August 14, 2008
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August 2008


Innuity, Inc. Reports Second Quarter 2008 Financial Results

$4.6 Million Gain From The Disposal Of In-Store Systems Business Line


Redmond, Wash. – (August 14, 2008) – Innuity, Inc. (OTCBB: INNU), a Software as a Service (SaaS) company that designs, acquires, and integrates applications to deliver affordable solutions to small businesses, reported its financial results for the quarter ended June 30, 2008.

Summary of Financial Results

Innuity’s net loss from continuing operations for the second quarter of 2008 was $1.4 million or $0.06 per share, as compared with a net loss of $0.6 million or $0.03 per share, from continuing operations during the same period in 2007. Consolidated revenues from continuing operations for the second quarter of 2008 decreased to $1.1 million as compared with $1.2 million for the second quarter of 2007. The increase in losses resulted from the lower revenue and an increase in operating expenses. The increase in operating expenses was due in part to an increase in general and administrative costs and a ramp-up in selling and marketing efforts focused on Innuity’s direct sales channel.

Net income from both continuing and discontinued operations for the second quarter of 2008 was $3.1 million, or $0.12 per share, as compared with a $0.5 million loss, or a $0.02 loss per share, for the same period in 2007. Innuity’s year to date net income from both continuing and discontinued operations was $2.0 million, or $0.08 per share, for the six months ended June 30, 2008, as compared with a $2.1 million dollar loss, or a $0.10 loss per share, for the same period in 2007. Innuity’s adjusted EBITDA from continuing operations was a negative $1.3 million for the first six months of 2008, as compared with a $1.0 million negative adjusted EBITDA number for the same period in 2007.

Discussion of Discontinued Operations

On May 2, 2008, Innuity sold substantially all of the assets used in its In-Store Systems business line that had operated as Jadeon, Inc. to Radiant Systems, Inc. for $7.0 million. In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets,” the operations of Jadeon, Inc. are presented in Innuity’s financial statements as a discontinued operation through the date of the sale.

The net proceeds from the sale of Jadeon were used to pay outstanding debt, including the retirement of the remaining $1.0 million of Innuity’s secured debt, and are expected to be used to continue funding the growth of Innuity’s high-margin business lines and for general corporate purposes.

“The sale of Jadeon has allowed us to make significant improvements to our balance sheet, including the retirement of our secured debt,” said John Wall, chairman and CEO of Innuity. “We are now well positioned to place a much stronger focus on growing our higher margin, small business service offerings, and returning to cash flow positive operations.”

About Innuity

Headquartered in Redmond, WA, Innuity is a Software as a Service (SaaS) company that designs, acquires, and integrates applications to deliver solutions for small business. Innuity’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 facilitates minimum start-up costs and maintenance. For more information on Innuity, go to www.innuity.com.

Forward-Looking Statements

This release contains information about management’s view of Innuity’s future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of a variety of factors, including, but not limited to, risks and uncertainties associated with our ability to develop or offer additional internet technology applications and solutions in a timely and cost-effective manner. If we are unable to develop, license, acquire or otherwise offer through arrangements with third parties the additional services that our customers desire, or if any of our existing or future relationships with these third parties were to be terminated, we could lose our ability to provide key internet technology solutions at cost-effective prices to our customers, which could hinder our ability to introduce new products and services and could cause our revenues to decline. In addition, we have incurred losses since our inception, and we may not achieve or maintain profitability. We will need additional funding to support our operations and capital expenditures, which may not be available in amounts or terms acceptable to us. If adequate additional funds are not available, we may be required to delay, reduce the scope of or eliminate implementation of material parts of our business strategy. Additional risks and uncertainties include our financial condition and those other risk factors described in our quarterly reports on Form 10-Q, our annual report on Form 10-K, and other documents we file periodically with the Securities and Exchange Commission.

Non-GAAP Financial Information

To supplement Innuity’s consolidated financial statements presented in accordance with GAAP and to provide clarity internally and externally, Innuity uses Adjusted EBITDA, which is a non-GAAP measure of financial performance. Adjusted EBITDA is calculated by reducing net losses computed in accordance with GAAP for interest expense, income taxes, depreciation, amortization and share-based payments.  This measure, among other things, is one of the primary metrics by which Innuity evaluates the performance of its business and believes this measure is useful to investors because it represents meaningful supplemental information regarding liquidity and Innuity’s ability to fund operations and its financing obligations.

Innuity’s management believes that investors should have access to, and Innuity is obligated to provide, the same set of tools that management uses in analyzing the company’s results. Non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, and should not be considered in isolation, as a substitute for, or superior to, GAAP results. Non-GAAP terms, as defined by Innuity, may not be comparable to similarly titled measures used by other companies. A reconciliation of Innuity’s GAAP net losses from continuing operations to Adjusted EBITDA from continuing operations for the three and six months ended June 30, 2008, and 2007 is included with the financial statement tables.

IR contact:
The Investor Relations Group
212-825-3120
Jordan Silverstein
jsilverstein@investorrelationsgroup.com

Christine Berni
cberni@investorrelationsgroup.com

Company contact:
Linden N. Barney
CFO
801-705-5163
lindenb@innuity.com