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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 6, 1999
REGISTRATION NO. 333-70613
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SECURITIES AND EXCHANGE COMMISSION
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AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ROCKY MOUNTAIN INTERNET, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3153858
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
CHRISTOPHER J. MELCHER
ROCKY MOUNTAIN INTERNET, INC.
999 EIGHTEENTH STREET, SUITE 2201
DENVER, COLORADO
(303) 672-0700
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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COPY TO:
JEFFREY M. KNETSCH
BROWNSTEIN HYATT FARBER & STRICKLAND, P.C.
410 SEVENTEENTH STREET, 22ND FLOOR
DENVER, COLORADO 80202
(303) 223-1100
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Approximate date of commencement of proposed sale to public: as soon as
practicable after the registration statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earliest effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Amount to be Offering Price per Aggregate Offering Registration Fee
Securities to be Registered Registered (1) Unit (2) Price (1)
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<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 2,209,193 $15.875 $35,070,938.88 (1) $9,749.72 (3)
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(1) Pursuant to Rule 416, Rocky Mountain Internet, Inc. is also registering
such indeterminate number of additional shares of Common Stock as may
be issuable upon the exercise of the Common Stock Purchase Warrants
described herein to prevent dilution resulting from stock dividends,
stock splits, or similar transactions.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
(3) Previously paid.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
will thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a) may determine.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
PROSPECTUS
SUBJECT TO COMPLETION. DATED APRIL 6, 1999.
ROCKY MOUNTAIN INTERNET, INC.
2,209,193 SHARES OF COMMON STOCK
These shares of common stock are being sold by the selling stockholders
listed on page 11. Rocky Mountain Internet will not receive any proceeds from
the sale of these shares.
Our common stock is traded on the Nasdaq National Market under the
symbol "RMII." On April __, 1999, the last reported sale was $__ per share.
The common stock may be sold on the Nasdaq National Market at
prevailing market prices, in negotiated transactions, or otherwise. See "Plan of
Distribution."
SEE "RISK FACTORS" BEGINNING ON PAGE 2 TO READ ABOUT FACTORS YOU SHOULD
CONSIDER BEFORE BUYING SHARES OF THE COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus is April __, 1999.
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RISK FACTORS
You should carefully consider the risks described below before making
an investment decision.
WE HAVE A SHORT OPERATING HISTORY, HAVE INCURRED NET LOSSES SINCE OUR INCEPTION
AND EXPECT FUTURE LOSSES
We started our business in 1993 and began offering Internet access
services in 1994. We have incurred operating losses in every year of our
existence. We incurred net losses of $2.3 million for the year ended December
31, 1996, $4.2 million for the year ended December 31, 1997 and $10.7 million
for year ended December 31, 1998. As of December 31, 1998, we have an
accumulated deficit of $17.4 million. We may never be profitable.
In 1998, a proposed merger transaction with Internet Communications
Corporation and related financing transactions was terminated. As a result, we
recorded costs, expenses and related fees of approximately $6.1 million. Of this
amount, approximately $4.2 million relates to warrants that we issued. Although
we are attempting to agree on a schedule for the payment of these expenses that
is satisfactory to all parties, we cannot assure that we will be able to reach
an agreement with all parties. If we are unsuccessful, we do not currently have
the ability to pay all of these expenses.
IF WE ARE UNABLE TO RAISE FUNDS TO FINANCE OUR GROWTH, YOUR INVESTMENT COULD BE
ADVERSELY AFFECTED
We intend to expand or open new access sites or make other capital
investments as dictated by subscriber demand and strategic considerations. To
open new dial-up access sites, known in our industry as points of presence or
POPs, we must spend significant amounts of money for new equipment as well as
for leased telecommunications facilities and advertising. In addition, to expand
our subscriber base nationwide, we will have to spend significant amounts of
money on additional equipment to maintain the high speed and reliability of our
Internet access services. We may also need to spend significant amounts of cash
to:
- fund growth, operating losses, and increased expenses;
- implement our acquisition strategy;
- take advantage of unanticipated opportunities, such as major
strategic alliances or other special marketing opportunities,
acquisitions of complementary businesses or assets, or the
development of new products; and
- respond to unanticipated developments or competitive pressures.
We will require additional funds through equity, debt, or other external
financing in order to fund our current operations and to achieve our business
plan. We cannot assure that any additional capital resources will be available
to us, or, if available, will be on terms that will be acceptable to us. Any
additional equity financing will dilute the equity interests of existing
security holders. If adequate funds are not available or are not available on
acceptable terms, our ability to execute our business plan and our business
could be materially and adversely affected.
COMPETITION IN OUR INDUSTRY IS INTENSE AND IS LIKELY TO INCREASE
We operate in the Internet services market, which is extremely
competitive. Our current and prospective competitors include many large
companies that have substantially greater market presence, financial, technical,
marketing and other resources than we have. We compete directly or indirectly
with the following categories of companies:
- established online services, such as America Online, the
Microsoft Network, CompuServe and Prodigy;
- local, regional and national Internet service providers, such as
MindSpring, Earthlink, Network, Inc., Internet America and PSINet;
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- national telecommunications companies, such as AT&T Corp., MCI
WorldCom, Inc., Sprint and GTE;
- regional Bell operating companies, such as BellSouth and SBC
Communications;
- computer hardware and software companies, such as International
Business Machines and Microsoft Corporation; and
- online cable services, such as At Home and Roadrunner.
Our competition is likely to increase. We believe this will probably happen as
large diversified telecommunications and media companies acquire Internet
service providers and as Internet service providers consolidate into larger,
more competitive companies. Diversified competitors may bundle other services
and products with Internet connectivity services, potentially placing us at a
significant competitive disadvantage. In addition, competitors may charge less
than we do for Internet services, causing us to reduce or preventing us from
raising our fees. As a result, our business may suffer.
WE MAY NOT BE ABLE TO COMPETE IN THE LOCAL EXCHANGE AND LONG-DISTANCE TELEPHONE
MARKET
In 1998, we entered the long distance telephone market. We will compete
directly with inter-exchange carriers and long distance carriers and other long
distance resellers and providers, including large carriers such as AT&T, MCI
WorldCom and Sprint and new entrants to the long distance market. Many of our
competitors are significantly larger and have substantially greater market
presence and financial, technical, operational, marketing and other resources.
We will face stiff price competition and may not be able to compete.
Moreover, the local exchange telephone services market in most states
was only recently opened to competition due to the passage of the 1996
Telecommunications Act and related regulatory rulings. There are numerous
operating complexities associated with providing these services. We will be
required to develop new products, services and systems and will need to develop
new marketing initiatives to sell these services. Our inability to overcome any
of these operating complexities could have a material adverse effect on us.
