Filed pursuant to Rule 424(b)(5)
Registration No. 333-252358
PROSPECTUS SUPPLEMENT
(To Prospectus dated February 16, 2021)
Up to $10,000,000 of Shares of Common Stock
AiAdvertising , Inc. is offering up to
$10,000,000 in shares of our common stock to GHS Investments, LLC (“GHS”) under a purchase agreement entered into on
March 28, 2022 (the “Purchase Agreement”). GHS may be deemed to be an “underwriter” within the meaning of
Section 2(a)(11) of the Securities Act. At any time until March 28, 2023, subject to the terms of the Purchase Agreement, the Company
shall have the right, but not the obligation, to direct the Investor by its delivery to the Investor of a Purchase Notice from time
to time, to purchase a minimum of ten thousand dollars ($10,000) worth of shares and up to a maximum of the lower of: (1) one
hundred percent (100%) of the average daily trading dollar volume for the Company’s common stock during the ten Trading Days
preceding the Purchase Date; or (2) one million dollars ($1,000,000). See “Purchase Agreement with GHS Investments, LLC on
page S-4 of this prospectus supplement for a description of the Purchase Agreement.
Our common stock is quoted on the OTC Pink under
the symbol “AIAD.” On March 28, 2022, the last reported sales price of our common stock on the OTC Pink was $0.0290 per share.
Investing in our securities involves significant
risks. See “Risk Factors” beginning on page S-5 of this prospectus supplement and in the documents incorporated by reference
into this prospectus supplement.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus
supplement. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is March
28, 2022.
TABLE OF CONTENTS
PROSPECTUS
You should rely only on the information incorporated
by reference or provided in this prospectus supplement and the accompanying prospectus. We have not have authorized anyone to provide
you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus
supplement and the accompanying prospectus do not constitute an offer to sell, or a solicitation of an offer to purchase, the securities
offered by this prospectus supplement and the accompanying prospectus in any jurisdiction where it is unlawful to make such offer or solicitation.
You should assume that the information contained in this prospectus supplement or the accompanying prospectus, or any document incorporated
by reference in this prospectus supplement or the accompanying prospectus, is accurate only as of the date of those respective documents. Neither
the delivery of this prospectus supplement nor any distribution of securities pursuant to this prospectus supplement shall, under any
circumstances, create any implication that there has been no change in the information set forth or incorporated by reference into this
prospectus supplement or in our affairs since the date of this prospectus supplement. Our business, financial condition, results of operations
and prospects may have changed since that date.
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is
this prospectus supplement, which describes the specific terms of this offering of securities. The second part is the accompanying prospectus,
which provides more general information, some of which may not apply to this offering. The information included or incorporated by reference
in this prospectus supplement also adds to, updates and changes information contained or incorporated by reference in the accompanying
prospectus. If information included or incorporated by reference in this prospectus supplement is inconsistent with the accompanying prospectus
or the information incorporated by reference therein, then this prospectus supplement or the information incorporated by reference in
this prospectus supplement will apply and will supersede the information in the accompanying prospectus and the documents incorporated
by reference therein.
This prospectus supplement is part of a registration
statement that we filed with the Securities and Exchange Commission, or the SEC, using a “shelf” registration process, under
the Securities Act of 1933, as amended (the “Securities Act”).
Under the shelf registration process, we may from
time to time offer and sell any combination of the securities described in the accompanying prospectus up to a total dollar amount of
$100,000,000, of which this offering is a part.
In this prospectus
supplement and the accompanying prospectus, unless the context otherwise requires, references to AiAdvertising” the “Company,”
“we,” “us,” “our” refer to AiAdvertising, Inc. together with its subsidiaries.
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights selected information
about our company, this offering and information appearing elsewhere in this prospectus supplement, in the accompanying prospectus, and
in the documents we incorporate by reference. This summary is not complete and does not contain all the information that you should consider
before investing in our securities. You should read this entire prospectus supplement and the accompanying prospectus carefully, including
the “Risk Factors” contained in this prospectus supplement beginning on page S-5, and the risk factors, financial statements
and notes incorporated by reference herein, before making an investment decision. This prospectus supplement may add to, update or change
information in the accompanying prospectus.
Company Overview
AiAdvertising’s primary focus is to disrupt
the digital advertising world by offering a solution that harnesses the power of artificial intelligence (AI) to enable marketers to increase
productivity, efficiency and performance.
Our proprietary software empowers marketers by
intelligently automating data- driven, repetitive tasks, and improving their ability to make predictions at scale.
In the past we have contracted with clients to
deliver technology enabled services. These services were project-based and delivered against a contracted SOW (Statement of Work). Beginning
in the fourth quarter of 2022, we pivoted to a software licensing and delivery model, whereby our software is centrally hosted and licensed
on a monthly subscription basis. We believe this shift towards SaaS recurring revenue can potentially be highly valuable to the Company
and its shareholders.
Our Software Platform
Our
software platform harnesses the power of machine learning and artificial intelligence to eliminate guesswork, predict what works, and
prove advertising's impact on financial results. Key features of our platform include:
Alignment - We start
with the end in mind and use a comprehensive discovery process to outline goals and key performance indicators (KPIs) to connect them
to revenue targets. By aligning on the desired outcomes, our platform renders marketing and content calendars built upon the defined goals
and objectives.
Insights - AI Data
Services inventories and aggregates data from all of a client’s tools, such as customer relationship management (CRM), sales, marketing,
accounting, and customer service tools into a unified data warehouse where it is cleaned, organized, and tagged. This allows the artificial
intelligence in our platform to segment customers and prospective customers by revealing patterns, signals, and insights to draw commonalities
between points and grouping them into personas (fictional characters used to represent larger groups that share similarities). Once these
audiences are segmented, we use unique engagement predictors leveraging psychographic models to identify motivations, behaviors, influences,
and interests. These insights inform the type of creative assets these audience segments will most likely respond to. The models are leveraged
to find new incremental audiences.
Activate – Our
AI platform scores our clients’ existing creative assets and intelligently recommends enhancements to optimize performance. Our
AI leverages the audience personas of who will see the ads to accurately personalize and predict more successful creative assets. This
predictive engine allows clients to know the likelihood that their ad will resonate with their audiences before placing the ad. Our AI
can then dynamically create hundreds or thousands of variations of highly targeted ads based on what our AI knows about the specific audience
personas. Combined with our software, our teams then help our clients place these ads through the channels that will produce the highest
results.
Decisions – The
AiAd dashboard aggregates data from all marketing channels to connect marketing strategies to financial results. Our platform continuously
monitors and validates each campaign's impact and provides recommendations to maximize their effectiveness. Leveraging machine learning,
it provides ongoing analysis and optimization of behavioral profiles, creative, audience segments, and media activation. Our platform
empowers marketers to know what works, what doesn't, what's next, and why so they can make the most informed decisions.
Corporate Information
We were incorporated in Nevada on January 22, 2022.
Our principal executive offices are located at 321 Sixth Street, San Antonio, TX 78215, and our telephone number is 805-964-3313. Our
website address is www.aiadvertising.com. The information contained therein or connected thereto shall not be deemed to be
incorporated into this prospectus or the registration statement of which it forms a part. The information on our website is not part of
this prospectus. Effective August 5, 2021, the Company changed its name from CloudCommerce, Inc. to AiAdvertising, Inc.
THE OFFERING
Securities we are offering |
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Up to $10,000,000 of shares of our common stock we may sell from time to time, at our sole discretion, subject to the terms of the Purchase Agreement to GHS over the next year in accordance with the Purchase Agreement. |
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Common stock to be outstanding after the offering |
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1,400,384,104 shares |
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Use of proceeds |
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We estimate the net proceeds to us from this offering will be approximately $9,765,000 million
after deducting estimated offering expenses payable by us. We intend to use the net proceeds from the sale of the securities offered
by this prospectus for working capital and general corporate purposes. |
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OTC Pink symbol for common stock |
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Our common stock is quoted on the OTC Pink under the symbol “AIAD.” |
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Risk factors |
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Investing in our securities involves significant risks. See “Risk Factors” beginning
on page S-5 of this prospectus supplement. |
The number of shares of common
stock shown above to be outstanding after this offering is based on 1,055,556,518 shares outstanding as of March 23, 2022, and
excludes:
| ● | 450,625,000
shares of common stock issuable upon conversion of 18,025 outstanding shares of Series B
Preferred Stock; |
| | |
| ● | 144,250,000
shares of common stock issuable upon conversion of 14,425 outstanding shares of Series C
Preferred Stock; |
| | |
| ● | 215,052,500
shares of common stock issuable upon conversion of 86,021 outstanding shares of Series D
Preferred Stock; |
| | |
| ● | 20,000,000
shares of common stock issuable upon conversion of 10,000 outstanding shares of Series E
Preferred Stock; |
| | |
| ● | 136,684,211
shares of common stock issuable upon conversion of 2,597 outstanding shares of Series G Preferred
Stock; |
| | |
| ● | 890,733,332
shares of common stock issuable upon exercise of outstanding stock options, with a weighted
average exercise price of $.0093 per share; and |
| | |
| ● | 162,709,169 shares of common stock issuable upon exercise of warrants,
with an exercise price of $0.0479. |
Purchase Agreement
with GHS Investments, LLC
On March 28, 2022, we entered
into the Purchase Agreement with GHS, which provides that, upon the terms and subject to the conditions and limitations set forth therein,
we have the right to sell to GHS up to $10,000,000 of shares (“Purchase Shares”) of our common stock as described below.
The Company has the right,
in its sole discretion, subject to the conditions and limitations in the Purchase Agreement, to direct GHS, by delivery of a purchase
notice from time to time (a “Purchase Notice”) to purchase (each, a “Purchase”) over the one-year term of the
Purchase Agreement, a minimum of $10,000 and up to a maximum of the lower of: (1) one hundred percent (100%) of the average daily trading
dollar volume of the Company’s common stock during the ten trading days preceding the Purchase Date; or (2) one million dollars
($1,000,000), provided that the parties may agree to waive such limitations. The aggregate value of Purchase Shares sold to GHS may not
exceed $10,000,000. Each Purchase Notice will set forth the Purchase Price and number of Purchase Shares in accordance with the terms
of this Agreement.
The number of Purchase Shares
we will issue under each Purchase will be equal to 112.5% of the Purchase Amount sold under such Purchase, divided by the Purchase Price
per share (as defined under the Purchase Agreement).
The Purchase Price is defined
as the lower of (a) 90% of the lowest volume weighted average price during the Valuation Period; or (b) the Closing Price for our common
stock on the trading day preceding the date of the Purchase Notice. The Purchase Price will be subject to a floor of $.01 per share, at
or below which the Company will not deliver a Purchase Notice. The Valuation Period is the ten consecutive business days immediately preceding,
but not including, the date a Purchase Notice is delivered.
The Purchase Agreement prohibits
us from directing GHS to purchase any shares of common stock if those shares, when aggregated with all other shares of our common stock
then beneficially owned by GHS and its affiliates, would result in GHS and its affiliates having beneficial ownership, at any single point
in time, of more than 4.99% of the then total outstanding shares of our common stock.
There are no trading volume
requirements or restrictions under the Purchase Agreement. We will control the timing and amount of any sales of our common stock to GHS.
Events of default under the Purchase
Agreement include the following:
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the effectiveness of the registration
statement for the Purchase Shares lapses for any reason or is unavailable for the issuance to or resale by GHS of the Purchase
Shares; |
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the suspension of our common stock from trading for a period of two business days; |
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the delisting of the Company’s common
stock from the OTC Pink; provided, however, that the common stock is not immediately thereafter trading on the Nasdaq Capital
Market, New York Stock Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market, the NYSE American, or the OTCQB or
OTCQX; |
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the failure for any reason by the transfer
agent to issue Purchase Shares to GHS within three business days after the applicable date on which GHS is entitled to receive such
securities; |
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any breach of the representations and
warranties or covenants contained in the Purchase Agreement if such breach would reasonably be expected to have a material adverse
effect and such breach is not cured within five business days; |
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insolvency or bankruptcy proceedings are
commenced by or against us, as more fully described in the Purchase Agreement; or |
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if at any time we are not eligible to transfer our common stock electronically via DWAC. |
So long as an event of default
(all of which are outside the control of GHS) has occurred and is continuing, the Company may not deliver a Purchase Notice to GHS.
This offering will terminate
on the date that all shares offered by this prospectus supplement have been sold or, if earlier, the expiration or termination of the
Purchase Agreement. We and GHS each have the right to terminate the Purchase Agreement at any time upon thirty days notice. In the event
of bankruptcy proceedings by or against us, the Purchase Agreement will automatically terminate without action of any party.
The above description of the Purchase Agreement
is qualified in its entirety by reference to the Purchase Agreement, which is incorporated by reference into this prospectus supplement.
RISK FACTORS
Any investment
in our securities involves a high degree of risk, including the risks described below. Before purchasing our common stock, you should
carefully consider the risk factors set forth below, as well as all other information contained in this prospectus supplement and the
accompanying prospectus and incorporated by reference, including our consolidated financial statements and the related notes and the additional
risk factors contained in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as well as any amendments thereto,
as filed with the SEC, before deciding whether to invest in our common stock. Our business, financial condition and results of operations
could suffer as a result of these risks. As a result, the trading price of our stock could decline and you could lose all or part of your
investment. The risks discussed below also include forward-looking statements and our actual results may differ substantially from those
discussed in these forward-looking statements. See the section entitled “Forward-Looking Information”.
Risks Related to Our Business
Issues in the use of AI in our offerings
may result in reputational harm or liability.
As with many disruptive innovations,
AI presents risks and challenges that could affect its adoption, and therefore our business. AI algorithms may be flawed. Datasets may
be insufficient or contain biased information. Inappropriate or controversial data practices by us or others could impair the acceptance
of AI solutions. These deficiencies could undermine the decisions, predictions, or analysis AI applications produce, subjecting us to
competitive harm, legal liability, and brand or reputational harm. Some AI scenarios present ethical issues. If we enable or offer AI
solutions that are controversial because of their impact on human rights, privacy, employment, or other social issues, we may experience
brand or reputational harm.
