-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T40TPfcH0g3r4t2AVfQMefyvHnzIHxM2MIlJ5fP4n2paBJ0RBpbzBtxXVjbxISKt 6m/HRkdUPFDb3lQnxOp7ww== 0000950134-99-007985.txt : 19990906 0000950134-99-007985.hdr.sgml : 19990906 ACCESSION NUMBER: 0000950134-99-007985 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990903 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNET AMERICA INC CENTRAL INDEX KEY: 0001001279 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 860778979 STATE OF INCORPORATION: TX FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-25147 FILM NUMBER: 99706103 BUSINESS ADDRESS: STREET 1: 350 N ST PAUL STE 200 CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2148612500 MAIL ADDRESS: STREET 1: ONE DALLAS CENTRE 350 N. ST. PAUL STREET 2: SUITE 3000 CITY: DALLAS STATE: TX ZIP: 75201 8-K/A 1 AMENDMENT NO. 1 TO FORM 8-K 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) June 30, 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 -------------- 2 Reference is made to the Current Report on Form 8-K (the "Form 8-K") filed by Internet America, Inc. on July 15, 1999. The Form 8-K is hereby amended and restated in its entirety as follows: ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On June 30, 1999, Internet America, Inc., a Texas corporation (the "Company"), acquired all the issued and outstanding securities of NeoSoft, Inc., a Texas corporation ("NeoSoft"), for $8,000,000. As a result of the purchase, NeoSoft became a wholly owned subsidiary of the Company. The Company became the indirect owner of all of the assets of NeoSoft, which include approximately 9,500 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 an Agreement and Plan of Merger dated June 30, 1999, by and among NeoSoft, certain of its shareholders ("Shareholders") and the Company. The acquisition will be accounted for as a purchase. To the best knowledge of the Company, at the time of the acquisition there was no material relationship between (i) NeoSoft and the Shareholders 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 was $8,000,000 consisting of $7,300,000 paid to Shareholders and $700,000 due to employees. The consideration was determined by arms-length negotiations between the parties to the Agreement and Plan of Merger. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial statements of business acquired.
PAGE ---- (i) Independent Auditors' Report F-1 (ii) Balance Sheets as of June 30, 1999 and 1998 F-2 (iii) Statements of Operations for the years ended June 30, 1999 and 1998 F-3 (iv) Statements of Shareholders' Deficit for the years ended June 30, 1999 and 1998 F-4 (v) Statements of Cash Flows for the years ended June 30, 1999 and 1998 F-5 (vi) Notes to Financial Statements F-6
3 (b) Proforma financial information (unaudited).
PAGE ---- (i) Pro Forma Balance Sheet at March 31, 1999 P-1 (ii) Pro Forma Statement of Operations for the year ended June 30, 1998 P-2 (iii) Pro Forma Statement of Operations for the nine months ended March 31, 1999 P-3 (iv) Notes to Pro Forma Financial Statements P-4
(c) Exhibits. The following is a list of exhibits filed as part of this Current Report on Form 8-K: Exhibit No. Description 2.1 Agreement and Plan of Merger, dated June 30, 1999, among Internet America Inc., NeoSoft, Inc. and the Shareholders of NeoSoft, Inc. (1) 23.1 Consent of Deloitte & Touche LLP. (2) 99.1 Press Release of Internet America, Inc. dated June 30, 1999. (1) - -------------------- (1) Previously filed as an Exhibit to the Form 8-K on July 15, 1999. (2) Filed herewith. 4 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders of Neosoft, Inc.: We have audited the accompanying balance sheets of Neosoft, Inc. (the "Company") as of June 30, 1999 and 1998, and the related statements of operations, shareholders' 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 June 30, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Dallas, Texas August 10, 1999 F-1 5 NEOSOFT, INC. BALANCE SHEETS JUNE 30, 1999 AND 1998 - --------------------------------------------------------------------------------
