| [September 29, 2009] |
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Internet America Reports Fiscal Year End Results
HOUSTON --(Business Wire)--
Internet America (News - Alert), Inc. (OTCBB:GEEK) today announced results for its fiscal year ended June 30, 2009 and details regarding its Recovery Act grant application as well as expanded business services offerings.
In August 2009, the Company submitted an application for a $24.5 million grant from the Broadband Technology Opportunity Program. The purpose of the program is to expand wireless infrastructure to additional unserved and underserved areas with a goal to increase the deployment and adoption of high speed broadband Internet. Internet America proposed to expand outward from areas adjacent to the Company's existing service areas to unserved and underserved areas of 35 counties in southeast Texas.
Billy Ladin, Chairman and Chief Executive Officer of Internet America, said, "The National Telecommunication and Information Administration has stated that they will quickly award funds to high-quality "shovel ready" projects. Our systems are in place, running well, and are adequate to accommodate the proposed growth detailed in our application and allow us to commence construction rapidly. If awarded the grant, we can create jobs and improve economic, healthcare and educational opportunities in rural communities across southeast Texas."
During fiscal year 2009, Internet America entered into agreements with third-party service providers to fulfill additional demand for desktop video conferencing, DSL, and Voice over Internet Protocol ("VoIP") Hosted VoIP PBX (News - Alert). The Company now offers a comprehensive line of commercial-grade 24x7x365 monitored business services. Broadband connectivity offerings include Metro Ethernet from 3Mbps to 100Mbps, full and fractional T3/DS-3 and T1/DS-1 leased lines, commercial fixed wireless (licensed and unlicensed), and commercial DSL. The Company manages co-location data centers in Stafford, Victoria, and China Grove, Texas. Other business offerings include hosted services, including Video Conferencing, VoIP, web, and mail hosting.
Mr. Ladin said, "Under the present economic recession, many companies are seeking to reduce travel time and expenses. Also, the quality and availability of internet connectivity is improving and the power of personal computers is growing. These products may be very attractive to businesses. Without long-term capital costs or commitments, Internet America can provide businesses with immediate access to new, high performance technology."
For the fiscal year ended June 30, 2009, wireless broadband Internet revenue increased by $218,000 to $4,307,000, compared to $4,089,000 for the year ended June 30, 2008 while the wireless Internet subscriber base remained unchanged at approximately 8,000 as of June 30, 2009 and 2008. The increase in revenue per subscriber was primarily due to customers migrating to upgraded service levels upon completion of infrastructure upgrades in certain areas as well as purchasing additional services for the year ended June 30, 2009.
Presently stable revenues derived from wireless broadband Internet subscribers were offset by the decrease in other types of Internet service revenues of $1,068,000 due to the anticipated decline of dial-up Internet service customers from Internet America's legacy dial-up Internet operations. This decline contributed to decreases in subscriber count of 3,300, or 10.9%, to 27,000 as of June 30, 2009 and in total revenues for the fiscal year ended June 30, 2009 of $7.8 million compared to $8.8 million in fiscal 2008.
The Company's net loss was $2.7 million, or $0.16 per share, for the fiscal year ended June 30, 2009 compared to a net loss of $3.0 million, or $0.20 per share, for the previous year. The net loss included non-recurring charges for impairment of goodwill related to potential reduction in future cash flows from previous dial-up subscriber acquisitions of $1,120,000 and $780,000 for the years ended June 30, 2009 and 2008, respectively. Connectivity and operations, sales and marketing and general and administrative expenses were reduced by $1.5 million to $8,262,000 for the year ended June 30, 2009 primarily due to decrease in personnel costs, consolidation of offices and renegotiation of more favorable terms with telecommunications service providers. These decreases were offset by $194,000 in expenses incurred during fiscal 2009 related to a failed merger which was terminated due to the target company failing to comply with covenants in the merger agreement. EBITDA loss (earnings before interest, taxes, depreciation and amortization) adjusted for failed merger costs, decreased by $742,000, to $280,000 in fiscal 2009.
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 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.
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) we will not receive grant funding sought after in our application to the Broadband Technology Opportunity Program to expand our wireless infrastructure to additional unserved and underserved areas available under The American Recovery and Reinvestment Act, (4) we will not expand our coverage in public-private partnerships with state or local governments, utility providers, or other entities seeking to participate in grant programs or those partnerships may not be successful, (5) 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, (6) financing will not be available to us if and as needed, (7) we will not be competitive with existing or new competitors, (8) we will not keep up with industry pricing or technological developments impacting the Internet, (9) we will be adversely affected by dependence on network infrastructure, telecommunications providers and other vendors or by regulatory changes, (10) service interruptions or impediments could harm our business, (11) 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, (12) government regulations could force us to change our business practices, (13) we may be unable to hire and retain qualified personnel, including our key executive officers, (14) 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, (15) provisions in our certificate of incorporation, bylaws and shareholder rights plan could limit our share price and delay a change of management, and (16) 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 cautionary statements included in our other publicly filed reports and documents.
Internet America, Inc.
(OTC BB: GEEK)
Unaudited Financial Summary
(in thousands, except per share data and subscriber count)
For the Year Ended
6/30/2009
6/30/2008
Subscribers
27,000
30,300
Internet services
7,581
8,431
Other
202
346
Total revenue
7,783
8,777
Connectivity and operations
5,304
5,960
Sales and marketing
301
504
General and administrative
2,657
3,336
Provision for (recoveries of) bad debt
1
(1
)
Minority interest
(5
)
-
EBITDA (loss)
(475
)
(1,022
)
Depreciation and amortization
(1,076
)
(1,173
)
Impairment loss
(1,120
)
(780
)
Interest expense, net
(49
)
(25
)
Net loss
(2,720
)
(3,000
)
Basic and diluted loss per share
(0.16
)
(0.20
)
Weighted average shares - basic and diluted
16,857,031
14,978,681
Reconciliation of net income (a GAAP measure) to EBITDA (a Non-GAAP measure) (in thousands):
For the Year Ended
6/30/2009
6/30/2008
Net loss
(2,720
)
(3,000
)
Add:
Depreciation and amortization
1,076
1,173
Impairment loss
1,120
780
Interest expense, net
49
25
EBITDA (loss)
(475
)
(1,022
)
For the Year Ended
6/30/2009
6/30/2008
Current assets
$
3,348
$
4,984
Property and equipment, net
2,151
2,329
Other assets, net
3,211
4,882
Total assets
$
8,710
$
12,195
Current liabilities
$
2,538
$
2,751
Long-term liabilities
696
1,336
Total shareholders' equity
5,476
8,108
Total liabilities and shareholders' equity
$
8,710
$
12,195
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