Interliant Announces Second Quarter 1999 Financial Results

Second Quarter 1999 Revenues Up 96% Over First Quarter 1999 PURCHASE, N.Y. (PROTEXT) - Interliant, Inc. (Nasdaq: INIT), a leading provider of Internet hosting services, today reported financial results for the second quarter of 1999, and the six months ended June 30, 1999. Revenues for the second quarter of 1999 were $10.6 million, an increase of $9.8 million over the revenue of $845,000 for the second quarter of 1998 and $5.2 million more than the $5.4 million first quarter 1999 revenues. Revenues for the six months ended June 30, 1999 were $16.1 million, an increase of $15.2 million over the revenue of $858,000 for the first six months of 1998. Through the end of the most recent period, the Company has made 17 acquisitions, including the operations of Advanced Web Creations on May 4. Second quarter EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) was negative $6.3 million, EBITA (Earnings Before Interest, Taxes and Amortization) was negative $7.6 million and the net loss was $14.1 million or $0.44 per share. EBITDA and EBITA for the six months ended June 30, 1999 was negative $10.7 million and $12.8 million, respectively, and the net loss was $21.8 million or $0.77 per share. Given Interliant's aggressive acquisition program, the Company believes that EBITA is a more useful measure of operating performance than EBITDA, because it excludes non-operating charges such as amortization expense associated with acquisitions but includes depreciation expense, which is an operating expense that appropriately reflects capital invested in the business. "Interliant offers one of the most robust sets of Internet hosting services in the market today," commented Bradley Feld, Co-Chairman. "We generate more than 40% of our revenue from application hosting, the highest value-added services in Internet hosting. Through our acquisition of Interliant Texas in March 1999, we became one of the largest application service providers ("ASP") with a track record of more than five years. We are focused on fast implementations of Internet-enabled applications that provide cost-effective solutions for our customers and provide them with a competitive advantage by speeding their time to market." "We are pleased with the increase in our revenues for the three and six month periods ended June 30, 1999. To date, Interliant's growth has been achieved primarily through aggressive execution of its acquisition strategy," commented James M. Lidestri, President. He continued: "With the net proceeds of our IPO of more than $70 million, we are now positioned to invest in new products and services and distribution capability to generate internal growth in the businesses we've acquired over the past 18 months, as well as continue our acquisition strategy." Mr. Lidestri continued: "We believe that we are one of the largest Internet web hosting providers today and we obtain more than 35% of our revenue from these services. With more than 50,000 active web hosting customers, we host more than 85,000 active domains and our customers have parked more than 130,000 domain names with us, a significant proportion of which we hope to turn into active domains over time." Mr. Feld further stated that during this quarter, "Interliant made a strategic investment in Asia On-Line, a Hong Kong-based Internet Service Provider ("ISP") which will provide us with quick access to Asian markets." He also indicated that, "the investment earlier this year by SOFTBANK Technology Ventures affords us access to many of the SOFTBANK portfolio companies." Interliant is a registered trademark of Interliant, Inc. All rights reserved. For Investor Relations Contact: investor_relations@interliant.com About Interliant, Inc. Interliant, Inc. is a leading provider of web site hosting, application hosting and enhanced Internet services. These services enable customers of all sizes to capitalize on the latest web-based technologies quickly and cost-effectively by relieving them of the burdens associated with building, managing and maintaining the infrastructure required to support mission- critical applications. By offering a comprehensive suite of hosting and IT consulting services including virtual, dedicated, co-location hosting solutions, and application and groupware hosting, they are able to meet the needs of any size business and to grow with their customers. Interliant currently has three primary state of the art data centers located in Atlanta, Houston and the Washington, D.C. area. The Company's corporate headquarters are located in Purchase, New York. Forward-Looking Statements and Associated Risks This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Certain forward-looking statements, relating to, among other things, future results of operations, profitability, growth plans, sales, expense trends, capital requirements and general industry and business conditions applicable to our business. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. These forward-looking statements are based largely on our current expectations and are subject to a number of risks and uncertainties. The words "anticipate," "believe," "estimate" and similar expressions used herein are generally intended to identify forward-looking statements. In addition to the other risks described elsewhere in this press release and in our Registration Statement on Form S-1 filed on March 15, 1999, as amended, important factors to consider in evaluating such forward-looking statements include but are not limited to: changes in external competitive market factors; changes in our business strategy; an inability to execute our strategy due to unanticipated changes in the emerging hosting and Internet services industries or the economy in general; difficulties in the timely expansion of our network and data centers or in the acquisition and integration of new businesses; difficulties in retaining and attracting employees or new customers; difficulties in developing or deploying new services; risks associated with rapidly changing technology, including but not limited to Year 2000 compliance, and various other competitive factors that may prevent us from competing successfully in existing or future markets. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained herein will in fact be realized and we assume no obligation to update this information. INTERLIANT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Three Months Ended Six Months Ended

June 30,

June 30,

1999

1998

1999 1998 Service

revenues

$10,647,650

$844,678 $16,081,813 $857,804 Costs and expenses: Cost of service

revenues

6,088,440

457,059

9,339,143 510,833 Sales and marketing

4,072,779

422,842

5,969,136 533,724 General and administrative 6,738,636

1,322,829 11,501,942 1,712,954 Depreciation

1,400,754

64,170

2,100,306 73,587 Amortization of

intangibles

6,190,585

370,040

8,784,915 373,879

24,491,194

2,636,940 37,695,442 3,204,977 Operating loss (13,843,544) (1,792,262) (21,613,629) (2,347,173) Interest income (expense), net

