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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-QSB



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES ACT OF 1934
|- | -------------------------------------------------------------------------------



FOR THE TRANSITION PERIOD FROM  TO



COMMISSION FILE NUMBER 000-25147



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INTERNET AMERICA, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|TEXAS                                                          |  | 86-0778979                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)



|                                         |  |           
|---------------------------------------- |  | ----------
|350 N. ST. PAUL, SUITE 3000, DALLAS, TX  |  | 75201     
|(Address of principal executive offices) |  | (Zip Code)



(214) 861-2500

(Registrants telephone number, including area code)



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Indicate by
check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ̈No  x



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x



Transitional Small Business Disclosure Format (check one).    Yes ̈No  x



As of November 12, 2005, registrant had 12,452,756 shares of Common Stock at $.01 par value, outstanding.



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PART I - FINANCIAL INFORMATION



ITEM 1 - FINANCIAL STATEMENTS



INTERNET AMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                                                                                                                                                                                |  |                    |             |   |               |   |             |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | - | ------------- | - | ----------- | -
|                                                                                                                                                                                                |  | September 30, 2005 |             |   | June 30, 2005 |  
|ASSETS                                                                                                                                                                                          |  |                    |             |   |               |   |             |  
|                                                                                                                                                                                                |  |                   
|CURRENT ASSETS:                                                                                                                                                                                 |  |                    |             |   |               |   |             |  
|Cash and cash equivalents                                                                                                                                                                       |  | $                  | 2,018,802   |   |               | $ | 2,364,287   |  
|Accounts receivable, net of allowance for uncollectible accounts of $84,185 and $75,695 as of September 30, 2005 and June 30, 2005,
respectively                                                |  |                    | 218,222     |   |               |   | 182,953     |  
|Inventory                                                                                                                                                                                       |  |                    | 238,378     |   |               |   | 135,006     |  
|Prepaid expenses and other current assets                                                                                                                                                       |  |                    | 95,907      |   |               |   | 83,744      |  
|                                                                                                                                                                                                |  |                    |             |   |               |   |             |  
|Total current assets                                                                                                                                                                            |  |                    | 2,571,309   |   |               |   | 2,765,990   |  
|PROPERTY AND EQUIPMENT  Net                                                                                                                                                                    |  |                    | 808,568     |   |               |   | 712,139     |  
|OTHER ASSETS  Net                                                                                                                                                                              |  |                    | 4,961,695   |   |               |   | 4,904,712   |  
|                                                                                                                                                                                                |  |                    |             |   |               |   |             |  
|TOTAL                                                                                                                                                                                           |  | $                  | 8,341,572   |   |               | $ | 8,382,841   |  
|                                                                                                                                                                                                |  |                    |             |   |               |   |             |  
|                                                                                                                                                                                                |  |                   
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                                            |  |                    |             |   |               |   |             |  
|                                                                                                                                                                                                |  |                   
|CURRENT LIABILITIES:                                                                                                                                                                            |  |                    |             |   |               |   |             |  
|Trade accounts payable                                                                                                                                                                          |  | $                  | 401,170     |   |               | $ | 439,551     |  
|Accrued liabilities                                                                                                                                                                             |  |                    | 451,081     |   |               |   | 543,689     |  
|Deferred revenue                                                                                                                                                                                |  |                    | 1,329,294   |   |               |   | 1,367,852   |  
|Current portion of long-term debt                                                                                                                                                               |  |                    | 185,068     |   |               |   | 241,742     |  
|Current portion of capital lease obligations                                                                                                                                                    |  |                    | 68,761      |   |               |   | 68,460      |  
|                                                                                                                                                                                                |  |                    |             |   |               |   |             |  
|Total current liabilities                                                                                                                                                                       |  |                    | 2,435,374   |   |               |   | 2,661,294   |  
|                                                                                                                                                                                                |  |                   
|Long-term debt                                                                                                                                                                                  |  |                    | 158,886     |   |               |   | 104,738     |  
|Capital lease obligations                                                                                                                                                                       |  |                    | 171,148     |   |               |   | 187,988     |  
|                                                                                                                                                                                                |  |                    |             |   |               |   |             |  
|Total liabilities                                                                                                                                                                               |  |                    | 2,765,408   |   |               |   | 2,954,020   |  
|                                                                                                                                                                                                |  |                   
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                                   |  |                    |             |   |               |   |             |  
|SHAREHOLDERS EQUITY:                                                                                                                                                                           |  |                    |             |   |               |   |             |  
|Common stock, $.01 par value; 40,000,000 shares authorized, 12,449,711 and 12,597,035 issued and 12,449,711 and 12,397,035 outstanding as of
September 30, 2005 and June 30, 2005, respectively |  |                    | 124,497     |   |               |   | 125,971     |  
|Additional paid-in capital                                                                                                                                                                      |  |                    | 57,038,578  |   |               |   | 57,158,477  |  
|Treasury stock, at cost; -0- and 200,000 shares outstanding as of September 30, 2005 and June 30, 2005, respectively                                                                            |  |                    |            |   |               |   | (160,000    | )
|Accumulated deficit                                                                                                                                                                             |  |                    | (51,586,911 | ) |               |   | (51,695,627 | )
|                                                                                                                                                                                                |  |                    |             |   |               |   |             |  
|Total shareholders equity                                                                                                                                                                      |  |                    | 5,576,164   |   |               |   | 5,428,821   |  
|                                                                                                                                                                                                |  |                    |             |   |               |   |             |  
|TOTAL                                                                                                                                                                                           |  | $                  | 8,341,572   |   |               | $ | 8,382,841   |  
|                                                                                                                                                                                                |  |                    |             |   |               |   |             |  



See accompanying notes
to condensed consolidated financial statements.



