<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 2, 1999
------------------------------
Rocky Mountain Internet, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
001-12063 84-1322326
- -------------------------------- ---------------------------------
(Commission File Number) (IRS Employee Identification No.)
999 Eighteenth Street, Suite 2201 80202
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 672-0700
----------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 17, 1999, Rocky Mountain Internet, Inc. (the "Company")
filed a Current Report on Form 8-K (the "Dave's World Initial Report") dated
February 2, 1999 (the date of the event requiring the filing of the Dave's
World Initial Report). The Dave's World Initial Report describes the merger
of August 5th Corporation, d/b/a Dave's World ("Dave' World") with and into
the Company. This Current Report on Form 8-K/A (the "Form 8-K/A") amends the
Dave's World Initial Report by including with this Form 8-K/A the financial
statements and pro forma financial information required pursuant to Item 7.
ITEM 5. OTHER EVENTS.
On February 5, 1999, the Company also acquired substantially all of the
assets of ImageWare Technologies, L.L.C., an Alabama limited liability company
("ImageWare"), and Communication Network Services, L.L.C., An Alabama limited
liability company ("CNS") pursuant to the terms of an Asset Purchase Agreement
that was previously filed with the Dave's World Initial Report. The Company
intends to utilize the assets acquired from ImageWare and CNS in the same manner
that ImageWare and CNS utilized the assets.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Dave's World - Audited Financial Statements:
Independent Auditors' Report - Altschuler, Melvoin &
Glasser LLP
Balance Sheets as of December 31, 1998 and 1997 (Exhibit A)
Statements of Operations for the Years Ended December 31,
1998 and 1997 (Exhibit B)
Statements of Stockholders' Equity (Deficiency) for the Years
Ended December 31, 1998 and 1997 (Exhibit C)
Statements of Cash Flows for the Years Ended December 31,
1998 and 1997 (Exhibit D)
Notes to Financial Statements
(b) Pro Forma Financial Information
Pro Forma Condensed Combined Balance Sheet as of December 31,
1998
Pro Forma Condensed Combined Statement of Operations for the
Year Ended December 31, 1998
<PAGE>
(c) Exhibits
Exhibit
Number Description
----------------- ----------------------------------------------
10.1 Agreement and Plan of Merger dated as of
February 2, 1999 by and between Rocky
Mountain Internet, Inc. and August 5th
Corporation, d/b/a Dave's World. *
10.2 Asset Purchase Agreement by and among Rocky
Mountain Internet, Inc. ImageWare
Technologies, L.L.C., and Communication
Network Services, L.L.C. *
20.1 News Release dated February 3, 1999
announcing the Dave's World Merger. *
20.2 News Release dated February 9, 1999
announcing the purchase of the assets
of Image Ware and CNS. *
* Previously filed.
SIGNATURE
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 hereunto duly authorized.
Rocky Mountain Internet, Inc.
-------------------------------------------
(Registrant)
Date: April 16, 1999 By: /s/ PETER J. KUSHAR
--------------------------------
Peter J. Kushar
Chief Financial Officer and Treasurer
<PAGE>
AUGUST 5TH CORPORATION
(D/B/A DAVE'S WORLD)
INDEPENDENT AUDITORS' REPORT AND
FINANCIAL STATEMENTS
DECEMBER 31, 1998
<PAGE>
AUGUST 5TH CORPORATION
(D/B/A DAVE'S WORLD)
TABLE OF CONTENTS
Page
INDEPENDENT AUDITORS' REPORT 2
FINANCIAL STATEMENTS:
Balance Sheets, December 31, 1998 and 1997 (Exhibit A) 3
Statement of Operations, Years Ended December 31, 1998 and 1997 (Exhibit B) 4
Statement of Changes in Stockholders' Equity (Deficiency), Years Ended
December 31, 1998 and 1997 (Exhibit C) 5
Statement of Cash Flows, Years Ended December 31, 1998 and 1997 (Exhibit D) 6
Notes to the Financial Statements 7 - 11
<PAGE>
Altschuler, Melvoin & Glasser LLP
[Letterhead]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
August 5th Corporation
We have audited the accompanying balance sheets of AUGUST 5TH CORPORATION,
(D/B/A DAVE'S WORLD) as of December 31, 1998 and 1997, and the related
statements of operations, changes in stockholders' equity (deficiency) and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of August 5th Corporation, (d/b/a
Dave's World) as of December 31, 1998 and 1997, and the results of its
operations, changes in stockholders' equity (deficiency) and cash flows for the
years then ended, in conformity with generally accepted accounting principles.
