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PROSPECTUS SUPPLEMENT RULE 424(B)(3)
(TO PROSPECTUS DATED JUNE 7, 1999, FILE NO. 333-78615
PROSPECTUS SUPPLEMENT DATED SEPTEMBER 13, 1999,
PROSPECTUS SUPPLEMENT DATED SEPTEMBER 29, 1999,
PROSPECTUS SUPPLEMENT DATED DECEMBER 9, 1999
AND PROSPECTUS SUPPLEMENT DATED JANUARY 21, 2000)
382,635 SHARES
[LOGO]
INTERNET AMERICA, INC.
COMMON STOCK
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This Prospectus Supplement supplements and amends the Prospectus dated June 7,
1999, as amended by the Prospectus Supplement dated September 13, 1999, as
amended by the Prospectus Supplement dated September 29, 1999, as amended by the
Prospectus Supplement dated December 9, 1999, as amended by the Prospectus
Supplement dated January 21, 2000 (as supplemented or amended, the "Prospectus")
relating to 382,635 shares of Internet America Common Stock being offered by
certain of our shareholders named in the Prospectus who have acquired such
securities from us in connection with certain acquisitions of businesses by us.
All capitalized terms used but not defined in this Prospectus Supplement have
the meanings given to them in the Prospectus.
Trading Symbol for Common Stock
on the Nasdaq National Market -- GEEK
Closing Price on May 11, 2000 -- $4.813
SEE "RISK FACTORS" ON PAGE 6 OF THE ACCOMPANYING PROSPECTUS FOR A DISCUSSION OF
CERTAIN RISK FACTORS THAT YOU SHOULD CONSIDER BEFORE ACQUIRING THE COMMON STOCK
OFFERED HEREBY.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the Prospectus. Any representation to the contrary is a
criminal offense.
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The date of this Prospectus Supplement is May 12, 2000.
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RECENT DEVELOPMENTS
On May 10, 1999, Internet America, Inc., a Texas corporation (the
"Company"), issued a press release announcing preliminary financial results for
the quarter ended March 31, 2000 and its intent to restate its first and second
fiscal quarter results to adjust for a data processing error that reported
certain deferred revenue as access revenue.
The Prospectus, together with this Prospectus Supplement, constitutes
the prospectus required to be delivered by Section 5(b) of the Securities Act of
1933, as amended, with respect to offers and sales of the common stock.
EXHIBITS
Set forth below is certain information included in the Current Report
on Form 8-K filed by the Company on May 11, 2000 (the "Form 8-K"):
(c) Exhibits.
The following is a list of exhibits filed as part of the Form 8-K:
Exhibit No. Description
99.1 Press Release of Internet America, Inc. dated May 10, 2000.
EXHIBIT 99.1
[INTERNET AMERICA LETTERHEAD]
INTERNET AMERICA REPORTS THIRD QUARTER RESULTS
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Revenue Up 86% Year Over Year; Positive EBITDA Reported
DALLAS, May 10 -- Internet America, Inc. (Nasdaq: GEEK) today announced
record revenue of $8.8 million for its third fiscal quarter ended March 31,
2000, an increase of 86% over revenue of $4.8 million reported for the same
quarter of 1999. Internet America had approximately 153,000 subscribers at March
31, 2000 a 94% increase from 79,000 subscribers at March 31, 1999.
In the third fiscal quarter, Internet America achieved positive EBITDA
(earnings before interest, taxes, depreciation and amortization) for the first
time as a public company. Business services revenue grew by 328% over a year ago
and 80% over the last quarter, DSL orders increased to more than 6,500 and the
Company made major strides towards integrating PDQ.Net, NeoSoft and other
acquisitions.
Excluding amortization of goodwill, the Company reported a quarterly
loss of $0.04 per share at March 31, 2000 compared to a loss of $0.09 per share
a year ago. Goodwill amortization rose to $3.6 million for the third quarter,
due to the acquisitions of PDQ.Net and NeoSoft. Internet America recorded a net
loss of $4.0 million for the quarter, or $0.41 per share, versus a net loss of
approximately $709,000, or $0.10 per share a year ago.
