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As Filed with the Securities and Exchange Commission on May 24, 2000
Registration No. 333-___________
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SECURITIES AND EXCHANGE COMMISSION
--------------------------
REGISTRATION STATEMENT ON
FORM S-4
UNDER
THE SECURITIES ACT OF 1933
--------------------------
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.)
CHRISTOPHER J. MELCHER
RMI.NET, 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, 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 securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this Form is a post-effective amendment filed pursuant to Rule 462(d) 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. [ ]
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
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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 Unit(1) Price
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<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 4,000,000 $3.34375 $13,375,000.00 $3,531.00
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
(2) Pursuant to Rule 429(b), an additional 207,613 unissued shares of
common stock are carried forward to this Registration Statement. These
shares were previously registered on Post-Effective Amendment Nos. 4
and 5 to the Registrant's Registration Statement on Form S-1, as filed
on Form S-4 pursuant to Rule 401 (Registration No. 333-52731).
Post-Effective Amendment Nos. 4 and 5 were filed with the Securities
and Exchange Commission on May 4 and June 17, 1999. The registration
fee was previously paid with the initial Registration Statement on Form
S-1, which was filed with the Securities and Exchange Commission on May
15, 1998.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
will thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a) may determine.
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The information in this prospectus is not complete and may be changed. We 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 MAY 24, 2000.
RMI.NET, INC.
4,207,613 SHARES OF COMMON STOCK
This prospectus will allow us to issue of common stock over time in
connection with the acquisition of other businesses. This means:
o we may issue up to 4,207,613 shares of common stock from time
to time;
o we will provide a prospectus supplement each time we issue
common stock;
o the prospectus supplement will inform you about the specific
terms of that offering and also may add, update, or change
information contained in this document; and
o you should read this document and any prospectus supplement
carefully before you accept our common stock as all or part
of the price paid for your business or your securities.
This prospectus will also be used under certain limited circumstances
in connection with the resale of common stock that was originally issued
pursuant to this prospectus. Other than the businesses, assets, or securities
acquired, we will not receive any proceeds from these offerings.
We will negotiate the price and other terms of the transactions with
the owners of the businesses, assets, or securities that we acquire or with
their representatives. We will not pay underwriting discounts or concessions,
although fees may be paid to persons who bring specific acquisitions to our
attention.
We may structure our acquisitions as:
o a merger with RMI.NET or a subsidiary of RMI.NET;
o a purchase of all the stock of the other business; or
o a purchase of the assets of the other business.
Our common stock is traded on the Nasdaq National Market under the
symbol "RMII." On May 23, 2000, the average of the high and low price for our
common stock was $3.34375 per share.
See "Risk Factors" beginning on page 3 to read about factors you should
consider before accepting our common stock as all or part
of the price paid for your business or your securities.
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 May ___, 2000.
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TABLE OF CONTENTS
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PAGE
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<S> <C>
Risk Factors............................................................................................ 3
Cautionary Note About Forward-Looking Statements........................................................ 14
Recent Developments..................................................................................... 15
Selected Consolidated Financial Information............................................................. 15
Description of Common Stock............................................................................. 16
Plan of Distribution - Acquisition Terms................................................................ 16
Selling Stockholders.................................................................................... 17
Plan of Distribution - Selling Stockholders............................................................. 17
Legal Opinion........................................................................................... 17
Experts................................................................................................. 18
Where You Can Find More Information..................................................................... 18
</TABLE>
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RISK FACTORS
You should carefully consider the risks described below before making
an investment decision.
YOU MAY BE RESTRICTED IN YOUR ABILITY TO RESELL YOUR COMMON STOCK
If you are an affiliate of a company we acquire or an affiliate of
RMI.NET, you may not resell common stock issued pursuant to this prospectus
unless:
o we allow you to use this prospectus to resell your shares; or
o you rely on an exemption from registration.
The exemption from registration provided by Rules 144 and 145 under the
Securities Act of 1933 allows you to resell your shares immediately if you
comply with certain manner of sale and volume limitations. In general, you may
resell your RMI.NET common stock if:
o we continue to file adequate current public information about
RMI.NET with the SEC; and
o the number of shares sold within the preceding three months
does not exceed the greater of one percent of our common
stock outstanding at the time of the sale and the average
weekly trading volume in our common stock on the Nasdaq
National Market during the four calendar weeks before the
sale.
In addition, you may resell your RMI.NET common stock under Rules 144 and 145,
without regard to the volume limitation described above, if:
o we continue to file adequate current public information about
RMI.NET with the SEC; and
o you are not an affiliate of RMI.NET; and
o have held your RMI.NET common stock for at least one year.
Finally, another exemption from registration provided by Rules 144(k) and 145
allows you to resell all of your RMI.NET common stock if:
o you have held your RMI.NET common stock for at least two
years; and
o you have not been an affiliate of RMI.NET for at least three
months before the sale.
The one and two year holding periods described above do not begin to run until
you have paid the full purchase price of the common stock to RMI.NET or an
affiliate of RMI.NET.
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, $10.7 million for
year ended December 31, 1998, and $24.9 million for the year ended December 31,
1999. In the first quarter of 2000, we incurred a net loss of $7.4 million. As
of March 31, 2000, we have an accumulated deficit of $50.0 million. We may
never be profitable.
