Amendment No 3

S-4/A 1 d251907ds4a.htm AMENDMENT NO 3 Amendment No 3

As filed with the Securities and Exchange Commission on January 25, 2012

Registration No. 333-177983

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 3

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Inuvo, Inc.

(Exact name of registrant as specified in its charter)

Nevada

7310

87-0450450

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

15550 Lightwave Drive, Suite 300

Clearwater, FL 33760

(727) 324-0046

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

Wallace D. Ruiz

Chief Financial Officer

Inuvo, Inc.

15550 Lightwave Drive, Suite 300

Clearwater, FL 33760

(727) 324-0046

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

Copies of Correspondence to:

James M. Schneider, Esq.

Schneider Weinberger LLP

2200 Corporate Boulevard N.W., Suite 210

Boca Raton, Florida 33431

Telephone: (561) 362-9595

Facsimile: (561) 362-9612

John B. Pisaris

General Counsel

Vertro, Inc.

143 Varick Street

New York, NY 10013

Telephone: (212) 231-2000

Facsimile: (212) 736-9121

Jeremy D. Siegfried, Esq.

Porter, Wright, Morris & Arthur, LLP

41 South High Street

Columbus, Ohio 43215

Telephone: (614) 227-2000

Facsimile: (614) 227-2100

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement is declared effective and at the effective time of the merger referred to 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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	¨		Accelerated filer	¨
Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	x

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

Exchange Act Rule 13e-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, or until the Registration Statement shall become effective on such dates 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. We may not sell the securities offered by this preliminary joint proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary 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 or sale is not permitted.

PRELIMINARY — SUBJECT TO COMPLETION — DATED JANUARY 25, 2012

PROPOSED MERGER — YOUR VOTE IS VERY IMPORTANT

To the stockholders of Inuvo, Inc. and Vertro, Inc.:

On October 17, 2011, Inuvo, Inc. and Vertro, Inc. announced our proposed merger. This joint proxy statement/prospectus describes the merger, including the reasons the merger was proposed, the negotiation process that led to the merger, and other background information. We are sending you this joint proxy statement/prospectus and related materials in connection with the solicitation of proxies by the boards of directors of Inuvo and Vertro for use at their special meetings of stockholders, both to be held on February 29, 2012. At the special meetings, among other items, the stockholders of Inuvo and Vertro will be asked to consider and vote on proposals regarding the merger of Anhinga Merger Subsidiary, Inc., referred to as Merger Sub, a newly formed wholly owned subsidiary of Inuvo, with and into Vertro, with Vertro surviving the merger as a wholly owned subsidiary of Inuvo. These proposals are discussed in greater detail in the remainder of this joint proxy statement/prospectus. We urge you to read carefully this joint proxy statement/prospectus and the documents incorporated by reference into it.

If the proposed merger is completed, each holder of Vertro common stock will be entitled to receive 1.546 shares of Inuvo common stock for each share of Vertro common stock he, she or it owns. Inuvo stockholders will continue to own their existing shares of Inuvo common stock. Inuvo common stock is currently traded on the NYSE Amex under the symbol “INUV,” and shares of Vertro common stock are currently traded on the NASDAQ Capital Market under the symbol “VTRO.”

The Inuvo board of directors approved unanimously the merger agreement and the merger, and the Inuvo board of directors recommends unanimously that the Inuvo stockholders vote “FOR” the proposal to approve the issuance of shares of Inuvo common stock in the merger at the Inuvo special meeting. The Vertro board of directors approved unanimously the merger agreement and the merger and recommends unanimously that the Vertro stockholders vote “FOR” the proposal to adopt the merger agreement and approve the merger at the Vertro special meeting.

We cannot complete the merger unless:

•

the holders of a majority of the votes cast at the Inuvo special meeting approve the issuance of shares of Inuvo common stock in the merger;

•

the holders of a majority of the shares of Inuvo common stock outstanding and entitled to vote at the Inuvo special meeting adopt the Certificate of Amendment to Inuvo’s Amended Articles of Incorporation;

•

the holders of a majority of the votes cast at the Inuvo special meeting adopt an amendment to the Inuvo 2010 Equity Compensation Plan authorizing an additional 2,500,000 shares to be available for grant; and

•

the holders of a majority of the shares of Vertro common stock outstanding and entitled to vote at the Vertro special meeting adopt the merger agreement and approve the merger.

All Inuvo and Vertro stockholders are invited to attend their company’s special meeting in person. Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend either special meeting in person, please submit a proxy to vote your shares as promptly as possible so that your shares may be represented and voted at the Inuvo or Vertro special meeting, as applicable, by signing, dating and returning the enclosed proxy card, by calling the toll-free telephone number, or by using the Internet as described in the instructions included with your proxy card.

The obligations of Inuvo and Vertro to complete the merger are subject to the satisfaction or waiver of several conditions. The accompanying joint proxy statement/prospectus contains detailed information about Inuvo, Vertro, the special meetings, the merger agreement and the merger. You should read this joint proxy statement/prospectus carefully and in its entirety before voting, including the section entitled “Risk Factors” beginning on page 21.

Richard K. Howe

President and Chief Executive Officer

Inuvo, Inc.

Peter A. Corrao

President and Chief Executive Officer

Vertro, Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this joint proxy statement/prospectus or determined if this joint proxy statement/prospectus is adequate, accurate, truthful, or complete. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated [—], and is first being mailed to stockholders on or about [—].

INUVO, INC.

15550 Lightwave Drive, Suite 300

Clearwater, Florida 33760

(727) 324-0046

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

Time:

[—]

Date:

February 29, 2012

Place:

Corporate offices of Inuvo, located at 15550 Lightwave Drive, Suite 300, Clearwater, Florida 33760

Purpose:

(1)

To approve the issuance of Inuvo common stock in the merger

(2)

To adopt the Certificate of Amendment to Inuvo’s Amended Articles of Incorporation

(3)

To adopt an amendment to the Inuvo 2010 Equity Compensation Plan authorizing an additional 2,500,000 shares to be available for grant

(4)

To approve any motion to adjourn or postpone the Inuvo special meeting to another time or place, if necessary, to solicit additional proxies if there are insufficient votes at the time of the Inuvo special meeting to adopt any of the foregoing proposals

(5)

To consider and act upon such other business and matters or proposals as may properly come before the special meeting or any adjournment or postponement thereof

The first, second, and third proposals are conditioned on each other and approval of each is required for completion of the merger.

Record Date:

Holders of record of Inuvo common stock as of the close of business on January 27, 2012, the record date for the special meeting, are entitled to notice of and to vote at the meeting.

Proxy Statement:

The enclosed joint proxy statement/prospectus describes the purpose and business of the special meeting, contains a detailed description of the merger and the merger agreement, and includes a copy of the merger agreement as Appendix A. Please read these documents carefully before deciding how to vote.

The Inuvo board of directors recommends unanimously that stockholders vote “FOR” the proposal to approve the issuance of Inuvo common stock in the merger, “FOR” the proposal to adopt the Certificate of Amendment to Inuvo’s Amended Articles of Incorporation, “FOR” the proposal to adopt the amendment to the Inuvo 2010 Equity Compensation Plan, and “FOR” the proposal to adjourn or postpone the special meeting, if necessary to solicit additional proxies.

YOUR VOTE IS IMPORTANT

If you receive a copy of the proxy card by mail, we urge you to date, sign, and promptly return the enclosed form of proxy in the enclosed envelope, to which no postage need be affixed if mailed in the United States. You may also authorize the individuals named on your proxy card to vote shares by calling the toll-free telephone number or by using the Internet as described in the instructions included with your card. Voting your shares over the Internet, via the toll-free telephone number or by mailing a proxy card will not limit your right to vote in person or attend the special meeting. You are invited to attend the special meeting. If you attend, you may revoke your proxy and vote in person if you wish, even if you have previously returned your proxy. Please note, however, if your shares are held of record by a broker, bank, or other nominee and you wish to vote at the special meeting, you must obtain from the record holder a proxy issued in your name.

By order of the board of directors,

Wallace D. Ruiz

Chief Financial Officer and Secretary

Clearwater, Florida

[—]

VERTRO, INC.

143 Varick Street

New York, New York 10013

(212) 231-2000

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS


*Time:*		[—]

*Date:*		February 29, 2012

*Place:*		[—]

*Purpose:*		(1) To adopt the agreement and plan of merger, dated October 16, 2011, among Inuvo, Inc., Anhinga Merger Subsidiary, a wholly owned subsidiary of Inuvo, and Vertro, Inc.

		(2) To approve, on a nonbinding advisory basis, the compensation of Vertro’s named executive officers that is based on or otherwise relates to the merger

		(3) To approve any motion to adjourn or postpone the Vertro special meeting to another time or place, if necessary to solicit additional proxies if there are insufficient votes at the time of the Vertro special meeting to adopt the merger agreement and approve the merger

		(4) To consider and act upon such other business and matters or proposals as may properly come before the special meeting or any adjournment or postponement thereof

*Record Date:*		Holders of record of Vertro common stock as of the close of business on January 27, 2012, the record date for the special meeting, are entitled to notice of and to vote at the meeting.

*Proxy Statement:*		The enclosed joint proxy statement/prospectus describes the purpose and business of the special meeting, contains a detailed description of the merger and the merger agreement, and includes a copy of the merger agreement as Appendix A. Please read these documents carefully before deciding how to vote.

The Vertro board of directors recommends unanimously that Vertro stockholders vote “FOR” the proposal to adopt the merger agreement and approve the merger, “FOR” the proposal to approve, on a nonbinding advisory basis, the compensation of Vertro’s named executive officers that is based on or otherwise relates to the merger, and “FOR” the proposal to adjourn or postpone the special meeting, if necessary to solicit additional proxies.

YOUR VOTE IS IMPORTANT

If you receive a copy of the proxy card by mail, we urge you to date, sign and promptly return the enclosed form of proxy in the enclosed envelope, to which no postage need be affixed if mailed in the United States. You may also authorize the individuals named on your proxy card to vote shares by calling the toll-free telephone number or by using the Internet as described in the instructions included with your card. Voting your shares over the Internet, via the toll-free telephone number or by mailing a proxy card will not limit your right to vote in person or attend the special meeting. You are invited to attend the special meeting. If you attend, you may revoke your proxy and vote in person if you wish, even if you have previously returned your proxy. Please note, however, if your shares are held of record by a broker, bank or other nominee and you wish to vote at the special meeting, you must obtain from the record holder a proxy issued in your name.

By order of the board of directors,

John B. Pisaris

General Counsel and Secretary

New York, New York

[—]

ADDITIONAL INFORMATION

This joint proxy statement/prospectus references important business and financial information about Inuvo and Vertro that is not included in or delivered with this joint proxy statement/prospectus. Stockholders of Inuvo or Vertro may obtain copies of this information (excluding all exhibits), which are referred to or incorporated by reference in this joint proxy statement/prospectus, when available, free of cost, by directing a written or oral request to the applicable company at:

Inuvo, Inc.

15550 Lightwave Drive

Clearwater, Florida 33760

Attn: Corporate Secretary

(727) 324-0046, extension 2123

Vertro, Inc.

143 Varick Street

New York, New York 10013

Attn: Corporate Secretary

(646) 253-0606

Stockholders of Vertro may also obtain copies of any of these documents and answers to questions about the Vertro special meeting and proposals from Georgeson Inc., Vertro’s proxy solicitor, by directing a written or oral request to:

Georgeson Inc.

199 Water Street, 26th Floor

New York, NY 10038

(866) 647-8861

If you would like to request documents, in order to ensure timely delivery, you must do so at least five business days before the date of the special meetings. This means you must request this information no later than February 22, 2012. Inuvo or Vertro, as the case may be, will mail properly requested documents to requesting stockholders by first class mail, or another equally prompt means, within one business day after receipt of such request.

You should rely only on the information contained in, or incorporated by reference into, this joint proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated January 27, 2012. You should not assume that the information contained in, or incorporated by reference into, this joint proxy statement/prospectus is accurate as of any date other than that date. Neither the mailing of this joint proxy statement/prospectus to Inuvo or Vertro stockholders nor the issuance by Inuvo common stock in connection with the merger will create any implication to the contrary.

This joint proxy statement/prospectus 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. Information contained in this joint proxy statement/prospectus regarding Inuvo has been provided by Inuvo, and information contained in this joint proxy statement/prospectus regarding Vertro has been provided by Vertro.

TABLE OF CONTENTS


	Page
Questions and Answers		1

Summary		8

The Parties to the Merger Agreement		8
The Inuvo Special Meeting		8
The Vertro Special Meeting		9
Overview of the Merger Agreement		9
Inuvo Certificate of Amendment to the Amended Articles of Incorporation		10
Purposes and Reasons for the Merger		10
Ownership of Inuvo After the Merger		11
Directors and Executive Officers of Inuvo After the Merger		12
Operations and Administration After the Merger		12
Recommendation of the Inuvo Board of Directors		12
Recommendation of the Vertro Board of Directors		12
Opinion of Craig-Hallum Capital Group, LLC		13
Opinion of America’s Growth Capital, LLC		13
Interests of Certain Persons in the Merger		13
Accounting Treatment of the Merger		14
No Solicitation of Alternative Proposals		15
Termination of the Merger Agreement		15
Conditions to the Merger		15
Appraisal Rights		16
Listing of Inuvo Common Stock		16
Delisting of Vertro Common Stock		16
Comparative Rights of Inuvo and Vertro Stockholders		16
Regulatory Approval		16
Material U.S. Federal Income Tax Consequences of the Merger		17
Litigation Relating to the Merger		17

Comparative Market Prices and Dividends		18

Cautionary Statement Regarding Forward-Looking Statements		19

Risk Factors		21

Risks Relating to the Merger		21
Risk Relating to Inuvo		24
Risks Relating to Vertro		31

The Merger		43

General Description of the Merger		43
Ownership of Inuvo After the Merger		43
Background of the Merger		43
Inuvo’s Purposes and Reasons for the Merger		52
Recommendation of the Inuvo Board of Directors		54
Vertro’s Purposes and Reasons for the Merger		54
Recommendation of the Vertro Board of Directors		57
Certain Unaudited Prospective Financial Information		58
Opinion of Craig-Hallum Capital Group, LLC, Financial Advisor to the Inuvo Board of Directors		61
Opinion of America’s Growth Capital, LLC, Financial Advisor to the Vertro Board of Directors		68
Interests of Certain Persons in the Merger		73


Material Agreements and Relationships Between the Parties			79
Consideration to be Received in the Merger			80
Surrender of Vertro Stock Certificates			80
Payment of Merger Consideration			80
Effect on Awards Outstanding Under Vertro Equity Plans			80
Material U.S. Federal Income Tax Consequences			80
Accounting Treatment of the Merger			83
Listing of Inuvo Common Stock			84
Appraisal Rights			84
Regulatory Approval			84
Litigation Relating to the Merger			84

The Merger Agreement			85

The Merger			85
Effective Time			85
Consideration to be Received in the Merger			85
Adjustments			86
Dividends and Distributions			86
Fractional Shares			86
Conversion of Shares; Exchange Procedures			86
Lost Certificates			87
Treatment of Stock Options and Restricted Stock Units			87
Certificate of Incorporation and Bylaws of the Surviving Corporation			87
Directors and Executive Officers of the Surviving Corporation			87
Inuvo Board of Directors			87
Representations and Warranties			88
Covenants Relating to Conduct of Business Prior to the Merger			90
Investigation; Confidentiality			94
No Solicitation of Alternative Proposals			95
Preparation of Joint Proxy Statement/Prospectus and Registration Statement			96
Stockholders’ Meetings and Board of Directors’ Recommendations			96
Employee Matters			96
Certain Payments Under the Inuvo Deferred Compensation Program			97
Certain Payments Under the Vertro 2011 Bonus Program			97
Reasonable Best Efforts			97
Public Announcements			97
Indemnification of Directors and Officers			97
NYSE Amex Listing			98
Notification of Certain Matters			98
Rights Plan			98
Cooperation With Financing			98
Fees and Expenses			98
Conditions to Completion of the Merger			98
Termination			100
Effect of Termination			101
Amendment and Waiver			101
Specific Performance			102
Governing Law; Jurisdiction			102

Unaudited Pro Forma Condensed Consolidated Financial Information			103


Information about the Companies			109

Inuvo			109
Merger Sub			109
Vertro			109

Comparative Rights of Inuvo and Vertro Stockholders			110

Description of Inuvo Capital Stock			120

General			120
Common Stock			120
Preferred Stock			120
Preferred Stock Purchase Rights			121
Anti-Takeover Effects of Certain Provisions of Inuvo’s Amended Articles of Incorporation, Amended and Restated Bylaws and Nevada Law			121
Amendments to Inuvo’s Amended Articles of Incorporation and Amended and Restated Bylaws			122

The Inuvo Special Meeting			123

Time, Date, and Place			123
Matters to be Considered			123
Who Can Vote at the Special Meeting			123
Attending the Special Meeting			123
Vote Required			123
Voting by Proxy			124
Proxy Solicitation Costs			125
Householding			125
Appraisal Rights			125

Inuvo Proposal 1 — Approval of the Stock Issuance			126

Inuvo Proposal 2 — Adoption of the Certificate of Amendment to the Inuvo Amended Articles of Incorporation			127

Inuvo Proposal 3 — Adoption of the Amendment to the 2010 Equity Compensation Plan			129

Inuvo Proposal 4 — Adjournment or Postponement of the Special Meeting			135

The Vertro Special Meeting			136

Time, Date, and Place			136
Matters to be Considered			136
Who Can Vote at the Special Meeting			136
Attending the Special Meeting			136
Vote Required			136
Voting by Proxy			137
Proxy Solicitation Costs			137
Householding			138
Appraisal Rights			138

Vertro Proposal 1 — Adoption of the Merger Agreement and Approval of the Merger			139

Vertro Proposal 2 — Nonbinding Advisory Approval of the Compensation Based on the Merger			140

Vertro Proposal 3 — Adjournment or Postponement of the Special Meeting			141

Inuvo’s Business			142

Company Overview			142
Competitive Analysis			142
Sales and Marketing			143
Technology Platforms			143

iii


Principal Customers			143
Intellectual Property Rights			143
Employees			144
History of Inuvo			144
Properties			146
Legal Proceedings			146
Transfer Agent			148
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			148

Inuvo’s Management’s Discussion and Analysis of Financial Condition and Results of Operations			149

Overview			149
Results of Operations			151
Three and nine months ended September 30, 2011 and 2010			152
Years Ended December 31, 2010, compared to December 31, 2009			159
Liquidity and Capital Resources			162
Off Balance Sheet Arrangements			164
Critical Accounting Policies and Estimates			164

Vertro’s Business			165

Overview			165
ALOT			165
MIVA Media			167
Employees			167
Properties			167
Legal Proceedings			168

Vertro’s Management’s Discussion and Analysis of Financial Condition and Results of Operations			170

Executive Summary			170
Organization of Information			170
Results of Operations			171
Liquidity and Capital Resources			178
Contractual Obligation			180
Use of Estimates and Critical Accounting Policies			181

Management of the Combined Company Following the Merger			184

Board of Directors and Management of Inuvo Following the Merger			184
Director Independence			186
Transactions with Related Persons			186
Director Compensation			186
Executive Compensation			188

Securities Ownership of Certain Beneficial Owners and Management of Inuvo			193

Securities Ownership of Certain Beneficial Owners and Management of Vertro			195

Legal Matters			197

Experts			197

Dates for Submission of Stockholder Proposals for the 2012 Annual Meetings			197

Where You Can Find More Information			199

Inuvo, Inc. Index to Financial Statements			F-1

Vertro, Inc. Index to Financial Statements			F-45


Appendices

Appendix A — Agreement and Plan of Merger			A-1

Appendix B — Opinion of Craig-Hallum Capital Group, LLC			B-1

Appendix C — Opinion of America’s Growth Capital, LLC			C-1

Appendix D — Form of Certificate of Amendment to Amended Articles of Incorporation of Inuvo, Inc.			D-1

Appendix E — Amendment to the 2010 Equity Compensation Plan			E-1

QUESTIONS AND ANSWERS

Following are brief answers to certain questions that you may have regarding the proposals being considered at the special meeting of Inuvo stockholders, referred to as the Inuvo special meeting, and the special meeting of Vertro stockholders, referred to as the Vertro special meeting. Inuvo and Vertro urge you to read carefully this entire joint proxy statement/prospectus, including the appendices, and the other documents to which this joint proxy statement/prospectus refers or incorporates by reference, because this section does not provide all of the information that might be important to you.

Unless stated otherwise, all references in this joint proxy statement/prospectus to Inuvo are to Inuvo, Inc., a Nevada corporation; all references to Vertro are to Vertro, Inc., a Delaware corporation; all references to the combined company are to Inuvo after the completion of the merger; all references to Merger Sub are to Anhinga Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Inuvo. All references to the merger agreement are to the agreement and plan of merger, dated as of October 16, 2011, as it may be amended from time to time, by and among Inuvo, Vertro and Merger Sub, a copy of which is attached as Appendix A to this joint proxy statement/prospectus.

Q:	Why am I receiving these materials?

In order to complete the merger, among other conditions, Inuvo stockholders must vote to: (1) approve the issuance of Inuvo common stock to Vertro stockholders pursuant to the merger, (2) adopt the Certificate of Amendment to the Inuvo Amended Articles of Incorporation, and (3) adopt the amendment to the 2010 Equity Compensation Plan authorizing an additional 2,500,000 shares to be available for grant.

Vertro stockholders must vote to adopt the merger agreement and approve the merger. Vertro stockholders are also being asked to approve, on a nonbinding advisory basis, the compensation of Vertro’s named executive officers that is based on or otherwise relates to the merger. Inuvo and Vertro will hold separate special meetings to obtain these approvals.

This joint proxy statement/prospectus, which you should read carefully, contains important information about the merger, the merger agreement and the special meetings of stockholders of Inuvo and Vertro.

Q:	When and where are the special meetings of stockholders?

A:	Both the Inuvo special meeting and the Vertro special meeting will take place on February 29, 2012, at [—] local time and [—] local time, respectively, at the corporate offices of Inuvo, located at 15550 Lightwave Drive, Suite 300, Clearwater, Florida 33760 and [—], respectively.

Q:	What will Vertro stockholders receive in the merger?

If the merger is completed, each outstanding share of Vertro common stock will be converted into the right to receive 1.546 shares of Inuvo common stock. Inuvo will not issue any fractional shares of Inuvo common stock in exchange for shares of Vertro common stock. Instead, each holder of a fractional share interest will be paid an amount in cash (without interest) equal to the fractional share interest multiplied by the closing price of a share of Inuvo common stock on the NYSE Amex, LLC, referred to as the NYSE Amex, on the last trading day immediately preceding the effective time of the merger. For more information on the treatment of fractional shares, see the section entitled “The Merger Agreement — Fractional Shares,” beginning on page 86.

Q:	What is the value of the merger consideration?

Because Inuvo will issue 1.546 shares of Inuvo common stock in exchange for each share of Vertro common stock, the value of the merger consideration that holders of Vertro common stock receive will depend on the price per share of Inuvo common stock at the effective time of the merger. That price will not

be known at the time of the special meetings and may be less or more than the current price or the price at the time of the special meetings. We urge you to obtain current market quotations of Inuvo common stock and Vertro common stock.

Q:	What will happen to shares of Inuvo common stock in the merger?

Holders of shares of Inuvo common stock will continue to own their existing shares, which will not be converted or canceled in the merger. In the merger, each outstanding share of Vertro common stock will be converted into the right to receive 1.546 shares of Inuvo common stock. Based on 10,035,791 shares of Inuvo common stock and 7,154,941 shares of Vertro common stock outstanding as of October 14, 2011, and after giving effect to an estimated 244,476 shares of Inuvo common stock that are expected to be issued upon vesting of certain restricted stock units immediately prior to the effective time, net of shares withheld for taxes, 268,595 shares of Vertro common stock that are expected to be issued upon vesting of certain restricted stock units immediately prior to the effective time, net of shares withheld for taxes, an estimated 436,688 shares of Inuvo common stock that are expected to be issued in lieu of cash under Inuvo’s deferred compensation program immediately prior to the effective time and pursuant to awards of restricted stock that will be issued immediately prior to the effective time, net of shares withheld for taxes, based on the closing price of Inuvo common stock on October 14, 2011, and an estimated 321,150 shares of Vertro common stock that are expected to be issued in lieu of cash bonus payments under Vertro’s 2011 Bonus Program immediately prior to the effective time, net of shares withheld for taxes, based on the closing price of Vertro’s common stock on October 14, 2011, there would be an aggregate of approximately 22,690,509 shares of Inuvo common stock outstanding on a pro forma basis, giving effect to the merger as of that date.

The actual number of shares of Inuvo common stock to be issued in lieu of cash under Inuvo’s deferred compensation program and pursuant to awards of restricted stock that will be issued immediately prior to the effective time will be based upon the fair market value of Inuvo common stock on the date such shares or awards are granted, and the actual number of shares of Vertro common stock to be issued in lieu of cash bonus payments under Vertro’s 2011 Bonus Program immediately prior to the effective time will be based upon the fair market value of Vertro common stock immediately prior to the effective time.

Q:	What will happen to Vertro in the merger?

Merger Sub will merge with and into Vertro. Upon effectiveness of the merger, the separate corporate existence of Merger Sub will cease, and Vertro will continue as the surviving company in the merger as a wholly owned subsidiary of Inuvo and will succeed to and assume all the rights and obligations of Merger Sub.

Q:	How do Inuvo’s and Vertro’s directors and executive officers intend to vote at the special meetings on the proposals to approve the issuance of Inuvo common stock, and to adopt the merger agreement and approve the merger, respectively?

A:	Inuvo: As of January 27, 2012, which is the record date for the Inuvo special meeting, the directors and executive officers of Inuvo held and are entitled to vote, in the aggregate, shares of Inuvo common stock representing approximately [—]% of the outstanding Inuvo common stock.

Vertro: As of January 27, 2012, which is the record date for the Vertro special meeting, the directors and executive officers of Vertro held and are entitled to vote, in the aggregate, shares of Vertro common stock representing approximately [—]% of the outstanding Vertro common stock.

Each of Inuvo and Vertro believes that its directors and executive officers intend to vote all of their shares of Inuvo common stock and Vertro common stock “FOR” each of the respective proposals at the respective special meetings.

Q:	Are there risks I should consider in deciding whether to vote for the merger?

A.	Yes. A description of some of the risks that you should consider in connection with the merger is included in this joint proxy statement/prospectus in the section entitled “Risk Factors” beginning on page 21.

Q:	When do you expect to complete the merger?

A:	If Vertro and Inuvo receive the required stockholder approvals at their respective special meetings to be held on February 29, 2012, and the other conditions to closing have been satisfied or waived, we expect to complete the merger shortly after those meetings.

Q:	What will happen to Vertro stock options and restricted stock units?

At the effective time of the merger, options to purchase shares of, and restricted stock units based on, Vertro common stock will be converted into and become, respectively, options to purchase, or, as the case may be, restricted stock units based on Inuvo common stock, in each case on terms substantially identical to those in effect immediately prior to the effective time of the merger (after giving effect to any acceleration of vesting that occurs by reason of the merger and any related transactions). Each converted stock option may be exercised solely to purchase Inuvo common stock. The number of shares of Inuvo common stock issuable upon exercise of such converted option will be equal to the number of shares of Vertro common stock that were issuable upon exercise under the corresponding Vertro option immediately prior to the effective time of the merger multiplied by the exchange ratio, rounded down to the nearest whole share. The per share exercise price under the converted option will be the per share exercise price of the corresponding Vertro stock option immediately prior to the effective time divided by the exchange ratio, rounded up to the nearest whole cent. The number of shares of Inuvo common stock issuable in respect of converted restricted stock units will be equal to the number of shares of Vertro common stock in respect of such corresponding Vertro restricted stock unit immediately prior to the effective time of the merger multiplied by the exchange ratio, rounded down to the nearest whole share.

Q:	What are the material U.S. federal income tax consequences of the merger?

The merger is intended to qualify as a reorganization within the meaning of section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Each of Vertro and Inuvo will receive written opinions from their respective outside legal counsel regarding such qualification. As a result of the reorganization, Vertro stockholders receiving solely Inuvo common stock will not recognize gain or loss for U.S. federal purposes upon the exchange of their shares of Vertro common stock solely for shares of Inuvo common stock in connection with the merger. However, if a Vertro stockholder receives cash in lieu of a fractional share of Inuvo common stock, then such stockholder either will recognize gain or loss equal to the difference between such stockholder’s adjusted tax basis in the fractional share and the amount of cash received, or will receive a distribution taxed as a dividend to the extent of current or accumulated earnings and profits. Inuvo stockholders will not recognize gain or loss for U.S. federal income tax purposes as a result of the merger. For a more complete discussion of the U.S. federal income tax consequences of the merger, see the section entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 80.

Tax matters are very complicated, and the tax consequences of the merger to a particular Inuvo or Vertro stockholder will depend in part on such stockholder’s circumstances. Accordingly, Inuvo and Vertro urge you to consult your own tax advisor for a full understanding of the tax consequences of the merger to you, including the applicability and effect of federal, state, local and foreign income and other tax laws.

Q:	Why is Inuvo proposing adoption of the Certificate of Amendment to the Inuvo Amended Articles of Incorporation?

A:	Inuvo is proposing adoption of the Certificate of Amendment to the Inuvo Amended Articles of Incorporation to increase the number of authorized shares of Inuvo common stock from 20,000,000 shares to 40,000,000 shares.

Q:	Why is Inuvo proposing adoption of the amendment to the 2010 Equity Compensation Plan?

A:	Inuvo is proposing adoption of the amendment to the 2010 Equity Compensation Plan in order to increase the number of shares of Inuvo common stock available for grant by an additional 2,500,000 shares.

Q:	Who is entitled to vote at the Inuvo special meeting and the Vertro special meeting?

Inuvo stockholders: The record date for the Inuvo special meeting is January 27, 2012. Only holders of record of Inuvo common stock outstanding and entitled to vote as of the close of business on the record date are entitled to notice of, and to vote at, the Inuvo special meeting or any adjournment or postponement of the Inuvo special meeting.

Vertro stockholders: The record date for the Vertro special meeting is January 27, 2012. Only holders of record of Vertro common stock outstanding and entitled to vote as of the close of business on the record date are entitled to notice of, and to vote at, the Vertro special meeting or any adjournment or postponement of the Vertro special meeting.

Q:	What stockholder vote is required to adopt the various proposals at the Inuvo meeting?

The holders of a majority of the votes cast at the Inuvo special meeting must vote in favor of the proposal to approve the issuance of shares of Inuvo common stock in the merger as a condition to the closing of the merger.

The holders of a majority of the Inuvo common stock outstanding and entitled to vote at the Inuvo special meeting must vote in favor of the adoption of the Certificate of Amendment to the Amended Articles of Incorporation for its approval and adoption as a condition to the closing of the merger.

The holders of a majority of the votes cast at the Inuvo special meeting must vote in favor of the adoption of the amendment to the 2010 Equity Compensation Plan authorizing an additional 2,500,000 shares to be available for grant for its approval and adoption as a condition to the closing of the merger.

The holders of a majority of the Inuvo common stock, represented and entitled to vote at the Inuvo special meeting, whether or not a quorum is present, must vote in favor of the proposal to approve any motion to adjourn or postpone the Inuvo special meeting to another time or place, if necessary to solicit additional proxies if there are insufficient votes at the time of the Inuvo special meeting to adopt any of the foregoing proposals, for this proposal to be approved and adopted.

Q:	What stockholder vote is required to adopt the various proposals at the Vertro meeting?

The holders of a majority of the shares of Vertro common stock outstanding and entitled to vote must vote in favor of the adoption of the merger agreement and the approval of the merger. The proposal to approve the compensation of Vertro’s named executive officers that is based on or otherwise relates to the merger is nonbinding and advisory, and thus no stockholder vote is required. The proposal will be approved if holders of a majority of the Vertro common stock, represented and entitled to vote at the Vertro special meeting, vote in favor of the proposal. The holders of a majority of the Vertro common stock, represented and entitled to vote at the Vertro special meeting, whether or not a quorum is present, must vote in favor of the proposal to approve any motion to adjourn or postpone the Vertro special meeting to another time or place, if necessary to solicit additional proxies if there are insufficient votes at the time of the Vertro special meeting to adopt the merger agreement and approve the merger.

Q:	What constitutes a quorum?

For the Inuvo special meeting, a quorum is present if the holders of at least one-third of the shares of Inuvo common stock outstanding and entitled to vote at the meeting are present or represented. For the Vertro special meeting, a quorum is present if the holders of a majority of the shares of Vertro common stock

outstanding and entitled to vote at the meeting are present or represented. Broker non-votes (which are described below) and abstentions will be counted for purposes of determining whether a quorum is present.

Q:	How do I vote my shares?

Holders of shares of Inuvo common stock or Vertro common stock may indicate how they want to vote on their proxy card and then sign, date, and mail their proxy card in the enclosed return envelope as soon as possible so that their shares may be represented at the Inuvo special meeting or the Vertro special meeting, as applicable. You may also authorize the individuals named on your proxy card to vote your shares by calling the toll-free telephone number or by using the Internet as described in the instructions included with your card. Please note that if you are a stockholder of both Vertro and Inuvo, you will be receiving two separate mailings that contain the same joint proxy statement/prospectus, but two different proxy cards: one for the Inuvo special meeting and one for the Vertro special meeting. Please complete, sign, date, and return all proxy cards you receive in order to ensure that your shares are voted at the Inuvo special meeting or the Vertro special meeting, as applicable. Holders of shares of Inuvo common stock or Vertro common stock may also attend their company’s meeting and vote in person instead of submitting a proxy.

If you are a holder of record of shares of Inuvo common stock and you sign, date, and send in your proxy but do not indicate how you want to vote, your proxy will be voted “FOR” the proposal to approve the issuance of shares of Inuvo common stock in the merger and “FOR” all other proposals to be voted on at the Inuvo special meeting. If your shares are held by a broker, bank or other nominee, please see the answer to the next question.

If you are a holder of record of shares of Vertro common stock and you sign, date, and send in your proxy but do not indicate how you want to vote, your proxy will be voted “FOR” the proposal to adopt the merger agreement and approve the merger and “FOR” all other proposals to be voted on at the Vertro special meeting. If your shares are held by a broker, bank or other nominee, please see the answer to the next question.

Q:	If my shares of Inuvo common stock or Vertro common stock are held by a broker, bank or other nominee, will my broker, bank or other nominee vote my shares for me?

If you are an Inuvo stockholder and you do not provide your broker, bank or other nominee with instructions on how to vote your shares, your broker, bank or other nominee will not be permitted to vote them with respect to the proposals regarding the issuance of shares of Inuvo common stock in the merger, the adoption of the Certificate of Amendment to the Amended Articles of Incorporation, and the adoption of the amendment to the 2010 Equity Compensation Plan. If you are a Vertro stockholder and you do not provide your broker, bank or other nominee with instructions on how to vote your shares, your broker, bank or other nominee will not be permitted to vote them with respect to the proposal regarding the adoption of the merger agreement and the approval of the merger or the proposal regarding the nonbinding advisory approval of the compensation of Vertro’s named executive officers that is based on or otherwise relates to the merger. This results in a broker non-vote. A broker non-vote with respect to the Inuvo proposal of the Certificate of Amendment to the Inuvo Amended Articles of Incorporation and the Vertro proposal regarding the adoption of the merger agreement and approval of the merger will have the same effect as a vote “AGAINST” such proposals since approval of the proposals requires the affirmative vote of a majority of the voting power of the shares outstanding and entitled to vote. You should, therefore, provide your broker, bank or other nominee with instructions on how to vote your shares or arrange to attend the Inuvo special meeting or Vertro special meeting, as the case may be, and vote your shares in person to avoid a broker non-vote. You are urged to utilize telephone or Internet voting if your broker, bank or other nominee has provided you with the opportunity to do so. See the relevant voting instruction form for instructions. If your broker, bank or other nominee holds your shares and you attend your company’s special meeting in person, you should bring a letter from your broker, bank or other nominee identifying you as the beneficial owner of the shares and authorizing you to vote your shares at the corresponding meeting.

Q:	If I am an Inuvo stockholder, can I attend the Inuvo special meeting and vote my shares in person?

Yes. All holders of shares of Inuvo common stock, including stockholders of record and stockholders who hold their shares through a broker, bank or other nominee, or any other holder of record, are invited to attend the Inuvo special meeting. Holders of record of shares of Inuvo common stock as of the record date can vote in person at the Inuvo special meeting. If you are not a stockholder of record, you must obtain a proxy, executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the Inuvo special meeting. If you plan to attend the Inuvo special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership, and you must bring a form of personal photo identification with you in order to be admitted. Inuvo reserves the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification.

Q:	If I am a Vertro stockholder, can I attend the Vertro special meeting and vote my shares in person?