We are subject
to payment-related risks if customers dispute or do not pay their invoices, and any decreases or significant delays in payments could
have a material adverse effect on our business, results of operations and financial condition. These risks may be heightened as a result
of the COVID-19 pandemic and resulting economic downturn.
We
may become involved in disputes with our customers over the operation of our platform, the terms of our agreements or our billings for
purchases made by them through our platform. In the past, certain customers have sought to slow their payments to us or been forced into
filing for bankruptcy protection, resulting in delay or cancelation of their pending payments to us. These challenges have been exacerbated
by the COVID-19 pandemic and resulting economic impact, and a number of our customers are experiencing financial difficulties
and liquidity constraints. In certain cases, customers have been unable to timely make payments, and we have suffered losses. Certain
of our contracts with marketing agencies state that if their customer does not pay the agency, the agency is not liable to us, and we
must seek payment solely from their customer, a type of arrangement called sequential liability. Contracting with these agencies, which
in some cases have or may develop higher-risk credit profiles, may subject us to greater credit risk than if we were to contract directly
with the customer.
If we are unable to collect
customers’ fees on a timely basis or at all, we could incur write-offs for bad debt, which could have a material adverse effect
on our results of operations for the periods in which the write-offs occur. In the future, bad debt may exceed reserves for such contingencies,
and our bad debt exposure may increase over time. Any increase in write-offs for bad debt could have a materially negative effect on our
business, financial condition and operating results. Even if we are not paid by our customers on time or at all, we may still be obligated
to pay for the inventory we have purchased for our customers’ marketing campaigns, and consequently, our results of operations and
financial condition would be adversely impacted.
The reliability of some of our product solutions
is dependent on data and software from third-parties and the integrity and quality of that data and software..
Some of the data and software
that we use is licensed from third-party data suppliers, and we are dependent upon our ability to obtain necessary data licenses on commercially
reasonable terms. We could suffer material adverse consequences if our data suppliers were to withhold their data from us. For example,
data suppliers could withhold their data from us if there is a competitive reason to do so; if we breach our contract with a supplier;
if they are acquired by one of our competitors; if legislation is passed restricting the use or dissemination of the data they provide;
or if judicial interpretations are issued restricting use of such data. Additionally, we could terminate relationships with our data suppliers
if they fail to adhere to our data quality standards. If a substantial number of data suppliers were to withdraw or withhold their data
from us, or if we sever ties with our data suppliers based on their inability to meet our data standards, our ability to provide products
and services to our clients could be materially adversely impacted, which could result in decreased revenues.
The reliability of our solutions
depends upon the integrity and quality of the data provided us by our clients and that which we can license from third party providers.
A failure in the integrity or a reduction in the quality of our data could cause a loss of customer confidence in our solutions, resulting
in harm to our brand, loss of revenue and exposure to legal claims. We may experience an increase in risks to the integrity of our database
and quality of our data as we move toward real-time, non-identifiable, consumer- powered data through our products. We must continue to
invest in our database to improve and maintain the quality, timeliness and coverage of the data if we are to maintain our competitive
position. Failure to do so could result in a material adverse effect on our business, growth and revenue prospects.
Our business practices with respect to data
and consumer protection could give rise to liabilities or reputational harm as a result of governmental regulation, legal requirements
or industry standards relating to consumer privacy, data protection and consumer protection.
Federal, state and international
laws and regulations govern the collection, use, retention, sharing and security of data that we collect. We strive to comply with all
applicable laws, regulations, self-regulatory requirements and legal obligations relating to privacy, data protection and consumer protection,
including those relating to the use of data for marketing purposes. It is possible, however, that these requirements may be interpreted
and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. We cannot
assure you that our practices have complied, comply, or will comply fully with all such laws, regulations, requirements and obligations.
Any failure, or perceived failure, by us to comply with federal, state or international laws or regulations, including laws and regulations
regulating privacy, data security, marketing communications or consumer protection, or other policies, self-regulatory requirements or
legal obligations could result in harm to our reputation, a loss in business, and proceedings or actions against us by governmental entities,
consumers, retailers or others. We may also be contractually liable to indemnify and hold harmless performance marketing networks or other
third parties from the costs or consequences of noncompliance with any laws, regulations, self-regulatory requirements or other legal
obligations relating to privacy, data protection and consumer protection or any inadvertent or unauthorized use or disclosure of data
that we store or handle as part of operating our business. Any such proceeding or action, and any related indemnification obligation,
could hurt our reputation, force us to incur significant expenses in defense of these proceedings, distract our management, increase our
costs of doing business and cause consumers and retailers to decrease their use of our marketplace, and may result in the imposition of
monetary liability. Furthermore, the costs of compliance with, and other burdens imposed by, the data and privacy laws, regulations, standards
and policies that are applicable to the businesses of our clients may limit the use and adoption of, and reduce the overall demand for,
our products.
A significant breach of the
confidentiality of the information we hold or of the security of our or our customers’, suppliers’, or other partners’
computer systems could be detrimental to our business, reputation and results of operations. Our business requires the storage, transmission
and utilization of data. Although we have security and associated procedures, our databases may be subject to unauthorized access by third
parties. Such third parties could attempt to gain entry to our systems for the purpose of stealing data or disrupting the systems. We
believe we have taken appropriate measures to protect our systems from intrusion, but we cannot be certain that advances in criminal capabilities,
discovery of new vulnerabilities in our systems and attempts to exploit those vulnerabilities, physical system or facility break-ins and
data thefts or other developments will not compromise or breach the technology protecting our systems and the information we possess.
Furthermore, we face increasing cyber security risks as we receive and collect data from new sources, and as we and our customers continue
to develop and operate in cloud-based information technology environments. In the event that our protection efforts are unsuccessful,
and we experience an unauthorized disclosure of confidential information or the security of such information or our systems are compromised,
we could suffer substantial harm. Any breach could result in one or more third parties obtaining unauthorized access to our customers’
data or our data, including personally identifiable information, intellectual property and other confidential business information. Such
a security breach could result in operational disruptions that impair our ability to meet our clients’ requirements, which could
result in decreased revenues. Also, whether there is an actual or a perceived breach of our security, our reputation could suffer irreparable
harm, causing our current and prospective clients to reject our products and services in the future and deterring data suppliers from
supplying us data. Further, we could be forced to expend significant resources in response to a security breach, including repairing system
damage, increasing cyber security protection costs by deploying additional personnel and protection technologies, and litigating and resolving
legal claims, all of which could divert the attention of our management and key personnel away from our business operations. In any event,
a significant security breach could materially harm our business, financial condition and operating results.
Significant system disruptions, loss of
data center capacity or interruption of telecommunication links could adversely affect our business and results of operations.
Our product platform is hosted
and managed on Microsoft Azure Cloud servers and takes full advantage of open standards for processing, storage, security and big data
technology. Significant system disruptions, loss of data center capacity or interruption of telecommunication links could adversely affect
our business, results of operations and financial condition. Our business is heavily dependent upon highly complex data processing capability.
The ability of our platform hosts and managers to protect these data centers against damage or interruption from fire, flood, tornadoes,
power loss, telecommunications or equipment failure or other disasters is beyond our control and is critical to our ability to succeed.
We need to protect our intellectual property
or our operating results may suffer.
Third parties may infringe
our intellectual property and we may suffer competitive injury or expend significant resources enforcing our rights. As our business is
focused on data-driven results and analytics, we rely heavily on proprietary information technology. Our proprietary portfolio consists
of various intellectual property including source code, trade secrets, and know-how. The extent to which such rights can be protected
is substantially based on federal, state and common law rights as well as contractual restrictions. The steps we have taken to protect
our intellectual property may not prevent the misappropriation of our proprietary information or deter independent development of similar
technologies by others. If we do not enforce our intellectual property rights vigorously and successfully, our competitive position may
suffer which could harm our operating results.
We could incur substantial costs and disruption
to our business as a result of any claim of infringement of another party’s intellectual property rights, which could harm our business
and operating results.
From time to time, third parties
may claim that one or more of our products or services infringe their intellectual property rights. We analyze and take action in response
to such claims on a case-by-case basis. Any dispute or litigation regarding patents or other intellectual property could be costly and
time-consuming due to the complexity of our technology and the uncertainty of intellectual property litigation, which could divert the
attention of our management and key personnel away from our business operations. A claim of intellectual property infringement could force
us to enter into a costly or restrictive license agreement, which might not be available under acceptable terms or at all, or could subject
us to significant damages or to an injunction against development and sale of certain of our products or services.
We may be unable to maintain a competitive
technology advantage in the future.
Our ability to generate revenues
is substantially based upon our proprietary intellectual property that we own and protect through trade secrets and agreements with our
employees to maintain ownership of any improvements to our intellectual property. Our ability to generate revenues now and in the future
is based upon maintaining a competitive technology advantage over our competition. We can provide no assurances that we will be able to
maintain a competitive technology advantage in the future over our competitors, many of whom have significantly more experience, more
extensive infrastructure and are better capitalized than us.
We may not be able to integrate, maintain
and enhance our advertising solutions to keep pace with technological and market developments.
The market for digital advertising
solutions is characterized by rapid technological change, evolving industry standards and frequent introductions of new products and services.
To keep pace with technological developments, satisfy increasing publisher and advertiser requirements, maintain the attractiveness and
competitiveness of our advertising solutions and ensure compatibility with evolving industry standards and protocols, we will need to
anticipate and respond to varying product lifecycles, regularly enhance our current advertising solutions and develop and introduce new
solutions and functionality on a timely basis. This requires significant investment of financial and other resources. For example, we
will need to invest significant resources into expanding and developing our platforms in order to maintain a comprehensive solution. Ad
technology platforms and other technological developments may displace us or introduce an additional intermediate layer between us and
our customers and digital media properties that could impair our relationships with those customers.
If we default on our credit obligations,
our operations may be interrupted and our business and financial results could be adversely affected.
Vendors extend us credit
terms for the purchase of advertising inventory. We currently have outstanding payables to existing vendors. If we are unable to pay our
publishers in a timely fashion, they may elect to no longer sell us inventory to provide for sale to advertisers. Also, it may be necessary
for us to incur additional indebtedness to maintain operations of the Company. If we default on our credit obligations, our lenders and
debt financing holders may, among other things:
| ● | require
repayment of any outstanding obligations or amounts drawn on our credit facilities; |
| | |
| ● | stop
delivery of ordered equipment; |
| | |
| ● | discontinue
our ability to acquire inventory that is sold to advertisers; |
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| ● | require
us to accrue interest at higher rates; or |
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| ● | require
us to pay significant damages. |
If some or all of these events
were to occur, our operations may be interrupted and our ability to fund our operations or obligations, as well as our business, financial
results, and financial condition, could be adversely affected.
Risks Related to our Common Stock
and this Offering
There is a limited existing market
for our common stock and we do not know if a more liquid market for our common stock will develop to provide you with adequate liquidity.
Prior to this
offering, there has been a limited public market for our common stock as quoted on the OTC Pink, and a more active trading market for
our common stock may not develop or be maintained following this offering. You may not be able to sell your shares quickly or at the market
price if trading in our securities is not active. The public offering price for the shares of common stock will be determined by negotiations
between us and the underwriter and may not be indicative of prices that will prevail in the trading market. In the absence of an active
public trading market:
| ● | you
may not be able to resell your shares of common stock at or above the public offering price; |
| | |
| ● | the
market price of our common stock may experience more price volatility; and |
| | |
| ● | there
may be less efficiency in carrying out your purchase and sale orders. |
You may experience immediate and substantial
dilution in the net tangible book value per share of the common stock you purchase in the offering. In addition, we may issue additional
equity or convertible debt securities in the future, which may result in additional dilution to you.
The offering price per share in this offering may
exceed the net tangible book value per share of our common stock outstanding as of September 30, 2021. Assuming that we sell an
aggregate of 344,827,586 shares of our common stock for aggregate gross proceeds of $10,000,000, and after deducting estimated
aggregate offering expenses payable by us, you will experience immediate dilution of approximately $0.0028 per share, representing
the difference between our pro forma as adjusted net tangible book value per share as of September 30, 2021 after giving effect to
this offering and the assumed effective offering price. See the section titled “Dilution” below for a more detailed
illustration of the dilution you would incur if you participate in this offering.
Management
will have broad discretion in determining how to use the proceeds of this offering.
Our
management will have broad discretion over the use of proceeds from this offering, and we could spend the proceeds from this offering
in ways our stockholders may not agree with or that do not yield a favorable return, if at all. We currently intend to use the net proceeds
from this offering for general corporate purposes, including general working capital purposes. If we do not invest or apply the proceeds
of this offering in ways that improve our operating results, we may fail to achieve expected financial results, which could cause the
market price of our common stock to decrease.
Additional stock offerings in the future may dilute then existing
stockholders’ percentage ownership of our company.
Given our plans and expectations that we will need
additional capital, we anticipate that we will need to issue additional shares of common stock or securities convertible or exercisable
for shares of common stock, including convertible preferred stock, convertible notes, stock options or warrants. The issuance of additional
securities in the future will dilute the percentage ownership of then existing stockholders.
We have a substantial number of convertible
securities outstanding. The exercise of our outstanding warrants/options and conversion of our outstanding preferred shares can have a
dilutive effect on our common stock.