In 1998, a proposed merger transaction with Internet Communications
Corporation and related financing transactions were terminated. On March 17,
2000 we again reached an agreement to acquire Internet Communications
Corporation. However, claims by third parties unrelated to Internet
Communications Corporation
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allegedly arising from the terminated 1998 merger remain outstanding. We have
not agreed that we are responsible for these claims and have consistently
disputed their validity. 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
resolution of these disputes that is satisfactory to all parties, we may be
unable to reach an agreement with all parties. 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 customer 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 customer 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:
o fund growth, operating losses, and increased expenses;
o implement our acquisition strategy;
o 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
o 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.
WE FACE INTENSE COMPETITION, AND IF WE ARE UNABLE TO COMPETE EFFECTIVELY, WE
MAY LOSE MARKET SHARE OR BE FORCED TO REDUCE PRICES
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:
o established online services, such as America Online, the
Microsoft Network, CompuServe, and Prodigy;
o local, regional, and national Internet service providers,
such as Earthlink, Network, Internet America, PSINet, and
Verio;
o national telecommunications companies, such as AT&T Corp.,
MCI WorldCom, Sprint, and GTE;
o regional Bell operating companies, such as BellSouth and SBC
Communications;
o computer hardware and software companies, such as
International Business Machines and Microsoft Corporation;
and
o online cable services, such as At Home and Roadrunner.
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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 PROFITABILITY WILL BE ADVERSELY AFFECTED
In 1998, we entered the long distance telephone market. We 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 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 must develop new
products, services, and systems and 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.
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 customer needs, and
frequent new service and product introductions. Our future success depends, in
part, on our ability to:
o use leading technologies to develop our technical expertise;
o enhance our existing services; and
o develop new services that meet changing customer needs on a
timely and cost-effective basis.
In particular, we must provide customers 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 have
developed cable television modems and other "broadband technologies" that
transmit data at substantially faster speeds than the modems that our customers
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.
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ANY DECLINE IN OUR CUSTOMER RETENTION LEVELS OR OUR PRICES WILL ADVERSELY
AFFECT REVENUES AND PROFITABILITY
Our new customer acquisition costs are substantial relative to the
monthly fees we charge. Accordingly, our long-term success largely depends on
our retention of existing customers. While we continue to invest significant
resources in our infrastructure and technical and customer support
capabilities, it is relatively easy for Internet users to switch to competing
providers. Consequently, our investments may not help customer retention. Any
significant loss of customers 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.
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:
o closely monitor service quality, particularly through third
party POPs;
o acquire and install necessary equipment and
telecommunications facilities;
o create and implement marketing strategies in new and existing
markets;
o employ qualified personnel to provide technical and marketing
support for new sites; and
o 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 are unable to manage our growth, our ability to maintain and
increase our customer base will be impaired and our business will suffer.
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 16
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 customer accounts. Acquisitions often involve a
numberof special risks, including the following:
o we may experience difficulty integrating acquired operations
and personnel;
o we may be unable to retain acquired customers;
o the acquisition may disrupt our ongoing business;
o we may not be able to successfully incorporate acquired
technology and rights into our service offerings and maintain
uniform standards, controls, procedures, and policies;
o the businesses we acquire may fail to achieve the revenues
and earnings we anticipated;
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o we may ultimately be liable for contingent and other
liabilities, not previously disclosed to us, of the companies
that we acquire; and
o 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:
o causing us to incur additional debt;
o increasing amortization expenses related to goodwill and
other intangible assets; and
o diluting your ownership interest.
Any of these factors could have a material adverse effect on our business.
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:
o particular dial-up POPs affecting only customers attempting
to use that particular point of presence; and
o system wide services, such as e-mail and news services, which
can affect all customers.
Capacity constraints result in slowdowns, delays, or inaccessibility when
customers try to use a particular service. Poor network performance could cause
customers to terminate their service 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 customer
requirements on a timely basis or at a commercially reasonable cost.
In order to provide Internet access and other online services to our
customers, we lease access 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 access to our customers through PSINet's 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 customers' 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. Because we lease our lines from 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
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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 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
customers 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 customers. Our customers, in turn, could terminate
their service or assert claims against us. Third parties could also potentially
jeopardize the security of confidential information stored in our computer
systems or our customers' computer systems by their inappropriate use of the
Internet, which could cause losses to our customers 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
customers, which could have a material adverse effect on our business. In
addition, we expect that our customers 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, or
completed with compromised security. As a result, customers 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 customers may inhibit the growth of the Internet service
industry in general and our customer base and revenue in particular.
IF WE ARE UNABLE TO DELIVER OUR SERVICES VIA THIRD PARTY 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 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., Sun Microsystems, 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 customers 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.
TO PROTECT OUR PROPRIETARY RIGHTS OR TO AVOID CLAIMS THAT WE INFRINGE THE
PROPRIETARY RIGHTS OF OTHERS, WE MAY BE FORCED TO INCUR SUBSTANTIAL COSTS AND
TO DIVERT VALUABLE MANAGERIAL RESOURCES AWAY FROM OUR BUSINESS OPERATIONS
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.
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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 ON YOUR INVESTMENT
Our CEO, President, and Chairman of the Board of Directors, Douglas
Hanson has a controlling interest in RMI.NET, Inc. through his direct ownership
of common stock, ability to exercise outstanding 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.
