<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 22, 1999
REGISTRATION NO. 333-52731
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
------------------------------------
POST-EFFECTIVE AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT ON
FORM S-3
PURSUANT TO RULE 401
UNDER
THE SECURITIES ACT OF 1933
------------------------------------
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)
------------------------------------
COPY TO:
JEFFREY M. KNETSCH
BROWNSTEIN HYATT FARBER & STRICKLAND, P.C.
410 SEVENTEENTH STREET, 22ND FLOOR
DENVER, COLORADO 80202
(303) 223-1100
------------------------------------
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. [ ]
------------------------------------
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.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SECURITY HOLDERS 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 22, 1999.
ROCKY MOUNTAIN INTERNET, INC.
9,089,759 SHARES OF COMMON STOCK
3,992,100 COMMON STOCK PURCHASE WARRANTS
This prospectus will allow us to issue up to 6,436,775 shares of common
stock over time upon exercise of warrants we have already issued. If the warrant
holders exercise their warrants and receive common stock, they may also use this
prospectus to resell their common stock. The selling security holders listed on
pages 16-17 of this prospectus are also offering up to 2,652,984 shares of
common stock and warrants to purchase up to 3,992,100 shares.
We will not receive any proceeds from the sale of common stock or
warrants by the selling security holders. We will, however, receive proceeds if
warrant holders pay cash to exercise their warrants.
Our common stock is traded on the Nasdaq National Market under the
symbol "RMII" and our publicly traded common stock purchase warrants are
traded on the National Market under the symbol "RMIIW." On April 21, 1999,
the last reported sale price of our common stock was $___ per share and the
last reported sale price of our common stock purchase warrants was $___ per
warrant.
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 THE WARRANTS OR SHARES OF 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.
<PAGE>
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;
2
<PAGE>
- 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
3
<PAGE>
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 and may acquire another company, UStel, Inc. in the next few months.
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;
4
<PAGE>
- 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.
5
<PAGE>
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. We maintain multiple carrier agreements to reduce the risk of loss
of operations from damage, power failures, telecommunications failures and
similar events. However, 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.
6
<PAGE>
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 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 SECURITIES MAY FALL IF OTHER SECURITY HOLDERS SELL THEIR
STOCK
As of the date of 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 stock, and prior acquisitions. If our stockholders sell substantial
amounts of our common stock in the public market following this
7
<PAGE>
offering, the market price of our common stock and our publicly traded
warrants 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 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
- the 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 Commission may
decide that Internet-based telephone services should be subject to pay carrier
access charges on the same basis as traditional telecommunications companies.
8
<PAGE>
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.
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.
9
<PAGE>
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>
RECENT DEVELOPMENTS
On March 10, 1999, UStel, Inc. filed a voluntary petition for
bankruptcy under Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court, Western District of Washington. Since filing for
bankruptcy, UStel, Inc. had been in negotiations with various parties interested
in acquiring all or substantially all of its assets.
On April 7, 1999, we entered a preliminary agreement to acquire the
assets of UStel, Inc., a regional long-distance telecommunications company
headquartered in Seattle, Washington. In accepting our preliminary agreement
with UStel, the United States Bankruptcy Court conferred the status of
"preferred bidder and acquirer" on us. However, final approval of the
acquisition by the Bankruptcy Court is subject to three significant conditions.
Specifically, we must negotiate and execute the following agreements, all of
which must be deemed satisfactory to the Bankruptcy Court:
- a financing agreement with Goldman Sachs, LP, the senior secured
creditor, to provide us with all the funds necessary to purchase
UStel, and to operate UStel for at least the following year;
- an agreement with the wholesale long-distance carrier for UStel,
MCI WorldCom, which provides continued long-distance services
for a reasonable period of time; and
- commercial lease agreements which ensure uninterrupted
continuation of UStel business activities.
Because these conditions may never be realized, we cannot be sure that we will
be able to acquire the assets of UStel. Even if we succeed in acquiring the
assets of UStel, we may not succeed in integrating the acquired assets and
personnel. Further, we may not be able to retain acquired customers. See "Risk
Factors - We may not be able to compete in the local exchange and long-distance
telephone market" and "-- We are subject to risks associated with acquisitions."