ASSETS 1999 1998 CURRENT ASSETS: Cash and cash equivalents $ 33,566 $ 79,865 Accounts receivable, less allowances of $106,301 and $15,568 at June 30, 1999 and 1998, respectively 230,567 114,345 Other current assets 10,018 38,104 --------- --------- Total current assets 274,151 232,314 PROPERTY AND EQUIPMENT - Net (Note 2) 196,150 266,879 OTHER ASSETS 17,908 18,658 --------- --------- TOTAL $ 488,209 $ 517,851 ========= ========= LIABILITIES AND SHAREHOLDERS' DEFICIT CURRENT LIABILITIES: Trade accounts payable $ 478,054 $ 136,150 Accrued liabilities 111,711 193,427 Current maturities of long-term debt (Note 3) 49,224 84,224 Notes payable to related parties (Note 4) 53,647 58,882 Deferred revenue 183,457 158,210 --------- --------- Total current liabilities 876,093 630,893 LONG-TERM DEBT - Net of current portion 30,698 --------- --------- Total liabilities 876,093 661,591 COMMITMENTS AND CONTINGENCIES (Note 5) SHAREHOLDERS' DEFICIT (Note 7): Common stock (authorized 2,000,000 shares, $.01 par value and 1,000,000 shares at no par value at June 30, 1999 and 1998, respectively); 2,055,368 and 2,000,000 issued in 1999 and 1998, respectively 20,554 20,000 Capital in excess of par 243,354 232,834 Treasury stock (808,393 and 800,000 shares at June 30, 1999 and 1998, respectively) at cost (38,934) (36,000) Accumulated deficit (612,858) (360,574) --------- --------- Total shareholders' deficit (387,884) (143,740) --------- --------- TOTAL $ 488,209 $ 517,851 ========= =========
See notes to financial statements. F-2 6 NEOSOFT, INC. STATEMENTS OF OPERATIONS YEARS ENDED JUNE 30, 1999 AND 1998 - --------------------------------------------------------------------------------
1999 1998 NET REVENUES $ 3,726,840 $ 3,268,600 OPERATING COSTS AND EXPENSES: Connectivity and operations 2,456,123 1,845,134 Sales and marketing 328,242 291,379 General and administrative 955,174 999,734 Depreciation 182,750 217,923 ----------- ----------- Total operating costs and expenses 3,922,289 3,354,170 ----------- ----------- LOSS FROM OPERATIONS (195,449) (85,570) INTEREST EXPENSE 56,835 24,821 ----------- ----------- NET LOSS $ (252,284) $ (110,391) =========== ===========
See notes to financial statements. F-3 7 NEOSOFT, INC. STATEMENTS OF SHAREHOLDERS' DEFICIT YEARS ENDED JUNE 30, 1999 AND 1998 - --------------------------------------------------------------------------------
COMMON STOCK TREASURY STOCK CAPITAL ----------------------- ---------------------- IN EXCESS ACCUMULATED SHARES AMOUNT SHARES AMOUNT OF PAR DEFICIT BALANCE, JULY 1, 1997 2,000,000 $ 20,000 -- $ -- $ 232,834 $ (250,183) Repurchase of common stock (800,000) (36,000) Net loss (110,391) ---------- ---------- ---------- ---------- ---------- ---------- BALANCE, JUNE 30, 1998 2,000,000 20,000 (800,000) (36,000) 232,834 (360,574) Issuance of common stock 55,368 554 10,520 Repurchase of common stock (8,393) (2,934) Net loss (252,284) ---------- ---------- ---------- ---------- ---------- ---------- BALANCE, JUNE 30, 1999 2,055,368 $ 20,554 (808,393) $ (38,934) $ 243,354 $ (612,858) ========== ========== ========== ========== ========== ==========
See notes to financial statements. F-4 8 NEOSOFT, INC. STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 1999 AND 1998 - --------------------------------------------------------------------------------