/s/ Altschuler, Melvoin & Glasser LLP
Chicago, Illinois
January 27, 1999
<PAGE>
Exhibit A
AUGUST 5TH CORPORATION
(d/b/a Dave's World)
Balance Sheets
December 31, 1998 and 1997
<TABLE>
<CAPTION>
Assets 1998 1997
--------- ---------
<S> <C> <C>
Current Assets:
Cash $ 5,302 $ 126,359
Accounts receivable (Note 1) 128,202 51,456
Inventories (Note 1) 31,562 77,092
Receivable from related party (Note 3) 97,258 83,406
Other 370 3,485
--------- ---------
262,694 341,798
--------- ---------
Property and Equipment (Notes 1 and 2):
Cost 704,847 393,958
Less accumulated depreciation and amortization 334,232 211,226
--------- ---------
370,615 182,732
--------- ---------
Other Assets:
Unamortized loan costs 836 3,593
--------- ---------
$ 634,145 $ 528,123
--------- ---------
Liabilities and Stockholders' Equity (Deficiency)
Current Liabilities:
Accounts payable, trade $ 160,911 $ 95,183
Revolving loan indebtedness (Note 4) 100,000 100,000
Current maturities of long-term liabilities (Note 5) 92,315 49,697
Deferred revenue (Note 1) 119,669 70,394
Other 6,059 4,868
--------- ---------
478,954 320,142
--------- ---------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Long-term Liabilities (Note 5) 208,326 188,611
Stockholders' Equity (Deficiency):
Common stock, no par value; authorized
1,000 shares; issued and outstanding
915 shares 1,000 1,000
Additional paid-in capital 355,000 355,000
Retained earnings (deficit) (409,135) (336,630)
--------- ---------
(53,135) 19,370
--------- ---------
$ 634,145 $ 528,123
--------- ---------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
Exhibit B
AUGUST 5TH CORPORATION
(d/b/a Dave's World)
Statement of Operations
Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Revenue (Note 1):
Internet access and services $ 1,487,798 $ 938,360
Equipment sales 507,556 49,343
----------- -----------
1,995,354 987,703
----------- -----------
Cost of Revenue Earned:
Internet access and services 582,330 353,121
Equipment sales 343,930 32,115
----------- -----------
926,260 385,236
----------- -----------
Gross Margin 1,069,094 602,467
Depreciation and Amortization 133,672 101,589
Other General, Selling and Administrative Expense 972,521 453,252
----------- -----------
1,106,193 554,841
----------- -----------
Operating Income (Loss) (37,099) 47,626
----------- -----------
Other Income (Expenses):
Interest expense (56,518) (38,332)
Income from expired option (Note 3) 25,000 0
Loss on disposition of equipment (3,888) 0
----------- -----------
(35,406) (38,332)
----------- -----------
Net Income (Loss) for Year (to Exhibit C) $ (72,505) $ 9,294
----------- -----------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
Exhibit C
AUGUST 5TH CORPORATION
(d/b/a Dave's World)
Statement of Changes in Stockholders' Equity (Deficiency)
Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Total
Common Stock Additional Retained Stockholders'
Share Paid-in Earnings Equity
Outstanding Amount Capital (Deficit) (Deficiency)
----------- ------ ------- --------- ------------
<S> <C> <C> <C> <C> <C>
Balances, January 1, 1997 608 $ 1,000 $ 50,000 $(162,286) $(111,286)
1997:
Net income (Exhibit B) 0 0 0 9,294 9,294
Shares issued for cash 305 0 305,000 0 305,000
Net deficit of Advanced Micro Systems
Inc. upon merger (Note 8) 2 0 0 (183,638) (183,638)
------ -------- -------- --------- ---------
Balances, December 31, 1997 915 1,000 355,000 (336,630) 19,370
1998:
Net loss (Exhibit B) 0 0 0 (72,505) (72,505)