FUTURE ISSUANCE OF OUR COMMON STOCK PURSUANT TO STOCK OPTION PLANS AND EXERCISE
OF WARRANTS WILL DILUTE YOUR OWNERSHIP INTEREST, AND THE SALE OF SUCH SHARES
MAY NEGATIVELY AFFECT OUR STOCK PRICE
As of May 24, 2000, we have approximately 21,600,695 shares of common
stock outstanding, and have reserved approximately 5.7 million 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, 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. In
addition, we expect to issue warrants to purchase approximately 2.4 million
shares of common stock in connection with the proposed acquisition of Internet
Communications Corporation. Finally, 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.
OUR OUTSTANDING CLASS B WARRANTS COULD RESULT IN SUBSTANTIAL DILUTION OF YOUR
INVESTMENT, A DETRIMENTAL EFFECT ON OUR LIQUIDITY AND ABILITY TO RAISE
ADDITIONAL CAPITAL, AND A SIGNIFICANT DECLINE IN THE VALUE OF OUR COMMON STOCK
In a December 1999 private placement, we sold the following securities
to two institutional investors, Advantage Fund II Ltd. and Koch Investment
Group Limited, for aggregate consideration of $10 million:
o 761,610 shares of common stock;
o Class A Warrants to purchase 182,786 shares of common stock;
and
o Class B Warrants to purchase a potentially unlimited number
of shares of common stock.
The outstanding Class B Warrants carry certain risks, including the potential
for:
o substantial dilution of your investment in RMI.NET;
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o a detrimental effect on our ability to raise additional
funds; and
o a decline in the market value of our common stock as a result
of the exercise of the Class B Warrants and subsequent sales
of the common stock.
Each of these risks is discussed in greater detail below.
IF THE MARKET VALUE OF OUR COMMON STOCK DECLINES, WE MAY ISSUE A SUBSTANTIAL
AMOUNT OF COMMON STOCK UPON EXERCISE OF CLASS B WARRANTS AND YOU WILL
EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION
The number of shares that we may issue to holders of RMI.NET's Class B
Warrants is based on the market price of our common stock from May 2000 through
November 2002. In effect, the holders of the Class B Warrants have the
opportunity to profit from a rise in the market price of our common stock, if
any, without incurring the full risk of loss associated with a decline in our
stock price. If the market price of our common stock decreases, we will issue a
greater number of shares upon exercise of the Class B Warrants. There is
theoretically no limit on the number of shares of common stock that we may be
required to issue upon exercise of the Class B Warrants. Your percentage
ownership of our common stock could be diluted substantially. Moreover, because
the exercise price of the Class B Warrants is only $0.01 per share, we will not
receive material cash proceeds from the exercise of the Class B Warrants.
The following chart sets forth the maximum number of shares of common
stock we would issue upon full exercise of the Class B Warrants, assuming that:
o the market price of the common stock decreases to 100%, 75%,
50%, and 25% of the closing price of our common stock on May
5, 2000 ($5.00 per share) at any time over the next two and
one-half years, and stays at that level through November 20,
2002; and
o the selling stockholders do not sell any of their common
stock until after November 20, 2002.
<TABLE>
<CAPTION>
MAXIMUM NUMBER OF SHARES ISSUABLE UPON
EXERCISE OF CLASS B WARRANTS AT $0.01 PER
SHARE PERCENTAGE OF OUTSTANDING
MARKET PRICE PER SHARE (THROUGH NOVEMBER 2002) SHARES(1)
------------------------------ ------------------------------------------- ---------------------------
<S> <C> <C>
$5.00 - 100% of closing
price on 5/5/2000 1,629,104 7.0%
$3.75 - 75% of closing price
on 5/5/2000 2,426,009 10.1%
$2.50 - 50% of closing price
on 5/5/2000 4,019,818 15.6%
$1.25 - 25% of closing price
on 5/5/2000 8,801,246 28.9%
</TABLE>
------------------------------
(1) Assumes that all shares to be issued upon exercise of Class B
Warrants are outstanding as of May 5, 2000.
Sales of common stock by holders of Class B Warrants prior to November 2002
will reduce the number of shares issuable upon exercise of the Class B
Warrants.
10
<PAGE> 12
THE EXISTENCE OF OUR CLASS B WARRANTS MAY HINDER OUR ABILITY TO RAISE
ADDITIONAL CAPITAL
Because of the potential for dilution, as outlined above, we may find
it more difficult to raise additional equity capital while the Class B Warrants
are outstanding. Sources of equity capital may be reluctant to provide needed
operating capital, which could have an adverse affect on our ability to finance
growth opportunities and on our liquidity.
IF INSTITUTIONAL INVESTORS SELL LARGE VOLUMES OF THEIR COMMON STOCK WITHIN A
SHORT PERIOD OF TIME, INCLUDING SHARES TO BE ISSUED UPON EXERCISE OF THEIR
CLASS B WARRANTS, THE VALUE OF OUR COMMON STOCK MAY DECLINE
If the institutional investors sell large volumes of their common
stock within a relatively short period of time, the market price of our common
stock may decrease and allow the institutional investors to convert their Class
B Warrants into a greater amount of our common stock. Further sales of the
common stock issued upon exercise of the Class B Warrants could cause even
greater declines in the price of our common stock. Although holders of the
Class B Warrants are restricted in their ability to engage in short sales and
similar transactions, the downward pressure on the market price caused by
exercise of Class B Warrants and sale of the underlying common stock could
encourage short sales by other investors and further undermine the value of our
common stock.
