As filed with the Securities and Exchange Commission on March 15, 2019

Registration No. 333-228857

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 1

TO

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

CONVERSIONPOINT HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)

840 Newport Center Drive, Suite 450 

Newport Beach, California 92660

(888) 706-6764

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Robert Tallack

President and Chief Executive Officer

ConversionPoint Holdings, Inc.

840 Newport Center Drive, Suite 450

Newport Beach, California 92660

(888) 706-6764

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of all correspondence to:

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effectiveness of this registration statement and the satisfaction or waiver of all other conditions under the merger agreement described herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐ 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐ 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

If applicable, please an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13c-4(i) (Cross-Border Issuer Tender Offer)   ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)     ☐

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.  

The information in this preliminary joint proxy statement/prospectus is not complete and may be changed. ConversionPoint Holdings may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This joint proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer, solicitation or sale is not permitted.

PRELIMINARY PROSPECTUS

Subject to completion, dated March 15, 2019

TO THE STOCKHOLDERS OF CONVERSIONPOINT TECHNOLOGIES INC. AND INUVO, INC. 

MERGERS PROPOSED—YOUR VOTE IS VERY IMPORTANT

[●], 2019

Dear Stockholders:

ConversionPoint Technologies Inc., referred to as ConversionPoint, and Inuvo, Inc., referred to as Inuvo, have entered into an Agreement and Plan of Merger, dated as of November 2, 2018 (as it may be amended from time to time), referred to as the merger agreement. The merger agreement provides for a proposed business combination transaction between ConversionPoint and Inuvo.

Subject to the terms and conditions of the merger agreement, ConversionPoint and Inuvo will be combined under a new holding company currently named ConversionPoint Holdings, Inc., referred to as New Parent. The combination will bring together two e-commerce companies with complementary products and services and valuable intellectual property assets. Robert Tallack will serve as President and Chief Executive Officer and Richard K. Howe will serve as the non-executive Chairman of the Board of the combined organization. New Parent will be renamed ConversionPoint Technologies Inc. following completion of the combination.

The combination will be effected by two mergers, between subsidiaries of New Parent, on the one hand, and each of ConversionPoint and Inuvo, on the other hand. Upon completion of the merger between ConversionPoint and a subsidiary of New Parent, each share of ConversionPoint common stock will be converted into the right to receive 0.97314 of a share of common stock of New Parent (calculated as of March 8, 2019 and subject to downward adjustment based on the number of shares of ConversionPoint common stock outstanding at the closing of the mergers), which we refer to as the ConversionPoint exchange ratio. We refer to the consideration that each share of ConversionPoint common stock will be converted into, as the ConversionPoint merger consideration. Upon completion of the merger between Inuvo and a subsidiary of New Parent, each share of Inuvo common stock will be converted into the right to receive $0.45 in cash and 0.18877 of a share of common stock of New Parent (subject to downward adjustment based on the number of shares of Inuvo common stock outstanding at the closing of the mergers), which we refer to as the Inuvo exchange ratio. We refer to the consideration that each share of Inuvo common stock will be converted into, as the Inuvo merger consideration. We anticipate that ConversionPoint stockholders will own approximately 70.76%, and Inuvo stockholders will own approximately 29.24%, of the shares of New Parent common stock issued and outstanding immediately after consummation of the mergers and prior to the issuance of any stock in connection with a financing that is a condition to closing of the mergers.

The value of the shares of New Parent common stock issued in connection with the mergers will depend on the price per share of New Parent common stock at the time the mergers are completed. That price will not be known at the time of the special meetings of the ConversionPoint and Inuvo stockholders due to the contemplated underwritten public offering of New Parent common stock which we anticipate to occur after the time of the special meetings and at the time of the closing of the mergers, which we refer to as the New Parent public offering, in order for New Parent to satisfy the material condition contained in the merger agreement that New Parent receive at least $36 million in gross proceeds from the issuance and sale of its equity, debt and/or equity-linked securities on terms reasonably agreeable to ConversionPoint and Inuvo in good faith, which we refer to as the financing condition. See “Questions and Answers About the Mergers and the Special Meetings—What conditions must be satisfied to complete the mergers?” and “How will the financing condition be satisfied?” in this joint proxy statement/prospectus for a discussion of the financing condition and the New Parent public offering.

The size of New Parent’s board of directors, which we refer to as the New Parent board, will be set at seven with Robert Tallack and Raghunath “Raghu” Kilambi being appointed by ConversionPoint, Richard K. Howe and Gordon Cameron being appointed by Inuvo, and three individuals being appointed by New Parent, on or after the closing date. As of the date of this joint proxy statement/prospectus, no determination has been made as to the identity of the three directors who will be appointed by the New Parent board on or after the date of closing.

Completion of the mergers requires, among other things, the separate adoption and approval of the merger agreement by both ConversionPoint stockholders and Inuvo stockholders. To obtain these required adoptions, and approvals, ConversionPoint and Inuvo will hold special meetings of their respective stockholders on [●], 2019. At the special meeting of ConversionPoint stockholders, ConversionPoint stockholders will be asked to consider and vote on (1) a proposal to adopt the merger agreement, referred to as the ConversionPoint merger proposal, and (2) a proposal to adjourn the ConversionPoint special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the ConversionPoint merger proposal, referred to as the ConversionPoint adjournment proposal. At the special meeting of Inuvo stockholders, Inuvo stockholders will be asked to consider and vote on (1) a proposal to adopt and approve the merger agreement, referred to as the Inuvo merger proposal, (2) a proposal to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to the named executive officers of Inuvo, (3) a proposal to approve and adopt a certificate of amendment to Inuvo’s articles of incorporation to increase the number of authorized shares of Inuvo common stock from 40,000,000 shares to 60,000,000 shares, referred to as the Inuvo articles amendment proposal, and (4) a proposal to adjourn the Inuvo special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the Inuvo merger proposal and the Inuvo articles amendment proposal, referred to as the Inuvo adjournment proposal.

CONVERSIONPOINT’S BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE CONVERSIONPOINT MERGER PROPOSAL AND “FOR” THE CONVERSIONPOINT ADJOURNMENT PROPOSAL

INUVO’S BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE INUVO MERGER PROPOSAL, “FOR” APPROVAL OF THE MERGER-RELATED COMPENSATION PROPOSAL, “FOR” THE INUVO ARTICLES AMENDMENT PROPOSAL AND “FOR” THE INUVO ADJOURNMENT PROPOSAL

Information about the special meetings, the mergers and the other business to be considered by ConversionPoint stockholders and Inuvo stockholders is contained in this joint proxy statement/prospectus and the documents incorporated by reference in this joint proxy statement/prospectus, which we urge you to read carefully. The obligations of ConversionPoint and Inuvo to complete the mergers are subject to the satisfaction or waiver of several conditions set forth in the merger agreement including, among others, the financing condition. ConversionPoint and Inuvo encourage you to read this entire joint proxy statement/prospectus carefully before voting, including the section entitled “Risk Factors” beginning on page 29 of this joint proxy statement/prospectus.

Your vote is very important, regardless of the number of shares of Inuvo common stock or ConversionPoint common stock that you own. Whether or not you plan to attend the special meeting of ConversionPoint stockholders or the special meeting of Inuvo stockholders, as applicable, please mark, sign, date and return all proxy cards that you receive in the postage-paid envelope provided, or complete your proxy by following the instructions supplied on the proxy card for voting by telephone or via the Internet, so that your shares may be represented and voted at the ConversionPoint or Inuvo special meeting, as applicable. Your failure to vote with respect to the ConversionPoint merger proposal or Inuvo merger proposal will have the same effect as voting against such proposal. If you hold your shares in “street name,” you should instruct your broker how to vote your shares in accordance with your voting instruction form. 

We hope to see you at the special meetings and look forward to the successful completion of the mergers and the other transactions.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the securities to be issued in connection with the mergers or determined if the accompanying joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying joint proxy statement/prospectus is dated [●], 2019, and is first being mailed or otherwise delivered to stockholders of ConversionPoint and stockholders of Inuvo on or about [●], 2019.

ConversionPoint Technologies Inc.
840 Newport Center Drive, Suite 450
Newport Beach, CA 92660
(888) 706-6764

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD [●], 2019

To the Stockholders of ConversionPoint Technologies Inc.:

A special meeting of all stockholders of ConversionPoint Technologies Inc. will be held at 840 Newport Center Drive, Suite 450, Newport Beach, California, 92660 on [●], 2019 at [●] a.m., local time, for the following purposes:

If you held shares of ConversionPoint common stock at the close of business on [●], 2019, you are entitled to notice of and to vote at the special meeting and any adjournments or postponements thereof. If a new record date is set, you will be entitled to vote at the special meeting if you held shares in ConversionPoint as of such record date.

The ConversionPoint board has unanimously approved the merger agreement, has determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of ConversionPoint and its stockholders, and unanimously recommends that ConversionPoint stockholders vote “FOR” the ConversionPoint merger proposal and “FOR” the ConversionPoint adjournment proposal.

Your vote is very important. If you do not submit your proxy by telephone, the Internet, or return your signed proxy card(s) by mail or vote in person at your special meeting, it will be more difficult for ConversionPoint to obtain the necessary quorum to hold its special meeting.

Whether or not you plan to attend the special meeting in person, please complete, sign, date and return the enclosed proxy in the accompanying self-addressed postage pre-paid envelope or complete your proxy by following the instructions supplied on the proxy card for voting by telephone or via the Internet as soon as possible. If you attend the special meeting, you may withdraw your proxy and vote in person.

PLEASE VOTE YOUR SHARES PROMPTLY. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE ENCLOSED PROXY CARD. IF YOU HAVE QUESTIONS ABOUT THE PROPOSALS OR ABOUT VOTING YOUR SHARES, PLEASE CONTACT CONVERSIONPOINT’S GENERAL COUNSEL, JEFFREY MARKS VIA EMAIL AT JEFF@CONVERSIONPOINT.COM.

Inuvo, Inc.
500 President Clinton Avenue, Suite 300
Little Rock, Arkansas 72201
(501) 205-8508

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [●], 2019

To the Stockholders of Inuvo, Inc.:

A special meeting of all stockholders of Inuvo, Inc. will be held at 500 President Clinton Avenue, Suite 300, Little Rock, Arkansas 72201 on [●], 2019 at [●], local time, for the following purposes:

If you held shares of Inuvo common stock at the close of business on [●], 2019, you are entitled to notice of and to vote at the special meeting and any adjournments or postponements thereof. If a new record date is set, you will be entitled to vote at the special meeting if you held shares in Inuvo as of such record date.

The Inuvo board has unanimously approved the merger agreement and the articles amendment, has determined that the merger agreement, the articles amendment and the transactions contemplated thereby, including the merger, are advisable and in the best interests of Inuvo and its stockholders, and unanimously recommends that Inuvo stockholders vote “FOR” the Inuvo merger proposal, “FOR” the Inuvo merger-related compensation proposal “FOR” the Inuvo articles amendment proposal and “FOR” the Inuvo adjournment proposal.

Your vote is very important. If you do not submit your proxy by telephone, the Internet, or return your signed proxy card(s) by mail or vote in person at your special meeting, it will be more difficult for Inuvo to obtain the necessary quorum to hold its special meeting.

Whether or not you plan to attend the special meeting in person, please complete, sign, date and return the enclosed proxy in the accompanying self-addressed postage pre-paid envelope or complete your proxy by following the instructions supplied on the proxy card for voting by telephone or via the Internet (or, if your shares are held in “street name” by a broker, nominee, fiduciary or other custodian, follow the directions given by the broker, nominee, fiduciary or other custodian regarding how to instruct it to vote your shares) as soon as possible. If you attend the special meeting, you may withdraw your proxy and vote in person.

PLEASE VOTE YOUR SHARES PROMPTLY. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE ENCLOSED PROXY CARD. IF YOU HAVE QUESTIONS ABOUT THE PROPOSALS OR ABOUT VOTING YOUR SHARES, PLEASE CALL INUVO’S CHIEF FINANCIAL OFFICER, WALLACE D. RUIZ AT (501) 205-8397 OR VIA EMAIL AT WALLACE.RUIZ@INUVO.COM.

ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about Inuvo that is not included in or being delivered with this joint proxy statement/prospectus. The incorporated information that is not included in or being delivered with this joint proxy statement/prospectus is available to you without charge upon your written or oral request. You can obtain any document that is incorporated by reference in this joint proxy statement/prospectus, excluding all exhibits that have not been specifically incorporated by reference, on the investor relations page of Inuvo’s website at www.inuvo.com or by requesting it in writing or by telephone from Inuvo at the following address or telephone number:

Inuvo, Inc.
500 President Clinton Avenue, Suite 300
Little Rock, Arkansas 72201
(501) 205-8508
Attn.: Corporate Secretary
Website: www.inuvo.com

If you would like to request any documents, please do so by [●], 2019 in order to receive them before the Inuvo special meeting. See “Where You Can Find More Information.”

You should rely only on the information contained in, or incorporated by reference into, this document. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document. This document is dated [●], 2019, and you should assume that the information in this document is accurate only as of such date. You should assume that the information incorporated by reference into this document is accurate as of the date of such document. Neither the mailing of this document to ConversionPoint and Inuvo stockholders nor the issuance by New Parent of shares of New Parent common stock in connection with the merger will create any implication to the contrary.

This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in this document regarding Inuvo has been provided by Inuvo and information contained in this document regarding ConversionPoint has been provided by ConversionPoint.

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QUESTIONS AND ANSWERS ABOUT THE MERGERS AND THE SPECIAL MEETINGS

The following questions and answers are intended to address briefly some commonly asked questions regarding the mergers and the special meetings. These questions and answers may not address all questions that may be important to you as a stockholder of ConversionPoint or Inuvo. To better understand these matters, and for a description of the legal terms governing the mergers, you should carefully read this entire joint proxy statement/prospectus, including the annexes, as well as the documents that have been incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 229. All references in this joint proxy statement/prospectus to “ConversionPoint” refer to ConversionPoint Technologies Inc., a Delaware corporation. All references in this joint proxy statement/prospectus to “Inuvo” refer to Inuvo, Inc., a Nevada corporation. All references in this joint proxy statement/prospectus to “New Parent” refer to ConversionPoint Holdings, Inc., a Delaware corporation and a direct wholly-owned subsidiary of ConversionPoint, which will be renamed “ConversionPoint Technologies Inc.” following consummation of the mergers. All references in this joint proxy statement/prospectus to “ConversionPoint Merger Sub” refer to CPT Merger Sub, Inc., a Delaware corporation and a direct wholly-owned subsidiary of New Parent. All references in this joint proxy statement/prospectus to “Inuvo Merger Sub” refer to CPT Cigar Merger Sub, Inc., a Nevada corporation and a direct wholly-owned subsidiary of New Parent. All references in this joint proxy statement/prospectus to the “Merger Subs” refer to the ConversionPoint Merger Sub and the Inuvo Merger Sub, collectively. Unless otherwise indicated or as the context requires, all references in this joint proxy statement/prospectus to “we” refer to ConversionPoint and Inuvo. All references in this joint proxy statement/prospectus to the “merger agreement” refer to the Agreement and Plan of Merger, dated as of November 2, 2018 (as it may be amended from time to time), by and among ConversionPoint, Inuvo, New Parent, ConversionPoint Merger Sub and Inuvo Merger Sub, a copy of which, including each amendment thereto through the date hereof, is attached as Annex A to this joint proxy statement/prospectus.

About the Mergers

Q:     Why am I receiving this joint proxy statement/prospectus?

A:     ConversionPoint and Inuvo have entered into the merger agreement which provides for the combination of ConversionPoint and Inuvo under ConversionPoint Holdings, Inc., a new holding company which we refer to as, New Parent. Pursuant to the merger agreement, ConversionPoint Merger Sub will be merged with and into ConversionPoint with ConversionPoint as the surviving company, and Inuvo Merger Sub will be merged with and into Inuvo with Inuvo as the surviving company. As a result, ConversionPoint and Inuvo will each become wholly-owned subsidiaries of New Parent. As a result of the transactions contemplated by the merger agreement, former ConversionPoint and Inuvo stockholders will own stock in New Parent. The approval for listing of New Parent’s stock on The NASDAQ Capital Market, which we refer to as NASDAQ, subject to official notice of issuance, and on the Toronto Stock Exchange, which we refer to as the TSX, subject to standard listing conditions, are, among others, conditions to the obligations of Inuvo and ConversionPoint to consummate the mergers. We refer to these mergers as the ConversionPoint merger and the Inuvo merger, respectively, and together as the mergers. We refer to the date upon which the mergers are consummated as the closing date.

ConversionPoint is holding a special meeting of stockholders, which we refer to as the ConversionPoint special meeting, in order to obtain the stockholder approval necessary to adopt the merger agreement. We refer to this approval as the ConversionPoint stockholder approval. ConversionPoint stockholders will also be asked to approve the adjournment of the ConversionPoint special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to obtain the ConversionPoint stockholder approval.

Inuvo is holding a special meeting of stockholders, which we refer to as the Inuvo special meeting, in order to obtain the stockholder approval necessary to adopt and approve the merger agreement, which we refer to as the Inuvo stockholder approval. Inuvo stockholders will also be asked to approve (i) a proposal to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to the named executive officers of Inuvo that is based on or otherwise relates to the completion of the mergers, which we sometimes refer to as the merger-related compensation, (ii) a proposal to adopt a certificate of amendment to Inuvo’s articles of incorporation to increase the number of authorized shares of Inuvo common stock from 40,000,000 shares to 60,000,000 shares, which we sometimes refer to as the Inuvo articles amendment proposal, and (iii) the adjournment of the Inuvo special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to obtain the Inuvo stockholder approval and adoption of the Inuvo articles amendment proposal. The proposed certificate of amendment is attached hereto as Annex J-2, which we sometimes refer to as the Inuvo articles amendment.

We will be unable to complete the mergers unless both the ConversionPoint stockholder approval and the Inuvo stockholder approval are obtained at the respective special meetings and the other conditions to the mergers have been met. See “What conditions must be satisfied to complete the mergers” below for a discussion of the material conditions including the condition that New Parent receives at least $36 million in gross proceeds from the issuance and sale of its equity, debt and/or equity-linked securities on terms reasonably agreeable to ConversionPoint and Inuvo in good faith, which we refer to as the financing condition. New Parent intends to satisfy the financing condition through an underwritten public offering of New Parent common stock.

Q:     How will the financing condition be satisfied?

A:     In order to secure the necessary funds to satisfy the financing condition, New Parent intends to undertake an underwritten public offering of its common stock that will close at or prior to the closing of the mergers, referred to as the New Parent public offering, and as a condition to the consummation of the mergers, New Parent must receive at least $36 million in gross proceeds from the New Parent public offering. This joint proxy statement/prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of New Parent common stock in any state in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

Although New Parent intends to conduct the New Parent public offering to satisfy the financing conditions, under the terms of the merger agreement, New Parent (either directly or indirectly through ConversionPoint) may also satisfy the financing condition through the private issuances of debt, equity or equity-linked securities. Thus, if New Parent does not consummate the New Parent public offering, the financing condition to the mergers could be satisfied by New Parent and/or ConversionPoint through the private issuance of debt, equity or equity-linked securities.

Q:     Why are ConversionPoint and Inuvo conducting the mergers?

A:     The board of directors of ConversionPoint, which we refer to as the ConversionPoint board, consulted with ConversionPoint’s management and legal and financial advisors to approve the merger agreement and the transactions contemplated thereby, and determined that the terms of the ConversionPoint merger and the other transactions contemplated by the merger agreement are fair to, and in the best interests of, ConversionPoint and its stockholders. The ConversionPoint board believes that the strategic nature of the transaction is in the best interests of both ConversionPoint and Inuvo and their respective stockholders. The mergers will combine ConversionPoint’s and Inuvo’s respective businesses to create a new company that will sell marketing, data and e-commerce optimization technologies in a single platform serving e-commerce clients. Among other things, the combined company would have a strong balance sheet and the ability to invest in and improve new technology, services and products for customers. In reaching its conclusion, the ConversionPoint board considered a variety of factors, including financial and operating information relating to the two companies. To review the reasons for the mergers considered by ConversionPoint in greater detail, see “The Mergers—Recommendation of the ConversionPoint Board and its Reasons for the ConversionPoint Merger” beginning on page 152.

The board of directors of Inuvo, which we refer to as the Inuvo board, has consulted with Inuvo’s management and legal and financial advisors and periodically reviewed and considered various strategic opportunities available to Inuvo, including whether the continued execution of Inuvo’s strategy as a stand-alone company, or the possible sale of Inuvo to or a combination of Inuvo with a third party offered the best avenue to maximize stockholder value. The Inuvo board concluded that the consummation of the Inuvo merger would maximize value to Inuvo’s stockholders by providing the opportunity to participate in the growth and opportunities of the combined company and to receive cash for a portion of the value of the stockholders’ shares. The Inuvo board believes that the consummation of the mergers and the transactions contemplated by the merger agreement will allow the combined company to achieve strategic and financial benefits, including cost savings and operating synergies, which are expected to create value for the combined company’s stockholders. In reaching its conclusion, the Inuvo board considered a variety of factors, including financial and operating information relating to the two companies. To review Inuvo’s reasons for the Inuvo merger, please see “The Mergers—Recommendation of the Inuvo Board and its Reasons for the Inuvo Merger” beginning on page 152.

Q:     What are the positive and negative factors that each of the ConversionPoint board and the Inuvo board considered in connection with the mergers?

A:     The ConversionPoint board and the Inuvo board considered a variety of factors, both positive and negative, in connection with the mergers. The reasons in favor of the mergers considered by the ConversionPoint board included, but are not limited to, the fact that the combination of ConversionPoint’s and Inuvo’s respective businesses are expected to create combined annual cost synergies; the fact that ConversionPoint stockholders would have the opportunity to participate in the future performance of the combined company based on their majority ownership of New Parent common stock upon completion of the mergers; and the fact that the combined company would have a strong balance sheet and the ability to add new technology, services and products for customers. The potentially negative factors associated with the mergers considered by the ConversionPoint board include, but are not limited to, the dilution associated with the shares that New Parent is required to issue to satisfy the financing condition; the risk that the mergers might not be consummated in a timely manner; the risk that certain key employees of ConversionPoint or Inuvo might not choose to remain with the combined company; the potential challenges and difficulties relating to integrating the operations of ConversionPoint and Inuvo; and the potential $2,800,000 termination fee that ConversionPoint will be required to pay to Inuvo in certain circumstances if the merger agreement is terminated. To review the potentially positive and negative factors considered by the ConversionPoint board in greater detail, see “The Mergers—Recommendation of the ConversionPoint Board; and its Reasons for the ConversionPoint Merger” beginning on page 152.

The Inuvo board considered a number of positive factors, including the facts that the Inuvo merger is expected to result in a company with a stronger balance sheet; that the proposed cash consideration portion alone of the Inuvo merger consideration represented a premium over the market price at which Inuvo’s common stock traded prior to entering into the merger agreement; that by including both cash and stock, the Inuvo stockholders might participate in the future of the combined, publicly traded company; that the combination of technologies from both parties represents an alignment with a market-based consolidation of marketing, data and e-commerce optimization technologies; that certain Inuvo technologies could be immediately sold to certain ConversionPoint clients; that the marketplace that the combined company will operate in possesses significant competitive barriers to entry; and that the combined company would have scale sufficient to attract capital market interest. The Inuvo board also considered a number of negative factors, including the facts that the transaction is not all cash, ConversionPoint is a privately held company without a valuation set by public trading of its common stock, the unknown value of the portion of the consideration to Inuvo’s stockholders to be paid in New Parent common stock and the potential $2,800,000 termination fee that Inuvo will be required to pay to ConversionPoint in certain circumstances if the transactions are terminated. To review the full list of factors, positive and negative, that the Inuvo board considered in connection with the Inuvo merger, see “The Mergers—Recommendation of the Inuvo Board; and its Reasons for the Inuvo Merger” beginning on page 152.