We have a substantial number of convertible
securities outstanding. The exercise of our outstanding options and conversion of our outstanding convertible preferred stock can
have a dilutive effect on our common stock. As of March 23, 2022, we had (i)
outstanding options to purchase approximately 890,733,332 shares of our common stock at a weighted average exercise price of $0.0093
per shares; (ii) outstanding warrants to purchase approximately 162,709,169 shares of our common stock at an exercise price of
$0.0479; and (iii) outstanding shares of our Series B, C, D, E, and G Preferred Stock that, upon conversion without regard to any
beneficial ownership limitations, would provide the holders with an aggregate of 966,611,711 shares of our common stock. The
issuance of shares of common stock upon exercise of outstanding options and warrant or conversion of preferred stock could result in
substantial dilution to our stockholders, which may have a negative effect on the price of our common stock.
FORWARD-LOOKING INFORMATION
The
prospectus and this prospectus supplement, including the documents that we incorporate by reference, contain forward-looking statements. These
statements are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking
statements include statements concerning:
| ● | our
possible or assumed future results of operations; |
| | |
| ● | our
business strategies; |
| | |
| ● | our
ability to attract and retain customers; |
| | |
| ● | our
ability to sell additional products and services to customers; |
| | |
| ● | our
cash needs and financing plans; |
| | |
| ● | our
competitive position; |
| | |
| ● | our
industry environment; |
| | |
| ● | our
potential growth opportunities; |
| | |
| ● | expected
technological advances by us or by third parties and our ability to leverage them; |
| | |
| ● | the
effects of future regulation; and |
| | |
| ● | the
effects of competition. |
All statements
in this prospectus supplement, the prospectus and the documents and information incorporated by reference in this prospectus supplement
and the documents and information incorporated by reference in the prospectus that are not historical facts are forward-looking statements.
We may, in some cases, use terms such as “anticipates,” “believes,” “could,” “estimates,”
“expects,” “intends,” “may,” “plans,” “potential,” “predicts,”
“projects,” “should,” “will,” “would” or similar expressions or the negative of such items
that convey uncertainty of future events or outcomes to identify forward-looking statements.
You
should read the prospectus and this prospectus supplement and the documents that we reference herein and therein and have filed as exhibits
to the registration statement, of which the prospectus and this prospectus supplement is part, completely and with the understanding that
our actual future results may be materially different from what we expect. You should assume that the information appearing in the prospectus
and this prospectus supplement is accurate as of the date on the front cover of the prospectus or this prospectus supplement only. Because
the risk factors referred to or incorporated by reference in this prospectus supplement could cause actual results or outcomes to differ
materially from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on
any forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake
no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made
or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which
factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of the
information presented in the prospectus and this prospectus supplement, and particularly our forward-looking statements, by these cautionary
statements.
USE OF PROCEEDS
We estimate that the net proceeds from this offering,
after deducting estimated offering expenses payable by us, will be approximately $9,765,000.
We intend to use
the net proceeds from this offering for working capital and general corporate purposes.
As of the date
of this prospectus supplement, we cannot specify with certainty all of the particular uses of the proceeds from this offering. We may
find it necessary or advisable to use the net proceeds for other purposes, and we will have broad discretion in using these proceeds.
Investors will be relying on our judgment regarding the use of the net proceeds from this offering. Pending the use of proceeds as described
above, we plan to invest the net proceeds that we receive in short-term and intermediate-term interest-bearing obligations, investment-grade
investments, certificates of deposit or direct or guaranteed obligations of the U.S. government. We cannot predict whether the invested
proceeds will yield a favorable return.
DILUTION
If you invest in our common stock, your interest
will be diluted immediately to the extent of the difference between the offering price per share and the as adjusted net tangible book
value per share of our common stock after this offering.
Our
net tangible book value as of September 30, 2021 was a surplus of approximately $2,471,154, or positive $0.0025 per share of common stock.
Net tangible book value per share is determined by dividing our total tangible assets, less total liabilities, by the number of our shares
of common stock outstanding as of that respective date.
After giving effect to the sale of an assumed aggregate of 344,827,586
shares of our common stock for aggregate gross proceeds of $10,000,000 (assuming the sale of the maximum offering amount, and based on
a number of shares equal to 112.5% of $10,000,000 divided by 90% of the closing price of our common stock of $0.0290 on March 28, 2022,
for an effective assumed offering price per share of $0.0290 ) in this offering, and after deducting estimated offering expenses payable
by us, our pro forma as adjusted net tangible book value as of September 30, 2021 would have been approximately ($12,471,154 ) million,
or approximately ($0.0092 ) per share of our common stock. This represents an immediate increase in net tangible book value of $0.0068
per share of our common stock to our existing stockholders and an immediate dilution in net tangible book value of approximately $0.0028
per share of our common stock to new investors. The following table illustrates per share dilution:
The
following table illustrates this dilution on a per share basis:
Assumed effective offering price per share | |
$ | 0.0290 | |
Net tangible book value per share as of September 30, 2021 | |
$ | 0.0025 | |
| |
| | |
Increase in net tangible book value per share attributable to this offering | |
$ | 0.0068 | |
| |
| | |
Pro forma net tangible book value per share, to give effect to this offering | |
$ | 0.0092 | |
Dilution per share to new investors participating in this offering | |
$ | 0.0028 | |
The
above discussion and table, prior to adjustments and the pro forma adjustment, are based on 1,007,953,473 shares of common stock issued
and outstanding as of September 30, 2021 and excludes:
| ● | 450,625,000
shares of common stock issuable upon conversion of 18,025 outstanding shares of Series B Preferred Stock; |
| | |
| ● | 144,250,000
shares of common stock issuable upon conversion of 14,425 outstanding shares of Series C Preferred Stock; |
| | |
| ● | 215,052,500
shares of common stock issuable upon conversion of 86,021 outstanding shares of Series D Preferred Stock; |
| | |
| ● | 20,000,000
shares of common stock issuable upon conversion of 10,000 outstanding shares of Series E Preferred Stock; |
| | |
| ● | 136,684,211
shares of common stock issuable upon conversion of 2,597 outstanding shares of Series G Preferred Stock; |
| | |
| ● | 890,733,332
shares of common stock issuable upon exercise of outstanding stock options, with a weighted average exercise price of $.0093 per share; |
| | |
| ● | 151,000,000
shares of common stock issuable upon exercise of common stock warrants, with an exercise price of $0.0454; and |
| | |
| ● | 10,714,286
shares of common stock issuable upon exercise of common stock warrants, with an exercise price of $.0875. |
DESCRIPTION OF THE SECURITIES WE ARE OFFERING
In this offering, we are offering
shares of our common stock. The material terms and provisions of our common stock are described under the captions “Description
of Capital Stock” beginning on page 10 of the accompanying prospectus.
PLAN OF DISTRIBUTION
We are filing this prospectus
supplement to cover the offer and sale of up to $10,000,000 of shares of our common stock, which we may sell from time to time in our
sole discretion to GHS over the next year, subject to the conditions and limitations in the Purchase Agreement.
We entered into the Purchase
Agreement with GHS on March 28, 2022. The Purchase Agreement provides that, upon the terms and subject to the conditions set forth therein,
GHS is committed to purchase an aggregate of up to $10,000,000 of shares of our common stock over the one-year term of the Purchase Agreement.
See “The Offering—Purchase Agreement with GHS Investments, LLC.” GHS may be deemed to be an “underwriter”
within the meaning of Section 2(a)(11) of the Securities Act.
The Company has the right,
in its sole discretion, subject to the conditions and limitations in the Purchase Agreement, to direct GHS, by delivery of a purchase
notice from time to time (a “Purchase Notice”) to purchase (each, a “Purchase”) over the one-year term of the
Purchase Agreement, a minimum of a minimum of $10,000 and up to a maximum of the lower of: (1) one hundred percent (100%) of the average
daily trading dollar volume of the Company’s common stock during the ten trading days preceding the Purchase Date; or (2) one million
dollars ($1,000,000), provided that the parties may agree to waive such limitations. The aggregate value of Purchase Shares sold to GHS
may not exceed $10,000,000. Each Purchase Notice will set forth the Purchase Price and number of Purchase Shares in accordance with the
terms of the Purchase Agreement.
The number of Purchase Shares
we will issue under each Purchase will be equal to 112.5% of the Purchase Amount sold under such Purchase, divided by the Purchase Price
per share (as defined in the Purchase Agreement).
The Purchase Price is defined
as the lower of (a) 90% of the lowest volume weighted average price during the Valuation Period; or (b) the Closing Price for our common
stock on the trading day preceding the date of the Purchase Notice. The Purchase Price will be subject to a floor of $.01 per share, at
or below which the Company will not deliver a Purchase Notice. The Valuation Period is the ten consecutive business days immediately preceding,
but not including, the date a Purchase Notice is delivered. The Company may not deliver a Purchase Notice prior to five business days
from the most recent receipt by GHS’s broker of Purchase Shares, except as the parties may otherwise agree.
We estimate our total expenses
for this offering, assuming we sell the maximum offering amount of $10,000,000, will be approximately $235,000.
This offering will terminate
on the date that all shares offered by this prospectus supplement have been sold or, if earlier, the expiration or termination of the
Purchase Agreement. We and GHS each have the right to terminate the Purchase Agreement at any time upon thirty days notice. In the event
of bankruptcy proceedings by or against us, the Purchase Agreement will automatically terminate without action of any party.
LEGAL MATTERS
The validity of the securities being offered under
this prospectus by us will be passed upon for us by Sichenzia Ross Ference LLP, New York, New York.
EXPERTS
The financial statements
incorporated by reference into this prospectus have been so included in reliance on the reports of M&K CPAs, PLLC, an independent
registered public accounting firm, related to the consolidated financial statements as of December 31, 2020 and 2019 and for the
years then ended, given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the reporting requirements of
the Exchange Act and file annual, quarterly and current reports, and other information with the SEC. These reports, proxy statements and
other information are available at the SEC’s website at http://www.sec.gov.
This prospectus supplement and the accompanying
prospectus are only part of a registration statement on Form S-3 that we have filed with the SEC under the Securities Act and therefore
omit certain information contained in the registration statement. We have also filed exhibits and schedules with the registration statement
that are excluded from this prospectus supplement and the accompanying prospectus, and you should refer to the applicable exhibit or schedule
for a complete description of any statement referring to any contract or other document. The registration statement, including the exhibits
and schedules, without charge, are available at the SEC’s website.
We also maintain a website at www.cloudcommerce.com,
through which you can access our SEC filings. The information set forth on our website is not part of this prospectus supplement or the
accompanying prospectus.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows
us to “incorporate by reference” into this prospectus the information that we file with them, which means that we can disclose
important information to you by referring you to those documents. The information incorporated by reference is considered to be part of
this prospectus, and information that we file later with the SEC will automatically update and supersede this information. The following
documents are incorporated by reference and made a part of this prospectus:
| ● | our Annual Report on Form 10-K and Form 10-K/A for
the fiscal year ended December 31, 2020 (filed with the SEC on March 15, 2021 and March 18, 2021, respectively); |
| ● | Our Quarterly Reports on Form 10-Q for the quarter ended
March 31, 2021 (filed with the SEC on May 17, 2021), for the quarter ended June 30, 2021 (filed with the SEC on August 16, 2021),
and for the quarter ended September 30, 2021 (filed with the SEC on November 15, 2021); |
| ● | our Current Reports on Form 8-K filed with the SEC on January 11, 2021, January 15, 2021, February 2, 2021, February 9, 2021, February 22, 2021, March 8, 2021, March 22, 2021, April 19, 2021,
August 6, 2021, October 1, 2021, October 12, 2021, October 26, 2021, November 4, 2021, December 3, 2021; |
| ● | The description of our common stock contained in Exhibit 4.2 to
our Annual Report on Form 10-K for the year ended December 31, 2020; and |
| ● | all reports and other documents subsequently filed by us pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this prospectus and prior to the termination of this offering. |
Nothing in this
prospectus shall be deemed to incorporate information furnished but not filed with the SEC (including without limitation, information
furnished under Item 2.02 or Item 7.01 of Form 8-K, and any exhibits relating to such information).
Any statement contained
in this prospectus or in a document incorporated or deemed to be incorporated by, reference in this prospectus shall be deemed to be modified
or superseded for purposes of this prospectus to the extent that a statement contained herein or in the applicable prospectus supplement
or in any other subsequently filed document which also is or is deemed to be incorporated by reference modifies or supersedes the statement.
Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
The information
about us contained in this prospectus should be read together with the information in the documents incorporated by reference. You may
request a copy of any or all of these filings, at no cost, by writing or telephoning us at: AiAdvertising, Inc. 321 Sixth Street, San
Antonio, TX 78215. Our telephone number is +1-805-964-3313. Information about us is also available at our website at www.aiadvertising.com
However, the information in our website is not a part of this prospectus and is not incorporated by reference.
Prospectus
CloudCommerce,
Inc.
$100,000,000
COMMON STOCK
PREFERRED STOCK
WARRANTS
SUBSCRIPTION RIGHTS
DEPOSITARY SHARES
PURCHASE CONTRACTS
UNITS
We may offer and sell from time to time, in one or more series or issuances
and on terms that we will determine at the time of the offering, any combination of the securities listed below and described in this
prospectus, up to an aggregate amount of $100,000,000:
| ● | warrants to purchase our securities; |
| ● | subscription rights to purchase
any of the foregoing securities; |
| ● | units comprised of, or other
combinations of, the foregoing securities. |
We may offer and sell these securities separately or together, in one
or more series or classes and in amounts, at prices and on terms described in one or more offerings. We may offer securities through underwriting
syndicates managed or co-managed by one or more underwriters or dealers, through agents or directly to purchasers. The prospectus supplement
for each offering of securities will describe in detail the plan of distribution for that offering. For general information about the
distribution of securities offered, please see “Plan of Distribution” in this prospectus.
Each time our securities are offered, we will provide a prospectus
supplement containing more specific information about the particular offering and attach it to this prospectus. The prospectus supplements
may also add, update or change information contained in this prospectus. This prospectus may not be used to offer or sell securities
without a prospectus supplement which includes a description of the method and terms of this offering.
