Internet America, Inc. (OTCBB: GEEK) today announced results for its fiscal first quarter ended September 30, 2010. Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, stock-based compensation expense and loss on the transfer of assets) for the quarter ended September 30, 2010 increased by $554,000 to $315,000 as compared to a loss of ($239,000) for the prior year period. The Company’s net income for the quarter ended September 30, 2010 was $25,000, or $0.00 per share, as compared to a net loss of ($522,000), or ($0.03) per share, for the prior year period.

Wireless broadband Internet revenue for the quarter ended September 30, 2010 increased by $102,000 to $1,218,000 as compared to $1,116,000 for the prior year period. Billy Ladin, CEO, commented, “We are pleased with the results of the September quarter, which was our fourth sequential quarter of improving net income and adjusted EBITDA profits in a more challenging economic environment.”

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. 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 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 and (15) we will be unable to replace the towers that will be coming off contract in January 2011. 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.
     

Internet America, Inc.

Unaudited Financial Summary

(in thousands, except per share data and subscriber count)
 
Statement of Operations Data:
Quarters Ended
9/30/2010 9/30/2009
 
Wireless Broadband Internet Subscribers 8,100 8,100
 
Total Subscribers 25,500 26,400
Revenue:
Internet Services $ 1,779 $ 1,798
Other   -     38  
Total Revenue 1,779 1,836
Operating Costs & Expenses:
Connectivity & Operations 1,095 1,320
Sales & Marketing 56 78
General & Administrative 315 701
Recoveries of Bad Debt (1 ) (3 )
Depreciation & Amortization 249 247
Loss from Transfer of Assets   26     -  
Operating Income (Loss) 39 (507 )
 
 
Interest Expense, Net (14 ) (15 )
Noncontrolling Interest in Loss of Consolidated Subsidiary   -     -  
Net Income (Loss) $ 25   $ (522 )
 
Basic & Diluted Net Income (Loss) Per Share $ 0.00   $ (0.03 )

Weighted Average Basic Shares
  16,559     16,646  
Weighted Average Diluted Shares   19,448     16,646  
 
Adjusted EBITDA 315 (239 )
 
Reconciliation of Net Income (Loss) (a GAAP Measure) to Adjusted EBITDA (a Non-GAAP Measure)
 
Quarters Ended
9/30/2010 9/30/2009
 
Net Income (Loss) $ 25 $ (522 )
Add:
Depreciation & Amortization 249 247
Stock Compensation 1 21
Interest Expense, net 14 15
Loss from Transfer of Assets   26     -  
Adjusted EBITDA $ 315   $ (239 )
 
Balance Sheet Data:
Periods Ended
9/30/2010 9/30/2009
 
Current Assets $ 2,021 $ 2,641
Property & Equipment, Net 1,685 2,109
Other Assets, Net   2,693     3,053  
Total Assets $ 6,399   $ 7,803  
 
Current Liabilities $ 1,786 $ 2,477
Long-Term Liabilities 781 1,097
Total Shareholders' Equity   3,832     4,229  
Total Liabilities & Shareholders' Equity $ 6,399   $ 7,803  

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