Balance, December 31, 1998 915 $ 1,000 $ 355,000 $(409,135) $ (53,135)
------ -------- -------- --------- ---------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
Exhibit D
AUGUST 5TH CORPORATION
(d/b/a Dave's World)
Statement of Cash Flows
Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (loss) $ (72,505) $ 9,294
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation and amortization 133,672 101,589
Loss from disposition of equipment 3,888 0
Income from expired option (25,000) 0
Changes in assets and liabilities:
Increase in accounts receivable (76,745) (2,942)
Decrease (Increase) in inventories 45,530 (13,050)
Increase in related party receivable (13,851) (83,406)
Decrease in other assets 115 0
Increase (Decrease)in accounts payable 65,728 (17,775)
Increase in deferred revenues 49,276 30,581
Increase in other liabilities 1,188 0
Net cash provided by operating activities 111,296 24,291
Cash Flows from Investing Activities:
Acquisition of property and equipment (172,006) (100,776)
Proceeds from sales of equipment 3,000 0
Cash received upon merger (Note 5) 0 1,307
Proceeds from expired option 25,000 0
Net cash used in investing activities (144,006) (99,469)
Cash Flows from Financing Activities:
Repayments of capital lease obligations (41,650) (15,796)
Repayments of notes payable (49,697) (101,780)
Payment of stock subscriptions 3,000 302,000
Net cash (used in) provided by financing activities (88,347) 184,424
Net Increase (Decrease) in Cash (121,057) 109,246
Cash, Beginning of Year 126,359 17,113
Cash, End of Year $ 5,302 $ 126,359
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest $ 56,518 $ 38,332
Supplemental Disclosures of Noncash Investing
and Financing Activities:
Acquisitions of equipment through capitalized
leases $ 153,680 $ 21,679
Liabilities in excess of assets, other than
cash, assumed upon merger (Note 8) $ 0 $ 184,945
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
Note 1--Nature of Activities and Summary of Significant Accounting
Policies
August 5th Corporation, (d/b/a Dave's World), ("the Company") is an internet
service provider in central Illinois. The Company also is engaged in the
sales and repairs of computer hardware, operating from leased premises in
Bloomington, Illinois.
A summary of significant accounting policies followed by the Company is as
follows:
Accounts Receivable--The Company considers all accounts receivable to be
fully collectible; accordingly, no allowance for doubtful accounts is
required. The Company bills in advance of providing the internet service
access. The revenue, for financial reporting purposes, is recognized as
earned concurrent with the actual period of internet service. For income tax
purposes, such revenue is recorded as billed.
Inventories--Inventories of computer hardware held for resale are stated at
the lower of cost or market, with cost determined under the average cost
method.
Depreciation--Provisions for depreciation of property and equipment have been
computed (for both financial and income tax reporting purposes) over the
estimated useful lives of the assets under accelerated methods. Leasehold
improvements are amortized for financial reporting purposes over the
statutory recovery period for income tax reporting. The estimated lives for
equipment range from 3 to 5 years while an estimated life of 3 to 5 years is
used for software and related assets.
Income Taxes--See Note 6 regarding income taxes.