Yes. All holders of shares of Vertro common stock, including stockholders of record and stockholders who hold their shares through a broker, bank or other nominee, or any other holder of record, are invited to attend the Vertro special meeting. Holders of record of shares of Vertro common stock as of the record date can vote in person at the Vertro special meeting. If you are not a stockholder of record, you must obtain a proxy, executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the Vertro special meeting. If you plan to attend the Vertro special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership, and you must bring a form of personal photo identification with you in order to be admitted. Vertro reserves the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification.

Q:	May I change my vote after I have delivered my proxy or voting instruction card?

A:	Yes. You may change your vote at any time before your proxy is voted at the Inuvo or Vertro special meeting. You may do this in one of four ways:

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by sending a notice of revocation to the corporate secretary of Inuvo or Vertro, as applicable, which must be received no later than 5:00 p.m. Eastern time on the day before the special meeting;

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by logging onto the Internet website specified on your proxy card in the same manner in which you would to submit your proxy electronically or by calling the telephone number specified on your proxy card, in each case if you are eligible to do so and following the instructions on the proxy card, at any time before [—] Eastern time on [—];

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by sending a completed proxy card bearing a later date than your original proxy card, which must be received by [—] Eastern time on [—]; or

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by attending the Inuvo or Vertro special meeting, as applicable, and voting in person.

Q:	Are Inuvo and Vertro stockholders entitled to exercise appraisal rights?

A:	No. Neither Inuvo stockholders nor Vertro stockholders are entitled to exercise appraisal rights in connection with the merger. For more information on stockholder appraisal rights, see the section entitled “The Merger — Appraisal Rights” beginning on page 84.

Q:	What should I do if I receive more than one set of voting materials for the Inuvo special meeting or the Vertro special meeting?

You may receive more than one set of voting materials for the Inuvo special meeting or the Vertro special meeting, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares of Inuvo common stock or Vertro common

stock 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 of Inuvo common stock or Vertro common stock are registered in more than one name, you will receive more than one proxy card. Please submit each separate proxy or voting instruction card that you receive by following the instructions set forth in each separate proxy or voting instruction card.

Q:	Should I send in my Vertro stock certificates now?

No. You should not send in your Vertro stock certificates until you receive written instructions and a letter of transmittal. Please do not send your Vertro stock certificates with your proxy. If you are an Inuvo stockholder, you are not required to take any action with respect to your Inuvo stock certificates.

Q:	What do I need to do now?

A:	Mail your signed and dated proxy card in the enclosed return envelope as soon as possible, so that your shares may be represented at the meeting to vote on approving the merger.

Q:	Whom do I call if I have questions about the meetings or the merger?

Please call the corporate secretary of Inuvo at (727) 324-0046, extension 2123 or the corporate secretary of Vertro at (646) 253-0606. Vertro has also retained Georgeson Inc., a proxy solicitation firm, for assistance in connection with the solicitation of proxies for the Vertro special meeting. You may contact Georgeson with questions about the Vertro special meeting at (866) 647-8861.

SUMMARY

This summary highlights selected information contained in this joint proxy statement/prospectus and does not contain all of the information that may be important to you. Inuvo and Vertro urge you to read carefully this joint proxy statement/prospectus in its entirety, as well as the appendices. Additional, important information is also contained in the documents incorporated by reference into this joint proxy statement/prospectus; see the section entitled “Where You Can Find More Information” beginning on page 199.

The Parties to the Merger Agreement

Inuvo (page 109)

Inuvo, a Nevada corporation, develops software and analytics technology that is accessible over the Internet for use by online advertisers and website publishers. Inuvo’s common stock is quoted on the NYSE Amex under the symbol “INUV.” Its executive offices are located at 15550 Lightwave Drive, Suite 300, Clearwater, Florida 33760, Telephone: (727) 324-0046.

For additional information regarding Inuvo, see the section entitled “Information About the Companies —Inuvo” beginning on page 109.

Merger Sub (page 109)

Anhinga Merger Subsidiary, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Inuvo, was formed on October 12, 2011, solely for the purpose of facilitating the merger. Its executive offices are located at 15550 Lightwave Drive, Suite 300, Clearwater, Florida 33760, Telephone: (727) 324-0046.

For additional information regarding Merger Sub, see the section entitled “Information About the Companies — Merger Sub” beginning on page 109.

Vertro (page 109)

Vertro, a Delaware corporation, is an Internet company that owns and operates the ALOT product portfolio. Vertro’s common stock trades on the NASDAQ Capital Market under the symbol “VTRO.” Its executive offices are located at 143 Varick Street, New York, New York 10013, Telephone: (212) 231-2000.

For additional information regarding Vertro, see the section entitled “Information About the Companies — Vertro” beginning on page 109.

The Inuvo Special Meeting (page 123)

Inuvo will hold its special meeting of stockholders at its corporate offices, located at 15550 Lightwave Drive, Suite 300, Clearwater, Florida 33760 on the 29th day of February, 2012, at [—], local time. At this meeting, stockholders of Inuvo will be asked to (1) approve the issuance of shares of Inuvo common stock in the merger; (2) adopt the Certificate of Amendment to the Inuvo Amended Articles of Incorporation; (3) adopt the amendment to the Inuvo 2010 Equity Compensation Plan; (4) approve any motion to adjourn or postpone the meeting to solicit additional proxies; and (5) consider such other business as may properly come before the special meeting or any adjournment or postponement thereof.

You can vote at the Inuvo special meeting only if you owned Inuvo common stock at the close of business on January 27, 2012, which is the record date for that meeting.

The holders of a majority of the votes cast at the Inuvo special meeting must vote in favor of the proposal to approve the issuance of shares of Inuvo common stock to Vertro stockholders as a condition to the closing of the merger.

The holders of a majority of the shares of Inuvo common stock outstanding and entitled to vote at the Inuvo special meeting must vote in favor of the adoption of the Certificate of Amendment to the Amended Articles of Incorporation for its approval and adoption as a condition to the closing of the merger.

The holders of a majority of the votes cast at the Inuvo special meeting must vote in favor of the adoption of the amendment to the 2010 Equity Compensation Plan for its approval and adoption as a condition to the closing of the merger.

The holders of a majority of the shares of Inuvo common stock, represented and entitled to vote at the Inuvo special meeting, whether or not a quorum is present, must vote in favor of the proposal to approve any motion to adjourn or postpone the Inuvo special meeting to another time or place, if necessary to solicit additional proxies if there are insufficient votes at the time of the Inuvo special meeting to adopt any of the foregoing proposals, for this proposal to be approved and adopted.

As of January 27, 2012, which is the record date for the Inuvo special meeting, the directors and executive officers of Inuvo held and are entitled to vote, in the aggregate, shares of Inuvo common stock representing approximately [—]% of the outstanding Inuvo common stock.

The Vertro Special Meeting (page 136)

Vertro will hold its special meeting of at [—], located at [—], on the 29th day of February, 2012, at [—], local time. At this meeting, stockholders of Vertro will be asked to (1) adopt the merger agreement and approve the merger; (2) approve, on a nonbinding advisory basis, the compensation of Vertro’s named executive officers that is based on or otherwise relates to the merger; (3) approve any motion to adjourn or postpone the meeting to solicit additional proxies; and (4) consider such other business as may properly come before the special meeting or any adjournment or postponement thereof.

You can vote at the Vertro special meeting only if you owned Vertro common stock at the close of business on January 27, 2012, which is the record date for that meeting.

The holders of a majority of the shares of Vertro common stock outstanding and entitled to vote at the Vertro special meeting must vote in favor of the proposal to adopt the merger agreement and approve the merger. The proposal to approve the compensation of Vertro’s named executive officers that is based on or otherwise relates to the merger is nonbinding and advisory, and thus no stockholder vote is required. The proposal will be approved if holders of a majority of the Vertro common stock, represented and entitled to vote at the Vertro special meeting, vote in favor of the proposal. The holders of a majority of the shares of Vertro common stock represented and entitled to vote at the Vertro special meeting, whether or not a quorum is present, must vote in favor of the proposal to approve any motion to adjourn or postpone the Vertro special meeting to another time or place, if necessary to solicit additional proxies if there are insufficient votes at the time of the Vertro special meeting to adopt the merger agreement and approve the merger.

As of January 27, 2012, which is the record date for the Vertro special meeting, the directors and executive officers of Vertro held and are entitled to vote, in the aggregate, shares of Vertro common stock representing approximately [—]% of the outstanding Vertro common stock.

Overview of the Merger Agreement (page 85)

Inuvo, Merger Sub, and Vertro entered into a merger agreement, which provides for the merger of Vertro with and into Merger Sub, with Vertro surviving the merger as a wholly owned subsidiary of Inuvo. Pursuant to the merger agreement, each share of Vertro common stock outstanding immediately prior to the effective time of the merger will be canceled and automatically converted into the right to receive 1.546 shares of Inuvo common stock, as well as cash payable instead of any fractional shares.

Please see the section entitled “The Merger Agreement — Consideration to be Received in the Merger” beginning on page 85 and the section entitled “The Merger Agreement” beginning on page 85 for a more complete description of the material terms of the merger agreement. The full text of the merger agreement is attached as Appendix A to this joint proxy statement/prospectus and is incorporated herein by reference.

Inuvo Certificate of Amendment to the Amended Articles of Incorporation (page 127)

The closing of the merger is conditioned upon the holders of a majority of the shares of Inuvo common stock outstanding and entitled to vote at the Inuvo special meeting voting in favor of the adoption of the Certificate of Amendment to the Inuvo Amended Articles of Incorporation to increase the number of authorized shares of Inuvo common stock from 20,000,000 shares to 40,000,000 shares.

Purposes and Reasons for the Merger (page 52)

Inuvo

The board of directors of Inuvo considered many factors in making its determination that the adoption of the merger agreement, the approval of the merger and the issuance of the Inuvo common stock in the merger are advisable, and its unanimous recommendation that the Inuvo stockholders approve the issuance of Inuvo common stock. In arriving at its determination, the Inuvo board consulted with independent financial advisors to Inuvo, as well as Inuvo’s management, legal advisors and other representatives, and considered a number of factors as generally supporting its recommendation, including the following:

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the merger will create a stronger core business, providing more scale from which to attract advertisers, publishers and consumers;

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the merger is expected to eliminate approximately $2.4 million in overlapping annual expenses of the combined companies through operating and public company synergies;

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the merger will diversify revenue streams and mitigate Inuvo’s dependence on one major customer;

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the merger will provide an existing install and distribution capability through Vertro’s ALOT toolbar applications for Inuvo’s consumer facing innovations;

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the merger will create a stronger business from which to access both debt and capital markets to support growth; and

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the merger will combine two experienced digital marketing teams.

A detailed discussion of the background of, and reasons for, the merger are described in the sections entitled “The Merger — Background of the Merger” and “The Merger — Inuvo’s Purposes and Reasons for the Merger” beginning on pages 43 and 52, respectively.

Vertro

The Vertro board of directors considered many factors in making its determination that the adoption of the merger agreement and the approval of the merger are advisable, fair to, and in the best interests of, Vertro and its stockholders and recommending unanimously that the Vertro stockholders adopt the merger agreement and approve the merger. In arriving at its determination, the Vertro board of directors consulted with Vertro’s management, legal advisors and other representatives, and considered a number of factors as generally supporting its recommendation, including the following:

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based on the respective trading prices of shares of Inuvo’s and Vertro’s common stock on October 14, 2011, the merger consideration to be received by Vertro stockholders represented:

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an implied premium of approximately 68% over the closing price of Vertro’s common stock on October 14, 2011, the last trading day prior to the announcement of the execution of the merger agreement;

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an implied premium of approximately 69% over the average closing prices of Vertro’s common stock over the 30 days prior to the announcement of the execution of the merger agreement;

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an implied premium of approximately 60% over the average closing prices of Vertro’s common stock over the 60 days prior to the announcement of the execution of the merger agreement; and

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an implied premium of approximately 45% over the average closing prices of Vertro’s common stock over the 90 days prior to the announcement of the execution of the merger agreement;

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America’s Growth Capital’s opinion that the exchange ratio to be received by the holders of shares of Vertro common stock was fair, from a financial point of view, to such stockholders;

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America’s Growth Capital conducted a comprehensive strategic alternatives process and no other definitive offer was received and no other potential purchasers continued to express an interest in an acquisition of Vertro;

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the combined company would have a significant increase in scale that would create a stronger core business, which would be expected to attract more advertisers, publishers and consumers, and provide a stronger base to access both debt and capital markets to support growth;

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the belief that the combination of Inuvo’s and Vertro’s businesses would create more value for the Vertro stockholders in the long-term than Vertro could create as a standalone business given the challenges in its business and the risks of undiversified revenue stream and reliance on a single customer;

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the combined company would be expected to be able to capitalize on various operating efficiencies and eliminate overlapping operating and public company expenses;

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the merger would leverage existing relationships held by both parties and mitigate supplier and customer risk facing both Vertro and Inuvo;

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the merger would provide an existing install and distribution capability through Vertro’s ALOT toolbar applications for Inuvo’s consumer facing innovations; and

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the other factors set forth in “The Merger — Vertro’s Purposes and Reasons for the Merger” beginning on page 54.

A detailed discussion of the background of, and reasons for, the merger are described in the sections entitled “The Merger — Background of the Merger” and “The Merger — Vertro’s Purposes and Reasons for the Merger” beginning on pages 43 and 54, respectively.

Ownership of Inuvo After the Merger (page 43)

Upon completion of the merger, current stockholders of Inuvo would hold (based on shares owned and outstanding as of October 14, 2011) approximately 47.2% of the outstanding common stock of the combined company, and current stockholders of Vertro would hold (based on shares owned and outstanding as of October 14, 2011) approximately 52.8% of the outstanding common stock of the combined company. Assuming exercise of all the outstanding options (whether or not vested) and warrants of both Inuvo and Vertro, the current stockholders of Inuvo would hold (based on shares owned and outstanding as of October 14, 2011) approximately 51.4% of the outstanding common stock of the combined company, and current stockholders of Vertro would hold (based on shares owned and outstanding as of October 14, 2011) approximately 48.6% of the outstanding common stock of the combined company.

Such calculations are based on the assumption that an estimated 244,476 shares of Inuvo common stock are expected to be issued upon vesting of certain restricted stock units immediately prior to the effective time, net of shares withheld for taxes, 268,595 shares of Vertro common stock are expected to be issued upon vesting of certain restricted stock units immediately prior to the effective time, net of shares withheld for taxes, an estimated 436,688 shares of Inuvo common stock are expected to be issued in lieu of cash under Inuvo’s deferred compensation program immediately prior to the effective time and pursuant to awards of restricted stock that will be issued immediately prior to the effective time, net of shares withheld for taxes, based on the closing price of Inuvo common stock on October 14, 2011, and an estimated 321,150 shares of Vertro common stock are expected to be issued in lieu of cash bonus payments under Vertro’s 2011 Bonus Program immediately prior to the effective time, net of shares withheld for taxes, based on the closing price of Vertro common stock on October 14, 2011, such that there would be an aggregate of approximately 22,690,509 shares of Inuvo common stock outstanding on a pro forma basis, giving effect to the merger as of that date. It is expected that Inuvo will issue approximately 11,973,284 shares of Inuvo common stock to Vertro stockholders as merger consideration.

Directors and Executive Officers of Inuvo After the Merger (page 184)

Inuvo will increase the size of its board of directors from five members to seven members, which will include three members who served on Inuvo’s board of directors prior to the merger and three members who served on Vertro’s board of directors. Inuvo and Vertro have agreed to select a seventh member to fill the last vacancy that will exist on the Inuvo board of directors immediately prior to the effective time of the merger. The current president and chief executive officer of Vertro will become the president and chief executive officer of Inuvo and the current president and chief executive officer of Inuvo will become the executive chairman.

Operations and Administration After the Merger

Inuvo is expected to maintain offices in both New York, New York and Clearwater, Florida after closing the merger though with a reduced physical footprint. The various operations, sales, accounting and other administration functions will be performed at the office best equipped to handle the function. The majority of the combined company’s senior management team is expected to be comprised of former Inuvo management.

Recommendation of the Inuvo Board of Directors (page 54)

The Inuvo board of directors determined unanimously that the merger agreement and the merger are advisable, fair to, and in the best interests of Inuvo and its stockholders, and approved the merger agreement and the merger and the issuance of Inuvo common stock in the merger. The Inuvo board of directors recommends unanimously that stockholders vote “FOR” the proposal to approve the issuance of shares of Inuvo common stock in the merger, “FOR” the proposal to adopt the Certificate of Amendment to the Amended Articles of Incorporation, “FOR” the proposal to adopt the amendment to the 2010 Equity Compensation Plan, and “FOR” the proposal to adjourn or postpone the meeting, if necessary to solicit additional proxies.

Recommendation of the Vertro Board of Directors (page 57)

The Vertro board of directors determined unanimously that the merger agreement and the merger are advisable, fair to, and in the best interests of Vertro and its stockholders, and approved the merger agreement and

the merger. The Vertro board of directors recommends unanimously that stockholders vote “FOR” the proposal to adopt the merger agreement and approve the merger, “FOR” the proposal to approve, on a nonbinding advisory basis, the compensation of Vertro’s named executive officers that is based on or otherwise relates to the merger, and “FOR” the proposal to adjourn or postpone the meeting, if necessary to solicit additional proxies.

Opinion of Craig-Hallum Capital Group, LLC (page 61)

Craig-Hallum Capital Group, LLC, referred to as Craig-Hallum, delivered its opinion to the Inuvo board of directors that as of October 16, 2011, and based upon and subject to the factors and assumptions set forth therein, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to Inuvo, on the basis of and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Craig-Hallum in preparing its opinion.

Craig-Hallum’s opinion only addressed the fairness from a financial point of view to Inuvo, as of October 16, 2011, of the exchange ratio provided for in the merger pursuant to the merger agreement and did not address any other aspect or implication of the merger. The summary of Craig-Hallum’s opinion in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of its written opinion, which is included as Appendix B to this joint proxy statement/prospectus and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Craig-Hallum in preparing its opinion. However, Craig-Hallum’s opinion and the related analyses set forth in this joint proxy statement/prospectus are not intended to be, and do not constitute, a recommendation to the Inuvo board of directors or any stockholder as to how to act or vote with respect to the merger or related matters. See the section entitled “The Merger — Opinion of Craig-Hallum Capital Group, LLC, Financial Advisor to the Inuvo Board of Directors” beginning on page 61.

Opinion of America’s Growth Capital, LLC (page 68)

America’s Growth Capital, LLC, referred to as America’s Growth Capital, rendered its opinion to the Vertro board of directors as to the fairness, from a financial point of view, to the Vertro stockholders, as of October 16, 2011, of the exchange ratio provided for in the merger pursuant to the merger agreement, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by America’s Growth Capital in preparing its opinion.

America’s Growth Capital’s opinion only addressed the fairness from a financial point of view to the Vertro stockholders, as of October 16, 2011, of the exchange ratio provided for in the merger pursuant to the merger agreement and did not address any other aspect or implication of the merger. The summary of America’s Growth Capital’s opinion in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of its written opinion, which is included as Appendix C to this joint proxy statement/prospectus and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by America’s Growth Capital in preparing its opinion. However, America’s Growth Capital’s opinion and the summary of its opinion and the related analyses set forth in this joint proxy statement/prospectus are not intended to be, and do not constitute, a recommendation to the Vertro board of directors or any stockholder as to how to act or vote with respect to the merger or related matters. See the section entitled “The Merger — Opinion of America’s Growth Capital, LLC, Financial Advisor to the Vertro Board of Directors” beginning on page 68.

Interests of Certain Persons in the Merger (page 73)

In considering the recommendation of the Inuvo board of directors, you should be aware that certain of Inuvo’s officers and directors have interests in the transaction that are different from, or are in addition to, the

interests of the Inuvo stockholders. In considering the recommendation of the Vertro board of directors, you should be aware that certain of Vertro’s executive officers and directors have interests in the transaction that are different from, or are in addition to, the interests of the Vertro stockholders. These interests include the following:

•

Three members of Vertro’s board of directors will become directors of Inuvo at the effective time of the merger, and three members of Inuvo’s board of directors will continue as directors of the combined company. Inuvo and Vertro anticipate that the directors of Inuvo following the merger will be Richard K. Howe, Charles D. Morgan, Charles Pope, Peter A. Corrao, Dr. Adele Goldberg, Joseph P. Durrett, and a seventh director to be mutually determined by Inuvo and Vertro.

•

Certain directors and executive officers of Inuvo hold unvested options to purchase Inuvo common stock and restricted stock units based on Inuvo common stock that will vest in connection with the merger.

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Certain directors and executive officers of Vertro hold restricted stock units based on Vertro common stock that will vest in connection with the merger, and certain executive officers of Vertro are entitled to receive target bonuses under the Vertro 2011 Bonus Program in the event of a change of control such as the merger, all of which will be paid in Vertro common stock in lieu of cash.

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Executive officers of Inuvo, including Mr. Howe and Wallace D. Ruiz, and executive officers of Vertro, including Mr. Corrao and John B. Pisaris, will enter into new employment agreements with Inuvo upon completion of the merger.

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Following the merger, Vertro directors, officers and employees are entitled to continued indemnification coverage relating to their service to Vertro in such capacity.

The Inuvo board of directors and the Vertro board of directors were aware of these potential or actual conflicts of interest and considered them along with other matters when they determined to recommend the merger. For more information relating to the interests of Vertro and Inuvo directors and officers and certain other persons in the merger, see the section entitled “The Merger — Interests of Certain Persons in the Merger” beginning on page 73 and “The Merger — Material Agreements and Relationships Between the Parties” beginning on page 79.

Accounting Treatment of the Merger (page 83)

Inuvo will be the accounting survivor in the merger. The parties relied upon the fact that stockholders of Inuvo would have control of the combined company on a fully-diluted basis, that Inuvo was the larger of the two entities, that Inuvo paid a premium over the pre-combination fair value of the equity interests of Vertro, and that a majority of the senior management team as well as the finance and accounting operations of the combined company would be comprised of current Inuvo employees, in determining the fact that Inuvo was the accounting acquirer.

Inuvo will account for the merger under GAAP with Inuvo being deemed to have acquired Vertro. This means that the assets and liabilities of Vertro will be recorded, as of the completion of the merger, at their fair values and added to those of Inuvo, including potentially an amount for goodwill to the extent the purchase price exceeds the fair value of the identifiable net assets. Financial statements of Inuvo issued after the merger will reflect only the operations of Vertro’s business after the merger and will not be restated retroactively to reflect the historical financial position or results of operations of Vertro.

the fair value of the assets and liabilities of Vertro’s business. Accordingly, the final purchase accounting adjustments may be materially different from the unaudited pro forma adjustments. Any decrease in the fair value of the assets or increase in the fair value of the liabilities of Vertro’s business as compared to the unaudited pro forma combined financial information included in this joint proxy statement/prospectus will have the effect of increasing the amount of the purchase price allocable to goodwill, if any.

No Solicitation of Alternative Proposals (page 95)

The merger agreement restricts the ability of Inuvo and Vertro to take action with respect to other acquisition transactions. Except with respect to superior proposals for which the failure to take action would likely be inconsistent with fiduciary duties, each of Inuvo and Vertro has agreed that neither of them will, and they will not permit any of their subsidiaries, or any directors, officers, employees, affiliates, agents or representatives to, initiate, solicit, encourage, or knowingly facilitate the making of any proposal or offer with respect to an acquisition proposal.

Termination of the Merger Agreement (page 100)

Even if the stockholders of Inuvo and Vertro approve the proposals to issue Inuvo common stock in the merger and adopt the merger agreement and approve the merger, respectively, Inuvo and Vertro can jointly agree to terminate the merger agreement by mutual written consent. The merger agreement also contains provisions addressing the circumstances under which either Inuvo or Vertro may terminate the merger agreement.

Inuvo has agreed to pay Vertro $500,000 if the merger agreement is terminated by Inuvo as a result of Inuvo having breached or failed to perform in any respect its obligations with respect to third party acquisition proposals or an Inuvo change of recommendation, or if the merger agreement is terminated by Inuvo to accept a superior proposal. Inuvo also has agreed to pay Vertro the $500,000 termination fee if (i) the merger agreement is terminated by Vertro because of an uncured breach by Inuvo or by either party due to a failure to obtain the requisite stockholder approvals, (ii) prior to such termination, a third party shall have made an Inuvo acquisition proposal that was publicly disclosed, and (iii) within 12 months after such termination, Inuvo shall have entered into an agreement to consummate or shall have consummated such Inuvo acquisition proposal.

Vertro has agreed to pay Inuvo $500,000 if the merger agreement is terminated by Inuvo as a result of Vertro having breached or failed to perform in any respect its obligations with respect to third party acquisition proposals or a Vertro change of recommendation, or if the merger agreement is terminated by Vertro to accept a superior proposal. Vertro also has agreed to pay Inuvo the $500,000 termination fee if (i) the merger agreement is terminated by Inuvo because of an uncured breach by Vertro or by either party due to a failure to obtain the requisite stockholder approvals, (ii) prior to such termination, a third party shall have made a Vertro acquisition proposal that was publicly disclosed, and (iii) within 12 months after such termination, Vertro shall have entered into an agreement to consummate or shall have consummated such Vertro acquisition proposal.

For more information on the circumstances under which Inuvo or Vertro may terminate the merger agreement, see the section entitled “The Merger Agreement — Termination” beginning on page 100.

Conditions to the Merger (page 98)

The merger will be completed only if specific conditions, including, among others, the following, are met or waived (to the extent permitted by applicable law) by the parties to the merger agreement:

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the registration statement that includes this joint proxy statement/prospectus has become effective;

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the Inuvo proposals to approve the issuance of the shares of Inuvo common stock in the merger, to adopt the Certificate of Amendment to the Inuvo Amended Articles of Incorporation, and to adopt the amendment to the 2010 Equity Compensation Plan have been approved by the requisite votes of the Inuvo stockholders;

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the Vertro proposal to adopt the merger agreement and approve the merger has been approved by the requisite vote of the Vertro stockholders;

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the shares of Inuvo common stock to be issued in the merger have been approved for listing on the NYSE Amex, subject to official notice of issuance;

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the representations and warranties of the parties to the merger agreement are true and correct, except for inaccuracies that would not have a material adverse effect;

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the requisite covenants of each of the parties have been performed in all material respects in accordance with the merger agreement;

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this registration statement on Form S-4 will have become effective under the Securities Act, and no stop order or similar restraining order by the SEC suspending the effectiveness of the Form S-4 will be in effect;

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no applicable federal or state law or injunction, order or decree of a court or other governmental entity will prohibit or enjoin the merger or the other transactions contemplated by the merger agreement;

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each of Inuvo and Vertro shall have received the required third party consents;

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Inuvo shall have entered into certain employment agreements; and

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Inuvo shall have received financing on terms proposed by Bridge Bank, N.A., referred to as Bridge Bank, prior to the signing of the merger agreement or alternate financing on terms no less favorable in the aggregate.

Appraisal Rights (page 84)

Under the Delaware General Corporation Law, referred to as DGCL, and the Nevada Revised Statutes, referred to as NRS, Inuvo stockholders and Vertro stockholders are not entitled to appraisal rights in connection with the merger.

Listing of Inuvo Common Stock (page 84)

The Inuvo common stock issuable to Vertro stockholders pursuant to the merger will be approved for listing on the NYSE Amex. After the merger, Inuvo common stock will continue to be listed on the NYSE Amex under the symbol “INUV.”

Delisting of Vertro Common Stock

Vertro common stock will be delisted from the NASDAQ Capital Market after the merger and deregistered under the Exchange Act.

Comparative Rights of Inuvo and Vertro Stockholders (page 110)

As a result of the merger, Inuvo’s Amended Articles of Incorporation, as amended by the Certificate of Amendment, and amended and restated bylaws, and the applicable provisions of the NRS will govern the rights of the former holders of Vertro common stock who receive Inuvo common stock in the merger. The rights of those Vertro stockholders are governed currently by the amended and restated certificate of incorporation of Vertro, the amended and restated bylaws of Vertro, and the applicable provisions of the DGCL.

Regulatory Approval (page 84)

Inuvo and Vertro currently are not aware of material governmental consents, approvals, or filings that are required prior to the parties’ consummation of the merger, other than the requirement that Inuvo obtain approval of the listing of the Inuvo common stock to be issued in the merger on the NYSE Amex.

Material U.S. Federal Income Tax Consequences of the Merger (page 80)

Inuvo and Vertro intend that the merger will qualify as a tax-free reorganization for U.S. federal income tax purposes. A Vertro stockholder will not recognize gain or loss upon the receipt of Inuvo common stock in exchange solely for the stockholder’s Vertro common stock, except that if a Vertro stockholder receives cash in lieu of a fractional share of Inuvo common stock, then such stockholder either will recognize gain or loss, or will receive a distribution taxed as a dividend to the extent of current or accumulated earnings and profits. Any gain or loss will be measured by the difference between the amount of cash received and the stockholder’s tax basis allocable to such fractional share. Any capital gain or loss will generally be long-term capital gain or loss if the holding period for shares of Vertro common stock redeemed for cash instead of the fractional share of Inuvo common stock is more than one year as of the effective date of the merger.

Litigation Relating to the Merger (page 84)

On October 27, 2011, a complaint was filed in the Supreme Court of the State of New York, County of New York against Vertro, its directors, Inuvo, and Merger Sub on behalf of a putative class of similarly situated investors, referred to as the New York Action. Two other complaints, also purportedly brought on behalf of the same class of investors, were filed on November 3 and 10, 2011, against these same defendants in the Delaware Chancery Court. The two Delaware cases were consolidated on November 29, 2011, referred to as the Delaware Action. The plaintiffs in the New York and Delaware Actions allege that Vertro’s board of directors breached their fiduciary duties regarding the merger and that Vertro, Inuvo, and Merger Sub aided and abetted the alleged breach of fiduciary duties. The plaintiffs ask that the merger be enjoined and seek other unspecified monetary relief.

COMPARATIVE MARKET PRICES AND DIVIDENDS

Shares of Inuvo common stocks are listed on the NYSE Amex under the symbol “INUV.” Shares of Vertro common stock are listed on the NASDAQ Capital Market under the symbol “VTRO.” The following table shows the closing sale prices of shares of Inuvo common stock and Vertro common stock as reported on the NYSE Amex and NASDAQ Capital Market, respectively, on October 14, 2011, the last full trading day prior to the public announcement of the proposed merger, and on January 26, 2012, the last practicable trading day prior to mailing this joint proxy statement/prospectus. This table also shows the implied value as of those dates of the merger consideration proposed for each shares of Vertro common stock, which we calculated by multiplying the closing price of a share of Inuvo common stock on those dates by the exchange ratio of 1.546. All information in this table gives pro forma effect to Inuvo’s 1:10 reverse stock split of its common stock on December 10, 2010, and Vertro’s 1:5 reverse stock split of its common stock on August 17, 2010.


	Inuvo Common Stock		Vertro Common Stock		Implied Value of One Share of Vertro Common Stock
October 14, 2011	$	1.75	$	1.61	$	2.70
[—]	$	[—]	$	[—]	$	[—]

The following table sets forth for the periods indicated the high and low per share sale price of shares of Inuvo common stock and Vertro common stock.


	Inuvo				Vertro
	High		Low		High		Low
2010
First Quarter	$	4.40	$	2.70	$	2.50	$	1.17
Second Quarter		3.00		1.30		3.45		1.95
Third Quarter		3.40		1.60		2.77		1.69
Fourth Quarter		6.60		2.80		7.25		2.53
2011
First Quarter	$	5.85	$	2.58	$	5.98	$	3.23
Second Quarter		3.02		1.65		4.15		1.94
Third Quarter		4.49		1.02		2.44		1.30
Fourth Quarter		1.94		0.69		2.38		0.99
2012
First Quarter (through [—], 2012)		[—]		[—]		[—]		[—]

Vertro stockholders are encouraged to obtain current market quotations for shares of Inuvo common stock prior to making any decision with respect to the merger. No assurance can be given concerning the market price for shares of Inuvo common stock before or after the date on which the merger is consummated. The market price for shares of Inuvo common stock will fluctuate between the date of this joint proxy statement/prospectus and the date on which the merger is consummated and thereafter.

Inuvo and Vertro have never paid cash dividends, and currently do not intend to pay cash dividends on Inuvo common stock or Vertro common stock at any time in the near future.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus contains or incorporates by reference a number of forward-looking statements within the meaning of section 27A of the Securities Act and section 21E of the Exchange Act. Forward-looking statements often, although not always, include words or phrases like “will likely result,” “expect,” “will continue,” “anticipate,” “estimate,” “intend,” “plan,” “project,” “outlook,” or similar expressions. For example, the following types of statements are, or may be, forward-looking statements:

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projections, predictions, expectations, estimates or forecasts of the financial or operational performance of Inuvo, Vertro, or the combined company or of the value of assets or liabilities of Inuvo, Vertro, or the combined company;

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Inuvo’s, Vertro’s or the combined company’s objectives, plans, or goals; and

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conditions or events following the completion of the proposed merger of Inuvo or Vertro.

These forward-looking statements represent Inuvo’s and Vertro’s intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of these factors are outside the control of Inuvo and Vertro and could cause actual results to differ materially from the results expressed or implied by these forward-looking statements. In addition to the risk factors described in the section entitled “Risk Factors” beginning on page 21 of this joint proxy statement/prospectus, these factors include:

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obtaining Inuvo and Vertro stockholder approval of the merger;

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the merger being more expensive to complete than anticipated, including as a result of unexpected factors or events;

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the anticipated cost savings of the merger taking longer to realize or not being achieved in their entirety;

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the possibility of adverse publicity or litigation related to the merger, including an adverse outcome thereof, and delay or inability to complete the merger resulting therefrom, and the costs and expenses associated therewith;

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the risk that the conditions to closing will not be satisfied;

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the risk that the transaction will be delayed or not close when expected;

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fluctuations in the trading price and volume of shares of Inuvo and Vertro common stock;

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other economic, business, and competitive factors generally affecting the business of the combined company;

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Inuvo’s history of losses;

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risks frequently encountered by Internet marketing and advertising companies;

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the adverse effect of search engine industry consolidation and alliances;

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each of Vertro’s and Inuvo’s ability to expand their relationships with other Internet media content, advertising and product providers;

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the terms of each of Vertro’s and Inuvo’s bank loan agreements;

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the dependence of each of Vertro and Inuvo upon a single customer for a significant portion of their respective revenues;

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each of the parties’ abilities to effectively compete;

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the impact of increasing government regulations and consumer protection laws;

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the need to keep pace with changes in technology;

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the possible interruption of each of Inuvo’s and Vertro’s services and the reliance on third-party providers;

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Inuvo’s dependence on credit card processing companies and the risks of increasing fees;

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the risks related to credit card fraud;

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each of Inuvo’s and Vertro’s history of litigation;

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liabilities assumed with information that Inuvo retrieves from its websites;

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the impact of natural disasters on each of Inuvo’s and Vertro’s ability to compete;

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any failure to adequately protect personal information;

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possible security breaches and computer viruses;

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each of Inuvo’s and Vertro’s reliance on executive officers and key personnel;

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discounts offered to advertisers by upstream advertising networks;

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the adverse impact on demand for Inuvo’s services from a proliferation of “spam”;

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the ability to execute upon corporate strategies;

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Vertro’s ability to distribute and monetize its international products at rates sufficient to meet its expectations;

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each of Inuvo’s and Vertro’s ability to develop and successfully market new products and services;

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the potential acceptance of new products in the market;

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the impact of changes to each of Inuvo’s and Vertro’s monetization partners’ implementation guidelines; and

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the impact of quarterly results on each of Inuvo’s and Vertro’s stock prices.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this joint proxy statement/prospectus and should be read in conjunction with the risk factors and other disclosures contained or incorporated by reference into this joint proxy statement/prospectus. The areas of risk and uncertainty described above are not exclusive and should be considered in connection with any written or oral forward-looking statements that may be made in this joint proxy statement/prospectus or on, before, or after the date of this joint proxy statement/prospectus by Inuvo or Vertro or anyone acting for either or both of them. Except as required by applicable law or regulation, neither Inuvo nor Vertro undertakes any obligation to release publicly or otherwise make any revisions to any forward-looking statements, to report events or circumstances after the date of this joint proxy statement/prospectus or to report the occurrence of unanticipated events.

RISK FACTORS

In addition to the other information in this joint proxy statement/prospectus or incorporated in this joint proxy statement/prospectus by reference, including the matters addressed under “Forward-Looking Statements,” you should consider carefully the following factors before deciding how to vote.

Risks Related to the Merger

The issuance of shares of Inuvo common stock to Vertro stockholders in connection with the merger will substantially dilute the voting power of current Inuvo stockholders.

Accordingly, the issuance of shares of Inuvo common stock to Vertro stockholders in connection with the merger will significantly reduce the relative voting power of each share of Inuvo common stock held by current Inuvo stockholders.