WE MUST KEEP PACE WITH TECHNOLOGICAL CHANGE AND EVOLVING INDUSTRY STANDARDS TO
REMAIN COMPETITIVE
The Internet services market is characterized by rapidly changing
technology, evolving industry standards, changes in member needs and frequent
new service and product introductions. Our future success depends, in part, on
our ability to
- use leading technologies to develop our technical expertise;
- enhance our existing services; and
- develop new services that meet changing member needs on a timely
and cost-effective basis.
In particular, we must provide subscribers with the appropriate products,
services and guidance to best take advantage of the rapidly evolving Internet.
Our failure to respond in a timely and effective manner to new and evolving
technologies could have a negative impact on our business.
Our ability to compete will also depend upon the continued
compatibility of our services with products offered by various vendors. Although
we intend to support emerging standards in the market for Internet access,
industry standards may not be established. Moreover, if industry standards are
established, we may not be able to conform to these new standards in a timely
fashion. Our competitors may develop services and technologies that will render
our services or technology noncompetitive or obsolete.
We are also at risk to fundamental changes in the way customers access
the Internet. Currently, most customers access Internet services through
computers connected by telephone lines. However, several companies
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have developed cable television modems and other "broadband technologies" that
transmit data at substantially faster speeds than the modems that our
subscribers and we use. We must develop new technology or modify our existing
technology to accommodate new and faster sources of Internet access, including
cable television modems, screen-based telephones, wireless products,
televisions, and other consumer electronic devices. We may not succeed in
adapting our Internet access business to new and faster access devices.
ANY DECLINE IN OUR MEMBER RETENTION LEVELS OR OUR PRICES WILL ADVERSELY AFFECT
US
Our new member acquisition costs are substantial relative to the
monthly fees we charge. Accordingly, our long-term success largely depends on
our retention of existing members. While we continue to invest significant
resources in our infrastructure and technical and member support capabilities,
it is relatively easy for Internet users to switch to competing providers.
Consequently, our investments may not help member retention. Any significant
loss of members will substantially decrease our revenue and cause our business
to suffer.
As a result of competitive pricing pressures in the market for Internet
services, we reduced the prices we charge our Internet customers during 1995,
1997 and 1998. We expect that continued price pressures may cause us to reduce
prices further in order to remain competitive, and we expect that such further
price reductions could adversely effect our results of operations, unless we can
lower our costs commensurate with such price decreases.
OUR BUSINESS DEPENDS ON CONTINUED GROWTH OF THE INTERNET
Our future success substantially depends on continued growth in the use
of the Internet. Although we believe that Internet usage and popularity will
continue to grow as it has in the past, we cannot be certain that this growth
will continue or that it will continue in its present form. If Internet usage
declines or evolves away from our business, our growth will slow or stop and our
financial results will suffer.
IF WE FAIL TO EFFECTIVELY MANAGE OUR GROWTH, OUR BUSINESS WILL SUFFER
Our rapid growth has and will place a significant strain on our
managerial, operational, financial and information systems resources. To
accommodate our increasing size and manage our growth, we must continue to
implement and improve these systems and attract, train, manage and retain
qualified employees. These demands will require us to add new management
personnel and develop new expertise. In order to successfully integrate newly
acquired assets and continue to implement a nationwide strategy and network, we
must:
- closely monitor service quality, particularly through
third-party "POPs";
- acquire and install necessary equipment and telecommunications
facilities;
- create and implement marketing strategies in new and existing
markets;
- employ qualified personnel to provide technical and marketing
support for new sites; and
- continue to expand our managerial, operational, and financial
resources to support expansion.
Although we are taking steps to manage our growth effectively, we may not
succeed. If we fail to successfully manage our growth, our ability to maintain
and increase our member base will be impaired and our business will suffer.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH ACQUISITIONS
Since January 1998, we have acquired the stock or assets of eight
companies. As part of our long-term business strategy, we continually evaluate
strategic acquisitions of businesses and subscriber accounts. Acquisitions often
involve a number of special risks, including the following:
- we may experience difficulty integrating acquired operations
and personnel;
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- we may be unable to retain acquired subscribers;
- the acquisition may disrupt our ongoing business;
- we may not be able to successfully incorporate acquired
technology and rights into our service offerings and maintain
uniform standards, controls, procedures, and policies;
- the businesses we acquire may fail to achieve the revenues and
earnings we anticipated;
- we may ultimately be liable for contingent and other liabilities,
not previously disclosed to us, of the companies that we
acquire; and
- our resources may be diverted in asserting and defending our
legal rights.
We may not successfully overcome problems encountered in connection with
potential future acquisitions. In addition, an acquisition could materially
adversely affect our operating results by:
- diluting your ownership interest;
- causing us to incur additional debt; and
- forcing us to amortize expenses related to goodwill and other
intangible assets.
Any of these factors could have a material adverse effect on our business.
WE HAVE BEEN SUED FOR AN ALLEGED BREACH OF A MERGER AGREEMENT
In June 1998, we announced that we had entered into a merger agreement
to acquire Internet Communications Corporation. On October 13, 1998, we
announced that we had terminated the merger agreement due to, among other
things, Internet Communications Corporation's failure to satisfy certain
obligations under the merger agreement. On October 14, 1998, Internet
Communications Corporation filed a lawsuit against us in Denver District Court
claiming $30 million in damages and alleging, among other things, that we
breached the merger agreement and had made misrepresentations to them with
respect to the proposed merger transaction. We have filed several counterclaims
against Internet Communications Corporation. Our counterclaims allege that the
merger failed because of the actions and misrepresentations of Internet
Communications Corporation and its agents. We are seeking damages in excess of
$175 million. We believe Internet Communications Corporation's claims are
without merit, and intend to conduct a vigorous defense. We also intend to
vigorously pursue our counterclaims against Internet Communications Corporation.
However, we may not prevail in our defense or in any counterclaims. We hope that
we can resolve the dispute without the necessity for a trial, but we may not
succeed. If the dispute cannot be resolved quickly, we will incur additional
litigation costs and the litigation may hamper our ability to obtain additional
financing. An unfavorable outcome could have a material adverse affect on our
business.
IF WE DO NOT SUCCEED IN OBTAINING SUFFICIENT NETWORK CAPACITY FROM OUR INTERNAL
AND LEASED NETWORK, WE MAY LOSE CUSTOMERS
Our success depends, in part, on the capacity, reliability and security
of our network. Our network includes computers, servers, routers, modems,
broadband fiber systems, access to third party broadband systems and other
related hardware and software. Network capacity constraints have occurred in the
past and may occur in the future, in connection with:
- particular dial-up POPs affecting only members attempting to use
that particular point of presence; and
- system-wide services, such as e-mail and news services, which
can affect all members.