Estimates--In preparing financial statements in conformity with generally
accepted accounting principles, management makes estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements, as
well as the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Note 2--Property and Equipment
Property and equipment, and related accumulated depreciation at December 31,
1998 and 1997 consisted of:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Equipment $ 392,676 $ 246,798
Office furniture and fixtures 6,687 6,687
Office equipment 19,599 19,599
Leasehold improvements 19,507 19,507
Equipment software 11,331 0
Capitalized leased equipment 255,047 101,367
--------- ---------
704,847 393,958
Accumulated depreciation (235,486) (165,453)
Amortization of capitalized lease equipment (98,746) (45,773)
--------- ---------
$ 370,615 $ 182,732
--------- ---------
</TABLE>
<PAGE>
Note 3--Related-Party Receivable
At December 31, 1998 and 1997 the Company had receivables from a related party,
Websoft, Inc., in which the Company owns a 33 1/3% interest. Amounts due were:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Note Receivable $55,000 $55,000
Accounts Receivable 34,381 28,406
Interest Receivable 7,877 0
$97,258 $83,406
</TABLE>
The above note is due on July 10,1999, is unsecured and bears interest at
9.25% per annum.
The stock interest in Websoft, Inc., is carried at zero. In 1998 the Company
received $25,000 in exchange for an option to sell a portion of its interest
in Websoft, Inc. Such option expired in 1998 and the Company recognized
$25,000 of income.
Note 4--Revolving Loan Indebtedness
Secured revolving loan indebtedness as of December 31, 1998 was $100,000. The
revolving loan agreement, dated July 10, 1998, with Pontiac National Bank
provides for maximum borrowings of $100,000. The revolving loan facility
bears interest at a rate of 9.25%, is due on July 10, 1999 and is secured by
the Company's inventory and equipment.
Note 5--Long-term Borrowings
At December 31, 1998 and 1997 long-term borrowings consisted of the following:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Capital lease obligations (a) $193,303 $ 81,273
Note Payable - Lenhardt (b) 31,287 43,262
Note Payable - National City Bank (c) 19,912 30,887
Note Payable - Central Illinois Bank(d) 56,139 69,786
Note Payable - Stockholder 0 13,100
300,641 238,308
Less current portion 92,315 49,697
Long-term portion $208,326 $188,611
</TABLE>
<PAGE>
Note 5--Long-term Borrowings, Continued
Maturities of debt are as follows at December 31, 1998:
<TABLE>
<CAPTION>
Capital Lease
Obligations Other
-------------- --------
<S> <C> <C>
1999 $ 88,929 $ 36,451
2000 85,929 39,735
2001 61,566 24,459
2002 14,812 6,693
-------- --------
251,236 $107,338
Less imputed interest 57,933 0
-------- --------
$193,303 $ 0
-------- --------
</TABLE>
(a) At December 31, 1998 the Company has leased equipment with an original cost
of $255,047 under 6 separate leases expiring from 2001 to 2002. Monthly
payments, inclusive of interest (ranging from 14% to 33%) are approximately
$7,334 for 1999. Lease obligations are secured by related assets and certain
personal guarantees by corporate officers.
(b) At December 31, 1998, the Company was obligated to Gary Lenhardt for $31,287
assumed upon a merger in 1997 of the Company and an affiliate (Note 8). This
loan bears an interest rate at 8.00% and is repayable including interest, at
$1,250 per month.
(c) At December 31, 1998, the Company was obligated to National City Bank on a
note in the amount of $19,912, with the maturity date of August 28, 2000. The
loan bears an interest rate of 10.5% and is repayable including interest, at
$1,074 per month. The collateral on this loan consists of certain assets.
(d) At December 31, 1998, the Company was obligated to Central Illinois Bank
for a "Small Business Loan" in the amount of $57,257 which has an interest rate
of 9.75% and a maturity date of April 12, 2002. The monthly payments, including
interest, are $1,720 with the collateral on this loan consisting of certain
assets.