The merger is subject to closing conditions that, if not satisfied or waived in a timely manner or at all, will result in the merger not being completed or delayed. A failure to complete or delay in completing the merger may have an adverse effect on both companies’ businesses due to uncertainty or operating restrictions while the merger is pending or cause the market prices of Inuvo common stock or Vertro common stock to decline.

The merger will not be completed unless all of the conditions to the merger have been satisfied or, if permissible, waived. Neither Inuvo nor Vertro can predict what the effect on the market price of their respective shares would be if the merger is not completed, but depending on market conditions at the time, it could result in a decline in market price. A substantial delay in completing the merger due to litigation that has been and may be instituted regarding the merger or the need to satisfy the conditions to closing the merger, or the imposition of any unfavorable terms, conditions, or restrictions in obtaining a waiver to such conditions or otherwise, could have a material adverse effect on the anticipated benefits of, or increase the costs associated with or delay the cost savings anticipated from, the merger, thereby impacting the business, financial condition or results of operations of Inuvo after the merger. In addition, the parties are subject to restrictions on the operation of their business while the merger is pending, which could impair their ability to operate their businesses and prevent them from pursuing attractive business opportunities that may arise prior to the completion of the merger. Any of these situations could also result in a decline in the market price of Inuvo common stock or Vertro common stock. Also, the uncertainty regarding whether the merger will be completed (including uncertainty regarding whether the conditions to closing will be met) could impact Inuvo’s and Vertro’s relationships with their employees, suppliers and partners. These restrictions and uncertainties could have an adverse impact on Inuvo’s and Vertro’s business, financial condition, or results of operations and could result in a decline in the market price of Inuvo common stock or Vertro common stock or an increase in the volatility of these market prices.

Officers and directors of Vertro and Inuvo may have conflicts of interest because they have severance and other agreements providing for payments.

When considering the recommendation of the Vertro board of directors and the Inuvo board of directors, you should be aware that some executive officers of Vertro and Inuvo and some members of the Vertro board of directors and Inuvo board of directors have interests in the merger that are different from yours. These interests exist because of rights certain directors and executive officers have under incentive, benefit and compensation agreements. These interests may create conflicts of interest with respect to the merger. The Vertro board and the Inuvo board were aware of these conflicts of interest when they approved the merger. See the section entitled “The Merger — Interests of Certain Persons in the Merger” beginning on page 73.

The merger agreement contains provisions that limit Vertro’s and Inuvo’s ability to pursue alternatives to the merger, which could discourage a potential competing acquirer of either Inuvo or Vertro from making an alternative transaction proposal and, in certain circumstances, could require Inuvo or Vertro to pay to the other a fee of $500,000.

Under the merger agreement, Vertro and Inuvo are restricted, subject to limited exceptions, from entering into alternative transactions. Unless and until the merger agreement is terminated, subject to specified exceptions (which are discussed in more detail in the section entitled “The Merger Agreement — No Solicitation of Alternative Proposals” beginning on page 95), both Vertro and Inuvo are restricted from initiating, soliciting, encouraging, or knowingly facilitating, any inquiry, proposal or offer for a competing acquisition proposal with any person. Additionally, under the merger agreement, in the event of a potential change by either the Vertro or the Inuvo board of directors of its recommendation with respect to the merger-related proposals, the company considering changing its recommendation, if requested, must negotiate in good faith an adjustment to the terms and conditions of the merger agreement to avoid changing its recommendation. Vertro and Inuvo may terminate the merger agreement and enter into an agreement with respect to a superior proposal only if specified conditions have been satisfied, including compliance with the non-solicitation provisions of the merger agreement. These provisions could discourage a third party that may have an interest in acquiring all or a significant part of Vertro or Inuvo from considering or proposing that acquisition, even if such third party were prepared to pay consideration with a higher per share cash or market value than that market value proposed to be received or realized in the merger, or might result in a potential competing acquirer proposing to pay a lower price than it would otherwise have proposed to pay because of the added expense of the transaction expenses that may become payable in certain circumstances.

Because the exchange ratio is fixed and will not be adjusted for any change in either the price of Vertro common stock or the price of Inuvo common stock, Vertro stockholders cannot be sure of the value of the merger consideration they will receive.

If the merger is completed, each share of Vertro common stock outstanding as of immediately prior to the effective time will be converted into the right to receive 1.546 shares of Inuvo common stock. This exchange ratio was fixed in the merger agreement and will not be adjusted for changes in the market price of either Inuvo common stock or Vertro common stock. Changes in the market price of Inuvo common stock prior to the effective time of the merger will affect the market value of the merger consideration that Vertro stockholders will receive in the merger. In addition, the relationship between the market price of Vertro common stock and the market price of Inuvo common stock could change prior to consummation of the merger in a manner that makes the exchange ratio, from a current market price standpoint, less favorable to Vertro stockholders, or less favorable to Inuvo, than it was based on the market prices of Vertro common stock and of Inuvo common stock at the time the parties executed the merger agreement.

The failure to integrate successfully the businesses of Inuvo and Vertro in the expected timeframe could adversely affect the combined company’s future results following the completion of the merger.

The success of the merger will depend, in large part, on the ability of the combined company following the completion of the merger to realize the anticipated benefits from combining the businesses of Inuvo and Vertro. The failure to integrate successfully and to manage successfully the challenges presented by the integration process may result in the combined company’s failure to achieve some or all of the anticipated benefits of the merger. Potential difficulties that may be encountered in the integration process include the following:

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using the combined company’s cash and other assets efficiently to develop the business of the combined company;

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appropriately managing the liabilities of the combined company;

•

potential unknown or currently unquantifiable liabilities associated with the merger and the operations of the combined company;

•

potential unknown and unforeseen expenses, delays or regulatory conditions associated with the merger; and

•

performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by completing the merger and integrating the companies’ operations.

The merger will result in changes to the Inuvo board of directors and the combined company may pursue different strategies than either Inuvo or Vertro may have pursued independently.

If the parties complete the merger, the composition of the Inuvo board of directors will change in accordance with the merger agreement. Following the completion of the merger, the combined company’s board of directors will consist of seven members, including three of the current directors of both Inuvo and Vertro. Currently, it is anticipated that the combined company will continue to advance the product development efforts and business strategies of Inuvo and Vertro. However, because the composition of the board of directors of the combined company will consist of directors from both Inuvo and Vertro the combined company may determine to pursue certain business strategies that neither Inuvo nor Vertro would have pursued independently.

Future results of the combined company may differ materially from the unaudited pro forma financial statements presented in this joint proxy statement/prospectus and the financial forecasts prepared by Inuvo and Vertro in connection with discussions concerning the merger.

The future results of the combined company may be materially different from those shown in the unaudited pro forma condensed combined financial statements presented in this joint proxy statement/prospectus, which show only a combination of the historical results of Inuvo and Vertro, and the financial forecasts prepared by Inuvo and Vertro in connection with discussions concerning the merger. Inuvo and Vertro expect to incur significant costs associated with the completion of the merger and combining the operations of the two companies. The exact magnitude of these costs are not yet known. Furthermore, these costs may decrease the capital that the combined company could use for continued development of the combined company’s business in the future or may cause the combined company to seek to raise new capital sooner than expected.

Pending litigation against Vertro and Inuvo could prevent or delay the completion of the merger, result in the payment of damages in the event the merger is completed, or adversely affect Inuvo’s financial condition or results of operations following the merger.

Chancery Court. The two Delaware cases were consolidated on November 29, 2011, referred to as the Delaware Action. The plaintiffs in the New York and Delaware Actions allege that Vertro’s board of directors breached their fiduciary duties regarding the merger and that Vertro, Inuvo, and Merger Sub aided and abetted the alleged breach of fiduciary duties. The plaintiffs ask that the merger be enjoined and seek other unspecified monetary relief.

On December 6, 2011, the plaintiffs in the Delaware Action filed a motion requesting expedited proceedings. The Delaware Chancery Court denied plaintiffs’ motion on December 21, 2011. The defendants in the Delaware Action moved to dismiss the plaintiffs’ complaint on December 15, 2011 and January 3, 2012 and the Delaware Court entered a schedule for the submission of further briefs on these motions on January 6, 2012. On December 30, 2011, the plaintiff in the New York Action moved for expedited discovery and proceedings. The defendants opposed this motion on January 11, 2012. The defendants in the New York Action also moved to dismiss the plaintiff’s complaint on December 16, 2011 and the parties to that case are currently in the processing of briefing the defendants’ motions to dismiss. The Vertro defendants and Inuvo believe the lawsuits are without merit, but the outcome of any such litigation is inherently uncertain. If a dismissal is not granted or a settlement is not reached, the lawsuit could prevent or delay the completion of the merger and result in substantial costs to Inuvo and Vertro. In addition, the defense or settlement of any lawsuit or claim that remains unresolved at the time the merger closes could adversely affect Inuvo’s financial condition or results of operations.

Risks Relating to Inuvo

Inuvo has a history of losses and there are no assurances it will ever generate profits.

As of September 30, 2011, Inuvo has an accumulated deficit of approximately $110 million. For 2010, its operating loss from continuing operations was approximately $4.6 million and for 2009 its operating loss from continuing operations was approximately $5.1 million. For the first nine months of 2011, Inuvo’s loss from continuing operations was approximately $4.9 million. Its future capital requirements depend on a number of factors, including its ability to internally grow its revenues, manage its business and control its expenses. If Inuvo is not successful in increasing its revenues, it may be required to raise additional capital to fund its operations and pay its obligations as they become due. Inuvo does not have any firm commitments to provide capital, and it may be unable to raise funds upon terms satisfactory to it.

Inuvo is subject to risks frequently encountered by companies in the Internet marketing and advertising industry.

Inuvo’s prospects for financial and operational success must be considered in light of the risks frequently encountered by companies in the Internet marketing and advertising industry. During 2010 and continuing into 2011, the search alliance between Microsoft and Yahoo! adversely impacted Inuvo’s revenues, and any continued consolidation within the search segment could result in additional decline in this portion of its business. In addition, Inuvo faces other risks associated with its industry, including the need to:

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attract new clients and maintain current client relationships;

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achieve effective advertising campaign results for its clients;

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continue to expand the number of services and technologies it offers;

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successfully implement its business model, which is evolving;

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respond to pricing pressure in some of its lines of business;

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maintain its reputation and build trust with its clients;

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identify, attract, retain and motivate qualified personnel;

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accurately measure impressions, searches, clicks, or other online actions for its advertisers, publishers, or partners;

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adapt to changes in online advertising, email, and other filtering software; and

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manage online credit card billing and customer service concerns.

Inuvo may be unable to effectively manage these risks. Its failure to do so could result in a decline in its revenues and impact its ability to continue as a going concern.

Inuvo’s success depends on its ability to continue and expand relationships with other Internet media content, advertising and product providers.

The Internet includes an ever-increasing number of businesses that offer and market consumer products and services. Advertising providers allow Inuvo to generate advertising revenue from its and its affiliates’ websites, as well as profit sharing arrangements for joint effort marketing programs. Inuvo expects that with the increasing number of entrants into the Internet commerce arena, advertising costs and joint effort marketing programs will become more competitive. Additionally, upstream advertising networks that Inuvo uses may offer customers discounts as a way to attract more advertisers to their network thereby reducing its revenues generated by these networks. This competitive environment might prevent Inuvo from satisfactorily executing profit generating advertising and joint effort marketing programs in the future. This competitive environment may also prevent Inuvo from providing content and product and service providers from marketing their products and services through its or its affiliates’ websites. If Inuvo fails to continue establishing new, and maintaining and expanding existing, profitable advertising and joint marketing arrangements, it may suffer substantial adverse consequences to its financial condition and results of operations.

If Inuvo is unable to raise additional capital as needed, its ability to grow its company and satisfy its obligations as they become due will be in jeopardy.

It is likely that Inuvo will need to raise significant additional capital to grow its company, fund its operating expenses and satisfy its obligations as they become due, including its revolving credit facility with Bridge Bank, which matures in 2013, and to regain full compliance with the continued listing standards of NYSE Amex. In addition, Inuvo may require additional waivers from compliance with certain loan covenants from its primary lender which it may not receive. Inuvo does not have any commitments to provide this additional capital and it cannot assure you that funds are available to it upon terms acceptable to it, if at all. If Inuvo does not raise funds as needed, its ability to provide for current working capital needs and satisfy its obligations will be in jeopardy.

Inuvo depends on a single customer for a significant portion of its revenues.

Inuvo received 86% of its net revenue for the nine months ended September 30, 2011, from a single customer and this customer accounted for 80.3% of its revenue in 2010. Inuvo currently has 15 months remaining on the original agreement with this customer. The loss of that customer or a material change in the revenue or gross profit generated by that customer could have a material adverse impact on Inuvo’s business, results of operations and financial condition.

Inuvo may not successfully defend itself against litigation.

Inuvo is a defendant in several pending lawsuits in which the plaintiffs are seeking damages in significant amounts. If Inuvo is not successful, one or more of these lawsuits could result in an unfavorable judgment against it. If Inuvo is unable to satisfactorily settle these lawsuits and it does not prevail in court, it may be subject to judgments in amounts which exceed its available capital which will damage its business and its ability to continue as a going concern.

Inuvo is deficient in the continued listing standards of NYSE Amex and there are no assurances it will be able to regain compliance within the timeframe permitted by the exchange.

In May 2011, Inuvo was notified by NYSE Regulation that it was below certain of the NYSE Amex’s continued listing standards due to stockholders’ equity of less than $4,000,000 and losses from continuing operations and/or net losses in three of its four most recent fiscal years as set forth in Section 1003(a)(ii) of the NYSE Amex’s company guide. Inuvo was afforded the opportunity to submit a plan of compliance to the exchange by June 8, 2011, that demonstrated its ability to regain compliance with Section 1003(a)(ii) of the company guide within a maximum of 18 months from the submission of the plan. On July 6, 2011, Inuvo was notified by the exchange that it had made a reasonable demonstration of Inuvo’s ability to regain compliance with the continued listing standards by December 8, 2012. The exchange continued the listing of Inuvo’s common stock subject to certain conditions, including the requirement to provide updates on Inuvo’s progress. If Inuvo does not regain compliance with the continued listing standards by December 8, 2012, subject to its continued progress in accordance with the plan it submitted, Inuvo’s common stock will be subject to delisting procedures. In that event, it is likely that Inuvo’s common stock would be quoted in the over the counter market on the OTC Bulletin Board. The loss of Inuvo’s exchange listing will adversely impact the future liquidity of Inuvo’s common stock and may make it more difficult for its stockholders to resell those shares.

Inuvo competes with many companies, some of whom are more established and better capitalized than it.

Inuvo competes with a variety of companies on a worldwide basis both through the Internet and in traditional markets. Most of these companies are larger and better capitalized than Inuvo. There are also few barriers to entry in its markets. Inuvo’s competitors may develop services that are superior to, or have greater market acceptance than its services. For example, many of Inuvo’s current and potential competitors have longer operating histories, significantly greater financial, technical, marketing and other resources and larger customer bases than Inuvo. These factors may allow Inuvo’s competitors to respond more quickly than it can to new or emerging technologies and changes in customer requirements. Inuvo’s competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies which may allow them to build larger registrant and membership bases. In addition, current and potential competitors are making, and are expected to continue to make, strategic acquisitions or establish cooperative, and, in some cases, exclusive relationships with significant companies or competitors to expand their businesses or to offer more comprehensive products and services. To the extent these competitors or potential competitors establish exclusive relationships with major portals, search engines and Internet service providers (ISPs), Inuvo’s ability to reach potential customers through online advertising may be restricted. Any of these competitors could jeopardize Inuvo’s existing affiliate program and relationships with portals, search engines, ISPs and other Internet properties. Failure to compete effectively including by developing and enhancing Inuvo’s services offerings would have a material adverse effect on its business, results of operations, financial condition and the trading price of its common stock.

Increasing government regulations, consumer protection laws or taxation could adversely affect Inuvo’s business.

Inuvo is affected not only by regulations applicable to businesses generally, but also by federal, state, local and foreign laws, rules, regulations and taxes directly applicable to electronic communications, telecommunications and the Internet. Laws and regulations related to the Internet are becoming more prevalent, and new laws and regulations are under consideration in various jurisdictions. Many areas of law affecting the Internet remain unsettled, and it may take years to determine whether and how existing laws such as those governing consumer protection, intellectual property, libel and taxation apply to the Internet. New, or amendments to existing laws and regulations, including laws and regulations that govern, restrict, tax or affect things such as user privacy, the pricing and taxation of goods and services offered over the Internet, the content of websites, access to websites, linking of websites, outgoing email solicitations, consumer protection and the characteristics and quality of products and services offered over the Internet could have a material adverse effect on Inuvo’s business, results of operations, financial condition and the trading price of its common stock.

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. It must adapt to rapidly changing technologies and industry standards and continually improve the speed, performance, features, ease of use and reliability of its services. Introducing new technology into its systems involves numerous technical challenges, requires substantial amounts of capital and personnel resources, and often takes many months to complete. Inuvo may not successfully integrate new technology into its websites on a timely basis, which may degrade the responsiveness and speed of its websites. Technology, once integrated, may not function as expected. In addition, the number of people who access the Internet through devices other than desktop and laptop computers, including mobile telephones and other handheld computing devices, has increased dramatically in the past few years. Failure to attract and retain a substantial number of mobile device users to Inuvo’s services, or failure to develop services that are more compatible with mobile communications devices, or failure to generally keep pace with rapid technological change could have a material adverse effect on its business, results of operations, financial condition and the trading price of Inuvo’s common stock.

Inuvo’s services may be interrupted due to problems with its servers, its network hardware and software, or its inability to obtain network capacity.

The performance of Inuvo’s server and networking hardware and software infrastructure is critical to its business and reputation and its ability to attract Internet users, advertisers, members and e-commerce partners to its websites and to convert members to subscribers. Inuvo has experienced occasional system interruptions as a result of unexpected increases in usage. Inuvo cannot assure you it will not incur similar or more serious interruptions in the future. An unexpected or substantial increase in the use of its websites could strain the capacity of its systems, which could lead to a slower response time or system failures. Any slowdowns or system failures could adversely affect the speed and responsiveness of Inuvo’s websites and would diminish the experience for users. Further, if usage of Inuvo’s websites substantially increases, it may need to purchase additional servers and networking equipment to maintain adequate data transmission speeds, the availability of which may be limited or the cost of which may be significant. Any system failure that causes an interruption in service or a decrease in the responsiveness of Inuvo’s websites could reduce traffic on the websites and, if sustained or repeated, could impair Inuvo’s reputation and the attractiveness of its brands, all of which could have a material adverse effect on Inuvo’s business, results of operations, financial condition and the trading price of its common stock. Furthermore, Inuvo relies on many different hardware and software systems. Failure of these systems or inability to rapidly expand its transaction-processing systems and network infrastructure in response to a significant unexpected increase in usage could have a material adverse effect on Inuvo’s business, results of operations, financial condition and the trading price of its common stock. The failure to establish and maintain affiliate agreements and relationships could limit the growth of business. Inuvo has entered into, and expect to continue to enter into, arrangements with affiliates to increase traffic to its websites and enhance its brands. If any of the current agreements are terminated, Inuvo may not be able to replace the terminated agreement with an equally beneficial arrangement. Inuvo cannot assure you that it will be able to renew any of its current agreements when they expire on acceptable terms, if at all. Inuvo also does not know whether it will be successful in entering into additional agreements or that any relationships, if entered into, will be on terms favorable to it. Failure to establish and maintain affiliate agreements and relationships could have a material adverse effect on Inuvo’s business, results of operations, financial condition and the trading price of its common stock.

Inuvo’s business relies on a number of third-party providers, and their failure to perform or termination of the relationships with them could harm Inuvo’s business.

Inuvo licenses technologies from third parties to facilitate its ability to provide its services. Any failure on Inuvo’s part to comply with the terms of these licenses could result in the loss of its rights to continue using the licensed technology, and Inuvo could experience difficulties obtaining licenses for alternative technologies.

Furthermore, any failure of these third parties to provide these and other services, or errors, failures, interruptions or delays associated with licensed technologies, could have a material adverse effect on Inuvo’s business, results of operations, financial condition and the trading price of its common stock.

Inuvo depends on its merchant and banking relationships, as well as strategic relationships with third parties, who provide it with payment processing solutions.

From time to time, VISA and MasterCard increase the fees that they charge processors. Inuvo may attempt to pass these increases along to its merchant customers, but this might result in the loss of those customers to Inuvo’s competitors who do not pass along the increases. Inuvo’s revenues from merchant account processing are dependent upon its continued merchant relationships which are highly sensitive and can be canceled if customer charge-backs escalate and generate concern that the company has held back insufficient funds in reserve accounts to cover these charge-backs. Cancellation by Inuvo’s merchant providers would most likely result in the loss of new customers and lead to a reduction in Inuvo’s revenues.

Inuvo is exposed to risks associated with credit card fraud and credit payment.

Many of Inuvo’s customers use credit cards to pay for its services. Inuvo has suffered losses, and may continue to suffer losses, as a result of orders placed with fraudulent credit card data, even though the associated financial institution approved payment. Under current credit card practices, a merchant is liable for fraudulent credit card transactions when the merchant does not obtain a cardholder’s signature. A failure to adequately control fraudulent credit card transactions would result in significantly higher credit card-related costs and could have a material adverse effect on Inuvo’s business, results of operations, financial condition and the trading price of its common stock.

Inuvo’s business may incur liability for information retrieved from or transmitted through its websites or websites linked to it.

Because Inuvo’s business publishes or makes various information available on its websites or though linked websites, it may be sued for, or incur liability related to, defamation, civil rights infringement, negligence, copyright or trademark infringement, invasion of privacy, personal injury, product liability or other legal claims. Inuvo’s business also offers email services subjecting it to liabilities or claims relating to unsolicited email or spamming, lost or misdirected messages, security breaches, illegal or fraudulent use of email or interruptions or delays in email service. Liability or expense relating to these types of claims could have a material adverse effect on Inuvo’s business, results of operations, financial condition and the trading price of its common stock.

Inuvo’s business could be significantly impacted by the occurrence of natural disasters such as hurricanes and other catastrophic events.

Inuvo’s primary data center and corporate headquarters are located in Clearwater, Florida and are, therefore, susceptible to damage from hurricanes or other tropical storms. Although Inuvo believes it has adequate backup for this data in a secure location, it may not be able to prevent outages and downtime caused by these storms or other events out of its control, which could have a material adverse effect on Inuvo’s business, results of operations, financial condition and the trading price of its common stock.

Inuvo may incur liability if it fails to adequately protect personal information.

Inuvo’s business handles personally identifiable information pertaining to visitors to its websites residing in the United States as well as foreign countries. Many jurisdictions have adopted privacy, security, and data protection laws and regulations intended to prevent improper use and disclosure of personally identifiable information. In addition, some jurisdictions impose database registration requirements for which significant monetary and other penalties may be imposed for failure to comply. These laws, which are subject to change and may be inconsistent, may impose costly administrative requirements, limit Inuvo’s handling of information, and subject it to increased government oversight and financial liabilities all of which could have a material adverse effect on Inuvo’s business, results of operations, financial condition and the trading price of its common stock.

Security breaches and inappropriate Internet use could damage Inuvo’s business.

Concerns over the security of transactions conducted on the Internet and the privacy of users may inhibit the growth of the Internet and other online services generally, and online commerce in particular. Failure to successfully prevent security breaches could significantly harm Inuvo’s business and expose it to lawsuits. Anyone who is able to circumvent Inuvo’s security measures could misappropriate proprietary information, including customer credit card and personal data, cause interruptions in Inuvo’s operations, or damage its brand and reputation. Breach of Inuvo’s security measures could result in the disclosure of personally identifiable information and could expose Inuvo to legal liability. Inuvo cannot assure you that its financial systems and other technology resources are completely secure from security breaches or sabotage. Inuvo has experienced security breaches and attempts at “hacking.” It may be required to incur significant costs to protect against security breaches or to alleviate problems caused by breaches. Further, any well-publicized compromise of Inuvo’s security or the security of any other Internet provider could deter people from using Inuvo’s services or the Internet to conduct transactions that involve transmitting confidential information or downloading sensitive materials. All of these factors could have a material adverse effect on Inuvo’s business, results of operations, financial condition and the trading price of its common stock.

Computer viruses could damage Inuvo’s business.

Computer viruses, worms and similar programs may cause Inuvo’s systems to incur delays or other service interruptions and could damage its reputation and ability to provide its services and expose it to legal liability, all of which could have a material adverse effect on Inuvo’s business, results of operations, financial condition and the trading price of its common stock.

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

Inuvo’s success depends in part on the retention of personnel critical to its business operations due to, for example, unique technical skills, management expertise or key business relationships. Inuvo may be unable to retain existing management, finance, engineering, sales, customer support, and operations personnel that are critical to its success, which may result in disruption of operations, loss of key business relationships, information, expertise or know-how, unanticipated additional recruitment and training costs, including loss of revenue and profitability. Inuvo’s future success is substantially dependent on the continued service of its key senior management. The loss of the services of any member of Inuvo’s senior management team, or of any other key employees, could divert management’s time and attention, increase Inuvo’s expenses and adversely affect its ability to conduct its business efficiently. Inuvo’s future success also depends on its continuing ability to attract, retain and motivate highly skilled employees. Inuvo may be unable to retain its key employees or attract, retain and motivate other highly qualified employees in the future. Inuvo has experienced difficulty from time to time in attracting or retaining the personnel necessary to support the growth of its business, and may experience similar difficulties in the future.

Demand for Inuvo’s services may decline due to the proliferation of “spam” and software designed to prevent its delivery.

Inuvo’s business may be adversely affected by the proliferation of “spam” and other unwanted Internet solicitations. In response to such proliferation, ISP’s have been adopting technologies, and individual computer users are installing software on their computers that are designed to prevent the delivery of certain Internet advertising, including legitimate solicitations such as those delivered by Inuvo. Inuvo cannot assure you that the number of ISP’s and individual computer users who employ these or other similar technologies and software will not increase, thereby diminishing the efficacy of Inuvo’s services. In the case that one or more of these technologies are widely adopted or the software widely utilized, demand for Inuvo’s services would decline.

Defects in the Inuvo Platform, disruptions in its service or errors in execution could diminish demand for Inuvo’s service and subject it to substantial liability.

The Inuvo Platform is complex and incorporates a variety of hardware and proprietary and licensed software. Internet-based services such as Inuvo’s frequently experience disruptions from undetected defects when first introduced or when new versions or enhancements are released. In addition, Inuvo’s recently added text messaging capabilities may hinder the performance of its platform as it has limited experience with dealing with text messaging services. From time to time Inuvo has corrected defects in its platform. Other defects in the Inuvo Platform, or defects in new features, complementary services or upgrades released in the future, could result in service disruptions for one or more clients. Inuvo’s clients might use Inuvo’s service in unanticipated ways that cause a service disruption for other clients attempting to access their contact list information and other data stored on the Inuvo platform. In addition, a client may encounter a service disruption or slowdown due to high usage levels of service. Because clients use Inuvo’s service for critical business processes, any defect in the Inuvo Platform, any disruption in its service or any error in execution could cause existing or potential clients not to use Inuvo’s service, could harm its reputation, and could subject it to litigation and significant liability for damage to its clients’ businesses.

The market price for shares of Inuvo’s common stock may continue to be highly volatile and subject to wide fluctuations.

The market for Inuvo’s common stock has recently been subject to significant disruptions that have caused substantial volatility in the prices of these securities, which may or may not have corresponded to the business or financial success of Inuvo. The market price for shares of Inuvo’s common stock has declined substantially in recent months and could decline further if Inuvo’s future operating results fail to meet or exceed the expectations of market analysts and investors and/or current economic or market conditions persist or worsen. Some specific factors that may have a significant effect on the future market price of Inuvo’s common stock include:

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actual or expected fluctuations in its operating results;

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variance in its financial performance from the expectations of market analysts;

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changes in general economic conditions or conditions in its industry generally;

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changes in conditions in the financial markets;

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announcements of significant acquisitions or contracts by Inuvo or its competitors;

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its inability to raise additional capital and maintain its exchange listing;

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changes in applicable laws or regulations, court rulings and enforcement and legal actions;

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additions or departures of key management personnel;

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actions by its stockholders;

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changes in market prices for its products; and

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changes in stock market analyst research and recommendations regarding the shares of Inuvo’s common stock, other comparable companies or its industry generally.

In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the affected companies. These broad market and industry factors may materially harm the market price of Inuvo’s common stock, regardless of Inuvo’s operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted against that company. Such litigation, if instituted against Inuvo, could result in substantial costs and a diversion of management’s attention and resources, which could have a material adverse effect on Inuvo’s business, financial condition and results of operations.

Risks Relating to Vertro

Risks Related to Vertro’s Business

One paid listings provider, which is a competitor of Vertro, accounts for a significant portion of Vertro’s consolidated revenue and any adverse change in that relationship would likely result in a significant decline in Vertro’s revenue, and Vertro’s business operations could be significantly harmed.

Vertro has an agreement with Google pursuant to which it utilizes Google’s paid search results and algorithmic search services for approved ALOT websites and applications. Vertro renewed its agreement with Google in December 2010 for a two year term beginning on January 1, 2011, and expiring on December 31, 2012, unless either party elects not to continue after December 31, 2011, by providing written notice thereof at least 60 days prior to December 31, 2011. Vertro receives a share of the revenue generated by the paid search results services supplied to it from Google. The amount of revenue Vertro receives from Google depends on a number of factors outside of its control, including the amount Google charges for advertisements, the depth of advertisements available from Google, and the ability of Google’s system to display relevant ads in response to its end-user queries. For the quarter ended September 30, 2011, Google accounted for approximately 82% of Vertro’s consolidated revenue from continuing operations. Vertro’s agreement with Google contains broad termination rights and its use of Google’s paid search results and algorithmic search services are subject to Google’s implementation guidelines. Google also competes with Vertro’s ALOT business. Vertro likely will experience a significant decline in revenue and its business operations could be significantly harmed if:

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Vertro fails to have websites and applications approved by Google;

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Google’s performance deteriorates;

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Vertro violates Google’s guidelines or Google changes their implementation guidelines; or

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Google exercises its termination right or elects to not continue the agreement after December 31, 2011.

In addition, if any of these preceding circumstances were to occur, Vertro may not be able to find a suitable alternate paid search results provider or otherwise replace the lost revenues.

On May 11, 2011, Vertro was notified by Google that they changed their implementation guidelines that apply to Vertro’s use of Google’s paid search results. These changes negatively impacted Vertro’s business in the third quarter of 2011 and may negatively impact its business and results of operations in the future.

The success of ALOT is dependent on Vertro’s ability to maintain and grow its active consumer base.

Vertro’s ALOT division operates a portfolio of consumer-oriented interactive products including Appbars and homepages. ALOT derives the majority of its revenue from advertisements directed towards consumers. The amount of revenue generated by ALOT is dependent on Vertro’s ability to maintain and grow its active consumer installed base. Factors that influence Vertro’s ability to maintain and grow its active consumer base include, but are not limited to, government regulation, acceptance of Vertro’s Appbar products by consumers, the availability of advertising to promote Appbar products, third-party designation of Appbar and/or other products as undesirable or malicious, user attrition, competition, and sufficiency of capital to purchase advertising. Vertro acquires users of its ALOT products primarily through online advertising that it purchases from ad networks at prices agreed to based on expected rate of return. Towards the end of the second quarter 2011 and the beginning of the third quarter 2011, Vertro experienced difficulties in achieving cost effective distribution for ALOT products because Vertro was unable to acquire its targeted number of users at desired prices. If Vertro is unable to maintain and grow its active consumer base, it could have a material adverse effect on Vertro’s business, financial condition, and results of operations.

Vertro bases customer acquisition decisions primarily on its model of the predicted rate of return on new users. If the estimates and assumptions it uses in calculating the predicted rate of return for new users are inaccurate, Vertro’s customer acquisition decisions may be misguided.

Vertro acquires users based on its predicted return which it calculates using estimates and assumptions and data from previously acquired users. The estimates and assumptions include estimates about user behavior and third party advertising revenue, both of which are out of Vertro’s control. Estimates and assumptions used in calculating predicted rate of return may not be accurate or correct. Accordingly, the calculation of predicted rate of return may not be reflective of Vertro’s actual returns. If Vertro is unable to effectively manage its customer acquisition costs, it could have a material adverse effect on its business, financial condition, and results of operations.

Vertro delivers advertisements to users from third-party ad networks which exposes its users to content and functionality over which Vertro does not have ultimate control.

Vertro displays pay-per-click, banner, cost per acquisition, and other forms of Internet advertisements to users that come from third-party ad networks. Vertro does not control the content and functionality of such third-party advertisements and, while it provides guidelines as to what types of advertisements are acceptable, there can be no assurance that such advertisements will not contain content or functionality that is harmful to users. Vertro’s inability to monitor and control what types of advertisements get displayed to users could have a material adverse effect on its business, financial condition, and results of operations.

Vertro’s business is dependent upon its ability to deliver qualified leads to Google, Vertro’s primary paid listings provider.

Vertro’s primary paid listings provider utilizes ALOT to deliver high quality Internet traffic to its advertisers. Vertro’s primary paid listings provider will only use its services if Vertro delivers high quality Internet traffic. If Vertro’s primary paid listings provider is not satisfied with the quality of Internet traffic delivered by Vertro, it may take remedial action. Vertro may not be successful in delivering high quality traffic to its primary paid listings provider, which could have a material adverse effect on Vertro’s business, financial position, and results of operations.

New technologies and changing industry standards could limit the effectiveness of Vertro’s products and services, which would harm Vertro’s business.

Vertro’s industry is characterized by changing industry standards, coupled with significant new product introductions and changes. For example, new technologies have been developed that can block the display of ads or sponsored listings or prevent Internet users from downloading Vertro’s products. Furthermore, Vertro’s Appbar products are an Internet browser plug-in and any changes to the Internet browser protocol could significantly interfere or limit the ability of consumers to utilize Vertro’s products. The development of new product introductions and enhancements in response to evolving industry standards requires significant time and resources, and Vertro may not be able to adapt quickly enough to these changes. Vertro’s failure to do so could adversely affect its business, financial condition and results of operations.

Vertro faces substantial and increasing competition in the market for Internet based marketing services.

Vertro faces substantial competition in every aspect of its business, and particularly from other companies that seek to connect people with information on the Internet and provide them with relevant advertising and commerce-enabling services, either directly or through a network of partners. Some of Vertro’s principal competitors include Google, Yahoo!, IAC, MSN, Answers.com, Xacti, InfoSpace, IncrediMail, and Conduit.com. Some of Vertro’s principal competitors have longer operating histories, larger customer bases, greater brand recognition, and significantly greater financial, marketing, personnel, and other resources than Vertro. These

competitors historically have developed and expanded their portfolios of products and services more rapidly than Vertro. In addition, these and other competitors may have or obtain certain intellectual property rights that may interfere with or prevent the use of one or more of Vertro’s business models. These and other competitors can use their experience and resources against Vertro in a variety of competitive ways, including by acquiring complementary companies or assets, investing aggressively in research and development, and competing more aggressively for consumers. Vertro expects that these competitors will increasingly use their financial and technological resources to compete.

Additionally, to the extent Vertro pursues strategic transactions, Vertro may compete with other companies with similar growth strategies, some of which may be larger and have greater financial and other resources. Competition for any such acquisition targets likely also will result in increased prices of acquisition targets and a diminished pool of companies available for acquisition.

Vertro has made and anticipates making additional significant investments in new initiatives related to current and future product and service offerings that may not meet expectations in terms of the viability, success, or profitability of such initiatives.

Vertro has made and anticipates making significant investments in new initiatives related to current and proposed product and service offerings, such as investments in its ALOT division and the launch of its new ALOT Appbar. All such new and proposed initiatives require the expenditure of significant time, money, personnel and other resources. There can be no assurance that any of these initiatives will be timely, viable, successful, and profitable or will enjoy the same margins as Vertro’s historical business. An investor should consider the likelihood of Vertro’s future success with respect to these and other initiatives to be speculative in light of Vertro’s limited history in successfully developing, introducing, and commercially exploiting new initiatives of this nature, as well as the problems, limited resources, expenses, risks, and complications frequently encountered by similarly situated companies in emerging and changing markets, such as e-commerce, with respect to the development and introduction of initiatives of this nature. Any inability to successfully develop, introduce, or implement these or other products or services could materially adversely affect Vertro’s business, financial condition, and results of operations.

Vertro has divested its MIVA Media Division pursuant to an Asset Purchase Agreement, and Vertro has certain ongoing obligations to the buyer.

In March 2009, Vertro sold its Media division pursuant to an asset purchase agreement. Under the terms of the asset purchase agreement, Vertro made certain representations and warranties and covenants in favor of the buyer, and Vertro has certain indemnification obligations to the buyer. Because the transaction was structured as an asset purchase, Vertro also retained potential liability to third parties for the pre-closing operation of the MIVA Media business. These obligations and retained liabilities could subject Vertro to potential claims in the future, which could result in the diversion of management’s time and attention and could cause Vertro to incur expenditures defending against such claims or could cause Vertro to have to make payments to the buyer or third parties.