Q:     What will Inuvo stockholders receive in the Inuvo merger?

A:     In the Inuvo merger, each share of Inuvo common stock, par value $0.001 per share, which we refer to as Inuvo common stock will be converted into the right to receive $0.45 in cash and 0.18877 of a share of validly issued, fully-paid and non-assessable common stock, par value $0.0001 per share, of New Parent, which we refer to as New Parent common stock (subject to downward adjustment based on the number of shares of Inuvo common stock outstanding at the closing of the mergers). We refer to the consideration that each share of Inuvo common stock will be converted into as the Inuvo merger consideration. Shares held by Inuvo as treasury stock or that are owned by Inuvo, Inuvo Merger Sub or any other wholly-owned subsidiary of Inuvo, which we refer to as the Inuvo excluded shares, will not be converted into the Inuvo merger consideration and will be canceled. For a discussion of how the amount of the stock portion of the Inuvo merger consideration may be adjusted downward based on the number of shares of Inuvo common stock issued and outstanding on the closing date of the mergers, see “The Merger Agreement and Related Agreement—Merger Consideration Received by Inuvo Stockholders” beginning on page 173.

Q:     What will ConversionPoint stockholders receive in the ConversionPoint merger?

A:     Upon completion of the ConversionPoint merger, each share of common stock of ConversionPoint, par value $0.0001 per share, which we refer to as ConversionPoint common stock, will be converted into 0.97314 of a share of New Parent common stock (calculated as of March 8, 2019 and subject to downward adjustment based on the number of shares of ConversionPoint common stock outstanding at the closing of the mergers), which we refer to as the ConversionPoint merger consideration. Shares held by ConversionPoint as treasury stock or that are owned by ConversionPoint, ConversionPoint Merger Sub or any other wholly-owned subsidiary of ConversionPoint, which we refer to as the ConversionPoint excluded shares, will not be converted into the ConversionPoint merger consideration and will be canceled. For a discussion of how the ConversionPoint merger consideration may be adjusted downward based on the number of shares of ConversionPoint common stock issued and outstanding on the closing date of the mergers, see “The Merger Agreement and Related Agreement—Merger Consideration Received by ConversionPoint Stockholders” beginning on page 172.

Q:     What was the effect of the amendment to the merger agreement?

A:     On March 1, 2019, ConversionPoint, Inuvo, New Parent, Inuvo Merger Sub, and CPT Merger Sub entered into Amendment No. 1 to Agreement and Plan of Merger, which we sometimes refer to herein as the first merger amendment, to, among other things, (i) extend the outside dates for financing and completion of the mergers, (ii) to permit the issuance by Inuvo of an aggregate of $1,440,000 principal of Original Issue Discount Unsecured Subordinated Convertible Notes by September 1, 2020, which we refer to as the Inuvo convertible notes, (iii) to permit the Inuvo exchange ratio to adjust downward upon the issuance of additional shares of Inuvo common stock, including in connection with the conversion of the Inuvo convertible notes, and (iv) to permit an increase in Inuvo’s authorized shares. The first merger amendment is more fully described at “The Merger Agreement and Related Agreements—Amendment No. 1 to the Agreement and Plan of Merger” beginning on page 193.

Q:     Should I send in my stock certificates now for the exchange?

A:     ConversionPoint Stockholders: Because all shares of ConversionPoint common stock have been issued in book entry form, ConversionPoint stockholders do not have any certificates to exchange. As of the effective time of the ConversionPoint merger, holders of ConversionPoint common stock will receive from New Parent’s exchange agent, a letter of transmittal and information on how to obtain the ConversionPoint consideration.

Inuvo Stockholders: No. Inuvo stockholders should keep any stock certificates they hold at this time. After the mergers are completed, Inuvo stockholders holding Inuvo stock certificates will receive a letter of transmittal and instructions on how to obtain the Inuvo merger consideration from New Parent’s exchange agent.

Q:     What equity stake will former ConversionPoint stockholders and Inuvo stockholders hold in New Parent?

A:     Upon completion of the mergers, it is anticipated that ConversionPoint stockholders, on the one hand, and Inuvo stockholders, on the other hand, will hold approximately 70.76% and 29.24%, respectively, of the shares of common stock of New Parent issued and outstanding immediately after the consummation of the mergers (on a fully diluted basis, including dilution from the exercise of outstanding stock options and warrants prior to the consummation of the mergers, and restricted stock units, based on the treasury method) and prior to the issuance by New Parent of any equity securities in connection with the New Parent public offering or in connection with a private offering of equity and/or equity-linked securities to satisfy the financing condition.

Since we do not know the value of the shares of New Parent common stock or the amount of shares of New Parent common stock that may be issued in connection with the New Parent public offering or the value or amount of New Parent or ConversionPoint common stock and/or equity-linked securities that may be issued privately to satisfy the financing condition should New Parent not proceed with the New Parent public offering, we will not know the exact percentage of equity former Inuvo stockholders or ConversionPoint stockholders will hold in New Parent until after the closing of the New Parent public offering and/or private offering.

Q:     How do I calculate the value of the ConversionPoint merger consideration?

A:     New Parent will issue 0.97314 of a share of New Parent common stock (calculated as of March 8, 2019 and subject to downward adjustment based on the number of shares of ConversionPoint common stock outstanding at the closing of the mergers) in exchange for each share of ConversionPoint common stock. The value of the ConversionPoint merger consideration that ConversionPoint stockholders will receive in the ConversionPoint merger for each share of ConversionPoint common stock will depend on the price per share of New Parent’s common stock on NASDAQ at the time the ConversionPoint merger is completed.

Q:     How do I calculate the value of the Inuvo merger consideration?

A:     New Parent will issue $0.45 in cash and 0.18877 of a share of New Parent common stock (subject to downward adjustment based on the number of shares of Inuvo common stock outstanding at the closing of the mergers) in exchange for each share of Inuvo common stock. The value of the Inuvo merger consideration that Inuvo stockholders will receive in the Inuvo merger for each share of Inuvo common stock will depend, in part, on the price per share of New Parent’s common stock on NASDAQ at the time the Inuvo merger is completed.

Q:     What are the material risks associated with the mergers?

A:     There are certain material risks associated with the mergers which you should carefully consider in deciding whether to vote for adoption and approval of the merger agreement. These material risks include the fact that the implied value to Inuvo stockholders of the Inuvo merger consideration and the implied value to ConversionPoint stockholders of the ConversionPoint merger consideration will not be known until the closing of the mergers that will occur after the special meetings. For a more complete summary of the material risks associated with the mergers, see “Risk Factors” beginning on page 29.

Q:     What will be the composition of New Parent’s Board of Directors after the mergers?

A:     After the mergers, the size of New Parent’s board of directors, which we refer to as the New Parent board, will initially be set at no less than five and no more than seven with Robert Tallack and Raghu Kilambi being appointed by ConversionPoint, Richard K. Howe and Gordon Cameron being appointed by Inuvo, and three individuals being appointed by New Parent after the closing date. As of the date of this joint proxy statement/prospectus, no determination has been made as to the identity of the three directors who will be appointed by the New Parent board after the date of closing.

Q:     What conditions must be satisfied to complete the mergers?

A:     ConversionPoint and Inuvo are not required to complete the mergers unless a number of conditions are satisfied or waived. These conditions include, among others: (i) receipt of both the ConversionPoint stockholder approval and Inuvo stockholder approval; (ii) that the shares of New Parent common stock have been approved for listing on NASDAQ, subject to official notice of issuance, and the TSX, subject to standard listing conditions; (iii) absence of any injunctions, orders or laws that would prohibit, restrain or make illegal the mergers; (iv) effectiveness of the registration statement on Form S-4, of which this joint proxy statement/prospectus forms a part, and the absence of any stop order or proceedings for that purpose; (v) New Parent, having met the financing condition at or prior to the closing of the mergers; and (vi) that ConversionPoint shall not have received demands for appraisal rights from holders of ConversionPoint common stock representing more than 10% of the issued and outstanding shares of ConversionPoint common stock.

For a more complete summary of the conditions that must be satisfied or waived prior to completion of the mergers, see “The Merger Agreement and Related Agreements—Covenants and Agreements—Conditions to Completion of the Mergers” beginning on page 189.

Q:     Why am I being asked to cast a non-binding advisory vote on the proposal approving the merger-related compensation, sometimes referred to as the merger-related compensation proposal?

A:     The Securities and Exchange Commission requires Inuvo to seek a non-binding advisory vote on the merger-related compensation proposal. The merger-related compensation consists of certain golden parachute payments to be received after closing by certain of Inuvo’s executive officers pursuant to Separation Agreements, which will be entered into by New Parent and such executive officers as a condition of closing of the mergers. If the mergers are completed, New Parent will be contractually obligated to make these payments to these executive officers under certain circumstances. Mr. Richard Howe will receive aggregate consideration in an amount equal to $1,251,457, Mr. Wallace Ruiz will receive aggregate consideration in an amount equal to $607,706, and Mr. Trey Barrett will receive aggregate consideration in an amount equal to $254,000. The executive officers will receive a mix of cash and equity consideration. For further discussion of the merger-related compensation, see “The Mergers—Merger-Related Compensation” beginning on page 168 for further information.

Q:     What will happen if the Inuvo shareholders do not approve the merger-related compensation proposal at the special meeting?

A:     Approval of the merger-related compensation proposal is not a condition to completion of the mergers. The vote with respect to the merger-related compensation proposal is an advisory vote and will not be binding on Inuvo (or New Parent or ConversionPoint following the mergers). Accordingly, as such compensation is contractual, such compensation will become payable if the mergers are completed regardless of the outcome of the advisory vote.

 Q:    Why is Inuvo proposing adoption of the Inuvo articles amendment?

A:    Inuvo is proposing adoption of the Inuvo articles amendment to increase the number of authorized shares of Inuvo common stock from 40,000,000 shares to 60,000,000 shares. Because Inuvo is a Nevada corporation, it is subject to the Nevada Revised Statutes, which we refer to as the NRS. In order to amend Inuvo’s articles of incorporation, the NRS effectively requires that such amendment be approved by stockholders representing a majority of the outstanding shares of Inuvo.

As a condition to the closing of the issuance of the Inuvo convertible notes, and in connection with the first merger amendment, the Inuvo board was required by the purchasers of the notes and CPT Investments to recommend the adoption and approval of the Inuvo articles amendment to the Inuvo stockholders. For further discussion of the Inuvo articles amendment, see “Proposal 3—Adoption of the Certificate of Amendment to the Inuvo Amended Articles of Incorporation” beginning on page 137.

Q:     What are the consequences to ConversionPoint and Inuvo if the merger agreement is terminated?

A:     The merger agreement may be terminated and the mergers may be abandoned at any time prior to the completion of the mergers (including after stockholder approval) by mutual written consent of ConversionPoint and Inuvo. The merger agreement may also be terminated by either ConversionPoint or Inuvo under certain conditions as described in greater detail in “The Merger Agreement and Related Agreements—Termination” beginning on page 190. If the merger agreement is terminated, a termination fee may be payable. To review the consequences if the merger agreement is terminated in greater detail, see “The Merger Agreement and Related Agreements—Termination Fee and Expenses” beginning on page 192.

If the mergers are not completed for any reason, ConversionPoint stockholders will not receive the ConversionPoint merger consideration and Inuvo stockholders will not receive the Inuvo merger consideration. Instead, ConversionPoint will remain a private company and Inuvo will remain an independent public company and its common stock will continue to be listed and traded on the NYSE American.

Q:     What constitutes a quorum?

A:     ConversionPoint Special Meeting: Holders of a majority in voting power of the ConversionPoint common stock issued and outstanding and entitled to vote at the ConversionPoint special meeting, present in person or represented by proxy, constitutes a quorum. In the absence of a quorum, stockholders holding a majority of the shares of ConversionPoint common stock, present in person or represented by proxy, will have the power to adjourn the special meeting. As of the record date for the ConversionPoint special meeting, [●] shares of ConversionPoint common stock would be required to achieve a quorum. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of shares of ConversionPoint common stock considered to be present at the meeting.

Inuvo Special Meeting: Holders of a majority of the outstanding shares of Inuvo common stock entitled to vote at the Inuvo special meeting, present in person or represented by proxy, constitutes a quorum. In the absence of a quorum, the chairman of the meeting or stockholders holding a majority of the shares of Inuvo common stock, present in person or represented by proxy, will have the power to adjourn the special meeting. As of the record date for the Inuvo special meeting, [●] shares of Inuvo common stock would be required to achieve a quorum. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of shares of Inuvo common stock considered to be present at the meeting.

Q:     What vote is required to approve each ConversionPoint proposal?

A:     Proposal to Adopt the Merger Agreement by ConversionPoint Stockholders: Adopting the merger agreement requires the affirmative vote of holders of a majority of the shares of ConversionPoint common stock outstanding and entitled to vote. Accordingly, a ConversionPoint stockholder’s failure to submit a proxy card or to vote in person at the special meeting or an abstention from voting, will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

Proposal to Adjourn the ConversionPoint Special Meeting by ConversionPoint Stockholders: At the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement requires the affirmative vote of holders of a majority of the shares of ConversionPoint common stock present, in person or represented by proxy, at the special meeting and entitled to vote on the adjournment proposal, regardless of whether a quorum is present. Accordingly, abstentions will have the same effect as a vote “AGAINST” the proposal to adjourn the special meeting, while shares not in attendance at the special meeting will have no effect on the outcome of any vote to adjourn the special meeting.

Q:     What vote is required to approve each Inuvo proposal?

A:     Proposal to Adopt the Merger Agreement by Inuvo Stockholders: Adopting the merger agreement requires the affirmative vote of holders of a majority of the shares of Inuvo common stock outstanding and entitled to vote. Accordingly, a Inuvo stockholder’s failure to submit a proxy card or to vote in person at the special meeting, an abstention from voting, or the failure of a Inuvo stockholder who holds his or her shares in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee, which we refer to as a broker non-vote, will have the same effect as a vote “AGAINST” the proposal to adopt and approve the merger agreement.

Merger-Related Compensation Proposal: Approving the advisory merger-related compensation proposal requires the affirmative vote of holders of a majority of the shares of Inuvo common stock present, in person or represented by proxy, at the special meeting and entitled to vote on the merger-related compensation proposal. Accordingly, abstentions will have the same effect as a vote “AGAINST” the merger-related compensation proposal, while broker non-votes and shares not in attendance at the special meeting will have no effect on the outcome of such vote. Approval of the advisory merger-related compensation proposal is not a condition to completion of the mergers. The vote is an advisory (non-binding) vote. If the mergers are completed, Inuvo may pay the specified compensation to its named executive officers in connection with the mergers even if Inuvo stockholders fail to approve the advisory merger-related compensation proposal.

Inuvo Articles Amendment Proposal: Approving and adopting the Inuvo articles amendment proposal requires the affirmative vote of holders of a majority of the shares of Inuvo common stock outstanding and entitled to vote. Accordingly, an Inuvo stockholder’s failure to submit a proxy card or to vote in person at the special meeting, an abstention from voting, or a broker non-vote, will have the same effect as a vote “AGAINST” the proposal to approve and adopt the Inuvo articles amendment.

Proposal to Adjourn the Inuvo Special Meeting by Inuvo Stockholders: Approving the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt and approve the merger agreement or the Inuvo articles amendment requires the affirmative vote of holders of a majority of the shares of Inuvo common stock present, in person or represented by proxy, at the special meeting and entitled to vote on the adjournment proposal. Accordingly, abstentions will have the same effect as a vote “AGAINST” the proposal to adjourn the special meeting, while broker non-votes and shares not in attendance at the special meeting will have no effect on the outcome of any vote to adjourn the special meeting.

Q:     What are the recommendations of the ConversionPoint board of directors?

A:     The ConversionPoint board has (i) approved the merger agreement and the consummation of the transactions contemplated by the merger agreement upon the terms and subject to the conditions set forth in the merger agreement, (ii) determined that the terms of the ConversionPoint merger and the other transactions contemplated by the merger agreement are fair to, and in the best interests of, ConversionPoint and its stockholders, (iii) directed that the merger agreement be submitted to ConversionPoint stockholders for adoption, (iv) recommended that ConversionPoint stockholders adopt the merger agreement and (v) declared that the merger agreement is advisable.

The ConversionPoint board recommends that ConversionPoint stockholders vote:

“FOR” the proposal to adopt the merger agreement; and

“FOR” the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement.

See “The Mergers—Recommendation of the ConversionPoint Board and its Reasons for the ConversionPoint Merger” beginning on page 152.

Q:     What are the recommendations of the Inuvo board of directors?

A:     The Inuvo board has (i) approved the merger agreement and consummation of the transactions contemplated by the merger agreement upon the terms and subject to the conditions set forth in the merger agreement, (ii) determined that the terms of the merger agreement, the Inuvo merger and the other transactions contemplated by the merger agreement are fair to, and in the best interests of, Inuvo and its stockholders, (iii) directed that the merger agreement be submitted to Inuvo stockholders for adoption and approval at the Inuvo special meeting, (iv) recommended that Inuvo’s stockholders adopt and approve the merger agreement and (v) declared that the merger agreement is advisable.

Additionally, the Inuvo board has (i) determined that the terms of the Inuvo articles amendment is in the best interests of Inuvo and its stockholders, (ii) approved the Inuvo articles amendment, (iii) directed that the Inuvo articles amendment be submitted to Inuvo stockholders for adoption and approval at the Inuvo special meeting, and (iv) recommended that Inuvo’s stockholders adopt and approve the Inuvo articles amendment.

The Inuvo board recommends that Inuvo stockholders vote:

“FOR” the proposal to adopt and approve the merger agreement;

“FOR” the proposal to approve, on a non-binding advisory basis, the merger-related compensation;

“FOR” the proposal to adopt and approve the Inuvo articles amendment; and

“FOR” the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt and approve the merger agreement or the Inuvo articles amendment.

See “The Mergers—Recommendation of the Inuvo Board and its Reasons for the Inuvo Merger” beginning on page 152.

Q:     When do you expect the mergers to be completed?

A:     ConversionPoint and Inuvo are working to complete the mergers as quickly as possible, and we anticipate that they will be completed in the second quarter of 2019. However, the mergers are subject to conditions which are described in more detail in this joint proxy statement/prospectus, and it is possible that factors outside the control of both companies could result in the mergers being completed at a later time, or not at all.

Q:     What are my U.S. federal income tax consequences as a result of the mergers?

A:     For United States federal income tax purposes, it is intended that the ConversionPoint merger, the Inuvo merger, and, to the extent New Parent satisfies the financing condition through the issuance of New Parent equity securities, which we refer to as an equity financing, taken together, will qualify as an “exchange” described in Section 351(a) of the Internal Revenue Code of 1986, as amended, which we refer to as the Code. It is a condition to ConversionPoint’s obligation to complete the ConversionPoint merger that ConversionPoint receive an opinion of its counsel, Troutman Sanders LLP, which we refer to as Troutman Sanders, to the effect that the ConversionPoint merger, the Inuvo merger, and the equity financing, taken together, will qualify as an “exchange” described in Section 351(a) of the Code. It is a condition to Inuvo’s obligation to complete the Inuvo merger that Inuvo receive a written opinion of its counsel, Porter Wright Morris & Arthur LLP, which we refer to as Porter Wright, to the effect that the ConversionPoint merger, the Inuvo merger, and the equity financing, taken together, will qualify as an “exchange” described in Section 351(a) of the Code. If the ConversionPoint merger, the Inuvo merger, and the equity financing, taken together, qualify as an “exchange” within the meaning of Section 351(a) of the Code, then:

Tax matters can be complicated, and the tax consequences of the transactions to a particular stockholder will depend on such stockholder’s particular facts and circumstances. You are strongly urged to consult with a tax advisor to determine the U.S. federal, state or local or foreign income or other tax consequences of the mergers to you. See “The Mergers—Material United States Federal Income Tax Consequences of the Mergers” on page 195.

Q:     Are ConversionPoint stockholders entitled to appraisal rights?

A:     Pursuant to Section 262, which we refer to as Section 262, of the General Corporation Law of the State of Delaware, which we refer to as the DGCL, holders of shares of ConversionPoint common stock that meet certain requirements will have the right to obtain payment in cash for the fair value of their shares of ConversionPoint common stock, as determined by the Delaware Court of Chancery, rather than the ConversionPoint merger consideration. Appraisal rights are only available to ConversionPoint stockholders who do not vote in favor of adopting the merger agreement and a vote in favor of adopting the merger agreement will constitute a waiver of the stockholders’ appraisal rights. To exercise appraisal rights, ConversionPoint stockholders must strictly follow the procedures prescribed by Section 262. These procedures are summarized under the section entitled “The Mergers—Appraisal Rights” beginning on page 169. In addition, the text of Section 262 is included as Annex G to this joint proxy statement/prospectus.

Q:     Are Inuvo stockholders entitled to appraisal rights?

A:     No. Under the NRS, appraisal rights shall not apply and holders of shares of Inuvo common stock will not have the right to obtain payment in cash for the fair value of their shares of Inuvo common stock.

Q:     If the mergers are completed, when can I expect to receive the New Parent common stock for my shares of ConversionPoint common stock?

A:     Each holder of record of one or more shares of ConversionPoint common stock whose shares will be converted into the right to receive the ConversionPoint merger consideration will automatically, upon the effective time of the ConversionPoint merger, be entitled to receive, and New Parent will cause the exchange agent to deliver to such holder as promptly as practicable after the effective time, the New Parent common stock to which such holder is entitled under the merger agreement. Because ConversionPoint has not issued any stock certificates, none of ConversionPoint’s stockholders will be required to deliver a certificate or an executed letter of transmittal to the exchange agent in order to receive the ConversionPoint merger consideration.

Q:     If the mergers are completed, when can I expect to receive the Inuvo merger consideration for my shares of Inuvo common stock?

A:     Certificated Shares: As soon as reasonably practicable after the effective time of the mergers, New Parent will cause an exchange agent to mail to each holder of certificated shares of Inuvo common stock a form of letter of transmittal and instructions for use in effecting the exchange of Inuvo common stock for the Inuvo merger consideration. After receiving the proper documentation from a holder of Inuvo common stock, the exchange agent will deliver to such holder the cash and New Parent common stock to which such holder is entitled under the merger agreement. More information on the documentation a holder of Inuvo common stock is required to deliver to the exchange agent may be found under the section entitled “The Merger Agreement and Related Agreements—Conversion of Shares; Exchange of Certificates; No Fractional Shares” beginning on page 175.

Book Entry Shares: Each holder of record of one or more book entry shares of Inuvo common stock whose shares will be converted into the right to receive the Inuvo merger consideration will automatically, upon the effective time of the mergers, be entitled to receive, and New Parent will cause the exchange agent to deliver to such holder as promptly as practicable after the effective time, the cash and New Parent common stock to which such holder is entitled under the merger agreement. Holders of book entry shares will not be required to deliver a certificate or an executed letter of transmittal to the exchange agent in order to receive the Inuvo merger consideration.

Q:     What happens if I sell my shares of ConversionPoint common stock or Inuvo common stock after the record date but before the applicable special meeting?

A:     The record dates for the ConversionPoint special meeting, which we refer to as the ConversionPoint record date and for the Inuvo special meeting, which we refer to as the Inuvo record date, are earlier than the date of the special meetings and the date that the mergers are expected to be completed. If you transfer your shares after the applicable record date, but before the applicable special meeting, unless you grant the transferee a proxy, you will retain your right to vote at such special meeting, but will have transferred the right to receive the ConversionPoint merger consideration or the Inuvo merger consideration, as applicable, in the mergers. In order to receive the ConversionPoint merger consideration or the Inuvo merger consideration, as applicable, you must hold your shares through completion of the mergers.

Q:     What happens if I sell my shares of ConversionPoint common stock or Inuvo common stock after the applicable special meeting, but before the applicable effective time of the mergers?