2



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Financial Statements - Continued



INTERNET AMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



|                                            |  |                                  |            |   |      |   |           
|------------------------------------------- |  | -------------------------------- | ---------- | - | ---- | - | ----------
|                                            |  | Three Months Ended September 30,
|                                            |  | 2005                             |            |   | 2004
|REVENUES:                                   |  |                                  |            |   |      |   |           
|Internet services                           |  | $                                | 2,241,910  |   |      | $ | 2,480,138 
|Other                                       |  |                                  | 405,893    |   |      |   | 21,243    
|                                            |  |                                  |            |   |      |   |           
|Total                                       |  |                                  | 2,647,803  |   |      |   | 2,501,381 
|                                            |  |                                  |            |   |      |   |           
|OPERATING COSTS AND EXPENSES:               |  |                                  |            |   |      |   |           
|Connectivity and operations                 |  |                                  | 1,535,177  |   |      |   | 1,378,308 
|Sales and marketing                         |  |                                  | 74,707     |   |      |   | 158,527   
|General and administrative                  |  |                                  | 696,518    |   |      |   | 670,468   
|Provision for bad debt expense              |  |                                  | 11,683     |   |      |   | 169       
|Depreciation and amortization               |  |                                  | 217,377    |   |      |   | 64,414    
|                                            |  |                                  |            |   |      |   |           
|Total                                       |  |                                  | 2,535,462  |   |      |   | 2,271,886 
|                                            |  |                                  |            |   |      |   |           
|INCOME FROM OPERATIONS                      |  |                                  | 112,341    |   |      |   | 229,495   
|INTEREST (EXPENSE) INCOME, NET              |  |                                  | (3,625     | ) |      |   | 8,079     
|                                            |  |                                  |            |   |      |   |           
|NET INCOME                                  |  | $                                | 108,716    |   |      | $ | 237,574   
|                                            |  |                                  |            |   |      |   |           
|NET INCOME PER COMMON SHARE:                |  |                                  |            |   |      |   |           
|BASIC                                       |  | $                                | 0.01       |   |      | $ | 0.02      
|                                            |  |                                  |            |   |      |   |           
|DILUTED                                     |  | $                                | 0.01       |   |      | $ | 0.02      
|                                            |  |                                  |            |   |      |   |           
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |  |                                  |            |   |      |   |           
|BASIC                                       |  |                                  | 12,514,812 |   |      |   | 10,462,903
|                                            |  |                                  |            |   |      |   |           
|DILUTED                                     |  |                                  | 12,523,761 |   |      |   | 10,469,461
|                                            |  |                                  |            |   |      |   |           



See accompanying notes
to condensed consolidated financial statements.



3



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Financial Statements - Continued



INTERNET AMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                            |  |                                  |           |   |      |   |           |  
|------------------------------------------------------------------------------------------- |  | -------------------------------- | --------- | - | ---- | - | --------- | -
|                                                                                            |  | Three Months Ended September 30, |          
|                                                                                            |  | 2005                             |           |   | 2004 |  
|OPERATING ACTIVITIES:                                                                       |  |                                  |           |   |      |   |           |  
|Net income                                                                                  |  | $                                | 108,716   |   |      | $ | 237,574   |  
|Adjustments to reconcile net income to net cash (used in) provided by operating activities: |  |                                  |           |   |      |   |           |  
|Depreciation and amortization                                                               |  |                                  | 217,377   |   |      |   | 64,414    |  
|Provision for bad debt expense                                                              |  |                                  | 11,683    |   |      |   | 169       |  
|Changes in operating assets and liabilities, net of effect of acquisitions:                 |  |                                  |           |   |      |   |           |  
|Accounts receivable                                                                         |  |                                  | (46,952   | ) |      |   | 20,710    |  
|Inventory                                                                                   |  |                                  | (140,117  | ) |      |   |          |  
|Prepaid expenses and other current assets                                                   |  |                                  | (12,163   | ) |      |   | (46,318   | )
|Other assets                                                                                |  |                                  | 904       |   |      |   | (899      | )
|Accounts payable and accrued liabilities                                                    |  |                                  | (160,708  | ) |      |   | (165,654  | )
|Deferred revenue                                                                            |  |                                  | (63,509   | ) |      |   | (97,222   | )
|                                                                                            |  |                                  |           |   |      |   |           |  
|Net cash (used in) provided by operating activities                                         |  |                                  | (84,769   | ) |      |   | 12,774    |  
|                                                                                            |  |                                  |           |   |      |   |           |  
|INVESTING ACTIVITIES:                                                                       |  |                                  |           |   |      |   |           |  
|Purchases of property and equipment                                                         |  |                                  | (103,165  | ) |      |   | (36,866   | )
|Cash paid at closing for acquisitions                                                       |  |                                  | (50,000   | ) |      |   | (68,750   | )
|                                                                                            |  |                                  |           |   |      |   |           |  
|Net cash used in investing activities                                                       |  |                                  | (153,165  | ) |      |   | (105,616  | )
|                                                                                            |  |                                  |           |   |      |   |           |  
|FINANCING ACTIVITIES:                                                                       |  |                                  |           |   |      |   |           |  
|Proceeds from issuance of common stock                                                      |  |                                  | 6,127     |   |      |   | 4,263     |  
|Principal payments under note payable                                                       |  |                                  | (97,139   | ) |      |   | (37,500   | )
|Principal payments under capital lease obligations                                          |  |                                  | (16,539   | ) |      |   |          |  
|                                                                                            |  |                                  |           |   |      |   |           |  
|Net cash used in financing activities                                                       |  |                                  | (107,551  | ) |      |   | (33,237   | )
|                                                                                            |  |                                  |           |   |      |   |           |  
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                                   |  |                                  | (345,485  | ) |      |   | (126,079  | )
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                              |  |                                  | 2,364,287 |   |      |   | 1,869,750 |  
|                                                                                            |  |                                  |           |   |      |   |           |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                                    |  | $                                | 2,018,802 |   |      | $ | 1,743,671 |  
|                                                                                            |  |                                  |           |   |      |   |           |  
|SUPPLEMENTAL INFORMATION:                                                                   |  |                                  |           |   |      |   |           |  
|Cash paid for interest                                                                      |  | $                                | 10,674    |   |      | $ |          |  
|                                                                                            |  |                                  |           |   |      |   |           |  
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                                                |  |                                  |           |   |      |   |           |  
|Transfers between fixed assets and inventory                                                |  | $                                | 36,746    |   |      | $ |          |  
|                                                                                            |  |                                  |           |   |      |   |           |  
|Assets acquired through accounts payable                                                    |  | $                                | 29,720    |   |      | $ |          |  
|                                                                                            |  |                                  |           |   |      |   |           |  
|Stock issued in connection with acquisitions                                                |  | $                                | 32,500    |   |      | $ | 29,500    |  
|                                                                                            |  |                                  |           |   |      |   |           |  
|Debt assumed in connection with acquisitions                                                |  | $                                |          |   |      | $ | 322,193   |  
|                                                                                            |  |                                  |           |   |      |   |           |  
|Debt issued in connection with acquisitions                                                 |  | $                                | 94,612    |   |      | $ | 230,778   |  
|                                                                                            |  |                                  |           |   |      |   |           |  



