<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 18, 1999
Internet America, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 000-25147 86-0778979
----- --------- ----------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One Dallas Center, 350 N. St. Paul Street, Suite 3000, Dallas, Texas 75201
--------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 861-2500
<PAGE> 2
Reference is made to the Current Report on Form 8-K (the "Form 8-K")
filed by Internet America, Inc. on March 1, 1999. The Form 8-K is hereby amended
and restated in its entirety as follows:
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 18, 1999, Internet America, Inc., a Texas corporation (the
"Company"), acquired all the issued and outstanding membership interests of
CyberRamp, L.L.C., a Texas limited liability company ("CyberRamp"), in exchange
for 365,725 shares of common stock of the Company. As a result of the purchase,
the Company became the indirect holder of all assets and personal property of
CyberRamp. Those assets include approximately 14,000 individual and corporate
internet access accounts and the computer equipment used to service those
accounts. The Company intends to continue to use these assets to provide
internet access to customers. The acquisition was effected pursuant to a
Securities Purchase Agreement dated February 18, 1999, by and among the members
of CyberRamp (the "Members") and the Company. The acquisition will be accounted
for as a pooling of interests.
To the best knowledge of the Company, at the time of the acquisition
there was no material relationship between (i) CyberRamp and the Members on the
one hand and (ii) the Company, or any of its affiliates, any director or officer
of the Company, or any associate of such director or officer on the other hand.
The consideration paid by the Company to CyberRamp was 365,725 shares
of common stock, par value $.01 per share, of the Company. The acquisition
consideration was determined by arms-length negotiations between the parties to
the Securities Purchase Agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
(i) Independent Auditors' Report F-1
(ii) Balance Sheets as of December 31, 1997 and 1998 F-2
(iii) Statements of Operations for the years ended December 31, 1997 and 1998 F-3
(iv) Statements of Members' Deficit for the years ended December 31, 1997 and 1998 F-4
(v) Statements of Cash Flows for the years ended December 31, 1997 and 1998 F-5
(vi) Notes to Financial Statements F-6
</TABLE>
<PAGE> 3
(b) Proforma financial information (unaudited).
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
(i) Pro Forma Balance Sheet at December 31, 1998 P-1
(ii) Pro Forma Statement of Operations for the year ended June 30, 1997 P-2
(iii) Pro Forma Statement of Operations for the year ended June 30, 1998 P-3
(iv) Pro Forma Statement of Operations for the six months ended December 31, 1998 P-4
(v) Notes to Pro Forma Financial Statements P-5
</TABLE>
(c) Exhibits.
The following is a list of exhibits filed as part of this Current
Report on Form 8-K:
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1 Securities Purchase Agreement, dated February 18, 1999, among Internet America Inc., CyberRamp,
L.L.C. and the members of CyberRamp, L.L.C. (1)
23.1 Consent of Deloitte & Touche LLP. (2)
99.1 Press Release of Internet America, Inc. dated February 18, 1999. (1)
</TABLE>
- --------------------
(1) Previously filed as an Exhibit to the Form 8-K on March 1, 1999.
(2) Filed herewith.
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Members of
CyberRamp, L.L.C.
We have audited the accompanying balance sheets of CyberRamp, L.L.C. (the
"Company") as of December 31, 1997 and 1998, and the related statements of
operations, members' deficit and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 1997 and 1998,
and the results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
Dallas, Texas
April 30, 1999
F-1
<PAGE> 5
CYBERRAMP, L.L.C.
BALANCE SHEETS
As of December 31, 1997 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
ASSETS 1997 1998
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 46,221 $ 72,185
PROPERTY AND EQUIPMENT - Net 450,957 278,464
----------- -----------
TOTAL $ 497,178 $ 350,649
=========== ===========
LIABILITIES AND MEMBERS' DEFICIT
CURRENT LIABILITIES:
Trade accounts payable $ 123,943 $ 207,157
Accrued liabilities 112,145 196,352
Deferred revenue 921,715 1,635,362
Notes payable 168,254 272,328
----------- -----------
Total current liabilities 1,326,057 2,311,199
NOTES PAYABLE, net of current portion 229,528 297,162
----------- -----------
Total liabilities 1,555,585 2,608,361
COMMITMENTS AND CONTINGENCIES (Note 4)
MEMBERS' DEFICIT:
Members' interest 585,000 849,784
Accumulated deficit (1,643,407) (3,107,496)
----------- -----------
Total members' deficit (1,058,407) (2,257,712)
----------- -----------
TOTAL $ 497,178 $ 350,649
=========== ===========
</TABLE>
See notes to financial statements.