A:     If you transfer your shares after the applicable special meeting, but before the effective time of the mergers, you will have transferred the right to receive ConversionPoint merger consideration or Inuvo merger consideration, as applicable, in the mergers. In order to receive the ConversionPoint merger consideration or the Inuvo merger consideration, you must hold your shares of ConversionPoint or Inuvo, as applicable, through completion of the mergers (i.e., through the effective times of the mergers).

About the Special Meetings

Q:     When and where will the ConversionPoint and Inuvo special meetings be held?

A:     ConversionPoint: The ConversionPoint special meeting will be held at the principal executive offices of ConversionPoint, 840 Newport Center Drive, Suite 450, Newport Beach, California 92660, on [●], 2019 at [●] a.m., local time, unless the special meeting is adjourned or postponed.

Inuvo: The Inuvo special meeting will be held at 500 President Clinton Avenue, Suite 300, Little Rock, Arkansas 72201, on [●], 2019 at [●] local time, unless the special meeting is adjourned or postponed.

Q:     Who is entitled to vote at the ConversionPoint and Inuvo special meetings?

A:     ConversionPoint Special Meeting: ConversionPoint has fixed [●], 2019 as the ConversionPoint record date. If you were a ConversionPoint stockholder at the close of business on the ConversionPoint record date, you are entitled to vote on matters that come before the ConversionPoint special meeting. However, a ConversionPoint stockholder may only vote his or her shares if he or she is present in person or is represented by proxy at the ConversionPoint special meeting.

Inuvo Special Meeting: Inuvo has fixed [●], 2019 as the Inuvo record date. If you were an Inuvo stockholder at the close of business on the Inuvo record date, you are entitled to vote on matters that come before the Inuvo special meeting. However, an Inuvo stockholder may only vote his or her shares if he or she is present in person or is represented by proxy at the Inuvo special meeting.

Q:     How many votes do I have?

A:     ConversionPoint: ConversionPoint stockholders are entitled to one vote at the ConversionPoint special meeting for each share of ConversionPoint common stock held of record as of the ConversionPoint record date. As of the close of business on the ConversionPoint record date, there were [●] outstanding shares of ConversionPoint common stock.

Inuvo: Inuvo stockholders are entitled to one vote at the Inuvo special meeting for each share of Inuvo common stock held of record as of the Inuvo record date. As of the close of business on the Inuvo record date, there were [●] outstanding shares of Inuvo common stock.

Q:     What if I hold shares in both ConversionPoint and Inuvo?

A:     If you are a stockholder of both ConversionPoint and Inuvo, you will receive two separate packages of proxy materials. A vote as an Inuvo stockholder for the proposal to adopt and approve the merger agreement will not constitute a vote as a ConversionPoint stockholder for the proposal to adopt the merger agreement, or vice versa.

THEREFORE, PLEASE MARK, SIGN, DATE AND RETURN ALL PROXY CARDS THAT YOU RECEIVE, WHETHER FROM CONVERSIONPOINT OR INUVO, OR SUBMIT A PROXY AS BOTH A CONVERSIONPOINT AND INUVO STOCKHOLDER OVER THE INTERNET OR BY TELEPHONE.

Q:     My shares of Inuvo common stock are held in “street name” by my broker. Will my broker automatically vote my shares for me?

A:     No. If your shares of Inuvo common stock are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this joint proxy statement/prospectus has been forwarded to you by your brokerage firm, bank or other nominee, or its agent. As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote.”

We believe that (i) under the NRS, broker non-votes will be counted for purposes of determining the presence or absence of a quorum at the Inuvo special meeting and (ii) under the rules that govern brokers who have record ownership of shares that are held in street name for their clients, brokers do not have discretionary authority to vote on any of the Inuvo proposals. To the extent that there are any broker non-votes, a broker non-vote will have the same effect as a vote “AGAINST” the proposal to adopt and approve the merger agreement but will have no effect on the other proposals.

Q:     What do I need to do now?

A:     Read and consider the information contained in this joint proxy statement/prospectus carefully, and then please vote your shares as soon as possible so that your shares may be represented at your company’s special meeting.

Q:     How do I vote?

A:     You can vote in person by completing a ballot at the special meeting, or you can vote by proxy before the special meeting. Even if you plan to attend your company’s special meeting, we encourage you to vote your shares by proxy as soon as possible. After carefully reading and considering the information contained in this joint proxy statement/prospectus, please submit your proxy by telephone or over the Internet in accordance with the instructions set forth on the enclosed proxy card, or mark, sign and date the proxy card, and return it in the enclosed postage-paid envelope as soon as possible so that your shares may be voted at your company’s special meeting. For detailed information, see “Information About the ConversionPoint Special Meeting and Vote—Voting of Shares; Proxies” beginning on page 126 and “Information About the Inuvo Special Meeting and Vote—Voting of Shares; Proxies” beginning on page 133. YOUR VOTE IS VERY IMPORTANT.

Q:     Can I change my vote after I have submitted a proxy by telephone or over the Internet or submitted my completed proxy card?

A:     Yes. You can change your vote by revoking your proxy at any time before it is voted at the ConversionPoint or Inuvo special meeting, as applicable. You can do this in one of four ways: (1) submit a proxy again by telephone or over the Internet prior to midnight on the night before the special meeting; (2) sign another proxy card with a later date and return it prior to midnight on the night before the special meeting; (3) attend the applicable special meeting and complete a ballot; or (4) send a written notice of revocation to the secretary of ConversionPoint or Inuvo, as applicable, so that it is received prior to midnight on the night before the special meeting.

If you have instructed a broker to vote your shares, you must follow directions received from your broker to change your vote.

Q:     What should stockholders do if they receive more than one set of voting materials for a special meeting?

A:     You may receive more than one set of voting materials for a special meeting, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. Please complete, sign, date and return each proxy card and voting instruction card that you receive. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card.

Q:     Who should I call if I have questions about the proxy materials or voting procedures?

A:     If you have questions about the mergers, or if you need assistance in submitting your proxy or voting your shares or need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, you should contact the proxy solicitation agent for the company in which you hold shares.

If you are a ConversionPoint stockholder, you should contact Jeffrey Marks, General Counsel, by mail at 840 Newport Center Drive, Suite 450, Newport Beach, California 92660, or by email at jeff@conversionpoint.com.

If you are an Inuvo stockholder, you should contact Georgeson LLC, the proxy solicitation agent for Inuvo, by telephone at (800) 509-1312 (toll free) or by email at Inuvo@georgeson.com.

If your shares are held in a stock brokerage account or by a bank or other nominee, you should contact your broker, bank or other nominee for additional information.

Q:     Will any fractional shares be issued in connection with the mergers?

A:     No fractional shares of New Parent common stock will be issued. Holders of ConversionPoint common stock and Inuvo common stock to whom fractional shares would have otherwise been issued will be entitled to receive, subject to applicable withholding, a cash payment equal to the same fraction of the market value of a full share of New Parent common stock, computed on the basis of the mean of the high and low sales price of one share of New Parent common stock, as reported on NASDAQ on the first full day on which the New Parent common stock is traded on NASDAQ after the effective time of the mergers.

Q:     Are there any ConversionPoint or Inuvo stockholders already committed to vote in favor of the merger-related proposals? 

A:     Yes. ConversionPoint, New Parent, Inuvo, and the Merger Subs have entered into support agreements dated as of November 1 and 2, 2018 (as they may be amended from time to time), referred to collectively as the support agreements, with certain stockholders of ConversionPoint and Inuvo pursuant to which each such stockholder has agreed to vote the number of shares of ConversionPoint common stock or Inuvo common stock, as the case may be, beneficially owned by them as of the record date in favor of the adoption of the merger agreement and, with respect to the stockholders of Inuvo, against any alternative transaction with respect to Inuvo.

The following stockholders of ConversionPoint have entered into support agreements: (i) Andre Peschong, (ii) Jack Thomsen, (iii) Christopher Jahnke, (iv) Haig Newton, (v) Hybrid Theory Capital Ltd., (vi) Jeffrey Marks, (vii) Peter Nguyen, (viii) Raghu Kilambi and (ix) Stephen Blazick. The ConversionPoint stockholders that have entered into the support agreements collectively own approximately, 58% of the outstanding shares of ConversionPoint as of March 8, 2019.

The following stockholders of Inuvo entered into support agreements: (i) G. Kent Burnett, (ii) Don “Trey” Barrett III, (iii) Gordon J. Cameron, (iv) Richard K. Howe, (v) Charles D. Morgan, (vi) John B. Pisaris, (vii) Wallace D. Ruiz, and (viii) Patrick Terrell. The Inuvo stockholders that have entered into support agreements collectively own approximately, 14.9% of the outstanding shares of Inuvo common stock as of March 12, 2019.

For more information, please see copies of the forms of support agreements attached as Annex D and Annex E to this joint proxy statement/prospectus and the section titled “The Merger Agreement and Related Agreements—Support Agreements” beginning on page 192 of this joint proxy statement/prospectus.

RISK FACTORS

In addition to the other information included or incorporated by reference in this joint proxy statement/prospectus, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 62, you should carefully consider the following risks associated with the mergers, the businesses of ConversionPoint and Inuvo and New Parent if the mergers are completed before deciding how to vote. You should also read and consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference in this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 229. 

Risks Related to the Mergers

Because the market price of New Parent common stock is uncertain and will fluctuate, ConversionPoint stockholders cannot be sure of the market value of the New Parent common stock that they will receive in the mergers. 

Upon consummation of the mergers, each share of ConversionPoint common stock will be converted into the right to receive 0.97314 of a share of New Parent common stock (calculated as of March 8, 2019 and subject to downward adjustment based on the number of shares of ConversionPoint common stock outstanding at the closing of the mergers), and each share of Inuvo common stock will be converted into the right to receive 0.18877 of a share of New Parent common stock (subject to downward adjustment based on the number of shares of Inuvo common stock outstanding at the closing of the mergers) and $0.45 in cash. Since we will not know the value of the shares of New Parent common stock that will be issued in connection with the New Parent public offering until the closing of the mergers, we do not know the exact value of shares of New Parent common stock that ConversionPoint and Inuvo stockholders will receive in the mergers.

The market price of Inuvo common stock will continue to fluctuate until the completion of the mergers. For example, during the fourth quarter of 2018, the closing sales price of Inuvo common stock ranged from a low of $0.40 to a high of $1.36, as reported on the NYSE American. The merger agreement does not provide for any price-based termination right for either party. Accordingly, the market value of the shares of New Parent common stock that New Parent issues and ConversionPoint stockholders and Inuvo shareholders will be entitled to receive when the parties complete the mergers will depend on the market value of shares of New Parent common stock at the time that the parties complete the mergers and could vary significantly from the value of ConversionPoint common stock or the market price of Inuvo common stock on the date of this joint proxy statement/prospectus or the date of the ConversionPoint or Inuvo special meetings. 

The announcement and pendency of the mergers could have an adverse effect on the value of ConversionPoint’s stock and the market price of Inuvo’s common stock, as well as New Parent’s business, financial condition, results of operations or business prospects. 

While neither ConversionPoint nor Inuvo is aware of any significant adverse effects to date, the announcement and pendency of the mergers could disrupt ConversionPoint’s and/or Inuvo’s businesses in the following ways, among others:   

Should they occur, any of these matters could adversely affect the value of ConversionPoint’s shares, the market price of Inuvo’s common stock, or harm the financial condition, results of operations or business prospects of, ConversionPoint, Inuvo and New Parent.

The market price of New Parent common stock after the mergers may be affected by factors different from those currently affecting the value of ConversionPoint common stock or the market price of Inuvo common stock. 

Upon completion of the mergers, holders of ConversionPoint common stock and Inuvo common stock will become holders of New Parent common stock. The results of operations of New Parent and the market price of New Parent common stock after the completion of the mergers may be affected by factors different from those currently affecting the independent results of operations of ConversionPoint or Inuvo. For a discussion of the businesses of ConversionPoint and Inuvo and of certain factors to consider in connection with those businesses, see the risk factors included in this joint proxy statement/prospectus under the section entitled “Risk Factors—Risks Related to ConversionPoint’s Business” beginning on page 34, “Risk Factors—Risks Related to Inuvo’s Business” beginning on page 45, “Risk Factors—Risks Related to the Combined Company if the Mergers Are Completed,” the description of ConversionPoint’s business under the section entitled “Description of ConversionPoint” beginning on page 63, and the description of Inuvo’s business under the section entitled “Description of Inuvo” beginning on page 93.

ConversionPoint and Inuvo will be subject to business uncertainties and contractual restrictions while the mergers are pending.

Uncertainty about the effect of the mergers on employees and customers may have an adverse effect on ConversionPoint and/or Inuvo and consequently on the combined company. These uncertainties may impair ConversionPoint’s or Inuvo’s ability to retain and motivate key personnel and could cause customers and others that conduct business with ConversionPoint or Inuvo to defer entering into contracts with ConversionPoint or Inuvo or making other decisions concerning ConversionPoint or Inuvo, or seek to change existing business relationships with ConversionPoint or Inuvo. Certain of Inuvo’s customer contracts contain change of control restrictions that may give rise to a right of termination or cancellation in connection with the mergers. In addition, if key employees depart because of uncertainty about their future roles and the potential complexities of the mergers, Inuvo’s and ConversionPoint’s businesses could be harmed. In addition, the merger agreement restricts ConversionPoint and Inuvo from making certain acquisitions and taking other specified actions until the mergers occur without the consent of the other party. These restrictions may prevent ConversionPoint and Inuvo from pursuing attractive business opportunities that may arise prior to the completion of the mergers. See the section entitled “The Merger Agreement and the Related Agreements—Covenants and Agreements” beginning on page 180 for a description of the restrictive covenants applicable to ConversionPoint and Inuvo.

The merger agreement limits Inuvo’s ability to pursue alternatives to the mergers.

Inuvo has agreed that it will not solicit, initiate, knowingly encourage or take any other action designed to facilitate inquiries or the making of any proposals which may reasonably be expected to lead to any takeover proposal, engage in discussions or negotiations regarding takeover proposals, provide any confidential information or data in relation to a takeover proposal, approve or recommend (or propose publicly to do the same) any takeover proposal or any letter of intent, merger agreement or similar agreement related to any takeover proposal, subject to limited exceptions, including Inuvo’s right to take certain actions if it receives an unsolicited takeover proposal that constitutes a superior proposal or is reasonably expected to lead to a superior proposal, and the Inuvo board determines in good faith, after consultation with its outside legal counsel, that a failure to take action with respect to such takeover proposal would be inconsistent with its fiduciary duties. Inuvo has also agreed that the Inuvo board will not change its recommendation to its stockholders or approve any alternative agreement, subject to limited exceptions, including that, at any time prior to the applicable stockholder approval, the Inuvo board may make a change in recommendation in response to a superior proposal, if the Inuvo board concludes that a failure to change its recommendation would be inconsistent with the exercise of its fiduciary duties to its stockholders under applicable laws and, if requested by the other party, its representatives shall have negotiated in good faith with the other party for five business days regarding any revisions to the terms of the transactions contemplated by the merger agreement proposed by the other party in response to such superior proposal. The merger agreement also requires each party to call, give notice of and hold a meeting of its stockholders for the purposes of obtaining the applicable stockholder approval. This special meeting requirement does not apply to a party in the event that the merger agreement is terminated in accordance with its terms. See “The Merger Agreement and Related Agreements—Termination.” In addition, under specified circumstances, ConversionPoint or Inuvo may be required to pay a termination fee of $2,800,000 to the other party if certain termination rights are triggered. See the section entitled “The Merger Agreement and Related Agreements—Termination Fee and Expenses” beginning on page 192 for a description of the circumstances under which such termination fees are payable. These provisions might discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of Inuvo from considering or proposing an acquisition, or might result in a potential competing acquiror proposing to pay a lower price per share to acquire Inuvo than it might otherwise have been willing to pay.

Litigation related to the mergers is filed against Inuvo and the Inuvo board and/or ConversionPoint and the ConversionPoint board that could prevent or delay the completion of the mergers and/or result in the payment of damages following the completion of the mergers.

On December 19, 2018 and December 20, 2018, respectively, Peter D’Arcy and Morris Akerman, both of whom claim to be stockholders of Inuvo, filed separate putative class action lawsuits, captioned D’Arcy v. Inuvo, Inc. et al., No. 1:18-cv-02023-UNA, in the United States District Court for the District of Delaware; and Akerman v. Inuvo, Inc. et al., No. 2:18-cv-02407, in the United States District Court for the District of Nevada. The two lawsuits each named Inuvo and the members of Inuvo’s board of directors as defendants. The D’Arcy action also names ConversionPoint Technologies and various entities created to effect the merger as defendants. The complaints filed in the lawsuits assert claims under Section 14(a) and Section 20(a) of the Exchange Act challenging the adequacy of the disclosures relating to the merger transactions made in a joint consent solicitation statement/prospectus.

On December 21, 2018, Domenic Spagnolo, another purported stockholder of Inuvo, filed a substantially similar lawsuit, captioned Spagnolo v. Inuvo, Inc. et al., No. 1:18-cv-12099, in the United States District Court for the Southern District of New York. This lawsuit also challenges the adequacy of disclosure under the same sections of the Exchange Act against Inuvo and its directors.

Each of the foregoing lawsuits seek, among other relief, an injunction preventing the parties from consummating the merger transactions, damages in the event the merger transactions are consummated, and an award of attorneys’ fees.  Inuvo and ConversionPoint believe the claims asserted in the lawsuits are without merit.  Inuvo intends to vigorously contest the lawsuits. On February 4, 2019, Inuvo filed a motion to dismiss, or in the alternative stay, the Akerman and Spagnolo actions pending the resolution of the first-filed D’Arcy case.  Then, on March 4, 2019, Inuvo filed a second motion to dismiss the Spagnolo action based on a failure to state a claim under the law. In the Akerman action, no hearings have been scheduled.  In the Spagnolo action, the court issued an order giving Plaintiff Spagnolo an opportunity to amend his complaint in response to the second motion to dismiss, or alternatively, serve his opposition to the motion to dismiss by March 25, 2019.  If Plaintiff Spagnolo files an amended complaint, Inuvo will have three weeks to respond.  Further, Plaintiff Spagnolo filed a preliminary injunction, seeking to enjoin a shareholder vote on the merger.  Per court order, Inuvo responded to the preliminary injunction on March 1, 2019.  Plaintiff Spagnolo was ordered to reply by March 8, 2019.

On January 4, 2019 and January 8, 2019, respectively, two more purported stockholders of Inuvo, Adam Franchi and Les Thomas, commenced substantially similar putative class action lawsuits, captioned Franchi v. Inuvo, Inc. et al., No. A-19-787021-C and Thomas v. Inuvo, Inc. et al., No. T19-57, in the District Court of the State of Nevada in the County of Clark. These complaints also name Inuvo and the members of Inuvo’s board of directors as defendants. The Franchi action also names ConversionPoint Technologies and various entities created to effect the merger as defendants. Both complaints assert breach of fiduciary duties claims arising from the adequacy of the disclosures relating to the merger transactions made in a joint consent solicitation statement/prospectus, and both complaints seek an injunction preventing the parties from consummating the merger transactions, damages in the event the merger transactions are consummated, and an award of attorneys’ fees.

Inuvo and ConversionPoint believe the claims asserted in the Franchi and Thomas lawsuits are similarly without merit. Each of ConversionPoint and Inuvo intend to vigorously defend these lawsuits. On January 25, 2018, the Thomas plaintiff filed a preliminary injunction seeking to enjoin the merger. A hearing on the preliminary injunction is scheduled for March 18, 2019. The Franchi and Thomas complaints seek, among other relief, an injunction preventing the parties from consummating the merger transactions, damages in the event the merger transactions are consummated, and an award of attorneys’ fees. Inuvo and ConversionPoint believe the claims asserted in the lawsuits are without merit. On February 5 and 14, 2019, Inuvo filed motions to dismiss, or in the alternative to stay, the Franchi and Thomas actions, respectively, pending the resolution of the first-filed D’Arcy action. A hearing on the Franchi motion is yet to be scheduled. A hearing on the Thomas motion is scheduled for April 1, 2019.

Because certain directors and executive officers of ConversionPoint and Inuvo, as the case may be, are parties to agreements or are participants in other arrangements that give them interests that may be different from, or in addition to, your interests as a stockholder of ConversionPoint or Inuvo, these persons may have conflicts of interest in recommending that ConversionPoint and Inuvo stockholders vote to adopt the merger agreement and approve the mergers. 

The directors and executive officers of ConversionPoint and Inuvo, as the case may be, are parties to certain agreements or are participants in other arrangements that give them interests that may be different from, or in addition to, your interests as a stockholder of ConversionPoint or Inuvo. This difference of interests stems from employment agreements covering certain executive officers under which such officers are entitled to severance payments, change of control payments and other benefits related to their employment resulting from the mergers. In addition, New Parent has an obligation under the merger agreement to indemnify ConversionPoint’s and Inuvo’s directors and executive officers for acts or omission occurring prior to the effective time of the merger. The merger agreement also provides that New Parent will purchase “tail” officers’ and directors’ liability insurance policies. The interests of the directors and executive officers of ConversionPoint and Inuvo in the mergers that are different than those of the ConversionPoint and Inuvo stockholders are described under “The Mergers—Interests of Officers and Directors in the Mergers” beginning on page 165.   

The shares of New Parent common stock to be received by ConversionPoint and Inuvo stockholders as a result of the mergers will have different rights from shares of ConversionPoint common stock and Inuvo common stock.

Following completion of the mergers, ConversionPoint stockholders and Inuvo stockholders will no longer be stockholders of ConversionPoint and Inuvo, but will instead be stockholders of New Parent. There will be important differences between your current rights as a ConversionPoint stockholder or Inuvo stockholder and your rights as a New Parent stockholder. See “Comparison of Stockholder Rights” beginning on page 211 for a discussion of the different rights associated with ConversionPoint common stock, Inuvo common stock and New Parent common stock.

Both ConversionPoint stockholders and Inuvo stockholders will have a reduced ownership and voting interest after the mergers and will exercise less influence over management.

After the completion of the mergers, the ConversionPoint stockholders and Inuvo stockholders, as a group, will own a smaller percentage of New Parent than they currently own of ConversionPoint and Inuvo, respectively. Upon completion of the mergers, it is anticipated that ConversionPoint stockholders, on the one hand, and Inuvo stockholders, on the other hand, will hold approximately 70.76% and 29.24%, respectively, of the shares of common stock of New Parent issued and outstanding immediately after the consummation of the mergers (on a fully diluted basis, including dilution from stock options (including options to purchase up to 1,300,000 shares of New Parent common stock to be issued by New Parent to certain employees of Inuvo at the closing of the mergers),warrants and restricted stock units, based on the treasury method), and before the issuance of any equity or equity-based securities of New Parent to satisfy the financing condition contained in the merger agreement.

Failure to complete the mergers could negatively impact the value of ConversionPoint common stock, the market price of Inuvo common stock and/or the businesses and financial results of ConversionPoint and Inuvo.

If the mergers are not completed, the ongoing businesses of ConversionPoint and Inuvo may be adversely affected and ConversionPoint and Inuvo will be subject to several risks and consequences, including the following:

In addition, if the mergers are not completed, ConversionPoint and/or Inuvo may experience negative reactions from the financial markets and from their respective customers and employees. ConversionPoint and Inuvo also could be subject to litigation related to a failure to complete the mergers or to enforce their respective obligations under the merger agreement. If the mergers are not consummated, ConversionPoint and Inuvo cannot assure their respective stockholders that the risks described above, will not materially adversely affect the value of ConversionPoint common stock, the market price of Inuvo common stock and/or the business and financial results of ConversionPoint or Inuvo.

ConversionPoint, Inuvo and New Parent will incur significant transaction and merger-related transition costs in connection with the mergers.