See accompanying notes
to condensed consolidated financial statements.



4



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INTERNET AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



|1. | Basis of Presentation
|-- | ---------------------



Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to Article 10 of Regulation S-X of the Securities and Exchange Commission. The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all
adjustments necessary to achieve a fair statement of the Companys financial position and results of operations for the interim periods presented. All such adjustments are of a normal and recurring nature. These condensed financial statements
should be read in conjunction with the financial statements for the year ended June 30, 2005, included in the Companys Annual Report on Form 10-K (File No 000-25147).



|2. | Acquisitions
|-- | ------------



On July 21, 2005, the Company acquired the subscriber base and assets of TopGun Telecom, Inc. The purchase price was approximately $202,000.
Subscriber acquisition costs and goodwill recorded in connection with the acquisition were approximately $157,000 and $24,000, respectively. The fair value assigned to the assets acquired at the date of acquisition is based upon preliminary
estimates. The Company is in the process of obtaining supplemental information related to certain intangible assets and equipment, and accordingly the allocation of the purchase price is subject to refinement.



The acquisition was accounted for as a purchase and, accordingly, the
operations of the acquired company were included in the financial statements from the date of acquisition. Pro forma information for the acquisition is not presented as the impact is not material.



|3. | Basic and Diluted Net Income Per Share
|-- | --------------------------------------



There are no adjustments required to be made to net income for the purpose of computing basic and diluted earnings per share (EPS) for the
three months ended September 30, 2005 and 2004. For the three months ended September 30, 2005 and 2004, options to purchase 94,500 and 200,000 shares of common stock were included in the computation of diluted EPS because the options were
in the money as of September 30, 2005 and 2004, respectively, and it resulted in 8,949 and 6,558 common stock equivalents to be added to the weighted average shares for the three months ended September 30, 2005 and 2004,
respectively. During the three months ended September 30, 2005 and 2004, options to purchase 408,289 and 288,537 shares of common stock were not included in the computation of diluted EPS because the options were not in the money as
of September 30, 2005 and 2004, respectively. There were no options exercised to purchase shares of common stock during the three months ended September 30, 2005 and 2004.



|4. | Employee Stock Option Plans
|-- | ---------------------------



The Company applies Accounting Principles Board Opinion (APB) No. 25 and related Interpretations in accounting for its employee stock
option plans. The estimated fair value of each option grant was determined by reference to the quoted market price of the Companys common shares at the date of grant over the amount an employee must pay to acquire the common shares of the
Company. No compensation expense has been charged against income for the three months ended September 30, 2005 and 2004, related to stock option plans.



5



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|4. | Employee Stock Option Plans (continued)
|-- | ---------------------------------------



Had compensation cost for the Companys stock options been determined based on the fair value at the grant dates for awards consistent with the
method of Statement of Financial Accounting Standard (SFAS) No. 123, the Companys net income and income per share for the three months ended September 30, 2005 and 2004 would have been as indicated below:



|                                        |  |                                      |         |   |                                      |   |         |  
|--------------------------------------- |  | ------------------------------------ | ------- | - | ------------------------------------ | - | ------- | -
|                                        |  | Three Months Ended September 30,2005 |         |   | Three Months Ended September 30,2004 |  
|Reported net income                     |  | $                                    | 108,716 |   |                                      | $ | 237,574 |  
|                                        |  |                                     
|Less: SFAS No. 123 compensation expense |  |                                      | (22,663 | ) |                                      |   | (25,140 | )
|                                        |  |                                      |         |   |                                      |   |         |  
|Pro forma net income                    |  | $                                    | 86,053  |   |                                      | $ | 212,340 |  
|                                        |  |                                      |         |   |                                      |   |         |  
|Reported basic income per share         |  | $                                    | 0.01    |   |                                      | $ | 0.02    |  
|                                        |  |                                      |         |   |                                      |   |         |  
|Reported diluted income per share       |  | $                                    | 0.01    |   |                                      | $ | 0.02    |  
|                                        |  |                                      |         |   |                                      |   |         |  
|Less: SFAS No. 123 compensation expense |  | $                                    |        |   |                                      | $ |        |  
|                                        |  |                                      |         |   |                                      |   |         |  
|Pro forma basic income per share        |  | $                                    | 0.01    |   |                                      | $ | 0.02    |  
|                                        |  |                                      |         |   |                                      |   |         |  
|Pro forma diluted income per share      |  | $                                    | 0.01    |   |                                      | $ | 0.02    |  
|                                        |  |                                      |         |   |                                      |   |         |  



|5. | Other Assets
|-- | ------------



Other assets consist of the following:



