<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to ___________.
COMMISSION FILE NUMBER: 001-12063
---------
ROCKY MOUNTAIN INTERNET, INC.
----------------------------------------------------
Exact name of Registrant as specified in its charter
Delaware 84-1322326
- -------- ---------------
State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification
1099 18th Street, Suite 3000 DENVER COLORADO 80202
- --------------------------------------------- ---------------
Address of principal executive offices Zip Code
Registrant's telephone number, including area code: 303-672-0700
---------------
Former name, former address and former fiscal year, if changed since last
report: NA
Indicate by check mark whether the Registrant (1) has filed all annual,
quarterly and other 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 periods that the Registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90 days.
YES X NO ___
As of April 30, 1997, Rocky Mountain Internet, Inc. had 4,648,565 shares of
common stock, $.001 par value, outstanding.
Transitional Small Business Disclosure Format (check one) Yes [ ] No [X]
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROCKY MOUNTAIN INTERNET, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, March 31,
1996 1997
(Note) (Unaudited)
------------ -----------
Current Assets
Cash and Cash equivalents $ 348,978 $ 526,290
Investments 1,356,629 576,918
Trade receivables, less allowance for
doubtful accounts 12/31/1996 $115,700;
3/31/97 $60,173 518,827 621,567
Inventories 91,047 116,908
Other 143,753 42,749
---------- ----------
$2,459,234 $1,884,432
---------- ----------
Property and equipment
Equipment 2,513,944 2,684,992
Computer software 202,501 222,039
Leasehold Improvements 127,877 172,921
Furniture, fixtures, and office equipment 413,678 430,623
---------- ----------
$3,258,000 $3,510,575
Less accumulated depreciation and
amortization 403,023 599,740
---------- ----------
$2,854,977 $2,910,835
---------- ----------
Other Assets
Customer Lists 145,444 583,686
Deposits 80,512 95,001
---------- ----------
$ 225,956 $ 678,687
---------- ----------
$5,540,167 $5,473,954
---------- ----------
---------- ----------
Note: The consolidated Balance Sheet information as of December 31,
1996 has been derived from the Company's audited financial
statements appearing in Form 10-QSB previously filed with the
U.S. Securities and Exchange Commission.
See Notes to Consolidated Financial Statements
2
<PAGE>
ROCKY MOUNTAIN INTERNET, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, March 31,
1996 1997
(Note) (Unaudited)
----------- -------------
Current liabilities
Note payable $ 4,250 $ 499,250
Current maturities of long-term debt
and obligations under capital leases 451,823 653,458
Accounts payable 425,160 858,355
Deferred revenue 218,121 257,059
Accrued payroll and related taxes 528,160 168,904
Other accrued expense 460,836 251,017
----------- -----------
Total current liabilities $ 2,088,350 $ 2,688,043
Long-term debt and obligations under
capital leases, less current
maturities $ 1,134,380 $ 1,077,329
----------- -----------
Stockholders equity
Preferred stock, $.001 par value;
authorized
1,000,000 shares; issued and
outstanding 1995, no share and
1996, 250,000 $ 250 $ 250
Common stock, $.001 par value;
authorized 10,000,000 shares;
issued and outstanding 1996 4,540,723
shares; 1997 4,648,565 shares. 4,541 4,658
Additional paid-in capital 4,839,968 5,133,990
Treasury Stock (12,000)
Accumulated deficit (2,527,322) (3,418,316)
----------- -----------
Total Stockholder's Equity $ 2,317,437 $ 1,708,582
----------- -----------
$ 5,540,167 $ 5,473,954
----------- -----------
----------- -----------
See Notes to Consolidated Financial Statements
3
<PAGE>
ROCKY MOUNTAIN INTERNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31
----------------------
1996 1997
--------- ----------
Revenue
Internet access and services $ 508,455 $1,314,039
Equipment sales 60,382 83,244
--------- ----------
$ 568,837 $1,397,283
--------- ----------
Cost of revenue earned
Internet access and services 88,835 437,111
Equipment sales 51,198 63,865
--------- ----------
$ 140,033 $ 500,976
--------- ----------
Gross Profit 428,804 896,307
Selling, general and administrative
expenses 675,730 1,708,306
--------- ----------
Operating (loss) income $(246,926) $ (811,999)
Other income (expense)
Interest expense (23,495) (80,122)
Interest income 12,849
Finance charges (4,880)
Other income (expense) 7,147 (5,485)
--------- ----------
$ (16,348) $ (77,638)
--------- ----------
Net (loss) income before income taxes $(263,274) $ (889,637)
Income tax expense
