Inphonic (INPC) 8-K InPhonic Announces Financial Results for Fourth Quarter

Exhibit 99.1

FOR IMMEDIATE RELEASE

InPhonic Announces Financial Results for Fourth Quarter

and Full Year 2006

Reports Record Fourth Quarter and Full Year 2006 Results

Signs Fifth Major Wireless Carrier to Residual Compensation Agreement

Reaches Final Settlement with Attorney General’s Office

WASHINGTON, February 22, 2007 (BUSINESS WIRE) — InPhonic, Inc. (NASDAQ:INPC), a leading online seller of wireless services and products, today reported financial results for the fourth quarter and full year ended December 31, 2006.

“We are very pleased with our fourth quarter and full year results. In 2006, InPhonic made substantial progress in transitioning our business by putting in place residual-based compensation agreements with most of the major wireless carriers, improving our customer service experience, expanding our industry leading online distribution channel with high-quality partners such as Best Buy, Staples and Amazon,” said InPhonic’s Chairman and CEO David A. Steinberg. “For 2007, we are focused on continuing the strong operational momentum of this past year while maintaining strong revenue growth, further improving operating and contribution margins and generating sustainable positive operating cash flow.”

Revenue was $120.3 million for the fourth quarter 2006, compared to $85.2 million for the fourth quarter 2005. Loss from continuing operations for the fourth quarter 2006 was ($3.4) million or ($0.09) per basic and diluted share compared to a loss from continuing operations of ($24.8) million for the fourth quarter of 2005 or ($0.70) per basic and diluted share. Excluding the impact of rebate settlement and related expenses and restructuring costs of $4.5 million, income from continuing operations for the fourth quarter 2006 would have been $1.1 million or $0.03 per basic and diluted share.

Non-GAAP Adjusted EBITDA for the fourth quarter 2006 was $11.4 million, compared to non-GAAP Adjusted EBITDA of ($12.4) million for the fourth quarter 2005. Non-GAAP Adjusted EBT for the fourth quarter 2006 was $10.6 million, or $0.28 per basic share, compared to non-GAAP Adjusted EBT of ($14.6) million, or ($0.41) per basic share for the fourth quarter 2005.

Revenue was $405.7 million for the year ended December 31, 2006, compared to $320.5 million for the year ended December 31, 2005. Loss from continuing operations for the year ended December 31, 2006 was ($17.3) million or ($0.48) per basic and diluted share compared to a loss from continuing operations of ($37.8) million for the year ended December 31, 2005 or ($1.10) per basic and diluted share. Excluding the impact of rebate settlement and related expenses, settlement and earnout expenses and restructuring costs of $11.1 million, loss from continuing operations for the full year of 2006 would have been ($6.2) million or ($0.17) per basic and diluted share.

Non-GAAP Adjusted EBITDA for the year ended December 31, 2006 was $24.5 million, compared to non-GAAP Adjusted EBITDA of $7.2 million for the year ended December 31, 2005. Non-GAAP Adjusted EBT for the year ended December 31, 2006 was $21.5 million, or $0.59 per basic share, compared to non-GAAP Adjusted EBT of $0.4 million, or $0.01 per basic share for the year ended December 31, 2005.

Adjusted EBITDA is defined as net income (loss) from continuing operations before interest expense, taxes, depreciation and amortization, restructuring costs, other non-recurring costs and stock-based compensation. Adjusted EBT is defined as Adjusted EBITDA after deducting depreciation and amortization and adding back the effect of amortization related to acquired software and intangibles and internal software development. Adjusted

EBT per basic share is defined as the per share value of Adjusted EBT based on the outstanding common stock. Adjusted EBT per diluted share is defined as the per share value of Adjusted EBT on a fully-diluted basis.

During the fourth quarter of 2006, InPhonic generated positive cash flow of approximately $6.5 million from its operations. The company also had changes in working capital reflecting purchases of inventory for the holiday selling season which utilized prompt pay discounts from its suppliers. We also experienced heavy activation volumes in the latter half of the fourth quarter, due to the holiday selling season, which increased accounts receivable that have subsequently converted to cash in the first quarter of 2007.