IF THE NUMBER OF SHARES ISSUABLE UPON EXERCISE OF THE CLASS B WARRANTS EXCEEDS
20% OF THE NUMBER OF SHARES OUTSTANDING BEFORE THE DECEMBER 1999 PRIVATE
PLACEMENT, WE MAY BE REQUIRED TO SEEK STOCKHOLDER APPROVAL OF THE CLASS B
WARRANT SHARES
Under the rules of the Nasdaq Stock Market, we are required to obtain
stockholder approval for the issuance of common stock upon exercise of the
Class B Warrants if the number of shares issuable upon exercise of the Class B
Warrants equals or exceeds 20% of the number of shares of common stock
outstanding before the Class B Warrants were issued. On the date the Class B
Warrants were issued, we had 18,865,448 shares of common stock outstanding.
Thus, we will be able to issue 3,773,089 shares upon exercise of Class B
Warrants without obtaining stockholder approval.
However, the terms of the Class B Warrants are structured so that we
will comply with Nasdaq's 20% limitation even if we are unable to obtain
stockholder approval. If the market price of our common stock declines and we
would need to otherwise issue common stock in excess of the Nasdaq 20%
limitation, we would then have the option of either:
o seeking stockholder ratification of shares to be issued upon
exercise of the Class B Warrants before issuing the
underlying common stock; or
o instead of issuing the common stock, pay a redemption fee
equal to 120% of the average market value of the unissued
common stock over a five-day period immediately preceding the
holder's request for redemption.
Redemption of the underlying common stock that cannot be issued due to the
Nasdaq limitation at a 20% premium could severely diminish our working capital
and harm our ability to raise additional capital. Furthermore, if we are unable
to obtain stockholder approval and we are deemed to have issued 20% or more of
our outstanding common stock in connection with the exercise of Class B
Warrants, we may be required to delist our shares from the Nasdaq National
Market.
THE PRICE OF OUR COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY, WHICH COULD LEAD TO
LOSSES FOR INDIVIDUAL INVESTORS AND COULD DAMAGE OUR REPUTATION AND LEAD TO
COSTLY AND TIME CONSUMING SECURITIES CLASS ACTION LITIGATION
Our financial results may fluctuate significantly because of several
factors, many of which are beyond our control. These factors include:
o costs associated with gaining and retaining customers and
capital expenditures for upgrading our systems and
infrastructure;
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<PAGE> 13
o timing and market acceptance of new and upgraded Internet
service introductions, technologies, and services by us and
our competitors;
o loss of customers and seasonal fluctuations in demand for our
services;
o downward pressure on prices due to increased competition;
o changes in our operating expenses, including
telecommunications costs; and
o the effect of potential acquisitions.
Historically, 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.
In the past, there have been class action lawsuits filed against
companies after periods of fluctuations in the market price of their
securities. If we were subject to this type of litigation, it would be a strain
on our personnel and financial resources, and divert management's attention
from running our company. Litigation could also negatively affect our public
image and reputation.
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 FACE POTENTIAL COSTS AND LIABILITY IN CONNECTION WITH THE INFORMATION WE
HOST AND THAT IS DISSEMINATED THROUGH OUR NETWORK
We are not currently subject to direct federal, state, or local
government regulation, other than regulations applicable to businesses
generally. There currently is only a small body of laws and regulations
directly applicable to the provision of access to or commerce services on the
Internet. For example, in late 1998, Congress enacted the Digital Millennium
Copyright Act, which includes a limitation on liability of on-line service
providers for copyright infringement for transmitting, routing, or providing
connections, storage or caching of data at the direction of a user. This
limitation on liability applies if the service provider has no actual knowledge
that the particular data infringed on third party intellectual property rights
and if certain other conditions are met. Because this law is relatively new, we
are not sure how it will be applied to limit any liability that we may face in
the future for possible copyright infringement-related issues that arise in
connection with the services we provide. This law also requires that service
providers follow certain notice and take-down procedures with respect to
allegedly infringing materials in order to take advantage of the limitation on
liability provided by the Digital Millenium Copyright Act. We are in the
process of implementing these sorts of procedures across our operations.
Certain provisions of the Communications Decency Act, which imposes criminal
penalties for using an interactive computer service for transmitting obscene or
indecent communications, have been found unconstitutional by the U.S. Supreme
Court. Other federal legislation that was enacted to require limitations on
access to pornography and other material deemed harmful to minors was
determined to violate the First Amendment, but that decision is on appeal. We
are unable to predict the outcome of this appeal or whether other similar
legislation will be enacted or enforced. In addition, the Federal Trade
Commission adopted final rules, effective April 21, 2000, regarding the
Children's Online Privacy Protection Act's prohibition of unfair and deceptive
acts and practices in connection with the collection and use of personal
information from and about children on the Internet. The rules provide that Web
sites directed at children under 13 years of age must obtain verifiable
parental consent before collecting personal
12
<PAGE> 14
information from children and must take other measures intended to safeguard
children's privacy. Additional requirements may be imposed on Web site
operations relating to the use, dissemination, and collection of personal
information. We have adopted a standard acceptable use policy that applies to
all of our customers and that prohibits them from posting, transmitting, or
storing material on or through our services that we determine to be in
violation of third party intellectual property rights. Our acceptable use
policy also imposes other restrictions on our customers in connection with the
use of our services, including prohibitions on illegal activity or other
activity that is destructive or potentially destructive to our business or
reputation or to our customers. We initially designed and continue to evolve
our acceptable use policy to promote the security, reliability, and privacy of
our systems and network. However, we cannot assure you that our policy will
accomplish this goal or shield us from liability under the Digital Millennium
Copyright Act or otherwise with respect to the activities of, or the content
hosted or transmitted by, our customers or other Internet users.