Net (loss) income $(263,274) $ (889,637)
--------- ----------
--------- ----------
Primary and fully diluted loss per share
Net earnings (loss) per share $ (.08) $ (0.18)
--------- ----------
--------- ----------
See Notes to Consolidated Financial Statements
4
<PAGE>
ROCKY MOUNTAIN INTERNET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31
---------------------------
1996 1997
------------ ------------
Cash Flows from Operating Activities
Net (loss) income $ (263,274) $ (889,962)
Items not requiring (providing) cash:
Depreciation and amortization 53,507 175,011
Changes in assets and liabilities:
Trade receivables (101,983) (102,740)
Inventories (17,251) (25,861)
Other current assets 811 101,004
Accounts payable 106,863 433,195
Deferred revenue 29,671 38,938
Accrued payroll and related taxes 56,203 (334,979)
Other accrued expenses 82,193 (209,820)
------------ ------------
Net cash provided by (used in)
operating activities $ (53,260) $ (815,214)
------------ ------------
Cash Flows from Investing Activities
Proceeds from investments 779,711
Acquisition of ONE,Inc. (125,300)
Purchase of property and equipment (64,851) (166,461)
(Additions) deletions to deposits 47,905 (14,490)
------------ ------------
Net cash provided by (used in)
investing activities $ (16,946) $ 473,460
------------ ------------
Cash Flows from Financing Activities
Proceeds from notes payable 0 495,000
Proceeds from long-term debt 117,815 248,300
Payment of deferred offering cost (66,518)
Payment of Preferred Stock Dividend (12,500)
RMI stock purchase (12,000)
Payments on notes payable (12,729)
Payments on long-term debt and obligations
under capital leases (76,845) (199,735)
------------ ------------
Net cash provided by (used in) financing
activities $ (38,277) $ 519,065
------------ ------------
Increase (decrease) in cash and cash
equivalents $ (108,483) $ 177,311
Cash and cash equivalents
Beginning 274,661 348,978
------------ ------------
Ending $ 166,178 $ 526,289
------------ ------------
------------ ------------
See Notes to Consolidated Financial Statements
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. - REPRESENTATION OF MANAGEMENT
The interim financial data is unaudited; however, in the opinion of
management, the interim data includes all adjustments, consisting only of
normal recurring adjustments necessary for a fair statement on the results
for the interim periods. The financial statements included herein have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principals have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that
the disclosures included herein are adequate to make the information
presented not misleading.
NOTE 2. - INVESTMENT
The Company has invested as follows;
Description Maturity Date Investment
US Treasury Note Oct. 31, 1997 $ 276,918
Repurchase Number 96-1 Sept. 10, 1997 $ 300,000
NOTE 3. - LINE OF CREDIT
The Company has established a line of credit for $500,000 effective September
18, 1996 with a maturity of September 10, 1997. The line of credit is secured
by pledge of a $300,000 Master Repurchase Agreement of a US Treasury Note
held with the lender and by accounts receivable. $495,000 of the $500,000
line of credit is currently drawn down. Additionally, as part of the
acquisition of the Information Exchange, the Company has an additional $4,250
drawn against another line of credit.
NOTE 4. - ACQUISITION OF ONLINE NETWORK ENTERPRISES, INC.
In January, 1997, the Company acquired the dedicated high speed and dial-up
subscribers from Online Network Enterprises, Inc. (ONE), headquartered in
Boulder, Colorado, a division of VR*1, Inc. The ONE acquisition netted RMI
approximately 47 dedicated and 732 dial-up subscribers and equipment
valued at approximately $24,000. The Company paid $150,000 cash and issued
116,932 shares of the Company's common stock.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Certain information contained in this Form 10-QSB, including "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
contain forward-looking statements. The forward-looking statements herein
are based on current expectations that involve a number of risks and
uncertainties. Such forward-looking statements are based on assumptions that
the Company will continue to design, market and provide successful new
services, that competitIve conditions will not change materially, that demand
for the Company's services will continue to grow, that the Company will
retain and add qualified personnel, that the Company's forecasts will
accurately anticipate revenue growth and the costs of producing that growth,
and that there will be no material adverse change in the Company's business.