(168,338)

29,957

(114,427) 43,602 Other income (expense)

(70,741)

--

(112,188) -- Net loss

$(14,082,623) $(1,762,305)$(21,840,244) $(2,303,571) Net loss per share -

basic and diluted

$(0.44)

$(0.33)

$(0.77) $(0.55) Weighted average shares outstanding

- basic

and diluted

31,968,991

5,380,619 28,369,440

4,190,310 EBITDA

$(6,252,205) $(1,358,052)$(10,728,408) $(1,899,707) EBITA

$(7,652,959) $(1,422,222)$(12,828,714) $(1,973,294) INTERLIANT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS

June 30,

December 31,

1999

1998

(unaudited) Assets Current assets: Cash and cash equivalents

(See Note)

$3,269,491

$6,813,360 Cash-restricted

1,256,772

-- Accounts receivable, net of allowance

of $1,013,000 and $320,000 at June 30,

1999 and December 31, 1998,

respectively

5,166,477

806,322 Prepaid and other current assets 1,002,576

639,662

Total current assets

10,695,316

8,259,344

Furniture, fixtures and equipment, net

12,417,328

5,103,123 Intangibles, net

77,486,021

12,612,228 Other assets

3,130,370

222,172

Total assets

$ 103,729,035 $26,196,867 Liabilities and stockholders' equity Current liabilities:

Notes payable and current

portion of long-term debt

$10,983,866

--

Accounts payable

3,994,192

$787,412

Accrued expenses

6,679,260

2,301,507

Deferred revenue

4,347,112

1,414,969

Total current liabilities

26,004,430

4,503,888 Long-term debt, less current portion

1,660,970

-- Series A redeemable convertible

preferred stock

13,000,000

-- Stockholders' equity:

Preferred stock, $.01 par value;

1,000,000 shares authorized; 0 shares

issued and outstanding

Common stock, $.01 par value;

200,000,000, and 100,000,000 shares

authorized; 32,567,610, and

19,217,197 shares issued and

outstanding, respectively

325,676

192,172

Additional paid-in capital

96,102,605

34,160,334

Deferred compensation

(634,304) (1,769,429)

Accumulated deficit

(32,730,342) (10,890,098)

Total stockholders' equity 63,063,635

21,692,979

Total liabilities and

stockholders' equity $ 103,729,035 $ 26,196,867 Note: Cash and cash equivalents at June 30, 1999 do not reflect proceeds

from the Initial Public Offering closed in July 1999.

INTERLIANT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Six Months Ended

June 30,

1999

1998 Operating activities Net loss

$(21,840,244)

$(2,303,571) Adjustments to reconcile net

loss to net cash used in

operating activities: Provision for uncollectible accounts

662,813

52,500 Depreciation and amortization

10,885,221

447,466 Amortization of deferred

compensation

1,135,125

55,333

Other non-cash charges

163,715

-- Changes in operating assets and

liabilities:

Accounts receivable

(456,439)

(336,374)

Prepaid expenses and other

current assets

(12,692)

(212,589)

Other assets

(167,951)

--

Accounts payable

406,561

548,702

Accrued expenses

2,931,244

770,710

Deferred revenue

548,793

(131,720) Net cash used in operating activities

(5,743,854)

(1,109,543) Investing activities Purchases of furniture, fixtures

and equipment

(3,238,932)

(783,590) Payments issued in connection

with non-compete agreements

(1,000,000)

-- Investments in restricted securities

(952,969)

-- Transfers to restricted cash

(1,256,772)

-- Acquisitions of businesses,

net of cash acquired

(20,701,570)

(8,788,580) Net cash used in investing activities

(27,150,243)

(9,572,170) Financing activities Proceeds from sale of common stock

11,000,000

15,040,000 Proceeds from issuance of Series A

redeemable convertible preferred

stock

13,000,000

-- Proceeds from exercise of options

and warrants

5,098,518

-- Proceeds from capital lease financing

1,277,255

-- Repayment of debt

(243,870)

-- Offering costs

(781,675)

-- Net cash provided by

financing activities

29,350,228

15,040,000 Net increase (decrease) in cash

and cash equivalents

(3,543,869)

4,358,287 Cash and cash equivalents at

beginning of period

6,813,360

912,085 Cash and cash equivalents

at end of period (See Note)

$3,269,491

$5,270,372 Supplemental Disclosures of Noncash

Investing and Financing Activities

Stock issued and options granted for acquisitions

$45,937,237

$615,165 Stock issued for compensation

agreements

$

--

$498,000 Debt assumed or issued in

acquisitions

$10,395,000

$

-- Note: Cash and cash equivalents at June 30, 1999 do not reflect proceeds from the Initial Public Offering closed in July 1999. ots Original Text Service: Interliant, Inc. Internet: http://www.newsaktuell.de Contact: William A. Wilson, CFO, or Beth O'Byrne, VP, Finance & Assistant Treasurer, both of Interliant, Inc., 914-640-9000

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