In addition, we have registered for resale by means of separate prospectus
(the “Selling Stockholder Prospectus”) 38,001,563 outstanding shares of common stock held by certain Selling Stockholders
named in the Selling Stockholder Prospectus and up to 10,912,852 shares of common stock issuable upon exercise of warrants held by the
Selling Stockholders. Sales of our securities registered in this prospectus and in the Selling Stockholder Prospectus may result in two
offerings taking place sequentially or concurrently, which could affect the price and liquidity of, and demand for, our securities.
Our common stock is quoted on the OTC Pink market under the symbol
“CLWD.” The last reported sale price of our common stock on OTC Pink market on February 12, 2021, was $0.1285 per share. On
December 11, 2020, it was $0.006.
During calendar year 2020, our common stock traded at a low of $0..001
and a high of $0.0163. From the beginning of 2021 through February 12, 2021, our common stock traded at a low of $0.00596 and a high of
$0.185. We do not believe that this volatility corresponds to any recent change in our financial condition. However, our recent launch
of an artificial intelligence (AI) venture focused on using AI to enhance our existing SWARM solution with the goal of cutting advertising
costs, as well as conditions in the financial markets generally, may have caused or contributed to this volatility. The stock market in
general, and the market for technology companies in particular, have experienced extreme price and volume fluctuations that have often
been unrelated or disproportionate to the operating performance of those companies.
If we decide to seek a listing or qualification for trading of any
preferred stock, warrants, subscriptions rights, depositary shares or units offered by this prospectus, the related prospectus supplement
will disclose the exchange or market on which the securities will be listed or traded, if any, or where we have made an application for
listing or trading, if any.
Investing in our securities involves a high degree of risk, including
but not limited to the volatility of our stock price, which may cause the price of any securities we may offer hereunder to decline below
the initial offering price. See “Risk Factors” beginning on page 4 and the risk factors in our most recent Annual Report on
Form 10-K, which are incorporated by reference herein, as well as in any other more recently filed annual, quarterly or current reports
and, if any, in the relevant prospectus supplement. We urge you to carefully read this prospectus and the accompanying prospectus supplement,
together with the documents we incorporate by reference, describing the terms of these securities before investing.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation
to the contrary is a criminal offense.
The date of this Prospectus is February 16, 2021.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that
we filed with the Securities and Exchange Commission, or SEC, utilizing a “shelf” registration process. Under this shelf registration
process, we may offer and sell, either individually or in combination, in one or more offerings, any of the securities described in this
prospectus, for total gross proceeds of up to $100,000,000. This prospectus provides you with a general description of the securities
we may offer. Each time we offer securities under this prospectus, we will provide a prospectus supplement to this prospectus that will
contain more specific information about the terms of that offering. We may also authorize one or more free writing prospectuses to be
provided to you that may contain material information relating to these offerings. The prospectus supplement and any related free writing
prospectus that we may authorize to be provided to you may also add, update or change any of the information contained in this prospectus
or in the documents that we have incorporated by reference into this prospectus.
We urge you to read carefully this prospectus, any applicable prospectus
supplement and any free writing prospectuses we have authorized for use in connection with a specific offering, together with the information
incorporated herein by reference as described under the heading “Incorporation of Documents by Reference,” before investing
in any of the securities being offered. You should rely only on the information contained in, or incorporated by reference into, this
prospectus and any applicable prospectus supplement, along with the information contained in any free writing prospectuses we have authorized
for use in connection with a specific offering. We have not authorized anyone to provide you with different or additional information.
This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is
lawful to do so.
The information appearing in this prospectus, any applicable prospectus
supplement or any related free writing prospectus is accurate only as of the date on the front of the document and any information we
have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery
of this prospectus, any applicable prospectus supplement or any related free writing prospectus, or any sale of a security.
This prospectus contains summaries of certain provisions contained
in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries
are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed
or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain
copies of those documents as described below under the section entitled “Where You Can Find Additional Information.”
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This prospectus and any accompanying prospectus supplement and the
documents incorporated by reference herein may contain forward looking statements that involve risks and uncertainties. All statements
other than statements of historical fact contained in this prospectus and any accompanying prospectus supplement and the documents incorporated
by reference herein, including statements regarding future events, our future financial performance, business strategy, and plans and
objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements
by terminology including “anticipates,” “believes,” “can,” “continue,” “could,”
“estimates,” “expects,” “intends,” “may,” “plans,” “potential,”
“predicts,” “should,” or “will” or the negative of these terms or other comparable terminology. Although
we do not make forward looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy.
These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined
under “Risk Factors” or elsewhere in this prospectus and the documents incorporated by reference herein, which may cause our
or our industry’s actual results, levels of activity, performance or achievements expressed or implied by these forward-looking
statements. Moreover, we operate in a highly regulated, very competitive, and rapidly changing environment. New risks emerge from time
to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the
extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking
statements.
We have based these forward-looking statements largely on our current
expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations,
business strategy, short term and long term business operations, and financial needs. These forward-looking statements are subject to
certain risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward looking statements.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this prospectus, and in
particular, the risks discussed below and under the heading “Risk Factors” and those discussed in other documents we file
with the Securities and Exchange Commission (the “Commission”). This prospectus should be read in conjunction with the consolidated
financial statements as of and for the years ended December 31, 2019 and 2018, and as of, and for the three and nine months ended September
30, 2020 and 2019, and related notes thereto, incorporated by reference into this prospectus. We undertake no obligation to revise or
publicly release the results of any revision to these forward-looking statements, except as required by law. In light of these risks,
uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results
could differ materially and adversely from those anticipated or implied in the forward-looking statement. You should not place undue reliance
on any forward-looking statement, each of which applies only as of the date of this prospectus. You are advised, however, to consult any
further disclosures we make on related subjects in our reports on Forms 10-K, 10-Q and 8-K filed with the Commission after the date of
this prospectus.
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere
in this prospectus. This summary does not contain all the information that you should consider before investing in our Company. You should
carefully read the entire prospectus, including all documents incorporated by reference herein. In particular, attention should be directed
to our “Risk Factors,” “Information with Respect to the Company,” “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and the financial statements and related notes thereto contained herein or otherwise
incorporated by reference hereto, before making an investment decision.
All references herein to “CloudCommerce,”
“we,” “us,” “our,” and the “Company” mean CloudCommerce, Inc. and its subsidiaries.
Business Overview
CloudCommerce is a leading provider of digital advertising solutions.
Our flagship solution, SWARM, analyzes a robust mix of audience data to help businesses find who to talk to, what to say to them, and
how to market to them. We do this by applying advanced data science, behavioral science, artificial intelligence, and market research
techniques to discover, develop and create custom audiences for highly targeted digital marketing campaigns.
SWARM- An Audience Intelligence Solution
SWARM is an end-to-end solution that helps businesses find who to talk
to, what to say to them, and how to motivate them to take meaningful action. It does this by applying advanced data science, behavioral
science, artificial intelligence, and market research techniques to discover, develop and create custom audiences for any business activity.
With applications, such as marketing, brand perception, customer relationship management, human resources management and operational logistics,
SWARM delivers powerful audience-driven business intelligence to convert opportunities into business success.
The Problem
Marketers have largely taken a blanket approach to communication. The
same message is often sent across an entire customer audience with little regard for how different groups of people communicate, build
communities, and develop their purchasing habits. When they do segment audiences, they tend to use very objective selection criteria,
such as income, geography, education or purchase history to deduce attitudes or intentions.
However, research has shown that attitudes and intentions are weak
predictors of behavior, which is ultimately what marketers want to influence and affect. Instead, we believe motivations and feelings
are much better at predicting behavior. But they are also can be the hardest to deduce from audience data.
The Solution – SWARM
SWARM is a behavioral science approach to audience creation and communication.
It helps marketers probe deep consumer motivations and triggers, in order to effectively predict and influence their actions. We believe
if marketers can influence action, they can get people to buy, change the opinion of, or support a particular brand, business, or person.
There are 4 major products in SWARM:
BUZZ - Behavior Based Market Research
We believe that market research is evolving and that the techniques
being developed today are more sophisticated and backed by strong data science. Despite these changes, many traditional research firms
have failed to innovate, including: small sample sizes, survey design bias, improper weighting, and gut intuition sampling are just some
of the issues that plague the industry. BUZZ is designed with the ability to put a finger on the pulse of the marketplace in the moment.
It does this by deducing attitudes, emotions, and opinions from various internal and external data sources such as customer data, social
media activity, or micro and macro trends. We have automated the market research process that we believe provides a level of statistical
depth beyond what traditional firms can offer.
THE SWARM – Intelligent Audience Building
The core of our solution, and what we believe separates us from other
audience data companies, is our unique approach to audience building. The concept of ‘personas’ has been around for decades,
but we aim take that general concept to the next level. THE SWARM was developed to solve not only who to talk to, but also what to say
to them, and how to motivate them to take meaningful action. Using our proprietary clustering and behavioral analysis techniques, we believe
we are able to create audiences that are more efficient, targeted, and focused than traditional methods. Our clustering is designed to
not only finds the right people to talk to, but also the message that motivate them.
HIVE – Redefined Geographic Targeting
Our approach is that conventional geographic audience targeting is
outdated. Arbitrary units of location like counties, cities, DMAs, and regions were created hundreds of years ago based on land rights
ownership. We believe their use in understanding people’s behavior, purchase habits, and underlying values is minimal. We try to
solve this by clustering people into granular geographic tribes, called “Hives.” We define Hives by attributes such as common
language (e.g., colloquialisms), shared experience and narratives (e.g., climate, history), and concentrated demography and biology (e.g.,
ethnicity, age). Based on the needs of our clients, we can redraw the geographic lines based on various Hive selection criteria, which
can make marketing more efficient, business decisions more intelligent, and growth more plausible.
HONEY – Advanced Reporting and Visualization
We believe advanced audience data analysis technologies are useless
if it doesn’t produce simple, powerful and actionable business intelligence. HONEY comes with user-friendly reporting and visualization
tools intended to organize and explain all of the advance data science into a simple to understand format for decision makers. HONEY is
designed to combine the intelligence of client CRM data with third-party consumer data and targeted market research to create a powerful
foundation for any audience intelligence solution.
Comprehensive Product Ecosystem
We are constantly striving to help our clients better understand both
their current audience and the larger marketplace. Our team has developed a series of products intended to challenge the status quo of
how intelligence is done within the marketing industry. Each of our products can stand alone, but grow more powerful as part of a larger
ecosystem.
Core Services
Together with its wholly-owned subsidiaries, CloudCommerce can deliver
end-to-end marketing solutions through a range of services and capabilities. SWARM implementations can include some or all of these capabilities.
Data Propria – Data Analytics
To deliver the highest Return on Investment (“ROI”) for
our customers’ digital marketing campaigns, we utilize sophisticated data science to identify the correct universes to target relevant
audiences. Our ability to understand and translate data drives every decision we make. By listening to and analyzing our customers’
data we are able to make informed decisions that positively impact our customers’ business. We leverage industry-best tools to aggregate
and visualize data across multiple sources, and then our data and behavioral scientists segment and model that data to be deployed in
targeted marketing campaigns. We have data analytics expertise in retail, wholesale, distribution, logistics, manufacturing, political,
and several other industries.
Parscale Digital – Digital Marketing
We help our customers get their message out, educate their market and
tell their story. We do so creatively and effectively by deploying powerful call-to-action digital campaigns with national reach and boosting
exposure and validation with coordinated advertising in print media. Our fully-developed marketing plans are founded on sound research
methodologies, brand audits and exploration of the competitive landscape. Whether our customer is a challenger brand, a political candidate,
or a well-known household name, our strategists are skillful at leveraging data and creating campaigns that move people to make decisions.
Giles Design Bureau – Branding and Creative Services
We approach branding from a “big picture” perspective,
establishing a strong identity and then building on that to develop a comprehensive branding program that tells our customer’s story,
articulates what sets our customer apart from their competitors and establishes our customer in their market.
WebTegrity – Development and Managed Infrastructure Support
Commerce-focused, user-friendly digital websites and apps elevates
our customer’s marketing position and draw consumers to their products and services. Our platform-agnostic approach allows us to
architect and build solutions that are the best fit for each customer. Once the digital properties are built, our experts will help manage
and protect the website or app and provide the expertise needed to scale the infrastructure needed as our customer’s business grows.
Growth Strategy
Our goal is to become the leading provider of audience-driven business
intelligence and marketing solutions. Our strategies to meet this goal include:
| ● | Automate our SWARM solution
through the development of software that will allow our customers to self-serve on our platform. |
| ● | Acquire or partner with companies
that can speed up the automation and delivery of the SWARM platform. |
| ● | Continue to hire top talent
in the fields of data science, machine learning, artificial intelligence, and behavioral science. |
| ● | Drive profitable business growth. |
Market for Common Stock
Our common stock is quoted on the OTC Pink market under the symbol
“CLWD.”
Selling Stockholder Registration
We have simultaneously registered for resale by means of the separate
Selling Stockholder Prospectus up to 38,001,563 shares of our Common Stock, which are outstanding shares held by the Selling Stockholders
(the “Resale Shares”). Before, simultaneous with or after the offering by us of any our securities described in this prospectus,
the Selling Stockholders may offer any or all of the Resale Shares. We are registering the Resale Shares pursuant to our agreement with
the holders granting them “piggyback” registration rights.
Selling Shareholders holding the 38,001,563 Resale Shares have agreed
with us that, until April 21, 2021, they will not sell such shares in an amount per day greater than the higher of a gross dollar amount
of $150,000 or 10% of the daily dollar volume (as defined in the agreement) for our common stock, provided that such restriction shall
not apply to any sales of the common stock by the Selling Stockholder at a price equal to or greater than $0.25 per share. Nevertheless,
the sale of the Resale Shares by the Selling Stockholders could adversely affect the price and liquidity of, and demand for, our securities.