Note 6--Income Taxes
Deferred tax assets and liabilities are recognized for temporary differences
between the financial reporting basis and tax basis of the Company's assets and
liabilities. At December 31, 1998 and 1997, the Company's net deferred income
tax assets consisted of:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Gross deferred tax assets $75,000 $37,000
Less - Valuation allowance 75,000 37,000
Net deferred tax assets $ 0 $ 0
</TABLE>
The Company's gross deferred income tax assets consist primarily of (a) the tax
effects of the net operating loss carryforward (amounting at December 31, 1998
to $77,000, expiring in 2012 and 2013) and (b) revenue deferred for financial
reporting purposes only. (Note 1).
<PAGE>
Note 7--Commitments
The Company has entered into a lease agreement whereby it rents office space in
Bloomington, Illinois, for $2,127 per month until March 31, 1999 when the rent
increases to $2,195 per month until March 31, 2000. However, the Company has the
option to renew the lease for one additional three-year term. Future lease
commitments under this agreement are as follows at December 31, 1998:
<TABLE>
<S> <C>
1999 $ 26,138
2000 6,586
--------
$ 32,724
--------
</TABLE>
The Company has another lease agreement whereby it rents space in Peoria,
Illinois at $450 per month through January 1999.
Note 8--Advanced Micro Systems, Inc.
In December 1997, the Company merged with an affiliate, Advanced Micro Systems,
Inc. ("Advanced") whereby the Company acquired all of the assets and liabilities
of Advanced in exchange for two shares of its own common stock. Since this
merger involved entities under common control, it was accounted for in a manner
similar to a pooling-of-interests. At historical cost the transaction was
recorded as follows:
<TABLE>
<S> <C>
Fair value of assets acquired
(including $1,307 cash) $ 96,787
Liabilities assigned 280,425
---------
Net deficit, charged to retained earnings $ 183,638
---------
</TABLE>
<PAGE>
Note 9--Potential Merger
The Company is currently in negotiation with Rocky Mountain Internet, Inc., (a
publicly held company) whereby the latter's common stock would be exchanged for
all of the Company's stock. Such transaction is expected to close in early
February 1999.
AUGUST 5TH CORPORATION
(d/b/a Dave's World)
Notes to the Financial Statements
December 31, 1998 and 1997
<PAGE>
SELECTIVE UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following selected unaudited pro forma combined financial information
presented below has been derived from the unaudited or audited historical
financial statements of the company and August 5th Corporation (d/b/a Dave's
World) and reflects management's present estimate of pro forma adjustments,
including a preliminary estimate of the purchase price allocations, which
ultimately may be different. The pro forma financial data given effect to the
proposed acquisition of August 5th Corporation (d/b/a Dave's World).
The acquisition is being accounted for using the purchase method of
accounting. Accordingly, assets acquired and liabilities assumed are recorded at
their estimated fair values, which are subject to further adjustment based upon
appraisals and other analysis, with appropriate recognition given to the effect
of the Company's borrowing rates and income tax rates.
The unaudited pro forma combined statement of operations for the years
ended December 31, 1998 and 1997 gives effect to the acquisition as if it had
been consummated at the beginning of such year. This pro forma statement of
operations combines the historical consolidated statement of operations for the
years ended December 31, 1998 and 1997 for the Company and August 5th
Corporation (d/b/a Dave's World).
The unaudited pro forma condensed combined balance sheet as of December
31,1998 gives effect to the acquisition as if it had been consummated on that
date. This pro forma balance sheet combines the historical consolidated balance
sheet at that date for the Company and for August 5th Corporation (d/b/a Dave's
World).
The unaudited pro forma condensed combined financial statements may not
be indicative of the results that actually would have occurred if the
transaction described above had been completed and in effect for the periods
indicated or the results that may be obtained in the future. The unaudited pro
forma condensed combined financial data presented below should be read in
conjunction with the audited and unaudited historical financial statements and
related notes thereto of the Company.