ConversionPoint and Inuvo expect that they, and New Parent, will incur significant, non-recurring costs in connection with consummating the mergers and integrating the operations of the two companies. ConversionPoint and Inuvo may incur additional costs to maintain employee morale and to retain key employees. ConversionPoint and Inuvo will also incur significant fees and expenses relating to legal, accounting and other transaction fees and other costs associated with the mergers. Some of these costs are payable regardless of whether the mergers are completed. Moreover, under specified circumstances, ConversionPoint or Inuvo may be required to pay a termination fee of $2,800,000 if the mergers are not consummated. See “The Merger Agreement and Related Agreements—Termination Fee and Expenses” beginning on page 192.

The fairness opinion received by the Inuvo board from Canaccord does not reflect changes in circumstances subsequent to the date of the fairness opinion.

Canaccord delivered to the Inuvo board its fairness opinion dated November 1, 2018. The opinion does not speak as of the time the Inuvo merger will be completed or any date other than the date of such opinion. The opinion does not reflect changes that may occur or may have occurred after the date of the opinion, including changes to the merger agreement, changes to the operations and prospects of Inuvo or ConversionPoint, changes in general market and economic conditions or regulatory or other factors including. Any such changes may materially alter or affect the relative values of Inuvo and ConversionPoint.

New Parent has applied for listing of New Parent common stock issued in connection with the mergers on NASDAQ and intends to apply for listing of New Parent common stock on the TSX. There is no guarantee that New Parent common stock will be listed on either or both NASDAQ or the TSX.

New Parent has applied to have shares of New Parent common stock issued in connection with the mergers listed for trading on NASDAQ and intends to apply for listing of New Parent common stock on the TSX. On the date of this joint proxy statement/prospectus, New Parent believes that it will satisfy the listing requirements and expects that New Parent common stock it plans to issue in connection with the mergers will be listed on NASDAQ and the TSX. These listings, which are conditions to the closing of the mergers, however, are not guaranteed. Even if such listings are approved, there can be no assurance any broker will be interested in trading New Parent’s common stock issued in connection with the mergers. Therefore, it may be difficult to sell any shares of New Parent common stock you receive in connection with the mergers if you desire or need to sell them. No person will be obligated to make a market in New Parent common stock, and even after making a market, any such person can discontinue market making at any time without notice. New Parent cannot provide any assurance that an active and liquid trading market in New Parent common stock will develop or, if developed, that the market will continue.

Risks Related to ConversionPoint’s Business

ConversionPoint experienced a significant loss in 2018 as compared to 2017, a decline in revenues in 2018 from 2017 and may not achieve or sustain profitability in the future.

ConversionPoint reported a net loss of approximately $33.2 million in 2018 as compared to net income of approximately $400,000 in 2017 and its net revenues in 2018 declined approximately $10.2 million from approximately $50.0 million in 2017 to approximately $39.8 million in 2018. As of December 31, 2018, ConversionPoint had an accumulated deficit of approximately $34.4 million. ConversionPoint expects net losses to decrease during 2019, as it focuses on growing its higher margin managed services and SaaS revenues. These efforts may prove more expensive than ConversionPoint currently anticipates, and it may not succeed in increasing its revenue sufficiently, or at all, to achieve and sustain profitability. Growth of ConversionPoint’s revenue may slow or revenue may decline for a number of possible reasons, including a decrease in its ability to attract and retain customers, increasing competition, decreasing growth of its overall market, and an inability to timely and cost-effectively introduce new products and services that are favorably received by customers. If ConversionPoint is unable to meet these risks and challenges as it encounters them, its business and operating results may be adversely affected, and even if it were able to achieve profitability, ConversionPoint may not be able to sustain or increase such profitability.

ConversionPoint has substantial debt.

ConversionPoint and its subsidiaries are parties to a Loan and Security Agreement with Montage Capital II, L.P., and Partners for Capital Growth IV, L.P. As of March 1, 2019, $2,438,664, in principal and interest was outstanding under the loan and which is due and payable upon the earlier of the closing of New Parent initial public offering and May 31, 2020. In addition, as of March 1, 2019, (i) ConversionPoint had an outstanding convertible promissory note with $143,425 in principal and interest outstanding and an outstanding non-interest bearing promissory note in the amount of $225,000, both of which are due and payable on April 30, 2019, (ii) ConversionPoint had outstanding unsecured subordinated promissory notes issued to certain directors having an aggregate outstanding balance of principal and interest in the amount of $253,334 due and payable with 30 days after ConversionPoint repays the Montage Capital loan, (iii) SellPoints, a wholly-owned subsidiary of ConversionPoint, had outstanding unsecured subordinated promissory notes, under which an aggregate of $3,110,935 in principal and accrued interest is outstanding, which are due and payable on May 31, 2019, however, the notes are subject to automatic 90-day extensions; and (iv) SellPoints had $68,491, outstanding under a revenue royalty agreement. A default under any loan agreement note or the revenue royalty agreement could result in a charging order, or in the case of its secured lenders, a foreclosure on all of ConversionPoint’s assets, which, in either case, would have a material adverse effect on its business, results of operations or financial condition.

 ConversionPoint’s management has concluded that factors raise substantial doubt about its ability to continue as a going concern and its independent registered public accounting firm has included an explanatory paragraph relating to ConversionPoint’s ability to continue as a going concern in its report on ConversionPoint’s audited consolidated financial statements included in this proxy statement/prospectus.

The report of ConversionPoint’s independent registered public accounting firm for the year ended December 31, 2018 included herein contains an explanatory paragraph indicating that there is substantial doubt as to ConversionPoint’s ability to continue as a going concern as a result of the significant loss from operations in 2018, negative operating cash flows and a significant accumulated deficit. This report is dated March 15, 2019 and does not take into account any proceeds New Parent will receive in the proposed public offering of New Parent common stock. ConversionPoint’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States, which contemplate that ConversionPoint will continue to operate as a going concern. ConversionPoint’s financial statements do not contain any adjustments that might result if it were unable to continue as a going concern. ConversionPoint’s ability to continue as a going concern will be determined by its and New Parent’s ability to complete the proposed public offering. If ConversionPoint is unable to obtain adequate funding from the proposed public offering of New Parent common stock or in the future, or if ConversionPoint is unable to grow its revenue to achieve and sustain profitability, ConversionPoint may not be able to continue as a going concern.

If an event of default is declared under ConversionPoint’s secured loan agreement, ConversionPoint could lose possession of its assets, which would have a material adverse effect on its business.

ConversionPoint’s loan with Montage and Partners for Growth, is secured by all of ConversionPoint’s assets. The loan includes certain debt covenants which require ConversionPoint to maintain a minimum cash reserve and minimum EBITDA. As of September 31, 2018, ConversionPoint had certain technical defaults and an anticipated financial covenant default under the loan agreement, and on November 1, 2018, entered into an amendment pursuant to which the lenders agreed to forbear from exercising remedies arising out of the existing defaults and the anticipated default until the earlier to occur of (i) ConversionPoint’s timely compliance with certain non-financial covenants under the loan agreement, upon which time the existing defaults and anticipated default shall automatically be waived, (ii) the occurrence of another event of default, or (iii) February 15, 2019. The lenders also agreed to decrease certain minimum cash covenants and eliminate certain revenue and EBITDA covenants until February 15, 2019. As of February 15, 2019, ConversionPoint remained in breach of the financial covenants under the loan agreement, however, on March 13, 2019, the lenders agreed to forbear from exercising remedies arising from such defaults, and that such forbearance shall be converted into a waiver of such defaults, provided that ConversionPoint raises a minimum of $5,000,000 on or before May 31, 2019. If $5,000,000 is not raised by May 31, 2019, through New Parent’s initial public offering, or otherwise by ConversionPoint, then on June 1, 2019, and on the first day of each month thereafter, until such time as such financing milestone is satisfied, ConversionPoint shall be required to pay the lenders a cash fee, equal to 5% of the aggregate advances outstanding under the loan agreement as of such date. If ConversionPoint defaults on the loan, or is unable to repay the debt upon any default, the lenders could take control of ConversionPoint’s bank accounts, and/or seek to foreclose on ConversionPoint’s assets in an effort to seek repayment under the loan. If successful, ConversionPoint would be unable to conduct its business as it is presently conducted and its ability to generate revenues and fund its ongoing operations would be materially adversely affected.

ConversionPoint operates in a rapidly developing and changing industry, which makes it difficult to evaluate its current business and future prospects.

ConversionPoint has encountered and will continue to encounter risks and difficulties frequently experienced by companies in rapidly developing and changing industries, including challenges in hiring and retaining qualified employees, determining appropriate investments of its limited resources, market acceptance of its existing and future solutions, effectively integrating acquired software platforms, competition from established companies with greater financial and technical resources, acquiring and retaining customers, making improvements to its existing solutions and developing new solutions. ConversionPoint’s current operations infrastructure may require changes for ConversionPoint to achieve profitability and scale its operations efficiently. If ConversionPoint fails to implement these changes in a timely manner or is unable to implement them due to factors beyond its control, its business may suffer, its revenue may decline, and it may not be able to achieve further growth or profitability. It cannot be assured that ConversionPoint will be successful in addressing these and other challenges it may face in the future.   

If the market for ConversionPoint’s solutions slows or declines, its business, growth prospects, and financial condition would be adversely affected.

The future growth of digital marketing and e-commerce could be constrained by the level of acceptance and expansion of digital marketing and e-commerce SaaS solutions and managed services.  Even if these services become widely adopted, brands, product companies, advertisers and agencies may not make significant investments in such solutions.  It is difficult to predict customer adoption rates, customer demand for ConversionPoint’s technologies, the future growth rate and size of the digital marketing solutions or the entry of competitive solutions. The continued expansion of the market for digital marketing solutions depends on a number of factors, including the continued growth of e-commerce, the online advertising market, and social and mobile advertising, and the cost, performance and perceived value associated with online marketing solutions, as well as ConversionPoint’s ability to address security and privacy concerns and comply with applicable legal requirements which are continually evolving.

ConversionPoint expects to derive, in the future, a substantial portion of its revenue from the sale of its solutions delivered under a SaaS model. As a result, widespread use and acceptance of this business model is critical to its future growth and success. Under the more traditional license model for software procurement, users of software typically run the applications in-house on their own hardware. Because many companies are generally predisposed to maintaining control of their information technology systems and infrastructure, there may be resistance to the concept of accessing software functionality as a service provided by a third party. In addition, the market for SaaS solutions is still evolving, and existing and new market participants may introduce new types of solutions and different approaches to enable organizations to address their needs. If the market for SaaS solutions fails to grow or grows slower than ConversionPoint currently anticipates, demand for its solutions and its revenue, gross margin and other operating results could be negatively impacted.

ConversionPoint’s growth depends in part on the success of its strategic relationships with third parties.

ConversionPoint anticipates that it will continue to depend on its relationships with various third parties, including online retailers, ad networks, affiliate marketing companies, fulfillment companies, credit card processors, and technology and content providers, in order to grow its business. Identifying, negotiating and documenting relationships with these third parties may require significant time and resources as does integrating their content and technology with ConversionPoint’s solutions. If the third-party content or technology integrated with ConversionPoint’s solutions is not well received by its customers, ConversionPoint’s brand and reputation could be negatively affected. ConversionPoint’s agreements with third-party business partners such as Walmart and Costco, are typically non-exclusive and do not prohibit them from working with ConversionPoint’s competitors or from offering competing services. If and to the extent that any of these third parties compete with ConversionPoint or cease to do business with ConversionPoint, it could hurt ConversionPoint’s growth prospects.   

If ConversionPoint does not retain its senior management team and key employees, or if it fails to attract and retain additional highly skilled sales talent, ConversionPoint may not be able to sustain its growth or achieve its business objectives.

ConversionPoint’s future success is substantially dependent on the continued service of its senior management team including, among others, Robert Tallack, President and Chief Executive Officer and Raghu Kilambi, Vice Chair and Chief Financial Officer. ConversionPoint’s future success also depends on its ability to continue to attract, retain, integrate and motivate highly skilled technical, sales and administrative employees. Competition for these employees in ConversionPoint’s industry is intense. As a result, ConversionPoint may be unable to attract or retain management executives and other key personnel that are critical to ConversionPoint’s success, resulting in harm to ConversionPoint’s key client relationships, loss of key information, expertise or know-how and unanticipated recruitment and training costs. The loss of the services of ConversionPoint’s senior management or other key employees could make it more difficult to successfully operate ConversionPoint’s business and pursue its business goals.

ConversionPoint may not realize all of the anticipated benefits of its acquisitions, or these benefits may take longer to realize than expected.

ConversionPoint completed its acquisitions of Branded Response and Push Holdings in April 2017, and of SellPoints in December 2017. Even if ConversionPoint is successful in integrating these acquisitions and their related technologies into ConversionPoint’s existing operations, and into an end-to-end e-commerce platform, ConversionPoint may not derive the benefits, such as administrative or operational synergy or anticipated earnings increases, that were expected from such acquisitions, which may result in the commitment of capital resources without the expected returns on the capital.

ConversionPoint stores personally identifiable information of its customers and consumers which is subject to vast regulation.

ConversionPoint stores personally identifiable information such as credit card information, addresses, phone numbers and other confidential information of its customers and consumers who purchase products and services from it to enable payment for such products and services and for shipping such products. ConversionPoint also captures and stores non-personally identifiable information from consumers and customers such as IP addresses, online behavioral information and geographic information through ConversionPoint’s web analytics tracking solutions, that enable ConversionPoint to display digital advertisements to targeted population segments, as well as collect, manage and store data regarding the measurement and valuation of their digital advertising and marketing campaigns. As such, ConversionPoint is subject to federal, state, provincial and foreign laws regarding privacy and protection of data. Some jurisdictions have enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data and ConversionPoint’s agreements with certain merchants require ConversionPoint to notify them in the event of a security incident. Evolving regulations regarding personal data and personal information, in the European Union and elsewhere, including, but not limited to, the General Data Protection Regulation, which we refer to as GDPR, and the California Consumer Privacy Act of 2018, especially relating to classification of IP addresses, machine identification, location data and other information, may limit or inhibit ConversionPoint’s ability to operate or expand its business. Such laws and regulations require or may require ConversionPoint or its customers to implement privacy and security policies, permit consumers to access, correct or delete personal information stored or maintained by ConversionPoint or its customers, inform individuals of security incidents that affect their personal information, and, in some cases, obtain consent to use personal information for specified purposes. Other proposed legislation could, if enacted, impose additional requirements and prohibit the use of specific technologies, such as those that track individuals’ activities on web pages or record when individuals click on a link contained in an email message. Such laws and regulations could restrict ConversionPoint’s ability and its customers’ ability to collect and use web browsing data and personal information, which may reduce ConversionPoint’s customers’ demand for its solutions.

Changing industry standards and industry self-regulation regarding the collection, use and disclosure of data may have similar effects. Existing and future privacy and data protection laws and increasing sensitivity of consumers to unauthorized disclosures and use of personal information may also negatively affect the public’s perception of ConversionPoint’s sales and marketing practices. If ConversionPoint’s solutions are perceived to cause, or are otherwise unfavorably associated with, invasions of privacy, whether or not illegal, ConversionPoint or its customers may be subject to public criticism.

Any failure on ConversionPoint’s part to comply with applicable privacy and data protection laws, regulations, policies and standards or any inability to adequately address privacy concerns associated with ConversionPoint’s solutions, even if unfounded, could subject ConversionPoint to liability, damage ConversionPoint’s reputation, impair its sales and harm its business. Furthermore, the costs of compliance with, and other burdens imposed by, such laws, regulations, policies and standards may result in a decrease in ConversionPoint’s profitability and/or limit adoption of and demand for its solutions.

Domestic and foreign government regulation and enforcement of data tracking technologies is expansive, not clearly defined and rapidly evolving. Such regulation could directly restrict portions of ConversionPoint’s business or indirectly affect its business by constraining its customers’ use of ConversionPoint’s platform.

ConversionPoint’s services, through the use of cookies and tracking pixel technologies, enable ConversionPoint and its customers to track consumer online behavior and display digital advertisements to targeted population segments at opportune times. Federal, state, municipal and/or foreign governments and agencies have adopted and could in the future adopt, modify, apply or enforce laws, policies, and regulations covering technologies such as cookies and tracking pixels, that are used to collect, store and/or process data. The uncertainty and inconsistency among these laws, coupled with a lack of guidance as to how these laws will be applied to current and emerging Internet and mobile technologies, creates a risk that regulators, lawmakers or other third parties, may assert claims, pursue investigations or audits, or engage in civil or criminal enforcement. These actions could limit the market for ConversionPoint’s services or impose burdensome requirements on its services and/or customers’ use of its services, thereby rendering ConversionPoint’s business unprofitable.

This area of the law is currently under intense government scrutiny and many governments, including the U.S. government, are considering a variety of proposed regulations that would restrict or impact the conditions under which data obtained from or through the activities of visitors could be collected, processed or stored. ConversionPoint may have to develop alternative systems to collect, store and manage user data if users block cookies, tracking pixels or regulations introduce barriers to collecting cookie data or using tracking pixels. In addition, third parties may develop technology or policies to track consumer online behavior, including through next-generation web browsers or other means, which could subsequently prevent ConversionPoint from directly importing data to ConversionPoint’s systems. ConversionPoint may not be able to develop adequate alternatives to cookie data and pixel data collection, which could negatively impact ConversionPoint’s revenue and operating results.

Cybersecurity incidents could harm ConversionPoint’s business and negatively impact its financial results.

ConversionPoint stores personally identifiable information, credit card information and other confidential information of its customers and consumers. ConversionPoint may experience successful attempts by third parties to obtain unauthorized access to such personally identifiable information. This information could also be otherwise exposed through human error or malfeasance. The unauthorized access or compromise of this personally identifiable information could have an adverse effect on ConversionPoint’s business, financial condition and results of operations. 

Cybersecurity incidents could endanger the confidentiality, integrity and availability of ConversionPoint’s information resources and the information it collects, uses, stores and discloses. These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to ConversionPoint’s information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption. ConversionPoint believes that it takes reasonable steps to protect the security, integrity and confidentiality of the information ConversionPoint collects, uses, stores, and discloses, and is continuously taking steps to strengthen its security protocols and infrastructure, but there is no guarantee that inadvertent or unauthorized data access will not occur despite its efforts. For example, ConversionPoint could be negatively impacted by software bugs or other technical malfunctions, as well as employee error or malfeasance. Any unauthorized access or use of information, virus or similar breach or disruption to ConversionPoint’s, its customers’, or its partners’ systems could result in disrupted operations, loss of information, damage to ConversionPoint’s reputation and customer relationships, early termination of ConversionPoint’s contracts and other business losses, indemnification of its customers, liability for stolen assets or information, increased cybersecurity protection and insurance costs, financial penalties, litigation, regulatory investigations, and other significant liabilities, any of which could materially harm ConversionPoint’s business. 

If ConversionPoint cannot efficiently implement its solutions for customers, ConversionPoint may lose customers.

ConversionPoint’s customers have a variety of different data formats, enterprise applications and infrastructure and ConversionPoint’s platform must support its customers’ data formats and integrate with complex enterprise applications and infrastructures. If ConversionPoint’s platform does not support a customer’s required data format or appropriately integrate with a customer’s applications and infrastructure, then ConversionPoint may choose to configure its platform to do so, which would increase ConversionPoint’s expenses. Additionally, ConversionPoint does not control its customers’ implementation schedules. As a result, as ConversionPoint has experienced in the past, if ConversionPoint’s customers do not allocate internal resources necessary to meet their implementation responsibilities or if ConversionPoint faces unanticipated implementation difficulties, the implementation may be delayed. If the customer implementation process is not executed successfully or if execution is delayed, ConversionPoint could incur significant costs, customers could become dissatisfied and decide not to increase usage of ConversionPoint’s platform, not to use ConversionPoint’s platform beyond an initial period prior to their term commitment and revenue recognition could be delayed. In addition, competitors with more efficient operating models that have lower implementation costs, could penetrate ConversionPoint’s customer relationships.

Additionally, large customers may request or require specific features or functions unique to their particular business processes, which increase ConversionPoint’s upfront investment in sales and deployment efforts and the revenues resulting from the customers under ConversionPoint’s typical contract term may not cover ConversionPoint’s upfront investments. If prospective large customers require specific features or functions that ConversionPoint does not offer, then the market for ConversionPoint’s solutions will be more limited and ConversionPoint’s business could suffer. If ConversionPoint is unable to address the needs of these customers in a timely fashion or further develop and enhance ConversionPoint’s solutions, these customers may not renew their subscriptions, seek to terminate their relationship with ConversionPoint, renew on less favorable terms, or reduce their marketing spend on ConversionPoint’s platform. If any of these were to occur, ConversionPoint’s revenues may decline and its operating results could be adversely affected.

If ConversionPoint fails to manage and increase the capacity of its hosted infrastructure, ConversionPoint’s customers may be unable to use ConversionPoint’s platform, which could harm ConversionPoint’s reputation and demand for its solutions.

ConversionPoint has experienced significant growth in the number of users, transactions and data that ConversionPoint’s hosting infrastructure supports. ConversionPoint seeks to maintain sufficient excess capacity in its third party hosted infrastructure to be sufficiently flexible and scalable to meet the needs of all of its customers. However, the provision of new hosting infrastructure requires significant lead time. If ConversionPoint does not accurately predict its infrastructure capacity requirements, its customers could experience service outages that may subject ConversionPoint to financial penalties or other liabilities, result in customer losses, harm ConversionPoint’s reputation and adversely affect its ability to grow its revenue.

Mobile and other devices are increasingly being used to conduct e-commerce, and if ConversionPoint’s solutions do not operate as effectively, when accessed through these devices, or in different formats and resolutions, ConversionPoint’s customers may not be satisfied with ConversionPoint’s services, which could harm ConversionPoint’s business. 

Effective functionality on mobile and other devices, and across multiple platforms and using different resolutions, is integral to ConversionPoint’s long-term development and growth strategy. In the event that ConversionPoint’s customers have difficulty accessing and using ConversionPoint’s platform on mobile and other devices, ConversionPoint’s business and operating results could be adversely affected.  In addition, ConversionPoint is taking steps to comply with the Twenty-First Century Communications and Video Accessibility Act and similar accessibilities laws that require making the internet fully accessible to people with disabilities.

ConversionPoint must develop and introduce enhancements and new features that achieve market acceptance or that keep pace with technological developments to remain competitive in the evolving online marketing industry.

ConversionPoint operates in a dynamic market characterized by rapidly changing technologies and industry and legal standards. The introduction of new digital marketing solutions by ConversionPoint’s competitors, the market acceptance of solutions based on new or alternative technologies, or the emergence of new industry standards could render ConversionPoint’s platforms obsolete. ConversionPoint’s ability to compete successfully, attract new customers and increase revenues from existing customers depends in large part on its ability to enhance and improve its existing digital marketing solutions and to continually introduce or acquire new features that are in demand by the markets ConversionPoint serves. ConversionPoint is in the process of a significant upgrade to its software platform infrastructure, and the success of this project or any other enhancement or new solution depends on several factors, including, timely completion, adequate quality testing, and appropriate introduction and market acceptance. Any new platform or feature that ConversionPoint develops or acquires may not be introduced in a timely manner, may contain defects, may be costlier to complete than ConversionPoint anticipates or may not achieve the broad market acceptance necessary to generate significant revenues. If ConversionPoint is unable to complete the upgrade to its software platform infrastructure and integrate its various service offerings effectively or in a timely manner, or to anticipate or timely and successfully develop or acquire new offerings or features or enhance ConversionPoint’s existing platform to meet customer requirements, ConversionPoint’s business and operating results will be adversely affected.

ConversionPoint’s business and prospects would be harmed if changes to technologies used in its platform or new versions or upgrades of operating systems and internet browsers adversely impact the process by which merchants, brands and consumers interface with ConversionPoint’s platform.