Corporate Information
Our principal executive offices are located at 321 Sixth Street, San
Antonio, TX 78215, and our telephone number is +1-805-964-3313. Our website address is www.cloudcommerce.com. The information
contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration statement of which
it forms a part. The information on our website is not part of this prospectus.
RISK FACTORS
Investing in our securities involves a high degree of risk. Before
making an investment decision, you should consider carefully the risks, uncertainties and other factors described under the caption “Risk
Factors” and elsewhere in our most recent Annual Report on Form 10-K, as supplemented and updated by subsequent quarterly reports
on Form 10-Q and current reports on Form 8-K, that we have filed or will file with the SEC, which are incorporated by reference into this
prospectus.
Our business, affairs, prospects, assets, financial condition, results
of operations and cash flows could be materially and adversely affected by these risks. For more information about our SEC filings, please
see “Where You Can Find More Information.”
The following additional risks could affect an investment in the securities
we may offer pursuant to this prospectus.
The trading price of our common stock may to continue to be volatile.
The trading price of our common stock has been highly volatile and
could continue to be subject to wide fluctuations in response to various factors, some of which are beyond our control. During calendar
year 2020, our common stock traded at a low of $0..001 and a high of $0.0163. From the beginning of 2021 through February 12, 2021, our
common stock traded at a low of $0.00596 and a high of $0.185.
We do not believe that this volatility corresponds to any recent change
in our financial condition. However, our recent launch of an artificial intelligence (AI) venture focused on using AI to enhance our existing
SWARM solution with the goal of cutting advertising costs, as well as conditions in the financial markets generally, may have caused or
contributed to this volatility.
The stock market in general, and the market for technology companies
in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating
performance of those companies. Public perception and other factors outside of our control may additionally impact the stock price of
companies like us that garner a disproportionate degree of public attention, regardless of actual operating performance.
As a result of this volatility, our securities
could experience rapid and substantial decreases in price, and you may be able to sell securities you purchase under this prospectus only
at a substantial loss to the initial offering price.
Some, but not all, of the factors that may
cause the market price of our common stock to fluctuate include:
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fluctuations in our quarterly or annual financial results or the quarterly or annual financial results of companies perceived to be similar to us or relevant for our business; |
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changes in estimates of our financial results or recommendations by securities analysts; |
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failure of our products to achieve or maintain market acceptance; |
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changes in market valuations of similar or relevant companies; |
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success of competitive service offerings or technologies; |
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changes in our capital structure, such as the issuance of securities or the incurrence of debt; |
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announcements by us or by our competitors of significant services, contracts, acquisitions or strategic alliances; |
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regulatory developments in the United States, foreign countries, or both; |
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additions or departures of key personnel; |
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investors’ general perceptions; and |
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changes in general economic, industry or market conditions. |
In addition, if the market for technology
stocks, or the stock market in general, experiences a loss of investor confidence, the trading price of our common stock could decline
for reasons unrelated to our business, financial condition, or results of operations. Further, in the past, following periods of volatility
in the overall market and the market price of a particular company’s securities, securities class action litigation has often been
instituted against these companies. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to lawsuits
that, even if unsuccessful, could be costly to defend and a distraction to management.
[A possible “short squeeze” due to a sudden increase
in demand of our common stock that largely exceeds supply may lead to additional price volatility.
Historically there has not been a large short position in our common
stock. However, in the future investors may purchase shares of our common stock to hedge existing exposure or to speculate on the
price of our common stock. Speculation on the price of our common stock may involve long and short exposures. To the extent an aggregate
short exposure in our common stock becomes significant, investors with short exposure may have to pay a premium to purchase shares for
delivery to share lenders at times if and when the price of our common stock increases significantly, particularly over a short period
of time. Those purchases may in turn, dramatically increase the price of our common stock. This is often referred to as a “short
squeeze.” A short squeeze could lead to volatile price movements in our common stock that are not directly correlated to our business
prospects, financial performance or other traditional measures of value for the Company or its common stock.]
The number of shares of common stock we may offer (or underlying
other securities we may offer) hereunder is significant relative to the number of shares currently outstanding, and if we offer and sell
a significant number of such securities, it could result in a decline in the price of our securities.
At the price of our common stock as of the date of this prospectus,
the $100 million of securities we may offer under this prospectus, in common stock or equivalents, if offered and sold in its entirety,
would represent more than the number of shares of common stock we currently have outstanding. If we sell a large number of such securities
at one time or over a short period of time, our securities could experience a substantial decrease in price, and you may be able to sell
securities you purchase under this prospectus only at a substantial loss to the initial offering price.
Additional stock offerings in the future may dilute then-existing
shareholders’ percentage ownership of the Company.
Given our plans and expectations that we will need additional capital
in the future, we anticipate that we will need to issue additional shares of common stock or securities convertible or exercisable for
shares of common stock, including convertible preferred stock, convertible notes, stock options or warrants. The issuance of additional
securities in the future will dilute the percentage ownership and potentially voting power of then current stockholders and could negatively
impact the price of our common stock and other securities.
USE OF PROCEEDS
Unless otherwise indicated in a prospectus supplement, we intend to
use the net proceeds from these sales for working capital and general corporate purposes, which includes, without limitation, further
development of our SWARM advertising platform, investing in or acquiring companies that are synergistic with or complimentary to our technologies,
licensing activities related to our current and future product candidates and working capital, the development of emerging technologies,
investing in or acquiring companies that are developing emerging technologies, licensing activities, or the acquisition of other businesses.
The amounts and timing of these expenditures will depend on numerous factors, including the development of our current business initiatives.
PLAN OF DISTRIBUTION
We may sell the securities from time to time to or through underwriters
or dealers, through agents, or directly to one or more purchasers. A distribution of the securities offered by this prospectus may also
be effected through the issuance of derivative securities, including without limitation, warrants, rights to purchase and subscriptions.
In addition, the manner in which we may sell some or all of the securities covered by this prospectus includes, without limitation, through:
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a block trade in which a broker-dealer will attempt to sell as agent, but may position or resell a portion of the block, as principal, in order to facilitate the transaction; |
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purchases by a broker-dealer, as principal, and resale by the broker-dealer for its account; or |
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ordinary brokerage transactions and transactions in which a broker solicits purchasers. |
A prospectus supplement or supplements with respect to each series
of securities will describe the terms of the offering, including, to the extent applicable:
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the terms of the offering; |
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the name or names of the underwriters or agents and the amounts of securities underwritten or purchased by each of them, if any; |
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the public offering price or purchase price of the securities or other consideration therefor, and the proceeds to be received by us from the sale; |
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any delayed delivery requirements; |
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any over-allotment options under which underwriters may purchase additional securities from us; |
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any underwriting discounts or agency fees and other items constituting underwriters’ or agents’ compensation; |
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any discounts or concessions allowed or re-allowed or paid to dealers; and |
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any securities exchange or market on which the securities may be listed or quoted. |
The offer and sale of the securities described in this prospectus by
us, the underwriters or the third parties described above may be effected from time to time in one or more transactions, including privately
negotiated transactions, initially at a fixed price to be set forth in the applicable pricing supplement. If and when our common
stock is quoted on the OTCQB or OTCQX Market of OTC Markets, Inc., or a national securities exchange (of which there can be no assurance),
then the securities described in this prospectus may be offered and sold either:
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at fixed price or prices, which may be changed; |
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in an “at the market” offering within the meaning of Rule 415(a)(4) of the Securities Act; |
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at prices related to such prevailing market prices; or |
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at negotiated prices. |
Only underwriters named in the prospectus supplement will be underwriters
of the securities offered by the prospectus supplement.
Underwriters and Agents; Direct Sales
If underwriters are used in a sale, they will acquire the offered securities
for their own account and may resell the offered securities from time to time in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time of sale. We may offer the securities to the public through
underwriting syndicates represented by managing underwriters or by underwriters without a syndicate.
Unless the prospectus supplement states otherwise, the obligations
of the underwriters to purchase the securities will be subject to the conditions set forth in the applicable underwriting agreement. Subject
to certain conditions, the underwriters will be obligated to purchase all of the securities offered by the prospectus supplement, other
than securities covered by any over-allotment option. Any public offering price and any discounts or concessions allowed or re-allowed
or paid to dealers may change from time to time. We may use underwriters with whom we have a material relationship. We will describe in
the prospectus supplement, naming the underwriter, the nature of any such relationship.
We may sell securities directly or through agents we designate from
time to time. We will name any agent involved in the offering and sale of securities, and we will describe any commissions we will pay
the agent in the prospectus supplement. Unless the prospectus supplement states otherwise, our agent will act on a best-efforts basis
for the period of its appointment.
We may authorize agents or underwriters to solicit offers by certain
types of institutional investors to purchase securities from us at the public offering price set forth in the prospectus supplement pursuant
to delayed delivery contracts providing for payment and delivery on a specified date in the future. We will describe the conditions to
these contracts and the commissions we must pay for solicitation of these contracts in the prospectus supplement.
Dealers
We may sell the offered securities to dealers as principals. The dealer
may then resell such securities to the public either at varying prices to be determined by the dealer or at a fixed offering price agreed
to with us at the time of resale.
Institutional Purchasers
We may authorize agents, dealers or underwriters to solicit certain
institutional investors to purchase offered securities on a delayed delivery basis pursuant to delayed delivery contracts providing for
payment and delivery on a specified future date. The applicable prospectus supplement or other offering materials, as the case may be,
will provide the details of any such arrangement, including the offering price and commissions payable on the solicitations.
We will enter into such delayed contracts only with institutional purchasers
that we approve. These institutions may include commercial and savings banks, insurance companies, pension funds, investment companies
and educational and charitable institutions.
Indemnification; Other Relationships
We may provide agents, underwriters, dealers and remarketing firms
with indemnification against certain civil liabilities, including liabilities under the Securities Act, or contribution with respect to
payments that the agents or underwriters may make with respect to these liabilities. Agents, underwriters, dealers and remarketing firms,
and their affiliates, may engage in transactions with, or perform services for, us in the ordinary course of business. This includes commercial
banking and investment banking transactions.
Market-Making; Stabilization and Other Transactions
There is currently no market for any of the offered securities, other
than our common stock, which is quoted on the OTC Pink market. If the offered securities are traded after their initial issuance, they
may trade at a discount from their initial offering price, depending upon prevailing interest rates, the market for similar securities
and other factors. While it is possible that an underwriter could inform us that it intends to make a market in the offered securities,
such underwriter would not be obligated to do so, and any such market-making could be discontinued at any time without notice. Therefore,
no assurance can be given as to whether an active trading market will develop for the offered securities. We have no current plans for
listing of the preferred stock, warrants or subscription rights on any securities exchange or quotation system; any such listing with
respect to any particular preferred stock, warrants or subscription rights will be described in the applicable prospectus supplement or
other offering materials, as the case may be.
Any underwriter may engage in over-allotment, stabilizing transactions,
short-covering transactions and penalty bids in accordance with Regulation M under the Securities Exchange Act of 1934, as amended, or
the Exchange Act. Over-allotment involves sales in excess of the offering size, which create a short position. Stabilizing transactions
permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum price. Syndicate-covering
or other short-covering transactions involve purchases of the securities, either through exercise of the over-allotment option or in the
open market after the distribution is completed, to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession
from a dealer when the securities originally sold by the dealer are purchased in a stabilizing or covering transaction to cover short
positions. Those activities may cause the price of the securities to be higher than it would otherwise be. If commenced, the underwriters
may discontinue any of the activities at any time.
Any underwriters or agents that are qualified market makers on the
OTC Pink market may engage in passive market making transactions in our common stock on the OTC Pink market in accordance with Regulation
M under the Exchange Act, during the business day prior to the pricing of the offering, before the commencement of offers or sales of
our common stock. Passive market makers must comply with applicable volume and price limitations and must be identified as passive market
makers. In general, a passive market maker must display its bid at a price not in excess of the highest independent bid for such security;
if all independent bids are lowered below the passive market maker’s bid, however, the passive market maker’s bid must then
be lowered when certain purchase limits are exceeded. Passive market making may stabilize the market price of the securities at a level
above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.
Fees and Commissions
If 5% or more of the net proceeds of any offering of securities made
under this prospectus will be received by a FINRA member participating in the offering or affiliates or associated persons of such FINRA
member, the offering will be conducted in accordance with FINRA Rule 5121.
DESCRIPTION OF SECURITIES WE MAY OFFER
General
This prospectus describes the general terms of our capital stock. The
following description is not complete and may not contain all the information you should consider before investing in our capital stock.
For a more detailed description of these securities, you should read the applicable provisions of Nevada law and our amended and restated
certificate of incorporation, referred to herein as our certificate of incorporation, and our amended and restated bylaws, referred to
herein as our bylaws. When we offer to sell a particular series of these securities, we will describe the specific terms of the series
in a supplement to this prospectus. Accordingly, for a description of the terms of any series of securities, you must refer to both the
prospectus supplement relating to that series and the description of the securities described in this prospectus. To the extent the information
contained in the prospectus supplement differs from this summary description, you should rely on the information in the prospectus supplement.
We, directly or through agents, dealers or underwriters designated
from time to time, may offer, issue and sell, together or separately, up to $250,000,000 in the aggregate of:
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common stock; |
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preferred stock; |
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warrants to purchase our securities; |
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subscription rights to purchase our securities; |
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depositary shares; |
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purchase contracts; or |
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units comprised of, or other combinations of, the foregoing securities. |
The preferred stock may also be exchangeable for and/or convertible
into shares of common stock, another series of preferred stock or other securities that may be sold by us pursuant to this prospectus
or any combination of the foregoing. When a particular series of securities is offered, a supplement to this prospectus will be delivered
with this prospectus, which will set forth the terms of the offering and sale of the offered securities.
