San Diego, California - (The Hosting News) - October 10, 2008 - Web host and web access solutions provider, Internet America, Inc., has released its fiscal year results for June 30, 2008, including revenue of $8.4 million compared to $7.9 million a year ago.

The increase in revenues was primarily due to an increase in wireless subscribers through acquisition and organic growth, partially offset by an ongoing decline in the Company's legacy dial-up Internet business. Revenue from telex messaging services included in other income was $346,000 for fiscal 2008. The Company did not have telex revenues prior to fiscal 2008. While Internet America's total subscriber base decreased by 11.4% to 30,300 at June 30, 2008 due to a decrease in dial-up Internet customers, the Company's broadband wireless Internet subscriber base increased 39.1% to 8,000 as of June 30, 2008 from 5,750 for the previous year.

The Company's net loss was $3.0 million for the fiscal year ended June 30, 2008 compared to a net loss of $347,000 for the previous year. The increase of $2,653,000 is related primarily to the non-cash impairment of goodwill, increases in telecommunications costs and professional fees, and temporary increases in personnel costs.

In furtherance of its policy to regularly evaluate the carrying value of intangible assets, the Company recorded $780,000 as impairment of goodwill related to potential reduction in future cash flows from previous dial-up subscriber acquisitions.

During 2008, the Company experienced an increase in the telecommunications cost per subscriber as a result of the expansion of network capacity to provide higher quality service to customers as well as a growth in its wireless broadband footprint. Higher costs were partially offset with more favorable agreements with telecommunications service providers. Professional fees increased due to payments of $224,000 under a consulting contract related to telex messaging services.

Beginning in January 2008, the Company implemented a productivity program designed to improve operating margins by quality improvements in service processes. Although the Company experienced increases in personnel costs in the first and second quarters for the year ended June 30, 2008, the Company has experienced a significant decline in headcount in the third and fourth quarters. From its peak of 93 employees in December 2007, headcount was reduced to 73 people as of June 30, 2008 and further to 63 people as of September 21, 2008.

During the year, the Company undertook substantial network upgrade projects, investing $1.2 million in property and equipment, compared to $320,000 invested in fiscal 2007. Funding for these improvements was generated from two private placements of securities during fiscal 2008, totaling $5.3 million. Remaining cash on hand at June 30, 2008 totaled $3.9 million.

In addition to the continued growth of the Company's broadband wireless subscriber base, the Company has sought to identify prospective acquisition opportunities that provide significant subscriber growth, a larger revenue base and meaningful geographic expansion. The Company believes that these acquisitions allow it to spread the costs of the Company's well developed systems, superior network performance, high quality customer care and technical support over an increased number of subscribers, thus providing the benefits of economies of scale. The Company is actively looking at acquisition opportunities with operations outside of Texas which provide geographical diversity and greater potential for organic growth. The Company attempts to use its stock as consideration in acquisitions though financing for acquisitions could be a combination of the issuance of stock, the public issuance of equity securities and the private sale of debt or equity securities.

Internet America is an 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 Fax2email, online backup and storage solutions, parental control software, and global roaming solutions.

To learn more, please visit: www.internetamerica.com.