In the future, providers of internet browsers could introduce new features that would make it difficult for ConversionPoint to provide certain of its services such as retargeter, or for ConversionPoint’s customers to use ConversionPoint’s platform. In addition, internet browsers for desktop or mobile devices could introduce new features, change existing browser specifications such that they would be incompatible with ConversionPoint’s platform, or prevent customers from accessing ConversionPoint’s platform. In addition, the growing use of ad blockers in internet browsers could impact ConversionPoint’s ability to serve ads. Any changes to technologies used in ConversionPoint’s platform, to existing features that ConversionPoint relies on, or to operating systems or internet browsers that make it difficult for customers to access or use ConversionPoint’s platform, may make it more difficult for ConversionPoint to maintain or increase its revenues and could adversely impact its business and prospects.

ConversionPoint derives a portion of its revenue from monthly subscription agreements, and intends to increase the proportion of its revenue which is generated through monthly subscription agreements.

ConversionPoint derives a portion of its revenue from subscription agreements and intends to increase the portion of its revenue which is generated through subscription agreements. Subscription agreements are typically month-to-month or one year in length, and often terminable on 30 days’ notice. As a result, a portion of the revenue ConversionPoint reports in each quarter is generated from customer agreements entered into during previous periods. Consequently, a decline in new or renewed subscriptions in any one quarter may not be reflected in ConversionPoint’s financial performance in that quarter but might negatively affect ConversionPoint’s revenue in future quarters. Accordingly, the effect of significant declines in sales and market acceptance of ConversionPoint’s solutions may not be reflected in ConversionPoint’s short-term results of operations.

ConversionPoint derives some of its revenue from usage-based pricing models, which makes it difficult to forecast revenues from its current customers and future prospects.

Some of ConversionPoint’s services are offered on a usage-based pricing model in which ConversionPoint’s fees are calculated based on the customer’s use of aspects of ConversionPoint’s services. This pricing model makes it difficult to accurately forecast revenues because ConversionPoint’s customers’ activities on ConversionPoint’s platform may vary from month to month based on the variety of industries in which ConversionPoint’s advertisers operate, the seasonality of those industries and fluctuations in ConversionPoint’s customers’ marketing budgets or other factors. If ConversionPoint incorrectly forecasts revenues for these customers and the amount of revenue is less than projections ConversionPoint provides to investors, the price of ConversionPoint’s common stock could decline substantially. Additionally, if ConversionPoint overestimates usage, ConversionPoint may incur additional expenses in adding infrastructure, without a commensurate increase in revenues, which would harm ConversionPoint’s gross margins and other operating results.

If ConversionPoint fails to maintain a consistently high level of customer service, its brand, business and financial results may be harmed. 

ConversionPoint believes its focus on customer service and support is critical to onboarding new customers, retaining existing customers and growing ConversionPoint’s business. If ConversionPoint is unable to maintain a consistently high level of customer service and technical support, ConversionPoint may lose existing customers. In addition, ConversionPoint’s ability to attract new customers is highly dependent on ConversionPoint’s reputation and on positive recommendations from its existing customers. Any failure to maintain a consistently high level of customer service, or a market perception that ConversionPoint does not maintain high-quality customer service, could adversely affect its reputation and the number of positive customer referrals that ConversionPoint receives.

ConversionPoint obtains certain products it sells from third parties.

ConversionPoint derives a portion of its revenue from direct online product sales, and sources certain products it sells from third-parties and relies on them to meet its sales needs. ConversionPoint plans to continue to rely upon such third parties to supply products it sells. If these suppliers fail to maintain high manufacturing standards and processes, it could harm ConversionPoint’s business. In the event of a natural disaster or business failure, including due to bankruptcy of a supplier, ConversionPoint may not be able to secure replacement products on a timely or cost-effective basis, which could result in delays, additional costs and reduced revenues. In addition, price increases from a supplier would directly affect ConversionPoint’s profitability if it is not able to pass price increases on to customers.

 As a direct-to-consumer marketer, ConversionPoint is subject to vast regulation. If ConversionPoint is required to pay damages or expenses in connection with legal claims, ConversionPoint’s business, financial condition and results of operations may be harmed.

Historically, a substantial portion of ConversionPoint’s revenue has been derived from negative option marketing, in which consumers sign up to receive a free trial product and to be billed monthly for continued delivery of such product until such consumer affirmatively cancels his or her subscription. Such products typically include monthly subscriptions for health and wellness e-books, and health and beauty products such as facial creams and nutritional supplements. During 2017 and 2018, ConversionPoint generated net revenues of $35,912,210, and $12,266,634, respectively, through such trial offer sales, which represented, 71.9% and 30.8%, respectively, of ConversionPoint’s net revenues. Although ConversionPoint continues, and contemplates continuing, to engage in e-commerce product sales through negative option marketing, since the second quarter of 2018, ConversionPoint has shifted its focus from e-commerce product sales to growing its managed services and SaaS businesses. As a direct-to-consumer marketer, ConversionPoint is subject to various federal, state and foreign laws and regulations such as the Restore Online Shoppers Confidence Act, which we refer to as ROSCA, and the Dot Com Disclosure Guidance published by the United States Federal Trade Commission, which requires certain disclosures to prevent unfair, deceptive or misleading online advertisements. ConversionPoint’s failure to comply with these regulations could, among other things, result in consumer lawsuits, federal investigations, or State Attorney General actions or inquiries. Such claims or inquiries, regardless of their merit, could divert management time and attention away from ConversionPoint’s business, result in significant costs to investigate and defend, harm ConversionPoint’s reputation and result in the cessation of certain portions of ConversionPoint’s business. If ConversionPoint or its subsidiaries become subject to these or similar types of claims or investigations, and are not successful in their defense, ConversionPoint or its subsidiaries may be forced to pay damages, some of which may be substantial, or to cease parts of their business.

ConversionPoint could be required to collect additional sales taxes or be subject to other tax liabilities that may increase the costs its clients would have to pay for its offering and adversely affect its operating results.

In general, in connection with e-commerce product sales, ConversionPoint has not historically collected state or local sales, use or other similar taxes in any jurisdictions in which ConversionPoint does not have a tax nexus, in reliance on court decisions or applicable exemptions that restrict or preclude the imposition of obligations to collect such taxes with respect to online sales of products. In addition, ConversionPoint has not historically collected state or local sales, use or other similar taxes in certain jurisdictions in which ConversionPoint does have a physical presence, in reliance on applicable exemptions. On June 21, 2018, the U.S. Supreme Court decided, in South Dakota v. Wayfair, Inc., that state and local jurisdictions may, at least in certain circumstances, enforce a sales and use tax collection obligation on remote vendors that have no physical presence in such jurisdiction. A number of states have already begun, or have positioned themselves to begin, requiring sales and use tax collection by remote vendors and/or by online marketplaces. The details and effective dates of these collection requirements vary from state to state. It is possible that one or more jurisdictions may assert that ConversionPoint has liability for periods for which ConversionPoint has not collected sales, use or other similar taxes, and if such an assertion or assertions were successful it could result in substantial tax liabilities, including for past sales taxes and penalties and interest, which could materially adversely affect ConversionPoint’s business, financial condition and operating results.

ConversionPoint or its subsidiaries may be exposed to material product liability claims, which could increase their costs and adversely affect ConversionPoint’s reputation and business.

As a marketer and distributor of products designed for human consumption or use, ConversionPoint or its subsidiaries could be subject to product liability claims if the use of products they market or distribute, is alleged to have resulted in injury or undesired results. Products marketed include vitamins that are classified as dietary supplements and skin care products, and in most cases are not subject to pre-market regulatory approval in the United States. Previously unknown adverse reactions resulting from human consumption of these ingredients could occur.

ConversionPoint has not had any product liability claims filed against it or its subsidiaries, but in the future ConversionPoint or its subsidiaries may be subject to various product liability claims, including, due to product tampering by unauthorized third parties, product contamination, and claims that products had inadequate instructions for use, or inadequate warnings concerning possible side effects and interactions with other substances. The cost of defense can be substantially higher than the cost of settlement even when claims are without merit. The high cost to defend or settle product liability claims could have a material adverse effect on ConversionPoint’s business and operating results and ConversionPoint’s insurance, if any, may not be adequate.

ConversionPoint’s business is exposed to a multitude of risks based on its acceptance of credit cards and reliance on third party credit card processors.

ConversionPoint’s customers typically pay for their orders with debit cards or credit cards, and ConversionPoint depends on third party credit card processing in connection with online product sales. There are many risks related to ConversionPoint’s acceptance of credit cards, the collection and storage of credit card data, and ConversionPoint’s dependence on third party credit card processors to process payments.

ConversionPoint’s failure to limit fraudulent transactions conducted on its websites or through its platform, such as through use of stolen credit card numbers, could subject ConversionPoint to liability and adversely impact its reputation. Under credit card association rules, penalties may be imposed at the discretion of the association for inadequate fraud protection. Any such potential penalties would be imposed on ConversionPoint’s credit card processor by the association. Under ConversionPoint’s contracts with ConversionPoint’s payment processors, ConversionPoint is required to reimburse them for such penalties. ConversionPoint faces the risk that it may fail to maintain an adequate level of fraud protection and that one or more credit card associations or other processors may, at any time, assess penalties against ConversionPoint or terminate ConversionPoint’s ability to accept credit card payments or other form of online payments from customers, which would have a material adverse effect on ConversionPoint’s business, financial condition and operating results. Although ConversionPoint does not believe there has been a compromise of customer information, it is possible that either ConversionPoint or its subsidiaries may not be in full compliance with these standards. Accordingly, ConversionPoint could be fined, which could impact its financial condition, or certain of ConversionPoint’s products could be suspended, which would cause ConversionPoint to be unable to process payments using credit cards. If ConversionPoint is unable to accept credit card payments, ConversionPoint’s business, financial condition and operating results may be adversely affected.

In addition, most of ConversionPoint’s e-commerce product sale transactions are deemed high risk, and there often exists a shortage of merchant processors able or willing to process such online transactions. Relevant factors typically used in determining whether a credit card transaction is high risk, include, the nature of the industry (health and wellness products are considered high risk), high monthly sales volumes or individual transactions, the acceptance of recurring payments, the sale of subscription-based products and card not present (CNP) transactions (i.e., transactions made where the cardholder does not physically present the credit card for a merchant’s visual examination, which is the case in all online credit card transactions). Almost all of ConversionPoint’s product sales, which constituted 83.4% and 51.0% of ConversionPoint’s net revenues in 2017 and 2018, respectively, are deemed “high” risk because they either involve health and wellness products, a high number of individual monthly transactions, recurring payments, and/or CNP transactions.

In the past, ConversionPoint has had to decrease the volume of sales as a result of the shortage of available merchant processing. The future shortage of merchant processing available to process payments for ConversionPoint’s e-commerce product sales and the sales of ConversionPoint’s customers’ products, could result a decrease in the volume of products ConversionPoint or its managed service customers are able to sell and could have a material adverse effect on ConversionPoint’s revenue. Further, such credit card processors require ConversionPoint to maintain significant reserves (often up to 10% of the sale) to cover refunds, chargebacks and fraud, which results in delays of up to 6 months in receiving such revenue. If ConversionPoint’s refunds or chargebacks increase, ConversionPoint’s processors could require ConversionPoint to increase such reserves, increase fees or terminate their contracts with ConversionPoint, which would have an adverse effect on ConversionPoint’s financial condition.

In addition, ConversionPoint could be liable if there is a breach of security with respect to the payment information it stores. Online commerce and communications depend on the secure transmission of confidential information over public networks. ConversionPoint relies on encryption and authentication technology to authenticate and secure the transmission of confidential information, including customer credit card numbers. However, ConversionPoint cannot ensure this technology will prevent breaches of the systems it uses to protect customer payment data.

In the future, ConversionPoint may explore accepting various forms of payment that may have higher fees and costs than ConversionPoint’s current payment methods. If ConversionPoint’s customers utilize alternative payment methods, ConversionPoint’s payment costs could increase and ConversionPoint’s operating results could be adversely impacted.

ConversionPoint operates in an industry with extensive intellectual property litigation. Claims of infringement against ConversionPoint may harm ConversionPoint’s business.

ConversionPoint’s success depends, in part, upon its non-infringement of intellectual property rights owned by others and being able to resolve claims of intellectual property infringement without major financial expenditures or adverse consequences. The internet-related software field generally is characterized by extensive intellectual property litigation. Although ConversionPoint’s industry is rapidly evolving, many companies that own, or claim to own, intellectual property have aggressively asserted their rights. From time to time, ConversionPoint may be subject to legal proceedings and claims relating to the intellectual property rights of others, including, but not limited to, patents and trademarks, and ConversionPoint expects that third parties will assert intellectual property claims against ConversionPoint, particularly as ConversionPoint expands the complexity and scope of its business. In addition, many of ConversionPoint’s subscription agreements require ConversionPoint to indemnify its customers against claims that its solutions infringe the intellectual property rights of third parties.

Future litigation may be necessary to defend ConversionPoint or its customers by determining the scope, enforceability and validity of third-party proprietary rights or to establish ConversionPoint’s proprietary rights. Some of ConversionPoint’s competitors have substantially greater resources than ConversionPoint does and are able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than ConversionPoint could. In addition, patent holding companies that focus solely on extracting royalties and settlements by enforcing patent rights may target ConversionPoint. Regardless of whether claims that ConversionPoint is infringing patents or other intellectual property rights have any merit, these claims are time-consuming and costly to evaluate and defend and could, harm ConversionPoint’s reputation, adversely affect its relationship with customers and partners, cause delays or stoppages in its services, divert management’s attention and resources, require changes to its software that would cause it to incur substantial costs and/or subject it to significant liability.

In addition to liability for monetary damages against ConversionPoint, which may be tripled and may include attorneys’ fees, or, in some circumstances, damages against ConversionPoint’s customers, ConversionPoint may be prohibited from developing, commercializing or continuing to provide some or all of ConversionPoint’s software solutions unless ConversionPoint obtains licenses from, and pay royalties to, the holders of the patents or other intellectual property rights, which may not be available on commercially favorable terms, or at all.

Activities of ConversionPoint’s customers and affiliates or the content of their marketing messages, could damage ConversionPoint’s brand, subject it to liability and harm its business and financial results.

ConversionPoint’s terms of service prohibit ConversionPoint’s customers and affiliates from using ConversionPoint’s platform to engage in illegal activities, including, fraudulent marketing activities, and its employment and marketing policies prohibit its employees from engaging in fraudulent marketing activities. Customers, affiliate marketers or employees may nonetheless engage in prohibited or illegal activities in violation of applicable laws, which could subject ConversionPoint to liability. For example, from time to time, certain of ConversionPoint’s affiliate marketing companies use content that infringes on the rights of others, including, but not limited to, unauthorized celebrity endorsements, that have resulted in the receipt of cease and desist letters and claims for damages. In addition, there have been limited instances in which ConversionPoint’s employees have used infringing content in certain marketing materials, that have resulted in the receipt of cease and desist letters and claims for damages. ConversionPoint’s brand may be negatively impacted by the actions of customers, affiliates or employees, that are deemed to be hostile, offensive, inappropriate or illegal. Although ConversionPoint attempts to monitor the appropriateness of the content of its customers, affiliates and employees, ConversionPoint does not have control over their activities. The safeguards ConversionPoint has in place may not be sufficient for ConversionPoint to avoid liability or avoid harm to ConversionPoint’s brand, especially if such hostile, offensive, inappropriate or illegal use is high profile, which could adversely affect its business and financial results.

ConversionPoint’s failure to protect its intellectual property rights could diminish the value of its services, weaken its competitive position and reduce its revenue.

ConversionPoint regards the protection of its intellectual property, which includes trade secrets, copyrights, trademarks and domain names, as critical to ConversionPoint’s success. ConversionPoint strives to protect its intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions. ConversionPoint enters into confidentiality and invention assignment agreements with its employees and contractors, and confidentiality agreements with parties with whom it conducts business in order to limit access to, and disclosure and use of, its proprietary information. However, these contractual arrangements and the other steps ConversionPoint has taken to protect ConversionPoint’s intellectual property may not prevent the misappropriation of ConversionPoint’s proprietary information or deter independent development of similar technologies by others.

ConversionPoint has four provisional patent applications and is investigating seeking patent protection for other aspects of ConversionPoint’s technologies, but there can be no assurance that ConversionPoint will file for any additional patent protection, or any patents will ultimately be issued, or that, if issued, they will not be challenged. ConversionPoint has registered domain names, trademarks and service marks in the United States and may also pursue additional registrations both in and outside the United States. Effective trade secret, copyright, trademark, domain name and patent protection is expensive to develop and maintain, both in terms of initial and ongoing registration requirements and the costs of defending ConversionPoint’s rights. ConversionPoint may be required to protect its intellectual property in an increasing number of jurisdictions, a process that is expensive and may not be successful or which ConversionPoint may not pursue in every location.

Monitoring unauthorized use of ConversionPoint’s intellectual property is difficult and costly. ConversionPoint’s efforts to protect its proprietary rights may not be adequate to prevent misappropriation of its intellectual property. Further, ConversionPoint may not be able to detect unauthorized use of, or take appropriate steps to enforce, its intellectual property rights. In addition, ConversionPoint’s competitors may independently develop similar technology. The laws in the United States and elsewhere change rapidly, and any future changes could adversely affect ConversionPoint and its intellectual property. ConversionPoint’s failure to meaningfully protect its intellectual property could result in competitors offering services that incorporate ConversionPoint’s most technologically advanced features, which could seriously reduce demand for ConversionPoint’s software solutions. In addition, ConversionPoint may in the future need to initiate infringement claims or litigation. Litigation, whether ConversionPoint is a plaintiff or a defendant, can be expensive, time-consuming and may divert the efforts of ConversionPoint’s technical staff and managerial personnel, which could harm ConversionPoint’s business, whether or not such litigation results in a determination that is unfavorable to ConversionPoint. In addition, litigation is inherently uncertain, and thus ConversionPoint may not be able to stop its competitors from infringing upon ConversionPoint’s intellectual property rights.

ConversionPoint’s use of “open source” software could negatively affect its ability to sell its solutions and could subject ConversionPoint to litigation.

A portion of ConversionPoint’s technology platform and solutions incorporate so-called “open source” software, and ConversionPoint may incorporate additional open source software in the future. Open source software is generally licensed by its authors or other third parties under open source licenses. If ConversionPoint fails to comply with these licenses, it may be subject to specified conditions, including requirements that ConversionPoint offer its solutions that incorporate the open source software for no cost, that ConversionPoint make available source code for modifications or derivative works it creates based upon, incorporating or using the open source software and that ConversionPoint license such modifications or derivative works under the terms of the particular open source license. If an author or other third party that distributes open source software that ConversionPoint uses were to allege that ConversionPoint has not complied with the conditions of one or more of these licenses, ConversionPoint could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, including being enjoined from the sale of ConversionPoint’s solutions that contain the open source software. ConversionPoint could be subject to suits by parties claiming ownership of what ConversionPoint believes to be open source software. Litigation could be costly for ConversionPoint to defend, have a negative effect on ConversionPoint’s operating results and financial condition and require ConversionPoint to devote additional research and development resources to change ConversionPoint’s solutions.

Risks Related to Inuvo’s Business

Inuvo has a history of losses, and its revenues declined in 2018 from 2017 and Inuvo cannot anticipate with any degree of certainty what its revenues will be in future periods. Inuvo’s working capital deficit has increased substantially at December 31, 2018 as compared to December 31, 2017.

Inuvo reported a net loss of approximately $5.9 million in 2018 as compared to a net loss of approximately $3.1 million in 2017. At December 31, 2018, Inuvo had a cash balance of approximately $229,000 and a working capital deficit of approximately $6.9 million as compared to a cash balance of approximately $4.1 million and a working capital deficit of approximately $6.2 million at December 31, 2017. As described elsewhere in this joint proxy statement/prospectus, Inuvo’s industry is currently in a consolidation phase and Inuvo’s strategic decisions to discontinue certain non-strategic technologies in response to Inuvo’s changing industry involved the short-term loss of revenue and margin in anticipation of future growth and margins starting in 2019. Inuvo estimates that the revenue loss associated with this decision was $7.2 million in 2018. In addition, Inuvo is incurring certain additional costs associated with the mergers which also adversely impacts Inuvo’s working capital. Since Inuvo’s credit facility is dependent upon receivables, and Inuvo does not know when, if ever, that Inuvo’s revenues will return to historic levels or if Inuvo will be able to replace those lost revenues with revenues from other sources, the combination of lower credit availability and recent negative cash flows generated from operating activities introduces potential risk of operation without interruption.

Inuvo relies on three customers for a significant portion of its revenues.

Inuvo is reliant upon Yahoo!, Google, and Microsoft Online for most of its revenue. During 2018, they accounted for 71.8% , 10.1% and 5.5% of its revenues, respectively. In 2017, Yahoo!, Google, and OpenX accounted for 66.7%, 10.4% and 9.4% of Inuvo’s revenues. The amount of revenue Inuvo receives from these customers is dependent on a number of factors outside of Inuvo’s control, including the amount they charge for advertisements, the depth of advertisements available from them, and their ability to display relevant ads in response to end-user queries. Inuvo’s revenue in the third quarter 2018 was 17.3% lower than the same quarter of 2017 due to demand and pricing changes by Inuvo’s largest customer, Yahoo!. The result was approximately a 40% decrease in RPCs. Inuvo has not seen an appreciable change in remote procedure calls, or RPCs, and Inuvo does not know whether RPCs will return to their former levels.

Inuvo would likely experience a significant decline in revenue and Inuvo’s business operations could be significantly harmed if (i) these customers do not approve Inuvo’s new websites, publishers and / or applications, (ii) if Inuvo or its publishers violate their guidelines or they change their guidelines, or (iii) if Inuvo’s contracts with these customers are terminated or expire without being renewed. In addition, if any of these preceding circumstances were to occur, Inuvo may not be able to find a suitable alternate paid search results provider or otherwise replace the lost revenues. Inuvo’s contracts with each of these customers contain broad termination provisions and Inuvo’s Yahoo! contract expires in November 2020, Inuvo’s Google contract expires in February 2021 and Inuvo’s Microsoft Online contract expires in February 2020. The loss of any of these customers or a material change in the revenue or gross profit they generate would have a material adverse impact on Inuvo’s business, results of operations and financial condition in future periods.

Failure to comply with the covenants and restrictions in Inuvo’s credit facility could impact Inuvo’s ability to access capital as needed.

Inuvo has a credit facility with Western Alliance Bank. The facility expired in September 2018 and was extended to October 2018. Inuvo signed a new facility agreement with Western Alliance Bank on October 11, 2018. The new agreement may be terminated by either party at any time and has a sub-limit provision that expires on April 30, 2019. While Inuvo believes it will be able to renew with substantially similar terms and conditions, there are no assurances that Inuvo will be able to renew. In that event, Inuvo’s liquidity in future periods would be materially adversely impacted. The credit facility contains a number of requirements, among other things:

A breach in Inuvo’s covenants could result in a default under the credit facility, and in such event Western Alliance Bank could elect to declare all borrowings outstanding, if any, to be due and payable. If this occurs and Inuvo has outstanding obligations and is not able to repay, Western Alliance Bank could require Inuvo to apply all of its available cash to repay the debt amounts and could then proceed against the underlying collateral. Should this occur, Inuvo cannot assure you that its assets would be sufficient to repay its debt in full, Inuvo would be able to borrow sufficient funds to refinance the debt, or that Inuvo would be able to obtain a waiver to cure any such default. In such an event, Inuvo’s ability to conduct its business as it is currently conducted would be in jeopardy.

Failure to comply with the covenants and restrictions in Inuvo’s grant agreement with the State of Arkansas could result in the repayment of a portion of the grant, which Inuvo may not be able to repay or finance on favorable terms.

In January 2013, Inuvo entered into an agreement with the State of Arkansas whereby Inuvo was granted $1,750,000 for the relocation of Inuvo to Arkansas and for the purchase of equipment. The grant was contingent upon Inuvo having at least 50 full-time equivalent permanent positions within four years, maintaining at least 50 full-time equivalent permanent positions for the following six years and paying those positions an average total compensation of $90,000 per year.