In light of the significant uncertainties inherent in the forward-looking
information included in this Form 10-QSB, actual results could differ
materially from the forward-looking information contained in this Form 10-QSB.
The Company is implementing an operating plan calling for growth through
expansion of existing business categories, acquisitions of Internet providers
that complement existing business, expansion of capabilities through
implementation of a frame relay switch backbone, expanding World Wide Web
page hosting and creation, and additional opportunities that fit within the
Internet business.
Effective January 16, 1997, the Company acquired dial-up and dedicated access
subscribers from Online Network Enterprises, Inc. (ONE), a Boulder, Colorado,
based provider of Internet access and Web services for consideration
consisting of $150,000 of cash and 116,932 shares of the Company's common
stock.
The Company may experience fluctuations in operating results in the future
caused by various factors, some of which are outside of the Company's
control, including general economic conditions, specific economic conditions
in the Internet access industry, user demand for the Internet, capital
expenditures and other costs relating to the expansion of operations, the
timing and number of customer subscriptions, the introduction of new services
by the Company or its competitors, the mix of services sold and the mix of
distribution channels through which those services are sold. In addition,
the Company's expenses, including but not limited to obligations under
equipment leases, facilities leases, telephone access lines, and Internet
access are relatively fixed in the short term, and therefore variations in
the timing and amount of revenues could have a material adverse effect on the
Company's results of operations.
The Company received notice from a Joint Venture partner (see Dial Up Service
below) of an intent to terminate the Joint Venture agreement effective July
9, 1997 (90 days notice as required by the contract). This partner has four
POP's (points of presence) in Pueblo, Hayden, Leadville, and Alamosa,
Colorado. These locations represent approximately 65% or $90,000 of Joint
Venture revenues for the first quarter 1997. It is the intent of this partner
to compete against the Company in these markets. Effective July 9, 1997 the
Company intends to have POP's installed at these locations and will continue
to service the customers. The cost for equipment for these four locations is
estimated at $75,000 to $100,000. A substantial amount of this is expected
to be funded by arrangements with the equipment vendors. At this date, the
Company will assume the cost of all circuits and will be entitled to all
revenue. The joint venture agreement includes a noncompete clause with
regards to the joint venture partner. The Company's legal counsel is
currently reviewing the application of this clause in regards to this
termination.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1997
The Company's revenues grew 146% from $568,837 to $1,396,958 for the three
months ended March 31, 1997 as compared to the comparable period in 1996.
Listed below is a breakdown of the revenue billing categories.
7
<PAGE>
Three Months Ended
March 31
---------- ----------- --------
1996 1997 % Change
REVENUE ---------- ----------- --------
Dial-Up Service $ 319,576 $ 595,686 86%
Dedicated Access Service 122,633 347,592 183%
Web Services 56,041 216,472 286%
Equipment 60,382 83,244 38%
Other 10,205 153,963 1409%
---------- ----------- --------
Total $ 568,837 $ 1,396,957 146%
---------- ----------- --------
---------- ----------- --------
DIAL-UP SERVICE
The Company's strategy is to provide an high quality service with few busy
signals. In order to assure this service level the Company does not provide
any unlimited access service price plans during the business day, these plans
have a tendency to congest the network. The Company does provide a range of
service offerings based on a set number of hours for a set rate with
additional hours billed as overage. The table below shows the composite
weighted average billing rate for full service Internet access by quarter for
1995, 1996, and 1997.
For the Three Months Ended
Mar Jun Sep Dec Mar Jun Sep Dec Mar
1995 1995 1995 1995 1996 1996 1996 1996 1997
$20.52 $20.42 $20.88 $21.02 $20.97 $20.33 $20.41 20.50 $20.10
The Dial up business continues to experience strong growth based on
reputation, trade show attendance, and marketing by joint venture partners in
outlying areas of Colorado. Dial-up Service has been split approximately
evenly between commercial and residential customers throughout 1995, 1996,
and 1997. The reduction in the average billing rate in March 1997 is the
result of an aggressive program on the part of the Company to encourage
customers to use credit cards to pay their charges. The Company provides a
discount for certain usage plans if paid by credit card.
RMI has established business alliances with five unrelated parties for the
purpose of providing Internet Services in secondary markets in the State of
Colorado. These joint venture agreements provide for the local party to
provide equipment and marketing services while the Company provides Internet
Access and administrative services. Dial-up revenues based on these joint
ventures generated $ 62,600 in revenues for the three month period ending
March 1996 and $ 136,340 for the same period in 1997 for an increase of 118%.