|                                                 |  |                   |             |   |               |   |             |  
|------------------------------------------------ |  | ----------------- | ----------- | - | ------------- | - | ----------- | -
|                                                 |  | September 30,2005 |             |   | June 30, 2005 |  
|Goodwill                                         |  | $                 | 26,047,266  |   |               | $ | 26,023,407  |  
|Accum. amortization-goodwill                     |  |                   | (21,734,139 | ) |               |   | (21,734,139 | )
|                                                 |  |                   |             |   |               |   |             |  
|Total goodwill, net                              |  |                   | 4,313,127   |   |               |   | 4,289,268   |  
|                                                 |  |                   |             |   |               |   |             |  
|Subscriber acquisition costs                     |  |                   | 1,013,106   |   |               |   | 856,441     |  
|Accum. amortization-subscriber acquisition costs |  |                   | (431,449    | ) |               |   | (308,812    | )
|                                                 |  |                   |             |   |               |   |             |  
|Total subscriber acquisition costs, net          |  |                   | 581,657     |   |               |   | 547,629     |  
|                                                 |  |                   |             |   |               |   |             |  
|Deposits                                         |  |                   | 66,911      |   |               |   | 67,815      |  
|                                                 |  |                   |             |   |               |   |             |  
|Total other assets, net                          |  | $                 | 4,961,695   |   |               | $ | 4,904,712   |  
|                                                 |  |                   |             |   |               |   |             |  



The amortization
period for subscriber acquisition costs is 24 months. Amortization expense for the three months ended September 30, 2005, was approximately $125,000. As of September 30, 2005, amortization expense for the fiscal years ended June 30,
2006, 2007 and 2008 is expected to be $379,915, $197,742 and $4,000, respectively. Goodwill and subscriber acquisition costs acquired during the three months ended September 30, 2005, were approximately $24,000 and $157,000, respectively.



|6. | Income Taxes
|-- | ------------



During the three months ended September 30, 2005 and 2004, the Company generated net income. No provision for income taxes has been recorded as the
Company has reduced the valuation allowance on its net operating losses generated in prior periods. As of September 30, 2005, the Company continues to maintain a full valuation allowance for its net deferred tax assets of approximately $12.0
million. Given its limited history of generating net income, the Company has concluded that it is not more likely than not that the net deferred tax assets will be realized.



6



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|7. | Long-Term Debt
|-- | --------------



Long-term debt consists of:



|                                                                                                                        |  |                   |          |   |              |   |          |  
|----------------------------------------------------------------------------------------------------------------------- |  | ----------------- | -------- | - | ------------ | - | -------- | -
|                                                                                                                        |  | September 30,2005 |          |   | June 30,2005 |  
|Note payable due November 15, 2007, payable in monthly installments of $1,825, bearing interest at prime plus 3%        |  | $                 | 44,827   |   |              | $ | 47,729   |  
|                                                                                                                        |  |                  
|Note payable due September 22, 2007, payable in annual installments of $41,667 with interest imputed at 8%              |  |                   | 74,303   |   |              |   | 107,379  |  
|                                                                                                                        |  |                  
|Note payable due April 1, 2006, payable in monthly installments of $5,629 with interest imputed at 8%                   |  |                   | 38,393   |   |              |   | 54,315   |  
|                                                                                                                        |  |                  
|Note payable due October 1, 2005, payable in quarterly payments of $23,863 with interest imputed at 8%                  |  |                   | 23,401   |   |              |   | 46,349   |  
|                                                                                                                        |  |                  
|Note payable due May 30, 2007, payable in monthly installments of approximately $987, bearing interest at prime plus 2% |  |                   | 20,535   |   |              |   | 23,013   |  
|                                                                                                                        |  |                  
|Note payable due November 17, 2005, payable in quarterly payments of $12,000 with interest imputed at 8%                |  |                   | 11,768   |   |              |   | 23,308   |  
|                                                                                                                        |  |                  
|Note payable due July 19, 2009, payable in quarterly payments of $7,751 with interest imputed at 9%                     |  |                   | 94,612   |   |              |   |         |  
|                                                                                                                        |  |                  
|Note payable due September 15, 2005, payable in quarterly payments of $3,809 with interest imputed at 8%                |  |                   |         |   |              |   | 3,771    |  
|                                                                                                                        |  |                  
|Credit card line of credit advance, payable on demand, bearing interest at prime plus 6.5%                              |  |                   | 36,115   |   |              |   | 40,616   |  
|                                                                                                                        |  |                   |          |   |              |   |          |  
|                                                                                                                        |  |                   | 343,954  |   |              |   | 346,480  |  
|Less current portion                                                                                                    |  |                   | (185,068 | ) |              |   | (241,742 | )
|                                                                                                                        |  |                   |          |   |              |   |          |  
|Total long-term debt                                                                                                    |  | $                 | 158,886  |   |              | $ | 104,738  |  
|                                                                                                                        |  |                   |          |   |              |   |          |  



The Companys
long-term debt is unsecured except for approximately $65,000 and $71,000 as of September 30, 2005 and June 30, 2005, respectively, which is secured by certain inventory and equipment. The prime rate at September 30, 2005 and
June 30, 2005, was 6.75% and 6.25%, respectively.



|8. | Capital Lease Obligations
|-- | -------------------------



The Company leases certain wireless equipment under leases with bargain purchase options. The following is a schedule by fiscal years of the future
minimum lease payments under these capital leases together with the present value of the net minimum lease payments as of September 30, 2005:



|                                              |  |   |         |  
|--------------------------------------------- |  | - | ------- | -
|2006                                          |  | $ | 64,876  |  
|2007                                          |  |   | 74,113  |  
|2008                                          |  |   | 54,367  |  
|2009                                          |  |   | 54,367  |  
|2010                                          |  |   | 31,714  |  
|                                              |  |   |         |  
|Total minimum lease payments                  |  |   | 279,437 |  
|Less amounts representing interest            |  |   | (39,528 | )
|                                              |  |   |         |  
|Present value of minimum capitalized payments |  |   | 239,909 |  
|Less current portion                          |  |   | (68,761 | )
|                                              |  |   |         |  
|Long-term capitalized lease obligations       |  | $ | 171,148 |  
|                                              |  |   |         |  