Because of the increased popularity and use of the Internet, it is
likely that a number of additional laws and regulations may be adopted at the
federal, state, and local levels, governing such issues as user privacy,
freedom of expression, pricing, taxation, advertising, intellectual property
rights, information security, and the convergence of traditional
telecommunications services with on-line services and Internet communications.
Legislation addressing such things as on-line security, privacy, mass
unsolicited commercial e-mail messages, and the regulation of sales of
products, such as pharmaceuticals, firearms, drug paraphernalia, and gambling,
is proposed regularly in many states and in Congress. The implementation of any
such legislation could result in direct or indirect regulation of on-line
service providers generally, including us. In that case, it is likely that we
would have to implement additional policies and procedures designed to assure
our compliance with the particular legislation.
The imposition on Internet service providers or Web hosting providers
of potential liability for materials carried on or disseminated through their
systems could require us to implement measures to reduce our exposure to such
liability. These measures may require that we spend substantial resources or
discontinue certain product or service offerings. Any of these actions could
have a material adverse effect on our business, financial condition and results
of operations. Further, the adoption of such laws and regulations might
decrease growth of the Internet generally, which in turn could negatively
impact our business. In addition, applicability to the Internet of existing
laws governing such things as property ownership, intellectual property rights,
taxation, obscenity, defamation, libel, and personal property is uncertain.
Because so many of the existing laws on these topics were adopted prior to the
advent of the Internet and related technologies, they do not contemplate,
address, or readily apply to the unique issues that the Internet and its use
create.
The law relating to the regulation and liability of Internet access
providers in relation to information carried or disseminated is also developing
in other countries. For example, the European Union has enacted its own data
privacy regulations, and Australia has imposed new obligations on Internet
service providers to block access to certain types of content. Decisions, laws,
regulations, and other activities regarding regulation and content liability
may significantly affect the development and profitability of companies
offering on-line and Internet access services.
We carry an errors and omissions insurance policy. This insurance may
not be adequate or available to compensate us for all liability that may be
imposed.
OUR INTERNET ACCESS OPERATIONS MAY BECOME SUBJECT TO BURDENSOME GOVERNMENT
REGULATION, WHICH COULD DECREASE OUR REVENUES AND INCREASE OUR COSTS
Although as an Internet access provider we are not currently subject
to direct federal governmental regulation other than regulations applicable to
businesses generally, changes in the regulatory environment relating to the
Internet connectivity market could affect our business, financial condition,
and results of operations. For example, regulations at the Federal
Communications Commission require discounted Internet connectivity rates for
schools and libraries. Due to the increasingly widespread use of the Internet
for the hosting, use, and transmission of content, it is likely that additional
laws and regulations will be adopted at the federal, state, and local level,
especially that is content related, that will apply directly or indirectly to
us. For example, legislation concerning unsolicited commercial e-mail messages,
on-line gambling, on-line sales of pharmaceuticals, drug paraphernalia, and
other illegal or controlled goods and services, privacy, libel, intellectual
property protection and infringement, technology
13
<PAGE> 15
export, and other controls is pending and, in some cases, has been adopted in
various states as well as at the federal level. We may be subject to similar or
other laws and regulations in non-U.S. jurisdictions.
Moreover, the Federal Communications Commission continues to review
its regulatory position on the usage of the basic network and communications
facilities by Internet service providers. Although the Federal Communications
Commission determined that Internet service providers should not be treated as
telecommunications carriers and, therefore, need not be regulated, in an April
1998 report, the regulatory status of Internet service providers remains
uncertain. Indeed, in its 1998 report, the Federal Communications Commission
concluded that certain services offered over the Internet, such as
phone-to-phone Internet protocol telephony, may be functionally
indistinguishable from traditional telecommunications service offerings and
their non-regulated status may have to be re-examined.
Changes in the regulatory structure and environment affecting the
Internet access market, including regulatory changes that directly or
indirectly affect telecommunications costs or increase the likelihood of
competition from regional bell operating companies or other telecommunications
companies, could adversely affect us. Although the Federal Communications
Commission has decided not to allow local telephone companies to impose
per-minute access charges on Internet service providers, and that decision has
been upheld by a reviewing court, further regulatory and legislative
consideration of this issue is likely. In addition, some telephone companies
are seeking relief through the Federal Communications Commission and state
regulatory agencies. Such rules, if adopted, are likely to have a greater
impact on consumer-oriented Internet access providers than on business-oriented
Internet service providers such as us. Nonetheless, the imposition of access
charges would affect our costs of serving dial-up customers and could have a
material adverse effect on our business, financial condition, and results of
operations.