Fifth Major Wireless Carrier Signs Up For Residual Compensation

InPhonic recently signed an agreement with another major wireless carrier that provides for monthly residual commission payments. This represents the fifth major wireless carrier to enter into a residual compensation agreement with InPhonic. In addition, InPhonic has residual compensation agreements with two MVNO partners, Virgin Wireless and Amp’d Mobile. “We continue to be successful in negotiating residual based compensation over the life of a subscriber in exchange for a reasonable concession in near-term activation revenue,” commented InPhonic CFO Larry Winkler. “We are very pleased with the economics of these residual compensation agreements and believe they are providing increased visibility and value to the business.”

InPhonic ended 2006 with approximately 660,000 residual revenue subscribers.

Final Settlement with District of Columbia Attorney General’s Office

InPhonic has reached a Final settlement with the District of Columbia Attorney General’s Office concerning the outstanding consumer protection lawsuit related to the use of mail-in rebates. The Company believes that it has adequately reserved for such settlement and does not expect any additional financial statement changes related to the settlement in the future.

New Affinity and Distribution Partners

• Launched full suite wireless devices and wireless services on Amazon’s wireless store. InPhonic now offers through its popular consumer brand Wirefly a wide range of activated cell phones, smartphones, PDAs and aircards with service plans from all the nation’s leading wireless carriers. InPhonic also offers prepaid cell phones and cell phone accessories, and is the only third party merchant within the Amazon.com wireless store.

• Launched US Airways Dividend Miles Wireless and Air Tran A+ Rewards Wireless online stores that reward customers for their purchases of wireless products and services. US Airways and Air Tran join Delta and United as the third and fourth InPhonic operated travel related benefits wireless programs.

Debt Financing Completed

During the quarter, InPhonic entered into a $100 million debt financing agreement with Goldman Sachs and Citigroup. The financing will be used for any or all of the following: (a) to repay all indebtedness under the Company’s existing revolving operating line of credit, (b) to fund share repurchases by the Company and (c) for working capital needs and general corporate purposes. To date, $75 million has been drawn down. It is expected the balance will be drawn down in the first quarter of 2007. Following the completion of the debt financing, InPhonic announced a $30 million stock buyback program.

Business Outlook

The following business outlook is based on current information and expectations as of February 22, 2007. The business outlook for first quarter and full year 2007 includes the near-term impact to revenue and Adjusted EBITDA of the addition of a fifth residual compensation carrier. It is currently expected that the outlook will not be updated until the release of InPhonic’s next quarterly earnings announcement, notwithstanding subsequent developments; however, InPhonic may update the outlook or any portion thereof at any time.

	FY 2007	Q1 2007
Revenue (in millions)	$500 - $510	$108 - $110
Adjusted EBITDA (in millions)	$33 - $35	$4.5 - $5.5
Adjusted EPS per basic and diluted share	$0.24 - $0.27	$0.00 - $0.02

Adjusted EPS per basic and diluted share is defined as earnings per share as calculated on the face of the income statement adjusted for stock-based compensation expense and depreciation of intangibles.

Non-GAAP Financial Measures

A reconciliation between GAAP and Non-GAAP results is shown immediately following the Unaudited Condensed Consolidated Statements of Cash Flows.

The Company believes that the presentation of the above Non-GAAP measures provides useful information to investors regarding certain additional financial and business trends relating to its financial condition and results of operations. The Company believes when U.S. GAAP results are viewed in conjunction with these Non-GAAP measures, investors are provided with a more meaningful understanding of the Company’s ongoing operating performance. In addition, the Company’s management uses these measures for reviewing the Company’s financial results.

These measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for, or superior to, GAAP results. The Company has reconciled Non-GAAP financial measures included in this press release to the nearest GAAP measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these Non-GAAP financial measures to their most directly comparable GAAP financial measure.

