the beneficial owners, but only
because they agree to do so in their customer agreements or because
they are legally required to do so. Investors who hold securities
in street name will be indirect holders, not holders, of those
securities.
Legal Holders
Our
obligations, as well as the obligations of any applicable trustee
and of any third parties employed by us or a trustee, run only to
the legal holders of the securities. We do not have obligations to
investors who hold beneficial interests in global securities, in
street name or by any other indirect means. This will be the case
whether an investor chooses to be an indirect holder of a security
or has no choice because we are issuing the securities only in
global form.
For
example, once we make a payment or give a notice to the legal
holder, we have no further responsibility for the payment or notice
even if that legal holder is required, under agreements with its
participants or customers or by law, to pass it along to the
indirect holders but does not do so. Whether and how the legal
holders contact the indirect holders is up to the legal
holders.
Special Considerations for Indirect Holders
If you
hold securities through a bank, broker or other financial
institution, either in book-entry form because the securities are
represented by one or more global securities or in street name, you
should check with your own institution to find out:
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how it
handles securities payments and notices;
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whether
it imposes fees or charges;
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how it
would handle a request for the holders’ consent, if ever
required;
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whether
and how you can instruct it to send you securities registered in
your own name so you can be a holder, if that is permitted in the
future;
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how it
would exercise rights under the securities if there were a default
or other event triggering the need for holders to act to protect
their interests; and
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if the
securities are in book-entry form, how the depositary’s rules
and procedures will affect these matters.
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Global Securities
A
global security is a security that represents one or any other
number of individual securities held by a depositary. Generally,
all securities represented by the same global securities will have
the same terms.
Each
security issued in book-entry form will be represented by a global
security that we issue to, deposit with and register in the name of
a financial institution or its nominee that we select. The
financial institution that we select for this purpose is called the
depositary. Unless we specify otherwise in any applicable
prospectus supplement, DTC will be the depositary for all
securities issued in book-entry form.
A
global security may not be transferred to or registered in the name
of anyone other than the depositary, its nominee or a successor
depositary, unless special termination situations arise. We
describe those situations below under “Special Situations
When a Global Security Will Be Terminated.” As a result of
these arrangements, the depositary, or its nominee, will be the
sole registered owner and legal holder of all securities
represented by a global security, and investors will be permitted
to own only beneficial interests in a global security. Beneficial
interests must be held by means of an account with a broker, bank
or other financial institution that in turn has an account with the
depositary or with another institution that does. Thus, an investor
whose security is represented by a global security will not be a
legal holder of the security, but only an indirect holder of a
beneficial interest in the global security.
If the
prospectus supplement for a particular security indicates that the
security will be issued in global form only, then the security will
be represented by a global security at all times unless and until
the global security is terminated. If termination occurs, we may
issue the securities through another book-entry clearing system or
decide that the securities may no longer be held through any
book-entry clearing system.
Special Considerations for Global Securities
The
rights of an indirect holder relating to a global security will be
governed by the account rules of the investor’s financial
institution and of the depositary, as well as general laws relating
to securities transfers. We do not recognize an indirect holder as
a holder of securities and instead deal only with the depositary
that holds the global security.
If
securities are issued only in the form of a global security, an
investor should be aware of the following:
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an
investor cannot cause the securities to be registered in his or her
name, and cannot obtain non-global certificates for his or her
interest in the securities, except in the special situations we
describe below;
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an
investor will be an indirect holder and must look to his or her own
bank, broker or other financial institution for payments on the
securities and protection of his or her legal rights relating to
the securities, as we describe above;
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an
investor may not be able to sell interests in the securities to
some insurance companies and to other institutions that are
required by law to own their securities in non-book-entry
form;
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an
investor may not be able to pledge his or her interest in a global
security in circumstances where certificates representing the
securities must be delivered to the lender or other beneficiary of
the pledge in order for the pledge to be effective;
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the
depositary’s policies, which may change from time to time,
will govern payments, transfers, exchanges and other matters
relating to an investor’s interest in a global
security;
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we and
any applicable trustee have no responsibility for any aspect of the
depositary’s actions or for its records of ownership
interests in a global security, nor do we or any applicable trustee
supervise the depositary in any way;
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the
depositary may, and we understand that DTC will, require that those
who purchase and sell interests in a global security within its
book-entry system use immediately available funds, and your bank,
broker or other financial institution may require you to do so as
well; and
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financial
institutions that participate in the depositary’s book-entry
system, and through which an investor holds its interest in a
global security, may also have their own policies affecting
payments, notices and other matters relating to the
securities.
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There
may be more than one financial intermediary in the chain of
ownership for an investor. We do not monitor and are not
responsible for the actions of any of those
intermediaries.