The joint venture points of presence (POP) began in the second quarter of
1995 and grew to six locations by the end of 1995 and eight locations by the
end of 1996. Refer to Item 2, paragraph 4 on page 7 for details on
termination notice received by the Company from a joint venture partner.
8
<PAGE>
DEDICATED ACCESS SERVICE
Dedicated access services are primarily provided to commercial customers and
include a wide range of connectivity options tailored to the requirements of
the customer. These services include private port (dedicated modem),
Integrated Services Digital Network (ISDN) connections, 56 Kbps frame relay
connections, T-1 (1.54 Mbps) frame relay connections, point to point
connections, and T-3 (45 Mbps) or fractional T-3 connections. The Company
also offers a colocation service in which the customer's equipment is located
in the RMI data center, thereby providing access to the Internet directly
through the Company's connection.
Dedicated business has grown based principally on ISDN and High Speed circuit
growth. ISDN sales have grown from $3,000 to $107,900 from first quarter
1996 to first quarter 1997, while high speed circuits have increased from
$81,400 to $173,400 for the same periods.
The table below shows the quarterly customer count by each of the component
services offered for dedicated access as of the dates indicated:
<TABLE>
Service Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31 Mar 31
1995 1995 1995 1995 1996 1996 1996 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Private Port 29 30 36 35 42 47 46 54 50
56 Kbps 18 27 27 34 47 69 71 72 78
ISDN 0 0 0 2 3 13 46 80 168
T-1 7 10 10 11 16 25 29 30 65
Colocation 0 1 4 4 6 4 5 6 11
</TABLE>
WEB SERVICES
Web services revenues are composed of Web page hosting and Web page
production. Web page hosting provides ongoing revenue from customers for
whom RMI hosts a Web site on Web servers in the RMI data center. All access
made to these Web Sites by the customer and the Internet community as a whole
are processed on the RMI servers. The advantage to customers is high speed
access to sites by their targeted audiences. The following is a summary of
the number of Web hosting customers as of the dates indicated:
Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31 Mar 31
1995 1995 1995 1995 1996 1996 1996 1996 1997
1 21 45 90 157 217 242 341 418
Web page hosting accounted for $26,580 of revenue in the first quarter of
1996 and $90,820 in the first quarter of 1997 revenue for an increase of
242%. The increase resulted from increases in the direct sales force,
increased server capacities and speed, and the increasing popularity of the
Web as a business tool.
Web page production increased from $24,520 for the first quarter 1996 to
$114,100 for the first quarter 1997 for an increase of 365%. The Company
increased the size of the Web production department as well as provided
customers more complex applications. The growth in Web hosting business
helped to drive this part of the business plus the activities of the
Company's direct sales force. The Company did not have a direct sales force
until December, 1995.
9
<PAGE>
Other Revenue
The large increase in Other Revenue was from a consulting contract with one
customer that resulted in approximately $100,000 in revenue for the
first quarter of 1997. This contract has concluded and the Company does not
anticipate additional contracts from this customer.
Gross Profit
Gross margin consists of total revenue less the cost of delivering services
and equipment. The gross margin was 75.4% for the three months ended March
31, 1996 and 64.1% for the same period in 1997. In late December, 1996, the
Company implemented a frame relay network using Cascade switches. The
switches are connected with a T-3 fiber optic network to provide a high speed
and highly reliable connection. The implementation of this network has
provided very high capacities for connections and has resulted in a short
term erosion of gross margin while the capacity is sold. Future circuits
sold on this network should have high yields because the capacity is in place.
Selling, General, and Administrative Expenses
Selling, general and administrative expenses increased by 160% from the three
months ended September 30, 1996 over the same period of 1997. This increase
resulted from the overall expansion of the business and is in keeping with
the strategy of building an organization capable of handling rapid growth and
expansion. Compensation and related personnel costs increased from $390,100
to $957,900 or 146% from the three month period in 1996 over 1997. Personnel
were added in all areas to expand the Company's sales efforts, technical
support, and administrative capabilities. The Company believes that future
revenue growth will not require a proportional increase in personnel expense
as the company is positioned to experience economies of scale. Advertising,
trade shows, and marketing expenses growth was flat when comparing the three
months ended March 1996 as compared to the same period for 1997. Outside
services expense increased by $144,100 or 625% for the first quarter 1997
over first quarter 1996. The largest components of the increase are public
relations expense ($21,100), accounting expense in regards to the annual
audit and preparation of the Form 10-K ($38,000), legal expenses ($30,500),
and clerical accounting staff hired on a temporary to permanent basis
($50,882). Depreciation and amortization in regards to equipment, software,
furnishings, and capital leases increased by $144,000 or 385% due to
establishing a state of the art data center, implementing the frame relay
network with Cascade switches, expansion of equipment for dial up
connections, plus equipment for administrative use. Communication expense in
the form of 800 number lines, long distance, and general administration
increased to $74,200 or 91% for the three months ended March 1996 to the same
period in 1997. This increase is reflective of the companies growth plus the
increase of toll free 800 technical support service offered for dial in
customers.