IF WE ARE UNABLE TO RETAIN KEY EXECUTIVES, OUR GROWTH POTENTIAL AND OPERATING
RESULTS 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 business could 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 customer base;
o we may not be able to sustain our current growth or to
successfully integrate new customers or assets obtained
through acquisitions;
14
<PAGE> 16
o we may fail to compete with existing and new competitors;
o we may not adequately respond to technological developments
impacting the Internet;
o we may fail to implement proper security measures to protect
our network from inappropriate use, which could overload our
network's capacity and cause us to experience a major system
failure;
o we may issue a substantial number of shares of our common
stock upon exercise of Class B Warrants, especially if the
market value of our stock declines, thereby causing
significant dilution in the value of your investment;
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 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."
RECENT DEVELOPMENTS
We have submitted the following proposals to our shareholders at our
2000 Annual Meeting of Stockholders, which is scheduled for June 15, 2000:
o the election of five directors;
o approval of the change of our name from "RMI.NET, Inc." to
"Internet Communications Company, Inc., subject to completion
of our proposed acquisition of Internet Communications
Corporation;
o adoption of the RMI.NET, Inc. 2000 Employees' Stock Option
Plan;
o adoption of the RMI.NET, Inc. Employees' Stock Purchase Plan;
and
o ratification of the appointment of Ernst & Young LLP as our
independent auditors;
Each of the proposals is described in detail in our definitive proxy statement,
which was filed with the Securities and Exchange Commission on May 1, 2000 and
has been incorporated by reference.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following is a summary of selected consolidated financial data as
of and for the five years ended December 31, 1999. This data should be read in
conjunction "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our Consolidated Financial Statements and the Notes
thereto, which are included in our Annual Report on Form 10-K and are
incorporated by reference in this document.
15
<PAGE> 17
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues ........................ $ 30,122,004 $ 10,087,015 $ 6,127,111 $ 3,281,579 $ 1,179,325
Operating loss .................. (24,545,868) (10,478,162) (3,800,706) (2,281,194) (108,522)
Net loss ........................ (24,927,652) (10,668,802) (4,152,853) (2,342,571) (128,794)
Basic and diluted loss per
share ....................... (1.83) (1.39) (0.79) (1.03) (0.07)
BALANCE SHEET DATA:
Cash and cash equivalents ....... $ 11,238,188 $ 5,729,346 $ 1,053,189 $ 348,978 $ 274,661
Investments ..................... -- -- -- 1,356,629 --
Working capital (deficit) ....... 2,004,051 1,986,513 (209,003) 370,884 (186,865)
Total assets .................... 70,719,030 24,681,801 5,082,119 5,540,167 924,603
Long term debt and capital lease
obligations ................. 2,222,373 493,963 904,627 1,134,380 904,627
Redeemable, Convertible
Preferred Stock ............. -- 6,747,843 -- -- --
Total stockholders' equity
(deficit) ................... 54,445,345 11,817,614 2,083,370 2,317,437 (169,036)
</TABLE>
DESCRIPTION OF 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.
PLAN OF DISTRIBUTION - ACQUISITION TERMS
We will offer and issue our common stock from time to time in
connection with our acquisition of other businesses, assets, or securities. We
expect that:
o terms of the acquisitions involving the issuance of common
stock covered by this prospectus will be determined by direct
negotiations with the owners of the businesses, assets, or
securities that we acquire or with their representatives; and
o the common stock will be issued at prices reasonably related
to the market price of the common stock either at the time an
agreement is entered into or at or about the time the
securities will be delivered.
While we do not expect to pay underwriting discounts or commissions, we may pay
a finder's fee from time to time with respect to specific mergers or
acquisitions.
Regardless of the method we use to distribute the common stock, we
will provide a prospectus supplement that will disclose:
o the material terms of the acquisition, including the number
of shares issued and the consideration received;
o the amount of any compensation received by any finders,
dealers, or agents; and
o the terms of any indemnification provisions, including
indemnification from liabilities under the federal securities
laws.
16
<PAGE> 18
SELLING STOCKHOLDERS
Some of the persons who receive securities from us pursuant to
acquisitions covered by this prospectus may be required to use this prospectus
to register the resale of their common stock. We refer to these individuals as
the "selling stockholders." However, no selling stockholder will be authorized
to use this prospectus or a supplement to this prospectus without first
obtaining our consent. We may restrict the selling stockholders' right to use
this prospectus. In particular, we may restrict the time period in which
selling stockholders may use this prospectus and the number of shares of common
stock that selling stockholders may offer pursuant to this prospectus. We may
also impose other limitations and conditions in the agreements we negotiate
with the owners of the businesses, assets or securities that we acquire or with
their representatives. We will identify the selling stockholders and the number
of shares that they can sell in a prospectus supplement.
PLAN OF DISTRIBUTION - SELLING STOCKHOLDERS
With our permission, selling stockholders may use this prospectus and
a prospectus supplement to resell their common stock from time to time,
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, dealers, or market makers, or in direct
transactions with purchasers;
o in connection with long or 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 security holders may sell their common stock at prevailing market
prices, at prices related to prevailing market prices, at negotiated prices, or
at fixed prices.
Brokers and dealers that are used will either receive discounts or
commissions from the selling stockholders, or will receive commissions from the
purchasers. The selling stockholders may be deemed to be underwriters within
the meaning of the Securities Act of 1933. We may agree to indemnify the
selling stockholders against liabilities, including liabilities arising under
the Securities Act of 1933.
LEGAL OPINION
For the purposes of this offering, 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 May 24, 2000,
Mr. Melcher beneficially owns 18,000 shares of RMI.NET common stock.