DESCRIPTION OF SECURITIES
COMMON STOCK
The description of our common stock, $0.001 par value, is included in
our Registration Statement on Form 8-A, which was filed with the Securities and
Exchange Commission on August 14, 1996. We have incorporated our Registration
Statement on Form 8-A by reference.
In this prospectus, we are offering shares of our common stock upon
exercise of outstanding warrants. A description of the terms of these warrants
follows.
WARRANTS
IPO WARRANTS. In conjunction with our initial public offering in 1996,
we issued 1,365,000 warrants to purchase shares of our common stock. We refer to
these warrants as the "IPO Warrants." The exercise price and the number of
shares issuable upon exercise of the IPO Warrants are subject to adjustment to
prevent dilution in the event that we:
- sell shares of our common stock at a price less than the warrant
exercise price then in effect;
- sell options, rights, or warrants to purchase common stock or
other securities convertible into common stock at a price less
that the warrant exercise price;
- issue common stock as a dividend to common stockholders; or
- subdivide or combine the outstanding common stock into a greater
or lesser number of shares.
The IPO Warrants expire on September 5, 1999 and have a current exercise price
of $3.07 per share, after giving
11
<PAGE>
effect to dilution provisions. This prospectus covers the 1,479,019 shares of
our common stock issuable upon exercise of the remaining IPO Warrants, after
giving effect to dilution provisions.
Subject to prior approval under the securities law and regulations of
the states in which the IPO Warrant holders live, we have the right to redeem
the remaining IPO Warrants at $0.25 per warrant. Generally, we must notify IPO
Warrant holders in writing at least 30 days before the redemption date. However,
we can notify the IPO Warrant holders in as few as five days if we meet the
following conditions:
- our common stock is eligible to trade on Nasdaq; and
- the average closing bid price of our common stock equals or
exceeds $5.25 per share for any period of 20 consecutive days.
If we exercise our option to redeem the IPO Warrants at a time when the current
market price of our common stock exceeds the $3.07 per share exercise price of
the IPO Warrants, we believe that holders will exercise their IPO Warrants.
However, there is no assurance that we will receive any proceeds from the
warrants, including the IPO Warrants.
IPO UNIT WARRANTS AND UNDERWRITER IPO WARRANTS. In conjunction with our
initial public offering in 1996, we also issued 136,500 unit warrants to the
underwriter, Neidiger Tucker Bruner, Inc, and to certain affiliates of the
underwriter. Each unit warrant entitles the holder to purchase 136,500 units of
our securities, with each unit consisting of one share of common stock and one
common stock purchase warrant. We refer to these unit warrants as the "IPO Unit
Warrants" and to the common stock purchase warrants as "Underwriter IPO
Warrants." This prospectus covers:
- the 67,100 Unit Warrants that have not been previously sold
prior to the date of this prospectus;
- the 67,100 shares of common stock issuable upon exercise of the
remaining Unit Warrants; and
- the 103,310 shares of common stock issuable upon exercise of the
remaining Underwriter IPO Warrants.
The following table summarizes the terms of the Unit Warrants and the
Underwriter IPO Warrants.
<TABLE>
Type of Warrant Exercise Price Expiration Date
------------------------------- ----------------- -------------------
<S> <C> <C>
IPO Unit Warrants $4.20 September 5, 2001
Underwriter IPO Warrants $4.61 September 5, 2001
</TABLE>
The exercise price and the number of shares issuable upon exercise of the
Underwriter IPO Warrants are subject to adjustment to prevent dilution. Warrant
holders may exercise their Unit Warrants and Underwriter IPO Warrants by
redeeming outstanding warrants in lieu of paying the cash exercise price.
PRIVATE PLACEMENT WARRANTS. In conjunction with our 1997 private
placement, we issued warrants to purchase shares of our common stock. We refer
to these warrants as the "Private Placement Warrants. The exercise price and the
number of shares issuable upon exercise of the Private Placement Warrants are
subject to adjustment to prevent dilution. This prospectus covers the 257,371
shares of our common stock issuable upon exercise of the remaining Private
Placement Warrants, after giving effect to dilution provisions. The Private
Placement Warrants expire on June 13, 2000 and have an exercise price of $2.56
per share, after giving effect to dilution provisions.
