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As Filed with the Securities and Exchange Commission on February 11, 2000
Registration No.____________
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SECURITIES AND EXCHANGE COMMISSION
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RMI.NET, 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.)
999 EIGHTEENTH STREET, SUITE 2201
DENVER, COLORADO 80202
(303) 672-0700
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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ROCKY MOUNTAIN INTERNET, INC. 1998 EMPLOYEES' STOCK OPTION PLAN
ROCKY MOUNTAIN INTERNET, INC. 1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ROCKY MOUNTAIN INTERNET, INC. 1997 STOCK OPTION PLAN
MARY BETH VITALE EMPLOYMENT LETTER AGREEMENT
CHRISTOPHER J. MELCHER EMPLOYMENT LETTER AGREEMENT
MICHAEL D. DINGMAN, JR. EMPLOYMENT LETTER AGREEMENT
(Full Title of Plans)
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CHRISTOPHER J. MELCHER
RMI.NET, INC.
999 EIGHTEENTH STREET, SUITE 2201
DENVER, COLORADO 80202
(303) 672-0700
(Name, Address and Telephone Number, including Area Code, of Agent for Service)
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COPY TO:
JEFFREY M. KNETSCH
BROWNSTEIN HYATT & FARBER, P.C.
410 SEVENTEENTH STREET, 22ND FLOOR
DENVER, COLORADO 80202
(303) 223-1100
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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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 Price (1)
- ---------------------------------- ------------------ -------------------- ---------------------- -------------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 2,477,734 (2) $5.94 (2) $14,717,739 $3,885.48
Common Stock, $0.001 par value 104,666 (3) $9.5625 (3) $1,000,869 $264.23
Total 2,582,400 $4,149.71
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(1) Pursuant to Rule 416, RMI.NET, Inc. is also registering such
indeterminate number of shares of common stock that may be issuable
upon exercise of stock options by reason of stock splits, stock
dividends or similar transactions.
(2) Estimated in accordance with Rule 457(h) solely for the purpose of
calculating the registration fee on the basis of the weighted average
exercise price of $5.94 per share for outstanding options to purchase a
total of 2,477,734 shares of common stock. These options were
previously granted under the Rocky Mountain Internet, Inc. 1998
Employees' Stock Option Plan, the Rocky Mountain Internet, Inc. 1998
Non-Employee Directors' Stock Option Plan, the Rocky Mountain Internet,
Inc. 1997 Stock Option Plan, and three executive employment letter
agreements.
(3) Estimated in accordance with Rule 457(h) solely for the purpose of
calculating the registration fee on the basis of $9.5625 per share (the
average of the high and low prices of the Registrant's common stock as
reported on the Nasdaq National Market on February 8, 2000) for the
104,666 additional shares reserved for issuance under the 1998
Employees' Stock Option Plan and the 1998 Non-Employee Directors' Stock
Option Plan.
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EXPLANATORY NOTE
In accordance with the instructional Note to Part 1 of Form S-8 as
promulgated by the Securities and Exchange Commission, the information specified
by Part 1 of Form S-8 has been omitted from this Registration Statement on Form
S-8 for offers of Common Stock of RMI.NET, Inc. pursuant to the benefit plan
referred to herein. The resale prospectus filed as part of this Registration
Statement has been prepared in accordance with the requirements of Form S-3 and
may be used for reofferings and resales of registered shares of Common Stock
which may be issued in the future upon the exercise of options or other awards
granted under the Plan. Pursuant to Rule 429 under the Securities Act of 1933,
the resale prospectus contained in this Registration Statement also relates to
the resale of additional shares of common stock previously registered by the
Registrant pursuant to Registration Statements on Form S-8, as previously filed
with the Securities and Exchange Commission on January 7, 1997 and September 26,
1997.
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RESALE PROSPECTUS
RMI.NET, INC.
UP TO 2,582,400 SHARES OF COMMON STOCK
WHICH THE SELLING STOCKHOLDERS MAY RESELL UNDER THIS PROSPECTUS
You should read this resale prospectus carefully before you invest. The
stockholders of RMI.NET, Inc. listed in the "Selling Stockholders" section of
this resale prospectus may offer and resell up to 2,582,400 shares of our common
stock under this resale prospectus for their own accounts. RMI.NET, Inc. will
not receive any proceeds from the resale of these shares by the selling
stockholders.