17
<PAGE> 19
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule as of December 31, 1999 and 1998 and for each
of the two years in the period ended December 31, 1999 included in our Annual
Report on Form 10-K for the year ended December 31, 1999, as set forth in their
report, which is incorporated by reference in this prospectus and elsewhere in
the registration statement. Baird, Kurtz & Dobson, independent accountants,
have audited our consolidated financial statements and schedule for the year
ended December 31, 1997 included in our Annual Report on Form 10-K for the year
ended December 31, 1999, 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 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:
o Annual Report on Form 10-K for the year ended December 31,
1999;
o Quarterly Report on Form 10-Q for the quarter ended March 31,
2000;
o Current Reports on Form 8-K filed April 3 and May 24, 2000;
o Definitive Proxy Statement for the 2000 Annual Meeting of
Stockholders; 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-4 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.
18
<PAGE> 20
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. RMI.NET and
the selling stockholders 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> 21
COMMON STOCK
$0.001 PAR VALUE
RMI. NET, INC.
PROSPECTUS
MAY __, 2000
<PAGE> 22
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. 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 representations must not
be relied upon as having been authorized by the Registrant. This prospectus
does not constitute an offer to sell or a solicitation of an offer to buy any
of the securities offered hereby in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom it is unlawful
to make such an offer or solicitation. Neither the delivery of this prospectus
nor any sale made hereunder shall, under any circumstances, create an
implication that there has been no change in the circumstances of the
Registrant or the facts herein set forth since the date hereof.
II-1
<PAGE> 23
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
2.01 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(10)
3.01 Amended and Restated Certificate of Incorporation(15)
3.02 Bylaws(1)
3.03 Certificate of Designations of Series B Convertible Preferred
Stock(13)
4.01 Form of Stock Certificate(1)
4.02 Warrant Agreement between Rocky Mountain Internet, Inc. and
Douglas H. Hanson dated October 1, 1997(5)
4.03 1996 Employees' Stock Option Plan(1)
4.04 1996 Non-Employee Directors' Stock Option Plan(1)
4.05 1997 Non-Qualified Stock Option Plan(4)
4.06 1997 Stock Option Plan(6)
4.06.1 First Amendment to Non-Qualified Stock Option Agreement pursuant
to the 1997 Stock Option Plan(13)
4.06.2 First Amendment to Incentive Stock Option Agreement pursuant to
the 1997 Stock Option Plan(13)
4.07 1998 Employees' Stock Option Plan(10)
4.08 1998 Non-Employee Directors' Stock Option Plan(8)
4.09 Subscription Agreement, dated as of December 10, 1998, by and
between Rocky Mountain Internet, Inc. and Koch Industries,
Inc.(12)
4.10 Subscription Agreement, dated as of December 10, 1998, by and
between Rocky Mountain Internet, Inc. and Advantage Fund II
Ltd.(12)
4.11 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.(12)
4.12 Form of Registration Rights Agreement between Rocky Mountain
Internet, Inc. and (i) Koch Industries, Inc.; and (ii) Advantage
Fund II Ltd.(12)
4.13 Form of Registration Rights Agreement between Rocky Mountain
Internet and (i) Wharton Capital Partners Ltd.; (ii) Leslie
Bines; and (iii) Neidiger Tucker Bruner Inc.(12)
4.14 Form of Subscription Agreement dated as of December 7, 1999(28)
4.15 Form of Class A Warrant (Annex I to Exhibit 4.14 Subscription
Agreement)(28)
4.16 Form of Class B Warrant (Annex II to Exhibit 4.14 Subscription
Agreement)(28)
4.17 Form of Registration Rights Agreement (Annex IV to Exhibit 4.14
Subscription Agreement)(28)
4.18 2000 1998 Employees' Stock Option Plan(29)
4.19 Employees' Stock Purchase Plan(29)
4.20 Form of Registration Rights Agreement between RMI.NET and
Interwest Group, Inc.(30)
5.01 Opinion and Consent of Christopher J. Melcher, Esq., as to
legality of securities being registered.*
10.01 Agreement of Lease between Denver-Stellar Associates Limited
Partnership, Landlord and Rocky Mountain Internet, Inc.,
Tenant(2)
10.02 Sublease Agreement-February 26, 1997-1800 Glenarm, Denver, CO(3)
10.03 Carrier Services Switchless Agreement Between Frontier
Communications of the West, Inc. and Rocky Mountain Broadband,
Inc.**(12)
10.04 Wholesale Usage Agreement Between PSINet Inc. and Rocky Mountain
Internet, Inc.**(12)
10.05 PacNet Reseller Agreement between PacNet Inc. and Rocky Mountain
Internet, Inc.**(12)
10.06 Operating Agreement of The Mountain Area EXchange LLC(12)
10.07 Software License and Consulting Services Agreement Between Rocky
Mountain Internet, Inc. and Novazen Inc.**(12)
10.08 Merger Agreement among Rocky Mountain Internet, Inc., RMI-INI,
Internet Now, Hutchinson Persons, Leslie Kelly, Taufik, Islam,
Susan Coupal, and Gary Kim, dated November 20, 1998(9)