PRIVATE PLACEMENT UNIT WARRANTS AND UNDERWRITER PRIVATE PLACEMENT
WARRANTS. In conjunction with our 1997 private placement, we issued 31,050 unit
warrants to the underwriter, Neidiger Tucker Bruner, Inc, and to certain
affiliates of the underwriter. Each unit warrant entitles the holder to purchase
31,050 units, with each unit consisting of two shares of common stock and one
common stock purchase warrant. We refer to these unit warrants as the "Private
Placement Unit Warrants" and to the common stock purchase warrants as
"Underwriter Private Placement Warrants." This prospectus covers:
12
<PAGE>
- the 53,800 shares of common stock issuable upon exercise of the
remaining Private Placement Unit Warrants; and
- the 31,473 shares of common stock issuable upon exercise of
the remaining Underwriter Private Placement Warrants.
The following table summarizes the terms of the Private Placement Unit Warrants
and the Underwriter Private Placement Warrants:
<TABLE>
Type of Warrant Exercise Price Expiration Date
- --------------------------------------- ---------------- -----------------
<S> <C> <C>
Private Placement Unit Warrants $1.90 June 13, 2002
Underwriter Private Placement Warrants $2.56 June 13, 2002
</TABLE>
The exercise price and the number of shares issuable upon exercise of the
Underwriter Private Placement Warrants are subject to adjustment to prevent
dilution. Warrant holders may exercise their Underwriter Private Placement
Warrants by redeeming outstanding warrants in lieu of paying the cash exercise
price.
HANSON WARRANTS. In March of 1998, we issued warrants to purchase
4,000,000 shares of our common stock to Douglas H. Hanson, our chairman and
chief executive officer. We refer to these warrants as the "Hanson Warrants."
Mr. Hanson has exercised Hanson Warrants to purchase 75,000 shares of our common
stock. This prospectus covers the remaining Hanson Warrants to purchase
3,925,000 shares of our common stock and the 3,925,000 shares of common stock
issuable upon exercise of the remaining Hanson Warrants. The Hanson Warrants
expire in September 1999 and have an exercise price of $1.90 per share.
BRIDGE LOAN WARRANTS. In conjunction with a bridge loan we received in
July 1998, we issued warrants to purchase 560,000 shares of our common stock to
our creditors. We refer to these warrants as the "Bridge Loan Warrants." The
Bridge Loan Warrants expire in July 2002. The following table summarizes the
Bridge Loan Warrants:
<TABLE>
Number of Shares Issuable Upon Exercise of
Bridge Loan Warrants
Exercise Price of ------------------------------------------------------
Bridge Loan Warrants Originally Issued Exercised Currently Outstanding
- -------------------- ----------------- --------- ------------------------
<S> <C> <C> <C>
$9.01 220,833 0 220,833
$0.01 339,167 40,298 298,869
</TABLE>
This prospectus covers 220,833 shares issuable at $9.01 per share and 247,500
shares issuable at $0.01 per share. An additional 91,667 shares are issuable to
one bridge loan creditor upon exercise of Bridge Loan Warrants at $0.01 per
share, but this bridge loan creditor did not receive registration rights.
USE OF PROCEEDS
We previously issued warrants to purchase 4,061,500 shares of our
common stock and 3,635,538 shares of common stock to the selling security
holders listed on pages 16-17. We will not receive any of the proceeds from
their sale of common stock or warrants by the selling security holders.
