Welcome to the Inuvo and ConversionPoint Strategic Combination Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Sean Mansouri of Liolios. Please go ahead, sir.

Thank you, and good afternoon. I'd like to thank everyone for joining us today for the Inuvo and ConversionPoint Strategic Combination Conference Call. Today, Inuvo's Chief Executive Officer, Richard Howe; and Chief Financial Officer, Wally Ruiz, will be attending and are joined by ConversionPoint's Chief Executive Officer, Robert Tallack; and Chief Financial Officer, Raghu Kilambi. Before we begin, I'm going to review the company's safe harbor statement. The statements in this conference call that are not descriptions of historical facts are forward-looking statements relating to future events, and as such, all forward-looking statements are made pursuant to the Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. When used in this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project; and similar expressions as they relate to Inuvo are as such a forward-looking statement. Investors are cautioned that all forward-looking statements involve risks and uncertainties which may cause actual results to differ from those anticipated by Inuvo at this time. In addition, other risks are more fully described in Inuvo's public filings with the U.S. Securities and Exchange Commission, including our Form 8-K filed on November 5, 2018, Form 8-K and Form 10-Q filed on November 7, 2018, which can be reviewed at www.sec.gov. With that, I'll now turn the call over to CEO Richard Howe. Rich?

Thank you, Sean. And thanks, everyone, for joining us today. We are exceptionally enthusiastic to discuss the impending combination of 2 great companies, Inuvo and ConversionPoint Technologies. ConversionPoint specializes in delivering world-class eCommerce technology solutions to leading global brands and retailers. They have offices in Newport Beach and Emeryville, California as well as an office in Minneapolis. They did about $50 million of revenue in their audited 2017 financials and were recently named by Inc. magazine as 1 of the top 100 fastest-growing private companies in the United States. They have existing integrations at well-known online retailers like Walmart.com and officedepot.com; have well-respected shareholders that include Menlo Ventures, Granite and IBM. As we have stated in the past, our artificial intelligence platform has the potential to fundamentally change the way behavioral information is collected and used. We believe it is a game changer with respect to big data and artificial intelligence and is now expected to serve as a growth accelerator for the combined company. Inuvo has been searching for a partner that has existing relationships that could be leveraged, access to capital and a market where the technology and data behind our IntentKey and ValidClick platforms could be better monetized and where value better reflected the intellectual property we have developed and patented. We knew we had exceptional capabilities. We just needed more capital and/or a partner that could help us leverage these capabilities. Our thesis for the combination was simple. Inuvo sits on intent data and has access to tens of thousands of ads through relationships with the biggest tech and media companies in the world. ConversionPoint has software that manages consumer engagement across the eCommerce life cycle and the tools to take action on both intent data about consumers and the advertising used to message those consumers…

Excellent. Thank you, Rich. We share your enthusiasm for this merger, and we are equally impressed with your team as well as the technologies Inuvo has developed. We cofounded ConversionPoint 2 years ago with the intention of creating a unified eCommerce platform to help world-class retailers and brands run effective online eCommerce campaigns. eCommerce is already a $450 billion category in the U.S.A. alone and much larger worldwide. Retailers are competing to win customers in a crowded marketplace which is filled with individual point marketing solutions. Amazon has actually been a primary example of a company that focuses on using technology-driven data collections for the purposes of improving customer engagement and ultimately conversion. Amazon's first-party data and consumer insight is one of the main reasons why they're such a success. Our mission is simple, to provide Amazon-level data and insight to retailers running eCommerce programs both on their own websites as well as large online retailers like Walmart.com. ConversionPoint already possesses software technology that does a number of things, including enhancing product experiences, optimizing media, enabling upsells, managing logistics and running retargeting campaigns for customers who leave their shopping experiences before purchasing. Now as Rich correctly pointed out, what we were missing was world-class AI-driven data about the customers, data that's not limited to their immediate shopping interests. And ConversionPoint already has some insight, we already had some data, but it was limited to the current engagement with a customer. And while we'd evaluated many potential acquisition candidates, we were simply blown away with the artificial intelligence that underpins the IntentKey. And we were very impressed with the relationships and access to media inventories within the ValidClick platform. We were looking for a win-win; and in Inuvo, we found it, in the technology and the people and the culture and…