Authorized Capital Stock; Issued and Outstanding Capital Stock
We have authorized 2,005,000,000 shares of capital stock, par value
$0.001 per share, of which 2,000,000,000 are shares of common stock and 5,000,000 are shares of preferred stock, 10,000 of which are designated
Series A Preferred Stock, 25,000 of which are designated as Series B Preferred Stock, 25,000 of which are designated as Series C Preferred
Stock, 90,000 of which are designated as Series D Preferred Stock, 10,000 of which are designated as Series E Preferred Stock, 800,000
of which are designated as Series F Preferred Stock, and 2,600 of which are designated as Series G Preferred Stock. As of January 20,
2021, there were 702,253,178 shares of common stock issued and outstanding, 10,000 shares of Series A Preferred Stock outstanding, 18,025
shares of Series B Preferred Stock outstanding, 14,425 shares of Series C Preferred Stock outstanding, 90,000 shares of Series D Preferred
Stock outstanding, 10,000 shares of Series E Preferred Stock outstanding, 2,413 shares of Series F Preferred Stock outstanding, and 2,597
shares of Series G Preferred Stock outstanding. The authorized and unissued shares of common stock and the authorized and undesignated
shares of preferred stock are available for issuance without further action by our stockholders, unless such action is required by applicable
law or the rules of any stock exchange on which our securities may be listed. Unless approval of our stockholders is so required, our
board of directors does not intend to seek stockholder approval for the issuance and sale of our common stock or preferred stock.
Common Stock
The holders of our common stock are entitled to one vote per share.
Our certificate of incorporation does not provide for cumulative voting. At each annual meeting of stockholders, directors are elected
for a term of office to expire at the next succeeding annual meeting of stockholders. The holders of our common stock are entitled to
receive ratably such dividends, if any, as may be declared by our board of directors out of legally available funds. However, the current
policy of our board of directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up,
the holders of our common stock are entitled to share ratably in all assets that are legally available for distribution. The holders of
our common stock have no preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions applicable
to the common stock. The rights, preferences and privileges of holders of our common stock are subject to, and may be adversely affected
by, the rights of the holders of any series of preferred stock, which may be designated solely by action of our board of directors and
issued in the future.
As of January 20, 2021, 702,253,178 shares of common stock were outstanding.
As of January 20, 2021, we had options to purchase 821,675,799 shares
of common stock that are outstanding, with a weighted average exercise price of $0.0068, of which 247,804,566 were then exercisable.
We also have warrants to purchase common stock that are outstanding,
which are described below.
As of the date of this prospectus, we have no convertible promissory
notes outstanding.
Preferred Stock
Outstanding Preferred Stock
Series A Preferred
The Company has designated 10,000 shares of its preferred
stock as Series A Preferred Stock. Each share of Series A Preferred Stock is convertible into 10,000 shares of the Company’s common
stock. The holders of outstanding shares of Series A Preferred Stock are entitled to receive dividends, payable quarterly, out of any
assets of the Corporation legally available therefor, at the rate of $8 per share annually, payable in preference and priority to any
payment of any dividend on the common stock. As of September 30, 2020, the Company has 10,000 shares of Series A Preferred Stock outstanding. During
the nine months ended September 30, 2020 and 2019, we paid dividends of $20,000 and $20,000, respectively, to the holders of Series A
Preferred stock. As of September 30, 2020, the balance owed on the Series A Preferred stock dividend was $120,000.
Series B Preferred
The Company has designated 25,000 shares of its preferred
stock as Series B Preferred Stock. Each share of Series B Preferred Stock has a stated value of $100. The Series B Preferred Stock is
convertible into shares of the Company's common stock in amount determined by dividing the stated value by a conversion price of $0.004
per share. The Series B Preferred Stock does not have voting rights except as required by law and with respect to certain protective provisions
set forth in the Certificate of Designation of Series B Preferred Stock. As of September 30, 2020, the Company has 18,025 shares of Series
B Preferred Stock outstanding.
Series C Preferred
The Company has designated 25,000 shares of its preferred
stock as Series C Preferred Stock. Each share of Series C Preferred Stock has a stated value of $100. The Series C Preferred Stock is
convertible into shares of the Company's common stock by dividing the stated value by a conversion price of $0.01 per share. The Series
C Preferred Stock does not have voting rights except as required by law and with respect to certain protective provisions set forth in
the Certificate of Designation of Series C Preferred Stock. As of September 30, 2020, the Company has 14,425 shares of Series C Preferred
Stock outstanding.
Series D Preferred
The Company has designated 90,000 shares of its preferred
stock as Series D Preferred Stock. Each share of Series D Preferred Stock has a stated value of $100. The Series D Preferred Stock is
convertible into common stock at a ratio of 2,500 shares of common stock per share of preferred stock, and pays a quarterly dividend,
calculated as (1/90,000) x (5% of the Adjusted Gross Revenue) of the Company’s subsidiary Parscale Digital. Adjusted Gross
Revenue shall mean the top line gross revenue of Parscale Digital, as calculated under GAAP (generally accepted accounting principles)
less any reselling revenue attributed to third party advertising products or service, such as, but not limited to, search engine keyword
campaign fees, social media campaign fees, radio or television advertising fees, and the like. The Series D Preferred Stock does not have
voting rights except as required by law and with respect to certain protective provisions set forth in the Certificate of Designation
of Series D Preferred Stock. As of September 30, 2020, the Company had 90,000 shares of Series D Preferred Stock outstanding. During
the nine months ended September 30, 2020, and 2019, we paid dividends of zero, and zero respectively, to the holders of Series D
Preferred stock. As of September 30, 2020, the balance owed on the Series D Preferred stock dividend was $237,664, $12,116 of which relates
to the quarter ended September 30, 2020.
Series E Preferred
The Company has designated 10,000 shares of its preferred
stock as Series E Preferred Stock. Each share of Series E Preferred Stock has a stated value of $100. The Series E Preferred Stock is
convertible into shares of the Company's common stock in an amount determined by dividing the stated value by a conversion price of $0.05
per share. The Series E Preferred Stock does not have voting rights except as required by law and with respect to certain protective provisions
set forth in the Certificate of Designation of Series E Preferred Stock. As of September 30, 2020, the Company has 10,000 shares of Series
E Preferred Stock outstanding.
Series F Preferred
The Company has designated 800,000 shares of its preferred
stock as Series F Preferred Stock. Each share of Series F Preferred Stock has a stated value of $25. The Series F Preferred Stock is not
convertible into common stock. The holders of outstanding shares of Series F Preferred Stock are entitled to receive dividends, at the
annual rate of 10%, payable monthly, payable in preference and priority to any payment of any dividend on the Company’s common stock.
The Series F Preferred Stock does have voting rights, except as required by law and with respect to certain protective provisions set
forth in the Certificate of Designation. To the extent it may lawfully do so, the Company may, in its sole discretion, after the first
anniversary of the original issuance date of the Series F Preferred Stock, redeem any or all of the then outstanding shares of Series
F Preferred Stock at a redemption price of $25 per share plus any accrued but unpaid dividends. The Series F Preferred Stock is being
offered in connection with the Company’s offering under Regulation A under the Securities Act of 1933, as amended. As of September
30, 2020, the Company had 2,413 shares of Series F Preferred Stock outstanding.
Series G Preferred
On February 6, 2020, the Company designated 2,600 shares
of its preferred stock as Series G Preferred Stock. Each share of Series G Preferred Stock has a stated value of $100. The Series G Preferred
Stock is convertible into shares of the Company's common stock in an amount determined by dividing the stated value by a conversion price
of $0.0019 per share. The Series G Preferred Stock does not have voting rights except as required by law and with respect to certain protective
provisions set forth in the Certificate of Designation of Series G Preferred Stock. As of September 30, 2020, the Company had 2,597 shares
of Series G Preferred Stock outstanding.
Other Series of Preferred Stock We May Issue
The board of directors is authorized, subject to any limitations prescribed
by law, without further vote or action by our stockholders, to issue from time to time shares of preferred stock in one or more series.
Each such series of preferred stock shall have such number of shares, designations, preferences, voting powers, qualifications and special
or relative rights or privileges as determined by our board of directors, which may include, among others, dividend rights, voting rights,
liquidation preferences, conversion rights and preemptive rights. Issuance of preferred stock by our board of directors may result in
such shares having dividend and/or liquidation preferences senior to the rights of the holders of our common stock and could dilute the
voting rights of the holders of our common stock.
Prior to the issuance of shares of each series of preferred stock,
our board of directors is required by the Nevada Revised Law and our amended and restated certificate of incorporation to adopt resolutions
and file a certificate of designations with the Secretary of State of the State of Nevada, which fixes for each class or series the designations,
powers, preferences, rights, qualifications, limitations and restrictions. We will file as an exhibit to the registration statement of
which this prospectus is a part, or will incorporate by reference from a current report on Form 8-K that we file with the Commission,
the form of any certificate of designations for the series of preferred stock we are offering before the issuance of the related series
of preferred stock. The prospectus supplement relating to any preferred stock that we may offer will contain the specific terms of the
class or series and of the offering, which terms may include the following:
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the title and stated value; |
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the number of shares we are offering; |
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the offering price; |
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the number of shares constituting that series, which number may be increased or decreased (but not below the number of shares then outstanding) from time to time by action of our board of directors; |
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the dividend rate and the manner and frequency of payment of dividends on the shares of that series, whether dividends will be cumulative, and, if so, from which date; |
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whether that series will have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights; |
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whether that series will have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as our board of directors may determine; |
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whether or not the shares of that series will be redeemable, and, if so, the terms and conditions of such redemption; |
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whether that series will have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; |
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whether or not the shares of the series will have priority over or be on a parity with or be junior to the shares of any other series or class in any respect; |
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the rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights or priority, if any, of payment of shares of that series; |
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preemptive rights, if any; |
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restrictions on transfer, sale or other assignment, if any; |
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whether interests in the preferred stock will be represented by depositary shares; |
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a discussion of any material or special United States federal income tax considerations applicable to the preferred stock; |
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any limitations on issuance of any class or series of preferred stock ranking senior to or on a parity with the series of preferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs; and |
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any other relative rights, preferences and limitations of that series. |
Once designated by our board of directors, each series of preferred
stock may have specific financial and other terms that will be described in a prospectus supplement. The description of the preferred
stock that is set forth in any prospectus supplement is not complete without reference to the documents that govern the preferred stock.
These include our amended and restated certificate of incorporation and any certificates of designation that our board of directors may
adopt.
All shares of our preferred stock will, when issued, be fully paid
and non-assessable, including shares of our preferred stock issued upon the exercise of preferred stock warrants or subscription rights,
if any.
Our board of directors may authorize the issuance of preferred stock
with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. Preferred
stock could be issued quickly with terms designed to delay or prevent a change in control of our Company or make removal of management
more difficult. Additionally, the issuance of preferred stock could have the effect of decreasing the market price of our common stock.
Although our board of directors has no intention at the present time
of doing so, it could authorize the issuance of a series of preferred stock that could, depending on the terms of such series, impede
the completion of a merger, tender offer or other takeover attempt.
Warrants
We may issue warrants to purchase our securities
or other rights, including rights to receive payment in cash or securities based on the value, rate or price of one or more specified
commodities, currencies, securities or indices, or any combination of the foregoing. Warrants may be issued independently or together
with any other securities that may be sold by us pursuant to this prospectus or any combination of the foregoing and may be attached to,
or separate from, such securities. To the extent warrants that we issue are to be publicly-traded, each series of such warrants will be
issued under a separate warrant agreement to be entered into between us and a warrant agent.
We will file as exhibits to the registration
statement of which this prospectus is a part, or will incorporate by reference from a current report on Form 8-K that we file with the
Commission, forms of the warrant and warrant agreement, if any. The prospectus supplement relating to any warrants that we may offer will
contain the specific terms of the warrants and a description of the material provisions of the applicable warrant agreement, if any. These
terms may include the following:
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the title of the warrants; |
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the aggregate number of warrants; |
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the price or prices at which the warrants will be offered; |
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the designation, amount and terms of the securities or other rights for which the warrants are exercisable; |
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the designation and terms of the other securities, if any, with which the warrants are to be issued and the number of warrants issued with each other security; |
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if applicable, the date on and after which the warrants and the related securities will be separately transferable; |
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the price or prices at which the securities or other rights purchasable upon exercise of the warrants may be purchased; |
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any provisions for adjustment of the number or amount of securities receivable upon exercise of the warrants or the exercise price of the warrants; |
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the manner of exercise of the warrants, including any cashless exercise rights; |
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the terms of any rights of us to redeem or call the warrants; |
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the identities of any warrant agent and any calculation or other agent for the warrants; |
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a discussion of any material U.S. federal income tax considerations applicable to the exercise of the warrants; |
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the date on which the right to exercise the warrants will commence, and the date on which the right will expire; |
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If any, the maximum or minimum number of warrants that may be exercised at any time; |
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information with respect to book-entry procedures, if any; and |
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any other terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants. |
Exercise of Warrants. Each warrant
will entitle the holder of warrants to purchase the amount of securities or other rights, at the exercise price stated or determinable
in the prospectus supplement for the warrants. Warrants may be exercised at any time up to the close of business on the expiration date
shown in the applicable prospectus supplement, unless otherwise specified in such prospectus supplement. After the close of business on
the expiration date, if applicable, unexercised warrants will become void. Warrants may be exercised in the manner described in the applicable
prospectus supplement. When the warrant holder makes the payment and properly completes and signs the warrant certificate at the corporate
trust office of the warrant agent, if any, or any other office indicated in the prospectus supplement, we will, as soon as possible, forward
the securities or other rights that the warrant holder has purchased. If the warrant holder exercises less than all of the warrants represented
by the warrant certificate, we will issue a new warrant certificate for the remaining warrants.