If Inuvo fails to meet the requirements of the grant after the initial four-year period, it may be required to repay a portion of the grant, up to but not to exceed the full amount of the grant. As of December 31, 2018, Inuvo had 39 full-time employees located in Arkansas. Failure to meet the requirements of the grant after the initial four-year period, may require Inuvo to repay a portion of the grant, up to but not to exceed the full amount of the grant. At December 31, 2018, Inuvo accrued a contingent liability of $55,000 for the lower than required employment. Should the lower than required employment continue, Inuvo cannot assure you that its assets would be sufficient to repay its grant in full, Inuvo would be able to borrow sufficient funds to refinance the grant, or that Inuvo would be able to obtain a waiver to cure any such default. In such an event, Inuvo’s ability to conduct its business as it is currently conducted would be in jeopardy.

Inuvo’s business is seasonal and its financial results and cash availability may vary significantly from period to period.

Historically, the last half of the year has stronger demand and therefore greater revenue than the first half of the year. Inuvo experiences lower RPCs due to a decline in demand for inventory on website and app space and the recalibrating of advertiser’s marketing budgets after the holiday selling season. If Inuvo is not able to appropriately adjust to seasonal or other factors, it could have a material adverse effect on its financial results. A material percentage of Inuvo’s operating expense is fixed and does not vary significantly with revenue. When revenue is seasonally lower cash availability is constrained. The bank credit facility and cash generated by operations may be insufficient to continue normal operations. Inuvo may elect to sell securities to the public or to selected investors, or borrow under the current or any replacement line of credit or other debt instruments which may cause dilution.

Inuvo depends on relationships with and the success of its supply partners. 

Inuvo’s supply partners are very important to its success. Inuvo must recruit and maintain partners who are able to drive traffic successfully to their websites and mobile applications, resulting in clicks on advertisements Inuvo has delivered. These partners may experience difficulty in attracting and maintaining users for a number of reasons, including competition, rapidly changing markets and technology, industry consolidation and changing consumer preferences. Further, Inuvo may not be able to further develop and maintain relationships with distribution partners. They may be able to make their own deals directly with advertisers, may view Inuvo as a competitor or may find Inuvo’s competitors’ offerings more desirable. Any of these potential events could have a material adverse effect on Inuvo’s business, financial position and results of operations.

The success of Inuvo’s owned sites depend on Inuvo’s ability to acquire traffic in a profitable manner. 

Inuvo’s ALOT-branded websites depend on Inuvo’s ability to attract traffic in a profitable manner. Inuvo uses a predictive model to calculate the rate of return for marketing campaigns, which includes estimates and assumptions. If these estimates and assumptions are not accurate, Inuvo may not be able to effectively manage its marketing decisions and could acquire traffic in an unprofitable manner. In addition, Inuvo may not be able to maintain and grow its traffic for a number of reasons, including, but not limited to, acceptance of its websites by consumers, the availability of advertising to promote its websites, competition, and sufficiency of capital to purchase advertising. Inuvo advertises on search engine websites to drive traffic to its owned and operated websites. Inuvo’s keyword advertising is done primarily with Google and Facebook, but also with Yahoo! and Bing. If Inuvo is unable to maintain and grow traffic to its sites in a profitable manner, it could have a material adverse effect on Inuvo’s business, financial condition, and results of operations.

Inuvo’s business must keep pace with rapid technological change to remain competitive. 

Inuvo’s business operates in a market characterized by rapidly changing technology, evolving industry standards, frequent new product and service announcements, enhancements, and changing customer demands. Inuvo must adapt to rapidly changing technologies and industry standards and continually improve the speed, performance, features, ease of use and reliability of Inuvo’s services. This includes making Inuvo’s products and services compatible and maintaining compatibility with multiple operating systems, desktop and mobile devices, and evolving network infrastructure. If Inuvo fails to do this, its results of operations and financial position could be adversely affected.

Inuvo’s services may be interrupted if Inuvo experiences problems with its network infrastructure.

The performance of Inuvo’s network infrastructure is critical to its business and reputation. Because Inuvo’s services are delivered solely through the internet, Inuvo’s network infrastructure could be disrupted by a number of factors, including, but not limited to:

While Inuvo has data centers in multiple, geographically dispersed locations and active back-up and disaster recovery plans, Inuvo cannot assure you that serious interruptions will not occur in the future. If Inuvo’s services were to be interrupted, it could cause loss of users, customers and business partners, which could have a material adverse effect on Inuvo’s results of operations and financial position.

Inuvo depends on key personnel, the loss of whom could harm Inuvo’s business. 

Inuvo’s success depends in part on the retention of personnel critical to its business operations. Loss of key personnel may result in disruption of operations, loss of key business relationships or expertise, additional recruiting and training costs, and diminished anticipated benefits of acquisitions. Inuvo’s future success is substantially dependent on the continued service of its key senior management. Inuvo has experienced difficulty from time to time in attracting or retaining the personnel necessary to support the growth of its business, and Inuvo may experience similar difficulties in the future.

Regulatory and legal uncertainties could harm Inuvo’s business. 

While there are currently relatively few laws or regulations directly applicable to internet-based commerce or commercial search activity, there is increasing awareness of such activity and interest from state and federal lawmakers in regulating these services. New regulation of activities in which Inuvo is involved or the extension of existing laws and regulations to internet-based services could have a material adverse effect on Inuvo’s business, results of operations and financial position.

Failure to comply with federal, state and international privacy and data security laws and regulations, or the expansion of current or the enactment of new privacy and data security laws or regulations, could adversely affect Inuvo’s business. 

A variety of federal, state and international laws and regulations govern the collection, use, retention, sharing and security of consumer data. In addition, various federal, state and foreign legislative and regulatory bodies may expand current or enact new laws regarding privacy matters. For example, recently there have been Congressional hearings and increased attention to the capture and use of location-based information relating to users of smartphones and other mobile devices, and internationally the European Union’s new GDPR went into effect in May 2018. Inuvo has posted privacy policies and practices concerning the collection, use and disclosure of subscriber data on Inuvo’s websites and applications. The existing and soon to be enacted privacy and data security related laws and regulations are evolving and subject to potentially differing interpretations. Several internet companies have incurred penalties for failing to abide by the representations made in their privacy policies and practices. In addition, several states have adopted legislation that requires businesses to implement and maintain reasonable security procedures and practices to protect sensitive personal information and to provide notice to consumers in the event of a security breach. Any failure, or perceived failure, by Inuvo to comply with its posted privacy policies or with any data-related consent orders, FTC requirements or orders or other federal, state or international privacy or consumer protection-related laws, including the GDPR, regulations or industry self-regulatory principles could result in claims, proceedings or actions against Inuvo by governmental entities or others or other liabilities, which could adversely affect Inuvo’s business.

Inuvo may face third party intellectual property infringement claims that could be costly to defend and result in the loss of significant rights. 

From time to time third parties have asserted infringement claims against Inuvo, including copyright, trademark and patent infringement, among other things. While Inuvo believes that it has defenses to these types of claims under appropriate trademark laws, Inuvo may not prevail in its defenses to any intellectual property infringement claims. In addition, Inuvo may not be adequately insured for any judgments awarded in connection with any litigation. Any such claims and resulting litigation could subject Inuvo to significant liability for damages or result in the invalidation of Inuvo’s proprietary rights, which would have a material adverse effect on its business, financial condition, and results of operations. Even if Inuvo were to prevail, these claims could be time-consuming, expensive to defend, and could result in the diversion of management’s time and attention.

Inuvo is subject to risks from publishers who could fabricate clicks either manually or technologically. 

Inuvo’s business involves the establishment of relationships with website owners and publishers. In exchange for their consumer traffic, Inuvo provides an advertising placement service and shares a portion of the revenue it collects with that website publisher. Although Inuvo has click fraud detection software in place, Inuvo cannot guarantee that it will identify all fraudulent clicks or be able to recover funds distributed for fabricated clicks. This risk could materially impact Inuvo’s ability to borrow, its cash flow and the stability of its business.

A downturn or uncertainty in global economic conditions may have a significant negative effect on Inuvo’s access to credit and its ability to raise capital and may impact its business, operating results or financial condition. 

A future downturn or uncertainty in global economic conditions, may result in significant reductions in, and heightened credit quality standards for, available capital and liquidity from banks and other providers of credit and substantial reductions and/or fluctuations in equity and currency values worldwide, which may make it difficult for Inuvo to raise additional capital or obtain additional credit, when needed, on acceptable terms or at all. Moreover, deteriorated economic conditions, or the threat of a prolonged recessionary period, may cause disruptions and volatility in global financial markets, increased rates of default and bankruptcy and have a negative impact on the levels of consumer spending. These macroeconomic developments could negatively affect Inuvo’s business, operating results or financial condition in a number of ways. For example, current or potential customers, such as advertisers, may delay or decrease spending with Inuvo or may not pay Inuvo or may delay paying Inuvo for previously performed services. In addition, if consumer spending decreases, this may result in fewer clicks on Inuvo’s advertisers’ ads displayed on Inuvo’s or its partner websites.

Inuvo’s quarterly operating results can be difficult to predict and can fluctuate substantially, which could result in volatility in the price of its common stock.

Inuvo’s quarterly revenues and other operating results have varied in the past and are likely to continue to vary significantly from quarter to quarter. Inuvo’s agreements with distribution partners and key customers do not require minimum levels of usage or payments, and its revenues therefore fluctuate based on the actual usage of its service each quarter by existing and new distribution partners. Quarterly fluctuations in Inuvo’s operating results also might be due to numerous other factors, including:

Inuvo has historically had difficulties meeting the financial covenants set forth in its credit agreement.

During the third quarter of 2018, Inuvo failed to comply with the minimum revenue and adjusted EBITDA requirement. Inuvo’s lender has given it waivers in the past, including in connection with its failure to meet the covenants during the third quarter of 2018, and reset Inuvo’s financial covenants several times. A breach in its covenants could result in a default under the credit facility, and in such event Western Alliance Bank could elect to declare all borrowings outstanding, if any, to be due and payable. If this occurs and Inuvo has outstanding obligations and are not able to repay, Western Alliance Bank could require Inuvo to apply all of its available cash to repay the debt amounts and could then proceed against the underlying collateral. Should this occur, Inuvo cannot assure you that its assets would be sufficient to repay its debt in full, Inuvo would be able to borrow sufficient funds to refinance the debt, or that Inuvo would be able to obtain a waiver to cure any such default. In such an event, Inuvo’s ability to conduct its business as it is currently conducted would be in jeopardy.

Significant dilution will occur if outstanding convertible securities options are exercised or restricted stock unit grants vest.

As of December 31, 2018, Inuvo had stock options outstanding to purchase a total of 264,246 shares with exercise prices ranging from $0.56 to $3.70 per share, with a weighted average exercise price of $2.84. Inuvo also had 1,571,864 restricted stock units outstanding. If outstanding stock options are exercised or restricted stock units vest, dilution will occur to Inuvo’s stockholders, which may be significant. In addition, in relation to the CPT bridge note, under certain circumstances, CPT Investments, LLC has the right to convert its debt to Inuvo stock.

Risks Related to the Combined Company if the Mergers are Completed

Failure to successfully combine the businesses of ConversionPoint and Inuvo, or to achieve integration in the expected time frame, may adversely affect New Parent’s future results.

The success of the mergers will depend, in part, on New Parent’s ability to realize the anticipated benefits from combining the businesses of ConversionPoint and Inuvo as further described in the section titled “The Mergers—Recommendation of the ConversionPoint Board and its Reasons for the ConversionPoint Merger” beginning on page 152 and “The Mergers—Recommendation of the Inuvo Board and its Reasons for the Inuvo Merger” beginning on page 152. To realize these anticipated benefits, including the cost synergies being forecast, the businesses of ConversionPoint and Inuvo must be successfully integrated. Historically, ConversionPoint and Inuvo have been independent companies, and they will continue to be operated as such until the completion of the mergers. Management of New Parent may face significant challenges in consolidating the functions of Inuvo and ConversionPoint, integrating the technologies, organizations, procedures, policies and operations, as well as addressing the different business cultures of the two companies, and retaining key personnel. If the combined company is not successfully integrated or such integration is delayed, the anticipated benefits of the mergers may not be realized fully or at all, or may take longer to realize than expected. The integration may also be complex and time consuming, and require substantial resources and effort. The integration process and other disruptions resulting from the mergers may also disrupt each company’s ongoing businesses and/or adversely affect their relationships with employees, customers, regulators and others with whom they have business or other dealings.

The combined company’s future results will suffer if the combined company does not effectively manage its expanded operations following the mergers.

Following the mergers, the size of the combined company’s business will be significantly larger than the current businesses of Inuvo and ConversionPoint. New Parent’s future success depends, in part, upon its ability to manage this expanded business, which will pose substantial challenges for the combined company’s management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. Neither Inuvo nor ConversionPoint can assure you that the combined company will be successful or that the combined company will realize the expected operating efficiencies, annual net operating synergies, revenue enhancements and other benefits currently anticipated to result from the merger.

Failure to adequately manage New Parent’s growth could impair its ability to deliver high-quality solutions to its customers, hurt its reputation and compromise its ability to become profitable.

New Parent expects to experience significant growth in its business. If New Parent does not effectively manage its growth, the quality of service of its solutions may suffer, which could negatively affect its reputation, demand for its solutions or compromise its ability to become profitable. New Parent’s growth is expected to place a significant strain on its managerial, operational and financial resources and its infrastructure. New Parent’s future success will depend, in part, upon the ability of its senior management to manage growth effectively. This will require New Parent to, among other things, hire additional personnel, implement additional management information systems and maintain close coordination among its engineering, operations, legal, finance, sales and marketing and client service and support organizations.

The loss of key personnel could have a material adverse effect on the combined company’s business, financial condition or results of operations.

The success of the mergers will depend in part on the combined company’s ability to retain key employees who continue employment with the combined company after the merger is completed. In addition, certain key executives of Inuvo, including Richard Howe, its CEO, intend to cease an operational role with the combined company within six months following the consummation of the merger. It is possible that other key employees might decide not to remain with the combined company after the merger is completed. The loss of the day-to-day involvement of these executives could have a material adverse effect on the combined company, and if other key employees terminate their employment, the combined company’s business activities might be adversely affected, management’s attention might be diverted from integrating ConversionPoint’s and Inuvo’s operations to recruiting suitable replacements and the combined company’s business, financial condition or results of operations could be adversely affected. In addition, the combined company might not be able to locate suitable replacements for any such key employees who leave the combined company or offer employment to potential replacements on reasonable terms.

Most of the senior management team of New Parent will have limited experience managing a publicly traded company, and regulatory compliance may divert their attention from the day-to-day management of New Parent’s business. 

Most of the individuals who will constitute New Parent’s senior management team have limited experience managing a publicly-traded company and limited experience complying with the increasingly complex laws pertaining to public companies. The senior management team may not successfully or efficiently manage the transition to a public company that is subject to significant regulatory oversight and reporting obligations under United States securities laws. In particular, these new obligations will require substantial attention from the management and could divert their attention away from the day-to-day management of New Parent’s business.

The success of the combined company will depend on relationships with third parties and pre-existing customers of ConversionPoint and Inuvo, which relationships may be affected by customer preferences or public attitudes about the merger. Any adverse changes in these relationships could adversely affect the combined company’s business, financial condition or results of operations. 

The combined company’s success will be dependent on the ability to maintain and renew business relationships, including relationships with pre-existing customers and partners of both ConversionPoint and Inuvo, and to establish new business relationships. There can be no assurance that the business of the combined company will be able to maintain pre-existing customer contracts, partnership relationships and other business relationships, or enter into or maintain new customer contracts and other partnership and business relationships, on acceptable terms, if at all. The failure to maintain important business relationships could have a material adverse effect on the business, financial condition or results of operations of the combined company.

The combined company will incur significant transaction and merger-related costs in connection with the mergers. 

ConversionPoint and Inuvo expect to incur significant costs associated with completing the mergers and combining the operations of the two companies. Although the exact amount of these costs is not yet known, ConversionPoint and Inuvo estimate that these costs will be significant. In addition, there may be unanticipated costs associated with the integration. Although ConversionPoint and Inuvo expect that the elimination of duplicative costs and other efficiencies may offset incremental transaction and merger-related costs over time, these benefits may not be achieved in the near term or at all.

The combined company will record goodwill that could become impaired and adversely affect the combined company’s operating results. 

The mergers will be accounted for as an acquisition of Inuvo by ConversionPoint, in accordance with accounting principles generally accepted in the United States. Under the acquisition method of accounting, the assets and liabilities of ConversionPoint and Inuvo will be recorded, as of completion, at their respective fair values and added to those of ConversionPoint and Inuvo, respectively. The reported financial condition and results of operations of New Parent issued after completion of the mergers will reflect ConversionPoint and Inuvo balances and results after completion of the mergers, but will not be restated retroactively to reflect the historical financial position or results of operations of ConversionPoint and Inuvo for periods prior to the mergers. Following completion of the mergers, the earnings of the combined company will reflect acquisition accounting adjustments. See “Unaudited Pro Forma Combined Condensed Financial Statements” beginning on page 199.

Under the acquisition method of accounting, the total purchase price will be allocated to the tangible assets and liabilities and identifiable intangible assets acquired in the mergers based on their fair values as of the date of completion of the mergers. The excess of the purchase price over those fair values will be recorded as goodwill. Inuvo and ConversionPoint expect that the mergers will result in the creation of goodwill based upon the application of the acquisition method of accounting. To the extent the value of goodwill or intangibles becomes impaired, the combined company may be required to incur material charges relating to such impairment. Such a potential impairment charge could have a material impact on the combined company’s operating results.

New Parent’s ability to utilize net operating loss carryforwards and certain other tax attributes may be limited. 

Federal and state income tax laws impose restrictions on the utilization of net operating losses, which we refer to as NOL, and tax credit carryforwards in the event that an “ownership change” occurs for tax purposes, as defined by Section 382 of the Code. In general, an ownership change occurs when stockholders owning 5% or more of a “loss corporation” (a corporation entitled to use NOL or other loss carryovers) have increased their ownership of stock in such corporation by more than 50 percentage points during any three-year period. The annual base limitation under Section 382 of the Code is calculated by multiplying the loss corporation’s value at the time of the ownership change by the greater of the long-term tax-exempt rate determined by the IRS in the month of the ownership change or the two preceding months.

As of December 31, 2018, ConversionPoint and Inuvo had $25 million and $89 million, respectively, of federal NOLs that are currently limited in their annual use. As a result of the mergers, it is possible that either or both ConversionPoint and Inuvo will be deemed to have undergone an “ownership change” for purposes of Section 382 of the Code. Accordingly, the combined company’s ability to utilize ConversionPoint’s and/or Inuvo’s NOL carryforwards may be substantially limited. These limitations could in turn result in increased future tax payments for the combined company, which could have a material adverse effect on the business, financial condition or results of operations of the combined company. 

The combined company’s indebtedness following the merger will be significant. It may be difficult for the combined company to pay or refinance its debts and the combined company may need to divert its cash flow from operations to debt service payments. Such indebtedness could limit the combined company’s ability to pursue other strategic opportunities and increase its vulnerability to adverse economic and industry conditions.

In connection with the mergers, the combined company will be responsible for ConversionPoint and Inuvo’s outstanding debt. Inuvo’s total indebtedness as of March 12, 2019, was approximately $7.61 million, including $4.88 million due under a loan agreement with Western Alliance Bank, $1.03 million under the CPT bridge note, $1.44 million due under the Inuvo convertible notes, and $258,000 under the four notes related to the four loans from directors of Inuvo of $62,500 each, for an aggregate of $250,000, to cover certain costs associated with the pending mergers, and ConversionPoint’s indebtedness as of March 1, 2019, was approximately $6,239,899 million. The combined company’s debt service obligations with respect to this increased indebtedness could have an adverse impact on its earnings and cash flows, which after the mergers would include the earnings and cash flows of ConversionPoint, for as long as the indebtedness is outstanding.  It is a covenant under the merger agreement that all indebtedness under the Western Alliance Bank loan agreement will be paid off at or prior to closing. In addition, pursuant to their terms, the CPT bridge note and ConversionPoint’s loan with Montage and Partners for Growth, will be paid off at closing, and the Inuvo convertible notes will either be paid off at closing or will be converted into shares of Inuvo common stock immediately prior to closing.

The combined company’s increased indebtedness could also have important consequences to holders of New Parent common stock. For example, it could:

Based upon current levels of operations, management of ConversionPoint and Inuvo expect the combined company to be able to generate sufficient cash on a consolidated basis to make all of the principal and interest payments when such payments are due under its existing credit facilities, indentures and other instruments governing their outstanding indebtedness, and the indebtedness of ConversionPoint and Inuvo that may remain outstanding after the merger, but there can be no assurance that the combined company will be able to repay or refinance such borrowings and obligations.

The mergers may not be accretive, and may be dilutive, to ConversionPoint’s and Inuvo’s earnings per share, which may negatively affect the market price of New Parent common stock.

Although the mergers are expected to be accretive to earnings per share, the mergers may not be accretive, and may be dilutive, to ConversionPoint’s and Inuvo’s earnings per share. The expectation that the mergers will be accretive is based on preliminary estimates that may materially change. In addition, future events and conditions could decrease or delay any accretion, result in dilution or cause greater dilution than may be expected, including:

Any dilution of, or decrease or delay of any accretion to, ConversionPoint’s or Inuvo’s earnings per share could cause the price of New Parent’s common stock to decline.

Business issues currently faced by one company may be imputed to the operations of the other company or the combined company. 

To the extent that either ConversionPoint or Inuvo currently has or is perceived by customers to have operational challenges, those challenges may raise concerns by existing customers of the other company following the merger which may limit or impede New Parent’s future ability to maintain relationships with those customers.

The certificate of incorporation of New Parent provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between New Parent and its stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with New Parent or its directors, officers or employees.

The certificate of incorporation of New Parent provides that unless New Parent consents in writing to the selection of an alternative forum, the State of Delaware is the sole and exclusive forum for: (a) any derivative action or proceeding brought on behalf of New Parent; (b) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of New Parent to New Parent or its stockholders; (c) any action or proceeding asserting a claim arising pursuant to any provision of the General Corporation Law of Delaware, certificate of incorporation or bylaws of New Parent; or (d) any action or proceeding asserting a claim governed by the internal affairs doctrine. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with New Parent or its directors, officers or other employees, which may discourage such lawsuits against New Parent and its directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in the certificate of incorporation to be inapplicable or unenforceable in an action, New Parent may incur additional costs associated with resolving such action in other jurisdictions, which could harm its business, results of operations, and financial condition.

The unaudited pro forma combined condensed financial information included in this document may not be indicative of what New Parent’s actual financial position or results of operations would have been.

The unaudited pro forma combined condensed financial information in this joint proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what New Parent’s actual financial position or results of operations would have been had the mergers been completed on the dates indicated. The unaudited pro forma combined condensed financial information reflects adjustments, which are based upon preliminary estimates, to allocate the purchase price to the assets acquired and liabilities assumed of Inuvo based on their fair value. The purchase price allocation reflected in this document is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets acquired and liabilities assumed of Inuvo as of the date of the completion of the mergers. In addition, subsequent to the closing date, there may be refinements to the purchase price allocation as additional information becomes available. Accordingly, the final purchase price allocation may differ materially from the pro forma adjustments reflected in this document. See “Selected Unaudited Pro Forma Combined Condensed Financial Information,” beginning on page 26 and “Unaudited Pro Forma Combined Condensed Financial Statements,” beginning on page 199, for more information.

ConversionPoint, Inuvo and, after the mergers, the combined company, must continue to retain, motivate and recruit executives and other key employees, which may be difficult in light of uncertainty regarding the mergers, and failure to do so could negatively affect the combined company.