7



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|9. | Related Parties
|-- | ---------------



The Company entered into a consulting agreement for a one-year term beginning October 1, 2003 with the former Chairman and CEO of the Company, Jack
T. Smith (Mr. Smith). The agreement, which terminated September 30, 2004, stated that a consulting fee was to be paid at a rate of $10,000 per month. During the three months ended September 30, 2004, the Company paid a total of
$30,000 in consulting fees to Mr. Smith. The Company also had an $82,000 note receivable due from Mr. Smith and accrued interest income due on the note of $5,349 outstanding at September 30, 2004. Included in interest income for the
three months ended September 30, 2004, is approximately $1,300 related to Mr. Smiths note receivable. In October 2004, the Company entered into a release agreement with Mr. Smith for the note receivable in connection with the
purchase by the Company of 200,000 shares from Mr. Smith.



During the three months ended September 30, 2004, the Company paid approximately $23,000 in marketing consulting fees and related expenses to Marc Ladin Consulting. Marc Ladin is the son of William E. Ladin, Jr., the Chairman and CEO
of the Company.



The following table shows amounts paid to
three non-employee directors for serving on the Companys board of directors during the three months ended September 30, 2005 and 2004:



|                     |  |                                 |        |      |   |      
|-------------------- |  | ------------------------------- | ------ | ---- | - | -----
|                     |  | Three Months EndedSeptember 30,
|                     |  | 2005                            |        | 2004
|Troy LeMaile Stovall |  | $                               | 6,750  |      | $ | 4,250
|Justin McClure       |  |                                 | 6,750  |      |   | 4,250
|John Palmer          |  |                                 | 3,750  |      |   |     
|                     |  |                                 |        |      |   |      
|Total director fees  |  | $                               | 17,250 |      | $ | 8,500
|                     |  |                                 |        |      |   |      



|10. | New Accounting Pronouncements
|--- | -----------------------------



In December 2004, the FASB issued SFAS No. 123 (R), Share-Based Payment, which replaces SFAS No. 123 and supersedes APB 25. SFAS
No. 123 (R) requires that compensation cost relating to all share-based payment transactions, including grants of employee stock options, be recognized in the statement of operations based on their fair values. Pro forma disclosures are no
longer an alternative. In April 2005, the Securities and Exchange Commission amended the effective date of SFAS No. 123 (R) to be the first annual reporting period that begins after December 15, 2005, for public companies that are
small business issuers. The Company expects to adopt SFAS No. 123 (R) on July 1, 2006, based on the new effective date announced by the SEC and expects to apply the modified prospective method upon adoption. The modified prospective
method requires companies to record compensation cost beginning with the effective date (a) based on the requirements of SFAS No. 123 (R) for all share-based payments granted after the effective date and (b) based on the
requirements of SFAS No. 123 for all awards granted to employees prior to the effective date of SFAS No. 123 (R) that remain unvested on the effective date.



8



---

ITEM 2.



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Certain statements contained in this Form 10-QSB constitute forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements, identified by words such as anticipate, believe, estimate, should, expect and
similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to
risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. We do not intend to update the
forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information. Our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 and other publicly filed reports discuss some
additional important factors that could cause our actual results to differ materially from those in any forward-looking statements.



Overview



Internet America is an Internet service provider (ISP) serving approximately 51,000 subscribers in the southwestern United States, primarily
in Dallas and Houston, Texas, as of September 30, 2005. A subscriber represents an active, billed service. One customer account may represent multiple subscribers depending on the number of active and billed services for that customer. Prior to
fiscal 2005 the Company derived substantially all revenues from services, primarily Internet access services, and related fees, and such revenues represented more than 99% of our revenue for the three months ended September 30, 2004. During
fiscal 2005 the Company became a wireless equipment reseller which changed the revenue mix. For the three months ended September 30, 2005, Internet access services accounted for 84.7% of total revenue with the remaining revenues related
primarily to wireless equipment reseller revenues.



The Company
continues to experience an attrition of dial-up service customers. The loss of these customers is primarily attributable to their moving to broadband connectivity with other service providers. The Company does not currently have an adequate
broadband solution for a majority of its customers in the major metropolitan areas and we operate in a highly competitive market for each of our service offerings. The competitive environment impacts the churn rates we experience as well as the
number of new customers we are able to add. The largest competitors in broadband access are cable companies and Regional Bell Operating Companies.



The Companys strategy is to focus on providing wireless Internet connectivity to customers in under-served or non-served markets where competition
is less intense. During the fiscal year ended June 30, 2005, we expanded into several rural markets which meet these criteria through acquisitions and the deployment of new infrastructure. The Company is actively pursuing development and
acquisition opportunities in other non-metropolitan markets where competition is less intense and the demand for Internet connectivity may be under-served or non-served. In pursuing this strategy, the Company is narrowing its focus to products and
services that contribute directly to its implementation.



Additionally, management is evaluating other product offerings with a view toward improving profitability. Management is realigning both capital and human resources to focus on acquisitions, broadband connectivity, VoIP, and Fax-2-Email
software. We expect to continue to evaluate the feasibility of new technologies and develop new service offerings, focusing primarily on offerings associated with traditional wireline and wireless voice services.



Company management believes the initiatives identified above are instrumental
in the achievement of our goals, but they may be subject to competitive, regulatory, and other events and circumstances that are beyond our control. We can provide no assurance that we will be successful in achieving any or all of the initiatives,
that the achievement or existence of such initiatives will result in profit improvements, or that other factors will not arise that would adversely affect future profits.



9



---

Statement of Operations



Internet services revenue is derived from dial-up Internet access, including analog and ISDN access, DSL access, dedicated connectivity, wireless
access, bulk dial-up access, web hosting services, and value-added services, such as multiple e-mail boxes, personalized e-mail addresses and Fax-2-Email services. Other revenue includes Neo server revenue, which was discontinued in November 2004,
and wireless equipment reseller revenues.