Liquidity and Capital Resources
The initial public offering completed on September 5, 1996. Operating cash
flow and earnings for the remainder
10
<PAGE>
of 1996 and the first half of 1997 are projected to be negative. The Company
continues to build infrastructure and human resources to position itself to
be a prominent Internet provider in the regional market. The Company will
utilize lease financing, as available, for capital acquisitions, business
acquisitions will be funded based on utilizing projected cash flows from the
acquisition, as well as the public offering proceeds. The Company believes
its capital resources are sufficient to meets its anticipated needs at least
through the second quarter 1997. The Company's ability to continue
operations beyond that date depends on its ability to generate cash flow from
operations, which it has not done to date. If the Company is not successful
in generating cash flow from operations, it will be required to seek
additional funds through equity or debt financing. There is no assurance
that additional capital resources will be available to the Company if and
when required, or on the terms acceptable to the Company if available. The
absence of such financing would have a material adverse effect on the
Company's business, including a possible reduction of operations.
The Company has incurred losses since inception and has experienced negative
operating cash flow in the first quarter of 1997. The Company's operations
used net cash of approximately $815,200 for this period. The cash used by
operating activities is primarily attributable to the Company's continued
expansion of its facilities and employee base in anticipation of continued
growth in revenues.
The Company acquired $252,575 of property and equipment during the first
quarter of 1997 primarily to complete the Operations Data Center.
Additionally, the Company acquired ONE, Inc. for a combination of stock and
cash. The cash portion was $150,000, of which $24,000 was allocated to
equipment acquisition.
The Company has a bank line of credit in the amount of $500,000 of which
$495,000 is drawn at March 31, 1997. The line of credit is secured by a
pledge of a $300,000 treasury bill repurchase agreement and by the Company's
accounts receivable. The Company's office lease is also secured by a pledge
of a treasury bill of $250,000.
As of March 31, 1997, the Company had negative working capital of $803,612.
This included $526,290 of cash and cash equivalents and $576,918 of
investments in financial instruments convertible to cash. Trade receivables
as of that date were $621,567. Current liabilities as of that date were
approximately $2,688,043, including $858,355 of accounts payable, $653,458 of
current maturities of long-term debt and capital lease obligations, $165,904
of accrued payroll and related taxes, and $251,017 of accrued expenses
attributable primarily to a payable on office furniture, deferred office
rent, preferred stock dividend payable, accrual for unbilled circuit costs,
and amounts due joint venture partners pending cash collections. Also
included in current liabilities as of that date is $257,059 of deferred
revenue, which represents differences in the timing of payments by customers
and recognition of the related revenue.
RMI is an Internet Service Provider (ISP) with an high growth rate (as
discussed elsewhere in this document). The Company's growth is dependent on
building a strong infrastructure and hiring high quality sales, technical,
and administrative personnel. In order to build the infrastructure and
acquire the human resources needed to maintain an high growth rate, the
Company has operated with a negative cash flow
11
<PAGE>
from operations during 1996 and projects to continue to do so for the first
half of 1997. The company's cash requirements are relatively fixed for the
near term and the Company expects to generate positive operating cash flows
by late 1997 if revenues continue to increase according to expectations
without any significant cost increases. In the near term, the Company
expects to finance negative operating cash flows from incentive programs to
customers designed to increase the rate of realization of accounts
receivable, and, if necessary, from reductions in operating expenses. The
Company may conduct an equity financing which, if completed, the proceeds
would be available to fund operations. In the longer term, should revenues
not continue to increase according to expectations, the Company may have to
seek additional financing to fund operating losses or implement additional
reductions in operating expenses. Reductions in operating expenses, if
effected, could adversely affect revenues and therefore not result in the
expected increase in cash flow. The Company is currently pursuing additional
securities financing in order to raise a minimum of $500,000 and has entered
into discussions to increase the line of credit by $200,000.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On September 6, 1996, Robert Lewis and Storefronts in Cyberspace, L.L.C.,
filed a complaint in Denver District Court naming the Company and the
Colorado Rockies Baseball Club, Ltd., as defendants. All claims against the
Company have since been dismissed except for a breach of contract claim
seeking $25,000 in damages. The Company's management believes the breach of
contract claim is without merit and intends to vigorously defend against it.