Conference Call

Company management will be holding a conference call today, Thursday, February 22, 2007 at 5:00 PM Eastern Time to discuss its fourth quarter and year end 2006 financial results and provide a Company update.

The conference call can be accessed by calling the following phone numbers:

• 800-811-8845 (Domestic) or 913-981-4905 (International); passcode 9097544.

• The replay will be available through March 3, 2007 by dialing 888-203-1112 (Domestic) or 719-457-0820 (International); passcode 9097544.

• A link to an audio Webcast of the call will be available athttp://investor.inphonic.com/. An audio Webcast archive following the call will also be available at http://investor.inphonic.com/

About InPhonic

Headquartered in Washington, D.C., InPhonic, Inc. (NASDAQ:INPC—News) is a leading online seller of wireless services and products. InPhonic sells these services and products, and provides world-class customer service through websites that it creates and manages for online businesses, national retailers, member-based organizations and associations under their own brands. InPhonic also operates Wirefly (www.wirefly.com), a leading one-stop comparison mobile phones and wireless plans shopping site that has been awarded “Best of the Web” by Forbes magazine and “Best in Overall Customer Experience” by Keynote Performance Systems. InPhonic also delivers a full range of MVNO and mobility solutions to enterprise clients through its Mobile Virtual Network Enablement (MVNE) platform. Among many awards in its history, InPhonic holds the distinction as #1 Company of the Year on the INC. 500 for 2004. For more information on the company, its products and services, visit the InPhonic Corporate Web site atwww.inphonic.com.

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Forward-Looking Statements—This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, including, without limitation, all statements related to future financial performance, plans to grow our business and build our brand. Words such as “expect,” “anticipate,” “believe” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon our current expectations. Forward-looking statements involve risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to our fluctuating operating results, seasonality in our business, our ability to acquire products on reasonable terms, our online business model, demand for our products, the strength of our brand, competition, our ability to fulfill orders and other risks detailed in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the Year ended December 31, 2005 and our Quarterly Reports on Forms 10-Q. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and InPhonic undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof.

Contacts:
Investors: InPhonic, Inc. Gary Tiedemann VP, Investor Relations VP, Public Relations (202) 333-0001 gtiedemann@inphonic.com	Press: InPhonic, Inc. Tripp Donnelly VP, Public Relations (202) 333-0001 tdonnelly@inphonic.com

INPHONIC, INC.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2005			2006			2005			2006
Revenue:
Activations and services	$	63,122		$	99,854		$	233,730		$	330,050
Equipment		22,080			20,478			86,809			75,639
Total revenue		85,202			120,332			320,539			405,689
Cost of revenue, exclusive of depreciation and amortization:
Activations and services		326			777			1,221			2,653
Equipment		55,524			59,658			190,509			210,232
Total cost of revenue		55,850			60,435			191,730			212,885
Operating expenses:
Sales and marketing, exclusive of depreciation and amortization		32,127			34,108			93,726			117,718
General and administrative, exclusive of depreciation and amortization		18,804			18,553			63,131			63,841
Depreciation and amortization		3,461			5,188			9,840			17,174
Rebate settlement and related expenses		—			4,019			—			7,859
Settlement and earnout		—			—			—			696
Restructuring costs		—			436			847			2,551
Investment write-off		—			—			228			—
Total operating expenses		54,392			62,304			167,772			209,839
Operating loss		(25,040	)		(2,407	)		(38,963	)		(17,035	)
Other income (expense):
Interest income		591			713			2,167			2,329
Interest expense		(371	)		(1,738	)		(970	)		(2,638	)
Total other income		220			(1,025	)		1,197			(309	)
Loss from continuing operations		(24,820	)		(3,432	)		(37,766	)		(17,344	)
Discontinued operations:
Income (loss) from discontinued operations		(1,131	)		(94	)		(1,784	)		(193	)
Gain on sale		1,355			—			1,355			—
Total income (loss) from discontinued operations		224			(94	)		(429	)		(193	)
Net loss	$	(24,596	)	$	(3,526	)	$	(38,195	)	$	(17,537	)
Basic and diluted net loss per share:
Net loss from continuing operations	$	(0.70	)	$	(0.09	)	$	(1.10	)	$	(0.48	)
Net income (loss) from discontinued operations		0.01			—			(0.01	)		—
Basic and diluted net loss per share	$	(0.69	)	$	(0.09	)	$	(1.11	)	$	(0.48	)
Basic and diluted weighted average shares outstanding		35,463,559			37,688,951			34,417,954			36,312,970
Unaudited Stock-Based Compensation:	Three Months Ended December 31,						Twelve Months Ended December 31,
(In thousands)	2005			2006			2005			2006
Sales and marketing	$	440		$	687		$	2,201		$	2,891
General and administrative		3,883			3,287			15,585			9,860
Restructuring costs		—			201			—			1,513
Income (loss) from discontinued operations		574			114			832			112
	$	4,897		$	4,289		$	18,618		$	14,376