We issued these shares to the selling stockholders under the Rocky
Mountain Internet, Inc. 1998 Employees' Stock Option Plan, the Rocky Mountain
Internet, Inc. 1998 Non-Employee Directors' Stock Option Plan, the 1997 Rocky
Mountain Internet, Inc. Stock Option Plan, and three executive employment letter
agreements. We changed our name from Rocky Mountain Internet, Inc. to RMI.NET,
Inc. in July of 1999. The stock option plans still carry the old corporate name.
The selling stockholders may offer their common stock through public or
private transactions, at prevailing market prices or at privately negotiated
prices. These future prices are not currently known.
RMI.NET common stock is traded on the Nasdaq National Market under the
symbol "RMII". On February 10, 2000, the last reported sale price for the common
stock on the Nasdaq National Market was $11.00 per share.
See "Risk Factors" beginning on page 2 to read about factors you should
consider before buying 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 February 11, 2000.
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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. In the first nine months of 1999, we incurred
a net loss of $12.7 million. As of September 30, 1999, we have an accumulated
deficit of $30.3 million. We may never be profitable.
In 1998, a proposed merger transaction with Internet Communications
Corporation and related financing transactions were 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 ADDITIONAL FUNDS, WE WILL NOT BE ABLE TO MAINTAIN OUR
CURRENT LEVEL OF OPERATIONS OR TO PURSUE GROWTH OPPORTUNITIES
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 COULD CAUSE OUR REVENUES AND MARKET
SHARE TO DECLINE
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 and 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;
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* local, regional, and national Internet service providers, such as
MindSpring, Earthlink, Network, Inc., Internet America, and
PSINet;
* 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.
IF WE ARE UNABLE TO COMPETE IN THE LOCAL EXCHANGE AND LONG-DISTANCE TELEPHONE
MARKET, OUR LIQUIDITY AND CAPITAL RESOURCES WILL BE ADVERSELY AFFECTED
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, 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. Numerous operating
complexities are 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 our
liquidity and capital resources.
IF WE FAIL TO KEEP PACE WITH TECHNOLOGICAL CHANGE AND EVOLVING INDUSTRY
STANDARDS, WE MAY LOSE CUSTOMERS
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
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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 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. If we fail to adapt our
Internet access business to new and faster access devices, we may lose customers
and our revenues will decline.
ANY DECLINE IN OUR MEMBER RETENTION LEVELS OR OUR PRICES WILL ADVERSELY AFFECT
OUR REVENUES AND PROFITABILITY
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, THE QUALITY OF OUR SERVICE WILL
DECLINE AND WE WILL LOSE CUSTOMERS
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.
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IF WE FAIL TO INTEGRATE RESOURCES ACQUIRED THROUGH ACQUISITIONS, WE WILL LOSE
CUSTOMERS AND OUR LIQUIDITY, CAPITAL RESOURCES, AND PROFITABILITY WILL BE
ADVERSELY AFFECTED
Since January 1999, we have acquired the stock or assets of 17
companies and may acquire a number of other companies 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;
* 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
* increasing amortization expenses related to goodwill and other
intangible assets.
Any of these factors could have a material adverse effect on our liquidity,
capital resources, and profitability.
IF WE ARE UNABLE TO OBTAIN SUFFICIENT NETWORK CAPACITY FROM OUR INTERNAL AND
LEASED NETWORK, OUR ABILITY TO GROW WILL BE SEVERELY CURTAILED
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.
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.
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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 INTERRUPT OUR SERVICE AND
ADVERSELY AFFECT OUR REVENUES
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 our revenues and profitablity.
OUR NETWORK IS SUBJECT TO SECURITY RISKS AND INAPPROPRIATE USE BY INTERNET USERS
THAT COULD INTERRUPT OUR SERVICE AND CAUSE A DECLINE IN OUR PROFITABILITY
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.
IF WE UNABLE TO DELIVER OUR SERVICES VIA TELECOMMUNICATIONS CARRIERS AND OTHER
SUPPLIERS, WE COULD EXPERIENCE SERVICE DELAYS AND INCREASED COSTS IN EXPANDING
OUR NETWORK
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
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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 RMI.NET. 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 RMI.NET, INC. WHICH MAY PREVENT YOU
FROM REALIZING A PREMIUM RETURN
Our chief executive officer, Douglas Hanson has a controlling interest
in RMI.NET, Inc. 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 RMI.NET, Inc. 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.