Prior to fiscal 2005
the Company operated primarily out of its corporate headquarters in Dallas, Texas. In fiscal 2005, in addition to the corporate office, the Company began operating out of local offices including computer centers in Corsicana, Texas, Hillsboro, Texas
and Stafford, Texas. Operating expenses for the Company includes operating expenses for the both the corporate office and the local computer centers.



A brief description of each element of our operating expenses follows:



Connectivity and operations expenses consist primarily of setup costs for new subscribers, telecommunication
costs, merchant processing fees and wages of network operations and customer support personnel. Connectivity costs include (i) fees paid to telephone companies for subscribers dial-up connections to our network; (ii) fees paid to
backbone providers for connections from our network to the Internet; and (iii) equipment and tower lease costs for our new wireless networks.



Sales and marketing expenses consist primarily of creative and production costs, costs of media placement, management salaries and call
center wages. Advertising costs are expensed as incurred.



General and administrative expenses consist primarily of administrative salaries, professional services, rent and other general office and business expenses.



Bad debt expense consists primarily of customer accounts
that have been deemed uncollectible and will potentially be written off in future periods, net of recoveries. Historically, the expense has been based on the aging of customer accounts whereby all customer accounts that are 90 days or older and
certain other accounts, as necessary, have been provided for as a bad debt expense.



Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets or the capital lease term,
as appropriate. Data communications equipment, computers, data servers and office equipment are depreciated over three years. We depreciate furniture, fixtures and leasehold improvements over five years. Amortization expense consists of the
amortization of subscriber acquisition costs.



Our business is not subject to any significant seasonal influences.



10



---

Results of Operations



Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004



The following table sets forth certain unaudited financial data for the three months ended September 30, 2005 and 2004.
Operating results for any period are not indicative of results for any future period. Amounts are shown in thousands (except per share data and subscriber counts).



|                                            |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|------------------------------------------- |  | ------------------------------------- | ------ | - | ------------------------------------- | ----- | -- | ------- | - | ------ | ------------- |  | ----- | -
|                                            |  | Three Months Ended September 30, 2005 |        |   | Three Months Ended September 30, 2004 |      
|                                            |  | (000s)                               |        |   | % of Revenues                         |       |    | (000s) |   |        | % of Revenues | 
|STATEMENT OF INCOME DATA:                   |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|REVENUES:                                   |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|Internet services                           |  | $                                     | 2,242  |   |                                       | 84.7  | %  |         | $ | 2,480  |               |  | 99.2  | %
|Other                                       |  |                                       | 406    |   |                                       | 15.3  | %  |         |   | 21     |               |  | 0.8   | %
|                                            |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|Total                                       |  |                                       | 2,648  |   |                                       | 100.0 | %  |         |   | 2,501  |               |  | 100.0 | %
|                                            |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|OPERATING COSTS AND EXPENSES:               |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|Connectivity and operations                 |  |                                       | 1,535  |   |                                       | 58.0  | %  |         |   | 1,378  |               |  | 55.1  | %
|Sales and marketing                         |  |                                       | 75     |   |                                       | 2.8   | %  |         |   | 159    |               |  | 6.3   | %
|General and administrative                  |  |                                       | 696    |   |                                       | 26.3  | %  |         |   | 670    |               |  | 26.8  | %
|Provision for bad debt expense              |  |                                       | 12     |   |                                       | 0.4   | %  |         |   |       |               |  | 0.0   | %
|Depreciation and amortization               |  |                                       | 217    |   |                                       | 8.2   | %  |         |   | 64     |               |  | 2.6   | %
|                                            |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|Total                                       |  |                                       | 2,535  |   |                                       | 95.8  | %  |         |   | 2,271  |               |  | 90.8  | %
|                                            |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|OPERATING INCOME                            |  |                                       | 113    |   |                                       | 4.2   | %  |         |   | 230    |               |  | 9.2   | %
|INTEREST (EXPENSE) INCOME, NET              |  |                                       | (4     | ) |                                       | (0.1  | )% |         |   | 8      |               |  | 0.3   | %
|                                            |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|NET INCOME                                  |  | $                                     | 109    |   |                                       | 4.1   | %  |         | $ | 238    |               |  | 9.5   | %
|                                            |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|NET INCOME PER COMMON SHARE:                |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|BASIC                                       |  | $                                     | 0.01   |   |                                       |       |    |         | $ | 0.02   |               |  |       |  
|                                            |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|DILUTED                                     |  | $                                     | 0.01   |   |                                       |       |    |         | $ | 0.02   |               |  |       |  
|                                            |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|BASIC                                       |  |                                       | 12,515 |   |                                       |       |    |         |   | 10,463 |               |  |       |  
|DILUTED                                     |  |                                       | 12,524 |   |                                       |       |    |         |   | 10,469 |               |  |       |  
|                                            |  |                                       |        |  
|CASH FLOW DATA:                             |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|Cash flow (used in) provided by operations  |  | $                                     | (85    | ) |                                       |       |    |         | $ | 13     |               |  |       |  
|Cash flow used in investing activities      |  | $                                     | (153   | ) |                                       |       |    |         | $ | (106   | )             |  |       |  
|Cash flow used in financing activities      |  | $                                     | (107   | ) |                                       |       |    |         | $ | (33    | )             |  |       |  
|                                            |  |                                       |        |  
|OTHER DATA:                                 |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|Subscribers at end of period (1)            |  |                                       | 51,000 |   |                                       |       |    |         |   | 58,000 |               |  |       |  
|EBITDA(2)                                   |  | $                                     | 330    |   |                                       |       |    |         | $ | 294    |               |  |       |  
|EBITDA margin(3)                            |  |                                       | 12.5   | % |                                       |       |    |         |   | 11.8   | %             |  |       |  
|Reconciliation of net income to EBITDA:     |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|Net income                                  |  | $                                     | 109    |   |                                       |       |    |         | $ | 238    |               |  |       |  
|Add:                                        |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|Depreciation and amortization               |  |                                       | 217    |   |                                       |       |    |         |   | 64     |               |  |       |  
|Interest expense (income), net              |  |                                       | 4      |   |                                       |       |    |         |   | (8     | )             |  |       |  
|                                            |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  
|EBITDA(2)                                   |  | $                                     | 330    |   |                                       |       |    |         | $ | 294    |               |  |       |  
|                                            |  |                                       |        |   |                                       |       |    |         |   |        |               |  |       |  