<PAGE>
Pro Forma Condensed Combined
Balance Sheet
As of December 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Historical
---------------------------
Rocky August 5th
Mountain Corporation Pro Forma Pro Forma Pro Forma
Internet, INC. Subtotal Adjustments (B) Combined
-------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents 5,729 5 5,734 -- 5,734
Trade receivables less allowance for
doubtful accounts 1,599 226 1,825 -- 1,825
Inventories 56 32 88 -- 88
Other 225 -- 225 -- 225
-------------------------------------------------------------------------------
Total Current Assets 7,609 263 7,872 -- 7,872
-------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, net 3,540 371 3,911 -- 3,911
Goodwill, net 13,102 -- 13,102 3,053 (1) 16,155
Other 431 -- 431 -- 431
-------------------------------------------------------------------------------
Total Assets 24,682 634 25,316 3,053 28,369
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDER'S
EQUITY
CURRENT LIABILITIES
Accounts payable 2,280 261 2,541 -- 2,541
Current maturities of long term debt and
capital lease obligations 915 92 1,007 -- 1,007
Deferred revenue 513 126 639 -- 639
Accrued payroll & related taxes 303 303 -- 303
Accrued expenses 1,611 1,611 -- 1,611
-------------------------------------------------------------------------------
Total Current Liabilites 5,622 479 6,101 -- 6,101
-------------------------------------------------------------------------------
LONG-TERM DEBT AND CAPITAL
LEASE OBLIGATIONS 494 208 702 -- 702
-------------------------------------------------------------------------------
TotaL liabilites 6,116 687 6,803 -- 6,803
REDEEMABLE CONVERTIBLE
PREFERRED STOCK 6,748 -- 6,748 -- 6,748
Stockholders' Equity
Common Stock 9 -- 9 -- 9
Additional paid in capital 29,258 356 29,614 2,644 (3) 32,258
Accumulated deficit (17,449) (409) (17,858) 409 (2) (17,449)
Unearned compesation -- -- -- -- --
-------------------------------------------------------------------------------
11,818 (53) 11,765 3,053 14,818
-------------------------------------------------------------------------------
24,682 634 25,316 3,053 28,369
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
<PAGE>
Pro Forma Condensed Combined
Statement of Operations
For the Year Ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Historical
----------------------------
Rocky August 5th
Mountain Corporation Pro Forma Pro Forma Pro Forma
Internet, INC. Subtotal Adjustments (B) Combined
---------------------------------------------------------------------------
(Amount in Thousands, Except Per Share Data)
<S> <C> <C> <C> <C> <C>
Revenue
Communication Services 7,974 1,995 9,969 0 9,969
Web Solutions 2,113 0 2,113 0 2,113
---------------------------------------------------------------------------
10,087 1,995 12,082 0 12,082
---------------------------------------------------------------------------
Cost of revenue earned
Communication Services 3,471 926 4,397 0 4,397
Web Solutions 50 0 50 0 50
---------------------------------------------------------------------------
3,521 926 4,447 0 4,447
---------------------------------------------------------------------------
Gross profit 6,566 1,069 7,635 0 7,635
---------------------------------------------------------------------------
General, selling and administrative expenses 9,184 972 10,156 0 10,156
Cost related to unsuccessful merger attempt 6,071 0 6,071 0 6,071
Depreciation and amortization 1,789 134 1,923 576 (4) 2,499
---------------------------------------------------------------------------
Operating loss (10,478) (37) (10,515) (576) (11,091)
---------------------------------------------------------------------------
Other income (expense)
Interest expense (320) (57) (377) 0 (377)
Interest Income 51 0 51 0 51
Other income (expense), net 78 21 99 0 99
---------------------------------------------------------------------------
(191) (36) (227) 0 (227)
---------------------------------------------------------------------------
Net loss (10,669) (73) (10,742) (576) (11,318)
Preferred stock dividends 33 33
Net loss applicable to common Stockholders (10,702) (10,702)
Basic and Diluted loss per share from
continuing operations (1.39) (1.43)
----------- ---------
----------- ---------
Average number of common shares
outstanding (5) 7,690 7,914
----------- ---------
----------- ---------
</TABLE>
Pro Forma Condensed Combined
Statement of Operations