IF OTHER SECURITY HOLDERS SELL THEIR STOCK, THE MARKET PRICE OF RMI.NET COMMON
STOCK MAY FALL AND YOUR OWNERSHIP INTEREST COULD BE DILUTED
As of the date of this prospectus, we have 20,141,831 shares of common
stock outstanding. However, we have reserved approximately 7,300,000 additional
shares for issuance upon exercise of warrants and stock options, various
anti-dilution provisions contained in the warrants and stock options, and prior
acquisitions. If our stockholders sell substantial amounts of our common stock
in the public market following this 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
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converted, you may experience significant dilution in the market value of your
stock. Our stock price is highly volatile.
IF THE MARKET VALUE OF OUR STOCK DECLINES SIGNIFICANTLY, WE WILL BE FORCED TO
ISSUE A SUBSTANTIAL AMOUNT OF COMMON STOCK UPON EXERCISE OF CLASS B WARRANTS AND
YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION
In a December 1999 private placement, we issued 761,610 shares of
common stock, Class A Warrants to purchase 182,786 shares of common stock at an
exercise price of $9.85 per share, and Class B Warrants to purchase up to
2,828,693 additional shares of common stock at an exercise price of $0.01 per
share. The exact number of shares that may be issued under the Class B Warrants
is dependent upon the current market price of our common stock, as traded on the
Nasdaq National Market. If the market price of our common stock declines
significantly, we will be forced to issue up to 2,828,693 additional shares of
common stock, resulting in a 14% increase in the number of shares outstanding as
of February 11, 2000. Because the exercise price of the Class B Warrants, $0.01
per share, is significantly less than the current market value of RMI.NET common
stock, you could experience immediate and substantial dilution.
BECAUSE OUR STOCK PRICE IS HIGHLY VOLATILE, YOU MAY HAVE DIFFICULTY SELLING YOUR
STOCK
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 customers 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.
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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 the 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.
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 Federal
Telecommunications Act of 1996 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 RMI.NET, Inc. 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, technology export, and other
controls. Other federal Internet-related legislation has been introduced which
may limit commerce and discourse on the Internet. The Federal Communications
Commission 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 GROWTH POTENTIAL 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,
President and Chairman of the Board of Directors. The loss of Mr. Hanson or
other senior managers could have a materially detrimental effect on us. All
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 growth potential will
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. 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
address Year 2000 readiness issues could result in an interruption, or a
failure, of normal business activities or operations. Although we did not
experience any system failures on January 1, 2000, we remain concerned about the
potential for problems throughout the year. 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
9
<PAGE> 12
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.
We have established a program to coordinate appropriate activity to be
taken to address the Year 2000 issue. We have incurred approximately $200,000 of
expenses to implement our Year 2000 readiness program. However, we may have to
incur additional costs to address Year 2000 problems that surface throughout the
year, including problems associated with companies, systems, and products that
we may acquire. Acquisitions may cause actual costs of addressing the Year 2000
problem to significantly exceed our estimates and our business may be adversely
affected.
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:
o we may lose subscribers or fail to grow our subscriber base;
o we may not successfully integrate new subscribers or assets
obtained through acquisitions;
o we may fail to compete with existing and new competitors;
o we may not be able to sustain our current growth;
o we may not adequately respond to technological developments
impacting the Internet;
o we may fail to identify and correct a significant Year 2000
compliance problem and experience a major system failure;
o we may fail to settle outstanding litigation; and
o 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
10
<PAGE> 13
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."
With regard to Year 2000 issues, any reference to a Year 2000 issue
contained in this prospectus is a "Year 2000 Statement" and a "Year 2000
Readiness Disclosure," as defined in the Year 2000 Information and Readiness
Disclosure Act, signed into law by President Clinton on October 19, 1998 (Pub.
L. 105-271, 112 Stat. 2386).
SELLING STOCKHOLDERS
The selling stockholders acquired beneficial ownership of all the
shares offered for resale pursuant to this prospectus through stock options
granted under the 1998 Employees' Stock Option Plan, 1998 Employees' Stock
Option Plan, the 1998 Non-Employee Directors' Stock Option Plan, the 1997 Stock
Option Plan, and three executive employment letter agreements. The following
table shows:
* the name of each selling stockholder;
* how many shares the selling stockholder owns as of February 7,
2000;
* how many shares the selling stockholder can resell under this
prospectus; and
* assuming a selling stockholder sells the maximum number of shares
that may be resold pursuant to this prospectus, how many shares
the selling stockholder will beneficially own after completion of
the offering.