Enforceability of Rights By Holders of
Warrants. Any warrant agent will act solely as our agent under the applicable warrant agreement and will not assume any obligation
or relationship of agency or trust with any holder of any warrant. A single bank or trust company may act as warrant agent for more than
one issue of warrants. A warrant agent will have no duty or responsibility in case of any default by us under the applicable warrant agreement
or warrant, including any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any holder
of a warrant may, without the consent of the related warrant agent or the holder of any other warrant, enforce by appropriate legal action
the holder’s right to exercise, and receive the securities purchasable upon exercise of, its warrants in accordance with their terms.
Warrant Agreement Will Not Be Qualified
Under Trust Indenture Act. No warrant agreement will be qualified as an indenture, and no warrant agent will be required to qualify
as a trustee, under the Trust Indenture Act. Therefore, holders of warrants issued under a warrant agreement will not have the protection
of the Trust Indenture Act with respect to their warrants.
Outstanding Warrants
As of January 20, 2021, we had outstanding warrants to purchase 20,912,852
shares of common stock with a weighted average exercise price of $0.0067 per share, all of which are currently exercisable, but in some
cases subject to a customary 4.99% beneficial ownership “blocker” provisions. Certain warrants may be exercised on a cashless
“net exercise” basis under certain circumstances.
Subscription Rights
We may issue rights to purchase our securities.
The rights may or may not be transferable by the persons purchasing or receiving the rights. In connection with any rights offering, we
may enter into a standby underwriting or other arrangement with one or more underwriters or other persons pursuant to which such underwriters
or other persons would purchase any offered securities remaining unsubscribed for after such rights offering. In connection with a rights
offering to holders of our capital stock a prospectus supplement will be distributed to such holders on the record date for receiving
rights in the rights offering set by us.
We will file as exhibits to the registration
statement of which this prospectus is a part, or will incorporate by reference from a current report on Form 8-K that we file with the
Commission, forms of the subscription rights, standby underwriting agreement or other agreements, if any. The prospectus supplement relating
to any rights that we offer will include specific terms relating to the offering, including, among other matters:
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the date of determining the security holders entitled to the rights distribution; |
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the aggregate number of rights issued and the aggregate amount of securities purchasable upon exercise of the rights; |
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the exercise price; |
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the aggregate number of rights to be issued; |
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the date, if any, on and after which the rights will be separately transferable; |
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the conditions to completion of the rights offering; |
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the date on which the right to exercise the rights will commence and the date on which the rights will expire; |
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any applicable federal income tax considerations; and |
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any other terms of the rights, including terms, procedures and limitations relating to the distribution, exchange and exercise of the rights. |
Each right would entitle the holder of the
rights to purchase the principal amount of securities at the exercise price set forth in the applicable prospectus supplement. Rights
may be exercised at any time up to the close of business on the expiration date for the rights provided in the applicable prospectus supplement.
After the close of business on the expiration date, all unexercised rights will become void.
Holders may exercise rights as described in
the applicable prospectus supplement. Upon receipt of payment and the rights certificate properly completed and duly executed at the corporate
trust office of the rights agent, if any, or any other office indicated in the prospectus supplement, we will, as soon as practicable,
forward the securities purchasable upon exercise of the rights. If less than all of the rights issued in any rights offering are exercised,
we may offer any unsubscribed securities directly to persons other than stockholders, to or through agents, underwriters or dealers or
through a combination of such methods, including pursuant to standby underwriting arrangements, as described in the applicable prospectus
supplement.
Depositary Shares
General. We may offer fractional shares
of preferred stock, rather than full shares of preferred stock. If we decide to offer fractional shares of our preferred stock, we will
issue receipts for depositary shares. Each depositary share will represent a fraction of a share of a particular series of our preferred
stock, and the applicable prospectus supplement will indicate that fraction. The shares of preferred stock represented by depositary shares
will be deposited under a deposit agreement between us and a depositary that is a bank or trust company that meets certain requirements
and is selected by us. The depositary will be specified in the applicable prospectus supplement. Each owner of a depositary share will
be entitled to all of the rights and preferences of the preferred stock represented by the depositary share. The depositary shares will
be evidenced by depositary receipts issued pursuant to the deposit agreement. Depositary receipts will be distributed to those persons
purchasing the fractional shares of our preferred stock in accordance with the terms of the offering. We will file as exhibits to the
registration statement of which this prospectus is a part, or will incorporate by reference from a current report on Form 8-K that we
file with the Commission, forms of the deposit agreement, form of certificate of designation of underlying preferred stock, form of depositary
receipts and any other related agreements.
Dividends and Other Distributions.
The depositary will distribute all cash dividends or other cash distributions received by it in respect of the preferred stock to the
record holders of depositary shares relating to such preferred shares in proportion to the numbers of depositary shares held on the relevant
record date.
In the event of a distribution other than
in cash, the depositary will distribute securities or property received by it to the record holders of depositary shares in proportion
to the numbers of depositary shares held on the relevant record date, unless the depositary determines that it is not feasible to make
such distribution. In that case, the depositary may make the distribution by such method as it deems equitable and practicable. One such
possible method is for the depositary to sell the securities or property and then distribute the net proceeds from the sale as provided
in the case of a cash distribution.
Redemption of Depositary Shares.
Whenever we redeem the preferred stock, the depositary will redeem a number of depositary shares representing the same number of shares
of preferred stock so redeemed. If fewer than all of the depositary shares are to be redeemed, the depositary shares to be redeemed will
be selected by lot, pro rata or by any other equitable method as the depositary may determine.
Voting of Underlying Shares. Upon receipt
of notice of any meeting at which the holders of our preferred stock of any series are entitled to vote, the depositary will mail the
information contained in the notice of the meeting to the record holders of the depositary shares relating to that series of preferred
stock. Each record holder of the depositary shares on the record date will be entitled to instruct the depositary as to the exercise of
the voting rights represented by the number of shares of preferred stock underlying the holder’s depositary shares. The depositary
will endeavor, to the extent it is practical to do so, to vote the number of whole shares of preferred stock underlying such depositary
shares in accordance with such instructions. We will agree to take all action that the depositary may deem reasonably necessary in order
to enable the depositary to do so. To the extent the depositary does not receive specific instructions from the holders of depositary
shares relating to such preferred shares, it will abstain from voting such shares of preferred stock.
Withdrawal of Shares. Upon surrender
of depositary receipts representing any number of whole shares at the depositary’s office, unless the related depositary shares
previously have been called for redemption, the holder of the depositary shares evidenced by the depositary receipts will be entitled
to delivery of the number of whole shares of the related series of preferred stock and all money and other property, if any, underlying
such depositary shares. However, once such an exchange is made, the preferred stock cannot thereafter be re-deposited in exchange for
depositary shares. Holders of depositary shares will be entitled to receive whole shares of the related series of preferred stock on the
basis set forth in the applicable prospectus supplement. If the depositary receipts delivered by the holder evidence a number of depositary
shares representing more than the number of whole shares of preferred stock of the related series to be withdrawn, the depositary will
deliver to the holder at the same time a new depositary receipt evidencing the excess number of depositary shares.
Amendment and Termination of Depositary
Agreement. The form of depositary receipt evidencing the depositary shares and any provision of the applicable depositary agreement
may at any time be amended by agreement between us and the depositary. We may, with the consent of the depositary, amend the depositary
agreement from time to time in any manner that we desire. However, if the amendment would materially and adversely alter the rights of
the existing holders of depositary shares, the amendment would need to be approved by the holders of at least a majority of the depositary
shares then outstanding.
The depositary agreement may be terminated
by us or the depositary if:
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there has been a final distribution in respect of the shares of preferred stock of the applicable series in connection with our liquidation, dissolution or winding up and such distribution has been made to the holders of depositary receipts. |
Resignation and Removal of Depositary.
The depositary may resign at any time by delivering to us notice of its election to do so. We may remove a depositary at any time. Any
resignation or removal will take effect upon the appointment of a successor depositary and its acceptance of appointment.
Charges of Depositary. We will pay
all transfer and other taxes and governmental charges arising solely from the existence of any depositary arrangements. We will pay all
charges of each depositary in connection with the initial deposit of the preferred shares of any series, the initial issuance of the depositary
shares, any redemption of such preferred shares and any withdrawals of such preferred shares by holders of depositary shares. Holders
of depositary shares will be required to pay any other transfer taxes.
Notices. Each depositary will forward
to the holders of the applicable depositary shares all notices, reports and communications from us which are delivered to such depositary
and which we are required to furnish the holders of the preferred stock represented by such depositary shares.
Miscellaneous. The depositary agreement
may contain provisions that limit our liability and the liability of the depositary to the holders of depositary shares. Both the depositary
and we are also entitled to an indemnity from the holders of the depositary shares prior to bringing, or defending against, any legal
proceeding. We or any depositary may rely upon written advice of counsel or accountants, or information provided by persons presenting
preferred shares for deposit, holders of depositary shares or other persons believed by us to be competent and on documents believed by
us or them to be genuine.
Purchase Contracts
We may issue purchase contracts, representing
contracts obligating holders to purchase from us, and us to sell to the holders, a specific or varying number of common stock, preferred
stock, warrants, depositary shares or any combination of the above, at a future date or dates. Alternatively, the purchase contracts may
obligate us to purchase from holders, and obligate holders to sell to us, a specific or varying number of common stock, preferred stock,
warrants, depositary shares, or any combination of the above. The price of the securities and other property subject to the purchase contracts
may be fixed at the time the purchase contracts are issued or may be determined by reference to a specific formula set forth in the purchase
contracts. The purchase contracts may be issued separately or as a part of a unit that consists of (a) a purchase contract and (b) one
or more of the other securities that may be sold by us pursuant to this prospectus or any combination of the foregoing, which may secure
the holders’ obligations to purchase the securities under the purchase contract. The purchase contracts may require us to make periodic
payments to the holders or require the holders to make periodic payments to us. These payments may be unsecured or prefunded and may be
paid on a current or on a deferred basis. The purchase contracts may require holders to secure their obligations under the contracts in
a manner specified in the applicable prospectus supplement.
We will file as exhibits to the registration
statement of which this prospectus is a part, or will incorporate by reference from a current report on Form 8-K that we file with the
Commission, forms of the purchase contracts and purchase contract agreement, if any. The applicable prospectus supplement will describe
the terms of any purchase contracts in respect of which this prospectus is being delivered, including, to the extent applicable, the following:
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whether the purchase contracts obligate the holder or us to purchase or sell, or both purchase and sell, the securities subject to purchase under the purchase contract, and the nature and amount of each of those securities, or the method of determining those amounts; |
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whether the purchase contracts are to be prepaid or not; |
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whether the purchase contracts are to be settled by delivery, or by reference or linkage to the value, performance or level of the securities subject to purchase under the purchase contract; |
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any acceleration, cancellation, termination or other provisions relating to the settlement of the purchase contracts; |
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whether the purchase contracts will be issued in fully registered or global form; and |
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any applicable federal income tax considerations; and |
Units
We may issue units consisting of any combination
of the other types of securities offered under this prospectus in one or more series. We may evidence each series of units by unit certificates
that we may issue under a separate agreement. We may enter into unit agreements with a unit agent. Each unit agent, if any, may be a bank
or trust company that we select. We will indicate the name and address of the unit agent, if any, in the applicable prospectus supplement
relating to a particular series of units. Specific unit agreements, if any, will contain additional important terms and provisions. We
will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from a current
report that we file with the Commission, the form of unit and the form of each unit agreement, if any, relating to units offered under
this prospectus.
If we offer any units, certain terms of that
series of units will be described in the applicable prospectus supplement, including, without limitation, the following, as applicable
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the title of the series of units; |
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identification and description of the separate constituent securities comprising the units; |
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the price or prices at which the units will be issued; |
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the date, if any, on and after which the constituent securities comprising the units will be separately transferable; |
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a discussion of certain United States federal income tax considerations applicable to the units; and |
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any other material terms of the units and their constituent securities. |
Anti-takeover Effects of Our Articles of Incorporation and By-laws
Our Articles of Incorporation and Bylaws contain certain provisions
that may have anti-takeover effects, making it more difficult for or preventing a third party from acquiring control of our Company or
changing our Board of Directors and management. According to our Bylaws and Articles of Incorporation, neither the holders of our common
stock nor the holders of our preferred stock have cumulative voting rights in the election of our directors. The combination of the present
ownership by a few stockholders of a significant portion of our issued and outstanding common stock and lack of cumulative voting makes
it more difficult for other stockholders to replace our Board of Directors or for a third party to obtain control of our Company by replacing
our Board of Directors.
Anti-takeover Effects of Nevada Law
Business Combinations
The “business combination” provisions of Sections 78.411
to 78.444, inclusive, of the Nevada Revised Statutes, or NRS, generally prohibit a Nevada corporation with at least 200 stockholders of
record, a “resident domestic corporation,” from engaging in various “combination” transactions with any “interested
stockholder” unless certain conditions are met or the corporation has elected in its articles of incorporation to not be subject
to these provisions.
A “combination” is generally defined to include (a) a merger
or consolidation of the resident domestic corporation or any subsidiary of the resident domestic corporation with the interested stockholder
or affiliate or associate of the interested stockholder; (b) any sale, lease, exchange, mortgage, pledge, transfer, or other disposition,
in one transaction or a series of transactions, by the resident domestic corporation or any subsidiary of the resident domestic corporation
to or with the interested stockholder or affiliate or associate of the interested stockholder having: (i) an aggregate market value equal
to 5% or more of the aggregate market value of the assets of the resident domestic corporation, (ii) an aggregate market value equal to
5% or more of the aggregate market value of all outstanding shares of the resident domestic corporation, or (iii) 10% or more of the earning
power or net income of the resident domestic corporation; (c) the issuance or transfer in one transaction or series of transactions of
shares of the resident domestic corporation or any subsidiary of the resident domestic corporation having an aggregate market value equal
to 5% or more of the resident domestic corporation to the interested stockholder or affiliate or associate of the interested stockholder;
and (d) certain other transactions with an interested stockholder or affiliate or associate of the interested stockholder.