F-2
<PAGE> 6
CYBERRAMP, L.L.C.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1997 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1997 1998
----------- -----------
<S> <C> <C>
REVENUES:
Access $ 1,080,125 $ 1,905,392
Business services 485,273 856,046
----------- -----------
Total 1,565,398 2,761,438
----------- -----------
OPERATING COSTS AND EXPENSES:
Connectivity and operations 1,012,648 2,382,629
Sales and marketing 275,118 1,019,643
General and administrative 478,827 604,323
Depreciation and amortization 134,706 171,741
----------- -----------
Total 1,901,299 4,178,336
----------- -----------
LOSS FROM OPERATIONS (335,901) (1,416,898)
INTEREST EXPENSE 15,387 47,191
----------- -----------
NET LOSS $ (351,288) $(1,464,089)
=========== ===========
</TABLE>
See notes to financial statements.
F-3
<PAGE> 7
CYBERRAMP, L.L.C.
STATEMENTS OF MEMBERS' DEFICIT
For the years ended December 31, 1997 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL
MEMBERS' ACCUMULATED MEMBERS'
INTEREST DEFICIT DEFICIT
<S> <C> <C> <C>
Balance, January 1, 1997 $ 585,000 $(1,292,119) $ (707,119)
Net loss -- (351,288) (351,288)
----------- ----------- -----------
Balance, December 31, 1997 585,000 (1,643,407) (1,058,407)
Contributions from members 264,784 -- 264,784
Net loss -- (1,464,089) (1,464,089)
----------- ----------- -----------
Balance December 31, 1998 $ 849,784 $(3,107,496) $(2,257,712)
=========== =========== ===========
</TABLE>
See notes to financial statements.
F-4
<PAGE> 8
CYBERRAMP, L.L.C.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1997 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1997 1998
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (351,288) $(1,464,089)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 134,706 171,741
Changes in operating assets and liabilities:
Accounts receivable, net 47,698 --
Prepaid expenses and other current assets 27,948 --
Accounts payable and accrued liabilities 187,151 180,186
Deferred revenue (282,236) 918,389
----------- -----------
Net cash used in operating activities (236,021) (193,773)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from notes payable 333,708 179,229
Payments on notes payable (73,224) (224,276)
Proceeds from members' contributions -- 264,784
----------- -----------
Net cash provided by financing activities 260,484 219,737
----------- -----------
NET INCREASE IN CASH 24,463 25,964
CASH, BEGINNING OF PERIOD 21,758 46,221
----------- -----------
CASH, END OF PERIOD $ 46,221 $ 72,185
=========== ===========
SUPPLEMENTAL INFORMATION:
Cash paid for interest $ 15,437 $ 47,741
=========== ===========
</TABLE>
See notes to financial statements.
F-5
<PAGE> 9
CYBERRAMP, L.L.C.
NOTES TO FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL - CyberRamp, L.L.C. (the "Company"), operates in the State of Texas
as a provider of Internet access, serving both individual and corporate
customers in the Dallas/Ft. Worth area. The Company initially consisted of
three members, James G. Hazlewood, owning a 88.04% interest in the Company,
John H. Jackson, owning a 5.98% interest in the Company and Richard D.
Evans, owning a 5.98% in the Company. The Company was formed by cash
contributions from Mr. Hazlewood, Mr. Jackson and Mr. Evans of $515,234,
$35,000 and $35,000, respectively. Effective January 1, 1997, Mr. Hazlewood
assigned a total of 7.18% (in equal percentages of 1.795%) to four
additional members, reducing his ownership to 80.86%.
As described more fully in note 6, on February 18, 1999, all of the issued
and outstanding membership interests of the Company were sold to Internet
America, Inc. ("Internet America"), a Texas Corporation.
REVENUE RECOGNITION - The Company recognizes revenue as services are
rendered. Services paid in advance or subject to refund are recorded as
deferred revenue.