1999 1998 OPERATING ACTIVITIES: Net loss $(252,284) $(110,391) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 182,750 217,923 Changes in operating assets and liabilities: Accounts receivable, net (116,222) 47,219 Other current assets 28,086 (33,640) Other assets 750 Accounts payable 341,904 (39,355) Accrued liabilities (81,716) 71,314 Deferred revenue 25,247 32,308 --------- --------- Net cash provided by operating activities 128,515 185,378 --------- --------- INVESTING ACTIVITIES - Purchase of property, plant and equipment (112,021) (134,662) --------- --------- FINANCING ACTIVITIES: Proceeds from issuance of long-term debt 201,000 Proceeds from issuance of related party debt 8,500 7,000 Payments of long-term debt (65,698) (171,203) Payments of related party debt (13,735) (10,250) Stock purchase (2,934) (36,000) Issuance of common stock for restricted stock award 11,074 --------- --------- Net cash provided by (used in) financing activities (62,793) (9,453) --------- --------- NET INCREASE (DECREASE) IN CASH (46,299) 41,263 CASH, BEGINNING OF PERIOD 79,865 38,602 --------- --------- CASH, END OF PERIOD $ 33,566 $ 79,865 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 1,050 $ 2,922 ========= ========= Cash paid for income taxes $ -- $ -- ========= =========
See notes to financial statements. F-5 9 EOSOFT, INC. NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1999 AND 1998 - -------------------------------------------------------------------------------- 1. GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GENERAL - Neosoft, Inc. (the "Company") was incorporated in Texas on March 4, 1994, and is a provider of Internet access, serving both individual and corporate customers in the Houston and New Orleans areas. On June 30, 1999, substantially all of the outstanding stock of the Company was sold to Internet America, Inc. ("Internet America"), a Texas corporation. As a result of the purchase, the Company became a wholly owned subsidiary of Internet America, and Internet America became the indirect owner of all of the assets of the Company, including the customer base and the equipment used to service such customer base. The Company has experienced cumulative operating losses, and its operations are subject to certain risks and uncertainties, including, among others, risks associated with technology and regulatory trends, evolving industry standards, dependence on its network infrastructure and suppliers, growth and acquisitions, actual and prospective competition by entities with greater financial and other resources, the development of the Internet market, and the need for additional capital or refinancing of existing obligations. There can be no assurance that the Company will be successful in becoming profitable or generating positive cash flow in the future. REVENUE RECOGNITION - The Company recognizes revenue as services are rendered. Services paid inadvance or subject to refund are recorded as deferred revenue. CREDIT RISK - The Company's accounts receivable potentially subject the Company to credit risk, since collateral is generally not required. The Company's risk of loss is limited to the carrying value of the receivables. 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 debts, which have fixed interest rates, do not differ materially from their carrying values. PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years. OTHER ASSETS - Other assets consist of a security deposit for office space and credit card processing. At June 30, 1999 and 1998, the balances were $17,908 and $18,658, respectively. LONG-LIVED ASSETS - On an annual basis, the Company reviews the values assigned to long-lived assets 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. Management believes that the long-lived assets in the accompanying balance sheets are properly valued. F-6 10 ADVERTISING EXPENSES - The Company accounts for advertising costs as expenses in the period in which they are incurred. Advertising expenses for the years ended June 30, 1999 and 1998, were $18,410 and $14,464, 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. 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. 2. PROPERTY AND EQUIPMENT Property and equipment consist of the following at June 30, 1999 and 1998:
1999 1998 Computer equipment $ 894,653 $ 796,044 Data communications and office equipment 40,690 37,311 Furniture and fixtures 29,360 23,591 Computer software 73,360 70,253 Leasehold improvements 57,334 56,177 ----------- ----------- 1,095,397 983,376 Less accumulated depreciation (899,247) (716,497) ----------- ----------- $ 196,150 $ 266,879 =========== ===========