INPHONIC INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

	December 31, 2005			December 31, 2006
Assets					(unaudited	)
Current assets:
Cash and cash equivalents	$	70,783		$	89,972
Accounts receivable, net		34,606			88,398
Inventory, net		19,680			23,164
Prepaid expenses		2,405			6,507
Deferred costs and other current assets		6,823			3,122
Current assets of discontinued operations		2,430			391
Total current assets		136,727			211,554
Restricted cash and cash equivalents		400			38
Property and equipment, net		12,121			22,639
Goodwill		31,140			37,327
Intangible assets, net		12,651			8,092
Deposits and other assets		3,058			9,212
Total assets	$	196,097		$	288,862
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	31,543		$	81,747
Accrued expenses and other liabilities		31,588			14,432
Current portion of deferred revenue		13,851			7,188
Current maturities of long-term debt and capital leases		377			301
Current liabilities of discontinued operations		3,130			1,103
Total current liabilities		80,489			104,771
Long-term debt and capital lease obligations, net of current maturities		15,474			63,826
Deferred revenue, net of current portion		284			478
Total liabilities		96,247			169,075
Stockholders’ equity:
Common stock, $0.01 par value Authorized 200,000,000 shares at December 31, 2005 and December 31, 2006; issued and outstanding 35,232,869 and 37,138,480 shares at December 31, 2005 and December 31, 2006, respectively		353			371
Additional paid-in capital		264,155			301,611
Accumulated deficit		(164,658	)		(182,195	)
Total stockholders’ equity		99,850			119,787
Total liabilities and stockholders’ equity	$	196,097		$	288,862