---

|(1) | A subscriber represents an active, billed service. One customer account may represent multiple subscribers depending on the number of active and billed services for that customer.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | EBITDA (earnings before interest, taxes, depreciation and amortization) 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. Management has consistently used EBITDA on a historical basis as a measurement of the Companys current operating cash income.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | EBITDA margin represents EBITDA as a percentage of total revenue.
|--- | -----------------------------------------------------------------



11



---

Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004 (Continued)



Total revenue.Total revenue increased by $0.1
million, or 3.8%, to $2.6 million for the three months ended September 30, 2005, from $2.5 million for the three months ended September 30, 2004. The Companys subscriber count decreased by 7,000, or 12.1%, to 51,000 as of
September 30, 2005 compared to 58,000 as of September 30, 2004. The decrease in subscriber counts is attributed to the loss of dial-up customers moving to other providers broadband service. Wireless access revenue from the addition
of wireless subscribers from both acquisitions and organic growth of approximately $141,000 plus revenue from the wireless equipment reseller business of approximately $377,000 slightly more than offset the decrease in dial-up revenue.



Connectivity and operations.Connectivity and operations expense
increased by $0.1 million, or 7.1%, to $1.5 million for the three months ended September 30, 2005 from $1.4 million for the three months ended September 30, 2004. The increase is a result of increased connectivity costs related to
acquisitions of approximately $122,000 and the wireless reseller cost of sales of approximately $347,000 offset by net reductions in customer care and systems payroll.



Sales and marketing.Sales and marketing expense decreased by $84,000, or 52.8%, to $75,000 for the three months
ended September 30, 2005, compared to $159,000 for the three months ended September 30, 2004. The decrease relates primarily to reductions in head count.



General and administrative.General and administrative expense increased by $26,000, or 3.9%, to $696,000 for the
three months ended September 30, 2005, from $670,000 for the three months ended September 30, 2004. The increase is primarily attributable to operating costs of the new computer centers.



Provision for bad debt expense.Provision for bad debt expense
increased to $12,000 for the three months ended September 30, 2005, from $169 for the three months ended September 30, 2004. The increase is due primarily to reserve for bad debts for the wireless equipment reseller business. As of
September 30, 2005, the Company continues to be fully reserved for all customer accounts that are at least 90 days old and certain other accounts.



Depreciation and amortization. Depreciation and amortization increased by $153,000, or 239.1%, to $217,000 for the three months ended
September 30, 2005, from $64,000 for the three months ended September 30, 2004. The increase is primarily due to an increase in depreciation for fixed asset purchases related to new wireless infrastructure as well as amortization of
subscriber acquisition costs.



Interest (expense) income,
net.For the three months ended September 30, 2005 and 2004 the Company recorded net interest expense of $4,000 and net interest income of $8,000, respectively. For the three months ended September 30, 2005, the interest income earned
was more than offset by the interest paid on long-term debt and capital leases.



Liquidity and Capital Resources



We have
financed our operations to date primarily through (i) cash flows from operations, (ii) public and private sales of equity securities and (iii) loans from shareholders and third parties.



Cash (used in) provided by operating activities is net income adjusted for
certain non-cash items and changes in assets and liabilities. For the three months ended September 30, 2005, cash used in operations was $85,000 compared to cash provided by operations of $13,000 for the three months ended September 30,
2004. For the three months ended September 30, 2005, net income plus non-cash items contributed $338,000 in cash which was then used primarily for purchases of inventory, payments of accounts payable and accrued expenses and a decrease in
deferred revenue. Inventory, which primarily includes modems and wireless access radios, increased in the three months ended September 30, 2005, due to the new computer centers as well as the Company expanding its wireless equipment reseller
business. For the three months ended September 30, 2004, net income plus non-cash items contributed $302,000 in cash which was then used primarily for the payment of accounts payable and accrued expenses and a decrease in deferred revenue. The
decrease in deferred revenue from year to year is a result of the decrease in our subscriber count and the related decrease in revenue.



12



---

Cash used in investing activities totaled $153,000 and $106,000 for the three months ended
September 30, 2005 and 2004, respectively. The increase in cash used for investing activities for the three months ended September 30, 2005, relates primarily to the deployment of new wireless infrastructure.



Cash used in financing activities which totaled $108,000 and $33,000 for the
three months ended September 30, 2005 and 2004, respectively, consisted of proceeds from stock issuances offset by principal payments on debt and capital leases.



We estimate that cash on hand of $2.0 million at September 30, 2005 along with anticipated cash flow from operations
will be sufficient for meeting our working capital needs for the next twelve months with regard to continuing operations in existing markets. Additional financing may be required to fund acquisitions or expansion into new markets. Continued
decreases in revenues and subscriber count may ultimately adversely affect the liquidity of the Company.



If additional capital financing arrangements, including public or private sales of debt or equity securities, or additional borrowings from commercial
banks, are insufficient or unavailable, or if we experience shortfalls in anticipated revenues or increases in anticipated expenses, we will modify our operations and growth strategies to match available funding.



Off Balance Sheet Arrangements



None.



