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Inuvo, Inc. Reports Net Income Of $0.02 Per Share On Higher Revenue In The Second Quarter

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 our lack of profitable operating history, changes in our business, potential need for additional capital, 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 as set forth in our Annual Report on Form 10-K for the year ended December 31, 2012. 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.

INUVO, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
         
    (Unaudited)    
    June 30,   December 31,
    2013   2012
Assets        
Current assets        
Cash   $3,151,635   $3,381,018
Restricted cash    --     301,158
Accounts receivable, net    4,718,335    5,400,290
Unbilled revenue    15,720    58,219
Intangible, net - current    --     328,665
Other current assets    670,256    467,957
Total current assets    8,555,946    9,937,307
         
Property and equipment, net    1,543,534    2,110,771
Goodwill    5,760,808    5,760,808
Intangible assets, net    10,721,328    11,138,330
Other assets    479,205    182,387
Total assets   $27,060,821   $29,129,603
         
Liabilities and Stockholders' Equity (Deficit)          
Current liabilities          
Term and credit notes payable - current portion   $1,333,333   $1,333,333
Accounts payable    7,579,497    10,196,930
Accrued expenses and other current liabilities    2,762,552    1,872,722
Total current liabilities    11,675,382    13,402,985
         
Deferred tax liability    3,940,301    4,099,000
Term and credit notes payable - long term    5,604,913    6,488,889
Other long-term liabilities    1,258,249    932,377
Total liabilities    22,478,845    24,923,251
         
Total stockholders' equity (deficit)    4,581,976    4,206,352
Total liabilities and stockholders' equity (deficit)   $27,060,821   $29,129,603
 
 
INUVO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
                 
    Three Months Ended   Six Months Ended
    June 30, 2013   June 30, 2012   June 30, 2013   June 30, 2012
                 
Net revenue    $ 13,130,428    $ 12,873,981    $ 29,050,207    $ 21,641,133
Cost of revenue    6,964,311    6,097,341    14,445,179    11,445,093
Gross profit    6,166,117    6,776,640    14,605,028    10,196,040
                     
Operating expenses                    
Search costs    2,993,165    5,422,936    7,686,054    7,265,993
Compensation    1,455,369    1,625,790    3,448,694    2,922,355
Selling, general and administrative    1,631,945    2,386,083    3,776,776    4,355,546
Total operating expenses    6,080,479    9,434,809    14,911,524    14,543,894
Operating income    85,638    (2,658,169)    (306,496)    (4,347,854)
Interest expense, net    (66,328)    (104,731)    (172,997)    (271,431)
Net income (loss) from continuing operations before taxes    19,310    (2,762,900)    (479,493)    (4,619,285)
Income tax benefit (expense)    79,247    (45,977)    162,247    (61,977)
Net income (loss) from continuing operations    98,557    (2,808,877)    (317,246)    (4,681,262)
Net income (loss) from discontinued operations    283,015    (155,236)    408,108    (156,943)
Net income (loss)    381,572    (2,964,113)    90,862    (4,838,205)
                 
Other comprehensive income                
Foreign currency revaluation    (127)    (10,735)    (124)    (5,579)
Total comprehensive loss    $ 381,445    $ (2,974,848)    $ 90,738    $ (4,843,784)
                 
Per common share data                    
Basic and diluted                
Net income (loss) from continuing operations    $ 0.01     $ (0.12)    $ (0.02)    $ (0.25)
Net income (loss) from discontinued operations    0.01    (0.01)    0.02    (0.01)
Net income (loss)    $ 0.02    $ (0.13)    $ --     $ (0.26)
                 
Weighted average shares outstanding                
Basic   23,290,479   23,484,733   23,271,159   19,022,387
Diluted   23,323,158   23,484,733   23,271,159   19,022,387
                 
  By Segment (Unaudited):   Three Months Ended   Six Months Ended
    June 30, 2013   June 30, 2012   June 30, 2013   June 30, 2012
Net revenue                
Network    $ 10,090,434    $ 5,439,452    $ 20,883,519    $ 11,823,541
Applications    3,039,994    7,434,529    8,166,688    9,817,592
Total    $ 13,130,428    $ 12,873,981    $ 29,050,207    $ 21,641,133
                 
Gross profit                
Network    $ 3,400,971    $ 947,908    $ 7,120,651    $ 2,430,854
Applications    2,765,146    5,828,732    7,484,377    7,765,186
Total    $ 6,166,117    $ 6,776,640    $ 14,605,028    $ 10,196,040
 
 
INUVO, INC.
RECONCILIATION OF INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES TO ADJUSTED EBITDA
(Unaudited)
                 
    Three Months Ended   Six Months Ended
    June 30, 2013   June 30, 2012   June 30, 2013   June 30, 2012
                 
Income (loss) from continuing operations before taxes    $ 19,310    $ (2,762,900)    $ (479,493)    $ (4,619,285)
Interest expense, net    66,328    104,731    172,997    271,431
Depreciation    504,567    693,267    1,210,034    1,135,572
Amortization    198,501    1,977,065    745,667    2,820,811
Stock-based compensation    110,420    191,445    300,413    386,864
Accrued severances    (51,348)    --     264,813    -- 
Merger costs    --     --     --     436,458
Adjusted EBITDA    $ 847,778    $ 203,608    $ 2,214,431    $ 431,851

Reconciliation of Net Loss from Continuing Operations to Adjusted EBITDA

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