Depreciation expense charged to operations was $182,750 and $217,923 for the years ended June 30, 1999 and 1998, respectively. F-7 11 3. LONG-TERM DEBT Long-term debt consists of the following at June 30, 1999 and 1998:
1999 1998 Note payable, due May 15, 2000, monthly principal payments of $5,000, non-interest bearing (less unamortized discount based on imputed interest of 8%, of $5,776 and $12,078 as of June 30, 1999 and 1998, respectively) $ 49,224 $ 102,922 Note payable, due October 15, 1998, monthly principal payments of $3,000, non-interest bearing 12,000 --------- --------- 49,224 114,922 Less current portion of long-term debt (49,224) (84,224) --------- --------- Total debt $ -- $ 30,698 ========= =========
4. NOTES PAYABLE TO RELATED PARTIES At June 30, 1999 and 1998, the Company had a note payable to a related corporation with the same shareholders totaling $40,500 and $32,000, respectively. Interest has been accrued and paid at the prime rate (7.75% and 6.8% at June 30, 1999 and 1998, respectively). Accrued interest payable was $3,883 and $1,500 at June 30, 1999 and 1998, respectively. At June 30, 1999 and 1998, the Company had a note payable to a related party for $13,147. Interest has been accrued and paid at the prime rate (7.75% and 6.8% at June 30, 1999 and 1998, respectively). Accrued interest payable was $1,620 at June 30, 1999. 5. COMMITMENTS AND CONTINGENCIES The Company leases certain of its facilities under operating leases. Rental expense under these leases was approximately $235,827 and $246,189 for the years ended June 30, 1999 and 1998, respectively. At June 30, 1999, future minimum lease payments related to the operating leases are as follows: Year ending June 30: 2000 $ 81,368 2001 58,859 2002 4,080 -------- Total minimum lease payments $144,307 ========
F-8 12 6. INCOME TAXES No provision for income taxes has been recognized for the years ended June 30, 1999 and 1998, since the Company has incurred net operating losses for tax purposes. The Company has provided a valuation allowance for net deferred tax assets, since it is more likely than not that these assets will not be realized. Deferred tax assets and liabilities as of June 30, 1999 and 1998, consist of:
1999 1998 Deferred tax assets: Net operating loss carryforwards $ 208,000 $ 122,600 Depreciation 73,000 87,000 --------- --------- Total deferred tax assets 281,000 209,600 Valuation allowance (281,000) (209,600) --------- --------- Total deferred tax assets $ -- $ -- ========= =========
At June 30, 1999, the Company has net operating loss carryforwards of approximately $612,000 for federal income tax purposes. 7. SHAREHOLDERS' DEFICIT The Company was incorporated on March 4, 1994, with 1,000,000 shares authorized with no par value. In December 1998, the Company amended its charter so that 2,000,000 shares were authorized with $.01 par value. Additionally, the Company approved and effected a 1,000-to-1 stock split in the form of a stock dividend; thus, 2,000,000 shares of $.01 par value common stock are authorized. Prior-period financial statements have been restated to reflect the stock split. In September 1997, the Company repurchased 800,000 shares from a former employee for $36,000. The Company paid monthly installments of $3,000 through October 1998 for the purchase of the shares (see Note 3). During the year ended June 30, 1999, the Company issued 55,368 shares to its employees. The Company has an exclusive right to repurchase all shares from the employees at the fair value stated at the grant date. The Company recognized $11,074 in compensation expense during 1999 related to the issuance of these shares. During the year ended June 30, 1999, the Company repurchased 8,393 shares from employees for $2,934. At June 30, 1999, all outstanding securities of the Company were sold to Internet America, and all