Vertro has in the past and may in the future implement restructuring programs, which may subject it to claims and liabilities.

Over the past few years, Vertro has implemented a number of restructuring programs to reduce its headcount, reduce expenses and streamline operations. Vertro may implement further restructurings in the future. These restructurings may subject Vertro to claims and liabilities from employees and third parties, which could result in Vertro making payments to such persons and could materially adversely affect its business, financial condition and results of operations.

If Vertro does not continue to innovate and provide products and services that are useful to users, it may not remain competitive.

Vertro’s success depends on providing products and services that provide consumers with a high quality Internet experience. Vertro’s competitors are constantly developing innovative Internet products. As a result, Vertro must continue to seek to enhance its technology and existing products and services and introduce new high-quality products and services that businesses and/or consumers will use. Vertro’s success will depend, in part, on its ability to:

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enhance and improve the responsiveness and functionality of its Internet products and other primary traffic services;

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license, develop, or acquire technologies useful in its business on a timely basis, to enhance its existing services and develop new services and technology that address the increasingly sophisticated and varied needs of the business; and

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respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis.

Because Vertro’s markets are still developing and rapidly changing, it must allocate its resources based on predictions as to the future development of the Internet and its markets. These predictions ultimately may not prove to be accurate. If competitors introduce new products and services embodying new technologies, or if new industry standards and practices emerge, Vertro’s existing services, technology, and systems may become obsolete, and Vertro may not have the funds or technical know-how to upgrade its services, technology, and systems. If Vertro is unable to predict user preferences or industry changes, or to modify its products and services on a timely basis, it may lose consumers, which could cause a material adverse effect on its business, financial condition, and results of operations.

If Vertro fails to grow or manage its growth, its business will be adversely affected.

To succeed, Vertro must grow. Vertro may make additional acquisitions in the future as part of its growth initiatives. These may include acquisitions of international companies or other international operations. Vertro has limited experience in acquiring and integrating companies, and Vertro may also expand into new lines of business in which it has little or no experience. Additionally, Vertro may fail to achieve anticipated synergies from such acquisitions. Accordingly, Vertro’s growth strategy subjects it to a number of risks, including the following:

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Vertro may incur substantial costs, delays, or other operational or financial problems in integrating acquired businesses, including integrating each company’s accounting, management information, human resource, and other administrative systems to permit effective management;

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Vertro may not be able to identify, acquire, or profitably manage any additional businesses;

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with smaller acquired companies, Vertro may need to implement or improve controls, procedures, and policies appropriate for a public company;

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the acquired companies may adversely affect Vertro’s consolidated operating results, particularly since some of the acquired companies may have a history of operating losses;

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acquisitions may divert management’s attention from the operation of Vertro’s businesses;

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Vertro may not be able to retain key personnel of acquired businesses;

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there may be cultural challenges associated with integrating employees from acquired companies into Vertro’s organization; and

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Vertro may encounter unanticipated events, circumstances, or legal liabilities.

Any of these factors could materially adversely affect Vertro’s business, financial condition, and results of operations.

Vertro depends on third parties for certain software and services to operate its business.

Vertro depends on third-party software and services to operate its business. Although Vertro believes that several alternative sources for this software are available, any failure to obtain and maintain the rights to use such software on commercially reasonable terms would have a material adverse effect on Vertro’s business, financial condition, and results of operations. Vertro also is dependent on third parties to provide Internet services to allow it to connect to the Internet with sufficient capacity and bandwidth so that its business can function properly and its websites can handle current and anticipated traffic. Vertro currently has contracts with certain telecommunications providers for these services. Any restrictions or interruption in Vertro’s connection to the Internet, or any failure of these third-party providers to handle current or higher volumes of use, could have a material adverse effect on Vertro’s business, financial condition, and results of operations, and Vertro’s brand could be damaged if clients or prospective clients believe its system is unreliable. Any financial or other difficulties Vertro’s providers face may have negative effects on its business, the nature and extent of which cannot be predicted. Vertro exercises little control over these third party vendors, which increases its vulnerability to problems with the services they provide. Vertro has experienced occasional system interruptions in the past, and such interruptions will likely occur again in the future.

Vertro’s technical systems are vulnerable to interruption, security breaches, and damage, which could harm its business and damage its brands if clients or prospective clients believe that Vertro’s products are unreliable.

Vertro’s systems and operations are vulnerable to damage or interruption from fire, floods, hurricanes, power loss, telecommunications failures, break-ins, sabotage, computer viruses, penetration of its network by unauthorized computer users, or “hackers,” and similar events. Any such events could interrupt Vertro’s services and severely damage its business. The occurrence of a natural disaster or unanticipated problems at its technical operations facilities could cause material interruptions or delays in its business, loss of data, or render Vertro unable to provide services to customers. In addition, Vertro may be unable to provide services and access to websites due to a failure of the data communications capacity it requires, as a result of human error, natural disaster, or other operational disruptions. The occurrence of any or all of these events could materially adversely affect Vertro’s business, financial condition, and results of operations, and damage its brands if clients or prospective clients believe that its products are unreliable.

Vertro’s intellectual property rights may not be protectable or of significant value in the future.

Vertro depends upon confidentiality agreements with specific employees, consultants, and subcontractors to maintain the proprietary nature of its technology. These measures may not afford Vertro sufficient protection, and others may independently develop similar know-how and services, otherwise avoid Vertro’s confidentiality agreements, or produce patents and copyrights that would materially adversely affect Vertro’s business, financial condition, and results of operations.

Legal standards relating to the validity, enforceability, and scope of the protection of certain intellectual property rights in Internet-related industries are uncertain and still evolving. The steps Vertro takes to protect its intellectual property rights may not be adequate to protect its future intellectual property. Third parties may also infringe or misappropriate any Vertro copyrights, trademarks, service marks, trade dress and other proprietary rights. Any such infringement or misappropriation could have a material adverse effect on Vertro’s business, financial condition, and results of operations.

In addition, the relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights is unclear. Vertro may be unable to prevent third parties from acquiring domain

names that are similar to, infringe upon, or otherwise decrease the value of its trademarks and other proprietary rights, which may result in the dilution of the brand identity of its services.

Vertro’s business has historically been and may continue to be partially subject to seasonality, which may impact its quarterly growth rate.

Vertro has historically experienced, and may continue to experience, seasonal fluctuations in the number of click-throughs to advertisements available to ALOT. Historically, during the first quarter and the early part of the fourth quarter of each calendar year, Vertro realizes more activity than during the second and third quarters, and late in the fourth quarter due to increased overall Internet usage related to colder weather and holiday purchases. These seasonal fluctuations may continue in the future.

Vertro is subject to a patent settlement and license agreement from Yahoo! for certain portions of a divested business.

Vertro is subject to a patent settlement and license agreement from Yahoo! for certain portions of its MIVA Media business that were divested in March 2009. On August 15, 2005, Vertro settled a patent infringement lawsuit brought by Overture Services (“Overture Services”) and Yahoo!, Inc. (collectively with Overture Services, “Yahoo!”) regarding U.S. Patent No. 6,269,361 and took a royalty bearing non-exclusive license from Yahoo! regarding certain patents. Vertro divested its MIVA Media business in March 2009; however, Vertro is still subject to the terms of and has continuing obligations under the settlement and license agreement. The settlement and license agreement contains terms and conditions that may be unacceptable to a third party and could negatively impact Vertro’s ability to be sold or enter into a change of control transaction.

Vertro cannot predict its future capital needs and may not be able to secure additional financing.

Vertro has no material long-term agreements or short-term commitments for the funding of capital expenditures. Vertro currently anticipates that its cash of $4.0 million as of September 30, 2011, along with cash flows from operations during 2011 and 2012, will be sufficient to meet the anticipated liquidity needs for working capital and capital expenditures over the next 12 months.

Vertro’s future liquidity and capital requirements will depend on numerous factors. The pace of expansion of its operations will affect its capital requirements. Vertro may also have increased capital requirements in order to respond to competitive pressures. In addition, Vertro may need additional capital to fund acquisitions of complementary products, technologies, or businesses. As Vertro requires additional capital resources, it may seek to sell debt securities or additional equity securities, draw on its existing line of credit, or obtain an additional bank line of credit. There can be no assurance that any financing arrangements will be available in amounts, or on terms, acceptable to Vertro, if at all.

Vertro’s credit facility with Bridge Bank imposes significant restrictions. If Vertro draws on the credit facility, failure to comply with these restrictions could result in the acceleration of a substantial portion of such debt, which Vertro may not be able to repay or refinance.

In June 2011, Vertro entered into a credit facility with Bridge Bank, which provides for up to $8.0 million in loans. The credit facility contains a number of covenants that, among other things, requires Vertro, and certain of its subsidiaries, to:

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pay fees to the lender associated with the credit facility;

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maintain Vertro’s corporate existence in good standing;

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grant the lender a security interest in Vertro’s assets;

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provide financial information to the lender; and

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refrain from any transfer of any of Vertro’s business or property (subject to customary exceptions).

Vertro’s ability to comply with the provisions of the credit facility will be dependent upon its future performance, which may be affected by events beyond its control. A breach of any of its covenants could result in a default under the credit facility. In the event of any such default, Bridge Bank could elect to declare all borrowings outstanding under the credit facility, together with any accrued interest and other fees, to be due and payable, as well as require Vertro to apply all available cash to repay the amounts. If Vertro were unable to repay the indebtedness upon its acceleration, Bridge Bank could proceed against the underlying collateral. There can be no assurance that Vertro’s assets would be sufficient to repay an amount in full, that Vertro would be able to borrow sufficient funds to refinance the indebtedness, or that Vertro would be able to obtain a waiver to cure any such default. At September 30, 2011, Vertro did not have any amounts outstanding under its credit facility.

If Vertro were to access its credit facility, its debt would be subject to variable interest rates; and therefore rising interest rates could negatively impact its business.

Borrowings under Vertro’s credit facility bear interest at a variable rate. In addition, Vertro may incur other variable rate indebtedness in the future. At September 30, 2011, Vertro did not have any amounts outstanding under its credit facility. Carrying indebtedness subject to variable interest rates makes Vertro more vulnerable to economic and industry downturns and reduces its flexibility in responding to changing business and economic conditions. Increases in interest rates on this indebtedness would increase its interest expense, which could adversely affect its cash flows and its ability to service its debt as well as its ability to grow the business.

Current borrowings, as well as potential future financings, may substantially increase current indebtedness.

No assurance can be given that Vertro will be able to generate the cash flows necessary to meet its payment obligations with respect to its debt. Vertro could be required to incur additional indebtedness to meet payment obligations and there is no assurance that Vertro would be able to secure such financing on acceptable terms or at all, especially in light of the current economic, credit, and capital market environment. Should Vertro incur additional debt, among other things, such increased indebtedness could:

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adversely affect Vertro’s ability to expand its business, market products, and make investments and capital expenditures;

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adversely affect the cost and availability of funds from commercial lenders, debt financing transactions, and other sources; and

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create competitive disadvantages compared to other companies with lower debt levels.

Any inability to service Vertro’s fixed charges and payment obligations, or the incurrence of additional debt, would have a material adverse effect on Vertro’s business, financial condition and results of operations.

Vertro is subject to income taxes in both the United States and numerous international jurisdictions.

Vertro is subject to income taxes in both the United States and numerous international jurisdictions. Significant judgment is required in determining its worldwide provision for income taxes. In the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is uncertain. Although Vertro believes its tax estimates are reasonable and appropriate, the final determination of tax audits and any related tax litigation could be materially different than that which is reflected in historical income tax provisions and accruals. Based on the results of tax audits or tax litigation, Vertro’s income tax provision, net income (loss), or cash flows in the period or periods for which that determination is made could be materially adversely affected.

Risks Related to Vertro’s Industry

Regulatory and legal uncertainties could harm Vertro’s business.

While there are currently relatively few laws or regulations directly applicable to Internet access, commerce, or commercial search activity, there is increasing awareness and concern regarding some uses of the Internet and other online services, leading federal, state, local, and international governments to consider adopting civil and criminal laws and regulations, amending existing laws and regulations, conducting investigations, or commencing litigation with respect to the Internet and other online services covering issues such as:

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user privacy;

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trespass;

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defamation;

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database and data protection;

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limitations on the distribution of materials considered harmful to children;

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liability for misinformation provided over the web;

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user protection, pricing, taxation, and advertising restrictions (including, for example, limitation on the advertising on Internet gambling websites or of certain products);

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delivery of contextual advertisements via connected desktop software;

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intellectual property ownership and infringement, including liability for listing or linking to third-party websites that include materials infringing copyrights or other rights;

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distribution, characteristics, and quality of products and services; and

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other consumer protection laws.

Legislation has also been introduced in the U.S. Congress and some state legislatures that is designed to regulate spyware, which does not have a precise definition, but which is often defined as software installed on consumers’ computers without their informed consent and designed to gather and, in some cases, disseminate information about those consumers, including personally identifiable information. Vertro does not rely on spyware for any purpose, and it is not part of its product offerings, but the definition of spyware or proposed legislation relating to spyware may be broadly defined or interpreted to include legitimate ad-serving software, including toolbar offerings and other downloadable software currently provided by Vertro’s ALOT division. Currently, legislation has focused on providing Internet users with notification of and the ability to consent or decline the installation of such software, but there can be no guarantee that future legislation will not provide more burdensome standards by which software can be downloaded onto consumers’ computers. Currently, all downloadable software that Vertro distributes requires an express consent of the consumer and provides consumers with an easy mechanism to delete the software once downloaded. However, if future legislation is adopted that makes the consent, notice, or uninstall procedures more onerous, Vertro may have to develop new technology or methods to provide its services or discontinue those services in some jurisdictions or altogether. There is no guarantee Vertro will be able to develop this new technology at all or in a timely fashion or on commercially reasonable terms. The adoption of any additional laws or regulations, application of existing laws to the Internet generally or Vertro’s industry, or any governmental investigation or litigation related to the Internet generally, Vertro’s industry, or its services may decrease the growth of the Internet or other online services, which could, in turn:

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decrease the demand for Vertro’s services;

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increase Vertro’s cost of doing business;

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preclude Vertro from developing additional products or services;

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result in adverse publicity to Vertro;

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subject Vertro to fines, litigation, or criminal penalties; or

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enjoin Vertro from conducting its business or providing any of its services;

any of which could have a material adverse effect on Vertro’s business, financial condition, and results of operations.

The regulatory environment with respect to online marketing practices is also evolving. The Federal Trade Commission, or FTC, has increasingly focused on issues affecting online marketing, particularly online privacy and security issues. One of the key areas of focus for the FTC is the difference between spyware and ad-serving software, such as Vertro’s downloadable toolbar applications.

New legislation, which could be proposed or enacted at any time in the future, new regulations or changes in the regulatory climate, or the expansion, enforcement, or interpretation of existing laws could prevent Vertro from offering some or all of its services or expose Vertro to additional costs and expenses requiring substantial changes to its business or otherwise substantially harm its business.

Due to the global nature of the Internet, it is possible that multiple state, federal, or international jurisdictions might inconsistently regulate Internet activities, which would increase Vertro’s costs of compliance and the risk of violating the laws of a particular jurisdiction, both of which could have a material adverse effect on Vertro’s business, financial condition, and results of operations.

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

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

Risks Relating to an Investment in Vertro’s Common Stock

Vertro’s failure to maintain continued listing compliance criteria in accordance with NASDAQ Marketplace Rules could result in NASDAQ delisting its common stock.

NASDAQ Marketplace Rules require Vertro to have a minimum closing bid price of $1.00 per share for its common stock as well as maintaining certain stockholders’ equity, marketplace value, or other financial metric criteria. Vertro did not maintain compliance with the continued listing compliance criteria, and it received notice from NASDAQ that it was not in compliance with Marketplace Rules. Specifically, in December 2009, Vertro received a delisting notification based on non-compliance with NASDAQ listing rules, and it subsequently submitted an appeal to NASDAQ and was granted a hearing. At that hearing in January 2010, Vertro presented its plan to regain compliance with the listing requirements along with a request for an extension to June 2010 to execute that plan. A favorable ruling on the appeal was issued in February 2010, under which Vertro was transferred to the NASDAQ Capital Market and given until June 14, 2010, to comply with the cited issues. On

June 16, 2010, Vertro received written confirmation from the NASDAQ Office of General Counsel, Hearings that it had met the $2.5 million stockholders’ equity requirement for continued listing on The NASDAQ Stock Market. Pursuant to its authority under NASDAQ Listing Rule 5815(4)(A), however, the Panel will continue to monitor Vertro’s stockholders’ equity, and has imposed a Hearings Panel Monitor for that purpose, which extended until June 14, 2011.

Subsequent to the ruling in February 2010, the NASDAQ Listings Qualifications Panel granted Vertro’s request for an extension of time, as permitted under NASDAQ’s Listing Rules, to comply with the $1.00 per share minimum bid price requirement for continued listing. On June 11, 2010, Vertro’s stockholders approved an amendment to its amended and restated certificate of incorporation to implement a reverse stock split of shares of its common stock issued and outstanding at a ratio to be established by Vertro’s board of directors in its discretion of between 1-for-2 and 1-for-5 . On July 29, 2010, Vertro’s board of directors approved a 1-for-5 reverse split of its common stock, and Vertro announced that reverse split on August 17, 2010. Trading of Vertro’s common stock on the NASDAQ Capital Market on a split-adjusted basis began at the opening of trading on August 18, 2010. The reverse stock split enabled the per share trading price of Vertro common stock to satisfy the minimum bid price requirement for continued listing set forth in NASDAQ Marketplace Rule 5550(a)(2).

Even with Vertro’s compliance with the stockholders’ equity requirement and the reverse stock split, there is a risk Vertro could not execute on its plan for maintaining compliance, which ultimately could lead to the delisting of its stock. In the event that Vertro were delisted from the NASDAQ Capital Market, its common stock would become significantly less liquid, which would likely adversely affect its value. Although Vertro common stock would likely be traded over-the-counter or on pink sheets, these types of listings involve more risk and trade less frequently and in smaller volumes than securities traded on the NASDAQ Capital Market.

The market price of Vertro common stock has been and may continue to be volatile.

The market price of Vertro common stock has in the past and may in the future experience significant volatility as a result of a number of factors, many of which are outside of Vertro’s control. Each of the risk factors listed in this joint proxy statement/prospectus, and the following factors, may affect the market price for Vertro common stock:

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Vertro’s quarterly results and ability to meet analysts’ and its own published expectations;

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Vertro’s ability to continue to attract and retain users and paid listings providers;

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the amount and timing of operating costs and capital expenditures related to the maintenance and expansion of Vertro’s businesses, operations, and infrastructure;

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patents issued or not issued to Vertro or its competitors;

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announcements of technological innovations, new services or service enhancements, strategic alliances, mergers, acquisitions, dispositions, or significant agreements by Vertro or by its competitors;

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commencement or threat of litigation or new legislation or regulation that adversely affects Vertro’s business;

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general economic conditions and those economic conditions specific to the Internet and Internet advertising;

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Vertro’s ability to keep its products and services operational at a reasonable cost and without service interruptions;

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recruitment or departure of key personnel;

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geopolitical events such as war, threat of war, or terrorist actions;

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sales of substantial amounts of Vertro common stock, including shares issued upon the exercise of outstanding options or warrants; and

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potential of industry consolidation in Vertro’s sector.

Because Vertro’s business is changing and evolving, Vertro’s historical operating results may not be useful in predicting its future operating results. In addition, advertising spending has historically been cyclical in nature, reflecting overall economic conditions as well as budgeting and buying patterns. Also, online user traffic tends to be seasonal.

In addition, the stock market has experienced significant price and volume fluctuations that particularly have affected the trading prices of equity securities of many technology and Internet companies. Frequently, these price and volume fluctuations have been unrelated to the operating performance of the affected companies. Following periods of volatility in the market price of a company’s securities, such as Vertro has recently experienced, securities class action litigation is often instituted against such a company, as Vertro has recently had a number of such suits instituted against it. This type of litigation, regardless of the outcome, could result in substantial costs and a diversion of management’s attention and resources, which could materially adversely affect Vertro’s business, financial condition, and results of operations.

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

As of September 30, 2011, Vertro had stock options outstanding to purchase a total of approximately 0.2 million shares at share prices ranging from $5.00 to $115.70 per share under its stock incentive plans.

Also, as of September 30, 2011, Vertro has 0.4 million restricted stock units outstanding including approximately 0.1 million in restricted stock units that would vest upon its common stock reaching, and closing, at share prices ranging from $5.00 to $60.00 for ten consecutive trading days. The remaining approximate 0.3 million restricted stock units will vest in equal increments on January 2 in years 2012, 2013 and 2014. If outstanding stock options are exercised or restricted stock units vest, dilution will occur to Vertro stockholders, which may be significant.

Vertro’s certificate of incorporation authorizes it to issue additional shares of stock, which could impede a change of control that is beneficial to its stockholders.

Vertro is authorized to issue up to 40 million shares of common stock that may be issued by its board of directors for such consideration as they may consider sufficient without seeking stockholder approval, subject to stock exchange rules and regulations. Vertro’s certificate of incorporation also authorizes it to issue up to 500,000 shares of preferred stock, the rights and preferences of which may be designated by Vertro’s board of directors. These designations may be made without stockholder approval. The designation and issuance of preferred stock in the future could create additional securities that have dividend and liquidation preferences prior in right to the outstanding shares of common stock. These provisions could be used by Vertro’s board to impede a non-negotiated change in control, even though such a transaction may be beneficial to holders of Vertro’s securities, and may deprive stockholders of the opportunity to sell shares at a premium over prevailing market prices for Vertro common stock. The potential inability of Vertro stockholders to obtain a control premium could reduce the market price of Vertro common stock.

A class action lawsuit has been filed against Vertro and certain of its former officers and directors alleging violations of securities laws which could subject Vertro to damages and regardless of the outcome could have a material adverse impact on Vertro’s resources.

In 2005, a securities fraud class action lawsuit was filed against Vertro and certain of its former officers and directors in the United States District Court for the Middle District of Florida. The complaint alleges that Vertro

and the individual defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the “Act”) and that the individual defendants also violated Section 20(a) of the Act as “control persons.” Plaintiffs sought unspecified damages and other relief alleging generally that, during the putative class period, Vertro made certain misleading statements and omitted material information.

The court granted the defendants’ motion for summary judgment on November 16, 2009, and the court entered final judgment in favor of all the defendants on December 7, 2009. The plaintiffs filed an appeal of the summary judgment ruling and the court’s prior orders dismissing certain claims. On September 30, 2011, the United States Court of Appeals for the Eleventh Circuit affirmed the dismissal of 9 of the 11 alleged misstatements and reversed the court’s prior order on summary judgment. On October 21, 2011, Vertro filed a petition for panel rehearing or rehearing en banc with the Court of Appeals for the Eleventh Circuit.

If it is determined that Vertro or its officers or directors have engaged in the types of activities alleged by these plaintiffs, Vertro and its officers and directors could be subject to damages and may be subject to further prosecution. Regardless of the outcome, these lawsuits could have a material adverse impact on Vertro because of defense costs, diversion of management’s attention and resources, and other factors.

A putative derivative action has been filed against certain of Vertro’s present and former officers and directors, purportedly on behalf of Vertro.

On July 25, 2005, a stockholder, Bruce Verduyn, filed a putative derivative action purportedly on behalf of Vertro in the United States District Court for the Middle District of Florida, against certain of Vertro’s directors and officers. This action is based on substantially the same facts alleged in the securities class action litigation described above. The complaint seeks to recover damages in an unspecified amount. By agreement of the parties and by orders of the Court, the case was stayed pending the resolution of defendants’ motion to dismiss in the securities class action. On July 10, 2007, the parties filed a stipulation to continue the stay of the litigation. On July 13, 2007, the Court granted the stipulation to continue the stay and administratively closed the case pending notification by plaintiff’s counsel that the case is due to be reopened.

If it is determined that Vertro’s officers or directors have engaged in the types of activities alleged in the putative derivative action, Vertro’s officers and directors could be subject to damages and may be subject to further prosecution. Vertro has agreed to indemnify its officers and directors in connection with the defense of this action. Accordingly, regardless of the outcome, this litigation could have a material adverse impact on Vertro because of defense costs, including costs related to indemnification, diversion of management’s attention and resources, and other factors.

THE MERGER

General Description of the Merger

On October 16, 2011, Inuvo, Merger Sub, and Vertro entered into the merger agreement. The merger agreement provides for the merger of Merger Sub with and into Vertro with Vertro as the surviving entity and a wholly owned subsidiary of Inuvo.

Ownership of Inuvo After the Merger

Background of the Merger

For several years the Vertro board of directors has reviewed from time to time Vertro’s strategic alternatives and prospects as part of the board’s ongoing evaluation of Vertro’s business and strategic direction. These evaluations were generally conducted during board meetings at which board members would exchange views as to industry and economic trends and strategic opportunities that might be available to Vertro, and management would make presentations to the board of directors regarding its view with respect to strategic opportunities and its discussions with third parties regarding possible strategic transactions.

In 2010, Vertro management began informal discussions with a party, Party A, regarding a possible strategic transaction and in February 2010 entered into a confidentiality agreement with Party A to protect both parties’ confidential information regarding such discussions. Based on preliminary negotiations and preliminary due diligence, in the third quarter of 2010, Vertro submitted a non-binding letter of intent to acquire Party A, which was not accepted; however, representatives of Party A and Vertro continued to periodically discuss potential business combinations throughout the first quarter of 2011, including a possible acquisition of Vertro by Party A. On February 10, 2011, Vertro executed an updated confidentiality agreement with Party A regarding a possible transaction.

During 2010 and 2011, the Inuvo board of directors continuously evaluated Inuvo’s ability to compete in its highly competitive market alongside better-capitalized competitors. Among the strategic alternatives considered was the option to seek out similar sized businesses, in the same core market, with the objective to produce both top and bottom line synergies as a result of an increase in operating scale.

Throughout its discussions with Party A, Vertro management sought the advice of its previously-engaged financial advisor for company financings, America’s Growth Capital, and its previously engaged legal counsel, Porter Wright Morris & Arthur, LLP, referred to as Porter Wright. On February 23, 2011, representatives of Vertro and America’s Growth Capital met to discuss the current economic environment for mergers and acquisitions, other strategic opportunities, and the preliminary negotiations with Party A, including the fact that the parties had not yet entered into a letter of intent despite prolonged discussions.

On March 1, 2011, at a meeting of the Vertro board of directors, Vertro management reviewed with the board previous discussions with representatives of Party A and the possibility of a potential strategic transaction. The board engaged in preliminary discussions of how the business of Party A might complement Vertro’s business.

On March 14, 2011, the chairman of the Vertro board of directors, Lawrence Weber, met with Vertro’s president and chief executive officer, Peter Corrao, and a representative of America’s Growth Capital to discuss a potential transaction with Party A. Mr. Weber asked America’s Growth Capital to identify other potential acquirers of Vertro for consideration by the Vertro board of directors.

Throughout March of 2011, representatives of Vertro and Party A management continued to discuss a possible transaction that would result in joint ownership, and Mr. Corrao met the principal of Party A in Toronto, Ontario, Canada. Also, during this time, Vertro management identified potential financial advisors to be interviewed by the Vertro board if it was determined that Vertro should consider pursuing a strategic transaction.

On March 28 and March 29, 2011, the Vertro board of directors met to consider presentations from four investment banking firms regarding potential strategic alternatives. At the meeting, the Vertro board of directors determined to postpone formally engaging a financial advisor for strategic alternatives and instructed Vertro management to continue to work with America’s Growth Capital to evaluate potential acquisition candidates and to handle inbound inquiries regarding corporate development opportunities.

Throughout April of 2011, representatives of Vertro, Party A, and America’s Growth Capital continued to meet and discuss alternative structures for a business combination between Vertro and Party A, taking into account, among other considerations, that Party A would likely require financing to complete an acquisition of Vertro. In addition, Mr. Corrao met with the principal of Party A in London, England.

On April 18, 2011, the Vertro board of directors met to review the status of discussions with Party A, potential transaction structures and financial aspects of Vertro and Party A. The Vertro board of directors discussed, among other topics, whether Party A had the ability to secure financing to conduct a transaction with Vertro, the reputation of Party A in Vertro’s industry, and the background of the principal of Party A given that he was unable to meet in person in the United States. The Vertro board of directors requested additional background and financial information regarding Party A and its principal.

On April 19, 2011, the Inuvo board of directors met to consider the presentations of three investment banking firms to assist Inuvo in raising capital and evaluate its strategic alternatives.

On April 21, 2011, the Inuvo board met telephonically and selected Craig-Hallum as Inuvo’s financial advisor to assist Inuvo in raising capital to support Inuvo’s growth strategy. The agreement superseded a retainer agreement with Craig-Hallum from November 2010 to aid in evaluating strategic alternatives. Separately, in May 2011, Inuvo began discussions with several potential strategic partners.

On April 21, 2011, Vertro received a non-binding letter of intent from a party that Vertro understood to be an affiliate of Party A to acquire Vertro for a total purchase price not to exceed approximately $50 million.

On April 22, 2011, representatives of Vertro management and America’s Growth Capital met to discuss the April 21, 2011, non-binding letter of intent from Party A, including Party A’s ability to finance the transaction, the relationship between Party A and its affiliate that submitted the offer, a Bahamian limited company, and other matters.

On April 22, 2011, America’s Growth Capital corresponded with Party A regarding aspects of the transaction proposed in the April 21, 2011, letter of intent, which America’s Growth Capital had previously discussed with Vertro. Party A indicated that the letter of intent would be revised and resubmitted to describe the relationship between Party A and its affiliate, among other revisions. America’s Growth Capital provided a written response to the April 21, 2011, letter of intent on April 26, 2011.

Party A and Vertro continued to pursue due diligence matters; however, no revised letter of intent had been received by the time the Vertro board of directors met on May 3, 2011. At that meeting the Vertro board discussed the status of negotiations with Party A, including the failure of a revised letter of intent to materialize, and instructed Mr. Corrao to continue to pursue these negotiations. Because no revised letter of intent had been received and Party A had been generally unresponsive to additional inquiries of America’s Growth Capital, and Party A never provided proof of financing, the Vertro board of directors instructed Mr. Corrao to continue to work with representatives of America’s Growth Capital to pursue other possible corporate development opportunities. On the evening of May 3, 2011, Mr. Corrao received correspondence from Party A indicating a concern that potential changes to Vertro’s monetization partners implementation guidelines were likely going to negatively impact Vertro’s business.

As a result of previous communications between Richard K. Howe, Inuvo’s chief executive officer and Vertro regarding the merits of a possible transaction between Inuvo and Vertro, Vertro executed a confidentiality agreement with Inuvo on May 31, 2011, and representatives of Vertro and Inuvo had a teleconference to discuss meeting in person to review the two companies’ respective operations and to discuss the potential of a strategic transaction.

On June 8, 2011, the Vertro board of directors held a meeting, at which representatives of Vertro management were present, and discussed engaging America’s Growth Capital as financial advisor with respect to any strategic transaction that might be pursued involving Inuvo or otherwise. Also on June 8, 2011, Messrs. Corrao and Howe met to further discuss a potential transaction between Inuvo and Vertro.

On June 13, 2011, the Inuvo board of directors held a meeting and discussed the progress of discussions between Mr. Howe of Inuvo and Mr. Corrao of Vertro. The chairman of the Inuvo board of directors, Mitch Tuchman, led a discussion on hiring an investment banking firm to assist Inuvo’s management in the current discussions with Vertro and various potential strategic partners. Given the ongoing working relationship with Craig-Hallum, Inuvo then decided to engage the firm to formally advise Inuvo during its discussions with Vertro, as well as to assess other strategic alternatives available to it, including the potential sale of Inuvo, across a select group of targeted strategic buyers, both foreign and domestic.

On June 17, 2011, the Vertro board of directors held a meeting. Vertro management and the board discussed retaining America’s Growth Capital to serve as financial advisor to Vertro. Vertro management and the Vertro board of directors discussed the qualifications of America’s Growth Capital, noting among other factors that America’s Growth Capital had been assisting Vertro since August 2008 and Vertro was satisfied with its performance. Management and the Vertro board of directors also discussed the other investment banks that made presentations to the board at the March 28-29, 2011 meeting. Vertro management and the Vertro board of directors then discussed the process to be undertaken by America’s Growth Capital to ascertain market interest in Vertro. The Vertro board of directors unanimously agreed to engage America’s Growth Capital and determined to instruct America’s Growth Capital to conduct a competitive sale process for the potential sale of Vertro involving a broad group of potential strategic and financial buyers, both domestic and foreign.

During June 2011, representatives of Vertro management continued to meet with representatives of America’s Growth Capital to discuss the process for pursing a competitive sale of the company, including identifying potential strategic partners and strategic buyers, and to prepare materials for the competitive sale process. On June 21, 2011, America’s Growth Capital launched the competitive sale process for the sale of Vertro.

Also on June 21, 2011, the Inuvo board of directors met to deliberate on the status of discussions with potential merger and acquisition targets, and Mr. Howe provided updates on continuing discussions with both Vertro and other potential targets. Mr. Howe also informed the board that an agreement had been reached with Craig-Hallum regarding the terms of service under which Craig-Hallum would represent Inuvo should a transaction materialize.

On June 22, 2011, the Vertro board of directors was updated via informal teleconference regarding the competitive sale process.

On June 24, 2011, Inuvo amended an existing advisor agreement with Craig-Hallum to expand the scope of the services to be provided to Inuvo to include those related to identifying potential acquirers or merger partners and to assisting Inuvo in facilitating and closing such a transaction.

On June 27, 2011, Inuvo’s management team and representatives of Craig-Hallum met with the Vertro management team and representatives of America’s Growth Capital by telephone. The parties reviewed a business and financial overview of Inuvo and Vertro and the potential benefits of a merger, focused primarily on the revenue and cost synergies that could be realized from the transaction. At this meeting, a proposed due diligence schedule was discussed as was the drafting of a letter of intent.

On June 29, 2011, the Inuvo board of directors held a meeting and considered a report by a representative of Craig-Hallum reviewing Craig-Hallum’s efforts to solicit interest for potential transaction partners and the details of those efforts.

On July 5, 2011, a member of Inuvo’s board, Charles Morgan, met at Vertro’s offices in New York, New York with Mr. Corrao to discuss the potential business and operating synergies between Inuvo and Vertro.

On July 6, 2011, the Inuvo board of directors held a meeting and considered a report by a representative of Craig-Hallum regarding the status of various discussions with possible business combination targets.

On July 6, 2011, the Vertro board of directors was updated via informal teleconference regarding the competitive sale process.

Throughout July 2011, representatives of Vertro and Inuvo and their respective financial advisors continued to meet and discuss and negotiate the terms of a potential letter of intent for a strategic combination of Inuvo and Vertro.

On July 13, 2011, the Inuvo board of directors held a meeting at which a representative of Craig-Hallum reported on the status of the early due diligence with Vertro and the ongoing discussions with other potential merger and acquisition targets. The Inuvo board of directors met again on July 19, 2011, to discuss the possible business combination with Vertro and authorized Inuvo’s management to negotiate a term sheet and letter of intent.

On July 20, 2011, the Vertro board of directors was updated via informal teleconference regarding the competitive sale process.

On July 29, 2011, the Inuvo board of directors held a meeting during which a representative of Craig-Hallum reported on the status of the due diligence with Vertro and the ongoing discussions with other potential merger and acquisition targets. During this meeting, the Craig-Hallum representative reported that of the seven targeted potential strategic acquirers, three expressed initial interest in a transaction, but all three had subsequently declined to put forth offers.

On July 31, 2011, the Vertro board of directors met with management to discuss the principal terms of a letter of intent between Inuvo and Vertro whereby Inuvo would acquire Vertro via a subsidiary merger, including that the letter of intent set forth non-binding principal terms and conditions of the proposed transaction, and that the only material binding provisions of the letter of intent were regarding confidentiality and exclusivity. Mr. Corrao and the Vertro board reviewed in detail the non-binding potential merger consideration, discussing among other topics the fact that the letter of intent provided for Vertro stockholders to receive 49.9% of the outstanding stock of the combined company. The board determined that if the transaction were to move toward final approval, a detailed fairness analysis would need to be conducted by America’s Growth Capital. Additionally, the board discussed the exclusivity provision in detail, including the fact that the non-binding letter of intent was set up so that the exclusivity provision did not apply to parties contacted by either Vertro or Inuvo during the prior three months, which would allow Vertro to continue discussions with any parties contacted by America’s Growth Capital as part of the competitive sale process, including Party A. The Vertro board discussed the letter of intent and authorized Mr. Corrao to execute the letter of intent and move forward with due diligence regarding a potential transaction with Inuvo.