However, we have reserved an additional 6,209,695 shares of common
stock for issuance upon the exercise of outstanding warrants, without giving
effect to additional shares that may be issued pursuant to anti-dilution
provisions. We cannot be sure that warrant holders will exercise any of the
warrants that are currently outstanding and thus, we may not receive any
proceeds. The following table summarizes the net proceeds that we may receive
upon exercise of outstanding warrants:
13
<PAGE>
<TABLE>
Cashless Exercise Maximum Net
Warrants Provision Proceeds
--------------------------------------------- --------------------- ---------------------
<S> <C> <C>
IPO Warrants No $4,541,000
IPO Unit Warrants Yes 282,000
Underwriter IPO Warrants Yes 476,000
Private Placement Warrants No 659,000
Private Placement Unit Warrants Yes 102,000
Underwriter Private Placement Warrants Yes 81,000
Hanson Warrants No 7,458,000
Bridge Loan Warrants No 1,993,000
---------------------
Total $15,592,000
---------------------
---------------------
</TABLE>
As indicated in the table, the IPO Unit Warrants, Underwriter IPO Warrants,
Private Placement Unit Warrants and Underwriter Private Placement Warrants
provide for "cashless exercises." This allows the warrant holder to redeem
outstanding warrants or other Rocky Mountain Internet securities in lieu of
paying the cash exercise price. If warrant holders utilize their "cashless
exercise" option, we will not receive any proceeds. The "Maximum Net
Proceeds" column reflects the maximum proceeds that we would receive assuming
that all warrant holders pay cash to exercise their warrants and excludes
proceeds used to pay brokerage commissions. We are required to pay a five
percent commission to the underwriter, Neidiger Tucker Bruner, Inc., upon the
exercise of IPO Warrants and Private Placement Warrants. We have the right to
redeem the IPO Warrants at $0.25 per warrant. For a more detailed description
of the warrants, please refer to the "Description of Securities" section of
the prospectus on pages 11-13.
If we do receive proceeds from the exercise of warrants, we plan to use
the net proceeds for general corporate purposes, including:
- repaying our obligations as they become due;
- financing capital expenditures; and
- working capital.
Pending use of the net proceeds for any of these purposes, we may invest the net
proceeds in short-term investment grade instruments, interest-bearing bank
accounts, certificates of deposit, money market securities, U.S. government
securities or mortgage-backed securities guaranteed by federal agencies.
PLAN OF DISTRIBUTION
The common stock and warrants covered by this prospectus may be offered
and sold from time to time by the selling security holders, including in one or
more of the following transactions:
- on the Nasdaq National Market;
- in the over-the-counter market;
- in transactions 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;
- in connection with the writing of options, in hedge
transactions, and in settlement of other transactions in
standardized or over-the-counter options; or
14
<PAGE>
- in a combination of any of the above transactions.
The selling security holders may sell their shares and warrants at
prevailing market prices, at prices related to prevailing market prices, at
negotiated prices, or at fixed prices. If the selling security holders exercise
their warrants to purchase common stock, we will issue an appropriate amount of
common stock and cancel the underlying warrant upon:
- payment of the exercise price; or
- if the outstanding warrant authorizes "cashless exercise,"
receipt of outstanding warrants in lieu of a cash payment of the
exercise price.
Brokers and dealers that are used will either receive discounts or
commissions from the selling security holders, or will receive commissions from
the purchasers. We have agreed to indemnify the selling security holders against
liabilities, including liabilities arising under the Securities Act of 1933.
15
<PAGE>
SELLING SECURITY HOLDERS
The selling security holders listed below received common stock and
warrants to purchase common stock of Rocky Mountain Internet in connection with
prior securities offerings. The selling security holders listed below may use
this prospectus to sell their common stock, their warrants or the common stock
to be issued upon exercise of their warrants. The number of shares of common
stock has been adjusted to reflect anti-dilution clauses contained in warrant
agreements.