Thank you, Robert and Rich. I share your passion for this deal. ConversionPoint has offered and Inuvo accepted cash and stock with a total estimated value of $75.5 million, of which approximately $15.3 million would be in cash and an estimated $60.2 million would be equity of the combined company. Inuvo shareholders would own approximately 29% of that combined company with -- before any dilution from financing. This total consideration translates into $0.45 per Inuvo share in cash and an estimated $1.77 per Inuvo share in equity. The equity component of the valuation was based on ConversionPoint's most recent 2018 equity funding, which valued ConversionPoint's common shares at $9.21 per share, for a total estimated equity valuation for ConversionPoint of $146 million. A new holding company has been formed, and both Inuvo and ConversionPoint will be rolled into that holding company as wholly owned subsidiaries. The holding company's capitalization will include approximately 6.4 million shares for Inuvo shareholders and approximately 15.6 million shares for ConversionPoint stockholders, for a total capitalization prefinancing of 22 million shares. The exchange ratio for Inuvo shareholders associated with this new capitalization is 0.1877 (sic) [ 0.18877 ] shares of the holding company for each one Inuvo share owned. Or approximately 5.3 Inuvo shares would equal 1 share of the holding company after payment of $0.45 cash per share. For ConversionPoint shareholders, the exchange ratio is 0.9840 shares of the holding company in exchange for each ConversionPoint share. We are in the process of preparing to file a Form S-4 with the SEC to register the shares of the common stock issued in the acquisition. And we intend to file listing applications with both the Nasdaq Capital Market and the Toronto Stock Exchange for the holding company shares. We expect to close the transaction in the first quarter of 2019; and further expect to be able to meet the $36 million capital requirement that was part of the deal through the issuance of equity and/or debt, a portion of the cash of which will be used to satisfy the cash component of the payment to Inuvo shareholders. We've had strong support internally, with all of Inuvo's directors and executive officers as well as ConversionPoint Technologies stockholders owning 70% of Conversionpoint Technologies' outstanding shares signing support agreements in favor of the acquisition. I'd like to turn the call back to Rich for closing comments.

Thanks, Raghu. After the acquisition, we envision a combined company with technologies, data sources and industry partners capable of serving the demand for a data-driven eCommerce experience across small, medium and large business segments. I see 2 similar cultures with roughly 190 associates who want to win. I see a potentially lucrative upsell with the IntentKey. And I see numerous revenue and expense synergies that will be fully quantified with plans of action prior to the expected close in the first quarter of 2019. For our Inuvo stockholders, we see this as not only opportunity to obtain a fair valuation today but also to participate in the future success of the combined operations. Before we move on to questions-and-answers session, I do want to proactively address any questions regarding the financing contingency in the transaction. We are not permitted to discuss the details or status of the proposed financing due to SEC regulations, other than to reiterate what was disclosed in the press release, which is that the closing of the transaction is contingent on raising $36 million in gross proceeds from the issuance of equity and/or debt by ConversionPoint, a portion of which will be used to fund the cash portion of the acquisition transaction. I'd like to now turn the call back over to the operator for questions and answers.

[Operator Instructions] And we'll take our first question from Lisa Thompson with Zacks Investment Research.

So all right. So let me try to understand. I mean, first off, you said that there was $50 million in revenues. Is that a run rate or -- for 2018 or 2017? What was that?

I'll let Raghu answer that for ConversionPoint.

Lisa, this is Raghu from ConversionPoint. The $50 million noted in the press release were audited 2017 revenues. Unfortunately, until we file our S-4, which I mentioned in my comments, we cannot make any comments on ConversionPoint's financial performance in 2018 and any projections moving forward. Those items will be disclosed in the Form S-4 which we'll file in a few weeks with the SEC.

Okay, so that's the first time we'll see any information, correct?

That is correct.

Okay. So just -- I just want to understand this, the procedure here. So you're going to file that. We're going to get your financial numbers and then be able to put some sort of model together. And then you are going out to try to do a financing as a private company. Is that right?

Well, we're also in addition going -- the -- to file applications to list the holding company shares that both ConversionPoint and Inuvo shareholders will have on the NASDAQ capital markets and the Toronto Stock Exchange. And per the press release, we are looking at different equity and debt financing alternatives for the $36 million. We cannot comment any more on that, per SEC rules.

Okay, so -- but you don't -- you can't close the deal until you raise the financing. Is that correct?

That is correct.

Okay, so then that happens next. And then that might simultaneously happen with closing the deal, right, and listing but also...

That is correct.

Okay. Because I know that shareholders are concerned that there is going to be any period where they own a bunch of private company stock and have no liquidity. So you don't anticipate that happening, okay.

That is not -- we do not anticipate that happening, based on similar transactions within the marketplace. Inuvo shares would close one day and delist, and the new ConversionPoint shares would list the next day. And shareholders of -- at the record date -- of Inuvo would end up receiving the cash and obviously shares of the new co. That will be publicly traded.

And this will probably all happen in the first quarter, correct?

That is correct.

