August 2006
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August 2006

FOR IMMEDIATE RELEASE


Innuity, Inc. Issues 2nd Quarter 2006 Financial Results

Internet Technology Company Reports Substantial Revenue Increase as a Result of the Successful Integration of its Search Engine Marketing and Point-of-Sales Acquisitions


REDMOND, Wash. (August 4, 2006) – Innuity, Inc. (OTC BB: INNU), an Internet technology company delivering products and services that help small businesses manage their business life cycle, today announced its financial results for the second quarter of 2006.

Consolidated revenues were $5.6 million for the second quarter of 2006, a 211% increase from $1.8 million reported during the same quarter of 2005. Contributing to this revenue increase was significant growth in Innuity’s Commerce division, which includes revenues related to the acquisition of the point-of-sale company Jadeon; and in Innuity’s Promotion division, which includes revenues related to the acquisition of the search engine marketing firm 10x Marketing.

Innuity reported a loss from operations of $2.5 million for the second quarter of 2006 as compared to a $1.3 million loss from operations during the same quarter of 2005. The company’s net loss for the second quarter of 2006 was $2.5 million (or $(0.13) per basic and diluted share), compared to a net loss of $1.4 million for the second quarter of 2005 (or $(0.17) per basic and diluted share).  The net loss for the second quarter of 2006 before non-cash items (depreciation and amortization of $300,000, share-based payments of $800,000, amortization of prepaid royalties of $400,000, and $300,000 for accretion of debt discount and provision for bad debts ) was $700,000, an improvement of $400,000 from a $1.1 million net loss before non-cash items (depreciation and amortization of $300,000, share-based payments of $400,000, amortization of prepaid royalties of $400,000, and $300,000 for accretion of debt discount and provision for bad debts) during the first quarter of 2006.

Consolidated revenues were $10.5 million for the six months ended June 30, 2006, compared to consolidated revenues of $3.0 million for the six months ended June 30, 2005.  The Company’s loss from operations was $4.6 million for the six months ended June 30, 2006 compared to a loss from operations of $4.7 million during the same six months in 2005.  The Company’s net loss for the six months ended June 30, 2006 was $5.0 million compared to a net loss of $4.8 million for the same six months in 2005.

“The integration of our search engine marketing and point-of-sales acquisitions into our Promotion and Commerce divisions has driven our substantial year-over-year revenue increase,” said John Wall, chairman and chief executive officer of Innuity. “These positive revenue results continue to support our premise that small businesses need cost-effective technology products that help them manage their business cycle.”

Wall continued, "We continue to drive to cash breakeven and have made significant progress over the last two quarters towards this important goal.  Our net loss for Q2, 2006 before non-cash items was $700,000, an improvement of $400,000 from a $1.1 million net loss before non-cash items during Q1, 2006.”

About Innuity

Headquartered in Redmond, WA, Innuity is an Internet technology company that designs, acquires and integrates applications to deliver solutions for small business. The company’s Internet technology is based on an affordable, on-demand model that allows small businesses to simply interact with customers, business partners and vendors and efficiently manage their businesses. Innuity delivers its on-demand applications through its Internet technology platform, Innuity Velocity™.  The Velocity technology platform enables use-based pricing, provides the opportunity to choose applications individually or as an integrated suite and ensures minimum start-up costs and maintenance.  For more information on Innuity, go to www.innuity.com.

Forward-Looking Statements

This press release contains forward-looking statements and information, (within the meaning of the Private Securities Litigation Reform Act of 1995) about the company’s financial results and estimates, business prospects, and products under development that involve substantial risk and uncertainties.  You can identify these statements by the use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance.  Among the factors that could cause actual results to differ materially are the following: (1) worldwide economic conditions; (2) competitive conditions and customer preferences; (3) the impact of acquisitions, strategic alliances, divestitures, and other unusual events resulting from evolving business strategies, and possible organizational restructuring; (4) generating less sales or product developments than estimated; (5) working capital deficit and the ability to continue as a going concern, and (6) legal proceedings.  The information contained in this news release is as of the date indicated.  Innuity assumes no obligation to update any forward-looking statements contained in this release as a result of new information or future events or developments.

Media contact:
Bob Silver
MWW Group for Innuity
206-689-8505 (office)
206-355-2993 (cell)
bsilver@mww.com


IR contact:
Laurie S. Roop
Shareholder Relations
435-652-3884 (direct)
laurie@shareholder-relations.net