<TABLE>
Percentage of Common
Stock Beneficially
Securities Which Owned
May be Sold -------------------------
Pursuant to this Before After
Selling Security Holder Prospectus Offering Offering
- ------------------------------------------- ----------------------- -------------------------
<S> <C> <C> <C>
Douglas H. Hanson 5,430,000 Shares 41.3 3.3
3,925,000 Warrants
Metropolitan State College of Denver
Foundation, Inc. 50,000 Shares * *
Salvation Army 10,000 Shares * *
St. Anne's Episcopal School 10,000 Shares * *
Neidiger Tucker Bruner, Inc. 5,692 Shares * *
Eugene L. Neidiger 40,945 Shares * *
Charles C. Bruner 13,156 Shares * *
Robert L. Parrish 20,262 Shares * *
6,400 Warrants
J. Henry Morgan 22,201 Shares * *
7,200 Warrants
John J. Turk, Jr. 2,135 Shares * *
Carl A. Militello, Jr. 129,631 Shares 1.3 *
53,500 Warrants
James E. Tarrillion 39,625 Shares * *
Jeff Kavy 115,420 Shares 1.2 *
John E. Tarrillion 39,625 Shares * *
Jim Clausius 19,013 Shares * *
Roger Marino 79,250 Shares * *
Michael Carney 51,513 Shares * *
David Leider 104,610 Shares 1.1 *
Robert & Patricia Werts 15,850 Shares * *
Paul Davis 168,090 Shares 1.7 *
Burton Levy 87,175 Shares * *
MBM Young 53,855 Shares * *
Stephen Vento 15,850 Shares * *
Roswell and W. Monroe 15,850 Shares * *
Mark Buntzman 19,813 Shares * *
Kent Searl 7,925 Shares * *
Steven D. Brown 19,813 Shares * *
Ellen Brown 9,907 Shares * *
Sarah Brown 9,907 Shares * *
Applied Telecommunications
Technologies, Inc. 71,325 Shares * *
Dennis Cameron 7,925 Shares * *
William Preston 19,813 Shares * *
Michael Sanchez 25,125 Shares * *
Kent Hultquist 12,562 Shares * *
16
<PAGE>
Susan Weinkranz 10,000 Shares * *
Donald & Migon McElvaney 12,500 Shares * *
Frank & Lorraine Visciano 12,500 Shares * *
Cambridge Holdings 6,250 Shares * *
Gregory Pusey Investments 6,250 Shares * *
Schield Management Company 12,500 Shares * *
Caribou Bridge Fund LLC 17,500 Shares * *
Stuart Fullinwider 25,000 Shares * *
Jeremy J. Black 36,500 Shares * *
Kenneth Covell 15,000 Shares * *
John-Michael Keyes 15,000 Shares * *
Ronald Stevenson 68,202 Shares * *
Gregory A. Brown 19,164 Shares * *
Ronald Nicholl 17,182 Shares * *
Hare & Co. 24,978 Shares * *
Daffodil & Co. 152,487 Shares 1.5 *
Bear Stearns & Co. 11,000 Shares * *
Booth & Co. 9,073 Shares * *
Iceship 2,750 Shares * *
Mac & Co. 1,375 Shares * *
Indo Suez CM II, Inc. 45,833 Shares * *
INGBaring Furman Selz, LLC 175,000 Shares 1.7 *
ING (U.S.) Capital Corporation 45,833 Shares * *
Novazen Inc. 25,000 Shares * *
David M. Lalande 16,667 Shares * *
Mercier Family Trust 16,667 Shares * *
Timothy Guelker 2,732 Shares * *
WAMFAM 5 Inc. 2,186 Shares * *
Philip A. Reginelli 546 Shares * *
Kevin Jacobs 109 Shares * *
Clark & Co. f/a/o Costigan and
Wollrab 401(k) Kevin Jacobs Trust 273 Shares * *
William L. Galloway 273 Shares * *
David E. Weaver 273 Shares * *
David Wampler 164 Shares * *
Steve Osseck 4,098 Shares * *
Thomas Osseck, Sr. 546 Shares * *
James & Susan Smith, Joint Tenants 4,098 Shares * *
Thomas Kowa, Trustee under the
Jagger Steven Osseck Trust 683 Shares * *
Thomas Kowa, Trustee under the Jade Rene
Osseck Trust 683 Shares * *
</TABLE>
Douglas H. Hanson is the Chief Executive Officer and Chairman of the
Board of Directors of Rocky Mountain Internet. Neidiger Tucker Bruner, Inc.
acted as our managing underwriter in conjunction with our initial public
offering in 1996 and a private placement of securities in 1997. Eugene L.