FINANCIAL INSTRUMENTS - The carrying amounts of cash, accounts receivable,
accounts payable and accrued liabilities approximate fair value because of
the short maturity of these instruments. The fair values for debt and lease
obligations, which have fixed interest rates, do not differ materially from
their carrying values.
CASH EQUIVALENTS - For the purpose of presentation of cash flows, cash
equivalents consist of liquid investments with maturities of three months
or less at date of purchase, and primarily consist of short-term
investments in money market funds.
PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost.
Depreciation and amortization are provided using the straight-line method
over the estimated useful lives of the assets, ranging from three to five
years.
LONG-LIVED ASSETS - On an annual basis, the Company reviews the values
assigned to long-lived assets, such as property and equipment, to determine
if any impairments are other than temporary. Provisions for asset
impairments are based on discounted cash flow projections in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," and such assets are written down to their
estimated fair values.
ADVERTISING EXPENSES - The Company accounts for advertising costs as
expenses in the period in which they are incurred. Advertising expenses for
the years ended December 31, 1997 and 1998 were $142,816 and $380,148,
respectively.
INCOME TAXES - Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the carrying
amount of existing assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to reverse.
F-6
<PAGE> 10
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ significantly from
these estimates.
RECENT ACCOUNTING PRONOUNCEMENTS - In June 1998, Statement of Financial
Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities," was issued and is effective for fiscal
years beginning after June 15, 1999. SFAS 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes
in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a derivative
is designated as part of a hedge transaction and, if it is, the type of
hedge transaction. The Company has not yet evaluated the impact on the
Company's results of operations or financial position of adopting SFAS 133.
2. PROPERTY AND EQUIPMENT
Property and equipment consist of:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1998
<S> <C> <C>
Data communications and office equipment $ 808,749 $ 808,749
Furniture and fixtures 13,439 13,439
Computer software 752 --
--------- ---------
822,940 822,188
Less accumulated depreciation and amortization (371,983) (543,724)
--------- ---------
$ 450,957 $ 278,464
========= =========
</TABLE>
Depreciation expense charged to operations was $34,706 and $171,741 for the
years ended December 31, 1997 and 1998, respectively.
F-7
<PAGE> 11
3. NOTES PAYABLE
Notes payable consist of:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1998
<S> <C> <C>
Note payable to a third party maturing March 10, 1998
bearing interest at 1 percent per month on the unpaid
balance, with principal and interest due monthly $ 45,000 $ --
Note payable in connection with equipment acquisitions,
due at varying dates from July 2000 to November 2001,
bearing interest at 7% and 8%, with principal and interest
due monthly 320,165 461,190
Note payable in connection with equipment acquisitions,
due June 2000, bearing interest at 11%, with principal and
interest due monthly -- 47,818
Note payable in connection with equipment acquisitions,
due October 2001, bearing interest at 12%, with principal
and interest due monthly -- 40,712
Note payable in connection with equipment acquisitions,
due March 2000, bearing interest at 16%, with principal
and interest due monthly 32,617 19,770
--------- ---------
397,782 569,490
Less current portion (168,254) (272,328)
--------- ---------
$ 229,528 $ 297,162
========= =========
</TABLE>
F-8
<PAGE> 12
4. COMMITMENTS AND CONTINGENCIES
The Company leases certain of its facilities under two operating leases
entered into in December 1998 and January 1999. Rental expense under these
leases was $0 and $5,800 for the years ended December 31, 1997 and 1998,
respectively. At December 31, 1998, future payments on operating leases
were approximately as follows:
<TABLE>
<S> <C>
1999 $ 82,965
2000 83,580
2001 72,880
2002 1,215
2003 --
--------
$240,640
========
</TABLE>
5. INCOME TAXES
No provision for income taxes has been recognized for the year ended
December 31, 1997 and 1998 as the Company has incurred net operating losses
for income tax purposes. The Company has provided a valuation allowance for
net deferred tax assets, as it is more likely than not that these assets
will not be realized.
Deferred tax assets and liabilities as of December 31, 1997 and 1998,
consist of:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1998
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 62,000 $ 68,000
Depreciation and amortization 54,000 69,000
--------- ---------
Total deferred tax assets 116,000 137,000
Valuation allowance (116,000) (137,000)
--------- ---------
Net deferred tax assets $ -- $ --
========= =========
</TABLE>
At December 31, 1998, the Company has net operating loss carryforwards of
approximately $201,000 for federal income tax purposes.