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These capacity constraints result in slowdowns, delays or inaccessibility when
members try to use a particular service. Poor network performance could cause
members to terminate their membership with us. To reduce the probability of such
problems, we will be required to expand and improve our network. Such expansion
and improvement will be very costly and time consuming. We may not be able to
expand or adapt our network to meet additional demand or changing subscriber
requirements on a timely basis or at a commercially reasonable cost.
In order to provide Internet access and other on-line services to our
customers, we lease long distance fiber optic telecommunications lines from
multiple national telecommunications service providers. We are dependent upon
these providers of data communications facilities. In addition, we have a
wholesale usage agreement with PSINet, which allows us to provide dial-up and
"switched" network access to our customers through PSINet's 235 POPs throughout
the United States. We also have other agreements with service providers on whom
we rely to deliver our product and service offerings. Moreover, PSINet provides
network access to some of our competitors. PSINet could choose to grant these
competitors preferential network access, potentially limiting our members'
ability to access the Internet. Even without such preferential treatment,
increased usage of PSINet's POPs by other Internet service providers and online
service providers may negatively affect access system performance.
SYSTEM FAILURES CAUSED BY NATURAL DISASTERS COULD HAVE AN ADVERSE EFFECT ON OUR
BUSINESS
We must protect our infrastructure against fire, earthquakes, power
loss, telecommunications failure, computer viruses, security breaches and
similar events. We do not currently maintain a redundant or backup network hub
for all of our customers. Moreover, because we lease our lines from long
distance telecommunications companies and regional Bell operating companies, we
are dependent upon these companies for physical repair and maintenance of the
leased lines. Although we maintain multiple carrier agreements to reduce the
risk of loss of operations from damage, power failures, telecommunications
failures and similar events, the occurrence of a natural disaster or other
unanticipated problems at our network operations center or any of our POPs may
cause interruptions in the services we provide. In addition, failure of our
telecommunications providers to provide the data communications capacity we
require as a result of a natural disaster, operational disruption or for any
other reason could cause interruptions in the services we provide. Any damage or
failure that causes interruptions in our operations could have a material
adverse effect on us.
OUR NETWORK IS SUBJECT TO SECURITY RISKS AND INAPPROPRIATE USE BY INTERNET USERS
THAT COULD INTERRUPT OUR SERVICE
The future success of our business will depend on the security of our
network and the networks of third parties over which we have no control. Despite
implementation of security measures, we remain vulnerable to computer viruses,
sabotage, break-ins and similar disruptive problems caused by subscribers or
other Internet users. Any breach of our network security or other inappropriate
use of our network, such as the sending of excessive volumes of unsolicited bulk
e-mail or "spam," could lead to interruptions, delays, or cessation of services
to our subscribers. Our subscribers, in turn, could terminate their membership
or assert claims against us.
Third parties could also potentially jeopardize the security of
confidential information stored in our computer systems or our subscribers'
computer systems by their inappropriate use of the Internet, which could cause
losses to our subscribers or us or deter potential customers from subscribing to
our services. Inappropriate use of the Internet includes attempting to gain
unauthorized access to information or systems, commonly known as "cracking" or
"hacking." Although we intend to continue to implement security measures,
"hackers" have circumvented such measures in the past, and others may be able to
circumvent our security measures or the security measures of our third-party
network providers in the future.
To fix problems caused by computer viruses or other inappropriate uses
or security breaches, we may have to interrupt, delay, or cease service to our
subscribers, which could have a material adverse effect on our business. In
addition, we expect that our subscribers will increasingly use the Internet for
commercial transactions in the future. Any network malfunction or security
breach could cause these transactions to be delayed, not completed at all, or
completed with compromised security. As a result, subscribers or others may
assert claims of liability against us. Further, until more comprehensive
security technologies are developed, the security and privacy concerns of
existing and potential subscribers may inhibit the growth of the Internet
service industry in general and our subscriber base and revenue in particular.
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WE ARE DEPENDENT ON TELECOMMUNICATIONS CARRIERS AND OTHER SUPPLIERS
We rely on traditional telecommunications carriers to transmit our
traffic over local and long distance networks. These networks may experience
disruptions and capacity constraints that are not easily remedied. We may have
no means of replacing these services. In addition, local phone service is
sometimes available only from one telephone company. The benefits of competition
and alternative sources of supply are not present in these markets.
We also depend on certain suppliers of hardware and software
components. We acquire a majority of our networking service components,
including terminal servers and high-performance routers, from Cisco Systems,
Inc., Bay Networks, Inc. and Lucent Technologies, Inc. The expansion of our
network places a significant demand on our suppliers, some of which have limited
production capacity. In the past, we have experienced delays in delivery of new
telephone lines, modems, terminal servers and other equipment. If delays are
severe, all incoming modem lines may become full during peak times, resulting in
busy signals for subscribers who are trying to connect to Rocky Mountain
Internet. If our suppliers cannot meet increased demand and we are not able to
develop alternative sources of supply, we could experience delays and increased
costs in expanding our network, difficulty in providing our services and the
loss of dissatisfied customers.
WE MAY NOT SUCCESSFULLY PROTECT OUR PROPRIETARY RIGHTS OR AVOID CLAIMS THAT WE
INFRINGE THE PROPRIETARY RIGHTS OF OTHERS
Our success is dependent in part on our technology and other
proprietary rights. To protect our rights, we rely on a combination of
copyright, trademark, patent and trade secret laws and contractual restrictions.
We cannot be sure that these steps will be adequate to prevent misappropriation
or infringement of our intellectual property. Nor can we be sure that
competitors will not independently develop technologies that are substantially
equivalent or superior to our proprietary property and technology.
In our industry, competitors often assert intellectual property claims
against one another. The success of our business depends on our ability to
assert and defend our intellectual property rights. Future litigation may have
an adverse impact on our financial condition. These claims could result in
substantial costs and diversion of resources, even if the claim is ultimately
decided in our favor. If a claim is asserted alleging that we infringed the
proprietary technology or information of a third party, we may be required to
seek licenses for such intellectual property. We cannot be sure that such
licenses would be offered or obtained on commercially reasonable terms, if at
all. The failure to obtain the necessary licenses or other rights could have a
material adverse affect on our business.