Okay, so we just have a few weeks here where we don't know who bought -- what bought us. Because we have no numbers, right? So because I'm trying to understand. Obviously, there's a huge discount between the offering price and where the stock is trading right now. And I guess that's the whole risk profile of we don't know what we're getting and if it's even going to close, correct?

Yes, and I think most M&A deals that you see do have in a range of a discount unless another bid is expected, but even in -- there's a discount even in the IBM Red Hat deal, which is in the multiple tens of billions of dollars. It's over 10%. And so we -- and Inuvo has obviously had a -- and its management team under [ MD&A ], have had tremendous opportunities to do due diligence on our team, our vision and our numbers. They can't share them, but this deal has been done with full, open disclosure of our financial information to Inuvo's management team and their Board of Directors.

Okay, all right. So Rich and Wally, as far as the quarter goes, it's I see -- I understand the revenues dropping off because you're not doing any more publishing kind of stuff, but it seemed like marketing was the same number as usual. How does that work?

So let me answer that. And then Wally, I'll turn it over to you to comment on this, but when we talk about the publisher side of our business, Lisa, there's kind of 2 components to it. There's the actual publisher website that we manage ourselves, but there's a technology component too. In our industry, that's called an SSP. We actually have a platform that serves other parties. And we had told our shareholders on -- starting as early as the beginning of this year, that we were going to exit that. And we did. We didn't expect the revenue to fall off as fast as it did, but we did absolutely design to get out of that part of our business. So that's -- it's that part that we've declined in.

Okay. And are we seeing the full impact in the reduction of expenses because of leaving that business? Or is there a little bit more to come?

Wally, do you want to take that?

Sure. I think there's more to come, Lisa. I think we've seen -- I think you're seeing it there in the compensation already. And you're starting to see it, the SG&A. And you can see the margins, the gross margins, are somewhat higher than last year; and that is because of the change in mix and the change in focus. So you will see, I think you will continue to see some benefits in the restructuring that we've done.

And do you have like a new number of what your break-even revenues would be with this new cost structure?

Well, so we would be at a breakeven -- yes. So the revenue in the quarter would be somewhere, under this new structure, at about $20 million.

Okay, all right, good to know. So I guess I'll let other people ask questions. So we're just going to wait for the next filing, where we'll get the numbers and pro formas and things like that. Is that...

The S-4, yes. I think, Lisa, that's it.

[Operator Instructions] We'll take our next question from Tim Klein with Lake Street Capital.

I'm on for Eric today. And I just wanted to congratulate you on putting your heads together and to really looking at the market, I think, in a much more forward way. It definitely seems to have great transformative potential. So along those lines, I just wondered on the synergy side, Rich or Robert or Raghu, if you can give us some sense of some of the triggers where you identified that synergy and things like is ConversionPoint currently an IntentKey user? Is there any overlap in the customer base? Can you give us some color a little bit on the synergy that you identified?

Thanks, Tim. I'm going to turn that over to Robert and Raghu to answer them for you.

It's Robert Tallack here. On the revenue synergy side, I'll speak to that part of it. We're very excited because ConversionPoint spent the last -- a good part of really the company's 10 years building this incredible eCommerce technology business with numerous clients; and incredible retailer relationship, partnerships with the Walmart.coms of the world. And when we look at the strength of the IntentKey system, this AI-powered engine that Inuvo has, we feel it's going to be able to help essentially turbocharge our current lines of revenue with those -- with the different partners, so the agencies using our technology, the retailers using our technology. All of it becomes more powerful. All of it becomes more valuable when you power it with IntentKey. I know that's not overly descriptive, but just from a general perspective we feel that IntentKey will become the AI-driven engine that's going to power all of our existing technologies. And as we're able to announce this to our partners, like Walmart.com, et cetera, we feel they're going to be very excited about the new, enhanced capabilities of our existing technologies. And what I really like about it is it doesn't require us to do a bunch of R&D or create something new or go pioneer any new business. We're going to be able to expand the partnerships and revenue channels that already exist for ConversionPoint. That's what we're very excited about.

Okay, great. That's helpful. I understand. It makes sense. So as you guys look at the market, then, that's in front of you, right -- I mean you talk about this example of Amazon and what it's doing within its own ecosystem, right, but if you -- as we look out at the rest of the world that's trying to compete against that and you're helping them, how is -- are there any competitors that are doing what you're going to be trying to do by combining ConversionPoint and IntentKey? Or if not, what are you replacing? Is it kind of internal, kind of internally made systems? Or give us a sense for the market that you're going to be attacking with this to the extent that it's defined already.

So Robert, I think that's for you too.

I'm going hand this over to Raghu for a moment. I think he's got a good handle on this one.