For the mergers to be successful, during the period before the mergers are completed, both ConversionPoint and Inuvo must continue to recruit, retain and motivate executives and other key employees. Moreover, the combined company must be successful at retaining and motivating key employees following the completion of the mergers. Experienced employees in the industries in which ConversionPoint and Inuvo operate are in high demand and competition for their talents can be intense. Employees of both ConversionPoint and Inuvo, and potential recruits to the companies, may experience uncertainty about their future role with the combined company until, or even after, strategies with regard to the combined company are announced or executed. The potential distractions of the mergers may adversely affect the ability of ConversionPoint, Inuvo or, following completion of the mergers, the combined company, to retain, motivate and recruit executives and other key employees and keep them focused on applicable strategies and goals. A failure by ConversionPoint, Inuvo or, following the completion of the mergers, the combined company, to attract, retain and motivate executives and other key employees during the period prior to or after the completion of the mergers could have a negative impact on the business of ConversionPoint, Inuvo or the combined company.

The price of shares of New Parent common stock is likely to be volatile, and you could lose all or part of your investment.

The trading price of shares of New Parent common stock is likely to be volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond New Parent’s control, including limited trading volume. In addition to the factors discussed in the “Risk Factors” section and elsewhere in this proxy statement/prospectus, these factors include, without limitation:

Furthermore, the public equity markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of New Parent’s shares of common stock.

If securities or industry analysts do not publish research or reports, or publish inaccurate or unfavorable research or reports about New Parent’s business, New Parent’s share price and trading volume could decline.

The trading market for New Parent’s common stock will depend, in part, on the research and reports that securities or industry analysts publish about New Parent or New Parent’s business. New Parent does not have any control over these analysts. If no securities or industry analysts commence coverage of New Parent’s common stock, the trading price for New Parent’s common stock may be negatively impacted. If New Parent obtain securities or industry analyst coverage and if one or more of the analysts who covers New Parent downgrades New Parent’s common stock, changes their opinion of New Parent’s shares or publishes inaccurate or unfavorable research about New Parent’s business, New Parent’s share price would likely decline. If one or more of these analysts ceases coverage of New Parent or fails to publish reports on New Parent regularly, demand for New Parent’s common stock could decrease and New Parent could lose visibility in the financial markets, which could cause New Parent’s share price and trading volume to decline.

New Parent is not subject to the provisions of Section 203 of the Delaware General Corporation Law.

New Parent elected in New Parent’s certificate of incorporation to not be subject to the provisions of Section 203 of the Delaware General Corporation Law, or Section 203. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns (or, in certain cases, within three years prior, did own) 15% or more of the corporation’s voting stock. This may make New Parent more vulnerable to takeovers that are completed without the approval of the New Parent board and/or without giving New Parent the ability to prohibit or delay such takeovers as effectively.

Some provisions of New Parent’s charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of New Parent by others, even if an acquisition would be beneficial to New Parent’s stockholders, and may prevent attempts by New Parent’s stockholders to replace or remove New Parent’s current management.

Provisions in New Parent’s certificate of incorporation and bylaws, as well as provisions of Delaware law, could make it more difficult for a third party to acquire New Parent or increase the cost of acquiring New Parent, even if doing so would benefit New Parent’s stockholders. These provisions include:

These anti-takeover provisions and other provisions in New Parent’s certificate of incorporation and bylaws could make it more difficult for stockholders or potential acquirers to obtain control of the New Parent board or initiate actions that are opposed by the then-current board of directors and could also delay or impede a merger, tender offer or proxy contest involving New Parent. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause New Parent to take other corporate actions you desire. Any delay or prevention of a change of control transaction or changes in New Parent’s board of directors could cause the market price of New Parent common stock to decline.

New Parent’s certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by New Parent’s stockholders, which could limit New Parent’s stockholders’ ability to obtain a favorable judicial forum for disputes with New Parent or New Parent’s directors, officers or other employees.

New Parent’s certificate of incorporation provides that, unless New Parent consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on New Parent’s behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of New Parent’s directors, officers or other employees to New Parent or New Parent’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, New Parent’s certificate of incorporation or New Parent’s bylaws, or (iv) any action asserting a claim against New Parent governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of New Parent’s capital stock shall be deemed to have notice of and consented to the provisions of certificate of incorporation described above. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with New Parent or New Parent’s directors, officers or other employees, which may discourage such lawsuits against New Parent and New Parent’s directors, officers and other employees. Alternatively, if a court were to find these provisions of New Parent’s certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, New Parent may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect New Parent’s business, financial condition or results of operations.

New Parent is an “emerging growth company,” and New Parent cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make New Parent common stock less attractive to investors.

New Parent is an “emerging growth company,” as defined in the JOBS Act. For as long as New Parent continues to be an emerging growth company, New Parent may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in this proxy statement/prospectus, New Parent’s periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. New Parent could be an emerging growth company for up to five years, although circumstances could cause New Parent to lose that status earlier, including if the market value of New Parent common stock held by non-affiliates exceeds $700 million as of any June 30 before that time or if New Parent has total annual gross revenue of $1.07 billion or more during any fiscal year before that time, in which cases New Parent would no longer be an emerging growth company as of the following December 31, or if New Parent issues more than $1.0 billion in non-convertible debt during any three-year period before that time, in which case New Parent would no longer be an emerging growth company immediately. New Parent cannot predict if investors will find New Parent’s shares of common stock less attractive because New Parent may rely on these exemptions. If some investors find New Parent common stock less attractive as a result, there may be a less active trading market for New Parent common stock and New Parent’s share price may be more volatile.

Under the JOBS Act, emerging growth companies also can delay adopting new or revised accounting standards until such time as those standards apply to private companies. New Parent has elected to avail itself of this exemption from new or revised accounting standards.

If New Parent fails to maintain an effective system of internal control over financial reporting, New Parent may not be able to accurately report New Parent’s financial results or prevent fraud. As a result, stockholders could lose confidence in New Parent’s financial and other public reporting, which would harm New Parent’s business and the trading price of New Parent common stock.

Effective internal controls over financial reporting are necessary for New Parent to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause New Parent to fail to meet New Parent’s reporting obligations. In addition, any testing by New Parent conducted in connection with Section 404 of the Sarbanes-Oxley Act, or any subsequent testing by New Parent’s independent registered public accounting firm, may reveal deficiencies in New Parent’s internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to New Parent’s financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in New Parent’s reported financial information, which could have a negative effect on the trading price of New Parent.

New Parent will be required to disclose changes made in New Parent’s internal controls and procedures on a quarterly basis and New Parent’s management will be required to assess the effectiveness of these controls annually. However, for as long as New Parent are an “emerging growth company” under the JOBS Act, New Parent’s independent registered public accounting firm will not be required to attest to the effectiveness of New Parent’s internal controls over financial reporting pursuant to Section 404. New Parent could be an “emerging growth company” for up to five years. An independent assessment of the effectiveness of New Parent’s internal controls could detect problems that New Parent’s management’s assessment might not. Undetected material weaknesses in New Parent’s internal controls could lead to financial statement restatements and require New Parent to incur the expense of remediation.

New Parent may have difficulty operating as a publicly traded company.

As a publicly traded company, New Parent believes that New Parent’s business will benefit from, among other things, providing direct access to equity capital and a tailored capital structure, allowing New Parent to better focus New Parent’s financial and operational resources on New Parent’s specific business, allowing New Parent’s management to design and implement corporate strategies and policies that are based primarily on the business characteristics and strategic decisions of New Parent’s business, allowing us to more effectively respond to industry dynamics and allowing the creation of effective incentives for New Parent’s management and employees that are more closely tied to New Parent’s business performance. However, New Parent may not be able to achieve some or all of the benefits that New Parent believes New Parent can achieve as an independent company in the time New Parent currently expects, if at all. Additionally, new appointees to the New Parent’s board will have limited familiarity with New Parent’s offerings, business and strategy, and it may take time for such appointees to become conversant in New Parent’s business. Implementing these changes may take longer than New Parent expects, result in the incurrence of additional costs or divert management’s attention, which could adversely affect New Parent’s business.

New Parent will incur significant costs as a result of operating as a public company and New Parent’s management expects to devote substantial time to public company compliance programs.

As a public company, New Parent will incur significant legal, accounting and other expenses due to New Parent’s compliance with regulations and disclosure obligations applicable to New Parent, including compliance with the Sarbanes-Oxley Act as well as rules implemented by the SEC, NASDAQ and the TSX. The SEC and other regulators have continued to adopt new rules and regulations and make additional changes to existing regulations that require New Parent’s compliance. In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was enacted. There are significant corporate governance and executive compensation related provisions in the Dodd-Frank Act that have required the SEC to adopt additional rules and regulations in these areas. Stockholder activism, the current political environment, and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact, in ways New Parent cannot currently anticipate, the manner in which New Parent operates New Parent’s business. New Parent’s management and other personnel will devote a substantial amount of time to these compliance programs and monitoring of public company reporting obligations and, as a result of the new corporate governance and executive compensation related rules, regulations, and guidelines prompted by the Dodd-Frank Act and further regulations and disclosure obligations expected in the future, New Parent will likely need to devote additional time and costs to comply with such compliance programs and rules. These rules and regulations will cause New Parent to incur significant legal and financial compliance costs and will make some activities more time-consuming and costly.

To comply with the requirements of being a public company, New Parent may need to undertake various activities, including implementing new internal controls and procedures and hiring new accounting or internal audit staff. The Sarbanes-Oxley Act requires that New Parent maintain effective disclosure controls and procedures and internal control over financial reporting. New Parent is continuing to develop and refine New Parent’s disclosure controls and other procedures that are designed to ensure that information required to be disclosed by New Parent in the reports that New Parent files with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Securities Exchange Act of 1934, or the Exchange Act, is accumulated and communicated to New Parent’s principal executive and financial officers.

Any failure to develop or maintain effective controls could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of New Parent’s internal control over financial reporting which New Parent may be required to include in New Parent’s periodic reports New Parent will file with the SEC under Section 404 of the Sarbanes-Oxley Act, harm New Parent’s operating results, cause New Parent to fail to meet New Parent’s reporting obligations, or result in a restatement of New Parent’s prior period financial statements. In the event that New Parent is not able to demonstrate compliance with the Sarbanes-Oxley Act, that New Parent’s internal control over financial reporting is perceived as inadequate or that New Parent are unable to produce timely or accurate financial statements, investors may lose confidence in New Parent’s operating results and the price of New Parent common stock could decline. In addition, if New Parent is unable to continue to meet these requirements, New Parent may not be able to remain listed on NASDAQ.

New Parent is not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act, and are therefore not yet required to make a formal assessment of the effectiveness of New Parent’s internal control over financial reporting for that purpose. Upon becoming a public company, New Parent will be required to comply with certain of these rules, which will require management to certify financial and other information in New Parent’s quarterly and annual reports and provide an annual management report on the effectiveness of New Parent’s internal control over financial reporting commencing with New Parent’s second annual report. This assessment will need to include the disclosure of any material weaknesses in New Parent’s internal control over financial reporting identified by New Parent’s management or New Parent’s independent registered public accounting firm. New Parent is just beginning the costly and challenging process of compiling the system and processing documentation needed to comply with such requirements. New Parent may not be able to complete New Parent’s evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if New Parent identify one or more material weaknesses in New Parent’s internal control over financial reporting, New Parent will be unable to assert that New Parent’s internal control over financial reporting is effective.

Raising additional capital, including through future sales and issuances of New Parent common stock, or warrants or the exercise of rights to purchase common stock pursuant to New Parent’s equity incentive plan could result in additional dilution of the percentage ownership of New Parent’s stockholders, could cause New Parent’s share price to fall and could restrict New Parent’s operations.

New Parent expects that significant additional capital will be needed in the future to continue New Parent’s planned operations, including any potential acquisitions, hiring new personnel, and continuing activities as an operating public company. To the extent New Parent seeks additional capital through a combination of public and private equity offerings and debt financings, New Parent’s stockholders may experience substantial dilution. To the extent that New Parent raises additional capital through the sale of equity or convertible debt securities, the ownership interest of New Parent’s existing stockholders may be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of New Parent’s stockholders. Debt and receivables financings may be coupled with an equity component, such as warrants to purchase shares of New Parent common stock, which could also result in dilution of New Parent’s existing stockholders’ ownership. The incurrence of indebtedness would result in increased fixed payment obligations and could also result in certain restrictive covenants, such as limitations on New Parent’s ability to incur additional debt and other operating restrictions that could adversely impact New Parent’s ability to conduct New Parent’s business. A failure to obtain adequate funds may cause New Parent to curtail certain operational activities, including sales and marketing, in order to reduce costs and sustain the business, and would have a material adverse effect on New Parent’s business and financial condition.

Under New Parent’s 2018 Plan, New Parent may grant equity awards covering up to 4,500,000 shares of New Parent’s common stock. As of the date of this offering, New Parent have not granted any options to purchase shares of common stock under the 2018 Plan. Upon completion of the mergers, New Parent plans to issue options to purchase an aggregate of 1,300,000 shares of New Parent common stock that will be granted at the closing of the mergers. New Parent plans to register the number of shares available for issuance under New Parent’s 2018 Plan. Sales of shares issued upon exercise of options or granted under New Parent’s 2018 Plan may result in material dilution to New Parent’s existing stockholders, which could cause New Parent’s share price to fall.

New Parent’s issuance of shares of preferred stock could adversely affect the market value of New Parent’s common stock, dilute the voting power of common stockholders and delay or prevent a change of control.

Upon the completion of the mergers, the New Parent board will have the authority to cause New Parent to issue, without any further vote or action by the stockholders, up to 10,000,000 shares of preferred stock in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences of such series.

The issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect the market price for New Parent common stock by making an investment in the common stock less attractive. For example, investors in the common stock may not wish to purchase common stock at a price above the conversion price of a series of convertible preferred stock because the holders of the preferred stock would effectively be entitled to purchase common stock at the lower conversion price causing economic dilution to the holders of common stock.

Further, the issuance of shares of preferred stock with voting rights may adversely affect the voting power of the holders of New Parent’s other classes of voting stock either by diluting the voting power of New Parent’s other classes of voting stock if they vote together as a single class, or by giving the holders of any such preferred stock the right to block an action on which they have a separate class vote even if the action were approved by the holders of New Parent’s other classes of voting stock. The issuance of shares of preferred stock may also have the effect of delaying, deferring or preventing a change in control of New Parent without further action by the stockholders, even where stockholders are offered a premium for their shares.

Claims for indemnification by New Parent’s directors and officers may reduce New Parent’s available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.

New Parent’s certificate of incorporation and bylaws provide that New Parent will indemnify New Parent’s directors and officers, in each case to the fullest extent permitted by Delaware law. In addition, as permitted by Section 145 of the Delaware General Corporation Law, New Parent’s bylaws and New Parent’s indemnification agreements that New Parent plan to enter into with New Parent’s directors and officers provide that:

In addition, under the merger agreement, New Parent has agreed, following the effective times of the mergers, to indemnify and exculpate (and advance expenses to), each present and former director and officer of ConversionPoint and its subsidiaries and Inuvo and its subsidiaries, together with their respective executors, heirs and administrators, against all losses, claims, damages, expenses (including reasonable attorneys’ fees and including any attorneys’ fees or other fees incurred to enforce New Parent’s indemnification obligation), or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to matters existing or occurring at or prior to the effective times of the mergers. New Parent has also agreed to continue all rights to exculpation or indemnification provided for in the organizational documents of ConversionPoint and Inuvo in favor of the current or former directors or officers of ConversionPoint and Inuvo, as applicable. Further, New Parent has agreed, subject to certain limitations, to cause the surviving corporations in the ConversionPoint merger and Inuvo merger to maintain, for six years after the effective times of the mergers, directors’ and officers’ liability insurance in an amount and scope reasonably acceptable to ConversionPoint and Inuvo, as applicable.

To the extent that a claim for indemnification is brought by any of New Parent’s directors or officers, it would reduce the amount of funds available for use in New Parent’s business.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The statements in this joint proxy statement/prospectus and the documents incorporated by reference herein that are not historical statements, including statements regarding the expected timetable for completing the mergers, benefits and synergies of the mergers, future opportunities for the combined company and products, future financial performance and any other statements regarding ConversionPoint’s and Inuvo’s future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond the companies’ control, which could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: failure to obtain the required votes of ConversionPoint’s or Inuvo’s stockholders; the timing to consummate the mergers; the risk that conditions to closing of the mergers may not be satisfied or the closing of the mergers may otherwise not occur; the diversion of management time from operations to transaction-related issues; the ultimate timing, outcome and results of integrating the operations and technology solutions of ConversionPoint and Inuvo; the effects of the business combination of ConversionPoint and Inuvo, including New Parent’s future financial condition, results of operations, strategy and plans; expected synergies and other benefits from the mergers and the ability of New Parent to realize such synergies and other benefits; the possibility that ConversionPoint and Inuvo may not be able to maintain relationships with their employees, partners, suppliers or customers as a result of the uncertainty surrounding the mergers; results of litigation, settlements and investigations; actions by third parties, including governmental agencies; consequences of audits and investigations by government agencies and legislative bodies and related publicity and potential adverse proceedings by such agencies; courts adjudicating ongoing litigation related to the mergers may disagree with Inuvo’s and ConversionPoint’s position that the ongoing lawsuits are without merit and may make decisions or rulings that impact, delay or prevent the closing of the mergers; protection of intellectual property rights and against cyber-attacks; compliance with laws related to income taxes and assumptions regarding the generation of future taxable income; structural changes in the e-commerce industry and maintaining a highly skilled workforce.

Any forward-looking statements should be considered in light of such important factors. ConversionPoint and Inuvo undertake no obligation to revise or update publicly any forward-looking statements for any reason. Readers are cautioned not to place undue reliance on any forward-looking statement, which speaks only as of the date on which such statement is made or in the case of Inuvo documents incorporated by reference, as of the date of the document incorporated by reference.

All subsequent written and oral forward-looking statements concerning the mergers or other matters addressed in this joint proxy statement/prospectus and attributable to ConversionPoint, Inuvo, New Parent or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this joint proxy statement/prospectus.

DESCRIPTION OF CONVERSIONPOINT

Company Overview

ConversionPoint, through its wholly-owned subsidiaries, helps e-commerce companies and brands target, convert, manage and re-engage their customers using sophisticated online tracking and data analytics. ConversionPoint’s suite of technologies manages and optimizes multiple aspects of e-commerce including: rich media content creation and syndication, audience targeting, conversion optimization, remarketing, logistics and customer management. ConversionPoint both delivers its technologies to its customers through software-as-a-service, which we refer to as SaaS, and uses its technologies to provide managed digital marketing and e-commerce technology services to brands and advertisers, which we refer to as managed services. ConversionPoint also uses its own technologies to sell various products directly to consumers, which we refer to as e-commerce product sales. ConversionPoint’s vision is to simplify the entire e-commerce experience by integrating its technologies and offering a broad range of e-commerce solutions on a single, easy-to-use platform.

ConversionPoint was formed as a Delaware corporation on November 2, 2016, by the founders of Branded Response Inc., a California corporation, which was formed in May 2016. Branded Response began as an e-commerce seller of health, wellness and beauty products. Branded Response’s management team had significant prior successes in creating direct-to-consumer e-commerce product campaigns. As Branded Response’s sales began to grow, its management began evaluating e-commerce technologies to become more efficient and cost effective at acquiring customers and maximizing customer life-time value with respect to the sale of its own products. Branded Response began collaborating with Push Interactive, LLC, a direct-to-consumer marketing company based in Minneapolis, Minnesota, formed in May 2010, which had developed a suite of online marketing technologies to increase the efficiency of their own product sales. Push and Branded Response realized that the e-commerce market lacked an end-to-end solution to manage the entire e-commerce marketing, sales, customer service and logistics process. In April 2017, ConversionPoint acquired both Push and Branded Response, with the vision of using Push’s technology platform as the foundation to develop both organically and through strategic acquisition, a unified e-commerce solution to (a) more efficiently manage the companies’ own internal e-commerce product campaigns, (b) manage campaigns for third parties, on a managed services basis, and (c) license to third parties on a self-serve SaaS subscription basis. In 2017, ConversionPoint began generating managed service revenues.

In December 2017, ConversionPoint acquired SellPoints, Inc., a venture-backed Delaware corporation, formed in May 2000, which had developed a suite of software solutions enabling brands to create and syndicate rich media content to a network of online retailers, track online consumer behavior, retarget consumers based on their online behavior, and deliver robust data analytics and reporting. ConversionPoint believed that SellPoints’ technologies and large brand customers and partners, would add significant capabilities to the end-to-end e-commerce platform ConversionPoint was creating.

Industry Background

Growing e-commerce market

The U.S. e-commerce market is evolving and continues to be a high growth market as retailers and brands increase their online sales. According to an article published by e-Marketer.com on September 17, 2018, in the U.S. alone, over $525 billion in e-commerce product sales will be consummated in 2018, with Amazon.com controlling approximately 50% of the U.S. market.

ConversionPoint believes that Amazon.com has developed its leading market position, in part, due to its technology foundation across the entire consumer online retail lifecycle which enables Amazon to leverage customer shopping data as predictors of future purchase behavior. While Amazon.com dominates the online retail market in the U.S. and has positioned itself as strategically aligned with small and medium sized retailers, ConversionPoint believes Amazon.com’s dominance is making it increasingly difficult for non-Amazon online sellers to access shoppers. ConversionPoint believes this leaves retailers in a difficult situation with Amazon.com, because although retailers can reach large audiences through Amazon.com, participation in the Amazon.com marketplace comes with large fees and minimal access to customer data.

ConversionPoint believes this creates an increasingly large market opportunity for data driven e-commerce solutions to assist brands and retailers selling through non-Amazon.com channels. E-commerce platforms such as Shopify and Big Commerce, as well as leading retailers such as Walmart and Office Depot, continue to drive innovation through disparate technologies to lower customer acquisition costs while increasing the yield on e-commerce media spend.

Increasing complexity of e-commerce

ConversionPoint believes that several significant trends have contributed to an increasing complexity and fragmentation of digital marketing and sales, including:

Key Challenges Facing Retailers and Brands Selling Online

As online shopping increases, ConversionPoint believes it is becoming critical for brands, advertisers and retailers to leverage data and technology for reach, efficiency and return on e-commerce investment. According to AdMaster’s 2018 Digital Marketing Trends report, advertisers and brands are allocating larger portions of their advertising budgets to digital marketing and are seeking a more efficient and measurable way to reach their target audience. ConversionPoint believes its solutions address the challenges the industry faces today, which include:

ConversionPoint’s Solutions

ConversionPoint’s technologies optimize many aspects of the e-commerce ecosystem.

Ultimately, through its SaaS and managed service offerings, ConversionPoint’s technology platforms allow brands to generate and manage online sales on a more cost-effective basis. For example, ConversionPoint provides manufacturer brands with tools to create and syndicate rich media product content across ConversionPoint’s network of online retailers. Additionally, manufacturer brands, leveraging ConversionPoint’s technologies, can retarget shoppers, launch CRM acquisition programs, optimize acquisition media spend, improve add-to-cart rates, and manage shipping logistics and fulfillment.

ConversionPoint is in the process of unifying its current technology solutions into an integrated platform to provide manufacturer brands and retailers with an end-to-end SaaS offering.

ConversionPoint believes its solutions offer the following benefits:

ConversionPoint’s Technology Products

ConversionPoint offers a suite of solutions applicable to the pre-sale, sale and post-sale moments of the online shopper journey.

Pre-Sale: ConversionPoint’s suite of media buying and online sales and marketing management tools allow ConversionPoint and its advertisers and brands to target consumers based on their online behavior, and engage in and optimize media buying and campaign management in real time. ConversionPoint’s multi-variate testing technology helps manufacturer brands increase the yield of their digital marketing spend.