MR. HANSON HAS A CONTROLLING INTEREST IN ROCKY MOUNTAIN INTERNET WHICH MAY
PREVENT YOU FROM REALIZING A PREMIUM RETURN
Our chief executive officer, Douglas Hanson has a controlling interest
in Rocky Mountain Internet through his direct ownership of common stock, ability
to exercise outstanding warrants and options, and voting rights agreements. As a
result, Mr. Hanson has voting control of Rocky Mountain Internet and can
influence all matters that require stockholder approval. Mr. Hanson may
designate the members of our Board of Directors and can decide our operations
and business strategy. You may disagree with Mr. Hanson's management decisions.
As a controlling stockholder, Mr. Hanson also has the power to approve
or reject significant corporate matters, such as mergers, acquisitions and other
change-in-control transactions. Mr. Hanson's controlling interest could make it
more difficult for a third party to acquire us, even if the acquisition would be
beneficial to you. You may not realize the premium return that stockholders may
realize in conjunction with corporate takeovers.
MARKET PRICE OF OUR STOCK MAY FALL IF OTHER SECURITY HOLDERS SELL THEIR STOCK
As of April 5, 1999 and before this offering, we have 9,962,794 shares
of common stock outstanding. However, we have reserved approximately 10,500,000
additional shares for issuance upon exercise of warrants and stock options,
various anti-dilution provisions contained in the warrants and stock options,
conversion of preferred
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stock, and prior acquisitions. If any of the shares presently outstanding or to
be distributed are sold in the public market the market price of our common
stock could fall. If our stockholders sell substantial amounts of our common
stock in the public market following this offering, the market price of our
common stock could fall. Such sales also might make it more difficult for us to
sell equity or equity-related securities in the future at a price we deem
appropriate. We have also issued and plan to issue additional convertible equity
and debt securities in the future. If these securities are exercised or
converted, you may experience significant dilution in the market value of your
stock.
OUR STOCK PRICE IS HIGHLY VOLATILE
In the past, our common stock and publicly traded warrants have traded
at volatile prices. We believe that the market prices will continue to be
subject to significant fluctuations due to various factors and events that may
or may not be related to our performance. If the market value of our common
stock decreased substantially, we could be delisted from the Nasdaq National
Market. Consequently, you could find it difficult or impossible to sell your
stock or to determine the value of your stock.
In addition, the stock market has from time to time experienced
significant price and volume fluctuations, which have particularly affected the
market prices of the stocks of Internet-sector companies and which may be
unrelated to the operating performance of such companies. Furthermore, our
operating results and prospects from time to time may be below the expectations
of public market analysts and investors. Any such event could result in a
material decline in the price of your stock.
FACTORS OUTSIDE OF OUR CONTROL MAY AFFECT OUR OPERATING RESULTS AND CAUSE OUR
QUARTERLY RESULTS TO FLUCTUATE
Our financial results may fluctuate significantly because of several factors,
many of which are beyond our control. These factors include:
- costs associated with gaining and retaining members and capital
expenditures for upgrading our systems and infrastructure;
- timing and market acceptance of new and upgraded Internet service
introductions, technologies and services by us and our competitors;
- loss of subscribers, seasonal fluctuations in demand for our services;
- downward pressure on prices due to increased competition;
- changes in our operating expenses, including telecommunications costs;
and
- effect of potential acquisitions.
Fluctuations caused by these and other factors could cause our business to
suffer.
WE HAVE NO INTENTION TO PAY DIVIDENDS
We have never paid any cash dividends on our common stock. We currently
intend to retain all future earnings, if any, for use in our business and do not
expect to pay any dividends in the foreseeable future.
WE MAY BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATION
We provide Internet services through data transmissions over public
telephone lines and cable networks. The Federal Communications Commission
governs these transmissions and establishes charges and terms for
communications. As an Internet access provider, we are not subject to direct
regulation by the Federal Communications Commission or any other governmental
agency, other than the regulations applicable to businesses generally. However,
we could become subject to Federal Communications Commission or other regulatory
agency regulation especially as Internet services and telecommunication services
converge. Changes in the regulatory environment could decrease our revenue and
increase our costs. For example, the Federal Communications
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Commission may decide that Internet-based telephone services should be subject
to pay carrier access charges on the same basis as traditional
telecommunications companies.
The Federal Telecommunications Act of 1996 imposed fines on Internet
service providers, in part, for providing access to indecent and obscene
services. The United States Supreme Court found this part of the
unconstitutional in June of 1997. However, on March 12, 1998, the Senate
Commerce Committee approved two bills that attempt to reconstruct these
unconstitutional provisions. Although it is too early to determine the ultimate
course of these bills, and to evaluate the constitutionality of the proposals,
these provisions, if enacted and upheld, could expose ISPs such as Rocky
Mountain Internet to liabilities.
Additional laws and regulations may be adopted with respect to the
Internet, covering issues such as Universal Service Fund support payments,
content, user privacy, pricing, libel, obscene material, indecency, gambling,
intellectual property protection and infringement and technology export and
other controls. Other federal Internet-related legislation has been
introduced which may limit commerce and discourse on the Internet. The FCC
currently is considering:
- whether Internet service providers are regulated telecommunications
providers;
- whether Internet service providers are required to contribute to the
Universal Service Fund; and
- how various companies in the Internet and telecommunications
industries should be classified.
IF WE ARE UNABLE TO RETAIN KEY EXECUTIVES, OUR BUSINESS WILL BE ADVERSELY
AFFECTED
Our success greatly depends on our ability to attract and retain key
technical, sales, marketing, information systems, financial and executive
personnel. We are especially dependent on the continued services of our senior
management team, particularly Douglas H. Hanson, our Chief Executive Officer and
Chairman of the Board of Directors, and Mary Beth Vitale, our President and
Chief Operating Officer. The loss of Mr. Hanson, Ms. Vitale or other senior
managers could have a materially detrimental effect on us. Ms. Vitale is the
only executive with an employment agreement. All other members of our senior
management team can terminate their employment at any time. We do not maintain
key person life insurance on any of our personnel. If we fail to attract, hire
or retain the necessary personnel, or if we lose the services of any member of
our senior management team, our business could be adversely affected.
OUR FAILURE TO ENSURE THAT OUR SYSTEMS OR OUR CUSTOMERS AND SUPPLIERS SYSTEMS
ARE YEAR 2000 COMPLIANT COULD LEAD TO A MAJOR SYSTEM FAILURE THAT COULD
ADVERSELY AFFECT OUR BUSINESS
The Year 2000 problem is the result of computer programs that use two
digits rather than four to define the applicable year. On January 1, 2000,
computer equipment and programs that have time-sensitive software may not be
able to distinguish whether "00" means 1900 or 2000. Incompatible date coding
could cause a major system failure or could create erroneous results. We may
also be vulnerable to other companies' Year 2000 issues.