For the Year Ended December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Historical
---------------------------
Rocky August 5th
Mountain Corporation Pro Forma Pro Forma Pro Forma
Internet, INC. Subtotal Adjustments (B) Combined
---------------------------------------------------------------------------
(Amount in Thousands, Except Per Share Data)
<S> <C> <C> <C> <C> <C>
Revenue
Communication Services 5,076 988 6,064 0 6,064
Web Solutions 1,051 0 1,051 0 1,051
---------------------------------------------------------------------------
6,127 988 7,115 0 7,115
---------------------------------------------------------------------------
Cost of revenue earned
Communication Services 2,060 385 2,445 0 2,445
Web Solutions 0 0 0 0 0
---------------------------------------------------------------------------
2,060 385 2,445 0 2,445
---------------------------------------------------------------------------
Gross profit 4,067 603 4,670 0 4,670
---------------------------------------------------------------------------
General, selling and administrative expenses 6,980 453 7,433 0 7,433
Depreciation and amortization 887 102 989 576 (5) 1,565
---------------------------------------------------------------------------
Operating loss (3,800) 48 (3,752) (576) (4,328)
---------------------------------------------------------------------------
Other income (expense)
Interest expense (402) (38) (440) 0 (440)
Interest Income 54 0 54 0 54
Other income (expense), net (5) 0 (5) 0 (5)
---------------------------------------------------------------------------
(353) (38) (391) 0 (391)
---------------------------------------------------------------------------
Net loss (4,153) 10 (4,143) (576) (4,719)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Preferred stock dividends 27 27
Net loss applicable to common Stockholders (4,180) (4,180)
Basic and Diluted loss per share from
continuing operations (0.79) (0.86)
----------- ---------
----------- ---------
Average number of common shares
outstanding (5) 5,268 5,492
----------- ---------
----------- ---------
</TABLE>
<PAGE>
NOTES TO THE PRO FORMA CONSENSED
COMBINED FINANCIAL DATA
(UNAUDITED)
(A) BASIS OF PRESENTATION
The accompanying unaudited pro forma condensed combined balance sheet is
presented as of December 31, 1998. The accompanying unaudited pro forma
condensed combined statements of operations are presented for the year
ended December 31, 1998 and December 31, 1997.
(B) PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been made to the unaudited
condensed combined balance sheet as of December 31, 1998 and the unaudited
condensed combined statements of operations for the year ended December
31, 1998 and year ended December 31, 1997:
(1) To reflect the 223,989 shares of RMI stock valued at $3,000,000 which
is the number of shares anticipated to be issued in connection with
the acquisition of August 5th Corporation (d/b/a Dave's World). The
excess purchase price over the fair value of the assets acquired has
been allocated to goodwill. The pro forma adjustment reflects the
incremental goodwill in the amount of $2,879,000. Shares of Common
Stock anticipated to be issued for acquisitions were recorded at fair
market value as based on the current market price of RMI's publicly
traded stock. The final allocation of the purchase price will be made
after the appropriate appraisals or analyses are performed. Upon
completion of the appraisals and in accordance with the terms
thereof, the excess purchase price currently allocated to goodwill
will be allocated to the appropriate asset classifications, including
customer list and goodwill. While goodwill will be amortized over a
period of five years, customer list or other identified intangibles
may be amortized over shorter periods, which would therefore increase
amortization expense.
(2) To eliminate the equity accounts of the acquisition.
(3) To adjust amortization expense due to increase in the carrying value
of goodwill, using a life of five years, as if such acquisitions had
been completed as of January 1, 1997.
(4) To adjust for revenues and expenses for the acquisition of August 5th
Corporation (d/b/a Dave's World) as if such acquisitions had been
completed as of January 1, 1998.
(5) To adjust for revenues and expenses for the acquisition of August 5th
Corporation (d/b/a Dave's World) as if such acquisitions had been
completed as of January 1, 1997.