Business services revenue increased significantly, growing from
$500,000 for the quarter ended March 31, 1999 to over $2.1 million for the
latest quarter. Business services revenue has grown from 10.5% of total revenue
a year ago to 24.2% in the March 2000 quarter.
The Company also announced that it will amend its Quarterly Reports on
Form 10-QSB to restate results for the first and second fiscal quarters to
adjust for a data processing error that reported certain deferred revenue as
access revenue. This non-cash adjustment reduces access revenue by approximately
$246,000 for the quarter ended September 30, 1999 and by
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approximately $319,000 for the quarter ended December 31, 1999, resulting in an
additional loss of $0.04 per share for each quarter. This adjustment has no
impact on the Company's past, present or future cash position.
"Turning the corner with positive EBITDA is a result of our relentless
focus on the Company's high-density growth plan," said Mike Maples, president
and chief executive officer of Internet America. "Our high density strategy
emphasizes efficient use of marketing and technical resources by stressing
growth in markets where we have existing infrastructure. Integration of the
Dallas and Houston customer service and marketing operations has improved EBITDA
and cash flow and we are just beginning to realize economies of scale in those
markets."
Maples added, "We continue our impressive top-line growth, climbing
past the 150,000 mark in total subscribers and achieving an annualized revenue
run rate in excess of $35 million. In addition, we are expanding business
services in the areas of broadband, web hosting and domain name registrations."
Internet America is a leading Internet service provider primarily
serving the Texas market. Based in Dallas, Internet America offers businesses
and individuals a full range of Internet services, including dedicated
high-speed access, dial-up access, DSL and web hosting. 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 www.airmail.net.
This press release may contain forward-looking statements relating to
future financial results or business expectations, which are subject to the many
uncertainties that exist in Internet America's operations and business
environment. Business plans may change as circumstances warrant and actual
results may differ materially as a result of a number of risk factors. These
risk factors include, without limitation, that the Company (1) will not retain
or grow its customer base, (2) will not successfully integrate acquisitions or
achieve operating efficiencies, (3) will not be competitive with existing or new
competitors, (4) will not keep up with industry pricing and technology trends
and evolving industry standards, and (5) will be adversely affected by
dependence on network infrastructure, telecommunications carriers and other
suppliers, by regulatory changes and by general economic and business
conditions. These risk factors are not intended to represent a complete list of
all risks and uncertainties in the Company's business and should be read in
conjunction with the more detailed cautionary statements included in the
Company's most recent SEC filings.
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[INTERNET AMERICA LOGO]
Internet America, Inc.
(Nasdaq: GEEK)
Unaudited Financial Summary
(in thousands, except per share and share data and subscriber count)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
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3/31/99 3/31/00 3/31/99 3/31/00(1)
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<S> <C> <C> <C> <C>
Subscribers 79,000 153,000 79,000 153,000
Access revenue $ 4,221 $ 6,617 $ 11,436 $ 16,517
Business services revenue 500 2,139 1,620 4,246
Other revenue 35 89 80 386
----------- ----------- ----------- -----------
Total revenue 4,756 8,845 13,136 21,149
Connectivity and operations 2,036 4,985 6,284 12,067
Sales and marketing:
Salaries and wages 225 571 498 1,350
Other 1,916 915 3,706 3,181
General & administrative 1,057 2,331 2,824 5,515
EBITDA(2) (478) 43 (176) (964)
Depreciation 357 454 1,192 1,331
Goodwill amortization 71 3,583 213 6,596
Interest (income) expense (197) 5 (26) (45)
Income tax expense -- -- 10 --
----------- ----------- ----------- -----------
Net income (loss) $ (709) $ (3,999) $ (1,565) $ (8,846)
Basic earnings (loss) per share $ (0.10) $ (0.41) $ (0.31) $ (1.07)
Weighted average shares - basic 6,762,294 9,641,590 5,081,299 8,260,053
Fully diluted earnings (loss) per share $ (0.10) $ (0.41) $ (0.31) $ (1.07)
Weighted average shares - fully diluted 6,762,294 9,641,590 5,081,299 8,260,053
Net (loss) plus goodwill amortization (638) (416) (1,352) (2,250)
Cash basis EPS(3) $ (0.09) $ (0.04) $ (0.27) $ (0.27)
</TABLE>
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<TABLE>
<CAPTION>
6/30/99 3/31/00
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<S> <C> <C>
Current assets $ 7,095 $ 3,551
Property and equipment, net 2,622 2,808
Other assets 9,196 36,538
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Total assets $18,913 $42,897
Current liabilities $ 7,034 $ 9,245
Long-term debt, net 152 204
Long-term capital lease obligations, net 102 217
------- -------
Total liabilities 7,288 9,666
Total stockholders' equity 11,625 33,231
------- -------
Total liabilities and stockholders' equity $18,913 $42,897
</TABLE>
(1) Reflects the restated amounts for the first two quarters of fiscal 2000.
