May 13, 2011 at 11:42 AM EDT
Internet America Reports Adjusted EBITDA Profit for the Quarter Ended March 31, 2011
Increased Over the Prior Year Period and Continued Its Sixth Sequential Quarter of EBITDA Profitability

HOUSTON, TX -- (Marketwire) -- 05/13/11 -- Internet America, Inc. (OTCBB: GEEK) today announced results for its fiscal third quarter ended March 31, 2011. Adjusted EBITDA earnings, as defined below, for the quarter ended March 31, 2011 increased by $156,000 to $277,000 as compared to $121,000 for the prior year period. The Company's net loss under U.S. GAAP for the quarter ended March 31, 2011 was $11,000, or ($0.00) per share, as compared to a net loss under U.S. GAAP of $159,000, or ($0.01) per share, for the prior year period.

Wireless broadband Internet revenue for the quarter ended March 31, 2011 increased by $32,000 to $1,220,000 as compared to $1,188,000 for the prior year period. Billy Ladin, CEO commented, "We are pleased with the results of the March quarter during which we continued our system upgrades and filled out our management ranks as we began focusing on our top line."

About Internet America

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 Fax-2-Email, 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.

Use of Non-GAAP Financial Measures

In this press release, the Company refers to a non-GAAP financial measure called adjusted EBITDA because of management's belief that this measure is a financial indicator of the Company's ability to internally generate operating cash flow. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization and stock based compensation expense. 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. Adjusted EBITDA should not be considered an alternative to net income, as defined by U.S. GAAP.

Forward Looking Statements

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) Internet revenue in high-speed broadband will continue to increase at a slower pace than the decrease in other Internet services resulting in greater operating losses in future periods, (4) 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) future acquisitions of wireless broadband Internet customers and infrastructure may not be available on attractive terms and if available we may not successfully integrate those acquisitions into our operations, (13) provisions in our certificate of incorporation, bylaws and shareholder rights plan could limit our share price and delay a change of management and (14) our stock price has been volatile historically and may continue to be volatile. This list is intended to identify certain of the principal factors that could cause actual results to differ materially from those described in the forward-looking statements included elsewhere herein. 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 risk factors included in our other publicly filed reports. These forward-looking statements speak only as of the date hereof. Internet America, Inc. disclaims any obligation to update these forward-looking statements.

                          Internet America, Inc.
                       Unaudited Financial Summary
    (in thousands, except share, per share and subscriber count data)

Statement of Operations Data:
                                                        Quarters Ended
                                                     3/31/2011   3/31/2010
                                                    ----------  ----------
Wireless Broadband Internet Subscribers                  8,000       8,400

Total Subscribers                                       25,000      26,200
Revenue:
     Internet Services                              $    1,728  $    1,829
     Other                                                   -          45
                                                    ----------  ----------
          Total Revenue                                  1,728       1,874
Operating Costs and Expenses:
     Connectivity and Operations                         1,072       1,234
     Sales and Marketing                                    50          74
     General and Administrative                            344         510
     Recoveries of Bad Debt                                 (1)          -
     Depreciation and Amortization                         264         251
     Gain from restructuring of debt                         -         (52)
                                                    ----------  ----------
          Operating Loss                                    (1)       (143)

     Interest Expense, Net                                  10          16
                                                    ----------  ----------
          Net Loss                                  $      (11) $     (159)
                                                    ==========  ==========

Basic and Diluted Net Loss Per Share                $    (0.00) $    (0.01)
                                                    ==========  ==========
Weighted Average Basic Shares                       16,729,562  16,558,914
                                                    ==========  ==========
Weighted Average Diluted Shares                     16,729,562  16,558,914
                                                    ==========  ==========

          Adjusted EBITDA                           $      277  $      121



Reconciliation of Net Income (Loss) (a GAAP Measure)
 to Adjusted EBITDA (a Non-GAAP Measure)

                                                        Quarters Ended
                                                     3/31/2011   3/31/2010
                                                    ----------  ----------
Net Loss                                            $      (11) $     (159)
Add:
Depreciation and Amortization                              264         251
Stock-based Compensation                                    14          13
Interest Expense, net                                       10          16
                                                    ----------  ----------
     Adjusted EBITDA                                $      277  $      121
                                                    ==========  ==========

Balance Sheet Data:

                                                         Periods Ended
                                                     3/31/2011   3/31/2010
                                                    ----------  ----------
Current Assets                                      $    2,057  $    2,087
Property and Equipment, net                              1,502       1,898
Other Assets, net                                        2,731       2,863
                                                    ----------  ----------
     Total Assets                                   $    6,290  $    6,848
                                                    ==========  ==========

Current Liabilities                                 $    1,739  $    2,014
Long-Term Liabilities                                      652         995
Total Shareholders' Equity                               3,899       3,839
                                                    ----------  ----------
     Total Liabilities and Shareholders' Equity     $    6,290  $    6,848
                                                    ==========  ==========

Contact
Internet America, Inc.
713.968.2500
William E. Ladin, Jr.
Email Contact

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