We may amend or supplement this prospectus from time to time in the future to
update or change this list of selling stockholders and shares that may be
resold.
<TABLE>
<CAPTION>
Number of Issued Maximum Number of
Shares Owned as of Shares that may be Shares Owned After
Selling Stockholder February 7, 2000 Resold in this Offering Offering(1)
- -------------------------------- ---------------------- ------------------------- ------------------------
<S> <C> <C> <C>
Douglas H. Hanson 5,856,115 191,385 5,856,115
Michael D. Dingman, Jr. -0- 220,000 -0-
David LaLande 67,857 50,000 67,857
Michael R. Mara 29,100 107,500 29,100
Chris J. Melcher -0- 159,400 -0-
John Viola -0- 55,000 -0-
D.D. Hock -0- 25,000 -0-
Mary Beth Vitale -0- 145,000 -0-
Robert W. Grabowski 4,800 10,000 4,800
Lewis H. Silverberg 15,000 10,000 15,000
</TABLE>
- -----------
(1) Other than Douglas H. Hanson, each selling stockholder will beneficially own
less than one percent of our outstanding common stock after the offering.
Douglas H. Hanson will own approximately 28.8 percent of our outstanding
common stock after the offering.
11
<PAGE> 14
PLAN OF DISTRIBUTION
The common stock covered by this prospectus may be offered and sold
from time to time by the selling stockholders or by their pledgees, donees,
transferees or other successors in interest, including in one or more of the
following transactions:
o on the Nasdaq National Market;
o in the over-the-counter market;
o in transactions other than on the Nasdaq National Market or in the
over-the-counter market;
o through brokers or dealers, or in direct transactions with
purchasers;
o in connection with short sales;
o by pledge to secure debts and other obligations;
o in connection with the writing of options, in hedge transactions,
and in settlement of other transactions in standardized or
over-the-counter options; or
o 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. There is no assurance that the selling stockholders will sell
any or all of their common stock. Brokers and dealers that are used will either
receive discounts or commissions from the selling stockholders, or will receive
commissions from the purchasers.
The selling stockholders may also elect to sell their shares pursuant
to Rule 144 under the Securities Act of 1933.
The selling stockholders may choose not to exercise any of their stock
options. However, if the selling stockholders do exercise their stock options,
we will issue an appropriate amount of common stock and cancel the underlying
stock options upon payment of the exercise price.
We have agreed to indemnify the selling stockholders against certain
liabilities, including liabilities arising under the Securities Act of 1933.
LEGAL OPINION
Christopher J. Melcher, Vice President and General Counsel of RMI.NET,
Inc., has given his opinion as to the validity of the shares offered by the
selling stockholders. As of February 7, 2000, Mr. Melcher beneficially owns
159,400 shares of RMI.NET common stock.
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
12
<PAGE> 15
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 RMI.NET 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:
o Annual Report on Form 10-K for the year ended December 31, 1998;
o 1999 Definitive Revised Proxy Statement;
o Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30, and September 30, 1999;
o Current Reports on Form 8-K (and amendments) initially filed
January 8, February 17, June 28, July 1, 8, and 19, and, August 26
and 30, September 14 and 15, December 6 and 9, 1999 and January 7,
2000; and
o 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
RMI.NET, 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. However, our web site
is not a part of this prospectus.
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
13
<PAGE> 16
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.
INDEMNIFICATION AND THE SEC'S POSITION ON ENFORCEABILITY
Section 145 of the Delaware General Corporation Law authorizes a court
to award, or a corporation's Board of Directors to grant, indemnity to directors
and officers. Under certain circumstances, this may include indemnification for
liabilities arising under the Securities Act of 1933 as well as for expenses
incurred in that regard. Our Certificate of Incorporation and Bylaws provide for
the indemnification of our present and former directors, officers, employees,
and agents to the maximum extent permitted by the Delaware General Corporation
Law. We have also entered into, or will enter into, indemnification agreements
with our officers and directors.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, or persons controlling us
pursuant to the foregoing provisions, we have been informed that, in the opinion
of the SEC, indemnification is against public policy as expressed in the
Securities Act of 1933 and is therefore unenforceable.