On August 1, 2011, Inuvo and Vertro executed the letter of intent for a merger of Inuvo and Vertro, and the management teams of Inuvo and Vertro met to finalize the proposed terms of the transaction and discuss due diligence, transaction timeline, synergies, and other matters.

On August 3, 2011, the Vertro board of directors was updated via informal teleconference regarding the competitive sale process.

On August 4, 2011, the Inuvo board of directors met to receive an update of the status of the ongoing discussions with Vertro from Inuvo’s management and a representative of Craig-Hallum.

On August 5, 2011, Messrs. Weber and Tuchman had a telephonic meeting in which they discussed the potential benefits to both companies of a transaction between Inuvo and Vertro.

On August 9, 2011, at a meeting of the Vertro board of directors, a representative of America’s Growth Capital reviewed the competitive sale process undertaken by America’s Growth Capital, indicating that over 180 potential partners had been contacted regarding a possible transaction with Vertro. The presentation of America’s Growth Capital summarized the results of Vertro’s contact with over 80 strategic parties and over 80 financial parties who declined interest in a transaction with Vertro, while the remaining parties initially contacted were undecided. A representative of America’s Growth Capital reported that of the initially undecided parties, Vertro remained in active discussions with three interested parties, in addition to Inuvo, and updated the board on the status of those discussions. A proposed Inuvo transaction and timeline were also reviewed. A representative of Porter Wright gave a presentation regarding the fiduciary duties of the Vertro board of directors. Additionally, at

the meeting, Mr. Corrao gave a presentation regarding Inuvo, reviewing the strategic opportunity to combine two smaller companies into a larger more diverse entity and leverage synergies within product line, distribution channels, clients, consumers, banking relationships and operating costs. Mr. Corrao discussed the combined entity’s financial position and the near term and long term business cases for the transaction, among other topics. Finally, Mr. Corrao discussed potential risks to the transaction and the combined entity, including but not limited to cash position, revenue concentration, litigation, lease costs, potential culture clashes, and employees in multiple locations.

During the months of August and September 2011, representatives of Vertro and Inuvo continued to correspond and meet regarding the proposed transaction, due diligence matters, financial forecasts, and a strategic plan for the combined company. Representatives of Porter Wright and Inuvo’s legal counsel, Schneider Weinberger, LLP, referred to as Schneider Weinberger, began drafting and negotiating definitive transaction agreements.

During August, representatives of America’s Growth Capital and Vertro management continued to correspond and meet to discuss the three parties besides Inuvo and Party A that continued to express interest in a strategic transaction. At the request of one such party as part of its due diligence, Vertro management prepared an evaluation of the estimated monthly revenue of Vertro, or tail analysis, if it were to discontinue its operations, which valuation represented a significant diminution of Vertro’s estimated value as a going concern despite not including the costs of liquidation associated with such discontinuation of operations. As a result of the tail analysis, liquidation was never considered to be a viable strategic alternative for Vertro.

On August 12, 2011, the Inuvo board of directors held a telephonic meeting at which a representative of Craig-Hallum addressed the board and summarized the developments since the last meeting of the board. Also on August 12, 2011, Messrs. Tuchman and Weber held a brief follow-up telephonic meeting to their earlier call on August 5, 2011.

On August 19, 2011, the Inuvo board of directors held a meeting and received an update as to the status of the transaction from Inuvo’s management and a representative of Craig-Hallum.

On August 24, 2011, the Inuvo board of directors held a meeting and received an update as to the status of the transaction from Inuvo’s management, a representative of Craig-Hallum, and a representative of Schneider Weinberger.

On August 24, 2011, the Vertro board of directors was updated via informal teleconference regarding the competitive sale process.

On August 25, 2011, Vertro received a written, non-binding letter of intent from an affiliate of Party A to acquire the Company for a total purchase price not to exceed approximately $13.1 million.

On August 29, 2011, a representative of America’s Growth Capital spoke with Party A to request documentation showing adequate capital to complete the transaction and to request a revised, non-binding letter of intent to correct erroneous dates, revise the structure of the proposed transaction, and include a more competitive price.

On August 31, 2011, the Inuvo board of directors held a meeting at which it received an update as to the status of the transaction from Inuvo’s management, a representative of Schneider Weinberger, and a representative of Craig-Hallum.

On September 7, 2011, the Vertro board of directors met with representatives of America’s Growth Capital to receive an update on Vertro’s discussions with the three parties besides Inuvo and Party A that had continued to express interest in a possible strategic transaction with Vertro. America’s Growth Capital informed the board

that the three parties declined to continue pursuing a transaction for various reasons, including inability to pursue non-core acquisitions due to one party’s declining stock price, one party’s dissatisfaction with its analysis of Vertro’s business, and a determination by one party that Vertro’s business was not core to the party’s operations. Representatives of America’s Growth Capital also discussed with the board the non-binding letter of intent received from Party A on August 25, 2011, and stated that Party A had subsequently indicated it was in the process of updating its proposed non-binding letter of intent.

On September 9, 2011, Vertro received an edited, written, non-binding letter of intent from an affiliate of Party A to acquire Vertro for a total purchase price not to exceed approximately $14.2 million.

On September 10, 2011, representatives of America’s Growth Capital contacted Party A on behalf of Vertro and answered several due diligence questions and discussed proposed revisions to the non-binding letter of intent. Party A indicated it would likely prepare a revised non-binding letter of intent; however, no revised letter of intent was ever received by Vertro.

On September 13, 2011, the Inuvo board of directors held a meeting at which it received an update as to the status of the transaction from Inuvo’s management, a representative of Schneider Weinberger, and a representative of Craig-Hallum.

On September 14, 2011, at an informal teleconference of the Vertro board of directors, management provided an update of the competitive sale process. Among matters discussed were the September 9, 2011, non-binding letter of intent from an affiliate of Party A, the cash position of Party A relative to its ability to finance a transaction, due diligence matters, concerns over the ability of a principal of Party A to enter the United States, and a lack of responsiveness of Party A regarding inquiries from America’s Growth Capital. Mr. Corrao informed the Vertro board of directors that he would be meeting with representatives of Party A and America’s Growth Capital within the coming week.

On September 18, 2011, Mr. Corrao met with a representative of Party A and on September 19, 2011, met with a representative of Party A and a representative of America’s Growth Capital to discuss a potential acquisition of Vertro or Vertro acquiring Party A.

On September 22, 2011, a representative of America’s Growth Capital and a representative of Party A had a teleconference to discuss the possibility of Vertro purchasing Party A in a highly leveraged transaction at some point in the future, and the discussions of Party A acquiring Vertro were discontinued.

On September 29, 2011, the management teams of Inuvo and Vertro met to discuss transaction structure, finalize the details of a definitive merger agreement, and review financial forecasts, synergies, due diligence and other matters.

On September 30, 2011, the Inuvo board of directors held a meeting at which it received an update as to the status of the transaction from Inuvo’s management, a representative of Schneider Weinberger, and a representative of Craig-Hallum.

On October 5, 2011, the Vertro board of directors was updated via informal teleconference regarding negotiations with Inuvo.

On October 11, 2011, the members of the Vertro board of directors held a meeting at which members of Vertro’s management, America’s Growth Capital and Porter Wright attended. Members of America’s Growth Capital updated the Vertro board of directors on the strategic alternatives process to date and confirmed that the proposed merger with Inuvo was the only opportunity that existed as a result of such process as discussions of Party A acquiring Vertro had been discontinued. Vertro’s management discussed the proposed merger transaction at significant length with the Vertro board of directors. Vertro’s management and the board of

directors also considered current outlook and projections for Vertro on a standalone basis. Mr. Pisaris and a representative of Porter Wright provided a summary of the proposed merger agreement and updated the board on negotiations of the merger agreement to date. The approximate proposed exchange ratio was 1.385 shares of Inuvo common stock per share of Vertro common stock, which was calculated to provide Vertro stockholders with an ownership interest of approximately 49.9% of the combined company on a fully diluted basis. A representative of Porter Wright discussed with the Vertro board of director its fiduciary duties in connection with the strategic alternatives process and potential merger with Inuvo. After further discussion, the Vertro board of directors instructed Vertro management to continue to finalize negotiations with Inuvo.

On October 11, 2011, the compensation committee of the Vertro board of directors met to discuss the proposed forms of employment agreement that were to be negotiated and attached to the merger agreement and instructed Vertro management to continue to negotiate the same with Inuvo based on guidance from the committee, including the fact that the new employment agreements with Inuvo should be substantially similar to the existing employment agreements with Vertro.

Also on October 11, 2011, the Inuvo board of directors held a meeting and a representative of Craig-Hallum delivered Craig-Hallum’s fairness analysis regarding the fairness of the transaction to Inuvo’s stockholders. At this meeting, Inuvo’s management and a representative of Schneider Weinberger provided an update as to the status of the transaction.

Between October 11 and 15, 2011, representatives of Vertro’s and Inuvo’s management, Porter Wright and Schneider Weinberger conducted discussions, and resolved the remaining open issues, concerning the merger agreement provisions.

On October 13, 2011, Messrs. Weber and Tuchman held a telephonic meeting to discuss the status of the proposed forms of employment agreements for Messrs. Howe, Ruiz, Corrao and Pisaris. Also on October 13, 2011, the compensation committee of Inuvo’s board of directors met and approved the forms of employment agreements for Messrs. Howe, Ruiz, Corrao and Pisaris to be entered into at the closing of the merger.

On October 14, 2011, the Inuvo board of directors held a meeting and a representative of Craig-Hallum provided the Inuvo board of directors with an update on the status of the proposed merger agreement since the last meeting of the Inuvo board of directors and an expected schedule for the execution and announcement of the merger agreement.

On October 16, 2011, the Inuvo board of directors held a meeting to be updated on events since the previous meeting and to review the final terms of the merger agreement. Representatives of Craig-Hallum and Schneider Weinberger were also present. At the meeting, a representative of Craig-Hallum delivered an update of the presentation he had made at the October 11, 2011, board meeting regarding Craig-Hallum’s final fairness analysis, and Craig Hallum rendered its oral opinion to the Inuvo board of directors (which was confirmed in writing by delivery of its written opinion dated October 16, 2011) to the effect that as of October 16, 2011, and based upon and subject to the factors set forth therein, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to Inuvo. A representative of Schneider Weinberger provided a summary of the material terms of the merger agreement, which had been provided in advance to the Inuvo board of directors, and management provided its final recommendations. At the board meeting, the Inuvo board approved and adopted the merger, the merger agreement and all transactions contemplated as described in the merger agreement.

On October 16, 2011, the Vertro board of directors held a meeting to be updated on events since the previous meeting and review the final version of the merger agreement. Representatives of Porter Wright, America’s Growth Capital and Messrs. Pisaris and James Gallagher, Vertro’s chief financial officer, were also present. Prior to the meeting, the members of the Vertro board of directors had been furnished a draft of the merger agreement and other information related to the proposed transaction. At this meeting, America’s Growth Capital rendered its oral opinion

to the Vertro board of directors (which was confirmed in writing by delivery of its written opinion dated October 16, 2011) to the effect that as of October 16, 2011, and based upon and subject to the factors set forth therein, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the Vertro stockholders. Porter Wright and Mr. Pisaris provided a summary of the material terms of the final merger agreement, including that the final exchange ratio had increased to 1.546 shares of Inuvo common stock per share of Vertro common stock due to additional equity incentive awards that had been recently granted by Inuvo’s board of directors. After discussion, including consideration of the factors described in “Vertro’s Purposes and Reasons for the Merger” and “Recommendations of the Vertro Board of Directors” beginning on pages 54 and 57, respectively, the Vertro board of directors unanimously determined that the adoption of the merger agreement and the approval of the merger are advisable, fair to, and in the best interests of, Vertro and its stockholders, approved and adopted the merger agreement and the merger, recommended that the Vertro stockholders adopt the merger agreement and approve the merger, and authorized the preparation and filing of this joint proxy statement/prospectus.

On October 16, 2011, after all required parties approved the transaction, Inuvo, Vertro, and Merger Sub executed the merger agreement. The parties filed a joint press release announcing the merger on the morning of October 17, 2011.

On December 5, 2011, Party B sent an unsolicited written proposal to Vertro, referred to as the proposal, which Party B asserted was superior to the merger. The proposal purported to be an offer to purchase substantially all of the assets and assume substantially all of the liabilities of Vertro for a cash purchase price of $10 million dollars, but other than stating it excluded Vertro’s cash and liabilities for pending litigation was not specific as to what assets would be purchased or liabilities assumed.

On December 7, 2011, the Vertro board of directors met with representatives of AGC, representatives of Porter Wright, Mr. Pisaris and Mr. Gallagher to discuss the proposal from Party B. Representatives of Porter Wright discussed with the Vertro board of directors its fiduciary duties with respect to addressing the proposal and Vertro’s contractual obligations under the merger agreement. Representatives of AGC discussed the merits of the proposal with the Vertro board of directors and discussed the fact that Party B was contacted during the competitive sales process, but was unwilling to execute the customary confidentiality agreement, precluding it from participating in the competitive sales process at that time. After discussions with representatives of AGC and Porter Wright, the Vertro board of directors determined that the December 5, 2011 proposal did not contain sufficient information on which to make an informed judgment of whether to commence any discussions or negotiations with Party B, and instructed AGC to correspond with Party B asking whether it desired to supplement its correspondence, dated December 5, 2011.

On December 8, 2011, AGC sent Party B a letter asking whether Party B desired to supplement its correspondence, dated December 5, 2011, to provide additional information concerning the proposal.

On December 9, 2011, AGC received a response from Party B. Party B reaffirmed its statement that it desired to purchase substantially all of Vertro’s assets and assume substantially all liabilities, but did not provide specifics beyond what was contained in the original proposal, although Party B stated that it would not assume liability for transaction fees, investment banking fees or litigation costs associated with the merger. On December 12, 2011, Vertro provided Party B with a confidentiality agreement. As of the date of this joint proxy statement/prospectus Vertro has not received an executed confidentiality agreement or any further communication from Party B.

Inuvo’s Purposes and Reasons for the Merger

The Inuvo board of directors (i) has determined that the merger agreement and the merger are advisable, fair to, and in the best interests of, Inuvo and its stockholders, (ii) has approved the merger agreement and the merger, and (iii) recommends that the Inuvo stockholders approve the issuance of shares of Inuvo common stock in the merger. In evaluating the merger agreement and the merger, the Inuvo board of directors considered a number of factors that supported its decisions and recommendations, including:

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the merger will create a stronger core business, providing more scale from which to attract advertisers, publishers and consumers;

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the merger is expected to eliminate approximately $2.4 million in annual overlapping expenses of the combined companies through operating and public company synergies;

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the merger will diversify revenue streams and mitigate Inuvo’s dependence on one major customer;

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the merger will provide an existing install and distribution capability through Vertro’s ALOT toolbar applications for Inuvo’s consumer facing innovations;

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the merger will create a stronger business from which to access both debt and capital markets to support growth;

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the merger will combine two experienced digital marketing teams;

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the opinion of Craig-Hallum as to the fairness of the merger to Inuvo; and

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the merger is intended to qualify as a reorganization for U.S. federal income tax purposes.

The Inuvo board of directors also considered a variety of risks and other potentially negative factors concerning the merger. The material risks and potentially negative factors considered by the Inuvo board included:

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although management of Inuvo believes the merger will have a positive effect on its business, it is possible the issuance of a significant number of shares of Inuvo common stock into the market, as would happen in the merger, could cause a decline in its price, and the increased size of Inuvo’s public float thereafter could adversely affect the price at which it trades;

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delays or difficulties in eliminating certain redundant costs of the two companies could reduce earnings relative to anticipated levels and negatively impact Inuvo’s ability to meet obligations under its bank financing agreement;

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Inuvo will be subject to risks related to any litigation and other contingencies pending against Vertro;

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the risk that the merger might not be completed in a timely manner, or at all, due to a failure to satisfy the closing conditions, some of which are outside of Inuvo’s control;

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the risk of the potential adverse effect of the public announcement of any termination of the merger agreement on Inuvo’s business, including its ability to attract new sources of capital, retain key personnel, and maintain its overall competitive position if the merger is not completed;

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certain executive officers and directors of Inuvo have separate interests with respect to the merger, in addition to their interests as Inuvo stockholders generally, as described in the section entitled “The Merger — Interests of Certain Persons in the Merger” beginning on page 73;

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the merger agreement imposes certain limitations on Inuvo’s right to consider third-party offers received prior to the effective time of the merger;

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the risk that Vertro’s revenue forecasts are not attained at the level or within the timeframe expected;

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the general challenges associated with successfully integrating two companies;

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the risk of stockholder lawsuits that may be filed against Inuvo and/or the Inuvo board of directors in connection with the merger agreement;

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the substantial transaction costs to be incurred by Inuvo in connection with the merger, even if the merger is not completed in a timely manner or at all;

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the fact that certain provisions contained in the merger agreement, including the no-solicitation provisions limiting Inuvo’s ability to engage in discussions or negotiations regarding, or furnish to any person any information with respect to, an alternative acquisition proposal, and the $500,000 termination fee payable by Inuvo under certain circumstances, could have the effect of discouraging or devaluing acquisition proposals involving Inuvo, including those that could otherwise become superior proposals;

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the immediate and substantial dilution of the equity interests and voting power of Inuvo’s current stockholders upon completion of the merger;

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the restrictions on the conduct of Inuvo’s business prior to the completion of the merger, which require Inuvo to carry on its business in the ordinary course and consistent with past practice, subject to specific additional restrictions, which may delay or prevent Inuvo from pursuing business opportunities that would otherwise be in its best interests as a standalone company;

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delays or difficulties in eliminating certain redundant costs of the two companies could reduce earnings relative to anticipated levels; and

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various other applicable risks associated with the business of Inuvo, Vertro, and the combined company and the merger, including those described above in the section entitled “Risk Factors — Risks Related to the Merger” beginning on page 21.

The Inuvo board of directors concluded, however, that these risks and potentially negative factors were outweighed by the potential benefits of the merger. The foregoing discussion and the discussion under “Background of the Merger” are not intended to be exhaustive, but rather include the material factors considered by the Inuvo board of directors in evaluating the proposed merger. The Inuvo board of directors oversaw the performance of financial and legal due diligence by Inuvo’s management and Inuvo’s advisors and Inuvo’s management conducted an extensive review, evaluation, and negotiation of the terms and conditions of the merger on behalf of Inuvo. In view of the large number of factors considered by the Inuvo board of directors in connection with the evaluation of the merger and the merger agreement and the complexity of these matters, the Inuvo board of directors did not consider it practicable, nor did it attempt, to quantify, rank, or otherwise assign relative weights to the specific factors it considered in reaching its decision, nor did it evaluate whether these factors were of equal importance. Rather, the Inuvo board of directors made its recommendations based on the totality of information presented and the investigation it conducted. In addition, individual directors may have given different weight to the various factors.

In addition to determining that the merger is advisable and in the best interests of Inuvo and the Inuvo stockholders, the Inuvo board of directors determined that the transaction was procedurally and substantively fair to the Inuvo stockholders. The Inuvo board of directors believes that a number of factors support the determination of procedural and substantive fairness to Inuvo and Inuvo stockholders, including the following:

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the unanimous recommendation of the Inuvo board of directors in favor of the merger agreement and the merger in light of the review of Vertro’s business, assets, liabilities and financial condition by Inuvo’s management and advisors;

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the financial analysis reviewed by Craig-Hallum with the Inuvo board of directors and its written opinion to the Inuvo board of directors, with respect to the fairness, from a financial point of view, to Inuvo, of the exchange ratio provided for in the merger pursuant to the merger agreement, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Craig-Hallum in preparing its opinion. See the section entitled “The Merger — Opinion of Craig-Hallum Capital Group, LLC, Financial Advisor to the Inuvo Board of Directors” beginning on page 61;

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the fact that Inuvo has no obligation to effect the merger if a material adverse effect with respect to Vertro’s business has occurred since the date of the merger agreement;

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the no-solicitation provisions of the merger agreement limiting Vertro’s ability to engage in discussions or negotiations regarding, or furnish to any person any information with respect to, or solicit, encourage, or knowingly facilitate any inquiry with respect to, an alternative acquisition proposal;

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the limited number and nature of the conditions to Vertro’s obligation to complete the merger and the limited risk of non-satisfaction of such conditions;

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the conclusion of the Inuvo board of directors that the $500,000 termination fee set forth in the merger agreement is reasonable in the context of termination fees that were payable in comparable transactions and is not likely to preclude another party from making a superior offer with respect to Inuvo;

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the belief that the terms of the merger agreement, including the parties’ representations, warranties, and covenants, and the conditions to their respective obligations, are reasonable under the circumstances;

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the merger consideration and other terms and conditions of the merger agreement were the result of negotiations between the Inuvo board of directors and the Vertro board of directors and their respective financial and legal advisors following thorough due diligence; and

•

under the terms of the merger agreement, the Inuvo board of directors may terminate the merger agreement if it determines in good faith, after consultation with its legal counsel, that it is required by its fiduciary duties to terminate the merger agreement in order to enter into a definitive agreement with respect to a superior offer.

Recommendation of the Inuvo Board of Directors

Inuvo’s management oversaw the performance of the financial and legal due diligence by Inuvo and its advisors and conducted an extensive review, evaluation and negotiation of the terms and conditions of the merger on behalf of Inuvo. Inuvo’s management and Inuvo’s advisors regularly reported the status of the evaluations and negotiations to Inuvo’s board. Inuvo’s board, after giving careful consideration to the presentation made by Craig-Hallum, and upon management’s recommendation determined by a unanimous vote at a meeting on October 16, 2011, that the merger is advisable, fair to, and in the best interests of, Inuvo and the Inuvo stockholders. At its meeting on October 16, 2001, Inuvo’s board also unanimously approved the merger agreement, the merger and the related transactions.

The Inuvo board of directors recommends unanimously that stockholders vote “FOR” the proposal to approve the issuance of shares of Inuvo common stock in the merger, “FOR” the proposal to adopt the Certificate of Amendment to the Amended Articles of Incorporation, “FOR” the proposal to adopt the amendment to the 2010 Equity Compensation Plan, and “FOR” the proposal to adjourn or postpone the meeting, if necessary to solicit additional proxies.

Vertro’s Purposes and Reasons for the Merger

The Vertro board of directors (i) has determined that the merger agreement and the merger are advisable, fair to, and in the best interests of, Vertro and its stockholders, (ii) has approved the merger agreement and the merger, and (iii) recommends that the Vertro stockholders adopt the merger agreement and approve the merger. In evaluating the merger agreement and the merger, the Vertro board of directors considered a number of factors that supported its decisions and recommendations, including:

•

based on the respective trading prices of shares of Inuvo’s and Vertro’s common stock on October 14, 2011, the merger consideration to be received by Vertro stockholders represented:

•

an implied premium of approximately 68% over the closing price of Vertro’s common stock on October 14, 2011, the last trading day prior to the announcement of the execution of the merger agreement;

•

an implied premium of approximately 69% over the average of the closing prices of Vertro’s common stock over the 30 days prior to the announcement of the execution of the merger agreement;

•

an implied premium of approximately 60% over the average of the closing prices of Vertro’s common stock over the 60 days prior to the announcement of the execution of the merger agreement; and

•

an implied premium of approximately 45% over the average of the closing prices of Vertro’s common stock over the 90 days prior to the announcement of the execution of the merger agreement.

•

America’s Growth Capital’s opinion that the exchange ratio to be received by the holders of shares of Vertro common stock was fair, from a financial point of view, to such stockholders;

•

that America’s Growth Capital conducted a comprehensive strategic alternatives process and no other definitive offer was received and no other potential purchasers had continued to express an interest in an acquisition of Vertro;

•

that the combined company would have a significant increase in scale that would create a stronger core business, which would be expected to attract more advertisers, publishers and consumers, and provide a stronger base to access both debt and capital markets to support growth;

•

that the combined company would be expected to be able to capitalize on various operating efficiencies and eliminate overlapping operating and public company expenses;

•

the merger will leverage existing relationships held by both parties and mitigate supplier and customer risk facing both Vertro and Inuvo;

•

the merger will provide an existing install and distribution capability through Vertro’s ALOT toolbar applications for Inuvo’s consumer facing innovations;

•

the historical and current information concerning Vertro’s business, financial performance, financial condition, operations, and management, including financial projections of Vertro under various scenarios and its short- and long-term strategic objectives and the risks associated therewith;

•

the opportunity for the Vertro stockholders to participate in the potential future value of the combined company;

•

the determination that the relative percentage of ownership of the combined company by Inuvo stockholders and Vertro stockholders is consistent with Vertro’s perceived valuations of each company at the time the Vertro board of directors approved the merger agreement;

•

the likelihood of retaining key Vertro employees to manage the combined company and the combined company being comprised of two experienced digital marketing teams;

•

the likelihood that the merger will be completed on a timely basis; and

•

the merger is intended to qualify as a tax-free reorganization under the Code and therefore will be non-taxable to the Vertro stockholders, except with respect to cash that is received instead of fractional shares of Inuvo common stock.

The Vertro board of directors also considered a variety of risks and other potentially negative factors concerning the merger. The material risks and potentially negative factors considered by the Vertro board of directors were as follows:

•

the risk that the merger might not be completed in a timely manner, or at all, due to a failure to satisfy the closing conditions, some of which are outside of Vertro’s control, including an adverse effect on Inuvo;

•

the risk of the potential adverse effect of the public announcement of any termination of the merger agreement on Vertro’s business, including its ability to attract new sources of capital, retain key personnel, and maintain its overall competitive position if the merger is not completed;

•

various other applicable risks associated with the business of Inuvo, Vertro, and the combined company and the merger, including those described in the section entitled “Risk Factors” beginning on page 21;

•

certain executive officers and directors of Vertro have separate interests with respect to the merger, in addition to their interests as Vertro stockholders generally, as described in the section entitled “The Merger — Interests of Certain Persons in the Merger” beginning on page 73;

•

the merger agreement imposes certain limitations on Vertro’s right to consider third-party offers received prior to the effective time of the merger;

•

the risk that Vertro’s revenue forecasts are not attained at the level or within the timeframe expected;

•

the general challenges associated with successfully integrating two companies;

•

the risk of stockholder lawsuits that may be filed against Vertro and/or the Vertro board of directors in connection with the merger agreement;

•

the substantial transaction costs to be incurred by Vertro in connection with the merger, even if the merger is not completed in a timely manner or at all;

•

the fact that certain provisions contained in the merger agreement, including the no-solicitation provisions limiting Vertro’s ability to engage in discussions or negotiations regarding, or furnish to any person any information with respect to, an alternative acquisition proposal, and the $500,000 termination fee payable by Vertro under certain circumstances, could have the effect of discouraging or devaluing acquisition proposals involving Vertro, including those that could otherwise become superior proposals;

•

the immediate and substantial dilution of the equity interests and voting power of Vertro’s current stockholders upon completion of the merger;

•

the ability of Vertro’s current stockholders to significantly influence the combined company’s business following the completion of the merger;

•

the restrictions on the conduct of Vertro’s business prior to the completion of the merger, which require Vertro to carry on its business in the ordinary course and consistent with past practice, subject to specific additional restrictions, which may delay or prevent Vertro from pursuing business opportunities that would otherwise be in its best interests as a standalone company; and

•

delays or difficulties in eliminating certain redundant costs of the two companies could reduce earnings relative to anticipated levels.

The Vertro board of directors concluded, however, that these risks and potentially negative factors were outweighed by the expected benefits of the merger. The foregoing discussion and the discussion under “Background of the Merger” are not intended to be exhaustive, but rather include the material factors considered by the Vertro board of directors in evaluating the proposed merger. The Vertro board of directors oversaw the performance of financial and legal due diligence by Vertro’s management and its and Inuvo’s respective advisors and conducted an extensive review, evaluation, and negotiation of the terms and conditions of the merger on

behalf of Vertro. In view of the large number of factors considered by the Vertro board of directors in connection with the evaluation of the merger and the merger agreement and the complexity of these matters, the Vertro board of directors did not consider it practicable, nor did it attempt, to quantify, rank, or otherwise assign relative weights to the specific factors it considered in reaching its decision, nor did it evaluate whether these factors were of equal importance. Rather, the Vertro board of directors made its recommendations based on the totality of information presented and the investigation it conducted. In addition, individual directors may have given different weight to the various factors.

In addition to determining that the merger is advisable and in the best interests of Vertro and the Vertro stockholders, the Vertro board of directors determined that the transaction was procedurally and substantively fair to the Vertro stockholders. The Vertro board of directors believes that a number of factors support the determination of procedural and substantive fairness to Vertro and Vertro stockholders, including the following:

•

the unanimous recommendation of the Vertro board of directors in favor of the merger agreement and the merger in light of the review of Inuvo’s business, assets, liabilities and financial condition by Vertro management and advisors;

•

the financial analysis reviewed by America’s Growth Capital with the Vertro board of directors and its written opinion to the Vertro board of directors, with respect to the fairness, from a financial point of view, to the Vertro stockholders, of the exchange ratio provided for in the merger pursuant to the merger agreement, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by America’s Growth Capital in preparing its opinion. See the section entitled “The Merger — Opinion of America’s Growth Capital, LLC, Financial Advisor to the Vertro Board of Directors” beginning on page 68;

•

the fact that Vertro has no obligation to effect the merger if a material adverse effect with respect to Inuvo’s business has occurred since the date of the merger agreement;

•

the no-solicitation provisions of the merger agreement limiting Inuvo’s ability to engage in discussions or negotiations regarding, or furnish to any person any information with respect to, or solicit, encourage, or knowingly facilitate any inquiry with respect to, an alternative acquisition proposal;

•

the limited number and nature of the conditions to Inuvo’s obligation to complete the merger and the limited risk of non-satisfaction of such conditions;

•

the conclusion of the Vertro board of directors that the $500,000 termination fee set forth in the merger agreement is reasonable in the context of termination fees that were payable in comparable transactions and is not likely to preclude another party from making a superior offer with respect to Vertro;

•

the merger consideration and other terms and conditions of the merger agreement were the result of negotiations between the Vertro board of directors and the Inuvo board of directors and their respective financial and legal advisors following thorough due diligence; and

•

under the terms of the merger agreement, the Vertro board of directors may terminate the merger agreement if it determines in good faith, after consultation with its legal counsel, that it is required by its fiduciary duties to terminate the merger agreement in order to enter into a definitive agreement with respect to a superior offer.

Recommendation of the Vertro Board of Directors

The Vertro board of directors oversaw the performance of financial and legal due diligence by Vertro management and its advisors and conducted an extensive review, evaluation, and negotiation of the terms and conditions of the merger on behalf of Vertro. The Vertro board of directors, after giving careful consideration to

the presentation made by America’s Growth Capital, determined by a unanimous vote at a meeting on October 16, 2011, that the merger agreement and the merger are advisable, fair to, and in the best interests of, Vertro and its stockholders and approved the merger agreement and the merger.

The Vertro board of directors recommends unanimously that stockholders vote “FOR” the proposal to adopt the merger agreement and approve the merger, “FOR” the proposal to approve, on a nonbinding advisory basis, the compensation of Vertro’s named executive officers that is based on or otherwise relates to the merger, and “FOR” the proposal to adjourn or postpone the meeting, if necessary to solicit additional proxies.

Certain Unaudited Prospective Financial Information

Vertro

Vertro’s senior management does not, as a matter of course, publicly disclose forecasts or projections as to its future financial performance or earnings due to the inherent unpredictability of the underlying assumptions and estimates. Vertro’s senior management, however, provided certain financial forecasts of Vertro’s operating performance to Vertro’s board of directors in connection with Vertro’s consideration of a potential merger transaction. Vertro’s management also provided certain financial forecasts of the combined company to Vertro’s board of directors, inclusive of projections with respect to Inuvo as provided by Inuvo, in connection with Vertro’s consideration of a potential merger transaction. These projections were also provided to Vertro’s financial advisor, America’s Growth Capital, and certain of these projections were utilized by America’s Growth Capital, at the direction of Vertro, for purposes of the financial analyses it rendered to the Vertro board of directors in connection with its opinion. See “— Opinion of America’s Growth Capital, LLC, Financial Advisor to the Vertro Board of Directors” beginning on page 68, and “— Background of the Merger” beginning on page 43. In addition, material portions of the projections were provided to Inuvo.

There has been included in this joint proxy statement/prospectus a summary of the projections that were deemed material by Vertro for purposes of considering and evaluating the merger. Although the projections are presented with numerical specificity, the projections reflect numerous estimates and assumptions with respect to industry performance, general business, economic, market and financial conditions, Vertro’s ability to execute its strategic plans and other matters, all of which are difficult to predict and many of which are beyond Vertro’s control. The material estimates and assumptions Vertro’s management made with respect to its projections related to gross margins, operating expenses, and customer acquisitions costs. Vertro’s management assumed that gross margins would be in line with historical experience and projected operating expenses based on anticipated increases ranging from flat to 10% year over year. With respect to customer acquisition costs, Vertro’s management assumed $60,000 per day through the end of the second quarter 2012, with a 0.25% increase month on month for the second half of 2012, and 0.5% month on month increase for fiscal years 2013 to 2016. With respect to the combined company projections, Vertro’s management made certain estimates with respect to operating and public company synergies.

The projections and their underlying estimates and assumptions are also subject to significant uncertainties related to Vertro’s business, including, but not limited to, economic conditions, changes in Vertro’s industry and the competitive environment in which Vertro operates. For a discussion of the risks and uncertainties applicable to Vertro’s business, see “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 19, and “Risk Factors — Risks Related to Vertro” beginning on page 31.

As a result, although the projections set forth below were prepared in good faith based upon assumptions believed to be reasonable at the time the projections were prepared, there can be no assurance that the projected results will be realized or that actual results will not be significantly higher or lower than projected. For the foregoing reasons, the inclusion of these projections should not be regarded as a representation by Vertro, its board of directors, Inuvo, Merger Sub, America’s Growth Capital or any other recipient of this information that any of them considered, or now considers, the projections to be a prediction of actual future results, and such data should not be relied upon as such.

Vertro believes that the assumptions Vertro’s management used as a basis for the projections were reasonable at the time the projections were prepared, given information Vertro’s management had at the time. Except to the extent required by applicable federal securities laws, however, Vertro does not intend, and expressly disclaims any responsibility, to update or otherwise revise the projections to reflect circumstances existing after the date the projections were prepared. The internal financial forecasts upon which these projections were based are, in general, prepared solely for internal use, such as budgeting and other management decisions, and are subjective in many respects, and thus are susceptible to various interpretations. Since the unaudited prospective financial information covers multiple years, such information by its nature becomes less predictive with each successive year. The combination of the Vertro and Inuvo unaudited prospective financial information does not represent the results that the combined company will achieve if the merger is completed, nor does it represent unaudited prospective financial information for the combined company.

The projections described below were not prepared with a view to public disclosure and are included in this joint proxy statement/prospectus only to give Vertro stockholders access to certain nonpublic information that was made available to the board of directors of Vertro in connection with its consideration of a possible merger transaction and to Inuvo. The accompanying prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information. Neither Vertro’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.

A summary of the projections prepared by Vertro senior management that were deemed material by Vertro is as follows (Values in Millions of Dollars):

Vertro Standalone Basis


Fiscal Year	2012		2013		2014		2015		2016
Revenue	$	36.0	$	37.9	$	40.3	$	42.7	$	45.4
Adjusted EBITDA (1)		4.3		4.3		4.7		5.2		5.8

Combined Company


Fiscal Year	2012		2013		2014		2015		2016
Revenue	$	74.8	$	80.8	$	87.8	$	95.7	$	105.4
Adjusted EBITDA (1)		10.1		10.5		12.0		13.4		14.9

⁽¹⁾

Adjusted EBITDA is defined as EBITDA (earnings from continuing operations before interest, income taxes, depreciation and amortization) plus non-cash compensation expense and plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business.

Readers of this joint proxy statement/prospectus are cautioned not to place undue reliance on the unaudited prospective financial information set forth above. No representation is made by Vertro, Inuvo or any other person to any stockholder of Vertro or any stockholder of Inuvo regarding the ultimate performance of Vertro compared to the information included in the above unaudited prospective financial information. The unaudited prospective financial information in this joint proxy statement/prospectus constitutes forward-looking statements and should not be regarded as an indication that such unaudited prospective financial information will be an accurate prediction of future events nor construed as financial guidance.

VERTRO DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE ABOVE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING SUCH UNAUDITED PROSPECTIVE FINANCIAL INFORMATION ARE NO LONGER APPROPRIATE.

Inuvo

Inuvo’s senior management does not, as a matter of course, publicly disclose forecasts or projections as to its future financial performance or earnings due to the inherent unpredictability of the underlying assumptions and estimates. Inuvo’s senior management, however, provided certain financial forecasts of Inuvo’s operating performance to Craig-Hallum for purposes of the financial analyses it rendered to the Inuvo board of directors in connection with its opinion. See “— Opinion of Craig-Hallum Capital Group, LLC, Financial Advisor to the Inuvo Board of Directors” beginning on page 61, and “— Background of the Merger” beginning on page 43. In addition, material portions of the projections were provided to Vertro.