A reconciliation of the income tax provision computed at statutory tax
rates to the income tax provision for the years ended December 31, 1997 and
1998 is as follows:
F-9
<PAGE> 13
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1997 1998
<S> <C> <C>
Federal income tax benefit at statutory rate (34)% (34) %
State tax benefit, net of federal benefit (3)% (3) %
Adjustment due to deferred tax asset valuation allowance 37 % 37 %
----- -----
Total income tax provision 0 % 0 %
===== =====
</TABLE>
6. SUBSEQUENT EVENT
On February 18, 1999, Internet America acquired all of the issued and
outstanding membership interests of the Company in exchange for 365,725
shares of common stock of Internet America. The combination was accounted
for as a pooling of interests.
F-10
<PAGE> 14
INTERNET AMERICA, INC.
PRO FORMA CONDENSED FINANCIAL STATEMENTS
(unaudited)
The following unaudited condensed pro forma balance sheet as of December 31,
1998 and the unaudited condensed pro forma statements of operations for the
years ended June 30, 1997 and 1998 and the six months ended December 31, 1998
reflect the acquisitions of CompuNet, Inc. ("CompuNet") and CyberRamp, L.L.C.
("CyberRamp") by Internet America, Inc. (the "Company") as if the combination
occurred at the beginning of the periods presented. The combinations have been
accounted for as poolings of interests under the provisions of Accounting
Principles Board Opinion No. 16, "Business Combinations."
The condensed pro forma statements of operations for the years ended June 30,
1997 and 1998 and the six months ended December 31, 1998 are based upon the
historical financial statements of the Company for the years ended June 30, 1997
and 1998 and the six month period ended December 31, 1998, the historical
financial statements of CompuNet for the period from October 10, 1996
(inception) to June 30, 1997 and the year ended June 30, 1998 and the six month
period ended December 31, 1998, and the historical financial statements of
CyberRamp for the years ended June 30, 1997 and 1998 and the six month period
ended December 31, 1998.
The condensed pro forma financial statements are not necessarily indicative of
the Company's results of operations that might have occurred had the acquisition
been completed at the beginning of the periods presented, or indicative of the
Company's consolidated financial position or results of operations for any
future date or period.
These unaudited pro forma financial statements should be read in conjunction
with the historical financial statements and notes thereto of CyberRamp included
elsewhere in this document and the financial statements of Internet America,
Inc. and CompuNet referred to above.
<PAGE> 15
INTERNET AMERICA, INC.
PRO FORMA CONDENSED BALANCE SHEET
DECEMBER 31, 1998
(unaudited)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
------------------------------------------- -------------- -------------
INTERNET COMPUNET, CYBERRAMP, INTERNET
AMERICA, INC. INC. L.L.C. AMERICA, INC.
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 17,761,993 $ 6,247 $ 72,185 $ 17,840,425
Trade receivables, net 267,716 77,602 - 345,318
Prepaid expenses and other current assets 134,976 1,496 - 136,472
------------ ------------ ------------- -------------
Total current assets 18,164,685 85,345 72,185 18,322,215
PROPERTY AND EQUIPMENT, net 1,463,835 158,907 278,464 1,901,206
OTHER ASSETS, net 427,375 121,868 - 549,243
------------ ------------ ------------- -------------
$ 20,055,895 $ 366,120 $ 350,649 $ 20,772,664
============ ============ ============= =============
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Trade accounts payable $ 1,051,995 $ 273,423 $ 207,157 $ 1,532,575
Accrued liabilities 655,346 161,778 196,352 1,013,476
Deferred revenue 1,927,789 273,079 1,635,362 3,836,230
Current maturities of long-term debt - 70,255 - 70,255
Current maturities of capital lease
obligations 106,395 35,833 272,328 414,556
Notes payable to related parties - 311,186 - (311,186)(2) -
------------ ------------ ------------- -------------
Total current liabilities 3,741,525 1,125,554 2,311,199 6,867,092
CAPITAL LEASE OBLIGATIONS, net of current
portion - 102,246 297,162 399,408
LONG-TERM DEBT, net of current portion - 559,505 - 559,505
------------ ------------ ------------- -------------
Total liabilities 3,741,525 1,787,305 2,608,361 7,826,005
------------ ------------ ------------- -------------
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock 62,860 - - 3,826 (1) 66,686
Additional paid-in capital 22,697,916 83,000 - 307,360 (2) 23,088,276
Members' interest - - 849,784 (849,784)(1) -
Accumulated deficit (6,446,406) (1,504,185) (3,107,496) 849,784 (1) (10,208,303)
------------ ------------ ------------- -------------
Total shareholders' equity (deficit) 16,314,370 (1,421,185) (2,257,712) 12,946,659
------------ ------------ ------------- -------------
$ 20,055,895 $ 366,120 $ 350,649 $ 20,772,664
============ ============ ============= =============
</TABLE>
P-1
<PAGE> 16
INTERNET AMERICA, INC.
PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
YEAR ENDED JUNE 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
-------------------------------------------------- --------------
INTERNET COMPUNET, CYBERRAMP, INTERNET
AMERICA, INC. INC. L.L.C. AMERICA, INC.
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES:
Access $ 8,177,300 $ 643,440 $ 784,449 $ 9,605,189
Business services 1,044,689 -- 404,111 1,448,800
Other 248,933 -- -- 248,933
-------------- -------------- -------------- --------------
Total 9,470,922 643,440 1,188,560 11,302,922
-------------- -------------- -------------- --------------
OPERATING COSTS AND EXPENSES:
Connectivity and operations 6,185,100 412,649 718,577 7,316,326
Sales and marketing 1,912,265 67,288 201,827 2,181,380
General and administrative 2,747,225 143,114 391,323 3,281,662
Depreciation and amortization 1,618,089 44,352 137,403 1,799,844
Impairment of equipment 350,787 264,184 -- 614,971
-------------- -------------- -------------- --------------
Total 12,813,466 931,587 1,449,130 15,194,183
-------------- -------------- -------------- --------------
OPERATING LOSS (3,342,544) (288,147) (260,570) (3,891,261)
INTEREST EXPENSE, NET 480,985 28,658 7,694 517,337
-------------- -------------- -------------- --------------
NET LOSS $ (3,823,529) $ (316,805) $ (268,264) $ (4,408,598)
============== ============== ============== ==============
NET LOSS PER COMMON SHARE:
BASIC $ (1.12) $ (1.16)
============== ==============
DILUTED $ (1.12) $ (1.16)
============== ==============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
BASIC 3,417,808 16,910 365,725 3,800,443 (1)
DILUTED 3,417,808 16,910 365,725 3,800,443 (1)
</TABLE>
P-2
<PAGE> 17
INTERNET AMERICA, INC.
PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
YEAR ENDED JUNE 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
--------------------------------------------------- ---------------- ----------------
INTERNET COMPUNET, CYBERRAMP, INTERNET
AMERICA, INC. INC. L.L.C. AMERICA, INC.
---------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Access $ 9,565,815 $ 1,271,534 $ 1,492,759 $ 12,330,108
Business services 1,036,145 - 670,660 1,706,805
Other 41,312 - - 41,312
---------------- --------------- --------------- ----------------
Total 10,643,272 1,271,534 2,163,419 14,078,225
---------------- --------------- --------------- ----------------
OPERATING COSTS AND EXPENSES:
Connectivity and operations 4,508,781 1,181,399 1,697,639 7,387,819
Sales and marketing 1,140,279 107,520 647,381 1,895,180
General and administrative 1,919,325 536,917 541,575 2,997,817
Depreciation and amortization 1,473,779 112,298 153,224 1,739,301
---------------- --------------- --------------- ----------------
Total 9,042,164 1,938,134 3,039,819 14,020,117
---------------- --------------- --------------- ----------------
OPERATING INCOME (LOSS) 1,601,108 (666,600) (876,400) 58,108
INTEREST EXPENSE, NET 571,106 67,640 31,289 (20,539)(2) 649,496
---------------- --------------- --------------- ----------------
INCOME (LOSS) BEFORE INCOME TAX 1,030,002 (734,240) (907,689) (591,388)
INCOME TAX EXPENSE 24,000 - - 24,000
---------------- --------------- --------------- ----------------
NET INCOME (LOSS) $ 1,006,002 $ (734,240) $ (907,689) $ (615,388)
================ =============== =============== ================
NET INCOME (LOSS) PER COMMON SHARE:
BASIC $ 0.28 $ (0.16)
================ ================
DILUTED $ 0.21 $ (0.16)
================ ================
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
BASIC 3,532,221 16,910 365,725 3,914,856
DILUTED 4,783,319 3,914,856
</TABLE>
P-3
<PAGE> 18
INTERNET AMERICA, INC.
PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
-------------------------------------------------- -------------- -------------
INTERNET COMPUNET, CYBERRAMP, INTERNET
AMERICA, INC. INC. L.L.C. AMERICA, INC.
---------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Access $ 5,791,434 $ 558,539 $ 1,002,838 $ 7,352,811
Business services 531,546 - 450,551 982,097
Other 44,841 - - 44,841
---------------- -------------- -------------- -------------
Total 6,367,821 558,539 1,453,389 8,379,749
---------------- -------------- -------------- -------------
OPERATING COSTS AND EXPENSES:
Connectivity and operations 2,522,972 545,277 1,254,015 4,322,264
Sales and marketing 1,546,432 10,016 536,654 2,093,102
General and administrative 1,217,860 231,198 318,065 1,767,123
Depreciation and amortization 787,970 99,275 90,390 977,635
---------------- -------------- -------------- -------------
Total 6,075,234 885,766 2,199,124 9,160,124
---------------- -------------- -------------- -------------
OPERATING INCOME (LOSS) 292,587 (327,227) (745,735) (780,375)
INTEREST EXPENSE, NET 105,768 40,309 24,837 (10,270)(2) 160,644
---------------- -------------- -------------- -------------
INCOME (LOSS) BEFORE INCOME TAX 186,819 (367,536) (770,572) (941,019)
INCOME TAX EXPENSE 10,000 - - (10,000)
---------------- -------------- -------------- -------------
NET INCOME (LOSS) $ 176,819 $ (367,536) $ (770,572) $ (951,019)
================ ============== ============== =============
NET INCOME (LOSS) PER COMMON SHARE:
BASIC $ 0.05 $ (0.22)
================ =============
DILUTED $ 0.03 $ (0.22)
================ =============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
BASIC 3,878,305 16,910 365,725 4,260,940
DILUTED 5,848,830 4,260,940
</TABLE>
P-4
<PAGE> 19
INTERNET AMERICA, INC.
NOTES TO CONDENSED PRO FORMA FINANCIAL STATEMENTS
(1) Reflects the exchange of 16,910 shares of common stock of Internet
America, Inc. for the net assets of CompuNet and the exchange of 365,725
shares of common stock of Internet America, Inc. for the outstanding
membership interests of CyberRamp. The combinations were accounted for as
poolings of interests.
(2) Notes payable to related parties were not assumed by Internet America,
Inc. as part of the CompuNet combination. Adjustment reflects the
decrease in notes payable as a contribution of capital and the decrease
in interest expense related to the notes payable to related parties.
P-5
<PAGE> 20
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.
INTERNET AMERICA, INC.
Date: May 5, 1999 By:/s/ Michael T. Maples
-------------------------------------
Michael T. Maples,
President and Chief Executive
Officer
<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<S> <C>
2.1 Securities Purchase Agreement, dated February 18,
1999, among Internet America Inc., CyberRamp, L.L.C.,
and the members of CyberRamp. (1)
23.1 Consent of Deloitte & Touche LLP. (2)
99.1 Press Release of Internet America, Inc. dated
February 18, 1999. (1)
</TABLE>
- --------------------
(1) Previously filed as an Exhibit to the Form 8-K on March 1, 1999.
(2) Filed herewith.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statements
on Form S-8 of Internet America, Inc. (Nos. 333-70461, 333-72109, 333-72111 and
333-77153) of our report dated April 30, 1999, relating to the financial
statements of CyberRamp, L.L.C. for the years ended December 31, 1997 and 1998,
appearing in this Current Report on Form 8-K/A dated May 5, 1999 of Internet
America, Inc.
/s/ DELOITTE & TOUCHE LLP
Dallas, Texas
May 5, 1999