shareholders were paid in cash amounting to $7,300,000. ****** F-9 13 INTERNET AMERICA, INC. PRO FORMA CONDENSED FINANCIAL STATEMENTS (unaudited) The following unaudited condensed pro forma balance sheet as of March 31, 1999 and the unaudited condensed pro forma statements of operations for the nine months ended March 31, 1999 and the year ended June 30, 1998 reflect the acquisition of NeoSoft, Inc. by Internet America, Inc. (the "Company"). The combination has been accounted for as a purchase under the provisions of Accounting Principles Board Opinion No. 16, "Business Combinations." The results of operations for the periods presented include the results of operations of the acquired business assuming the transaction was consummated at the beginning of the earliest periods presented. Also, net assets of the company acquired are recorded at their fair value to the Company as of March 31, 1999. 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 NeoSoft, Inc. included elsewhere in this document and the financial statements of Internet America, Inc. as filed on May 17, 1999 under Form SB-2. 14 INTERNET AMERICA, INC. PRO FORMA CONDENSED BALANCE SHEET MARCH 31, 1999 (unaudited)
PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ----------------------------- ----------- ------------- INTERNET NEOSOFT, INTERNET AMERICA, INC. INC. AMERICA, INC. ------------- ------------ ------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 16,661,431 $ -- $ (8,252,864)(1) $ 8,408,567 Trade receivables, net 781,643 191,787 973,430 Prepaid expenses and other current assets 120,153 18,558 138,711 ------------ ------------ ------------ Total current assets 17,563,227 210,345 9,520,708 PROPERTY AND EQUIPMENT, net 2,084,572 213,832 (71,230)(2) 2,227,174 OTHER ASSETS, net 479,498 20,796 4,049,425 (3) 4,549,719 ------------ ------------ ------------ $ 20,127,297 $ 444,973 $ 16,297,601 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' DEFICIT CURRENT LIABILITIES: Trade accounts payable $ 1,450,322 $ 477,347 $ 1,927,669 Accrued liabilities 1,298,481 74,146 1,372,627 Deferred revenue 4,055,448 177,145 4,232,593 Current maturities of long-term debt 272,328 84,200 356,528 Current maturities of capital lease obligations 212,482 -- 212,482 ------------ ------------ ------------ Total current liabilities 7,289,061 812,838 8,101,899 CAPITAL LEASE OBLIGATIONS, net of current portion 32,328 -- 32,328 LONG-TERM DEBT, net of current portion 297,162 32,000 329,162 ------------ ------------ ------------ Total liabilities 7,618,551 844,838 8,463,389 ------------ ------------ ------------ SHAREHOLDERS' EQUITY (DEFICIT): Common stock 68,928 20,554 (20,554)(4) 68,928 Additional paid-in capital 24,217,070 243,354 (243,354)(4) 24,217,070 Treasury stock -- (38,934) 38,934 (4) Accumulated deficit (11,777,252) (624,839) (4,049,695)(4) (16,451,786) ------------ ------------ ------------ Total shareholders' equity (deficit) 12,508,746 (399,865) 7,834,212 ------------ ------------ ------------ $ 20,127,297 $ 444,973 $ 16,297,601 ============ ============ ============
P-1 15 INTERNET AMERICA, INC. PRO FORMA CONDENSED STATEMENTS OF OPERATIONS YEAR ENDED JUNE 30, 1998 (Unaudited)
PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ----------------------------- ----------- ------------- INTERNET NEOSOFT, INTERNET AMERICA, INC. INC. AMERICA, INC. ------------- ------------ ------------- REVENUES: Access $ 12,117,587 $3,126,473 $ 15,244,060 Business services 1,919,326 -- 1,919,326 Other 41,312 142,127 183,439 ------------ ------------ ------------ Total 14,078,225 3,268,600 17,346,825 ------------ ------------ ------------ OPERATING COSTS AND EXPENSES: Connectivity and operations 7,417,819 1,845,134 9,262,953 Sales and marketing 1,925,180 291,379 2,216,559 General and administrative 2,947,828 999,734 3,947,562 Depreciation and amortization 1,739,301 217,923 2,666,667(5) 4,623,891 ------------ ------------ ------------ Total 14,030,128 3,354,170 20,050,965 ------------ ------------ ------------ OPERATING INCOME (LOSS) 48,097 (85,570) (2,704,140) INTEREST EXPENSE, NET 670,035 24,821 694,856 ------------ ------------ ------------ INCOME (LOSS) BEFORE INCOME TAX (621,938) (110,391) (3,398,996) INCOME TAX EXPENSE 24,000 -- 24,000 ------------ ------------ ------------ NET INCOME (LOSS) $ (645,938) $ (110,391) $ (3,422,996) ============ ============ ============ NET INCOME (LOSS) PER COMMON SHARE: BASIC $ (0.16) $ (0.87) ============ ============ DILUTED $ (0.16) $ (0.87) ============ ============ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: BASIC 3,914,856 3,914,856 DILUTED 3,914,856 3,914,856
P-2 16 INTERNET AMERICA, INC. PRO FORMA CONDENSED STATEMENTS OF OPERATIONS NINE MONTHS ENDED MARCH 31, 1999 (Unaudited)
PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ----------------------------- ----------- ------------- INTERNET NEOSOFT, INTERNET AMERICA, INC. INC. AMERICA, INC. ------------- ------------ ------------- REVENUES: Access $ 11,435,757 $ 2,660,312 $ 14,096,069 Business services 1,620,498 -- 1,620,498 Other 79,773 134,819 214,592 ------------- ------------ ------------- Total 13,136,028 2,795,130 15,931,158 ------------- ------------ ------------- OPERATING COSTS AND EXPENSES: Connectivity and operations 6,283,527 1,842,092 8,125,619 Sales and marketing 4,203,665 246,182 4,449,847 General and administrative 2,824,363 716,381 3,540,744 Depreciation and amortization 1,405,340 137,063 2,000,000(5) 3,542,403 ------------- ------------ ------------- Total 14,716,895 2,941,717 19,658,612 ------------- ------------ ------------- OPERATING INCOME (LOSS) (1,580,867) (146,587) (3,727,454) INTEREST EXPENSE, NET (25,682) 42,626 16,944 ------------- ------------ ------------- INCOME (LOSS) BEFORE INCOME TAX (1,555,185) (189,213) (3,744,398) INCOME TAX EXPENSE 10,000 -- 10,000 ------------- ------------ ------------- NET INCOME (LOSS) $ (1,565,185) $ (189,213) $ (3,754,398) ============= ============ ============= NET INCOME (LOSS) PER COMMON SHARE: BASIC $ (0.31) $ (0.74) ============= ============= DILUTED $ (0.31) $ (0.74) ============= ============= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: BASIC 5,081,299 5,081,299 DILUTED 5,081,299 5,081,299
P-3 17 INTERNET AMERICA, INC. NOTES TO CONDENSED PRO FORMA FINANCIAL STATEMENTS (1) Represents cash paid for the purchase of NeoSoft, Inc. (2) Reflects the write-down of fixed assets to fair value under the provisions of Accounting Principles Board Opinion 16, "Accounting for Business Combinations." (3) Represents subscriber acquisition costs and goodwill associated with the purchase of NeoSoft, Inc. (4) Represents eliminating entries made to consolidate NeoSoft balance sheet items into Internet America's consolidated balance sheet as of March 31, 1999. (5) Represents amortization of goodwill and subscriber acquisition costs for the periods presented. P-4 18 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: September 3, 1999 By: /s/ James T. Chaney ---------------------------------- James T. Chaney, Chief Financial Officer 19 INDEX TO EXHIBITS
Exhibit Number Description of Exhibit ------- ---------------------- 2.1 Agreement and Plan of Merger, dated June 30,1999, among Internet America Inc., NeoSoft, Inc. and the shareholders of NeoSoft, Inc.(1) 23.1 Consent of Deloitte & Touche LLP.(2) 99.1 Press Release of Internet America, Inc. dated June 30, 1999.(1)
- -------------------- (1) Previously filed as an Exhibit to the Form 8-K on July 15, 1999. (2) Filed herewith. EX-23.1 2 CONSENT OF DELOITTE & TOUCHE LLP 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, 333-77153, 333-80277 and 355-80285) of our report dated August 10, 1999, relating to the financial statements of NeoSoft, Inc. for the years ended June 30, 1998 and 1999,appearing in this Current Report on Form 8-K/A dated September 3, 1999 of Internet America, Inc. /s/ DELOITTE & TOUCHE LLP Dallas, Texas September 2, 1999 -----END PRIVACY-ENHANCED MESSAGE-----