There has been included in this joint proxy statement/prospectus a summary of the projections that were deemed material by Inuvo for purposes of considering and evaluating the merger. Although the projections are presented with numerical specificity, the projections reflect numerous estimates and assumptions with respect to industry performance, general business, economic, market and financial conditions, Inuvo’s ability to execute its strategic plans and other matters, all of which are difficult to predict and many of which are beyond Inuvo’s control. With respect to the combined company projections, Inuvo’s management made certain estimates with respect to operating and public company synergies.

The projections and their underlying estimates and assumptions are also subject to significant uncertainties related to Inuvo’s business, including, but not limited to, economic conditions, changes in Inuvo’s industry and the competitive environment in which Inuvo operates. For a discussion of the risks and uncertainties applicable to Inuvo’s business, see “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 19, and “Risk Factors — Risks Related to Inuvo” beginning on page 24.

As a result, although the projections set forth below were prepared in good faith based upon assumptions believed to be reasonable at the time the projections were prepared, there can be no assurance that the projected results will be realized or that actual results will not be significantly higher or lower than projected. For the foregoing reasons, the inclusion of these projections should not be regarded as a representation by Inuvo, its board of directors, Vertro, Merger Sub, Craig-Hallum or any other recipient of this information that any of them considered, or now considers, the projections to be a prediction of actual future results, and such data should not be relied upon as such.

Inuvo believes that the assumptions Inuvo’s management used as a basis for the projections were reasonable at the time the projections were prepared, given information Inuvo’s management had at the time. Except to the extent required by applicable federal securities laws, however, Inuvo does not intend, and expressly disclaims any responsibility, to update or otherwise revise the projections to reflect circumstances existing after the date the projections were prepared. The internal financial forecasts upon which these projections were based are, in general, prepared solely for internal use, such as budgeting and other management decisions, and are subjective in many respects, and thus are susceptible to various interpretations. Since the unaudited prospective financial information covers multiple years, such information by its nature becomes less predictive with each successive year. The combination of the Inuvo and Inuvo unaudited prospective financial information does not represent the results that the combined company will achieve if the merger is completed, nor does it represent unaudited prospective financial information for the combined company.

The projections described below were not prepared with a view to public disclosure and are included in this proxy statement/prospectus only to give Inuvo stockholders access to certain nonpublic information that was made available to the board of directors of Inuvo in connection with its consideration of a possible merger

transaction and to Inuvo. The accompanying prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information. Neither Inuvo’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.

A summary of the projections prepared by and for Inuvo senior management that were deemed material by Inuvo is as follows (Values in Millions of Dollars):

Inuvo Standalone Basis


Fiscal Year	2012		2013		2014		2015		2016

Revenue	$	38.8	$	42.9	$	47.5	$	53.0	$	60.1
Adjusted EBITDA (1)		3.0		3.4		4.4		5.3		6.2

⁽¹⁾

In addition, Craig-Hallum prepared financial projections of the combined companies on behalf of Inuvo. These combined projections reflect the combination of the stand-alone projections shown above as well as estimates of future revenue and expense synergies as provided by Inuvo senior management. A summary of the combined financial projections is as follows:


Fiscal Year	2012		2013		2014		2015		2016
	(Values in Millions of Dollars)
Revenue	$	84.2	$	86.8	$	93.8	$	101.7	$	111.5
Net Income (Loss)		2.2		2.0		3.1		3.8		4.7
Adjusted EBITDA (1)		11.2		11.1		12.5		13.9		15.4

Readers of this joint proxy statement/prospectus are cautioned not to place undue reliance on the unaudited prospective financial information set forth above. No representation is made by Inuvo, Vertro or any other person to any stockholder of Inuvo or any stockholder of Vertro regarding the ultimate performance of Inuvo compared to the information included in the above unaudited prospective financial information. The unaudited prospective financial information in this joint proxy statement/prospectus constitutes forward-looking statements and should not be regarded as an indication that such unaudited prospective financial information will be an accurate prediction of future events nor construed as financial guidance.

INUVO DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE ABOVE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING SUCH UNAUDITED PROSPECTIVE FINANCIAL INFORMATION ARE NO LONGER APPROPRIATE.

Opinion of Craig-Hallum Capital Group, LLC, Financial Advisor to the Inuvo Board of Directors

At the meeting of the board of directors of Inuvo on October 16, 2011, Craig-Hallum rendered its oral opinion to the board of directors of Inuvo that, as of such date and based upon and subject to the factors, assumptions and limitations set forth in its written opinion and described below, the exchange ratio in the merger

was fair from a financial point of view to Inuvo. Craig-Hallum subsequently confirmed its oral opinion by delivering its written opinion, dated October 16, 2011, to the board of directors of Inuvo.

The full text of the written opinion of Craig-Hallum, dated October 16, 2011, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitation on the review undertaken in rendering its opinion, is attached to this joint proxy statement/prospectus as Appendix B and incorporated by reference herein. The summary of Craig-Hallum’s opinion set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion. Stockholders should read this opinion carefully and in its entirety. Craig-Hallum’s opinion is directed to the board of directors of Inuvo, addresses only the fairness, from a financial point of view, of the exchange ratio pursuant to the merger agreement to Inuvo as of the date of the opinion, and does not address any other aspect of the merger, Inuvo’s Certificate of Amendment to the Amended Articles of Incorporation, the amendment to Inuvo’s 2010 Equity Compensation Plan or the relative merits of the proposed merger compared to any alternative business strategy or transaction in which Inuvo might engage. Craig- Hallum provided its advisory services and opinion for the information and assistance of the board of directors of Inuvo in connection with its consideration of the proposed merger. The opinion of Craig-Hallum does not constitute a recommendation as to how any stockholder should vote with respect to the proposed merger. In addition, this opinion does not in any manner address the prices at which Inuvo common stock will trade following the completion of the merger. The Craig-Hallum opinion was approved by Craig-Hallum’s fairness committee.

In addition, Craig-Hallum’s opinion was just one of the many factors taken into consideration by the Inuvo board of directors when considering the merger and the merger agreement. Consequently, Craig-Hallum’s analysis should not be viewed as determinative of the decision of the board of directors with respect to the fairness, from a financial point of view, of the exchange ratio pursuant to the merger agreement to Inuvo as of the date of the opinion.

In arriving at its opinion, Craig-Hallum, among other things:

•

reviewed a draft, dated October 15, 2011, of the merger agreement;

•

reviewed certain publicly available business and financial information concerning Inuvo and Vertro and the industries in which they operate;

•

compared the financial and operating performance of Vertro and Inuvo with publicly available information concerning other companies Craig-Hallum deemed relevant, and reviewed the current and historical market prices of the Vertro common stock and Inuvo common stock and certain publicly traded securities of such other companies;

•

reviewed, to the extent publicly available, financial information relating to selected transactions deemed comparable to the proposed merger;

•

reviewed certain internal financial analyses and forecasts prepared by or at the direction of the managements of Inuvo and Vertro relating to their respective businesses, as well as the estimated amount and timing of the cost saving and related expenses and synergies expected to result from the merger, which we refer to as the synergies; and

•

performed such other financial studies and analyses and considered such other information as Craig-Hallum deemed appropriate for the purpose of its opinion.

In addition, Craig-Hallum held discussions with members of the management of Inuvo and Vertro with respect to certain aspects of the merger, and the past and current business operations of Inuvo and Vertro, the financial condition and future prospects and operations of Inuvo and Vertro, the effects of the merger on the financial condition and future prospects of Inuvo, and certain other matters Craig-Hallum believed necessary or appropriate to its inquiry.

The following is a summary of certain of the financial analyses undertaken and information presented by Craig-Hallum and delivered to the board of directors of Inuvo on October 16, 2011, which analyses were among those considered by Craig-Hallum in connection with delivering the Craig-Hallum opinion.

Historical Exchange Ratio Analysis

Craig-Hallum calculated the daily implied historical exchange ratios during the year ending October 14, 2011, by dividing the daily closing prices per share of Vertro common stock by the closing price of Inuvo common stock for the one-day, ten-day, thirty-day, ninety-day, six-month, and one-year periods ending October 14, 2011. Craig-Hallum also noted the low and high exchange ratios for the one-year period ending October 14, 2011. The analysis resulted in the following implied exchange ratios for the periods indicated:


	Exchange Ratio
1-day		0.92 x
10-day average		0.98 x
30-day average		1.14 x
90-day average		1.11 x
6-month average		1.16 x
1-year average		1.22 x
1-year high		1.94 x
1-year low		0.78 x

Craig-Hallum noted that a historical exchange ratio analysis is not a valuation methodology and that such analysis was presented solely for informational purposes.

Comparable Company Analysis

In order to assess how the public market values shares of similar publicly-traded companies, Craig-Hallum reviewed and compared specific financial and operating data relating to Inuvo and Vertro and eight other companies in the Internet media industry. None of the selected companies used in this analysis as a comparison is identical to Inuvo or Vertro. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of Craig-Hallum’s analysis, may be considered similar to those of Inuvo and Vertro. Using publicly available information, Craig-Hallum calculated and analyzed the ratios of each company’s enterprise value to equity research analyst projections for the calendar years 2011 and 2012 revenues and earnings before interest, taxes, depreciation, amortization, and stock-based compensation, referred to as EBITDA. The enterprise value of each company was obtained by adding its short-and long-term debt to, and subtracting its cash from, the market value of its diluted common equity as of October 14, 2011. The following presents the results of this analysis:

Inuvo

Low

Mean

Median

High

EV/Revenue CY 2011

0.5 x

0.3 x

1.2 x

1.3 x

2.2 x

EV/Revenue CY 2012

0.5 x

0.3 x

1.1 x

1.8 x

EV/EBITDA CY 2012

6.7 x

2.6 x

7.0 x

6.7 x

11.0 x

However, given the inherent differences between business, operations and prospects of Inuvo, Vertro and the companies included in the comparable company analysis, Craig-Hallum did not rely solely on the quantitative aspects of the comparable company analysis and accordingly made qualitative judgments concerning differences between the financial and operating characteristics and prospects of Inuvo and Vertro and the companies included in the comparable company analysis that would affect the public trading values of each. These qualitative judgments related primarily to the differing sizes, growth prospects, profitability levels and degrees of operational risk between Inuvo, Vertro and the selected comparable companies. Based on these judgments,

Craig-Hallum selected the reference ranges of 0.9-1.8 times calendar year 2011 Revenue, 0.7-1.6 times calendar year 2012 revenue, and 6.4-8.4 times calendar year 2012 EBITDA for both the Inuvo case and the Vertro case. The high and low ranges represent the seventy-fifth and twenty-fifth percentiles in each multiple range, respectively. The reference ranges yielded the following range of implied equity values per share:

EV/Revenue CY 2011


	INUV		VTRO
High	$	6.42	$	7.08
Low		3.02		3.69

EV/Revenue CY 2012


	INUV		VTRO
High	$	5.75	$	7.38
Low		2.51		3.62

EV/EBITDA CY 2012


	INUV		VTRO
High	$	2.22	$	4.81
Low		1.65		3.79

Craig-Hallum compared the results of the implied equity values per share for Inuvo and Vertro. For each comparison, Craig-Hallum compared the highest equity value per share for Vertro to the lowest equity value per share for Inuvo to derive the highest exchange ratio implied by each pair of estimates. Craig-Hallum also compared the lowest equity value per share for Vertro to the highest equity value per share for Inuvo to derive the lowest exchange ratio implied by each pair of estimates. The implied exchange ratios were:

EV/ Revenue CY 2011


	Exchange Ratio
Highest Inuvo equity value per share to lowest Vertro equity value per share		2.34 x
Lowest Inuvo equity value per share to highest Vertro equity value per share		0.57 x

EV/ Revenue CY 2012


	Exchange Ratio
Highest Inuvo equity value per share to lowest Vertro equity value per share		2.94 x
Lowest Inuvo equity value per share to highest Vertro equity value per share		0.63 x

EV/EBITDA CY 2012


	Exchange Ratio
Highest Inuvo equity value per share to lowest Vertro equity value per share		2.92 x
Lowest Inuvo equity value per share to highest Vertro equity value per share		0.58 x

Transaction Premium Analysis

In order to assess the implied premium offered to the stockholders of Vertro in the proposed transaction relative to the premiums offered to stockholders in other transactions, Craig-Hallum reviewed the premium paid in selected transactions. Craig-Hallum used the following criteria to select the transactions:

•

mergers in the information technology industry between two U.S. publicly traded companies;

•

transactions announced since January 1, 2008;

•

transactions in which common equity was the only consideration; and

•

transactions in which the target and acquirer market caps were between $10 million and $1 billion one day before the announcement.

The following table lists the 12 transactions included in Craig-Hallum’s premiums paid analysis:


*Date*	Target	Acquirer
February 7, 2011	Endwave Corp.	GigOptix, Inc.;
June 2, 2010	DivX, Inc.	Sonic Solutions;
April 5, 2010	Symyx Technologies Inc.	Accelrys Inc.;
February 10, 2009	SiRF Technology Holdings, Inc.	CSR plc;
January 27, 2009	Oclaro, Inc.	Bookham Inc.;
November 21, 2008	Digital Fusion, Inc.	Kratos Defense & Security Solutions, Inc.;
June 26, 2008	Photon Dynamics, Inc.	Orbotech Ltd.;
June 20, 2008	Credence Systems Corporation	LTX Corp.;
May 19, 2008	Jazz Technologies, Inc.	Tower Semiconductor Ltd.;
May 15, 2008	Optium Corporation	Finisar Corp.;
May 8, 2008	Enliven Marketing Technologies Corporation	DG FastChannel, Inc.; and
February 20, 2008	SYS Technologies, Inc.	Kratos Defense & Security Solutions, Inc.

For each transaction, Craig-Hallum calculated the premium per share paid by the acquirer by comparing the announced transaction value per share to the target company’s historical average share price during the following periods: (1) one trading day prior to announcement, (2) one week prior to announcement, and (3) one month prior to announcement. The results or this transaction premium analysis are summarized below:

Implied Premium (Discount)


	1^stQuartile			Mean			Median			3^rd Quartile
One-Day		12	%		52.2	%		40.1	%		66	%
One-Week		15	%		54.3	%		45.4	%		72	%
One-Month		17	%		60.6	%		28.0	%		80	%

The reasons for and the circumstances surrounding each of the transactions analyzed in the premium analysis were diverse and there are inherent differences in the business, operations, financial conditions and prospects of Vertro and the companies included in the premium analysis. Accordingly, Craig-Hallum believed that purely quantitative transaction premium analysis would not be particularly meaningful in the context of considering the proposed transaction. Craig-Hallum therefore made qualitative judgments concerning the differences between the characteristics of the selected transactions and the proposed transaction which would affect the acquisition values of the target companies and Vertro. Based upon these judgments, Craig-Hallum selected a range of premiums based on the first and third quartiles of the one-day, one-week, and one-month premiums paid to calculate a range of implied exchange ratios of Vertro equity value per share to Inuvo equity value per share.

Exchange Ratio

One-Day

One- Week

One -Month

High

1.52 x

1.56 x

2.44 x

Low

1.03x

1.05 x

1.59 x

Relative Discounted Cash Flow Analysis

Craig-Hallum conducted a discounted cash flow analysis for both Inuvo and Vertro for the purpose of determining their respective fully diluted equity value per share on a standalone basis. Craig-Hallum calculated the unlevered free cash flows that Inuvo and Vertro are expected to generate during fiscal years 2011 through 2016 based upon financial projections prepared by management of Inuvo in connection with the proposed transaction. Craig-Hallum also calculated a range of terminal values of both Inuvo and Vertro at the end of the 5-year period ending 2016 by applying an EBITDA terminal multiple ranging from five to nine. The unlevered free cash flows and the range of terminal values were then discounted to present values using a range of discount rates, 17% to 21% for Inuvo and 20% to 24% for Vertro, which were chosen by Craig-Hallum based upon an analysis of the cost of capital of Inuvo and Vertro. The present value of the unlevered free cash flows and the range of terminal values were then adjusted for Inuvo and Vertro estimated September 30, 2011, net debt to obtain fully diluted equity value.

As part of the total equity value calculated for Inuvo, Craig-Hallum calculated the present value of the tax benefit from Inuvo’s estimated net operating loss carry-forwards (referred to as NOLs) balance as of September 30, 2011. As part of the total equity value calculated for Vertro, Craig-Hallum calculated the present value of Vertro’s estimated NOLs balance as of September 30, 2011. The analysis yielded the following implied equity value per share:


	Inuvo		Vertro
High	$	2.55	$	3.84
Low		1.22		2.46

Craig-Hallum compared the results for the Inuvo case to the Vertro case. For the comparison, Craig-Hallum compared the highest equity value per share for Vertro with the lowest equity value per share for Inuvo to derive the highest exchange ratio implied by each pair of estimates. Craig-Hallum also compared the lowest equity value per share for Vertro to the highest equity value per share for Inuvo to derive the lowest exchange ratio implied by each pair of estimates. The implied exchange ratios were as follows:


	Exchange Ratio
Highest Vertro equity value per share to lowest Inuvo equity value per share		3.13x
Lowest Vertro equity value per share to highest Inuvo equity value per share		0.96x

Pro Forma Merger Analysis

Craig-Hallum reviewed the impact of the merger on earnings by comparing the earnings per share of Inuvo common stock on a standalone basis projected by Inuvo’s management to the pro forma earnings per share of the combined company following the merger, using projections prepared by Vertro’s management and forecast of synergies prepared by Inuvo and Vertro management. Craig-Hallum assumed a closing date of the merger of December 31, 2011. Based on this analysis, the merger would be accretive to Inuvo’s stockholders for the 2012 calendar year.

General

In reaching its conclusion as to the fairness of the merger consideration and in its presentation to the board of directors, Craig-Hallum did not rely on any single analysis or factor described above, assign relative weights to the analyses or factors considered by it, or make any conclusion as to how the results of any given analysis, taken alone,

supported its opinion. The preparation of a fairness opinion is a complex process and not necessarily susceptible to partial analysis or summary description. Craig-Hallum believes that its analyses must be considered as a whole and that selection of portions of its analyses and of the factors considered by it, without considering all of the factors and analyses, would create a misleading view of the processes underlying the opinion.

The analyses of Craig-Hallum are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by the analyses. Analyses relating to the value of companies do not purport to be appraisals or valuations or necessarily reflect the price at which companies may actually be sold. No company or transaction used in any analysis for purposes of comparison is identical to Inuvo or the merger. Accordingly, an analysis of the results of the comparisons is not mathematical; rather, it involves complex considerations and judgments about differences in the companies to which Inuvo were compared and other factors that could affect the public trading value of the companies.

For purposes of its opinion, Craig-Hallum relied upon and assumed the accuracy and completeness of all information that was publicly available and the financial statements and other information provided to it by Inuvo, or otherwise made available to it, and did not assume responsibility for the independent verification of that information. Craig-Hallum relied upon the assurances of the management of Inuvo that the information provided to it by Inuvo was prepared on a reasonable basis in accordance with industry practice, and the financial planning data and other business outlook information reflects the best currently available estimates and judgment of management, and management was not aware of any information or facts that would make the information provided to Craig-Hallum incomplete or misleading. Craig-Hallum expressed no opinion as to such financial planning data and other business outlook information or the assumptions on which they are based.

For purposes of its opinion, Craig-Hallum assumed that the merger will be consummated pursuant to the terms of the merger agreement without material modifications thereto and without waiver by any party of any material conditions or obligations there under. Craig-Hallum undertook no independent analysis of any owned or leased real estate, or any pending or threatened litigation, possible unasserted claims or other contingent liabilities to which Inuvo or its affiliates was a party or may be subject and Craig-Hallum’s opinion made no assumption concerning and therefore did not consider the possible assertion of claims, outcomes or damages arising out of any such matters.

In arriving at its opinion, Craig-Hallum did not perform any appraisals or valuations of any specific assets or liabilities of Inuvo and was not furnished with any such appraisals or valuations. Craig-Hallum analyzed Inuvo as a going concern and accordingly expressed no opinion as to the liquidation value of Inuvo. Craig-Hallum expressed no opinion as to the price at which shares of Inuvo common stock have traded or at which such shares may trade following announcement of the merger or at any future time. The opinion is based on information available to Craig-Hallum and the facts and circumstances as they existed and were subject to evaluation on the date of the opinion. Events occurring after that date could materially affect the assumptions used in preparing the opinion. Craig-Hallum has not undertaken to and is not obligated to affirm or revise its opinion or otherwise comment on any events occurring after the date it was given.

The board of directors of Inuvo selected Craig-Hallum because Craig-Hallum is a nationally recognized investment banking firm and because, as a customary part of its investment banking business, Craig-Hallum is engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, underwritings and secondary distributions of securities, private placements and valuations for estate, corporate and other purposes. In the ordinary course of its business, Craig-Hallum and its affiliates may actively trade securities of Inuvo for their own accounts or the accounts of their customers and, accordingly, may at any time hold a long or short position in such securities. Prior to being engaged to deliver a fairness opinion, Craig-Hallum was engaged by Inuvo in November of 2010 to perform advisory services for a fee of $15,000.

Under the terms of the engagement letter dated June 24, 2011, Craig-Hallum acted as Inuvo’s financial advisor in connection with the merger and will receive an estimated fee of approximately $500,000 from Inuvo, all of which, except for the opinion fee discussed in this paragraph, is contingent upon the consummation of the

merger. The opinion fee was not contingent upon the consummation of the merger or the conclusions reached in Craig-Hallum’s opinion. The opinion fee will be credited against the fee for financial advisory serviced described in the preceding sentence. Inuvo has agreed to pay Craig-Hallum a fee of $150,000 for rendering its fairness opinion to Inuvo’s board of directors. In addition, Inuvo has agreed to reimburse Craig-Hallum for reasonable expenses incurred in connection with the engagement and to indemnify Craig-Hallum against certain liabilities that may arise out of its engagement by Inuvo and the rendering of the opinion.

Opinion of America’s Growth Capital, LLC, Financial Advisor to the Vertro Board of Directors

America’s Growth Capital delivered its opinion to the Vertro board of directors that, as of October 16, 2011, and based upon and subject to the factors and assumptions set forth therein, the exchange ratio pursuant to the merger agreement was fair, from a financial point of view, to the holders of Vertro common stock.

The full text of the written opinion of America’s Growth Capital, dated October 16, 2011, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Appendix C to this joint proxy statement/prospectus. America’s Growth Capital provided its opinion for the information and assistance of the Vertro board of directors in connection with its consideration of the merger agreement. The America’s Growth Capital opinion was not intended to be and does not constitute a recommendation as to how any holder of Vertro common stock should vote with respect to the merger proposal described in this joint proxy statement/prospectus or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, America’s Growth Capital reviewed and considered, among other things:

•

the draft of the merger agreement dated October 15, 2011;

•

certain publicly-available business, financial and other information about Vertro and Inuvo;

•

certain information furnished to America’s Growth Capital by Vertro’s management, including financial forecasts and analyses, related to the business, operations and prospects of Vertro, including, among other things, certain cost-savings and operating synergies projected by Vertro’s management to result from the merger, referred to as the Vertro Forecasts;

•

certain information furnished to America’s Growth Capital by Inuvo’s management and its financial advisor, including financial forecasts and analyses, related to the business, operations and prospects of Inuvo;

•

discussions with the management and board of directors of Vertro concerning the business, past and current operations, financial condition and future prospects of Vertro, including the Vertro Forecasts;

•

discussions and negotiations among representatives of Vertro, Inuvo and their respective financial advisors;

•

a comparison of the historical and present financial condition of Vertro with those of other companies that America’s Growth Capital deemed relevant;

•

a comparison of the proposed financial terms of the merger agreement with the financial terms of certain other business combinations and transactions that America’s Growth Capital deemed relevant;

•

the results of America’s Growth Capital’s efforts to solicit indications of interest and definitive proposals with respect to a sale of Vertro;

•

the potential pro forma impact of the merger;

•

an analysis of the discounted cash flows of Vertro and the Vertro / Inuvo combination;

•

the stock price and trading history of Vertro and Inuvo shares of common stock; and

•

other information and analyses to the extent deemed relevant by America’s Growth Capital.

In conducting the review and arriving at its opinion, America’s Growth Capital, with the Vertro board of directors’ consent, assumed and relied, without any independent investigation on America’s Growth Capital’s part, upon the accuracy and completeness of all financial and other information provided to America’s Growth Capital by Vertro and Inuvo or that was prepared by Vertro and Inuvo and is publicly available. America’s Growth Capital has not undertaken any responsibility for the accuracy, completeness or reasonableness of, or attempted to independently verify, the information, and is not aware of any material inaccuracies. America’s Growth Capital has not performed a formal valuation, or independently verified the value of a share of Vertro’s and Inuvo’s outstanding shares, and its opinion does not address and should not be construed to address, the value of a share of Vertro common stock or Inuvo common stock. In addition, America’s Growth Capital has not conducted nor has it assumed any obligation to conduct any physical inspection of the properties or facilities of Vertro. America’s Growth Capital has further relied upon the assurance of management of Vertro that it is unaware of any facts that would make the information incomplete or misleading in any material respect. America’s Growth Capital has, with the consent of the Vertro board of directors, assumed that the Vertro Forecasts that America’s Growth Capital examined were reasonably prepared by the management of Vertro on bases reflecting the best currently available estimates and good faith judgments of such management as to the future performance of Vertro.

America’s Growth Capital has not made or obtained any independent evaluations, valuations or appraisals of the assets or liabilities of Vertro, nor has America’s Growth Capital been furnished with such materials. America’s Growth Capital has not made any review of or sought or obtained advice of legal counsel regarding legal matters relating to Vertro, and America’s Growth Capital understands that Vertro has relied and will rely only on the advice of its legal counsel as to such matters. America’s Growth Capital’s opinion does not address any legal, regulatory, tax or accounting matters. America’s Growth Capital’s services to Vertro in connection with the merger have been comprised of (i) advising members of Vertro’s management and board of directors regarding financial matters relevant to the merger, and (ii) rendering an opinion as to the fairness, from a financial point of view, to the holders of the Vertro common stock of the exchange ratio to be received by such holders. The opinion is necessarily based upon economic and market conditions and other circumstances as they exist and can be evaluated by America’s Growth Capital on the date of its opinion. It should be understood that, although subsequent developments may affect America’s Growth Capital’s opinion, America’s Growth Capital does not have any obligation to update, revise or reaffirm its opinion (except upon the request of Vertro in accordance with the engagement letter with Vertro) and America’s Growth Capital expressly disclaims any responsibility to do so (except as provided in the engagement letter with Vertro).

For purposes of rendering its opinion, America’s Growth Capital assumed in all respects material to its analysis that the representations and warranties of each party contained in the merger agreement are true and correct as of the date of the opinion, that each party will perform all of the covenants and agreements required to be performed by it under the merger agreement and that all conditions to the consummation of the merger will be satisfied. America’s Growth Capital also assumed that all governmental, regulatory and other consents and approvals contemplated by the merger agreement will be obtained and that in the course of obtaining any of those consents no restrictions will be imposed or waivers made that would have an adverse effect on the contemplated benefits of the merger to the holders of Vertro common stock. America’s Growth Capital assumed that the final form of the merger agreement will be substantially similar to the draft merger agreement dated October 15, 2011.

In preparing the opinion, America’s Growth Capital performed a variety of financial and comparative analyses that it considered reasonable and appropriate to the merger. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. America’s Growth Capital arrived at its ultimate opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis. Accordingly, America’s Growth Capital believes that its analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying its analyses and opinion.

In its analyses, America’s Growth Capital considered industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond Vertro’s control. No company, transaction or business used in America’s Growth Capital’s analyses as a comparison is identical to Vertro or the merger, and an evaluation of the results of those analyses is not entirely mathematical. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies, business segments or transactions analyzed. The estimates contained in America’s Growth Capital’s analyses and the ranges of valuations resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold. Accordingly, the estimates used in, and the results derived from, America’s Growth Capital’s analyses are inherently subject to substantial uncertainty.

The following is a summary of the material financial analyses reviewed with the Vertro board of directors on October 16, 2011, in connection with America’s Growth Capital’s opinion. America’s Growth Capital did not attribute any particular weight to any analysis, methodology or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor; accordingly, America’s Growth Capital’s analyses must be considered as a whole. Considering any portion of such analyses and only certain of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying the conclusions expressed herein.

Sale Process/Competitive Bids

America’s Growth Capital commenced a competitive sale process on June 21, 2011, as part of the advisory services contracted by Vertro and directed by the Vertro board of directors. As a part of that formal process, America’s Growth Capital contacted approximately 186 potential strategic and financial acquirers for the business, of which more than 30 entered into, or had previously entered into, separate confidentiality agreements with Vertro to receive confidential information on Vertro. One other party made a preliminary proposal but they were unwilling to negotiate terms and the discussions were discontinued.

Historical Price and Exchange Ratio Analysis

America’s Growth Capital reviewed the reported prices for Vertro common stock and Inuvo common stock as of various dates and over various periods between June 9, 2011 and October 14, 2011, which was the last trading date prior to the parties’ entering into the merger agreement for which stock price information was readily available to America’s Growth Capital at the time it conducted its analysis. America’s Growth Capital noted that based on the closing price of Inuvo common stock of $1.75 per share on October 14, 2011, the implied value of the exchange ratio pursuant to the merger agreement of 1.546 shares of Inuvo common stock to be paid for each share of Vertro common stock was $2.70 per share of Inuvo common stock, which is referred to as the per-share value. America’s Growth Capital then compared the average closing price of Vertro common stock for the 1, 30, 60 and 90 trading day periods ended October 14, 2011 with the per-share value. This analysis indicated an implied per share equity value range of $1.50 to $1.80, as compared to the per-share value of $2.70.

America’s Growth Capital then calculated historical implied exchange ratios by dividing the average price per share of Vertro common stock for the 1, 30, 60 and 90 trading days prior to October 14, 2011 by the average price per share of Inuvo common stock over such periods, respectively. This analysis indicated an implied exchange ratio of 0.90 to 1.20, as compared to the Inuvo offer exchange ratio of 1.546.

Pro Forma Contribution Analysis

America’s Growth Capital reviewed certain historical and estimated future financial information for Vertro and Inuvo for the last twelve months ended September 30, 2011 and calendar years 2011 and 2012 based on Vertro’s and Inuvo’s management forecasts. Such estimated future operating and financial information included,

for each of Vertro and Inuvo, (a) revenue, and (b) earnings before income taxes, depreciation and amortization, referred to as EBITDA. America’s Growth Capital analyzed the relative potential financial contributions of Vertro and Inuvo to the combined company following completion of the merger and Vertro’s implied percentage equity ownership of the combined company. This analysis indicated an implied per share equity value range of $1.75 to $2.05, as compared to the per-share value of $2.70.

Precedent Merger of Equals Analysis

America’s Growth Capital compared the one-day and thirty-day premium to be paid to holders of Vertro common stock in the merger against one-day and thirty-day premiums paid in the following seven technology merger of equals transactions involving U.S. and European companies since 2005 based on publicly available information.


Acquirer		Target
Symyx Technologies, Inc.		Accelrys, Inc.
Ticketmaster Entertainment, LLC		Live Nation Entertainment, Inc.
XM Satellite Radio, Inc.		SIRIUS Satellite Radio, Inc.
Gemplus International SA		Axalto Holding N.V.
Credence Systems Corp.		LTX Corp.
Lucent Technologies, Inc.		Alcatel
Intentia International AB		Lawson Software, Inc.

This analysis indicated an implied per share equity value range of $1.75 to $2.05, as compared to the per-share value of $2.70.

Discounted Cash Flow Analysis

America’s Growth Capital performed a discounted cash flow analysis to calculate the estimated present value of the standalone, free cash flows that Vertro could generate during Vertro’s calendar years 2012 through 2016 using (a) the base case for Vertro on a stand alone basis and (b) the base case for the combined company on a pro forma basis, taking into account projected synergies as estimated by Vertro’s management team. Estimated terminal values for Vertro were calculated by applying terminal value multiples of 3.3x to 4.3x and 5.0x to 6.0x to the stand alone and combined calendar year 2016 estimated EBITDA, respectively. The cash flows and terminal values were then discounted to present value using discount rates ranging from 14% to 24% and 13% to 17% for the standalone and combined scenarios, respectively. This analysis indicated implied per share equity value ranges for Vertro of approximately $2.45 to $3.60 for the standalone scenario as compared to the per-share value of $2.70. The combined scenarios analysis indicated a range of implied per share equity value range for Vertro of $3.70 to $4.80, resulting in an incremental value of $1.20 to $1.25 per share of Vertro common stock versus the standalone scenario.

Comparable Public Companies Analysis

America’s Growth Capital reviewed financial and stock market information of Vertro and the following eight selected publicly traded companies with similar products, similar operating and financial characteristics and servicing similar markets.

•

IAC/InterActive Corp.;

•

ValueClick, Inc.;

•

AOL, Inc.;

•

QuinStreet, Inc.;

•

Marchex, Inc.;

•

interCLICK, Inc.;

•

InfoSpace, Inc.; and

•

Local.com Corp.

America’s Growth Capital reviewed, among other things, enterprise values of the selected companies, calculated as fully diluted equity value based on closing stock prices on October 14, 2011, plus debt, minority interest and preferred stock, less cash and equivalents, as a multiple of calendar year 2011 estimated revenue and last twelve months as of June 30, 2011 actual and calendar year 2011 and 2012 estimated EBITDA. America’s Growth Capital then applied an estimated calendar year 2011 revenue multiple of 0.5x and a selected range for last twelve months actual and 2012 estimated EBITDA multiples of 3.8x to 4.8x derived from AOL, InfoSpace and Local.com to corresponding Vertro standalone data. America’s Growth Capital also applied an estimated calendar year 2011 revenue multiple of 1.3x and a selected range calendar year 2011 and 2012 estimated EBITDA multiples of 5.5x to 7.8x derived from the eight selected publicly traded companies listed above to corresponding combined company data. Estimated financial data of the selected companies were based on publicly available research analysts’ estimates. Estimated financial data of Vertro was based on estimates of Vertro’s management. This analysis indicated an implied per share equity value range for Vertro of approximately $2.15 to $2.45 per share on a stand-alone basis as compared to the per-share value of $2.70. This analysis indicated an implied per share equity value range for Vertro of approximately $3.45 to $3.75 per share on a combined basis, resulting in an incremental value of $1.30 per share of Vertro common stock versus the stand-alone comparable public companies analysis.

Although the selected companies were used for comparison purposes, none of those companies is directly comparable to Vertro. Accordingly, an analysis of the results of such a comparison is not purely mathematical, but instead involves complex considerations and judgments concerning differences in historical and projected financial and operating characteristics of the selected companies and other factors that could affect the public trading value of the selected companies or Vertro.

Fee Arrangements with America’s Growth Capital

On October 16, 2011, America’s Growth Capital rendered its oral opinion to Vertro’s board of directors (which was subsequently confirmed in writing by delivery of America’s Growth Capital written opinion later that same day) to the effect that, as of October 16, 2011, the exchange ratio of 1.546 to be paid in the merger to the holders of the Vertro Common Stock was fair to such holders from a financial point of view. America’s Growth Capital has performed limited investment banking and financial services for Vertro in the past and has no prior relationship with Inuvo.

Pursuant to an engagement letter dated June 20, 2011, Vertro retained America’s Growth Capital as its financial advisor in connection with, among other things, the proposed merger. Vertro agreed to pay to America’s Growth Capital a fairness opinion fee of $200,000. The payment of America’s Growth Capital fairness opinion fee was independent of the consummation of the proposed merger and irrespective of the content of the fairness opinion. Vertro has agreed to pay America’s Growth Capital an additional strategic transaction fee of approximately $470,000, contingent upon consummation of the proposed merger. The additional strategic transaction fee is calculated as 3% on merger aggregate consideration up to $16,000,000 and 4.25% on merger aggregate consideration above $16,000,000, which aggregate consideration will be determined by the average closing prices of the received Inuvo securities for the last five trading days prior to the date of the consummation of the merger. America’s Growth Capital also received a non-refundable cash retainer fee payable upon signing of its engagement letter with Vertro dated June 20, 2011 of $50,000 which is creditable against the strategic transaction fee. Vertro also agreed to reimburse America’s Growth Capital for the reasonable expenses incurred by America’s Growth Capital in performing its services, including fees and expenses of its legal counsel, independent of the consummation of the proposed merger, and to indemnify America’s Growth Capital and related persons against liabilities, including liabilities under securities laws, arising out of its engagement.