An “interested stockholder” is generally defined as a person
who, together with affiliates and associates, owns (or within three years, did own) 10% or more of a corporation’s voting stock.
An “affiliate” of the interested stockholder is any person that directly or indirectly through one or more intermediaries
is controlled by or is under common control with the interested stockholder. An “associate” of an interested stockholder is
any (a) corporation or organization of which the interested stockholder is an officer or partner or is directly or indirectly the beneficial
owner of 10% or more of any class of voting shares of such corporation or organization; (b) trust or other estate in which the interested
stockholder has a substantial beneficial interest or as to which the interested stockholder serves as trustee or in a similar fiduciary
capacity; or (c) relative or spouse of the interested stockholder, or any relative of the spouse of the interested stockholder, who has
the same home as the interested stockholder.
If applicable, the prohibition is for a period of two years after the
date of the transaction in which the person became an interested stockholder, unless such transaction is approved by the board of directors
prior to the date the interested stockholder obtained such status; or the combination is approved by the board of directors and thereafter
is approved at a meeting of the stockholders by the affirmative vote of stockholders representing at least 60% of the outstanding voting
power held by disinterested stockholders; and extends beyond the expiration of the two-year period, unless (a) the combination was approved
by the board of directors prior to the person becoming an interested stockholder; (b) the transaction by which the person first became
an interested stockholder was approved by the board of directors before the person became an interested stockholder; (c) the transaction
is approved by the affirmative vote of a majority of the voting power held by disinterested stockholders at a meeting called for that
purpose no earlier than two years after the date the person first became an interested stockholder; or (d) if the consideration to be
paid to all stockholders other than the interested stockholder is, generally, at least equal to the highest of: (i) the highest price
per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination
or in the transaction in which it became an interested stockholder, whichever is higher, plus compounded interest and less dividends paid,
(ii) the market value per share of common shares on the date of announcement of the combination and the date the interested stockholder
acquired the shares, whichever is higher, plus compounded interest and less dividends paid, or (iii) for holders of preferred stock, the
highest liquidation value of the preferred stock, plus accrued dividends, if not included in the liquidation value. With respect to (i)
and (ii) above, the interest is compounded at the rate for one-year United States Treasury obligations from time to time in effect.
Applicability of the Nevada business combination law would discourage
parties interested in taking control of our company if they cannot obtain the approval of our board of directors. These provisions could
prohibit or delay a merger or other takeover or change in control attempt and, accordingly, may discourage attempts to acquire our company
even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.
Control Share Acquisitions
The “control share” provisions of Sections 78.378 to 78.3793,
inclusive, of the NRS, apply to “issuing corporations,” which are Nevada corporations with at least 200 stockholders of record,
including at least 100 stockholders of record who are Nevada residents, and which conduct business directly or indirectly in Nevada, unless
the corporation has elected to not be subject to these provisions.
The control share statute prohibits an acquirer of shares of an issuing
corporation, under certain circumstances, from voting its shares of a corporation’s stock after crossing certain ownership threshold
percentages, unless the acquirer obtains approval of the target corporation’s disinterested stockholders. The statute specifies
three thresholds: (a) one-fifth or more but less than one-third, (b) one-third but less than a majority, and (c) a majority or more, of
the outstanding voting power. Generally, once a person acquires shares in excess of any of the thresholds, those shares and any additional
shares acquired within 90 days thereof become “control shares” and such control shares are deprived of the right to vote until
disinterested stockholders restore the right. These provisions also provide that if control shares are accorded full voting rights and
the acquiring person has acquired a majority or more of all voting power, all other stockholders who do not vote in favor of authorizing
voting rights to the control shares are entitled to demand payment for the fair value of their shares in accordance with statutory procedures
established for dissenters’ rights.
A corporation may elect to not be governed by, or “opt out”
of, the control share provisions by making an election in its articles of incorporation or bylaws, provided that the opt-out election
must be in place on the 10th day following the date an acquiring person has acquired a controlling interest, that is, crossing any of
the three thresholds described above. We have not opted out of the control share statutes.
The effect of the Nevada control share statute is that the acquiring
person, and those acting in association with the acquiring person, will obtain only such voting rights in the control shares as are conferred
by a resolution of the stockholders at an annual or special meeting. The Nevada control share law, if applicable, could have the effect
of discouraging takeovers of our company.
Listing
Our common stock is traded on OTC Pink market under the symbol “CLWD.”
Transfer Agent
The transfer agent and registrar for our common stock is Worldwide
Stock Transfer, LLC. The transfer agent’s address 1 University Plaza Suite 505, Hackensack, NJ 07601 and its telephone number is
+1-201-820-2008.
FORMS OF SECURITIES
Each security may be represented either by
a certificate issued in definitive form to a particular investor or by one or more global securities representing the entire issuance
of securities. Certificated securities in definitive form and global securities will be issued in registered form. Definitive securities
name you or your nominee as the owner of the security, and in order to transfer or exchange these securities or to receive payments other
than interest or other interim payments, you or your nominee must physically deliver the securities to the trustee, registrar, paying
agent or other agent, as applicable. Global securities name a depositary or its nominee as the owner of the warrants or units represented
by these global securities. The depositary maintains a computerized system that will reflect each investor’s beneficial ownership
of the securities through an account maintained by the investor with its broker/dealer, bank, trust company or other representative, as
we explain more fully below.
Registered Global Securities
We may issue the securities in the form of
one or more fully registered global securities that will be deposited with a depositary or its nominee identified in the applicable prospectus
supplement and registered in the name of that depositary or nominee. In those cases, one or more registered global securities will be
issued in a denomination or aggregate denominations equal to the portion of the aggregate principal or face amount of the securities to
be represented by registered global securities. Unless and until it is exchanged in whole for securities in definitive registered form,
a registered global security may not be transferred except as a whole by and among the depositary for the registered global security,
the nominees of the depositary or any successors of the depositary or those nominees.
The specific terms of the depositary arrangement
with respect to any securities to be represented by a registered global security will be described in the prospectus supplement relating
to those securities. We anticipate that the following provisions will apply to all depositary arrangements.
Ownership of beneficial interests in a registered
global security will be limited to persons, called participants, that have accounts with the depositary or persons that may hold interests
through participants. Upon the issuance of a registered global security, the depositary will credit, on its book-entry registration and
transfer system, the participants’ accounts with the respective principal or face amounts of the securities beneficially owned by
the participants. Any dealers, underwriters or agents participating in the distribution of the securities will designate the accounts
to be credited. Ownership of beneficial interests in a registered global security will be shown on, and the transfer of ownership interests
will be effected only through, records maintained by the depositary, with respect to interests of participants, and on the records of
participants, with respect to interests of persons holding through participants. The laws of some states may require that some purchasers
of securities take physical delivery of these securities in definitive form. These laws may impair your ability to own, transfer or pledge
beneficial interests in registered global securities.
So long as the depositary, or its nominee,
is the registered owner of a registered global security, that depositary or its nominee, as the case may be, will be considered the sole
owner or holder of the securities represented by the registered global security for all purposes under the applicable indenture, warrant
agreement or unit agreement.
Except as described below, owners of beneficial
interests in a registered global security will not be entitled to have the securities represented by the registered global security registered
in their names, will not receive or be entitled to receive physical delivery of the securities in definitive form and will not be considered
the owners or holders of the securities under the applicable indenture, warrant agreement or unit agreement. Accordingly, each person
owning a beneficial interest in a registered global security must rely on the procedures of the depositary for that registered global
security and, if that person is not a participant, on the procedures of the participant through which the person owns its interest, to
exercise any rights of a holder under the applicable indenture, warrant agreement or unit agreement. We understand that under existing
industry practices, if we request any action of holders or if an owner of a beneficial interest in a registered global security desires
to give or take any action that a holder is entitled to give or take under the applicable indenture, warrant agreement or unit agreement,
the depositary for the registered global security would authorize the participants holding the relevant beneficial interests to give or
take that action, and the participants would authorize beneficial owners owning through them to give or take that action or would otherwise
act upon the instructions of beneficial owners holding through them.
Payments to holders with respect to securities
represented by a registered global security registered in the name of a depositary or its nominee will be made to the depositary or its
nominee, as the case may be, as the registered owner of the registered global security. None of the Company, the trustees, the warrant
agents, the unit agents or any other agent of the Company, agent of the trustees, the warrant agents or unit agents will have any responsibility
or liability for any aspect of the records relating to payments made on account of beneficial ownership interests in the registered global
security or for maintaining, supervising or reviewing any records relating to those beneficial ownership interests.
We expect that the depositary for any of the
securities represented by a registered global security, upon receipt of any payment of principal, premium, interest or other payment or
distribution to holders of that registered global security, will immediately credit participants’ accounts in amounts proportionate
to their respective beneficial interests in that registered global security as shown on the records of the depositary. We also expect
that payments by participants to owners of beneficial interests in a registered global security held through participants will be governed
by standing customer instructions and customary practices, as is now the case with the securities held for the accounts of customers or
registered in “street name,” and will be the responsibility of those participants.
If the depositary for any of these securities
represented by a registered global security is at any time unwilling or unable to continue as depositary or ceases to be a clearing agency
registered under the Exchange Act and a successor depositary registered as a clearing agency under the Exchange Act is not appointed by
us within 90 days, we will issue securities in definitive form in exchange for the registered global security that had been held by the
depositary. Any securities issued in definitive form in exchange for a registered global security will be registered in the name or names
that the depositary gives to the relevant trustee, warrant agent, unit agent or other relevant agent of ours or theirs. It is expected
that the depositary’s instructions will be based upon directions received by the depositary from participants with respect to ownership
of beneficial interests in the registered global security that had been held by the depositary.
LEGAL MATTERS
Unless otherwise indicated in the applicable prospectus supplement,
the validity of the securities offered by this prospectus and certain other legal matters as to Nevada law will be passed upon for us
by Sichenzia Ross Ference LLP, New York, New York. If legal matters in connection with offerings made by this prospectus are passed on
by counsel for the underwriters, dealers or agents, if any, that counsel will be named in the applicable prospectus supplement.
EXPERTS
The financial statements incorporated by reference into this prospectus
have been so included in reliance on the reports of M&K CPAs, PLLC, an independent registered public accounting firm, related to the
consolidated financial statements as of December 31, 2019 and 2018 and for the years then ended, given on the authority of said firm
as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, along with other information
with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov.
This prospectus is part of a registration statement on Form S-3 that
we filed with the SEC to register the securities offered hereby under the Securities Act of 1933, as amended. This prospectus does not
contain all of the information included in the registration statement, including certain exhibits and schedules. You may obtain the registration
statement and exhibits to the registration statement from the SEC from the SEC’s internet site.
INCORPORATION OF DOCUMENTS BY REFERENCE
We are “incorporating by reference” in this prospectus
certain documents we file with the Commission, which means that we can disclose important information to you by referring you to those
documents. The information in the documents incorporated by reference is considered to be part of this prospectus. Statements contained
in documents that we file with the Commission and that are incorporated by reference in this prospectus will automatically update and
supersede information contained in this prospectus, including information in previously filed documents or reports that have been incorporated
by reference in this prospectus, to the extent the new information differs from or is inconsistent with the old information. We have filed
or may file the following documents with the Commission and they are incorporated herein by reference as of their respective dates of
filing.
| ● | Our Annual Report on Form
10-K for the fiscal year ended December 31, 2019, filed with the Commission on April 16, 2020, as amended by Form
10K/A filed with the Commission on May 22, 2020; |
| ● | Our Quarterly Reports on Form
10-Q for the quarterly period ended March
31, 2020, filed with the Commission on May 15, 2020, for the quarterly period ended June
30, 2020, filed with the Commission on August 14, 2020, and for the quarterly period ended September
30, 2020, filed with the Commission on November 13, 2020; and |
| ● | Our Current Reports on Form
8-K and 8-K/A filed with the Commission April
29, 2020, May 12, 2020, May
20, 2020, June 16, 2020, June
18, 2020, June 24, 2020, June
26, 2020, July 15, 2020, July
20, 2020, July 28, 2020,
October 28, 2020, January
11, 2021, and January 15, 2021.,
February 2, 2021, and February
9, 2021. |
All documents that we filed with the Commission pursuant to Sections
13(a), 13(c), 14, and 15(d) of the Exchange Act subsequent to the date of this registration statement and prior to the filing of a post-effective
amendment to this registration statement that indicates that all securities offered under this prospectus have been sold, or that deregisters
all securities then remaining unsold, will be deemed to be incorporated in this registration statement by reference and to be a part hereof
from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed modified, superseded or replaced for purposes of this prospectus to the extent
that a statement contained in this prospectus, or in any subsequently filed document that also is deemed to be incorporated by reference
in this prospectus, modifies, supersedes or replaces such statement. Any statement so modified, superseded or replaced shall not be deemed,
except as so modified, superseded or replaced, to constitute a part of this prospectus. None of the information that we disclose under
Items 2.02 or 7.01 of any Current Report on Form 8-K or any corresponding information, either furnished under Item 9.01 or included as
an exhibit therein, that we may from time to time furnish to the Commission will be incorporated by reference into, or otherwise included
in, this prospectus, except as otherwise expressly set forth in the relevant document. Subject to the foregoing, all information appearing
in this prospectus is qualified in its entirety by the information appearing in the documents incorporated by reference.
You may request, orally or in writing, a copy of these documents, which
will be provided to you at no cost (other than exhibits, unless such exhibits are specifically incorporate by reference), by contacting
our chief financial officer, c/o CloudCommerce, Inc., at 321 Sixth Street, San Antonio, TX 78215. Our telephone number is +1-805-964-3313.
Information about us is also available at our website at www.cloudcommerce.com. However, the information in our website is not
a part of this prospectus and is not incorporated by reference.
Up to $10,000,000 of Shares of Common Stock
PROSPECTUS SUPPLEMENT
March 28, 2022
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