ConversionPoint’s pre-sale products include:

Sale: ConversionPoint’s online sales solutions enable manufacturer brands to create and syndicate rich media content to ConversionPoint’s network of online retailers and improve the buying experience across online retailers. ConversionPoint’s data analytics and reporting capabilities provide engagement insights that can be used to optimize marketing efforts.

Post-Sale: ConversionPoint’s post-sale solutions manage shipping and fulfillment, customer communications, upsells and remarketing. ConversionPoint’s post-sale solutions include:

ConversionPoint’s E-Commerce Product Sales

Through ConversionPoint’s subsidiaries, Branded Response and Push, ConversionPoint sells a multitude of products directly to consumers, including health and wellness products (e.g., facial creams, nutritional supplements and anti-snoring devices), eBooks and various other consumer products. During 2017 and 2018, ConversionPoint generated $41,651,146 and $20,287,005, respectively, in e-commerce product net revenues, which constituted, 83.4% and 51.0%, respectively, of ConversionPoint’s net revenues during those periods.

E-commerce products are sold through trial offers, in which consumers sign up to receive a free trial product and to be billed monthly for continued delivery of these products until the consumer affirmatively cancels his or her subscription, and non-trial offers, in which consumers make one-time purchases of products. In 2017 and 2018, trial offer sales constituted 86.2% and 60.5%, respectively, of ConversionPoint’s e-commerce product net revenues and non-trial sales constituted the balance.

Sales and Marketing

Push and Branded Response market products directly to consumers online and through various online third-party marketing companies, that send traffic to landing pages for the products on a cost-per-acquisition, or CPA, basis where the marketing company is paid a flat fee for each product sold, or on a cost-per-click, or CPC, basis where ConversionPoint pays a set fee each time a consumer clicks on an advertisement, regardless of whether the consumer purchases a product. CPA and CPC rates generally depend upon the price at which the product is sold and are negotiated separately with each marketing company.

Products are marketed online, primarily through email marketing, native advertising (material in an online publication which resembles the publication’s editorial content but is paid for by an advertiser and intended to promote the advertiser’s product), and display advertisements (such as online banner ads). Customers pay for products online using credit cards.

Suppliers, Shipping and Fulfillment

Branded Response purchases finished products from various U.S.-based third-party fulfillment houses that store and ship the products to customers. Push purchases finished products it sells from various manufacturers, and stores and ships products from its facility in Minneapolis, Minnesota.

Although Branded Response and Push generally have good relationships with the third-party fulfillment houses and manufacturers with which they work, they believe they could replace any of their current fulfillment houses or manufacturers without great difficulty or a significant increase to their cost of goods sold.

Customers

ConversionPoint serves customers across a wide range of industries and geographies. ConversionPoint’s technology product customers include both traditional and online retailers, and small and large brands, such as Canon USA, Intel, Brother, FujiFilm and Nikon. ConversionPoint’s e-commerce product sales are made primarily to individuals located in the United States.

Key Relationships

ConversionPoint has long-standing relationships with Walmart, Lowes, Costco and other major online retailers, which integrate ConversionPoint’s JavaScript tags on their online retail store web pages, allowing ConversionPoint’s brand customers to directly publish interactive experiences and product information to such retail websites.

ConversionPoint’s Competitive Strengths

ConversionPoint believes it has the following competitive strengths:

ConversionPoint’s Growth Strategy

In the second quarter of 2018, ConversionPoint began shifting its focus away from e-commerce product sales, towards its long term growth strategy of further developing and expanding its managed services and SaaS businesses. The following are key elements of ConversionPoint’s growth strategy:

ConversionPoint’s Technology Platform

ConversionPoint has developed its proprietary technology platform with a focus on delivering industry-leading breadth, scalability, reliability and flexibility. A portion of ConversionPoint’s platform is cloud-based and SaaS, with a single code base and multi-tenant software architecture. Because of this architecture, there is no need for customers to download, install or upgrade software.

ConversionPoint’s software has been developed using agile software development methodologies, which allow ConversionPoint to rapidly iterate by developing small, incremental changes that are continuously integrated into its code base.

ConversionPoint hosts its platform on secure third-party hosting platforms, using servers, networking systems and storage systems it leases from its hosting providers. ConversionPoint employs system security, including firewalls, load balancers, threat protection layers, encryption technology and antivirus software, and conducts regular system tests and vulnerability and intrusion assessments. In the event of failure, ConversionPoint has engineered its systems with backup and recovery capabilities designed to provide for business continuity.

Competition

The overall market for e-commerce solutions is rapidly evolving, highly competitive, complex, fragmented with numerous single point solutions, and is subject to changing technology and shifting customer needs. ConversionPoint faces significant competition. To maintain and improve ConversionPoint’s competitive position, ConversionPoint must keep pace with the evolving needs of its customers and continue to develop and introduce new modules, features and services in a timely and efficient manner, and complete the development of its unified end-to-end e-commerce SaaS platform. 

ConversionPoint currently competes with established companies, such as Optimizely and Volume in the digital media optimization space, WebCollage in the rich content creation and product information syndication space, Limelight and Click Funnels in the sales conversion space, AdRoll and Criteo in the remarketing space, and Narvar and ShipStation in the shipping and logistics space.

ConversionPoint believes the principal competitive factors in its market include the following: 

ConversionPoint believes that it competes favorably with respect to the factors described above, however, competitors continue to increase their suite of offerings across e-commerce channels to better compete. A number of competitors have greater name recognition and are better capitalized than ConversionPoint. ConversionPoint’s ability to remain competitive in its market segment depends upon its ability to innovate and to efficiently provide unique solutions to its demand and supply customers.

Research and Development

ConversionPoint’s research and development efforts are focused on the following:

Intellectual Property

ConversionPoint’s ability to protect its intellectual property, including its technology, will be an important factor in the success and continued growth of its business. ConversionPoint protects its intellectual property through trade secrets law, copyrights, trademarks and contracts. ConversionPoint has filed four provisional U.S. patent applications related to its content creation, syndication and online tracking technologies. Some of ConversionPoint’s technologies rely on third-party licensed intellectual property. ConversionPoint also protects details about its processes, products, and strategies as trade secrets, keeping confidential the information that it believes provides it with a competitive advantage.

In addition, ConversionPoint has established business procedures designed to maintain the confidentiality of its proprietary information, including the use of confidentiality agreements and assignment-of-inventions agreements with employees, independent contractors, consultants and companies with which ConversionPoint conducts business.

Government Regulation

The legal environment of the Internet is evolving rapidly in the United States and elsewhere. The manner in which existing laws and regulations will be applied to the internet in general, and how they will relate to ConversionPoint’s business in particular, both in the United States and internationally, are often unclear. For example, ConversionPoint often cannot be certain how existing laws will apply in the e-commerce and online context, including with respect to such topics as privacy, pricing, credit card fraud, advertising, taxation, content regulation, quality of products and services and intellectual property ownership and infringement. Furthermore, it is not clear how existing laws governing issues such as sales and other taxes and personal privacy will apply to the internet, as many of these laws were adopted prior to the advent of the internet and do not contemplate or address the unique issues raised by the internet or e-commerce. It is also unclear how the laws that do reference the internet will be interpreted by courts, which may impact their applicability and scope. Compliance may be costly and may require ConversionPoint to modify its business practices and product offerings. In addition, it is possible that governments of one or more countries may seek to censor content available on ConversionPoint’s or its customer’s websites or may even attempt to completely block access to those websites. Noncompliance or perceived noncompliance could also subject ConversionPoint to significant penalties and negative publicity. Accordingly, adverse legal or regulatory developments could substantially harm ConversionPoint’s business.

Customers load product information and other content onto ConversionPoint’s platform, generally without any control or oversight by ConversionPoint, at which point ConversionPoint may legally be considered to be the distributor of that content. This presents legal challenges to ConversionPoint’s business and operations, such as rights of privacy or intellectual property rights related to the content loaded onto ConversionPoint’s platform. Both in the United States and internationally, ConversionPoint must monitor and comply with a host of legal concerns regarding the content loaded onto its platform. The scope of ConversionPoint’s liability for third-party content loaded onto its platform for delivery to various online e-commerce channels may vary from jurisdiction to jurisdiction and may vary depending on the type of claim, such as privacy, infringement or defamation claims. ConversionPoint’s ability to employ processes to quickly remove infringing or offending content from its platform, for example, is an important tool in protecting ConversionPoint from exposure for the potentially infringing activities of its customers. ConversionPoint also incorporates protections in customer contracts that allows ConversionPoint to take steps, if needed, to limit its risk regarding much of the content loaded onto, and collected by, ConversionPoint’s platform and solutions.

Numerous laws and regulatory schemes have been adopted at the national and state level in the United States and internationally that have a direct impact on ConversionPoint’s business and operations. These laws include, but are not limited to, the following:

Copyright and trademark.    The Copyright Act of 1976 and the statutes and regulations associated with copyrights and trademarks and enforced by the United States Patent and Trademark Office are intended to protect the rights of third parties from infringement. Using certain of ConversionPoint’s services, customers can upload any content they desire for use with ConversionPoint’s solutions. ConversionPoint maintains an active copyright and trademark infringement policy and responds to take-down requests by third-party intellectual property right owners that might result from content posted by ConversionPoint’s customers using ConversionPoint’s solutions. As ConversionPoint’s business expands to other countries, ConversionPoint must also respond to regional and country-specific intellectual property considerations, including take-down and cease and desist notices in foreign languages, and ConversionPoint must build infrastructure to support these processes. The Digital Millennium Copyright Act, or DMCA, also applies to ConversionPoint’s business. This statute provides relief for claims of circumvention of copyright-protected technologies but includes a safe harbor that is intended to reduce the liability of online service providers for listing or linking to third-party websites that include materials that infringe copyrights or other rights of others.

Data privacy and security.    Data privacy and security with respect to the collection of personally identifiable information continues to be a focus of worldwide legislation and compliance review. Examples include statutes adopted by the State of California that require online services to report breaches of the security of personal data, and to report to California customers when their personal data might be disclosed to direct marketers. In the European Union, where U.S. companies must meet specified privacy and security standards, the Data Protection Directive requires comprehensive information privacy and security protections for consumers with respect to information collected about them. Compliance requirements include disclosures, consents, transfer restrictions, notice and access provisions for which ConversionPoint may in the future need to build further infrastructure to support. ConversionPoint attempts to adhere to the Data Protection Directive’s Safe Harbor Privacy Principles and comply with the U.S.-E.U. Safe Harbor Framework as agreed to and set forth by the U.S. Department of Commerce and the European Union concerning U.S. companies doing business in Europe and collecting personal information from European citizens. Under the Safe Harbor Framework, ConversionPoint posts on its website, privacy policies and practices concerning the use and disclosure of user data. Any failure by ConversionPoint to comply with its posted privacy policies, the Safe Harbor Framework, U.S. Federal Trade Commission, or FTC, requirements or other privacy-related laws and regulations could result in proceedings by governmental or regulatory bodies that could potentially harm its business, results of operations and financial condition.

In this regard, there are a large number of legislative proposals before the U.S. Congress and various state legislative bodies regarding privacy issues that could affect ConversionPoint’s business. It is not possible to predict whether or when such legislation may be adopted, and certain proposals, if adopted, could harm ConversionPoint’s business through a decrease in customers and revenue. These decreases could be caused by, among other possible provisions, the required use of disclaimers or other requirements before prospective buyers can interact with ConversionPoint’s customers. ConversionPoint uses tracking technology to track purchases and consumer online behavior to enable ConversionPoint to serve relevant ads to consumers based on their online behavior. Laws prohibiting or inhibiting such tracking could make it difficult to effectively provide certain of ConversionPoint’s services. The interpretation and implementation of processes to comply with cookie laws continues to evolve, and ConversionPoint cannot predict how any new laws will apply to ConversionPoint or its business.

Credit card protections.  ConversionPoint collects credit card data in processing the fees paid to ConversionPoint by its customers, as well as consumer credit card information when ConversionPoint’s customers use some of its solutions. Several major credit card companies have formed the Payment Card Industry Council, or PCI Council, in order to establish and implement security standards for companies that transmit, store or process credit card data. The PCI Council has created the Payment Card Industry Data Security Standard, or PCI DSS. Although the PCI DSS is not law, merchants using PCI Council members to process transactions are required to comply with the PCI DSS, with associated fines and penalties for non-compliance. Elements of the PCI DSS have begun to emerge as law in some states, however, and ConversionPoint expects the trend to continue as to further laws and restrictions in collecting and using credit card information.

Employees

As of March 1, 2019, ConversionPoint had 85 full-time employees, none of which are covered by a collective bargaining agreement.

Facilities

ConversionPoint’s corporate headquarters are located in Newport Beach, California, where it leases 9,209 square feet of office space. The lease has a term of five years, and expires in July 2023. It also conducts operations from 26,558 square feet of office and warehouse space in Minneapolis, Minnesota, which consists of three interconnected buildings, pursuant to a lease that has a term of 60 months and expires in December 2021. It also operates from 15,096 square feet of office space in Emeryville, California pursuant to a lease that expires in May 2021.

Legal Proceedings

From time to time, ConversionPoint is subject to legal proceedings, claims and litigation arising in the ordinary course of business. ConversionPoint is currently involved in two litigation matters related to the mergers, D’Arcy v. Inuvo, Inc. et al, and Franchi v. Inuvo, Inc. et al. For a description of these two lawsuits, see “Risk Factors—Risks Related to the Mergers—Litigation related to the mergers is filed against Inuvo and the Inuvo board and/or ConversionPoint and the ConversionPoint board that could prevent or delay the completion of the mergers and/or result in the payment of damages following the completion of the mergers” on page 31.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Company Overview

ConversionPoint, through its wholly-owned subsidiaries, helps e-commerce companies and brands target, convert, manage and re-engage their customers using sophisticated online tracking and data analytics. ConversionPoint’s suite of technologies manages and optimizes multiple aspects of e-commerce including: rich media content creation and syndication, audience targeting, conversion optimization, remarketing, logistics and customer management. ConversionPoint both delivers its technologies to its customers through software-as-a-service, which we refer to as SaaS, and uses its technologies to provide managed digital marketing and e-commerce technology services to brands and advertisers, which we refer to as managed services. ConversionPoint also uses its own technologies to sell various products directly to consumers, which we refer to as e-commerce product sales. ConversionPoint’s vision is to simplify the entire e-commerce experience by integrating its technologies and offering a broad range of e-commerce solutions on a single, easy-to-use platform.

ConversionPoint was formed as a Delaware corporation on November 2, 2016. In April 2017, ConversionPoint acquired Branded Response and Push Holdings, both of which are engaged in the business of e-commerce product sales, with the vision of using Push’s existing technology platform as the foundation to develop both organically and through strategic acquisition, a unified e-commerce solution to (a) more efficiently manage ConversionPoint’s own internal e-commerce product campaigns, (b) manage campaigns for third parties, on a managed services basis, and (c) develop and license their technology to third parties on a self-serve SaaS subscription basis. In 2017, ConversionPoint began generating managed service revenues.

In December 2017, ConversionPoint acquired SellPoints, Inc., a venture-backed Delaware corporation, which had developed a suite of software solutions enabling brands to create and syndicate interactive rich media content experiences to a network of online retailers, track online consumer behavior, retarget consumers based on their online behavior, and deliver robust data analytics and reporting. ConversionPoint believed that SellPoints’ technologies, coupled with its large brand customers and partners, would add significant capabilities to the end-to-end e-commerce platform ConversionPoint was creating.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported periods. ConversionPoint evaluates these estimates and assumptions on an ongoing basis and bases its estimates on historical experience, current conditions and various other assumptions that are believed to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. ConversionPoint’s actual results may materially differ from these estimates.

The more critical accounting estimates include estimates related to revenue recognition, accounts receivable, business combinations, goodwill and intangible assets, software development costs, stock-based compensation and income taxes, have the greatest potential impact on our consolidated financial statements. Therefore, ConversionPoint considers these to be our critical accounting policies and estimates.

Revenue Recognition

ConversionPoint generates revenue from three primary revenue types: e-commerce products sales, managed services, and Software-as-a-Service (“SaaS”).

ConversionPoint recognizes revenue in accordance with ASC 605, Revenue Recognition, and related authoritative guidance. Under ASC 605, revenue is recognized when the following criteria are met: (i) persuasive evidence of an arrangement exists; (ii) fees are fixed or determinable; (iii) the collection of the fees is reasonably assured; and (iv) services have been rendered.

ConversionPoint recognizes revenue in accordance with ASC 605-2, Multiple Deliverables. The determination of whether the arrangement contains multiple elements is determined based on whether the product or service has a stand-alone value. ConversionPoint evaluates each arrangement and was determined that SaaS offerings are recorded as a single unit of accounting for the purposes of allocation of the arrangement consideration and revenue recognition. For arrangements that include a combination of both managed services and SaaS, ConversionPoint has determined that standalone value exists since both products are sold separately. In these cases, ConversionPoint allocates the arrangement consideration to the managed services and SaaS elements based on the relative stand-alone selling prices.

Accounts Receivable

Accounts receivable consists primarily of in-transit credit card settlements from customer sales processed through merchant accounts and revenue earned from customers based on contractual agreements. Merchant accounts frequently require a portion of settlements to be held back for potential future chargebacks and refunds. Holdbacks generally amount to 10% of total settlements and are generally released within six months or when the risk of chargebacks is remote. ConversionPoint estimates the impact of future chargebacks and sales returns based on historical experience and provides an allowance against accounts receivable. Additionally, ConversionPoint performs ongoing evaluations of its customers’ financial condition. ConversionPoint provides credit to some of its customers in the normal course of business and maintains allowances for potential credit losses.

Business Combinations

ConversionPoint allocates the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date. The purchase price allocation process requires management to make significant estimates and assumptions with respect to intangible assets and liability obligations. Although ConversionPoint believes the assumptions and estimates ConversionPoint has made are reasonable, they are based in part on historical experience, market conditions and information obtained from management of the acquired companies and are inherently uncertain. Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to:

Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results.

Goodwill and Intangible Assets

Goodwill is recorded as the difference between the aggregate consideration paid for the acquisitions of Push and SellPoints in 2017 and the fair value of the acquired net tangible and intangible assets acquired. ConversionPoint evaluates goodwill for impairment on an annual basis in the fourth quarter or more frequently if indicators of impairment exist that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

For 2018, ConversionPoint conducted the goodwill impairment testing by assessing qualitative factors to determine whether it was more likely than not that the fair value of our reporting unit was less than its carrying amount. As part of this assessment, ConversionPoint considered factors, including but not limited to, the overall macroeconomic environment, specific industry and market conditions, cost factors, our overall financial performance against expectations, and changes in strategy or the manner in which it uses its assets. While ConversionPoint had operating losses in 2018, ConversionPoint increased its revenues in managed services and SaaS, which are the key segments. No other indicators of impairment were identified during ConversionPoint assessment. Accordingly, ConversionPoint concluded there was no impairment to goodwill at the impairment testing date.

ConversionPoint’s intangible assets consist of software technology, customer lists, and brand names which are amortized using the straight-line method over five years. These intangible assets resulted from the acquisitions of Push and SellPoints in 2017.

Software Development Costs

Capitalization of software development costs begins during the application development stage. Costs incurred in the application development phase, including upgrades and enhancements, if it is probable that such expenditures will result in additional functionality, are capitalized and will be amortized over their estimated useful life. Software development costs incurred subsequent to the establishment of technological feasibility are capitalized on the accompanying balance sheets on a periodic basis, usually quarterly. Software development costs are amortized using the straight-line method over five years.

Software development activities generally consist of three stages: (i) the planning stage; (ii) the application and infrastructure development stage; and (iii) the post-implementation stage. Costs incurred in the planning and post-implementation stages of software development, including costs associated with the post configuration training and repairs and maintenance of the developed technologies, are expensed as incurred. ConversionPoint capitalizes costs associated with software developed when both the preliminary project stage is completed and management has authorized further funding for the completion of the project. Costs incurred in the application and infrastructure development stages, including significant enhancements and upgrades, are capitalized. Capitalization ends once a project is substantially complete and the software and technologies are ready for their intended purpose. Software development costs are amortized using a straight-line method over the estimated useful life of five years, commencing when the software is ready for its intended use.

Stock-Based Compensation

ConversionPoint values stock compensation based on the fair value recognition provisions of ASC 718, Compensation – Stock Compensation, which establishes accounting for stock-based awards exchanged for employee services and requires companies to expense the estimated grant date fair value of stock awards over the requisite employee service period.

The fair value of restricted stock awards is based on the market price of ConversionPoint’s common stock on the date of the grant. To value stock option awards, ConversionPoint uses the Black-Scholes-Merton option pricing model. This model involves assumptions including the stock price, expected life of the option, stock price volatility, risk-free interest rate, dividend yield and exercise price. ConversionPoint recognizes compensation expense in earnings over the requisite service period, while forfeitures of awards are recognized as they occur.

ConversionPoint also grants stock-based awards to non-employees. ConversionPoint believes that for stock options issued to non-employees, the fair value of the stock option is more reliably measurable than the fair value of the services rendered. Therefore, ConversionPoint estimates the fair value of non-employee stock options using a Black-Scholes-Merton valuation model with appropriate assumptions. The estimated fair value of non-employee stock options is re-measured over the vesting period, and the expense is recognized on a straight-line basis over the period during which the award vests.

Income Taxes

ConversionPoint uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax laws is recognized in the consolidated statement of operations in the period that includes the enactment date.

Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not expected to be realized based on the weighting of positive and negative evidence. Future realization of deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryback or carryforward periods available under the applicable tax law. ConversionPoint regularly reviews the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. ConversionPoint’s judgments regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute its business plans and/or tax planning strategies. Should there be a change in the ability to recover deferred tax assets, the tax provision would increase or decrease in the period in which the assessment is changed.

Overview of 2018

In the second quarter of 2018, ConversionPoint shifted its focus away from e-commerce product sales towards its long-term growth strategy of further developing its managed services and SaaS offerings for brands and advertisers. ConversionPoint began devoting resources to integrating its various technology solutions into an end-to-end e-commerce platform and increasing managed services and SaaS revenues. While ConversionPoint continued, and plans to continue, e-commerce product sales, the shift in internal resources away from e-commerce product sales resulted in a decrease in overall revenues in 2018, as compared to 2017, although managed services and SaaS revenues increased during 2018.

As part of its strategy of focusing on developing its managed services and SaaS businesses and continuing to develop and enhance its end-to-end e-commerce solutions, in November 2018, ConversionPoint entered into the merger agreement to acquire Inuvo. Inuvo owns IntentKey, a first party consumer data platform with strong intellectual property that allows brands to better target potential customers online. ConversionPoint views Inuvo and its first party data platform as a key part of the development of its end-to-end e-commerce technology platform and the growth of its managed services and SaaS revenues.

ConversionPoint believes it is providing enterprise grade e-commerce technologies available to SMBs, which primarily currently use multiple technology point solutions to operate their e-commerce businesses.

Results of Operations for the Years ended December 31, 2018 and 2017

Segment Reporting

ConversionPoint and its subsidiaries operate in the following three business segments: e-commerce product sales, managed services, and SaaS. The following financial information presents ConversionPoint’s consolidated statements of income (loss) and certain operating data for each of the periods indicated. The results of operations by segment are also discussed as part of a discussion of the consolidated overview.

In the e-commerce product sales reportable segment, ConversionPoint sells various products, primarily, in the health, wellness and beauty industries, directly to consumers online. ConversionPoint sells these products, primarily through trial offers and a monthly subscription model. ConversionPoint uses its expertise and its internally developed technologies to maximize the lifetime value of customers.

The managed services reportable segment consists mainly of the management of digital advertising campaigns and retargeting technologies for brands and advertisers.

The SaaS reportable segment consists of rich media content creation and product information management and syndication, which increase the return on investment for brands and advertisers selling on various online retail channels through higher online check out rates for the brands and advertisers using the technology.

Operating Data for the Year ended December 31, 2018 and 2017