America’s Growth Capital’s opinion was directed to Vertro’s board of directors and only addressed the fairness from a financial point of view of the 1.546 exchange ratio to be paid in the merger to the holders of the Vertro common stock, and did not address any other aspect or implication of the merger. The summary of America’s Growth Capital’s opinion in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of its written opinion, which is included as Appendix C to this proxy statement and sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken by America’s Growth Capital in connection with the opinion. However, neither America’s Growth Capital’s written opinion nor the summary of its opinion and the related analyses set forth in this joint proxy statement/prospectus are intended to be, and they do not constitute, a recommendation as to how any holder of Vertro common stock should vote with respect to the share issuance proposal described in this joint proxy statement/prospectus or any other matter.

Interests of Certain Persons in the Merger

Inuvo stockholders considering the recommendation of Inuvo’s board of directors regarding the merger should be aware that certain directors and executive officers of Inuvo have interests in the merger that are different from, or in addition to, the interests of Inuvo stockholders generally. The Inuvo board of directors was aware of these interests and considered them when they approved the merger agreement and the merger, and recommended that the Inuvo stockholders approve the issuance of Inuvo common stock in the merger.

Vertro stockholders considering the recommendation of Vertro’s board of directors regarding the merger should be aware that certain directors and executive officers of Vertro have certain interests in the merger that are different from, or in addition to, the interests of Vertro stockholders generally. The Vertro board of directors was aware of these interests and considered them when they adopted the merger agreement and approved the merger and recommended that the Vertro stockholders adopt the merger agreement and approve the merger.

These interests of certain directors and executive officers of Inuvo and Vertro relate to or arise from, among other things:

•

the fact that certain directors of Vertro and Inuvo would continue to serve on the board of directors of the combined company following completion of the merger;

•

severance benefits to which Mr. Gallagher will become entitled in connection with the completion of the merger;

•

the accelerated vesting of all Inuvo stock options and restricted stock units held by the independent directors and certain of the stock options held by Mr. Howe, the president and chief executive officer of Inuvo, upon completion of the merger;

•

the accelerated vesting of all Vertro stock options and restricted stock units held by the directors and executive officers of Vertro upon completion of the merger;

•

the payment of bonuses to Messrs. Corrao, Pisaris, Gallagher, and Robert Roe in the event of a change of control such as the merger under the Vertro 2011 Bonus Program, which bonuses will be paid in Vertro common stock in lieu of cash;

•

the right to continued indemnification and insurance coverage for directors and executive officers of Vertro following the completion of the merger, pursuant to the terms of the merger agreement;

•

the granting of restricted stock units immediately prior to the merger to the directors and executive officers of Inuvo as additional compensation for their efforts in the merger; and

•

the fact that the executive officers of the combined company following the completion of the merger are expected to be Messrs. Corrao, Howe, Pisaris, and Ruiz.

Ownership Interests

As of January 27, 2012, the latest practicable date before the printing of this joint proxy statement/prospectus, directors and executive officers of Inuvo, together with their respective affiliates, beneficially owned

and were entitled to vote [—] shares of Inuvo common stock, or approximately [—]% of the shares of Inuvo common stock outstanding on that date. Assuming the merger had been completed as of such date, all directors and executive officers of Inuvo, together with their respective affiliates, would beneficially own, in the aggregate, approximately [—]% of the outstanding shares of common stock of the combined company.

As of January 27, 2012, the latest practicable date before the printing of this joint proxy statement/prospectus, directors and executive officers of Vertro, together with their respective affiliates, beneficially owned and were entitled to vote [—] shares of Vertro common stock, or approximately [—]% of the shares of Vertro common stock outstanding on that date. Assuming the merger had been completed as of such date, all directors and executive officers of Vertro, together with their respective affiliates, would beneficially own, in the aggregate, approximately [—]% of the outstanding shares of common stock of the combined company.

For a more complete discussion of the ownership interests of the directors and executive officers of Inuvo and Vertro, see the sections entitled “Securities Ownership of Certain Beneficial Owners and Management of Inuvo” and “Securities Ownership of Certain Beneficial Owners and Management of Vertro” beginning on pages 193 and 195, respectively.

Treatment of Equity Awards.

The terms of the Inuvo 2010 Equity Compensation Plan provide that upon the occurrence of certain corporate transactions, including the merger, the compensation committee of the board of directors may, subject to board authorization, accelerate the vesting of any stock options and restricted stock units outstanding under such plan. The Inuvo board has not authorized such acceleration at the effective time of the merger. As a result, other than specific grants to independent directors, none of the outstanding unvested stock options and restricted stock units held by executive officers or employees of Inuvo will be impacted by the merger. The terms of certain grants made under Inuvo’s 2010 Equity Compensation Plan to its independent directors also provide that upon the occurrence of certain corporate transactions, including the merger, the vesting of any stock options and restricted stock units outstanding under such plan will be accelerated in full at the effective time of such corporate transaction. As a result, the outstanding unvested stock options and restricted stock units held by Inuvo’s independent directors will immediately vest and become exercisable in full upon completion of the merger.

The terms of Inuvo’s employment agreement with Mr. Howe includes a provision that upon the occurrence of certain corporate transactions, including the merger, the vesting of any unvested stock options granted to him as additional compensation under the employment agreement will be accelerated in full at the effective time of such corporate transaction.

As of October 14, 2011, the number of shares of Inuvo common stock subject to unvested stock options that will vest as of the effective time of the merger is 137,648 shares held by Mr. Howe, 11,668 shares held by Mr. Morgan, and 7,502 shares held by each of Mr. Pope, Mr. John (Jack) Balousek, and Mr. Tuchman.

As of October 14, 2011, the number of shares of Inuvo common stock based on restricted stock units that will vest as of the effective time of the merger is 62,547 shares held by Mr. Howe, 20,150 shares held by Mr. Ruiz, 3,143 shares held by Mr. Morgan, 11,768 shares held by Mr. Tuchman, and 5,954 shares held by each of Messrs. Pope and Balousek.

On October 13, 2011, the compensation committee of the Inuvo board of directors agreed to grant the equivalent of $300,000 of fully vested restricted stock units immediately prior to the closing of the merger to Inuvo’s executive officers, members of its board of directors and certain employees as additional compensation for their efforts in connection with the merger, all of which will be based upon the fair market value of Inuvo’s common stock on the date of grant.

The terms of the Vertro 2006 Stock Award and Incentive Plan provide that upon the occurrence of certain corporate transactions, including the merger, the vesting of any stock options and restricted stock units

outstanding under such plans will be accelerated in full at the effective time of such corporate transaction. As a result, the outstanding unvested stock options and restricted stock units held by directors and executive officers of Vertro will immediately vest and become exercisable in full upon completion of the merger.

As of October 31, 2011, the number of shares of Vertro common stock subject to unvested stock options that will vest as of the effective time of the merger is 50,000 shares held by Mr. Corrao and 7,100 shares held by Mr. Roe.

As of October 31, 2011, the number of shares of Vertro common stock based on restricted stock units that will vest as of the effective time of the merger is 152,000 shares held by Mr. Corrao, 49,784 shares held by Mr. Pisaris, 49,893 shares held by Mr. Roe, and 40,000 shares held by Mr. Gallagher.

The terms of the Vertro 2011 Bonus Program provide for the payment of cash bonuses to employees of Vertro if certain financial performance goals are met. In the event of a change of control such as the merger, the financial performance goals are deemed to be met and Messrs. Corrao, Pisaris, Roe, and Gallagher are entitled to receive their target bonuses of $320,000, $167,500, $143,960, and $110,000 respectively, for the full year upon the effective time of the merger. Vertro and Messrs. Corrao, Pisaris, Roe, and Gallagher have agreed that any payments due under Vertro’s 2011 Bonus Program will be paid to the recipients in Vertro common stock in lieu of cash immediately prior to the merger, based on the fair market value of Vertro common stock on the date paid.

Golden Parachute Compensation

The following table shows the compensation of Vertro’s named executive officers that is based on or otherwise relates to the merger:

Golden Parachute Compensation


Name	Equity ($)			Other ($)			Total ($)
Peter A. Corrao		276,640	(1)		320,000	(2)		596,640
John B. Pisaris		90,607	(1)		167,500	(2)		258,107

⁽¹⁾

Represents stock awards for which vesting would be accelerated as a result of the merger and calculated based on a price per share of $1.82, which is the average closing market price of Vertro’s common stock over the first five business days following October 17, 2011, the first public announcement of the merger.

⁽²⁾

Represents cash bonuses under the Vertro 2011 Bonus Program for certain financial performance goals that are deemed to be met in the event of a change of control such as the merger. Such payments will be paid in Vertro common stock in lieu of cash. The actual number of shares of Vertro common stock to be issued in lieu of cash bonus payments immediately prior to the effective time of the merger will be based upon the fair market value of Vertro common stock immediately prior to the effective time.

Retention and Severance Obligations and Employment Agreements

Mr. Howe, the chief executive officer of Inuvo, is party to an employment agreement with Inuvo, dated November 3, 2008, that provides for the payment of a severance amount in the event Mr. Howe terminates the agreement for good reason, which includes termination following a change of control such as the merger. However, it is contemplated that at the effective time of the merger, Mr. Howe will enter into a new employment agreement as the executive chairman of Inuvo. Mr. Howe will not receive any severance payments under his current employment agreement. It is contemplated that at the effective time of the merger, Mr. Ruiz, who currently serves as the chief financial officer of Inuvo, will enter into an employment agreement to continue serving as the chief financial officer of Inuvo.

Mr. Corrao, the chief executive officer of Vertro, and Mr. Pisaris, the general counsel of Vertro, are each party to an employment agreement, dated September 6, 2005, and February 1, 2004, respectively, both as amended December 23, 2008, that provide for the payment of a severance amount in the event of termination

following a change of control such as the merger. Additionally, Mr. Corrao’s employment agreement provides for the payment of a severance amount in the event Mr. Corrao terminates his employment within a designated time period following a change of control such as the merger. However, it is contemplated that at the effective time of the merger, Messrs. Corrao and Pisaris will each enter into new employment agreements as the chief executive officer and president, and general counsel, respectively, of Inuvo, which employment agreements are substantially similar to their current employment agreements with Vertro, and Messrs. Corrao and Pisaris will not receive any severance payments under their current employment agreements.

The new employment agreements to be entered into by Messrs. Howe, Ruiz, Corrao, and Pisaris, each referred to as an executive, have an initial term of one year, after which each executive’s employment agreement automatically renews for additional one-year periods on the same terms and conditions, unless either party to the agreement exercises the respective termination rights available to such party in the agreement. The employment agreements provide for a minimum annual base salary of $395,000 for Mr. Corrao, $395,000 for Mr. Howe, $335,000 for Mr. Pisaris, and $275,000 for Mr. Ruiz. The employment agreements require Inuvo to compensate the executives and provide them with certain benefits if their employment is terminated. The compensation and benefits the executives are entitled to receive upon termination of employment vary depending on whether their employment is terminated:

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by Inuvo for cause (as defined below);

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by Inuvo without cause, or by the executive for good reason (as defined below);

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due to death or disability; or

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by the executive without good reason.

In the event of a termination by Inuvo without cause or a termination by the executive for good reason, the executive would be entitled to receive the following:

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his earned but unpaid basic salary through the termination date, plus a portion of the executive’s bonus based upon the bonus he would have earned in the year in which his employment was terminated, pro-rated for the amount of time employed by Inuvo during such year and paid on the original date such bonus would have been payable;

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an amount payable over the twelve-month period following termination equal to one times the sum of his basic salary at the time of termination, plus a termination bonus equal to the bonus paid to the executive during the four fiscal quarters prior to the date of termination (except that if a target bonus has been established for Mr. Corrao or Mr. Howe, each such person’s termination bonus is equal to his target bonus for the fiscal year in which the termination occurs, increased or decreased pursuant to actual performance versus targeted performance in the then current plan measured as of the end of the calendar month preceding the termination date), or in the event of a change of control (as defined below), the greater of the relevant calculation above or the bonus paid to the executive during the four fiscal quarters prior to the change of control;

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any other amounts or benefits owing to the executive under the then-applicable employee benefit, long-term incentive, or equity plans and programs of Inuvo, within the terms of such plans, payable over the twelve-month period following termination; and

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benefits (including health, life, and disability) as if the executive was still an employee during the twelve-month period following termination.

Finally, in the event of a termination without cause by Inuvo, with good reason by the executive, or following a change of control, any equity award held by the executive will immediately and fully vest and become exercisable throughout the full term of such award as if the executive were still employed by Inuvo.

Each employment agreement provides that a change of control includes the occurrence of any of the following:

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a person becomes the beneficial owner of securities of Inuvo representing 35% or more, excluding in the calculation of beneficial ownership securities acquired directly from Inuvo, of the combined voting power of Inuvo’s then outstanding voting securities;

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a person becomes the beneficial owner of securities of Inuvo representing 51% or more of the combined voting power of Inuvo’s then outstanding voting securities;

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the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, when the employment agreement became effective, constitute the board of directors of Inuvo and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of Inuvo) whose appointment or election by the board of directors or nomination for election by Inuvo’s stockholders was approved or recommended by a vote of at least 2/3 of the directors then still in office who either were directors when the employment agreement became effective or whose appointment, election, or nomination for election was previously so approved or recommended;

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there is a consummated merger or consolidation of Inuvo or any direct or indirect subsidiary of Inuvo with any other corporation, other than (a) a merger or consolidation that would result in the voting securities of Inuvo outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving parent entity) more than 50% of the combined voting power of the voting securities of Inuvo or such surviving or parent equity outstanding immediately after such merger or consolidation or (b) a merger or consolidation effected to implement a recapitalization of Inuvo (or similar transaction) in which no person acquired 25% or more of the combined voting power of Inuvo’s then outstanding securities (not including in the securities beneficially owned by such person any securities acquired directly from Inuvo or its affiliates); or

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the stockholders of Inuvo approve a plan of complete liquidation of Inuvo or there is consummated an agreement for the sale or disposition by Inuvo of all or substantially all of Inuvo’s assets (or any transaction having a similar effect), other than a sale or disposition by Inuvo of all or substantially all of Inuvo’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by stockholders of Inuvo in substantially the same proportions as their ownership of the Inuvo immediately prior to such sale.

In the event of a termination by Inuvo with cause, Messrs. Corrao, Pisaris, Ruiz and Howe would be entitled to receive the earned but unpaid portion of such executive’s base salary through the date of termination.

In the event of a termination by Inuvo of Messrs. Pisaris or Ruiz upon the death or permanent disability of such executive, the executive would be entitled to receive the earned but unpaid portion of such executive’s base salary through the date of termination, the earned but unpaid portion of any vested incentive compensation under and consistent with plans adopted by Inuvo prior to the date of termination, and over the twelve months following the date of termination an amount equal to 20% base salary at the time of termination for each year of employment with Inuvo or Vertro, capped at 100% of the base salary.

In the event of a termination by Inuvo of Messrs. Corrao or Howe upon the death or permanent disability of such executive, the executive would be entitled to receive the earned but unpaid portion of such executive’s base salary through the date of termination, any other amounts or benefits owing to the executive under any then-applicable employee benefit, long-term incentive or equity plans and programs of Inuvo, and over the twelve months following the date of termination an amount equal to 20% base salary at the time of termination for each year of employment with Inuvo or Vertro, capped at 100% of the base salary.

In the event of a termination by Messrs. Pisaris or Ruiz without good reason, each such executive is entitled to receive the earned but unpaid portion of such executive’s base salary through the date of termination, and the

earned but unpaid portion of any vested incentive compensation under and consistent with plans adopted by Inuvo prior to the date of termination. In the event of a termination by Messrs. Corrao or Howe without good reason, each such executive is entitled to receive the earned but unpaid portion of his base salary through the termination date and any other amounts and benefits owing to the executive under the then applicable employee benefit, long term incentive or equity plans and programs of Inuvo.

Each employment agreement provides that cause refers only to one or more of the following grounds:

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commission of a material and substantive act of theft, including, but not limited to misappropriation of funds or any property of Inuvo;

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intentional engagement in activities or conduct clearly injurious to the best interests or reputation of Inuvo that in fact result in material and substantial injury to Inuvo;

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refusal to perform assigned duties and responsibilities (so long as Inuvo does not assign any duties or responsibilities that would give the executive good reason to terminate employment) after receipt of written detailed notice and reasonable opportunity to cure;

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gross insubordination, which shall consist only of a willful refusal to comply with a lawful written directive to the executive issued pursuant to a duly authorized resolution of the board of directors, so long as the directive does not give the executive good reason to terminate employment;

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clear violation of any of the material terms and conditions of any agreement the executive has with the Inuvo after thirty days’ written notice from Inuvo specifying the violation and the executive’s failure to cure such violation within such thirty day period;

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the executive’s substantial dependence, as reasonably determined by the board of directors, on alcohol or any narcotic drug or other controlled or illegal substance that materially and substantially prevents the executive from performing his duties; or

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the final and unappealable conviction of the executive of a crime that is a felony or a misdemeanor involving an act of moral turpitude, or a misdemeanor committed in connection with employment by Inuvo, that causes Inuvo a substantial detriment.

Each employment agreement provides that good reason means any one or more of the following grounds:

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a change in the executive’s title(s), status, position, or responsibilities without the executive’s written consent, which does not represent a promotion from existing status, position, or responsibilities, despite the executive’s written notice to Inuvo of objections to such change and Inuvo’s failure to address such notice in a reasonable fashion within 30 days of such notice;

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the assignment to the executive of any duties or responsibilities that are inconsistent with the executive’s status, position, or responsibilities as set forth in the employment agreement, despite the executive’s written notice to Inuvo of objections to such change and Inuvo’s failure to address such notice in a reasonable fashion within 30 days of such notice;

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a reduction in the executive’s base salary;

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a breach by Inuvo of any material term or provision of the executive’s employment agreement; or

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certain relocations of Inuvo offices in which such executive works.

The executive may terminate employment for any reason (other than good reason) upon giving 30 days’ advance written notice to Inuvo. As to a termination by Messrs. Pisaris or Ruiz for any reason other than a good reason, Inuvo will pay the executive the earned but unpaid portion of his base salary through the termination date and any earned but unpaid vested incentive compensation under and consistent with plans adopted by Inuvo prior to the date of termination. As to a termination by Messrs. Corrao or Howe for any reason other than a good reason, Inuvo will pay the executive the earned but unpaid portion of his base salary through the termination date and any other amounts and benefits owing to the executive under the then applicable employee benefit, long term incentive or equity plans and programs of Inuvo.

During 2011, the members of Inuvo’s board of directors, its executive officers and certain of its employees have been deferring all or a portion of their cash compensation. In consideration of deferring the cash compensation, Inuvo agreed to issue restricted stock units to the board of directors, its executive officers and certain of its employees at the time of deferral, which restricted stock units vest on the earliest of (i) when the deferred cash compensation is paid, (ii) one year from grant date, or (iii) a change of control such as the merger. These individuals have agreed to convert the accrued but unpaid deferred cash compensation, which was approximately $364,068 through September 30, 2011, into shares of Inuvo common stock, based upon the fair market value of Inuvo common stock immediately prior to the merger. The additional restricted stock awards for approximately 261,110 shares of Inuvo common stock, net of shares withheld for taxes, based upon the fair market value of Inuvo’s common stock on October 14, 2011, will also be made immediately prior to the merger and valued at fair market value on the date of grant.

Upon completion of the merger and following termination of his employment, Mr. Gallagher is entitled to receive an amount equal to 50% of his annual basic salary at the time of termination, and the cash value of health, dental, vision, and life insurance benefits that would be paid on his behalf if he were still employed during the six months following termination of his employment.

See also the section entitled “The Merger — Material Agreements and Relationships Between the Parties” beginning on page 79.

Indemnification and Insurance

The merger agreement provides that from and after the effective time of the merger, Inuvo will indemnify and hold harmless all past and present directors, officers, and employees of Vertro to the same extent such persons are indemnified as of the date of the merger agreement by Vertro pursuant to Vertro’s certificate of incorporation, by-laws, or indemnification agreements in existence on the date of the merger agreement arising out of acts or omissions in their capacity as directors, officers, or employees of Vertro or any subsidiary occurring at or prior to the effective time of the merger.

For six years following the effective time of the merger, Inuvo will cause to be maintained in effect the coverage provided by the policies of directors’ and officers’ liability insurance and fiduciary liability insurance in effect as of the effective time of the merger, or if directed by Vertro, Inuvo will purchase and maintain a “tail” directors’ and officers’ liability insurance policy for the same period for the persons who, as of the effective time of the merger, are covered by Vertro’s existing directors’ and officers’ liability insurance, with respect to claims arising from facts or events which occurred at or before the effective time of the merger, with substantially the same coverage and amounts and terms and conditions as the existing policies of directors’ and officers’ liability insurance maintained by Vertro, or the maximum coverage available on substantially equivalent terms for a cost not to exceed annual premiums in excess of 200% of the last annual premium paid by Vertro prior to the date of the merger agreement.

In each employment agreement with Inuvo that will be entered into by Messrs. Corrao, Howe, Pisaris, and Ruiz, Inuvo holds harmless and indemnifies the executive (subject to certain limitations and exclusions) from any and all expenses, judgments, fines, and amounts paid in settlement actually and reasonably incurred by the executive in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal administrative or investigative (excluding an action brought by or in right of Inuvo) to which such executive is, was or at any time becomes a party, or is threatened to be made a party, by reason of the fact that such executive is, was, or at any time becomes a director, officer, employee or agent of Inuvo (or is or was serving or at any time serves at the request of Inuvo as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise).

Material Agreements and Relationships Between the Parties

In addition to the merger agreement and the merger, Inuvo and Vertro are party to the Vertro BargainMatch Partner Agreement dated November 10, 2010. Under this agreement, Inuvo granted Vertro a non-exclusive

license to implement the BargainMatch application programming interface in its applications and websites thereby allowing Vertro to access the BargainMatch databases to view products, coupons and merchant listings and to display data to its customers.

Consideration to be Received in the Merger

Upon completion of the merger, each share of Vertro common stock outstanding immediately prior to the effective time of the merger will be canceled and converted automatically into the right to receive 1.546 fully paid and non-assessable shares of Inuvo common stock. Inuvo will not issue any fractional shares in connection with the merger. Instead, each holder of Vertro common stock who would otherwise be entitled to receive a fraction of a share of Inuvo common stock will receive cash, without interest, in an amount equal to the fraction multiplied by the closing price of Inuvo common stock on the NYSE Amex on the last trading day immediately preceding the effective time of the merger. See the section entitled “The Merger — Effect on Awards Outstanding Under Vertro Equity Plans” beginning on page 80 for a description of the treatment of stock options and restricted sock units under Vertro’s equity plans.

Surrender of Vertro Stock Certificates

As soon as practicable following the effective time of the merger, the exchange agent will mail to each record holder of Vertro common stock a letter of transmittal and instructions for surrendering the record holder’s stock certificates in exchange for certificates representing Inuvo common stock issuable to such holder pursuant to the merger. Vertro stockholders who hold their shares in book entry form also will receive instructions for the exchange of their stock for the merger consideration from the exchange agent. Following the completion of the merger, Vertro will not register any transfers of Vertro common stock on its stock transfer books.

Payment of Merger Consideration

Those holders of Vertro common stock who properly surrender their Vertro common stock certificates (or uncertificated stock) in accordance with the exchange agent’s instructions will receive (a) the shares of Inuvo common stock issuable to them pursuant to the merger, (b) cash, without interest, in lieu of any fractional shares of Inuvo common stock issuable to such holders, and (c) dividends or other distributions, if any, to which they are entitled under the terms of the merger agreement.

Effect on Awards Outstanding Under Vertro Equity Plans

At the effective time of the merger, options to purchase Vertro common stock and restricted stock units based on Vertro common stock will be converted into options to purchase Inuvo common stock and restricted stock units based on Inuvo common stock, respectively. The number of shares of Inuvo common stock issuable upon the exercise of such converted awards will be equal to the number of shares of Vertro common stock that were issuable upon exercise of the award under the applicable Vertro equity plan immediately prior to the effective time of the merger, multiplied by the exchange ratio, rounded down to the nearest whole share. The per share exercise price of such converted awards (if any) will be the per share exercise price of the award under the applicable Vertro equity plan immediately prior to the effective time of the merger, divided by the exchange ratio, rounded up to the nearest whole cent.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

The following notice is based on United States Treasury Regulations governing practice before the IRS: (1) any United States federal tax advice contained in this joint proxy statement/prospectus is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding United States federal tax penalties that may be imposed on the taxpayer, (2) any such advice is written to support the promotion or marketing of the transactions described in this joint proxy statement/prospectus, and (3) each taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

The following discussion summarizes the material U.S. federal income tax consequences of the merger. This summary is based upon current provisions of the Code, existing Treasury Regulations promulgated thereunder, and current administrative rulings and court decisions, all of which are subject to change and to differing interpretations, possibly with retroactive effect. Any change could alter the tax consequences to Inuvo, Vertro or Vertro stockholders, as described in this summary. Neither Inuvo nor Vertro has sought, and they will not seek, any rulings from the IRS with respect to the U.S. federal income tax consequences described below. The discussion below does not in any way bind the IRS or the courts or in any way constitute an assurance that the U.S. federal income tax consequences described below will be accepted by the IRS or the courts.

The discussion applies only to stockholders who hold Vertro common stock as a capital asset within the meaning of section 1221 of the Code. The discussion assumes that the merger will be completed in accordance with the merger agreement and as further described in this joint proxy statement/prospectus. This discussion is not a complete description of all of the consequences of the merger, and, in particular, this discussion and, specifically, the opinion below, may not address U.S. federal income tax considerations applicable to Vertro stockholders subject to special treatment under U.S. federal income tax law, including, without limitation:

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corporations (or other entities taxable as a corporation for U.S. federal income tax purposes) created or organized outside the U.S.;

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financial institutions, insurance companies, regulated investment companies, and real estate investment trusts;

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mutual funds;

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tax-exempt organizations and entities;

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stockholders who are not citizens or residents of the United States;

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stockholders who hold their stock as part of an integrated investment such as a hedging, straddle, or other risk reduction transaction;

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partnerships, limited liability companies that are not treated as corporations for U.S. federal income tax purposes, subchapter S corporations, and other pass-through entities and investors in such entities;

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estates and trusts;

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dealers, brokers, or traders in securities or foreign currencies;

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U.S. expatriates;

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stockholders who are subject to the alternative minimum tax provisions of the Code;

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stockholders who hold their shares through a pension plan or other qualified retirement plan;

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stockholders who hold individual retirement or other tax-deferred accounts;

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traders in securities who elect to apply mark-to-market method of accounting;

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stockholders who actually or constructively own 5% or more of the outstanding shares of Vertro common stock;

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stockholders who acquired their shares of Vertro common stock pursuant to the exercise of employee stock option, stock purchase plans, vesting of restricted stock units, or otherwise as compensation;

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stockholders holding stock through wash sales;

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stockholders who have a functional currency other than the U.S. dollar; or

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holders of options issued by Vertro that are assumed, replaced, exercised, or converted, as the case may be, in connection with the merger.

In addition, tax consequences arising under state, local and foreign laws or under federal laws other than federal income tax laws, including gift and estate tax laws, are not addressed in this joint proxy statement/prospectus.

Vertro stockholders are strongly urged to consult with their own tax advisors regarding the tax consequences of the merger to them, including the effects of U.S. federal, state, local, foreign and other tax laws.

U.S. Federal Income Tax Consequences of the Merger

The merger is intended to qualify as a reorganization within the meaning of Section 368(a) of the Code. Steven Rosenthal, P.A. is rendering a tax opinion to Inuvo that the merger will constitute a reorganization within the meaning of Section 368(a) of the Code, and Porter, Wright, Morris & Arthur, LLP is rendering a tax opinion to Vertro that the merger will constitute a reorganization within the meaning of Section 368(a) of the Code. Further, Inuvo and Vertro have agreed in the merger agreement to use reasonable best efforts to structure the merger to qualify as a reorganization and not to take any action that would prevent the merger from qualifying as a reorganization under Section 368(a) of the Code. Neither Inuvo or Vertro presently intends to waive these conditions. The tax opinions discussed in this section will be conditioned upon certain assumptions and qualifications stated in the tax opinions and will be based on the truth, accuracy, and completeness, as of the completion of the merger, of certain representations and other statements made by each of Inuvo, Merger Sub, and Vertro, as applicable, in letters delivered to counsel rendering such opinions.

Neither Inuvo nor Vertro will request a ruling from the IRS regarding the tax consequences of the merger. The opinions of counsel do not bind the IRS or courts of law and thus do not prevent the IRS from asserting a contrary position, or a court from upholding any such assertion. In addition, if any of the representations or assumptions upon which the opinions are based are inconsistent with the actual facts, the tax consequences of the merger, and the vitality of the opinions could be adversely affected.

It is the opinion of Steven Rosenthal, P.A. and Porter, Wright, Morris & Arthur, LLP that, subject to the qualifications described above, the merger will be treated for U.S. federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code and that the merger will have the following material U.S. federal income tax consequences:

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Except as provided below, Inuvo, Merger Sub, Vertro and the Inuvo stockholders will recognize no gain or loss solely as a result of the merger;

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Vertro stockholders receiving solely Inuvo common stock will not recognize gain or loss for U.S. federal purposes upon the exchange of their shares of Vertro common stock solely for shares of Inuvo common stock in connection with the merger. However, a Vertro stockholder who receives cash instead of a fractional share of Inuvo common stock either will recognize a capital gain or loss equal to the difference, if any, between such stockholder’s basis in the fractional share and the amount of cash received, or will receive a distribution taxed as a dividend to the extent of current or accumulated earnings and profits. Any capital gain or loss will be long-term capital gain or loss if the holding period for shares of Vertro common stock redeemed for cash instead of the fractional share of Inuvo common stock is more than one year as of the effective date of the merger. The deductibility of capital losses is subject to limitations;

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The holding period of the shares of Inuvo common stock received by a Vertro stockholder in connection with the Merger will include the holding period of the shares of Vertro common stock surrendered in exchange therefor; and

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The aggregate tax basis of the shares of Inuvo common stock that are received by a Vertro stockholder in the merger will be equal to the aggregate tax basis of the shares of Vertro common stock surrendered in exchange therefor, reduced by any amount allocable to a fractional share of Inuvo common stock for which cash is received.

Vertro stockholders who hold shares of Vertro common stock with differing bases or holding periods should consult their tax advisors with regard to identifying the bases or holding periods of the particular shares of Inuvo common stock received in the merger. This opinion speaks only through the date of effectiveness of this joint proxy statement/prospectus.

The discussion of material U.S. federal income tax consequences set forth above is not intended to be a complete analysis or description of all potential U.S. federal income tax consequences of the merger. Moreover, the discussion set forth above does not address tax consequences that may vary with, or are contingent upon, individual circumstances. In addition, the discussion set forth above does not address any non-income tax or any foreign, state or local tax consequences of the merger and does not address the tax consequences of any transaction other than the merger.

Accounting Treatment of the Merger

Inuvo will be the accounting survivor of the merger. In making this determination, various factors were considered, including all the requirements of the Accounting Standards Classification (ASC) paragraphs 805-10-55-11 through 55-15, which applicable factors are summarized below:

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the accounting acquirer usually is the combining entity whose owners as a group retain or receive the largest portion of the voting rights in the combined entity. In determining which group of owners retains or receives the largest portion of the voting rights, an entity shall consider the existence of any unusual or special voting arrangements and options, warrants, or convertible securities;

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the accounting acquirer usually is the combining entity whose single owner or organized group of owners holds the largest non-controlling voting interest in the combined entity;

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the accounting acquirer usually is the combining entity whose owners have the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity;

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the accounting acquirer usually is the combining entity whose former management dominates the management of the combined entity;

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the accounting acquirer usually is the combining entity that pays a premium over the pre-combination fair value of the equity interests of the other combining entity or entities; and

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the accounting acquirer usually is the combining entity whose relative size (measured in, for example, assets, revenues, or earnings) is significantly larger than that of the other combining entity or entities.

The parties did not determine the factors listed in the second and third bullet points above to be conclusive as to the determination of the accounting acquirer; however, the parties relied upon the fact that stockholders of Inuvo would have control of the combined company on a fully-diluted basis, that Inuvo was the larger of the two entities, that Inuvo paid a premium over the pre-combination fair value of the equity interests of Vertro, and that a majority of the senior management team as well as the finance and accounting operations of the combined company would be comprised of current Inuvo employees, in determining the fact that Inuvo was the accounting acquirer pursuant to ASC paragraphs 805-10-55-11 through 55-15.

All unaudited pro forma combined financial information contained in this joint proxy statement/prospectus were prepared using the acquisition method of accounting for business combinations. The final allocation of the purchase price will be determined after the merger is completed and after completion of an analysis to determine the fair value of the assets and liabilities of Vertro’s business. Accordingly, the final purchase accounting adjustments may be materially different from the unaudited pro forma adjustments. Any decrease in the fair value of the assets or increase in the fair value of the liabilities of Vertro’s business as compared to the unaudited pro forma combined financial information included in this joint proxy statement/prospectus will have the effect of increasing the amount of the purchase price allocable to goodwill, if any.

Listing of Inuvo Common Stock

It is a condition to the merger that at or prior to the effective time, the shares of Inuvo common stock that may be issued to Vertro stockholders pursuant to the merger agreement and the shares of Inuvo common stock to be reserved for issuance upon the exercise, vesting, or payment under any converted Vertro stock option or restricted stock unit are approved for listing on the NYSE Amex, subject to official notice of issuance. Shares of Inuvo common stock will continue to be listed on the NYSE Amex under the symbol “INUV.”

Appraisal Rights

Under the NRS and DGCL, respectively, Inuvo stockholders and Vertro stockholders are not entitled to appraisal rights in connection with the merger.

Regulatory Approval

To complete the merger, Inuvo is required to obtain the approval of the listing of the shares of Inuvo common stock to be issued in the merger on the NYSE Amex. Inuvo and Vertro currently are not aware of additional material governmental consents, approvals, or filings that are required prior to the parties’ consummation of the merger, and the merger is not subject to the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. If additional material consents, approvals, or filings are required to complete the merger, it is presently contemplated that such consents, approvals or filings will be sought or made. The parties’ obligations to complete the merger are conditioned upon the absence of any injunction prohibiting the merger.

Inuvo and Vertro will seek to complete the merger in the fourth quarter of Inuvo’s 2011 fiscal year or the first quarter of Inuvo’s 2012 fiscal year. While Inuvo and Vertro currently do not expect any action by a regulatory authority to enjoin or prohibit the merger or otherwise impose conditions upon or changes to the merger, there can be no assurance that there will not be any such actions, conditions or changes, and any such actions, conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on the parties or limiting revenues following the merger.

Litigation Relating to the Merger

THE MERGER AGREEMENT

The following summary describes certain aspects of the merger, including material provisions of the merger agreement. This summary may not include all of the information about the merger agreement that is important to you. The following description of the merger agreement is subject to, and qualified in its entirety by reference to, the merger agreement, which is attached to this joint proxy statement/prospectus as Appendix A and is incorporated by reference in this joint proxy statement/prospectus. We urge you to read the merger agreement carefully and in its entirety.

The merger agreement and the following summary have been included to provide you with information regarding the terms of the merger agreement and are not intended to provide you with any factual information about any party to the merger agreement, including any information about their condition (financial or otherwise). Specifically, although the merger agreement contains representations and warranties of each of Inuvo, Vertro, and Merger Sub, the assertions embodied in those representations and warranties were made for purposes of the merger agreement and the closing conditions under the merger agreement and are subject to qualifications and limitations agreed to by the respective parties in connection with negotiating the terms of the merger agreement, including exceptions and other information contained in the confidential disclosure schedules that the parties exchanged in connection with signing the merger agreement that are not included in this joint proxy statement/prospectus. In addition, certain representations and warranties were made as of a specific date, may be subject to a contractual standard of materiality different from what might be viewed as material to stockholders or may have been used for purposes of allocating risk between the respective parties rather than establishing matters of fact. Moreover, information concerning the subject matter of such representations and warranties may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in public disclosures. Accordingly, you should not look to or rely on such representations and warranties for information about the parties to the merger agreement. You should read the merger agreement together with the other information in this joint proxy statement/prospectus and that we publicly file in reports and statements with the SEC. See the section entitled “Where You Can Find More Information” beginning on page 199.

The Merger

Each of the Inuvo board of directors, the Vertro board of directors and the sole director and sole stockholder of Merger Sub approved the merger agreement, which provides for the merger of Merger Sub with and into Vertro, with Vertro surviving the merger as a wholly owned subsidiary of Inuvo.

Effective Time

The merger will become effective when a certificate of merger is filed with the Delaware Secretary of State (or at a later time as specified in the certificate of merger). Inuvo and Vertro will cause the certificate of merger to be filed on the closing date, which will take place as soon as practicable and, in any event, within three business days of the date of the satisfaction or (to the extent permitted by applicable law) waiver of the parties’ conditions to completion of the merger, or on such other date as agreed to by Inuvo and Vertro. See the section entitled “— Conditions to the Completion of the Merger” beginning on page 98.

