AMERICA ONLINE LATIN AMERICA, INC.

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                       ----------------------- -----------------------

                         Three Months Ended       Six Months Ended

                              June 30,                June 30,

                       ----------------------- -----------------------

                          2004        2003        2004        2003

CONSOLIDATED CONDENSED ----------- ----------- ----------- -----------

 OPERATING RESULTS AND   (In thousands, except per share information)

 EPS                          Unaudited               Unaudited

---------------------- ----------------------- -----------------------

Revenues:

 Subscriptions            $11,982     $15,864     $25,452     $30,822

 Advertising and

  commerce                    728       1,821       1,277       3,158

                       ----------- ----------- ----------- -----------

   Total revenues          12,710      17,685      26,729      33,980

 

Costs and expenses:

 Cost of revenues          (8,677)    (14,954)    (18,002)    (31,523)

 Sales and marketing      (12,389)    (17,412)    (24,526)    (33,951)

 General and

  administrative           (6,287)     (6,841)    (12,174)    (13,806)

 Impairment of

  Argentina VAT

  receivable               (4,009)          -      (4,009)          -

                       ----------- ----------- ----------- -----------

   Total costs and

    expenses              (31,362)    (39,207)    (58,711)    (79,280)

 

Loss from operations      (18,652)    (21,522)    (31,982)    (45,300)

Other expense, net         (4,115)     (4,477)     (8,148)     (8,898)

                       ----------- ----------- ----------- -----------

Loss before income

 taxes                    (22,767)    (25,999)    (40,130)    (54,198)

Income tax (provision)

 benefit                      (29)        (29)        (59)         (2)

                       ----------- ----------- ----------- -----------

Net loss                  (22,796)    (26,028)    (40,189)    (54,200)

Less: dividends on

 Series B and C

 preferred shares          (4,088)     (3,882)     (7,749)     (6,915)

                       ----------- ----------- ----------- -----------

Net loss applicable to

 common stockholders     $(26,884)   $(29,910)   $(47,938)   $(61,115)

                       =========== =========== =========== ===========

 

   Loss per common

    share, basic and

    diluted                $(0.20)     $(0.22)     $(0.35)     $(0.47)

                       =========== =========== =========== ===========

 

   Weighted average

    common shares

    outstanding           135,257     135,135     135,234     130,246

                       =========== =========== =========== ===========

 

 

AMERICA ONLINE LATIN AMERICA, INC.

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                                As of

---------------------- -----------------------

BALANCE SHEETS (In      June 30,    Dec. 31,

 thousands)               2004        2003

---------------------- ----------- -----------

                       (Unaudited)

ASSETS

CURRENT ASSETS:

Cash and cash

 equivalents              $27,638     $32,633

Short-term money

 market investments           227         268

                       ----------- -----------

   Total cash and cash

    equivalents            27,865      32,901

Trade accounts

 receivable, net of

 allowances                 1,691       2,267

Other receivables             392         243

Prepaid expenses and

 other current assets       6,239       8,796

                       ----------- -----------

   Total current

    assets                 36,187      44,207

Property and

 equipment, net             3,202       4,771

Investments, including

 securities available-

 for-sale                     648         194

Product development

 costs and other

 intangible assets,

 net                           36          50

Other assets                1,817       6,517

                       ----------- -----------

   TOTAL ASSETS           $41,890     $55,739

                       =========== ===========

 

LIABILITIES AND

 CAPITAL DEFICIENCY

CURRENT LIABILITIES

Trade accounts payable     $2,694      $3,264

Payables to affiliates      3,773       1,349

Accrued expenses and

 other current

 liabilities               16,495      22,586

                       ----------- -----------

   Total current

    liabilities            22,962      27,199

Senior convertible

 notes                    160,000     160,000

Deferred revenue and

 other non-current

 liabilities                1,391       1,499

                       ----------- -----------

   Total liabilities      184,353     188,698

 

CAPITAL DEFICIENCY

Preferred stock,

 common stock and

 additional paid-in

 capital , net of

 unearned services and

 accumulated other

 comprehensive loss       750,260     719,658

Accumulated deficit      (892,806)   (852,617)

                       ----------- -----------

   Total capital

    deficiency           (142,463)   (132,959)

                       ----------- -----------

   TOTAL LIABILITIES

    AND CAPITAL

    DEFICIENCY            $41,890     $55,739

                       =========== ===========

 

 

CONSOLIDATED CONDENSED

 CASH FLOW INFORMATION

 (in thousands)

---------------------- ----------------------- -----------------------

                         Three Months Ended       Six Months Ended

                              June 30,                June 30,

                       ----------------------- -----------------------

                          2004        2003        2004        2003

                       ----------- ----------- ----------- -----------

                              Unaudited               Unaudited

                       ----------------------- -----------------------

OPERATING ACTIVITIES

----------------------

Net loss                 $(22,796)   $(26,028)   $(40,189)   $(54,200)

Net operating activity     20,498      11,967      33,069      25,011

                       ----------- ----------- ----------- -----------

Net cash used in

 operating activities      (2,298)    (14,061)     (7,120)    (29,189)

Net cash used in

 investing activities         (42)       (348)       (103)       (692)

Net cash provided by

 financing activities       1,039           -       2,475           -

 

Effect of exchange

 rate changes on cash

 and cash equivalents        (165)       (183)       (288)        304

                       ----------- ----------- ----------- -----------

Net decrease in cash

 and cash equivalents      (1,466)    (14,592)     (5,036)    (29,577)

CASH AND CASH

 EQUIVALENTS,

 BEGINNING OF PERIOD       29,331      60,516      32,901      75,501

                       ----------- ----------- ----------- -----------

CASH AND CASH

 EQUIVALENTS, END OF

 PERIOD                   $27,865     $45,924     $27,865     $45,924

                       =========== =========== =========== ===========