Our failure, or the failure of third parties on which we rely, to
adequately address Year 2000 readiness issues could result in an interruption,
or a failure, of some normal business activities or operations. Presently, we
believe that the primary risks that we face with regard to the Year 2000 are
those arising from third party services or products. In particular, we depend
heavily on a significant number of third party vendors to provide both network
services and equipment. A significant Year 2000-related disruption of these
network services or equipment could cause our customers to consider seeking
alternate providers or cause an unmanageable burden on customer service and
technical support. This in turn could materially and adversely affect business.
Furthermore, our business depends on the continued operation of, and
widespread access to, the Internet. To the extent that the normal operation of
the Internet is disrupted by the Year 2000 issue, or if a large portion of our
customers are unable to access the Internet due to Year-2000 related issues in
connection with their own systems, our business could be materially and
adversely affected.
9
<PAGE>
We also face Year 2000 risks related to the acquisitions we make. If we
fail to identify and address Year 2000 issues in connection with our
acquisitions, our business could be materially and adversely affected.
We have established a program to coordinate appropriate activity to be
taken to address the Year 2000 issue. As of December 31, 1998, we had incurred
approximately $50,000 in connection with the implementation of the program. We
expect to incur an additional $150,000 to $200,000 of expenses to implement the
remainder of the Year 2000 readiness program. These estimates do not include
additional costs that may be incurred to expand the program for systems and
products that we may acquire later in 1999. These are our best estimates, and we
do not believe that the total costs will have a material affect on our business.
However, if the actual costs resulting from implementation of the Year 2000
readiness program significantly exceed our estimates, they may have a material
adverse effect on our business.
Furthermore, we have not developed a Year 2000 contingency plan to
identify and address significant Year 2000 risks.
CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference may
include "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. We intend the
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements in these sections. All statements regarding our
expected financial position and operating results, our business strategy, our
financing plans and the outcome of any contingencies are forward-looking
statements. These statements can sometimes be identified by our use of
forward-looking words such as "may," "believe," "plan," "will," "anticipate,"
"estimate," "expect," "intend" and other phrases of similar meaning. Known and
unknown risks, uncertainties and other factors could cause the actual results to
differ materially from those contemplated by the statements. The forward-looking
information is based on various factors and was derived using numerous
assumptions.
Although we believe that our expectations that are expressed in these
forward-looking statements are reasonable, we cannot promise that our
expectations will turn out to be correct. Our actual results could be materially
different from our expectations, including the following:
- we may lose subscribers or fail to grow our subscriber base;
- we may not successfully integrate new subscribers or assets obtained
through acquisitions;
- we may fail to compete with existing and new competitors;
- we may not be able to sustain our current growth;
- we may not adequately respond to technological developments impacting
the Internet;
- we may fail to identify and correct a significant Year 2000 compliance
problem and experience a major system failure;
- we may fail to settle outstanding litigation; and
- we may not be able to find needed financing.
This list is intended to identify some of the principal factors that could cause
actual results to differ materially from those described in the forward-looking
statements included elsewhere in this report. These factors are not intended to
represent a complete list of all risks and uncertainties inherent in our
business, and should be read in conjunction with the more detailed cautionary
statements included in this prospectus under the caption "Risk Factors."
10
<PAGE>
SELLING STOCKHOLDERS
The selling stockholders listed below received convertible preferred
stock and warrants to purchase common stock of Rocky Mountain Internet in
connection with prior securities offerings. If they convert their preferred
stock into common stock or exercise their warrants, the selling stockholders
listed below may use this prospectus to sell their common stock.
<TABLE>
<CAPTION>
Shares Shares Which May Shares Beneficially Owned
Owned be Sold Pursuant After Offering
Before the to this
Selling Stockholder Offering Prospectus Number Percentage
--------------- ------------------ ------------ -------------
<S> <C> <C> <C> <C>
Advantage Fund II, Ltd. -0- 1,260,955 -0- -0-
Koch Industries, Inc. -0- 756,573 -0- -0-
Wharton Capital Partners Ltd. -0- 45,000 -0- -0-
Leslie Bines -0- 45,000 -0- -0-
Eugene L. Neidiger 43,744 2,800 40,944 *
Charles C. Bruner 27,041 2,800 24,241 *
Anthony B. Petrelli -0- 2,800 -0- -0-
Regina L. Neidiger -0- 1,600 -0- -0-
Oppenheimer High Yield Fund -0- 24,520 -0- -0-
Oppenheimer Champion Income Fund -0- 12,145 -0- -0-
Oppenheimer Strategic Income Fund -0- 55,000 -0- -0-
</TABLE>
* Less than one percent.
The shares that may be sold pursuant to this prospectus represent
shares that will be issued upon conversion of preferred stock and exercise of
warrants held by the selling stockholders.
None of the selling stockholders, nor their officers, directors and
major shareholders, has held any material relationship with Rocky Mountain
Internet or any of its affiliates within the past three years other than as an
owner of Rocky Mountain Internet's common stock.
PLAN OF DISTRIBUTION
The common stock covered by this prospectus may be offered and sold
from time to time by the selling stockholders, including in one or more of the
following transactions:
- on the Nasdaq National Market;
- in the over-the-counter market;
- in transaction other than on the Nasdaq National Market or in the
over-the-counter market;
- through brokers or dealers, or in direct transactions with purchasers;
- in connection with short sales;
- by pledge to secure debts and other obligations;
11
<PAGE>
- in connection with the writing of options, in hedge transactions, and
in settlement of other transactions in standardized or
over-the-counter options; or
- in a combination of any of the above transactions.
The selling stockholders may sell their shares at prevailing market
prices, at prices related to prevailing market prices, at negotiated prices, or
at fixed prices.
Brokers and dealers that are used will either receive discounts or
commission from the selling stockholders, or will receive commissions from the
purchasers.
There is no assurance that the selling stockholders will sell any or
all of the common stock. We have agreed to indemnify the selling stockholders
against liabilities, including liabilities arising under the Securities Act of
1933.
LEGAL MATTERS
For the purposes of this offering, Brownstein Hyatt Farber &
Strickland, P.C. of Denver, Colorado, has given its opinion as to the validity
of the shares offered by the selling stockholders.
EXPERTS
Ernst & Young, LLP, independent auditors, have audited our consolidated
financial statements and schedule as of and for the year ended December 31, 1998
included in our Annual Report on Form 10-K for the year ended December 31, 1998,
as set forth in their report, which is incorporated by reference in this
prospectus and elsewhere in the registration statement. Baird, Kurtz and Dobson,
independent accountants, have audited our consolidated financial statements and
schedule as of December 31, 1997 and for each of the two years in the period
then ended included in our Annual Report on Form 10-K for the year ended
December 31, 1998, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements and schedule are incorporated by reference in reliance on
Ernst & Young LLP's and Baird, Kurtz & Dobson's reports, given on their
authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's web site at www.sec.gov. You may also read and copy
any document we file at the SEC's Public Reference Rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. The Public Reference Room in
Washington, D.C. is located at 450 Fifth Street, N.W. Please call the SEC at
1-800-SEC-0330 for further information on the Public Reference Rooms.