14
<PAGE> 17
TABLE OF CONTENTS
Page
------
Risk Factors............................................................ 2
Cautionary Note About Forward-Looking Statements........................ 10
Selling Stockholders.................................................... 11
Plan of Distribution.................................................... 12
Legal Opinion........................................................... 12
Experts................................................................. 12
Where You Can Find More Information..................................... 13
Indemnification and the SEC's Position on Enforceability................ 14
COMMON STOCK
$0.001 PAR VALUE
RMI.NET, INC.
PROSPECTUS
FEBRUARY 11, 2000
<PAGE> 18
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission are incorporated by reference into this Registration Statement:
o Annual Report on Form 10-K for the year ended December 31, 1998;
o 1999 Definitive Revised Proxy Statement;
o Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30, and September 30, 1999;
o Current Reports on Form 8-K (and amendments) initially filed
January 8, February 17, June 28, July 1, 8, and 19, and, August 26
and 30, September 14 and 15, December 6 and 9, 1999 and January 7,
2000; and
o the description of our common stock contained in our registration
statement on Form 8-A, filed August 14, 1996.
In addition, all documents filed by RMI.NET, Inc. (the "Company")
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934 after the date of this registration statement and prior to the filing of
a post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all such securities then remaining unsold,
shall be deemed to be incorporated in this registration statement by reference
and to be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
registration statement to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement.
The Company undertakes to provide without charge to each person who has
received a copy of a prospectus to which this registration statement relates,
upon the written or oral request of any such person, a copy of any or all the
documents that have been or may be incorporated by reference into this
registration statement, other than exhibits to such documents (unless such
exhibits are incorporated therein by reference). The Company further undertakes
to deliver or cause to be delivered to all participants who have an interest in
the Company's common stock through a Company sponsored stock option plan (and
any other participants who request such information orally or in writing) who do
not otherwise receive such material, copies of all reports, proxy statements,
and other communications distributed by the Company to its stockholders
generally, no later than the time such materials are first sent to its
stockholders.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Article 8 of the Company'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
<PAGE> 19
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 Company's by-laws provides, in general, that the
Company 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 Company, or, by reason
of the fact that such officer or director is or was serving at the request of
the Company as a director, officer, 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 Company 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 Company may also indemnify and
advance expenses to employees or agents who are not officers or directors of the
Company.
The Company 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 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.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The restricted securities not acquired under a registration statement
filed under the Act which are to be reoffered or resold pursuant to this
registration statement were originally issued by the Company to the Selling
Shareholders, who at the time of issuance were officers or key employees of the
Company, pursuant to the exemptions from registration provided by Sections 4(2)
of the Securities Act of 1933. Each of the Selling Shareholders had access to
adequate information prior to his purchase of stock as a result of a business
relationship with the Company. In addition, at the time of purchase, each
Selling Shareholder represented that he was acquiring such securities for his
own account for investment, without any present intention of selling or further
distributing the same.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- -------- -----------------------
<S> <C>
4.01 Amended and Restated Certificate of Incorporation (8)
4.02 Bylaws of Rocky Mountain Internet, Inc. (1)
4.04 1996 Employees' Stock Option Plan (2)
4.05 1996 Non-Employee Directors' Stock Option Plan (2)
4.06 Rocky Mountain Internet Inc. 1997 Non-Qualified Stock Option Plan (3)
4.07 1997 Stock Option Plan (4)
4.07.1 First Amendment to Non-Qualified Stock Option Agreement pursuant to the Rocky Mountain Internet, Inc.
1997 Stock Option Plan (5)
4.07.2 First Amendment to Incentive Stock Option Agreement pursuant to the Rocky Mountain Internet, Inc. 1997
Stock Option Plan (5)
4.08 Rocky Mountain Internet, Inc. 1998 Employees' Stock Option Plan (as amended) (6)
4.09 Rocky Mountain Internet, Inc. 1998 Non-Employee Directors' Stock Option Plan (7)
5.01 Opinion and Consent of Christopher J. Melcher, Esq., 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 Christopher J. Melcher, Esq. (included in Exhibit 5.01) *
</TABLE>
- --------------
* Filed herein.
(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 exhibits to the
Registrant's Initial Public Offering, as previously filed with the
Securities and Exchange Commission.
(3) Incorporated by reference to the Registrant's Registration
Statement on Form S-8, as previously filed with the Securities and
Exchange Commission on September 26, 1997.
