8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

August 14, 2007
Date of report (date of earliest event reported)

Innuity, Inc.

(Exact name of registrant as specified in its charter)

Utah	0-29129	87-0370820
(State or other jurisdiction	(Commission File Number)	(I.R.S. Employer Identification No.)
of incorporation)

8644 154th Avenue NE
Redmond, WA 98052
(Address of principal executive offices)(Zip Code)

(425) 497-9909
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

     As used in this current report on Form 8-K, unless the context otherwise requires, the terms “we,” “us,” “the Company,” and “Innuity” refer to Innuity, Inc., a Utah corporation.

Item 2.02 Results of Operations and Financial Condition.

On August 14, 2007, we issued a press release announcing our financial results for the fiscal quarter ended June 30, 2007. The press release is attached as Exhibit 99.1 to this report and is incorporated herein by reference.

Use of Non-GAAP Financial Information

To supplement the information that is presented in accordance with U.S. generally accepted accounting principles (GAAP), we use a non-GAAP measure of reducing net losses computed in accordance with GAAP for interest expenses, income taxes, depreciation, amortization and share-based payments. These non-GAAP figures are reconciled to their closest GAAP financial measures in the press release. We believe that these non-GAAP measures enhance an investor’s overall understanding of our financial performance by providing supplemental information regarding our liquidity and ability to fund our operations and financing obligations. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as reported by us may not be comparable to similarly titled items reported by other companies.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.	Description
99.1	Press release of Innuity, Inc., dated August 14, 2007

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	INNUITY, INC.
Dated: August 14, 2007	By:	/s/ LINDEN N BARNEY
		Linden N Barney
		Chief Financial Officer

EX-99.1

EXHIBIT 99.1

Innuity, Inc. Reports Second Quarter 2007 Financial Results

The Company Dramatically Decreases Net Loss and Generates $375,000 of Adjusted EBITDA Through
Decreased Operating Expenses and Settlement of Debt

REDMOND, Wash. (August 14, 2007) — Innuity, Inc. (INNU.OB), a Software as a Service (SaaS) company that designs, acquires and integrates applications to deliver affordable solutions to small business, reported its financial results for the second quarter of 2007.

The company’s net loss for the second quarter of 2007 was $517,000, or $0.02 per share, compared with a net loss of $2.5 million, or $0.13 per share, for the second quarter of 2006. The significant improvement to net loss resulted from the tightening of operating costs, the elimination of royalty payments, and the improvement of margins for service revenue, as well as a gain from the settlement of debt. Consolidated revenues for the second quarter of 2007 decreased to $5.5 million from $5.6 million reported during the same quarter of 2006. Revenue for the six months ended June 30, 2007 was $10.8 million, a 3% increase over $10.5 million of revenue for the same period in 2006. The net loss for the six months ended June 30, 2007 was $2.1 million, or $0.10 per share, compared with $5.0 million, or $0.26 per share, for the same period in 2006. The Company’s Adjusted EBITDA was $375,000 for the three months ended June 30, 2007, which represented a $1.1 million quarter-over-quarter improvement from a negative Adjusted EBITDA of $(748,000) for the three months ended March 31, 2007. Adjusted EBITDA for the three months ended June 30, 2007 includes a $577,000 gain from the settlement of debt.

“I am quite pleased with the achievement of our first quarter of positive Adjusted EBITDA. This is a significant milestone for the company that has been accomplished by our team,” said John Wall, Innuity chairman and CEO. “With this dramatic decrease in net loss and positive Adjusted EBITDA, Innuity is continuing the strong momentum towards sustainable cash flow from 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-QSB, our annual report on Form 10-KSB, 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 to Adjusted EBITDA for the three months ended March 31, 2007, and June 30, 2007, as well as for the six months ended June 30, 2007, is included with the financial statement tables.

