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Inuvo, Inc. Reports Second Quarter Financial Results; Hosts Conference Call Today

Conference Call Information

The Company will host a conference call at 4:30 PM EDT on August 9, 2012. Participants can access the call by dialing 1-877-941-2068 (domestic) or 1-480-629-9712 (international). In addition, the call will be webcast at http://public.viavid.com/index.php?id=101380 as well as on the Investor Relations section of the Company's website at http://investor.inuvo.com/events_and_presentations where it will also be archived for 45 days.

A telephone replay will be available through Thursday August 23, 2012. To access the replay, please dial 1-877-870-5176 (domestic) or 1-858-384-5517 (international). At the system prompt, enter the code 4558557 followed by the # sign. You will then be prompted for your name, company and phone number. Playback will then automatically begin.

About Inuvo, Inc.

Inuvo®, Inc. (NYSE Amex: INUV), is an Internet marketing and technology company specialized in marketing browser-based consumer applications, managing networks of website publishers and operating specialty websites. To learn more about Inuvo, please visit www.inuvo.com.

Forward-looking Statements

This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words or expressions such as "anticipate," "plan," "will," "intend," "believe" or "expect'" or variations of such words and similar expressions are intended to identify such forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of the Company's future Adjusted EBITDA, growth rate, user base, and preliminary unaudited revenue for the month of July 2012.

These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including, without limitation, statements made with respect to expectations with respect to: the strategy, markets, synergies, costs, efficiencies, and other anticipated financial impacts of the proposed transaction; the combined company’s plans, objectives, expectations, intentions with respect to future operations, fluctuations in demand; changes to economic growth in the U.S. economy; and government policies and regulations, including, but not limited to those affecting the Internet. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of Inuvo and are difficult to predict. Inuvo undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Additional key risks are described in the filings made by Inuvo with the U.S. Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2011 and most recent Form 10-Q.

INUVO, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
   
June 30, December 31,
2012 2011
(Unaudited)
Assets
Current assets
Cash $ 3,281,978 $ 4,413
Restricted cash 475,938 475,586
Accounts receivable, net 5,514,725 5,426,865
Intangible, net - current 963,398 947,882
Other current assets   1,096,208   482,797  
Total current assets 11,332,247 7,337,543
 
Property and equipment, net 3,142,721 1,590,011
Goodwill 6,067,270 1,776,544
Intangible assets, net 11,595,332 390,000
Other assets   165,427   2,243  
Total assets $ 32,302,997 $ 11,096,341  
 
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities
Term and credit notes payable - current portion $ 1,333,333 $ 452,000
Accounts payable 11,349,455 6,198,921
Deferred revenue 4,691 18,083
Accrued expenses and other current liabilities 1,266,724 2,523,176
Current liabilities of discontinued operations   25,000   160,000  
Total current liabilities 13,979,203 9,352,180
 
Term and credit notes payable - long term 6,555,556 2,454,303
Deferred tax liability 4,543,000 -
Other long-term liabilities   1,037,132   300,124  
Total liabilities 26,114,891 12,106,607
 
Total stockholders' equity (deficit)   6,188,106   (1,010,266 )
Total liabilities and stockholders' equity (deficit) $ 32,302,997 $ 11,096,341  
 

INUVO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
       
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
 
Net revenue $ 12,873,981 $ 9,213,037 $ 21,641,133 $ 21,006,530
Cost of revenue   6,097,341     5,098,813     11,445,093     11,470,277  
Gross profit 6,776,640 4,114,224 10,196,040 9,536,253
 
Operating expenses
Search costs 5,422,936 2,296,595 7,265,993 4,790,073
Compensation and telemarketing 1,625,790 2,336,656 2,922,355 5,011,430
Selling, general and administrative   2,386,083     1,097,888     4,355,546     2,530,558  
Total operating expenses   9,434,809     5,731,139     14,543,894     12,332,061  
Operating loss (2,658,169 ) (1,616,915 ) (4,347,854 ) (2,795,808 )
Interest and other expenses, net   (104,731 )   (214,345 )   (271,431 )   (685,814 )
Net loss from continuing operations before taxes (2,762,900 ) (1,831,260 ) (4,619,285 ) (3,481,622 )
Income tax expense   45,977     -     61,977     -  
Net loss from continuing operations (2,808,877 ) (1,831,260 ) (4,681,262 ) (3,481,622 )
Net loss (income) from discontinued operations   (155,236 )       (156,943 )   257,136  
Net loss $ (2,964,113 ) $ (1,831,260 ) $ (4,838,205 ) $ (3,224,486 )
 
Other comprehensive income
Foreign currency revaluation   (10,735 )   -     (5,579 )   -  
Total comprehensive loss $ (2,974,848 ) $ (1,831,260 ) $ (4,843,784 ) $ (3,224,486 )
 
Per common share data
Basic and diluted
Net loss from continuing operations $ (0.12 ) $ (0.21 ) $ (0.25 ) $ (0.40 )
Net loss (income) from discontinued operations   (0.01 )   -     (0.01 )   0.03  
Net loss $ (0.13 ) $ (0.21 ) $ (0.26 ) $ (0.37 )
 
Weighted average shares
(Basic and diluted) 23,484,733 8,805,132 19,022,387 8,681,150
 
By Segment: (unaudited)        
 
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
Net revenue
Publisher Network $ 4,834,813 $ 8,113,355 $ 10,459,768 $ 17,963,418
Software Search 5,496,401 - 7,263,742 -
Partner Programs   2,542,768     1,099,681     3,917,623     3,043,112
Total $ 12,873,982 $ 9,213,036 $ 21,641,133 $ 21,006,530
 
Gross profit
Publisher Network $ 963,903 $ 3,682,911 $ 2,205,093 $ 7,796,330
Software Search 4,151,512 - 5,603,823 -
Partner Programs   1,661,226   431,312   2,387,124   1,739,923
Total $ 6,776,641 $ 4,114,223 $ 10,196,040 $ 9,536,253
 
INUVO, INC.
RECONCILIATION OF NET LOSS FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA
(Unaudited)
       
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
 
Net loss from continuing operations $ (2,808,877 ) $ (1,831,260 ) $ (4,681,262 ) $ (3,481,622 )
Interest and other expenses, net 105,565 113,600 272,265 210,560
Income tax expense 45,977 - 61,977 -
Depreciation 693,267 390,777 1,135,572 805,312
Amortization 1,977,065 628,646 2,820,811 1,358,218
Stock based payments   191,445     365,227     386,864     976,511  
204,442 (333,010 ) (3,773 ) (131,021 )
 
Plus Merger costs   -     -     436,458     -  
Adjusted EBITDA $ 204,442   $ (333,010 ) $ 432,685   $ (131,021 )
 
By Segment
Publisher Network $ 578,478 $ 1,218,704 $ 1,482,746 $ 2,705,995
Software Search (56,505 ) - (10,622 ) -
Partner Programs 1,984,007 (346,381 ) 3,040,504 280,788
Corporate   (2,301,538 )   (1,205,333 )   (4,079,943 )   (3,117,804 )
Adjusted EBITDA $ 204,442   $ (333,010 ) $ 432,685   $ (131,021 )
 

Reconciliation of Net Loss from Continuing Operations to Adjusted EBITDA

In addition to disclosing financial results in accordance with United States generally accepted accounting principles (“GAAP”), our earnings release contains the non-GAAP financial measure “Adjusted EBITDA.”

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