Safe Harbor Statement



The following Safe Harbor Statement is made pursuant to the Private Securities Litigation Reform Act of 1995. Certain of the statements
contained in the body of this Report are forward-looking statements (rather than historical facts) that are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking
statements. With respect to such forward-looking statements, we seek the protections afforded by the Private Securities Litigation Reform Act of 1995. These risks include, without limitation, that (1) we will not be able to increase our rural
customer base at a rate that exceeds the loss of metropolitan area customers, (2) we will not improve EBITDA, profitability or product margins, (3) we will not continue to achieve operating efficiencies, (4) we will not be competitive
with existing or new competitors, (5) we will not keep up with industry pricing or technological developments impacting the Internet, (6) needed financing will not be available to us if and as needed, (7) we will be adversely affected
by dependence on network infrastructure, telecommunications providers and other vendors, by regulatory changes and by general economic and business conditions, especially as a result of the recent U.S. Supreme Court ruling and FCC order concerning
wholesale broadband access; (8) that service interruptions or impediments could harm our business; and 9) that we may not be able to protect our proprietary technologies or successfully defend infringement claims and may be required to enter
licensing arrangements on unfavorable terms. This list is intended to identify certain of the principal factors that could cause actual results to differ materially from those described in the forward-looking statements included elsewhere herein.
These factors are not intended to represent a complete list of all risks and uncertainties inherent in our business, and should be read in conjunction with the more detailed cautionary statements included in our other publicly filed reports and
documents.



ITEM 3. CONTROLS AND PROCEDURES



An evaluation was carried out under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934) in effect as of September 30, 2005. Based upon that evaluation, the Chief Executive Officer and Chief Accounting Officer concluded that, as of September 30, 2005, the design and operation of these disclosure controls
and procedures were effective in timely alerting them to the material information relating to the Company required to be included in its periodic filings with the Securities and Exchange Commission. There were no changes in our internal control over
financial reporting during the three months ended September 30, 2005 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



13



---

PART II - OTHER INFORMATION



ITEM 6. EXHIBITS



(a) Exhibits



|        |  |                                                                                                                                             
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                                                                                 
|3.1     |  | Internet America, Inc.s Articles of Incorporation (1)                                                                                      
|        | 
|3.2     |  | Internet America, Inc.s Bylaws, as amended (2)                                                                                             
|        | 
|4.1     |  | Rights Agreement dated as of August 9, 2004, between Internet America, Inc. and American Stock Transfer & Trust Company, as Rights Agent (3)
|        | 
|11.1    |  | Statement regarding computation of per share earnings(4)                                                                                    
|        | 
|31.1    |  | Rule 13a-14(a)/15d-14(a) Certification of William E. Ladin, Jr.*                                                                            
|        | 
|31.2    |  | Rule 13a-14(a)/15d-14(a) Certification of Sandra T. Everett*                                                                                
|        | 
|32.1    |  | Section 1350 Certification of William E. Ladin, Jr.*                                                                                        
|        | 
|32.2    |  | Section 1350 Certification of Sandra T. Everett*                                                                                            



(b) Reports on Form
8-K



The Company filed a Form 8-K on
July 22, 2005 announcing the acquisition of TopGun Telecom, Inc. and the expansion of its wireless service area.



---

|* | Filed herewith
|- | --------------

|(1) | Previously filed as an exhibit to Internet Americas Registration Statement on Form SB-2 as amended (file no. 333-59527) initially filed on July 21, 1998, and incorporated
herein by reference.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Previously filed as an exhibit to Internet Americas Registration Statement on Form S-8 (file no. 333-120001) filed on October 27, 2004, and incorporated herein by
reference.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Previously filed as an exhibit to Internet Americas Registration Statement on Form 8-A (file no. 001-32273) filed on August 11, 2004, and incorporated herein by
reference.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | See Note 3 to the Financial Statements.
|--- | ---------------------------------------



14



---

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, thereunto duly authorized.



|               |  |                        |  |                                        
|-------------- |  | ---------------------- |  | ---------------------------------------
|               |  | INTERNET AMERICA, INC.
|               |  | (Registrant)          
|               |  |                       
|Date: 11/14/05 |  | By:                    |  | /s/ William E. Ladin, Jr.              
|               |  |                        |  | William E. Ladin, Jr.                  
|               |  |                        |  | Chairman and Chief Executive Officer   
|               |  |                       
|Date: 11/14/05 |  | By:                    |  | /s/ Sandra T. Everett                  
|               |  |                        |  | Sandra T. Everett                      
|               |  |                        |  | Controller and Chief Accounting Officer
|               |  |                        |  | (Principal Accounting Officer)         



15



---

INDEX TO EXHIBITS



|            |  |                                                                                                                                             
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                 
|3.1         |  | Internet America, Inc.s Articles of Incorporation (1)                                                                                      
|            | 
|3.2         |  | Internet America, Inc.s Bylaws, as amended (2)                                                                                             
|            | 
|4.1         |  | Rights Agreement dated as of August 9, 2004, between Internet America, Inc. and American Stock Transfer & Trust Company, as Rights Agent (3)
|            | 
|1.1         |  | Statement regarding computation of per share earnings (4)                                                                                   
|            | 
|31.1        |  | Rule 13a-14(a)/15d-14(a) Certification of William E. Ladin, Jr.*                                                                            
|            | 
|31.2        |  | Rule 13a-14(a)/15d-14(a) Certification of Sandra T. Everett*                                                                                
|            | 
|32.1        |  | Section 1350 Certification of William E. Ladin, Jr.*                                                                                        
|            | 
|32.2        |  | Section 1350 Certification of Sandra T. Everett*                                                                                            

---

|* | Filed herewith
|- | --------------

|(1) | Previously filed as an exhibit to Internet Americas Registration Statement on Form SB-2 as amended (file no. 333-59527) initially filed on July 21, 1998, and incorporated
herein by reference.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Previously filed as an exhibit to Internet Americas Registration Statement on Form S-8 (file no. 333-120001) filed on October 27, 2004, and incorporated herein by
reference.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Previously filed as an exhibit to Internet Americas Registration Statement on Form 8-A (file no. 001-32273) filed on August 11, 2004, and incorporated herein by
reference.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | See Note 3 to the Financial Statements
|--- | --------------------------------------



16