Internet America Reports Fiscal Third Quarter Results

Business Wire,  May 14, 2008  

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HOUSTON -- Internet America, Inc. (OTCBB:GEEK) today announced results for the fiscal third quarter ended March 31, 2008. Total revenues for the third quarter increased by 15.4% to approximately $2.3 million compared to total revenues of approximately $2.0 million in the third quarter of 2007. Wireless broadband Internet revenue increased by $523,000, or 88.0% to $1,117,000 in the third quarter of 2008, and the Company's wireless broadband Internet subscriber count increased by 92.9% to 8,100 as of March 31, 2008, compared to 4,200 as of March 31, 2007. For the third quarter, wireless broadband Internet revenue of $1.1 million represented 51.4% of Internet services revenue of $2.2 million compared to 30.1% of Internet services revenue of $2.0 million as of March 31, 2007. The increase in wireless broadband Internet revenue and subscriber count was due to a combination of organic growth and growth attributable to four acquisitions completed by the Company over the last twelve months. Internet America's total subscriber count decreased to 31,800 on March 31, 2008 compared to 34,000 subscribers at the end of the same period last year. The decrease in total subscriber count was due to the anticipated decline of dial-up Internet service customers from Internet America's legacy dial-up Internet operations.

Net loss for the third quarter of 2008 was approximately $485,000, or a loss of $0.03 per share, compared to net loss of approximately $63,000, or $0.01 per share in the same period last year. EBITDA loss (earnings before interest, taxes, depreciation and amortization) was approximately $183,000 in the third quarter compared to EBITDA of approximately $141,000 in the third quarter a year ago. Net loss and EBITDA (loss) were impacted in the third quarter of 2008 by increased costs associated with connectivity and operations, sales and marketing and general and administrative expenses.

Internet America is a leading Internet service provider serving the Texas market. Based in Houston, Internet America offers businesses and individuals a wide array of Internet services including broadband Internet delivered wirelessly and over DSL, dedicated high-speed access, web hosting, and dial-up Internet access. Internet America provides customers a wide range of related value-added services, including Fax2email, online backup and storage solutions, parental control software, and global roaming solutions. Internet America focuses on the speed and quality of its Internet services and its commitment to providing excellent customer care. Additional information on Internet America is available on the Company's web site at http:/www.internetamerica.com.

In this press release, the Company refers to a non-GAAP financial measure called EBITDA because of management's belief that this measure is a financial indicator of the Company's ability to internally generate operating funds. Management also believes that this non-GAAP financial measure is useful information to investors because it is widely used by professional research analysts in the valuation and investment recommendations of companies in the Company's peer group. EBITDA should not be considered an alternative to net income, as defined by GAAP.

This press release may contain forward-looking statements relating to future business expectations. These statements, specifically including management's beliefs, expectations and goals, are subject to many uncertainties that exist in Internet America's operations and business environment. Business plans may change, and actual results may differ materially as a result of a number of risk factors. These risks include, without limitation, that (1) we will not be able to increase our rural customer base at the expected rate, (2) we will not improve EBITDA, profitability or product margins, (3) we will not be able to identify and negotiate acquisitions of wireless broadband Internet customers and infrastructure on attractive terms or successfully integrate those acquisitions into our operations, (4) needed financing will not be available to us if and as needed, (5) we will not be competitive with existing or new competitors, (6) we will not keep up with industry pricing or technological developments impacting the Internet, (7) we will be adversely affected by dependence on network infrastructure, telecommunications providers and other vendors or by regulatory changes, (8) service interruptions or impediments could harm our business; (9) we may be accused of infringing upon the intellectual property rights of third parties, which is costly to defend and could limit our ability to use certain technologies in the future, (10) government regulations could force us to change our business practices, (11) we may be unable to hire and retain qualified personnel, including our key executive officers, (12) provisions in our certificate of incorporation, bylaws and shareholder rights plan could limit our share price and delay a change of management; and (13) our stock price has been volatile historically and may continue to be volatile. These factors are not intended to represent a complete list of all risks and uncertainties inherent in our business, and should be read in conjunction with the more detailed cautionary statements included in our other publicly filed reports and documents.