Consideration to be Received in the Merger

Upon completion of the merger, each share of Vertro common stock outstanding immediately prior to the effective time of the merger will be canceled and automatically converted into the right to receive 1.546 fully paid and non-assessable shares of Inuvo common stock, plus any cash payable in respect of any fractional shares of Inuvo common stock, as described below in the section entitled “— Fractional Shares” beginning on page 86.

After the merger is effective, each holder of a certificate or book entry position formerly representing shares of Vertro common stock will no longer have any rights as a stockholder of Vertro with respect to the shares, except for the right to receive the merger consideration.

Adjustments

The exchange ratio will be appropriately adjusted if, at any time between the signing of the merger agreement and the effective time of the merger, there is any change in the number or class of the outstanding shares of Inuvo or Vertro, by reason of any stock split, reverse stock split, stock dividend, reorganization, recapitalization, reclassification or other like change with a record date during that period.

Dividends and Distributions

No dividends or other distributions declared or made after the effective time of the merger on shares of Inuvo common stock with a record date after such effective time will be paid to Vertro stockholders, until such stockholder surrenders his, her, or its shares of Vertro common stock for exchange.

Fractional Shares

Inuvo will not issue any fractional shares of Inuvo common stock in connection with the merger. Instead, each holder of shares of Vertro common stock who would otherwise be entitled to receive a fraction of a share of Inuvo common stock (after aggregating all shares of Inuvo common stock held by such holder) will receive cash, without interest, in an amount equal to the fraction multiplied by the closing price of a share of Inuvo common stock on the NYSE Amex on the last trading day immediately preceding the closing date of the merger.

Conversion of Shares; Exchange Procedures

The conversion of shares of Vertro common stock into the right to receive the merger consideration will occur automatically at the effective time of the merger. No later than the mailing of this joint proxy statement/prospectus, Inuvo will select an exchange agent reasonably satisfactory to Vertro to exchange certificates or book entries, as applicable, which immediately prior to the effective time of the merger represented shares of Vertro common stock, for the applicable shares of Inuvo common stock to be issued to Vertro stockholders.

On or prior to the effective time of the merger, Inuvo will deposit such shares of Inuvo common stock constituting the merger consideration with the exchange agent. From time to time after the effective date of the merger, as necessary, Inuvo will also make available cash in an amount sufficient to pay cash in lieu of fractional shares of Inuvo common stock, and, if required pursuant to the merger agreement, any dividends or distributions on Inuvo common stock with a record date after the completion of the merger.

Promptly following the effective time of the merger, the exchange agent will mail to each record holder of Vertro common stock a letter of transmittal and instructions for surrendering the record holder’s stock certificates in exchange for certificates representing the Inuvo common stock issuable to each such holder pursuant to the merger. Those holders of Vertro common stock who properly surrender their Vertro stock certificates (or uncertificated stock) in accordance with the exchange agent’s instructions will receive (a) the Inuvo common stock issuable to each such holder pursuant to the merger, (b) cash, without interest, in lieu of any fractional shares of Inuvo common stock issuable to any such holders, and (c) dividends or other distributions, if any, to which they are entitled under the terms of the merger agreement. Following the completion of the merger, Vertro will not register any transfers of Vertro common stock on its share transfer books.

Inuvo, Merger Sub, and the exchange agent will each be entitled to deduct and withhold from the merger consideration and from any cash dividends or other distributions, if any, to which a holder is entitled under the terms of the merger agreement such amounts as it is required to deduct or withhold under any United States federal, state, local, or foreign tax law. If Inuvo, Merger Sub, or the exchange agent withholds any amounts, these amounts will be treated for all purposes of the merger as having been paid to the stockholders from whom they were withheld.

Any portion of the merger consideration payable pursuant to the merger agreement and supplied to the exchange agent which remains unclaimed by the holders of Vertro common stock for 12 months after the

effective time of the merger will be returned to Inuvo upon demand. Thereafter, a holder of Vertro common stock must look only to Inuvo for payment of the applicable merger consideration to which the holder is entitled under the terms of the merger agreement.

Lost Certificates

If a certificate representing shares of Vertro common stock has been lost, stolen or destroyed, the exchange agent will issue the merger consideration properly payable under the merger agreement upon receipt of an affidavit as to that loss, theft or destruction, and if required by Inuvo, the delivery of a bond in such amount as Inuvo or the exchange agent may reasonably direct as indemnity.

Treatment of Stock Options and Restricted Stock Units

Each converted stock option may be exercised solely to purchase Inuvo common stock. The number of shares of Inuvo common stock issuable upon exercise of such converted option will be equal to the number of shares of Vertro common stock that were issuable upon exercise under the corresponding Vertro option immediately prior to the effective time of the merger multiplied by the exchange ratio, rounded down to the nearest whole share. The per share exercise price under the converted option will be the per share exercise price of the corresponding Vertro stock option immediately prior to the effective time divided by the exchange ratio, rounded up to the nearest whole cent.

The number of shares of Inuvo common stock issuable in respect of converted restricted stock units will be equal to the number of shares of Vertro common stock in respect of such corresponding Vertro restricted stock unit immediately prior to the effective time of the merger multiplied by the exchange ratio, rounded down to the nearest whole share.

Certificate of Incorporation and Bylaws of the Surviving Corporation

At the effective time of the merger, each of the certificate of incorporation and bylaws of Merger Sub as in effect immediately prior to the effective time will be the certificate of incorporation and bylaws of the surviving company until amended in accordance with their respective provisions and applicable law.

Directors and Executive Officers of the Surviving Corporation

The merger agreement provides that the officers of Vertro immediately prior to the effective time of the merger will be the officers of the surviving entity of the merger, and the sole director of Merger Sub immediately prior to the effective time of the merger will be the sole director of the surviving entity of the merger.

Inuvo Board of Directors

The merger agreement provides that Inuvo will increase the size of its board of directors from five members to seven members. In addition, Inuvo agrees to secure the resignation of two of its five current directors prior to the effective time of the merger. Inuvo has agree to appoint three members of Vertro’s current board, Mr. Corrao, Dr. Goldberg, and Mr. Durrett, to fill three of the vacancies that will exist on the Inuvo board of directors immediately prior to the effective time. Prior to closing, Inuvo and Vertro mutually agree to select a seventh member to fill the fourth vacancy that will exist on the Inuvo board of directors immediately prior to the effective time.

Representations and Warranties

The merger agreement contains representations and warranties made by each of Inuvo and Merger Sub, on the one hand, and Vertro, on the other hand. These representations and warranties were made for the purposes, and subject to the qualifications, limitations and exceptions, described in the introduction to this section.

The merger agreement contains representations and warranties of Inuvo as to, among other things:

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qualification, organization, and subsidiaries;

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capital structure;

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corporate authority and no violations;

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SEC reports and financial statements;

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no undisclosed liabilities;

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absences of certain changes or events;

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investigations and litigation;

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compliance with law and permits;

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tax matters;

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employee benefit plans;

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employment and labor matters;

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environmental laws and regulation;

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real property;

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personal property;

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insurance;

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intellectual property;

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material contracts;

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affiliate transactions;

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required vote of the Inuvo stockholders;

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anti-takeover statutes;

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finders or brokers;

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the opinion of Craig-Hallum;

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ownership of Vertro common stock;

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no additional representations;

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ownership and operations of Merger Sub; and

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Inuvo’s stockholder rights plan.

The merger agreement contains representations and warranties made by Vertro as to, among other things:

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qualification, organization, and subsidiaries;

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capital structure;

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corporate authority and no violations;

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SEC reports and financial statements;

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no undisclosed liabilities;

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absences of certain changes or events;

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investigations and litigation;

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compliance with law and permits;

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tax matters;

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employee benefit plans;

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employment and labor matters;

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environmental laws and regulation;

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real property;

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personal property;

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insurance;

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intellectual property;

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material contracts;

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affiliate transactions;

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required vote of the Vertro stockholders;

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antitakeover statutes and rights plan;

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the opinion of America’s Growth Capital;

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finders or brokers;

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ownership of Inuvo common stock; and

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no additional representations.

Certain representations and warranties of Inuvo and Vertro are qualified as to materiality or as to “material adverse effect.” With respect to Inuvo, a “material adverse effect,” means an event, change, development, state of facts, condition or occurrence that individually, or in the aggregate, is or would reasonably be expected to be, materially adverse to the business, condition (financial or otherwise), assets, liabilities, operations or results of operations of Inuvo and its subsidiaries, taken as a whole, or prevents the consummation of the merger or the ability of Inuvo to consummate the transactions contemplated by the merger. The occurrence of certain events on Inuvo’s disclosure schedule will also be deemed an Inuvo material adverse effect. None of the following will be deemed material or is considered to be a material adverse effect with respect to Inuvo:

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changes generally affecting the economy, financial or securities markets in the United States, or elsewhere in the world;

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changes affecting the industry or industries in which Inuvo or its subsidiaries operate generally or in any specific jurisdiction or geographic area to the extent such changes do not adversely affect Inuvo or its subsidiaries in a disproportionate manner;

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any action taken at the written request of Vertro or with the written consent of Vertro;

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any adoption, implementation, promulgation, repeal, modification, reinterpretation, change or proposal of any rule, regulation, ordinance, order, protocol or other applicable law by any applicable governmental entity;

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changes in generally accepted accounting principles or requirements or interpretations thereof;

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acts or war, commencement, continuation or escalation of war, acts of armed hostility, sabotage or terrorism;

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any decline in the market price or change in trading volume of the Inuvo common stock (unless due to a change or event that would separately constitute a material adverse effect with respect to Inuvo);

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any change resulting from or arising out of the identity of, or any facts or circumstances relating to Vertro or its subsidiaries; and

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any failure by Inuvo to meet any internal or published industry analyst projections or forecasts or estimates of revenues or earnings for any periods (unless due to a change or event that would separately constitute a material adverse effect with respect to Inuvo).

With respect to Vertro, a “material adverse effect,” means an event, change, development, state of facts, condition or occurrence that individually, or in the aggregate, is or would reasonably be expected to be, materially adverse to the business, condition (financial or otherwise), assets, liabilities, operations or results of operations of Vertro and its subsidiaries, taken as a whole, or prevents the consummation of the merger or the ability of Vertro to consummate the transactions contemplated by the merger. The occurrence of certain events on Vertro’s disclosure schedule will also be deemed a Vertro material adverse effect. None of the following will be deemed material or is considered to be a material adverse effect with respect to Vertro:

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changes generally affecting the economy, financial or securities markets in the United States, or elsewhere in the world;

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changes affecting the industry or industries in which Vertro or its subsidiaries operate generally or in any specific jurisdiction or geographic area to the extent such changes do not adversely affect Vertro or its subsidiaries in a disproportionate manner;

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any action taken at the written request of Inuvo or Merger Sub or with the written consent of Inuvo or Merger Sub;

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changes in generally accepted accounting principles or requirements or interpretations thereof;

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acts or war, commencement, continuation or escalation of war, acts of armed hostility, sabotage or terrorism;

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any decline in the market price or change in trading volume of the Vertro common stock (unless due to a change or event that would separately constitute a material adverse effect with respect to Vertro);

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any change resulting from or arising out of the identity of, or any facts or circumstances relating to Inuvo, Merger Sub, or their respective subsidiaries; and

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any failure by Vertro to meet any internal or published industry analyst projections or forecasts or estimates of revenues or earnings for any periods (unless due to a change or event that would separately constitute a material adverse effect with respect to Vertro).

Covenants Relating to Conduct of Business Prior to the Merger

Vertro has undertaken certain covenants that place restrictions on it and its subsidiaries until the effective time of the merger. In general, unless contemplated by the merger agreement or consented to by Inuvo, Vertro and its subsidiaries have agreed to conduct their business in the ordinary course and consistent with past practice and to use commercially reasonable efforts to preserve intact their present business organizations, to keep available the services of their key officers and employees, to preserve their assets and properties, to preserve their relationships with governmental entities, customers and suppliers and other having significant business dealings

with them and to comply in all material respects with all applicable laws, orders and permits applicable to them. In addition, unless contemplated by the merger agreement or consented to by Inuvo, and except for certain permitted transactions among Vertro and its subsidiaries set forth in the merger agreement, Vertro has agreed to certain restrictions limiting its and its subsidiaries’ ability to, among other things:

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adopt any amendments to its certificate of incorporation or bylaws or similar applicable governing documents;

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declare, set aside, or pay any dividends on or make any distributions in respect of its capital stock;

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split, combine, reclassify, issue or authorize any of its capital stock;

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adopt a complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization, or enter into a letter of intent or agreement in principle with respect thereto;

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redeem, repurchase, defease, cancel or otherwise acquires any indebtedness for borrowed money of Vertro or any of its subsidiaries, other than at or within 120 days of stated maturity and except for required amortization payments and mandatory prepayments;

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acquire or agree to acquire any person or assets for consideration valued in excess of $100,000 individually or $500,000 in the aggregate;

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make any capital expenditures except for capital expenditures made in accordance with Vertro’s ordinary course of business and consistent with past practices or capital expenditures required by applicable law or governmental entities or incurred in connection with the repair or replacement of facilities destroyed or damaged due to casualty or accident;

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sell, lease, exchange, mortgage, pledge, transfer or otherwise dispose of any person, facilities or other assets, except for dispositions of certain obsolete equipment or assets, dispositions in amounts less than $100,000 individually or $500,000 in the aggregate, and pledges and mortgages of property acquired by Vertro as required pursuant to Vertro debt instruments;

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except in the ordinary course of business consistent with past practice, increase the compensation or other benefits payable or provided to Vertro’s executive officers, directors, managers or employees, enter into or amend any employment, change of control, severance, or retention agreement with any current or future employee of Vertro, or establish, adopt or enter into, accelerate any rights or benefits under, or amend any plan, policy, program or arrangement for the benefit of any current or former directors, officer or employee;

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enter into, accelerate any rights or benefits under, amend or renew any agreements with labor unions;

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increase its employee headcount in the aggregate by more than 10% of the headcount projected in Vertro’s budget or reduce the number of employees in a manner which would implicate the WARN Act or any state or local laws requiring notice with respect to layoffs or terminations;

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issue, sell, pledge dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in Vertro or its subsidiaries or any securities convertible into or exchangeable for any such shares or ownership interest, or any rights, warrants or options to acquire or with respect to any such shares of capital stock, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan, other than (i) issuance of shares of Vertro common stock and settlement of Vertro restricted stock units outstanding on the date of the merger agreement, (ii) the sale of shares of Vertro common stock pursuant to the exercise of options exercisable into, or the vesting of awards with respect to, Vertro common stock, (iii) to purchase Vertro common stock if necessary to effectuate the withholding of taxes, and (iv) the grant of equity compensation awards in the ordinary course of business in accordance with customary compensation practices (provided that any such awards granted after the date of merger agreement shall be on terms pursuant to which such awards shall not vest or accelerate as a result of the merger or the closing);

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to purchase redeem or otherwise acquire any shares of capital stock of Vertro or its subsidiaries or any rights or options to acquire any such shares, other than pursuant to the terms of Vertro benefit plans or the express terms of a Vertro equity award;

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create, incur, assume, suffer to exist, or otherwise be liable with respect to any indebtedness for borrowed money or guarantees thereof or enter into any “keep well” or other agreement to maintain any financial condition of any other person or enter into any arrangement having the economic affect of any of the foregoing or issue or sell any debt securities other than in the ordinary course of business consistent with past practice on terms that allow prepayment at any time without penalty or in connection with a refinancing of existing indebtedness as contemplated by the financial budgets of Vertro;

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materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other materials terms for financial accounting purposes, except as required by GAAP, SEC rule or policy, or applicable law;

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initiate, settle or compromise any claim, action or proceeding relating to a material amount of taxes, make, change or revoke any material tax election, change any method of tax accounting that is not required by GAAP, file any material amended tax return or claim for refund of a material amount of taxes, enter into any closing agreement affecting any material tax liability or refund of a material amount of taxes, or extend or waive the application of any statute of limitations regarding the assessment or collection of any material taxes;

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pay or settle any material legal proceedings, other than payments or settlements that do not exceed $250,000 in the aggregate in any consecutive 12-month period, that have become due and payable prior to the date hereof or that are reflected or reserved against in, or contemplated by, the most recent financial statements of Vertro (in amounts not in excess of the amounts so reflected, reserved or contemplated); provided, that the first two exceptions set forth above shall not apply to any proceedings arising out of or related to the merger agreement or the transactions contemplated by the merger agreement and provided that neither Vertro or its subsidiaries shall settle or agree to settle any legal action which settlement involves a conduct remedy or injunction or similar relief or has a restrictive imposition on Vertro’s business;

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enter into any new line of business, except in the ordinary course of business consistent with past practice and except for the expansion of Vertro’s retail business;

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maintain with financially responsible insurance companies (or through self-insurance not inconsistent with such party’s past practice), insurance in such amounts and against such risks and losses as are reasonable for the nature of the property so insured and consistent with past practice;

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enter into, terminate or materially modify or amend any contract that is or would be a Vertro material contract to the extent permitted by applicable laws;

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enter into or amend any contract, or take any other action, if such contract, amendment of a contract or action would reasonably be expected to prevent or materially impede, interfere with, hinder or delay the consummation of the merger and the transactions contemplated by the merger agreement; and

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agree or commit, in writing or otherwise, to take any of the foregoing action.

Inuvo has also undertaken certain covenants that place restrictions on it and its subsidiaries until the effective time of the merger. In general, unless contemplated by the merger agreement or consented to by Vertro, Inuvo has agreed that Inuvo and its subsidiaries will conduct their business in the ordinary course and use their reasonable best efforts to preserve intact their present business organizations and assets, maintain their rights, franchises, licenses and other authorizations issued by governmental authorities and preserve their relationships with employees, customers, suppliers and others having business dealings with them to the end that their goodwill and ongoing businesses will not be impaired in any material respect at the closing of the merger. In

addition, unless contemplated by the merger agreement or consented to by Vertro, and except for certain permitted transactions among Inuvo and its subsidiaries set forth in the merger agreement, Inuvo has agreed to certain restrictions limiting its and its subsidiaries ability to, among other things:

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adopt any amendments to its articles of incorporation or bylaws or similar applicable governing documents;

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declare, set aside, or pay any dividends on or make any distributions in respect of its capital stock;

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split, combine, reclassify, issue or authorize any of its capital stock;

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redeem, repurchase, defease, cancel or otherwise acquires any indebtedness for borrowed money of Inuvo or any of its subsidiaries, other than at or within 120 days of stated maturity and except for required amortization payments and mandatory prepayments;

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acquire or agree to acquire any person or assets for consideration valued in excess of $100,000 individually or $500,000 in the aggregate;

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make any capital expenditures except for capital expenditures made in accordance with Inuvo’s ordinary course of business and consistent with past practices or capital expenditures required by applicable law or governmental entities or incurred in connection with the repair or replacement of facilities destroyed or damaged due to casualty or accident;

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sell, lease, exchange, mortgage, pledge, transfer or otherwise dispose of any person, facilities or other assets, except for dispositions among Inuvo and its wholly owned subsidiaries, dispositions of certain obsolete equipment or assets, dispositions in amounts less than $100,000 individually or $500,000 in the aggregate, and pledges and mortgages of property acquired by Inuvo as required pursuant to Inuvo debt instruments;

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except in the ordinary course of business consistent with past practice, increase the compensation or other benefits payable or provided to Inuvo’s executive officers, directors, managers or employees, enter into or amend any employment, change of control, severance, or retention agreement with any current or future employee of Inuvo, or establish, adopt or enter into, accelerate any rights or benefits under, or amend any plan, policy, program or arrangement for the benefit of any current or former directors, officer or employees;

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enter into, accelerate any rights or benefits under, amend or renew any agreements with labor unions;

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increase its employee headcount in the aggregate by more than 10% of the headcount project in Inuvo’s budget or reduce the number of employees in a manner which would implicate the WARN Act or any state or local laws requiring notice with respect to layoffs or terminations;

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issue, sell, pledge dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in Inuvo or its subsidiaries or any securities convertible into or exchangeable for any such shares or ownership interest, or any rights, warrants or options to acquire or with respect to any such shares of capital stock, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan, other than (i) issuance of shares of Inuvo common stock and settlement of Inuvo restricted stock units outstanding on the date of the merger agreement, (ii) the sale of shares of Inuvo common stock pursuant to the exercise of options exercisable into, or the vesting of awards with respect to, Inuvo common stock, (iii) to purchase Inuvo common stock if necessary to effectuate the withholding of taxes, and (iv) the grant of equity compensation awards in the ordinary course of business in accordance with customary compensation practices (provided that any such awards granted after the date of merger agreement shall be on terms pursuant to which such awards shall not vest or accelerate as a result of the merger or the closing);

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to purchase redeem or otherwise acquire any shares of capital stock of Inuvo or its subsidiaries or any rights or options to acquire any such shares, other than pursuant to the terms of Inuvo benefit plans or the express terms of a Inuvo equity award;

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pay or settle any material legal proceedings, other than payments or settlements that do not exceed $250,000 in the aggregate in any consecutive 12-month period, that have become due and payable prior to the date hereof or that are reflected or reserved against in, or contemplated by, the most recent financial statements of Inuvo (in amounts not in excess of the amounts so reflected, reserved or contemplated); provided, that the first two exceptions set forth above shall not apply to any proceedings arising out of or related to the merger agreement or the transactions contemplated by the merger agreement and provided that neither Inuvo or its subsidiaries shall settle or agree to settle any legal action which settlement involves a conduct remedy or injunction or similar relief or has a restrictive imposition on Inuvo’s business;

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enter into any new line of business, except in the ordinary course of business consistent with past practice and except for the expansion of Inuvo’s retail business;

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enter into, terminate or materially modify or amend any contract that is or would be a Inuvo material contract to the extent permitted by applicable laws;

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agree or commit, in writing or otherwise, to take any of the foregoing action.

Investigation; Confidentiality

Inuvo and Vertro each agree to afford to the representatives of the other reasonable access to all properties, books, contracts, records and employees and make available to each other such information concerning its business, properties and personnel as such other party may reasonably request. Neither party is required to provide access or disclose information where such access or disclosure would contravene any law or binding

agreement, result in disclosure of any trade secrets or confidential strategic analyses, or jeopardize any applicable privilege. The parties have agreed to hold such information that is nonpublic in confidence and to act to preserve any applicable privilege with respect to such information.

No Solicitation of Alternative Proposals

Each of Inuvo and Vertro has agreed to certain limitations of their ability to take action with respect to other acquisition transactions. Except as set forth below, each of Inuvo and Vertro has agreed that neither of them will, and they will not cause any of their subsidiaries, or any directors, officers, employees, affiliates, agents or representatives to, solicit, initiate, seek or knowingly encourage, or knowingly take any other action designed to facilitate any inquiries or the making or submission of an acquisition proposal as described below. In addition, Inuvo and Vertro may not engage in or have any discussion with or provide any confidential information or data to any person relating to an acquisition proposal, engage in any negotiations with respect to an acquisition proposal. Inuvo and Vertro may not approve, indorse or recommend, or execute or enter into, any letter of intent, agreement in principle, merger agreement, asset purchase, stock purchase, or share exchange agreement, option or similar agreement related to any acquisition proposal.

Under the merger agreement, an “acquisition proposal” means bona fide offer, inquiry, proposal or indication of interest received from a third party (other than an offer, inquiry, proposal or indication of interest by a party to the merger agreement) relating to any transaction or series of transactions involving any merger, consolidation, share exchange, recapitalization, business combination or similar transaction involving either Inuvo or Vertro, any direct or indirect acquisition of securities, tender offer, exchange offer or other similar transaction in which a person or group of persons directly or indirectly acquires beneficial or record ownership of securities representing 20% or more of any class of equity securities of Inuvo or Vertro, any direct or indirect acquisition of any business or businesses or of assets that constitute or account for 20% or more of the consolidated net revenues, net income or assets of Inuvo or Vertro, and their respective subsidiaries, taken as a whole, or any liquidation or dissolution of Inuvo or Vertro or any of their respective subsidiaries.

Notwithstanding these limitations, prior to the time that each of Inuvo and Vertro’ respective stockholders adopt the merger agreement, in response to an unsolicited, bona fide written acquisition proposal or an unsolicited inquiry relating to an acquisition proposal by a person that the board of directors determines is credible and reasonably capable of making a superior offer, that did not result from a breach of any non-solicitation covenants, and if Inuvo or Vertro, as the case may be, such party may:

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furnish information to the person and its representatives making the acquisition proposal; and

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participate in discussions or negotiations with the person and its representatives making such acquisition proposal;

provided, that such party:

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will not disclose any information to such person without first entering into a confidentiality agreement on terms no less favorable than the existing confidentiality agreement between Inuvo and Vertro; and

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will provide promptly to Inuvo or Vertro, as the case may be, any information provided to such third party which was not provided to Inuvo or Vertro, as the case may be.

In addition, Inuvo or Vertro, as applicable, may take and disclose to its stockholders a position contemplated by Rule 14d-9 and Rule 14e-2 under the Exchange Act with regard to any acquisition proposal. Neither Inuvo nor Vertro may change its recommendation to its stockholders, or make any public statement that it intends to take such action, unless:

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an acquisition proposal is made to such party by a third party and such offer is not withdrawn;

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such party’s board of directors determines after consultation with its financial advisors that such acquisition proposal constitutes a superior offer;

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such party’s board of directors determines, after consultation with outside legal counsel, that failure to change its recommendation or take such other action would reasonably be expected to be inconsistent with its fiduciary duties under applicable law; and

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prior to effecting a change in recommendation, such party has provided to the other party five business days prior written notice of its intentions and, if requested by the other party, has negotiated in good faith with the other party during such period regarding revisions to the merger agreement that would avoid such change of recommendation or termination.

Each of Inuvo and Vertro must notify the other party of any acquisition proposal received by it, and any information related to an acquisition proposal requested from it, or any discussion or negotiations by such party or its representatives.

Under the merger agreement, “superior proposal” means any bona fide written acquisition proposal (as defined above, except all references to “20%” are deemed to be a reference to “50%”), which the party’s board of directors concludes in good faith, after consultation with its financial advisors and legal counsel, taking into account the legal, financial, regulatory, timing and other aspects of the proposal and the person making the proposal is more favorable to Inuvo or Vertro, as the case may be, and its stockholders, than the transaction contemplated by the merger agreement.

Preparation of Joint Proxy Statement/Prospectus and Registration Statement

Inuvo and Vertro will use reasonable best efforts to have the Form S-4 registration statement of which this joint proxy statement/prospectus is a part declared effective as promptly as practicable, and will mail the joint proxy statement/prospectus to Inuvo and Vertro stockholders. Inuvo and Vertro will generally cooperate on all matters related to the preparation and filing of this joint proxy statement/prospectus.

Stockholders’ Meetings and Board of Directors’ Recommendations

Each of Inuvo and Vertro will, as promptly as practicable after the Form S-4 registration statement of which this joint proxy statement/prospectus is a part is declared effective under the Securities Act, take all action necessary in accordance with applicable laws and their respective organizational documents, and duly give notice of, convene and hold a meeting of its stockholders to consider the proposals discussed in this joint proxy statement/prospectus.

Except in the case of a permitted change of the recommendation by the Vertro board of directors, Vertro will, through its board of directors, recommend that its stockholders approve the proposals discussed in this joint proxy statement/prospectus and will use reasonable best efforts to solicit from its stockholders proxies in favor of the approval of the proposals in accordance with applicable laws. Except in the case of a permitted change of the recommendation by the Inuvo board of directors, Inuvo will, through its board of directors, recommend that its stockholders approve the proposals discussed in this joint proxy statement/prospectus and will use reasonable best efforts to solicit from its stockholders proxies in favor of the approval of the proposals in accordance with applicable laws.

Each of Inuvo and Vertro will use reasonable best efforts to hold their respective special meeting of stockholders on the same date as the other party.

Employee Matters

For purposes of vesting, eligibility to participate and accrual and level of benefits under the employee benefit plans of Inuvo and its subsidiaries providing benefits to any Vertro employees after the effective time of the merger, each new Inuvo employee shall be credited for his or her years of service with Vertro and its subsidiaries and their respective predecessors before the effective time of the merger, to the same extent as Inuvo

employee was entitled, before the effective time of the merger, to credit for such service under any similar Vertro employee benefit plan in which such Vertro employee participated or was eligible to participate immediately prior to the effective time of the merger.

Certain Payments Under the Inuvo Deferred Compensation Program

Inuvo has agreed that it will use reasonable best efforts to cause all amounts due under Inuvo’s deferred compensation program to be paid in Inuvo common stock, based on the fair market value of Inuvo common stock on the date paid, on or prior to the effective time of the merger; provided, however, that Inuvo shall not be required to pay any amount in Inuvo common stock to the extent that shares are not available at such time of payment under the existing Inuvo registration statements on Form S-8 as of the date of the merger agreement; provided, further, that to the extent payments cannot be made in Inuvo common stock due to the previous clause, Inuvo agrees to use reasonable best efforts to delay such payments in Inuvo common stock, until an effective registration statement on Form S-8 is filed after the effective time of the merger. Inuvo has also agreed, covenanted, represented, and warranted that all bonuses granted by Inuvo that are payable in Inuvo common stock, but have not been paid in Inuvo common stock prior to the date of the merger agreement, whether or not vested, are valued based on the fair market value of Inuvo common stock on the date of payment.

Certain Payments Under the Vertro 2011 Bonus Program

Vertro has agreed to use reasonable best efforts to cause any payments due, if any, under the its 2011 Bonus Program to be paid to the recipients in Vertro common stock in lieu of cash, based on the fair market value of Vertro common stock on the date paid; provided, however, Vertro shall not be required to pay any amount in Vertro common stock to the extent that shares are not available at such time of payment under existing Vertro Registration Statements on Form S-8 as of the date of the merger agreement.

Reasonable Best Efforts

Each party to the merger agreement agrees to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by the merger agreement.

Public Announcements

The parties agreed to develop a joint communications plan related to the merger and the other transactions contemplated thereby and, except as would be required by law or rules of the NYSE Amex or NASDAQ or where it is impractical, to consult with each other before issuing any press release or otherwise making any public statement with respect to the merger agreement or the transactions contemplated thereby.

Indemnification of Directors and Officers

From and after the effective time of the merger, Inuvo shall cause the surviving corporation to indemnify and hold harmless, and provide advancement of expenses to, all past and present directors, officers, and employees of Vertro against all claims and liabilities arising out of acts or omissions in their capacity as directors, officers, or employees of Vertro or any subsidiary occurring at or prior to the effective time of the merger to the same extent such persons are indemnified or have a right to advancement of expenses as of the date of the merger agreement by Vertro pursuant to Vertro’ certificate of incorporation, bylaws, or indemnification agreements in existence on the date of the merger agreement.

For six years following the effective time of the merger, Inuvo will purchase and maintain a “tail” directors’ and officers’ liability insurance policy for the persons who, as of the date of the merger agreement or as of the effective time of the merger, are covered by Vertro’ existing directors’ and officers’ liability insurance, with

respect to claims arising from facts or events which occurred at or before the effective time of the merger, with substantially the same coverage and amounts and terms and conditions as the existing policies of directors’ and officers’ liability insurance maintained by Vertro, provided that Inuvo shall not be required to pay annual premiums in excess of 200% of the latest annual premium paid by Vertro prior the date of the merger agreement.

NYSE Amex Listing

As a condition to the closing, Inuvo will cause the shares of Inuvo common stock that are to be issued in the merger and reserved for issuance upon exercise, vesting or payment under any Vertro stock option or restricted stock unit to be assumed by Inuvo or the surviving corporation, to be approved for listing on the NYSE Amex, subject to official notice of issuance, prior to the effective time of the merger.

Notification of Certain Matters

The parties have agreed to notify each other of the occurrence or failure to occur of any event which occurrence or failure to occur would be reasonably likely to cause the failure of any closing conditions to the merger.

Prior to the effective time of the merger, Inuvo and Vertro shall use their reasonable best efforts to approve in advance any dispositions of shares of Vertro common stock or acquisition of Inuvo common stock in connection with the merger by each individual who is subject to the reporting requirements of section 16(a) of the Exchange Act with respect to Vertro or will become subject to such reporting requirements with respect to Inuvo, to be exempt under Rule 16b-3 promulgated under the Exchange Act.

Rights Plan

Inuvo has agreed to take all further action necessary in order to render the rights granted under Inuvo’s stockholder rights plan to be inapplicable to the merger and the transactions contemplated by the merger agreement.

Cooperation with Financing

Inuvo has delivered to Vertro copies of a letter of intent from Bridge Bank, under which Bridge Bank proposes certain financing of the combined company. Inuvo has covenanted to use its reasonable best efforts to cause the financing contemplated by Bridge Bank, or in the event such financing is unavailable, alternate financing on terms and conditions no less favorable in the aggregate, to be available at closing. Vertro has agreed to provide reasonable best efforts to cooperate in connection with arrangement of such financing.

Fees and Expenses

All costs and expenses incurred in connection with the merger agreement and the transactions contemplated thereby will be paid by the party incurring such expenses whether or not the merger is consummated.

Conditions to Completion of the Merger

Pursuant to the merger agreement, each party’s obligation to effect the merger is subject to the satisfaction or waiver (to the extent permitted by applicable law) of the following conditions:

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Vertro will have obtained the requisite stockholder approval for the adoption of the merger agreement and the approval of the merger;

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Inuvo will have obtained the requisite stockholder approval for the issuance of shares of Inuvo common stock to Vertro stockholders in the merger, the Certificate of Amendment to the Inuvo Amended Articles of Incorporation, and the amendment to the 2010 Equity Compensation Plan;

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the shares of Inuvo common stock to be issued in the merger or pursuant to Vertro stock options or restricted stock units to be assumed by Inuvo in the merger will have been approved for listing on the NYSE Amex, subject to official notice of issuance;

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this registration statement on Form S-4 of which the joint proxy statement/prospectus is a part will have become effective under the Securities Act, and no stop order or similar restraining order by the SEC suspending the effectiveness of the Form S-4 will be in effect;

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Inuvo shall have entered into certain employment agreements; and

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Inuvo shall have received financing on terms proposed by Bridge Bank prior the signing of the merger agreement or alternate financing on terms no less favorable in the aggregate.

Inuvo and Merger Sub’s obligations to complete the merger are also subject to the satisfaction or waiver (to the extent permitted by applicable law) of the following conditions:

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the following representations and warranties made by Vertro must be true and correct in all respects as of the effective time of the merger:

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capital stock;

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corporate authority;

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required vote of Vertro stockholders; and

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antitakeover statues and rights plans.

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all other representations made by Vertro must be true and correct as of the effective time of the merger as if made at and as of the effective time (except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties must be true and correct as of such earlier date), except where the failure of such representations and warranties to be so true and correct as of the effective time would not, individually or in the aggregate, have or reasonably be expected to have a material adverse effect on Vertro;

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Vertro will have performed in all material respects the obligations and agreements and complied in all material respects with the covenants to be performed and complied with by it under the merger agreement prior to the closing (and Inuvo will have received an executed officer’s certificate of Vertro to that effect);

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a material adverse effect with respect to Vertro shall not have occurred; and

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Vertro shall have received a certain third party consent.

Vertro’ obligations to complete the merger are also subject to the satisfaction or waiver (to the extent permitted by applicable law) of the following conditions:

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the following representations and warranties made by Inuvo and Merger Sub must be true and correct in all respects as of the effective time of the merger:

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capital stock;

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corporate authority;

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required vote of Inuvo stockholders; and

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antitakeover statues and rights plans.

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all other representations made by Inuvo and Merger Sub must be true and correct as of the effective time of the merger as if made at and as of the effective time (except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties must be true and correct in all material respects as of such earlier date), except where the failure of such representations and warranties to be so true and correct as of the effective time would not, individually or in the aggregate, have or reasonably be expected to have a material adverse effect on Inuvo;

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Inuvo and Merger Sub will have performed in all material respects the obligations and agreements and complied in all material respects with the covenants to be performed and complied with by them under the merger agreement prior to the closing (and Vertro will have received an executed officer’s certificate of Inuvo to that effect);

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a material adverse effect with respect to Inuvo shall not have occurred; and

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Inuvo shall have received a certain third party consent.

Termination

Under the terms of the merger agreement, the merger agreement may be terminated at any time prior to the effective time of the merger whether before or after the Inuvo and/or Vertro stockholder approvals have been obtained, under the following circumstances:

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by written mutual consent of Inuvo and Vertro;

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by either Inuvo or Vertro, upon written notice to the other, if the merger has not been consummated on or before May 16, 2012; provided that such right will not be available to any party whose failure to perform or comply with any material provision of the merger agreement has been the cause of or resulted in the failure of the effective time of the merger to occur on or before such date;

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by either Inuvo or Vertro, upon written notice to the other, if a governmental entity shall have issued a judgment, injunction, order or decree permanently restraining, enjoining or otherwise prohibiting the merger or other transactions contemplated by the merger agreement, and such