And in terms of taking a look, Tim, at the market right now, what ConversionPoint has seen is that there are many point solutions that offer individual components of a full eCommerce ecosystem and particularly for small and medium businesses that we define as between $5 million and $150 million to $200 million in revenues. That creates great confusion, as companies have to integrate 6 to 10 different technologies to fully automate the eCommerce process. In terms of our look at the marketplace, certainly in North America and looking at the non-Amazon world, which is -- includes companies that have online stores on Shopify and BigCommerce and online retailers like Walmart.com and officedepot.com, there is not a end-to-end full-spectrum eCommerce ecosystem that exists. We believe that, certainly with the IntentKey technology that we have in place, we can go from big data and prospecting and targeting customers better than they could ever be targeted before, all the way through to, well, logistics and delivery at the end of our software ecosystem and then remarketing and retargeting customers. It's a very, very powerful and needed platform for the small, medium business market in eCommerce.

Okay, Raghu, that's helpful color. I mean I would say it is a very disparate market. And I think there is a tremendous opportunity to providing some clarity and some singular solution sets to that. Again, congrats on putting this together.

Thanks, Tim.

We will take our next question from Jon Hickman with Ladenburg.

As an analyst, I spend a lot of time trying to figure out valuation. And I've been following Inuvo for a long time. Can you give us any insight into how you came up with the $75 million...

We'll turn that over to Raghu -- yes. Thanks, Jon. I'm going to ask Raghu to answer that.

All right. We took a look at Inuvo's 2017 figures, and it's, certainly, run rate to the first 6 months which were in the $75 million to $80 million range. We looked at some public comps that were trading out there and made an offer at approximately 1x revenues, if you look at -- depending on what period you look at, certainly the last 12 months annualized. And that was the discussions that we had with Inuvo's management team and board, was giving them an opportunity to certainly get a cash portion but then, even with a premium, join with ConversionPoint and go out together to build even a bigger company can -- that can dominate the eCommerce market. So I'm -- we know, I'm sure that Rich and his management team have had other discussions, but we felt our offer provided the best combination solution for some immediate liquidity for shareholders and then a piece that has a very long-term, significant capital markets upside.

Okay. One other question from me, Rich. So you got rid of the sell-side platform. Are you -- did you indicate that you were getting rid of your publishing sites too?

No. No, we're not, no. I think, like we've explained in the past, those sites really have a dual purpose, and they will continue to have a dual purpose. One is a technical purpose. They allow us to develop technologies and test them. They give us competitive reconnaissance as well. And then of course, the other one is just the sheer nature of the publishing aspect of it, but no, we don't have any plan to get rid of that.

Okay, so when -- can you tell -- like did you shut down your sell-side platform at the beginning of the quarter, or in the middle? Or...

No. We started, Jon, at the beginning of the year. And we saw a dropoff -- just to quantify it, I mean we saw a dropoff in the second quarter that we kind of expected. And then we saw a faster dropoff in the third quarter than we had anticipated. We knew it was going to tail off. That's what happens when you start reducing the focus on one part of the business, but we estimated a longer tail than what happened.

And so the marketing expense that's left is all generated -- well, is all -- because that's all traffic that you guys had generated to -- for your own publishing site. And that expense will kind of continue going forward, right?

Yes, the majority of it.

Okay, okay. So could you -- I'm sorry. I didn't quite hear the number of people if you combine the 2 entities. How many employees...

About 190. 190...

190...

ConversionPoint's got like -- ConversionPoint has 124, and we've got 67. So almost -- a little bit more than 190.

Okay. And then can you explain, I don't know who wants to take this question, why there's dual listing in Toronto?

I'll turn that over to Raghu.

The main reason for the Toronto listing is our main comp is Shopify, which is a Canadian company that's dual listed in the U.S. and on the Toronto markets. Look, Robert and I and Rich are actually ex-pat Canadians in the United States. And so we have tremendous and senior investment banking and investor relationships in that market, and there's a lot of liquidity there. And in our conversations with investment bankers that came over the wall on the deal, we had a lot of enthusiasm out of that marketplace. And so it's a sophisticated large-capital market thriving in many spaces right now, including technology. And Shopify is a name that every Canadian institutional and retail investor knows. And we believe we're building, certainly with Inuvo, a comparable company to them.

That concludes today's question-and-answer session. I'd now like to turn the conference back to Richard Howe for any additional or closing remarks.

Thank you, operator. And thank you, everybody, for joining us today. We're, as you can tell, exceptionally excited about the future potential of this combination. And we're pleased with this outcome for our shareholders. Thank you very much.

This concludes today's call. Thank you for your participation. You may now disconnect.