Special Situations When a Global Security Will Be
Terminated
In a
few special situations described below, the global security will
terminate and interests in it will be exchanged for physical
certificates representing those interests. After that exchange, the
choice of whether to hold securities directly or in street name
will be up to the investor. Investors must consult their own banks,
brokers or other financial institutions to find out how to have
their interests in securities transferred to their own name, so
that they will be direct holders. We have described the rights of
holders and street name investors above.
Unless
we provide otherwise in any applicable prospectus supplement, the
global security will terminate when the following special
situations occur:
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if the
depositary notifies us that it is unwilling, unable or no longer
qualified to continue as depositary for that global security and we
do not appoint another institution to act as depositary within 90
days;
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if we
notify any applicable trustee that we wish to terminate that global
security; or
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if an
event of default has occurred with regard to securities represented
by that global security and has not been cured or
waived.
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The
prospectus supplement may also list additional situations for
terminating a global security that would apply only to the
particular series of securities covered by any applicable
prospectus supplement. When a global security terminates, the
depositary, and not we or any applicable trustee, is responsible
for deciding the names of the institutions that will be the initial
direct holders.
We may
sell the securities from time to time pursuant to underwritten
public offerings, negotiated transactions, block trades or a
combination of these methods. We may sell the securities to or
through underwriters or dealers, through agents, or directly to one
or more purchasers. We may distribute securities from time to time
in one or more transactions:
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at a
fixed price or prices, which may be changed;
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at
market prices prevailing at the time of sale;
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at
prices related to such prevailing market prices; or
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at
negotiated prices.
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We may
also sell equity securities covered by this registration statement
in an “at the market” offering as defined in Rule
415(a)(4) under the Securities Act. Such offering may be made into
an existing trading market for such securities in transactions at
other than a fixed price on or through the facilities of the NYSE
American LLC or any other securities exchange or quotation or
trading service on which such securities may be listed, quoted or
traded at the time of sale.
Such at
the market offerings, if any, may be conducted by underwriters
acting as principal or agent.
A
prospectus supplement or supplements (and any related free writing
prospectus that we may authorize to be provided to you) will
describe the terms of the offering of the securities, including, to
the extent applicable:
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the
name or names of any underwriters, dealers or agents, if
any;
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the
purchase price of the securities and the proceeds we will receive
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
agency fees or underwriting discounts and other items constituting
agents’ or underwriters’ compensation;
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any
public offering price;
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any
discounts or concessions allowed or reallowed or paid to dealers;
and
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any
securities exchange or market on which the securities may be
listed.
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Only
underwriters named in the prospectus supplement are underwriters of
the securities offered by the prospectus supplement.
If
underwriters are used in the sale, they will acquire the securities
for their own account and may resell the securities from time to
time in one or more transactions at a fixed public offering price
or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase the securities will be
subject to the conditions set forth in the applicable underwriting
agreement. We may offer the securities to the public through
underwriting syndicates represented by managing underwriters or by
underwriters without a syndicate. Subject to certain conditions,
the underwriters will be obligated to purchase all of the
securities offered by the prospectus supplement. Any public
offering price and any discounts or concessions allowed or
reallowed or paid to dealers may change from time to time. We may
use underwriters with whom we have a material relationship. We will
describe in the prospectus supplement, naming the underwriter, the
nature of any such relationship.
We may
sell securities directly or through agents we designate from time
to time. We will name any agent involved in the offering and sale
of securities, and we will describe any commissions we will pay the
agent in the prospectus supplement. Unless the prospectus
supplement states otherwise, our agent will act on a best-efforts
basis for the period of its appointment.
We may
authorize agents or underwriters to solicit offers by certain types
of institutional investors to purchase securities from us at the
public offering price set forth in the prospectus supplement
pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. We will describe the
conditions to these contracts and the commissions we must pay for
solicitation of these contracts in the prospectus
supplement.
We may
provide agents and underwriters with indemnification against civil
liabilities related to this offering, including liabilities under
the Securities Act, or contribution with respect to payments that
the agents or underwriters may make with respect to these
liabilities. Agents and underwriters may engage in transactions
with, or perform services for, us in the ordinary course of
business.
All
securities we offer, other than common stock, will be new issues of
securities with no established trading market. Any underwriters may
make a market in these securities, but will not be obligated to do
so and may discontinue any market making at any time without
notice. We cannot guarantee the liquidity of the trading markets
for any securities.