Neidiger, Anthony B. Petrelli, Charles C. Bruner, Robert L. Parrish, J. Henry
Morgan, John J. Turk, Jr., Carl A. Militello, and Paul Davis are affiliates of
Neidiger Tucker Bruner, Inc. Jeremy J. Black serves as Vice President -
Infohiway of Rocky Mountain Internet. We lease switches and other
telecommunications equipment from Advanced Telecommunications Technologies, Inc.
None of the other selling security holders, nor their officers, directors and
major shareholders, has held any material relationship with Rocky Mountain
Internet or any of our affiliates within the past three years other than as an
owner of our common stock.
17
<PAGE>
LEGAL MATTERS
For the purposes of this offering, Hall & Evans, L.L.C., of Denver,
Colorado, has given its opinion as to the validity of the securities offered in
this prospectus. In addition, Brownstein Hyatt Farber & Strickland, P.C., of
Denver, Colorado, has passed upon certain legal matters with respect to the
securities offered in this prospectus.
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:
- Current Report on Form 8-K, filed April 19, 1999;
- Annual Report on Form 10-K for the fiscal year ended December
31, 1998; and
- 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.
18
<PAGE>
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.
19
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
----
<S> <C>
Risk Factors.............................................................. 2
Cautionary Note About Forward-Looking Statements.......................... 10
Recent Developments....................................................... 11
Description of Securities................................................. 11
Use of Proceeds........................................................... 13
Plan of Distribution...................................................... 13
Selling Stockholders...................................................... 16
Legal Matters............................................................. 18
Experts................................................................... 18
Where You Can Find More Information....................................... 18
</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 ("DGCL") or (iv) for any transaction from
which the director derived any improper personal benefit. If the DGCL
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 DGCL. 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
<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.
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
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 Hall & Evans, L.L.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 Hall & Evans, L.L.C. (included in Exhibit 5.01) **
24.01 Power of Attorney (12)
27.01 Financial Data Schedule (13)
</TABLE>
* Filed with this Post-Effective Amendment No. 3 to the Registrant's
Registration Statement on Form S-3 pursuant to Rule 401 (Reg. No.
333-52731).
** Previously filed.
<PAGE>
(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.
(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.
<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.
<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 21, 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>
NAME TITLE DATE
- ---- ---- ----
<S> <S> <C>
/s/ Douglas H. Hanson Chief Executive Officer and April 21, 1999
- ----------------------------------------- Chairman of the Board of Directors
Douglas H. Hanson (PRINCIPAL EXECUTIVE OFFICER)
/s/ Peter J. Kushar Chief Financial Officer and April 21, 1999
- ----------------------------------------- Treasurer (PRINCIPAL FINANCIAL
Peter J. Kushar OFFICER AND PRINCIPAL ACCOUNTING
OFFICER)
/s/ Mary Beth Vitale * President, Chief Operating Officer April 21, 1999
- ----------------------------------------- and Director
Mary Beth Vitale
/s/ D.D. Hock * Director April 21, 1999
- -----------------------------------------
D.D. Hock
/s/ Robert S. Grabowski * Director April 21, 1999
- -----------------------------------------
Robert S. Grabowski
/s/ Lewis J. Silverberg * Director April 21, 1999
- -----------------------------------------
Lewis J. Silverberg
</TABLE>
* by Douglas H. Hanson, attorney-in-fact
<PAGE>
EXHIBIT INDEX
<TABLE>
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 Hall & Evans, L.L.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 Hall & Evans, L.L.C. (included in Exhibit 5.01) **
24.01 Power of Attorney (12)
27.01 Financial Data Schedule (13)
</TABLE>
* Filed with this Post-Effective Amendment No. 3 to the Registrant's
Registration Statement on Form S-3 pursuant to Rule 401 (Reg. No.
333-52731).
** Previously filed.
<PAGE>
(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.
(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.
<PAGE>
Exhibit 23.01
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Post-Effective Amendment No. 3 to Form S-1
Registration Statement on Form S-3 - SEC Registration No. 333-52731) and
related Prospectus of Rocky Mountain Internet, Inc. for the registration of
shares of its common stock and common stock purchase warrants 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 22, 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., Post-Effective
Amendment No. 3 to Form S-1 Registration Statement on 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 22, 1999