INPHONIC, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2005			2006			2005			2006
Cash flows from operating activities:
Net loss	$	(24,596	)	$	(3,526	)	$	(38,195	)	$	(17,537	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		3,461			5,188			9,840			17,174
Non-cash sales and marketing expense and other		—			160			—			456
Non-cash interest expense, net		108			498			594			498
Stock-based compensation		4,897			4,176			18,618			14,264
Gain from sale of Liberty Wireless		(1,355	)		—			(1,355	)		—
Non-cash write-off of investment		—			—			228			—
Cash generated by operations		(17,485	)		6,496			(10,270	)		14,855
Changes in operating assets and liabilities, net of assets and liabilities received from business acquisitions:
Accounts receivable		7,705			(31,852	)		(15,916	)		(53,446	)
Inventory		15,661			(5,010	)		(7,540	)		(1,167	)
Prepaid expenses		(454	)		146			(1,721	)		(5,577	)
Deferred costs and other assets		(3,092	)		(902	)		(4,152	)		3,705
Deposits and other assets		(1,238	)		(652	)		(2,595	)		(2,805	)
Accounts payable		(8,188	)		23,675			8,956			49,273
Accrued expenses and other liabilities		3,435			(4,899	)		8,973			(14,755	)
Deferred revenue		(840	)		(3,056	)		4,188			(6,469	)
Net cash used in operating activities		(4,496	)		(16,054	)		(20,077	)		(16,386	)
Cash flows from investing activities:
Capitalized expenditures, including internal capitalized labor		(3,091	)		(6,647	)		(11,836	)		(22,172	)
Cash paid for acquisitions		(111	)		(673	)		(8,781	)		(4,662	)
Cash paid for intangible assets		(193	)		—			(2,725	)		(193	)
Purchase of short-term investments		—			—			—			(5,000	)
Proceeds from the maturity of short-term investments		5,005			—			—			5,000
Proceeds from the sale of assets		101			—			101			1,111
Decrease (increase) in restricted cash and cash equivalents		100			(38	)		100			362
Net cash provided by (used in) investing activities		1,811			(7,358	)		(23,141	)		(25,554	)
Cash flows from financing activities:
Principal repayments on long-term debt		(69	)		(20,033	)		(284	)		(21,784	)
Borrowings on line-of-credit		—			—			15,000			6,355
Borrowings on term loan					75,000						75,000
Cash paid for repurchase of common stock		(9,998	)		(3,235	)		(13,088	)		(3,738	)
Proceeds from exercise of warrants and options		2,010			4,115			11,679			5,296
Net costs of initial public offering		(1	)		—			(292	)		—
Net cash provided by (used in) financing activities		(8,058	)		55,847			13,015			61,129
Net increase (decrease) in cash and cash equivalents		(10,743	)		32,435			(30,203	)		19,189
Cash and cash equivalents, beginning of the period		81,526			57,537			100,986			70,783
Cash and cash equivalents, end of the period	$	70,783		$	89,972		$	70,783		$	89,972
Supplemental disclosure of cash flows information:
Cash paid during the period for: Interest	$	146		$	143		$	253		$	917
Supplemental disclosure of non-cash activities:
Issuance of detachable warrants with term loan		—			11,945			—			11,945
Release of funds in escrow related to acquisitions		—			—			10,700			—
Issuance of common stock in business acquisitions		—			21			8,209			5,202
Issuance of warrant to purchase common stock to vendor		—			—			—			3,228
Purchase consideration in accrued liabilities		—			—			3,000			224
Inventory exchanged for advertising credits		—			—			—			2,323
Issuance of common stock in intangible asset purchase		—			—			1,549			—
Stock-based compensation capitalized as internal labor		—			173			—			616
Equipment purchased on capital lease		229			—			595			152

INPHONIC INC.

Reconciliation of non-GAAP measure to nearest comparable GAAP measures

(unaudited, in millions, except share and per share amounts)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2005			2006			2005			2006
Adjusted EBITDA and EBT:
Net loss from continuing operations	$	(24.8	)	$	(3.4	)	$	(37.8	)	$	(17.3	)
Add back:
Interest expense/(income)		0.1			1.0			(0.8	)		0.3
Depreciation and amortization		3.5			5.2			9.8			17.2
Non-cash amortization of sales and marketing expense		—			0.2			—			0.5
Restructuring costs		—			0.4			0.9			2.6
One-time and Non-recurring items		0.4			—			8.9			0.7
Rebate settlement and related expenses		—			4.0			0.0			7.9
Loss on investments		—			—			0.2			—
Impact of Discontinued Operations		4.1			—			8.0			—
Stock-based compensation		4.3			4.0			18.0			12.8
Adjusted EBITDA		(12.4	)		11.4			7.2			24.5
Depreciation and amortization adjustments:
Depreciation and amortization		(3.5	)		(5.2	)		(9.8	)		(17.2	)
Amortization related to acquired software and intangibles and internal software development		1.2			4.4			3.1			14.2
Adjusted EBT	$	(14.6	)	$	10.6		$	0.4		$	21.5
Adjusted EBT per share
Basic	$	(0.41	)	$	0.28		$	0.01		$	0.59
Diluted	$	(0.41	)	$	0.27		$	0.01		$	0.58
Basic weighted average shares		35,463,559			37,688,951			34,417,954			36,312,970
Diluted weighted average shares		37,374,506			39,218,650			37,754,914			37,236,261