(2) EBITDA: Earnings before Interest, Taxes and Depreciation and Amortization.
EBITDA is not a measurement of financial performance under generally accepted
accounting principles (GAAP) and should not be considered an alternative to net
income as a measure of performance.
(3) Cash Basis EPS represents earnings per share, excluding goodwill
amortization. Cash Basis EPS is not a measurement of financial performance under
generally accepted accounting principles (GAAP) and should not be considered an
alternative to net income as a measure of performance.
# # #
The Prospectus accompanying this Prospectus Supplement incorporates important
business and financial information about the Company that is not included in or
delivered with this Prospectus Supplement or with the Prospectus. This
information is available without charge to shareholders upon written request by
contacting the company at One Dallas Center, 350 North St. Paul Street, Suite
3000, Dallas, Texas 75201 or upon oral request by calling (214) 861-2500, attn.
Investor Relations. In order to obtain timely delivery, shareholders must
request the information no later than five business days before the date on
which you select to make your investment decision.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO
WHICH THEY RELATE OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, IN
ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH
STATE. THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AT ANY TIME
DOES NOT IMPLY THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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PROSPECTUS SUPPLEMENT
<S> <C>
Recent Developments ........................................................S-2
Financial Statements .......................................................S-2
PROSPECTUS
Prospectus Summary ...........................................................2
Risk Factors .................................................................6
Use of Proceeds .............................................................15
Dividend Policy .............................................................15
Capitalization ..............................................................15
Selected Financial and Operating Data .......................................17
Management's Discussion and Analysis of Financial Condition and Results
of Operations .............................................................19
Business ....................................................................25
Management ..................................................................33
Certain Transactions ........................................................39
Principal and Selling Shareholders ..........................................41
Description of Securities ...................................................43
Shares Eligible for Future Sale .............................................46
Plan of Distribution ........................................................47
Legal Matters ...............................................................48
Experts .....................................................................48
Available Information .......................................................48
Glossary of Technical Terms .................................................49
Financial Statements .......................................................F-1
</TABLE>
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THE AVAILABLE INFORMATION DESCRIBED ON P. 48 OF THE PROSPECTUS ACCOMPANYING THIS
PROSPECTUS SUPPLEMENT THAT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ("SEC") MAY BE READ AND COPIED AT THE SEC'S PUBLIC REFERENCE ROOM AT
450 FIFTH STREET, N.W., WASHINGTON, D.C. 20549. YOU MAY OBTAIN INFORMATION ON
THE OPERATION OF THE PUBLIC REFERENCE ROOM BY CALLING THE SEC AT 1-800-SEC-0330.
THE SEC MAINTAINS AN INTERNET SITE THAT CONTAINS REPORTS, PROXY AND INFORMATION
STATEMENTS, AND OTHER INFORMATION REGARDING ISSUERS THAT FILE ELECTRONICALLY
WITH THE SEC AND THE ADDRESS OF THAT SITE IS (http://www.sec.gov).
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