(4) Incorporated by reference to the Definitive Proxy Statement
(Appendix A) on Schedule 14A, as previously filed with the
Securities and Exchange Commission on February 13, 1998.
(5) Incorporated by reference to 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.
(6) Incorporated by reference to the Registrant's Definitive Revised
Proxy Statement (Appendix), as previously filed with the Securities
and Exchange Commission on Schedule 14A on May 27, 1999.
(7) Incorporated by reference to the Definitive Proxy Statement
(Appendix C), as previously filed with the Securities and Exchange
Commission on Schedule 14A on February 13, 1998.
(8) Incorporated by reference from the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1999, as previously filed
with the Securities and Exchange Commission.
ITEM 9. 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
<PAGE> 20
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> 21
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-8 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 February 11, 2000.
RMI.NET, INC.
a Delaware corporation
By: /s/ Douglas H. Hanson
-------------------------------
Name: Douglas H. Hanson
Title: Chief Executive Officer,
President and Chairman of the
Board of Directors
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
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, President February 11, 2000
- ---------------------------------------- and Chairman of the Board of
Douglas H. Hanson Directors (Principal Executive
Officer)
/s/ Michael D. Dingman, Jr. Treasurer (Principal Financial February 11, 2000
- ---------------------------------------- Officer and Principal Accounting
Michael D. Dingman, Jr. Officer)
/s/ D.D. Hock Director February 11, 2000
- -----------------------------------------
D.D. Hock
/s/ Mary Beth Vitale Director February 11, 2000
- -----------------------------------------
Mary Beth Vitale
/s/ Robert S. Grabowski Director February 11, 2000
- -----------------------------------------
Robert S. Grabowski
/s/ Lewis H. Silverberg Director February 11, 2000
- -----------------------------------------
Lewis H. Silverberg
</TABLE>
<PAGE> 22
EXHIBIT INDEX *
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<S> <C>
5.01 Opinion and Consent of Christopher J. Melcher, Esq., 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 Christopher J. Melcher, Esq. (included in Exhibit 5.01).
</TABLE>
* Excludes exhibits incorporated by reference. For a list of exhibits
incorporated by reference, refer to "Item 8. Exhibits" above.
<PAGE> 1
EXHIBIT 5.01
LETTERHEAD OF RMI.NET, INC.
February 11, 2000
RMI.NET, Inc.
999 Eighteenth Street, Suite 2201
Denver, Colorado 80202
Re: Registration of Common Stock pursuant to Registration Statement on Form S-8
Ladies and Gentlemen:
I have acted as counsel to RMI.NET, 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-8
(the "Registration Statement"), of a public offering of up to 2,582,400 shares
of the Company's common stock, $0.001 par value (the "Shares"), issued or to be
issued under the Rocky Mountain Internet, Inc. 1998 Employees' Stock Option
Plan, the Rocky Mountain Internet, Inc. 1998 Non-Employee Directors' Stock
Option Plan, the Rocky Mountain Internet, Inc. 1997 Stock Option Plan and three
executive employment letter agreements. The Shares may be resold by the Selling
Stockholders identified in the "Selling Stockholders" section of the
Registration Statement.
In this capacity, I 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 and other
matters as I have deemed relevant and necessary as a basis for the opinion
hereinafter set forth.
In conducting our examination I 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, I am of the opinion
that the Shares, when issued and delivered against payment therefor, will be
legally and validly issued, fully paid, and non-assessable.
I hereby consent to the incorporation of this opinion into the
Registration Statement as Exhibit 5.1 thereto and to the reference to my opinion
under the heading "Legal Opinion" in the prospectus constituting a part of the
Registration Statement.
Very truly yours,
/s/ CHRISTOPHER J. MELCHER
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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-8) and to the incorporation by reference therein
of our report dated March 26, 1999, with respect to the consolidated financial
statements and schedule of RMI.NET, Inc., formerly known as 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
February 11, 2000
<PAGE> 1
EXHIBIT 23.02
CONSENT OF INDEPENDENT ACCOUNTANTS
Board of Directors
RMI.NET, Inc.
Denver, Colorado
We hereby consent to the incorporation by reference in this
Registration Statement of RMI.NET, Inc., Form S-8, of our report included in
Form 10-K, dated February 27, 1998, with respect to the balance sheet of
RMI.NET, 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
February 11, 2000