IR contact:
Jordan Silverstein
Christine Berni
The Investor Relations Group
212-825-3120 (office)
jsilverstein@investorrelationsgroup.com

Company contact:
Shivonne Byrne
Innuity, Inc.
425-968-0306 (office)
shivonne@innuity.com

INNUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	June 30,			December 31,
	2007			2006
ASSETS
Current Assets
Cash and cash equivalents	$	423,829		$	307,483
Settlement deposits		266,617			467,078
Settlement receivable, net of allowance for doubtful accounts		183,693			173,098
Trade accounts receivable, net of allowance for doubtful accounts		1,035,845			1,318,773
Inventories, net of allowance for obsolete inventory		348,919			486,736
Other current assets		179,959			184,891
Total Current Assets		2,438,862			2,938,059
Property and equipment, net		724,354			901,318
Intangible assets, net		1,165,127			1,670,582
Goodwill		1,833,220			1,833,220
Total Assets	$	6,161,563		$	7,343,179
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Trade accounts payable	$	2,701,390		$	2,587,227
Accrued salaries and wages		466,186			612,745
Merchant settlement payable		404,832			453,596
Accrued liabilities		1,076,988			1,229,872
Deferred revenues		3,040,240			2,543,397
Line of credit		—			699,365
Related party notes payable, current portion, net of discount		654,994			658,105
Long-term debt, current portion, net of discount		1,706,144			1,294,529
Capital lease obligations, current portion		148,787			142,972
Total Current Liabilities		10,199,561			10,221,808
Long-Term Liabilities
Related party notes payable, net of discount of $0 and $22,944, respectively		—			330,832
Long-term debt, net of discount of $0 and $254,087, respectively		133,156			180,126
Capital lease obligations		114,187			190,024
Total Long-Term Liabilities		247,343			700,982
Total Liabilities		10,446,904			10,922,790
Commitments and Contingencies
Stockholders’ Deficit		(4,285,341	)		(3,579,611	)
Total Liabilities and Stockholders’ Deficit	$	6,161,563		$	7,343,179

INNUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three months ended June 30,						Six months ended June 30,
	2007			2006			2007			2006
Revenues
Product sales	$	2,277,666		$	2,348,069		$	4,390,537		$	4,247,910
Services		3,240,644			3,210,626			6,414,514			6,268,656
Total revenues		5,518,310			5,558,695			10,805,051			10,516,566
Operating expenses
Cost of product sales		1,744,245			1,688,520			3,388,218			3,248,572
Cost of services		1,771,838			1,820,444			3,586,559			3,532,389
General and administrative		1,088,598			2,000,961			2,418,472			3,484,021
Selling and marketing		1,172,423			1,509,988			2,415,594			2,862,174
Research and development		348,769			341,027			809,934			705,472
Royalty expense		—			415,749			—			831,497
Amortization expense		254,868			245,761			505,455			500,097
Loss from operations		(862,431	)		(2,463,755	)		(2,319,181	)		(4,647,656	)
Other income (expense)
Gain from settlement of debt		577,434			—			577,434			—
Other income		—			2,323			—			69,710
Interest expense		(231,656	)		(68,026	)		(329,611	)		(407,868	)
Total other expense		345,778			(65,703	)		247,823			(338,158	)
Net Loss	$	(516,653	)	$	(2,529,458	)	$	(2,071,358	)	$	(4,985,814	)
Basic and Diluted Loss Per Common Share	$	(0.02	)	$	(0.13	)	$	(0.10	)	$	(0.26	)
Basic and Diluted Weighted-Average Common Shares Outstanding		21,904,776			19,820,623			21,675,482			18,852,999

Adjusted EBITDA:

	Three Months Ended			Three Months Ended			Six Months Ended
	March 31, 2007			June 30, 2007			June 30, 2007
GAAP Net Loss	$	(1,554,705	)	$	(516,653	)	$	(2,071,358	)
Add back:
Interest expense		97,955			231,656			329,611
Income taxes		—			—			—
Depreciation		100,681			96,379			197,060
Amortization		250,587			254,868			505,455
Share-based payments		357,213			308,517			665,730
Adjusted EBITDA	$	(748,269	)	$	374,767		$	(373,502	)