Our common stock is listed on the Nasdaq National Market. Reports,
proxy statements and other information concerning Rocky Mountain Internet can be
reviewed at the offices of Nasdaq Operations, 1735 "K" Street, N.W., Washington,
D.C. 20006.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until we sell all of the common stock:
- Annual Report on Form 10-K for the year ended December 31, 1998; and
12
<PAGE>
- The description of our common stock contained in our registration
statement on Form 8-A, filed August 14, 1996.
We have also filed a registration statement on Form S-3 with the SEC under the
Securities Act of 1933. This prospectus does not contain all of the information
set forth in the registration statement. You should read the registration
statement for further information about our company and the common stock. You
may request a copy of these filings at no cost. Please direct your requests to:
Christopher J. Melcher
Vice President and General Counsel
Rocky Mountain Internet, Inc.
999 Eighteenth Street, Suite 2201
Denver, Colorado 80202
(303) 672-0700
You may also want to refer to our web site at WWW.RMI.NET.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of the common stock in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front page of
those documents.
13
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-------
<S> <C>
Risk Factors ......................................................................................... 2
Cautionary Note About Forward-Looking Statements...................................................... 10
Selling Stockholders ................................................................................. 11
Plan of Distribution ................................................................................. 11
Legal Matters ........................................................................................ 12
Experts .............................................................................................. 12
Where You Can Find More Information .................................................................. 12
</TABLE>
COMMON STOCK
$0.001 PAR VALUE
ROCKY MOUNTAIN INTERNET, INC.
PROSPECTUS
APRIL __, 1999
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following expenses incurred in connection with the sale of the
securities being registered will be borne by the Registrant. Other than the SEC
registration fee and Nasdaq filing fee, the amounts stated are estimates.
<TABLE>
<S> <C>
SEC Registration Fee .................................... $ 9,750.00
Nasdaq Filing Fee ....................................... 7,500.00
Printing and Engraving .................................. 10,000.00
Legal Fees and Expenses ................................. 30,000.00
Accounting Fees and Expenses ............................ 10,000.00
------------
Miscellaneous ........................................... 3,000.00
------------
TOTAL.................................................... $70,250.00
------------
------------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 8 of the Registrant's Certificate of Incorporation, as amended,
provides:
"No director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except as to liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for violations of Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived any
improper personal benefit. If the Delaware General Corporation Law hereafter is
amended to eliminate or limit further the liability of a director, then, in
addition to the elimination and limitation of liability provided by the
preceding sentence, the liability of each director shall be eliminated or
limited to the fullest extent provided or permitted by the amended Delaware
General Corporation Law. Any repeal or modification of this Article 8 shall not
adversely affect any right or protection of a director under this Article 8 as
in effect immediately prior to such repeal or modification with respect to any
liability that would have accrued, but for this Article 8, prior to such repeal
or modification."
Section 5.1 of the Registrant's by-laws provides, in general, that the
Registrant shall, to the fullest extent permitted by the DGCL, as now or
hereafter in effect, indemnify any person who was or is threatened to be made a
party to any threatened, pending, or completed action, suit, or proceeding,
whether criminal, civil, administrative, or investigative (a "Proceeding"), by
reason of the fact that he is or was a director or officer of the Registrant,
or, by reason of the fact that such officer or director is or was serving at the
request of the Registrant as a director, office, employee, or agent of another
corporation, partnership, joint venture, trust, association, or other
enterprise, against all liability and loss suffered and expenses (including
attorneys' fees), judgments, fines, ERISA excise taxes or penalties, and amounts
paid in settlement reasonably incurred by him in connection with such
Proceeding, including any Proceeding by or on behalf of the Registrant and will
advance all reasonable expenses incurred by or on behalf of any such person in
connection with any Proceeding, whether prior to or after final disposition of
such Proceeding. Section 5.8 of the bylaws also provides that the Registrant may
also indemnify and advance expenses to employees or agents who are not officers
or directors of the Registrant.
The Registrant has purchased a directors' and officers' liability
insurance contract that provides, within stated limits, reimbursement either to
a director or officer whose actions in his capacity result in liability, or to
the Registrant, in the event it has indemnified the director or officer.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Registrant, the Registrant has been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. No dealer, salesman or any
other person has been authorized in connection with this Offering to give any
information or to make any representations other than those contained in this
prospectus and, if given or made, such information or
II-1
<PAGE>
representations must not be relied upon as having been authorized by the
Registrant. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction in which such offer or solicitation is not authorized or in
which the person making such offer or solicitation is not qualified to do so
or to any person to whom it is unlawful to make such an offer or
solicitation. Neither the delivery of this prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there
has been no change in the circumstances of the Registrant or the facts herein
set forth since the date hereof.
