Internet America Announces Completion of $4 Million Private Placement of Common Stock and Election of New Director

HostReview.com
Wednesday, December 12, 2007; 02:13 AM

Houston -- Internet America, Inc., a Houston-based provider of Internet access services, today announced the private sale of 4 million shares of its common stock at $1.00 per share for $4 million to a trust controlled by Mr. Steven G. Mihaylo. Additionally, Mr. Mihaylo was elected to fill a vacancy in the Company’s Board of Directors.

Internet America has filed a Form 8-K with the Securities and Exchange Commission that attaches as an exhibit the form of Securities Purchase Agreement and Registration Rights Agreement under which the Company issued 4 million shares of Common Stock and agreed to limited registration rights for those shares. As a result of this transaction, Mr. Mihaylo is now positioned as the Company’s largest shareholder with an approximate 23% ownership stake.

Mr. Mihaylo founded Inter-Tel (Delaware), Incorporated in 1969 and served as its CEO from 1969 to February 2006. During his stewardship, Inter-Tel grew from a one-man business to a global organization employing over 2,000 people and servicing over 500,000 business customers.

“I see a tremendous opportunity for Internet America to establish a leading position in the rural wireless Internet access market,” said Mr. Mihaylo. “I intend on being an active participant in the Company’s growth and aim on directing my forty plus years of business experience in the telecommunications and data industries to educating the institutional investment community on the Company’s strategic objectives and market opportunity.”

“We are very excited about completing this capital raise as it allows us to continue our active growth and acquisition strategy,” said William (Billy) E. Ladin, Jr., Internet America’s Chief Executive Officer. “We believe that we are better positioned to pursue our growth initiatives now that we have expanded our access to lower rate Department of Agriculture Rural Utilities Service debt, coupled with the proceeds generated from this private placement. Additionally, adding Steve to our board will enable us to benefit from his vast experience in supporting the growth of early stage telecommunications companies.”

About Internet America

Internet America (OTCBB: GEEK) 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 Fax2email, 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.