Any
underwriter may engage in overallotment, stabilizing transactions,
short covering transactions and penalty bids. Overallotment
involves sales in excess of the offering size, which create a short
position. Stabilizing transactions permit bids to purchase the
underlying security so long as the stabilizing bids do not exceed a
specified maximum. Short covering transactions involve purchases of
the securities in the open market after the distribution is
completed to cover short positions. Penalty bids permit the
underwriters to reclaim a selling concession from a dealer when the
securities originally sold by the dealer are purchased in a
stabilizing or covering transaction to cover short positions. Those
activities may cause the price of the securities to be higher than
it would otherwise be. If commenced, the underwriters may
discontinue any of the activities at any time. These transactions
may be effected on any exchange or over-the-counter market or
otherwise.
Underwriters may
engage in passive market making transactions in the securities in
accordance with Regulation M. Passive market makers must comply
with applicable volume and price limitations and must be identified
as passive market makers. In general, a passive market maker must
display its bid at a price not in excess of the highest independent
bid for such security; if all independent bids are lowered below
the passive market maker’s bid, however, the passive market
maker’s bid must then be lowered when certain purchase limits
are exceeded. Passive market making may stabilize the market price
of the securities at a level above that which might otherwise
prevail in the open market and, if commenced, may be discontinued
at any time.
Pearlman Law Group LLP, Fort Lauderdale,
Florida, will pass upon certain legal matters relating to
the issuance and sale of the common stock, preferred stock,
warrants and units offered hereby on behalf of Inuvo. Additional
legal matters may be passed upon for us or any underwriters,
dealers or agents, by counsel that we will name in the applicable
prospectus supplement.
Our
audited consolidated balance sheets as of December 31, 2019 and
2018, and the related consolidated statements of income,
stockholders’ equity and cash flows for the years ended
December 31, 2019 and 2018 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
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 supplement, and later information filed with the SEC
will update and supersede this information. We incorporate by
reference the documents listed below that we have previously filed
with the SEC, except that information furnished under Item 2.02 or
Item 7.01 of our Current Reports on Form 8-K or any other filing
where we indicate that such information is being furnished and not
filed under the Exchange Act, is not deemed to be filed and not
incorporated by reference herein:
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our
Annual Report on Form 10-K for the year ended December 31, 2019 as
filed with the SEC on May 12, 2020;
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our
Quarterly Report on Form 10-Q for the period ended March 31, 2020
as filed with the SEC on May 15, 2020;
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our
Current Reports on Form 8-K as filed with the SEC on March 17,
2020, March 20, 2020, March 26, 2020, March 27, 2020, March 30,
2020, April 1, 2020, April 2, 2020, May 1, 2020, June 4, 2020 and
June 8, 2020; and
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the
description of our common stock contained in the registration
statement on Form 8-A as filed with the SEC on February 28,
2005.
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We
also incorporate by reference into this prospectus supplement
additional documents that we may file with the SEC under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
completion or termination of the offering, including all such
documents we may file with the SEC after the date of the initial
registration statement and prior to the effectiveness of the
registration statement, but excluding any information deemed
furnished and not filed with the SEC. Any statements contained in a
previously filed document incorporated by reference into this
prospectus supplement is deemed to be modified or superseded for
purposes of this prospectus supplement to the extent that a
statement contained in this prospectus supplement, or in a
subsequently filed document also incorporated by reference herein,
modifies or supersedes that statement.
This
prospectus may contain information that updates, modifies or is
contrary to information in one or more of the documents
incorporated by reference in this prospectus. You should rely only
on the information incorporated by reference or provided in this
prospectus. We have not authorized anyone else to provide you with
different information. You should not assume that the information
in this prospectus is accurate as of any date other than the date
of this prospectus or the date of the documents incorporated by
reference in this prospectus.
We
will provide to each person, including any beneficial owner, to
whom this prospectus is delivered, upon written or oral request, at
no cost to the requester, a copy of any and all of the information
that is incorporated by reference in this prospectus.
We
will provide to each person, including any beneficial owner, to
whom this prospectus supplement is delivered, upon written or oral
request, at no cost to the requester, a copy of any and all of the
information that is incorporated by reference in this prospectus
supplement. You may request a copy of these filings, at no cost to
you, by telephoning us at (501) 205-8508 or by writing us at the
following address:
Inuvo,
Inc.
500
President Clinton Boulevard
Suite
300
Little
Rock, Arkansas 72201
Attention:
Investor Relations
You
may also access the documents incorporated by reference in this
prospectus supplement through our website at www.inuvo.com. The
reference to our website is an inactive textual reference only and,
except for the specific incorporated documents listed above, no
information available on or through our website shall be deemed to
be incorporated in this prospectus supplement, the accompanying
prospectus or the registration statement of which it forms a
part.
$25,000,000
COMMON STOCK, PREFERRED STOCK,
WARRANTS OR UNITS
PROSPECTUS
June
25, 2020
20,000,000 Shares
Common Stock
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PROSPECTUS SUPPLEMENT
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Sole Book-Running Manager
A.G.P.
July 23, 2020