II-2
<PAGE>
<TABLE>
<CAPTION>
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------------- -------------------------------------
<S> <C>
2.04 Agreement and Plan of Reorganization and Liquidation by and Among
Rocky Mountain Internet, Inc., DataXchange Network, Inc., and
Certain of the Shareholders of DataXchange Network, Inc., dated as
of December 8, 1998 (2)
3.01 Certificate of Incorporation (1)
3.02 Bylaws of Rocky Mountain Internet, Inc. (1)
3.03 Certificate of Amendment of Certificate of Incorporation of Rocky
Mountain Internet, Inc. (3)
3.04 Certificate of Designations of Series B Convertible Preferred Stock (3)
4.01 Form of Warrant Agreement dated September 5,1996 between Rocky
Mountain Internet, Inc. and American
Securities Transfer, Inc. (1)
4.02 Form of Subordinated Convertible Promissory Note (1)
4.03 Form of Lock-Up Agreement for Common Stockholders (1)
4.04 Form of Lock-Up Agreement for Preferred Stockholders (1)
4.05 Form of Lock-Up Agreement for Debenture Holders (1)
4.06 Form of Stock Certificate (1)
4.07 Form of Warrant Certificate (1)
4.08 Warrant Agreement between Rocky Mountain Internet, Inc. and
Douglas H. Hanson dated October 1, 1997 (4)
4.09 1996 Employees' Stock Option Plan (5)
4.10 1996 Non-Employee Directors' Stock Option Plan (5)
4.11 Rocky Mountain Internet Inc. 1997 Non-Qualified Stock Option Plan (6)
4.12 1997 Stock Option Plan (7)
4.12.1 First Amendment to Non-Qualified Stock Option Agreement pursuant
to the Rocky Mountain Internet, Inc. 1997 Stock Option Plan (8)
4.12.2 First Amendment to Incentive Stock Option Agreement pursuant to the
Rocky Mountain Internet, Inc. 1997 Stock Option Plan (8)
4.13 Rocky Mountain Internet, Inc. 1998 Employees' Stock Option Plan (9)
4.14 Rocky Mountain Internet, Inc. 1998 Non-Employee Directors' Stock
Option Plan (10)
4.15 Subscription Agreement, dated as of December 10, 1998, by and
between Rocky Mountain Internet, Inc. and Koch Industries,
Inc. (11)
4.16 Subscription Agreement, dated as of December 10, 1998, by and
between Rocky Mountain Internet, Inc. and Advantage Fund II
Ltd. (11)
4.17 Form of Common Stock Purchase Warrant issued to Koch Industries,
Inc., Advantage Fund II Ltd., Wharton Capital Partners Ltd.,
Leslie Bines, and Neidiger Tucker Bruner Inc. (11)
4.18 Form of Registration Rights Agreement between Rocky Mountain
Internet, Inc. and (i) Koch Industries, Inc.; and (ii) Advantage
Fund II Ltd. (11)
4.19 Form of Registration Rights Agreement between Rocky Mountain
Internet and (i) Wharton Capital Partners Ltd.; (ii) Leslie Bines;
and (iii) Neidiger Tucker Bruner Inc. (11)
5.01 Opinion and Consent of Brownstein Hyatt Farber & Strickland, P.C.,
as to legality of securities being registered *
23.01 Consent of Ernst & Young LLP *
23.02 Consent of Baird, Kurtz & Dobson *
23.03 Consent of Brownstein Hyatt Farber & Strickland, P.C. (included
in Exhibit 5.01)
24.01 Power of Attorney (12)
27.01 Financial Data Schedule (13)
</TABLE>
* Filed with this Amendment No. 2 to the Registrant's Registration
Statement on Form S-3 (Reg. No. 333-70613).
(1) Incorporated by reference from the Registrant's Registration
Statement on Form SB-2 (Reg. No. 333-05040C) and amendments thereto,
as previously filed with the Securities and Exchange Commission.
II-3
<PAGE>
(2) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated December 8, 1998.
(3) Incorporated by reference from the Registrant's Registration
Statement on Form S-1 (Reg. No. 333-52731) and amendments thereto, as
previously filed with the Securities and Exchange Commission.
(4) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated October 6, 1997.
(5) Incorporated by reference to documents filed with the Registrant's
Initial Public Offering.
(6) Incorporated by reference to the Registrant's Registration
Statement on Form S-8, as filed with the Securities and Exchange
Commission on September 26, 1997.
(7) Incorporated by reference to the Registrant's Definitive Proxy
Statement (Appendix A) on Schedule 14A, as filed with the Securities
and Exchange Commission on February 13, 1998.
(8) Incorporated by reference to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1997.
(9) Incorporated by reference to the Registrant's Definitive Proxy
Statement (Appendix B) on Schedule 14A, as filed with the Securities
and Exchange Commission on February 13, 1998.
(10) Incorporated by reference to the Registrant's Definitive Proxy
Statement (Appendix C) on Schedule 14A, as filed with the Securities
and Exchange Commission on February 13, 1998.
(11) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated December 10, 1998.
(12) Included in Part II of this Registration Statement under the
caption "Signatures"
(13) Incorporated by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1998.
II-4
<PAGE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the 1934 Act)
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of Denver, state of Colorado, on April 6, 1999.
ROCKY MOUNTAIN INTERNET, INC.
a Delaware corporation
By: /s/ Douglas H. Hanson
------------------------------------
Name: Douglas H. Hanson
Title: Chief Executive Officer and Chairman of
the Board of Directors (PRINCIPAL
EXECUTIVE OFFICER)
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to Registration Statement and Power of Attorney has been signed below
by the following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----- ----- ------
<S> <C> <C>
/s/ Douglas H. Hanson Chief Executive Officer and April 6, 1999
- ----------------------------------------- Chairman of the Board of Directors
Douglas H. Hanson (PRINCIPAL EXECUTIVE OFFICER)
/s/ Peter J. Kushar Chief Financial Officer and April 6, 1999
- ----------------------------------------- Treasurer (PRINCIPAL FINANCIAL
Peter J. Kushar OFFICER AND PRINCIPAL ACCOUNTING
OFFICER)
/s/ Mary Beth Vitale * President, Chief Operating Officer April 6, 1999
- ----------------------------------------- and Director
Mary Beth Vitale
/s/ D.D. Hock * Director April 6, 1999
- -----------------------------------------
D.D. Hock
/s/ Robert S. Grabowski * Director April 6, 1999
- -----------------------------------------
Robert S. Grabowski
/s/ Lewis J. Silverberg * Director April 6, 1999
- -----------------------------------------
Lewis J. Silverberg
</TABLE>
* by Douglas H. Hanson, attorney-in-fact
II-6
<PAGE>
<TABLE>
<CAPTION>
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------------- -------------------------------------
<S> <C>
2.04 Agreement and Plan of Reorganization and Liquidation by and Among
Rocky Mountain Internet, Inc., DataXchange Network, Inc., and
Certain of the Shareholders of DataXchange Network, Inc., dated as
of December 8, 1998 (2)
3.01 Certificate of Incorporation (1)
3.02 Bylaws of Rocky Mountain Internet, Inc. (1)
3.03 Certificate of Amendment of Certificate of Incorporation of Rocky
Mountain Internet, Inc. (3)
3.04 Certificate of Designations of Series B Convertible Preferred Stock (3)
4.01 Form of Warrant Agreement dated September 5,1996 between Rocky
Mountain Internet, Inc. and American
Securities Transfer, Inc. (1)
4.02 Form of Subordinated Convertible Promissory Note (1)