The Company is not a party to any other litigation.
12
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-B
Exhibit
Number Description of Exhibits
3.1 Certificate of Incorporation *
3.2 Bylaws of Rocky Mountain Internet, Inc. *
4.1 Form of Warrant Agreement dated September 5, 1996 between
Rocky Mountain Internet, Inc. and American Securities
Transfer, Inc. *
4.2 Form of Subordinated Convertible Promissory Note *
4.3 Form of Lock-Up Agreement for Shareholders *
4.4 Form of Lock-Up Agreement for Preferred Stockholders *
4.5 Form of Lock-Up Agreement for Debenture Holders *
4.6 Form of Stock Certificate *
4.7 Form of Warrant Certificate *
10.1 Agreement of Lease between Denver-Stellar Associates Limited
Partnership, Landlord and Rocky Mountain Internet, Inc., Tenant **
10.2 Asset Purchase Agreement - Acquisition of Compunerd, Inc. **
10.3 Confirmation of $2.0 million lease line of credit **
10.4 Agreement between MCI and Rocky Mountain Internet, Inc. governing
the provision of professional information system development
services for the design and development of the MCI internal
Intranet project referred to as Electronic Advice. **
10.5 Sublease Agreement- 2/26/97 - 1800 Glenarm, Denver, Colorado
10.6 Acquisition of The Information Exchange ****
10.7 Asset purchase of On-Line Network Enterprises ****
10.8 1996 Incentive Compensation Plan - Annual Bonus Incentive ****
10.9 1997 Incentive Compensation Plan - Annual Bonus Incentive ****
16.1 Letter re change in certifying accountant ***
23.1 Consent of McGladrey & Pullen, LLP ****
23.2 Consent of Baird Kurtz & Dobson ****
27.1 Financial Data Schedule
* Incorporated by reference from the Company's registration statement on
Form SB-2 filed with the Commission on August 30, 1996, registration
number 333-05040C.
** Incorporated by reference from the Company's Form 10-QSB filing
dated 11/14/96.
*** Incorporated by reference to the Company's Form 8-K filing dated 1/28/97.
**** Incorporated by reference to the Company's Form 10-KSB dated March 31, 1997
(b) Reports on 8-K. State whether any reports on Form 8-K were filed during
the last quarter of the period covered by this report, listing the items
reported, any financial statements filed and the dates of such reports.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT - FILED
JANUARY 21, 1997.
13
<PAGE>
ITEM 5. OTHER EVENTS - CORRECTION TO EARNINGS PER SHARE REPORT -
FILED MARCH 21, 1997.
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, hereunto
duly authorized.
Date: May 20, 1997 By: /s/ D. KIRK ROBERTS
-------------------------------------
D. Kirk Roberts
Chief Financial Officer
/s/ ROY J. DIMOFF
-------------------------------------
Roy J. Dimoff
President and Chief Executive Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 526,290
<SECURITIES> 576,918
<RECEIVABLES> 681,740
<ALLOWANCES> (60,173)
<INVENTORY> 117,598
<CURRENT-ASSETS> 1,884,431
<PP&E> 3,510,575
<DEPRECIATION> (599,740)
<TOTAL-ASSETS> 5,473,954
<CURRENT-LIABILITIES> 2,688,043
<BONDS> 0
0
250
<COMMON> 4,658
<OTHER-SE> 1,703,674
<TOTAL-LIABILITY-AND-EQUITY> 5,473,954
<SALES> 83,244
<TOTAL-REVENUES> 1,396,958
<CGS> 63,865
<TOTAL-COSTS> 500,976
<OTHER-EXPENSES> 1,708,306
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 80,122
<INCOME-PRETAX> (889,962)
<INCOME-TAX> 0
<INCOME-CONTINUING> (889,962)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (889,962)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