4.03 Form of Lock-Up Agreement for Common Stockholders (1)
4.04 Form of Lock-Up Agreement for Preferred Stockholders (1)
4.05 Form of Lock-Up Agreement for Debenture Holders (1)
4.06 Form of Stock Certificate (1)
4.07 Form of Warrant Certificate (1)
4.08 Warrant Agreement between Rocky Mountain Internet, Inc. and
Douglas H. Hanson dated October 1, 1997 (4)
4.09 1996 Employees' Stock Option Plan (5)
4.10 1996 Non-Employee Directors' Stock Option Plan (5)
4.11 Rocky Mountain Internet Inc. 1997 Non-Qualified Stock Option Plan (6)
4.12 1997 Stock Option Plan (7)
4.12.1 First Amendment to Non-Qualified Stock Option Agreement pursuant
to the Rocky Mountain Internet, Inc. 1997 Stock Option Plan (8)
4.12.2 First Amendment to Incentive Stock Option Agreement pursuant to the
Rocky Mountain Internet, Inc. 1997 Stock Option Plan (8)
4.13 Rocky Mountain Internet, Inc. 1998 Employees' Stock Option Plan (9)
4.14 Rocky Mountain Internet, Inc. 1998 Non-Employee Directors' Stock
Option Plan (10)
4.15 Subscription Agreement, dated as of December 10, 1998, by and
between Rocky Mountain Internet, Inc. and Koch Industries,
Inc. (11)
4.16 Subscription Agreement, dated as of December 10, 1998, by and
between Rocky Mountain Internet, Inc. and Advantage Fund II
Ltd. (11)
4.17 Form of Common Stock Purchase Warrant issued to Koch Industries,
Inc., Advantage Fund II Ltd., Wharton Capital Partners Ltd.,
Leslie Bines, and Neidiger Tucker Bruner Inc. (11)
4.18 Form of Registration Rights Agreement between Rocky Mountain
Internet, Inc. and (i) Koch Industries, Inc.; and (ii) Advantage
Fund II Ltd. (11)
4.19 Form of Registration Rights Agreement between Rocky Mountain
Internet and (i) Wharton Capital Partners Ltd.; (ii) Leslie Bines;
and (iii) Neidiger Tucker Bruner Inc. (11)
5.01 Opinion and Consent of Brownstein Hyatt Farber & Strickland, P.C.,
as to legality of securities being registered *
23.01 Consent of Ernst & Young LLP *
23.02 Consent of Baird, Kurtz & Dobson *
23.03 Consent of Brownstein Hyatt Farber & Strickland, P.C. (included
in Exhibit 5.01)
24.01 Power of Attorney (12)
27.01 Financial Data Schedule (13)
</TABLE>
* Filed with this Amendment No. 2 to the Registrant's Registration
Statement on Form S-3 (Reg. No. 333-70613).
(1) Incorporated by reference from the Registrant's Registration
Statement on Form SB-2 (Reg. No. 333-05040C) and amendments thereto,
as previously filed with the Securities and Exchange Commission.
II-7
<PAGE>
(2) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated December 8, 1998.
(3) Incorporated by reference from the Registrant's Registration
Statement on Form S-1 (Reg. No. 333-52731) and amendments thereto, as
previously filed with the Securities and Exchange Commission.
(4) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated October 6, 1997.
(5) Incorporated by reference to documents filed with the Registrant's
Initial Public Offering.
(6) Incorporated by reference to the Registrant's Registration
Statement on Form S-8, as filed with the Securities and Exchange
Commission on September 26, 1997.
(7) Incorporated by reference to the Registrant's Definitive Proxy
Statement (Appendix A) on Schedule 14A, as filed with the Securities
and Exchange Commission on February 13, 1998.
(8) Incorporated by reference to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1997.
(9) Incorporated by reference to the Registrant's Definitive Proxy
Statement (Appendix B) on Schedule 14A, as filed with the Securities
and Exchange Commission on February 13, 1998.
(10) Incorporated by reference to the Registrant's Definitive Proxy
Statement (Appendix C) on Schedule 14A, as filed with the Securities
and Exchange Commission on February 13, 1998.
(11) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated December 10, 1998.
(12) Included in Part II of this Registration Statement under the
caption "Signatures"
(13) Incorporated by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1998.
II-8
<PAGE>
Exhibit 5.01
LETTERHEAD OF BROWNSTEIN HYATT FARBER & STRICKLAND
April 6, 1999
Rocky Mountain Internet, Inc.
999 Eighteenth Street, Suite 2201
Denver, Colorado 80202
Re: Registration of 2,209,193 Shares of Common Stock; Registration
Statement on Form S-3 (Reg. No. 333-70613)
Ladies and Gentlemen:
We have acted as counsel to Rocky Mountain Internet, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, pursuant to the Company's Registration
Statement on Form S-3, Registration No. 333-70613 (the "Registration
Statement"), of a public offering of 2,209,193 shares of common stock, $0.001
par value (the "Shares"), of the Company. All of the Shares are being sold by
the Selling Stockholders identified in the "Selling Stockholders" section of the
Registration Statement (the "Selling Stockholders").
In this capacity, we have examined the Registration Statement
(including all amendments thereto), the Company's Certificate of Incorporation
and originals or copies, certified or otherwise identified to our satisfaction,
of such corporate records, agreements, documents and other instruments of the
Company relating to the authorization and issuance of the Shares to be sold by
the Selling Stockholders and other matters as we have deemed relevant and
necessary as a basis for the opinion hereinafter set forth.
In conducting our examination we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such documents.
Based upon the foregoing, and in reliance thereon, we are of the
opinion that the Shares, when issued and delivered against payment therefor,
will be legally and validly issued, fully paid and non-assessable.
We hereby consent to the incorporation of this opinion into the
Registration Statement as Exhibit 5.1 thereto and to the reference to our firm
under the heading "Legal Matters" in the prospectus constituting a part of the
Registration Statement.
Very truly yours,
/s/ BROWNSTEIN HYATT FARBER
& STRICKLAND, P.C.
<PAGE>
Exhibit 23.01
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-70613) and related Prospectus of
Rocky Mountain Internet, Inc. for the registration of 2,209,193 shares of its
common stock and to the incorporation by reference therein of our report
dated March 26, 1999, with respect to the consolidated financial statements
and schedule of Rocky Mountain Internet, Inc. as of and for the year ended
December 31, 1998 included in its Annual Report (Form 10-K) for the year
ended December 31, 1998, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Denver, Colorado
April 6, 1999
<PAGE>
Exhibit 23.02
CONSENT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Rocky Mountain Internet, Inc.
Denver, Colorado
We hereby consent to the incorporation by reference in this Registration
Statement of Rocky Mountain Internet, Inc., Amendment No. 2 to Form S-3, of
our report included in Form 10-K, dated February 27, 1998, with respect to
the balance sheet of Rocky Mountain Internet, Inc. as of December 31, 1997,
and the related statements of income, stockholders' equity (deficit), and
cash flows for each of the two years then ended. We also consent to the
reference of us under the heading "Experts" in such registration statement.
/s/ BAIRD, KURTZ & DOBSON
Denver, Colorado
April 6, 1999