10.09 Asset Purchase Agreement between Rocky Mountain Internet, Inc.
and Unicom Communications Corporation dated as of November 24,
1998(9)
10.10 Asset Purchase Agreement among Rocky Mountain Internet, Inc.,
Stonehenge Business Systems Corporation, Todd Keener, and Danette
Keener, dated as of November 30, 1998(9)
10.11 Commitment letter dated December 10, 1998 from Advantage Fund
Ltd. to Rocky Mountain Internet, Inc.(12)
II-2
<PAGE> 24
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
10.12 Agreement and Plan of Merger by and between Rocky Mountain
Internet, Inc. and August 5th Corporation, d/b/a Dave's World
dated February 2, 1999(14)
10.13 Asset Purchase Agreement by and among Rocky Mountain Internet,
Inc., ImageWare Technologies, L.L.C., and Communication Network
Services, L.L.C. dated February 5, 1999(14)
10.14 Agreement and Plan of Merger by and among Rocky Mountain
Internet, Inc. d/b/a/ RMI.NET, Inc. and IdealDial Corporation.(16)
10.15 Agreement and Plan of Merger by and among Rocky Mountain
Internet, Inc. d/b/a/ RMI.NET, Inc. and Internet Connect, Inc.(16)
10.16 Agreement and Plan of Merger and Reorganization by and among
Rocky Mountain Internet, Inc. d/b/a/ RMI.NET, Inc. and Colorado
Mountain Net, Inc. dated June 16, 1999(17)
10.17 Stock Exchange Agreement between Rocky Mountain Internet, Inc.
d/b/a RMI.NET, Inc. and Roger L. Penner (CommerceGate) dated June
24, 1999(18)
10.18 Asset Purchase Agreement by and between Rocky Mountain Internet,
Inc. d/b/a RMI.NET, Inc. and CyberDesic Communications
Corporation, Inc. dated June 28, 1999(19)
10.19 Asset Purchase Agreement by and among RMI.NET, Inc. f/k/a Rocky
Mountain Internet, Inc. and Triad Resources, LLC dated July 30,
1999(20)
10.20 Asset Purchase Agreement by and among RMI.NET, Inc. and ACES
Research, Inc. dated July 30, 1999(21)
10.21 Asset Purchase Agreement by and among RMI.NET, Inc. and Novo
Media Group, Inc. dated August 30, 1999(22)
10.22 Asset Purchase Agreement by and among RMI.NET, Inc. and Wolfe
Internet Access, LLC dated August 31, 1999(23)
10.23 Asset Purchase Agreement by and among RMI.NET, Inc. and
Networld.com, Inc. and FutureOne, Inc. dated November 19, 1999(24)
10.24 Asset Purchase Agreement by and among RMI.NET, Inc. and Western
Regional Networks, Inc. dated November 24, 1999(25)
10.25 Asset Purchase Agreement by and among RMI.NET, Inc. and AIS
Network Corporation dated December 23, 1999(26)
16.01 Letter re change in certifying accountant(11)
21.01 Subsidiaries of the Registrant(27)
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)*
24.01 Power of Attorney (included in Part II of this Registration
Statement under the caption "Signatures")*
27.01 Financial Data Schedule(27)
----------------------
* Filed herewith.
** Portions of these documents have been omitted pursuant to a request
for confidential treatment.
(1) Incorporated by reference to 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 Quarterly Report
on Form 10-QSB for the quarter ended September 30, 1996.
(3) Incorporated by reference to the Registrant's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1996.
(4) 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.
(5) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated October 6, 1997.
(6) Incorporated by reference to the Registrant's Definitive Proxy
Statement (Appendix A) on Schedule 14A filed on February 13,
1998.
(7) Incorporated by reference to the Registrant's Definitive Proxy
Statement (Appendix B) on Schedule 14A filed on February 13,
1998.
(8) Incorporated by reference to the Registrant's Definitive Proxy
Statement (Appendix C) on Schedule 14A
II-3
<PAGE> 25
filed on February 13, 1998.
(9) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated November 20, 1998.
(10) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated December 8, 1998.
(11) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated December 9, 1998.
(12) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated December 10, 1998.
(13) 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.
(14) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated February 2, 1999.
(15) Incorporated by reference to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1999.
(16) Incorporated by reference to the Registrant's Current Report on
Form 8-K/A dated June 11, 1999.
(17) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated June 16, 1999.
(18) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated June 23, 1999.
(19) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated June 28, 1999.
(20) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated July 30, 1999.
(21) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated July 30, 1999.
(22) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated August 30, 1999.
(23) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated August 31, 1999.
(24) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated November 19, 1999.
(25) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated November 24, 1999.
(26) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated December 23, 1999.
(27) Incorporated by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1999, as previously
filed with the Securities and Exchange Commission.
(28) Incorporated by reference to the Registrant's Registration
Statement on Form S-3 (Reg. No. 333-95185) and amendments
thereto, as previously filed with the Securities and Exchange
Commission.
(29) Incorporated by reference to the Registrant's 2000 Definitive
Proxy Statement on Schedule 14A filed on May 1, 2000.
(30) Incorporated by reference to the Registrant's Current Report on
Form 8-K/A dated March 17, 2000.
II-4
<PAGE> 26
ITEM 22. 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) The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is part of this registration statement, by any person or party
who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(d) The registrant undertakes that every prospectus (i) that is filed pursuant
to paragraph (c) immediately preceding, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 145, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement
II-5
<PAGE> 27
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.
(e) 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.
(f) The undersigned registrant hereby undertakes to respond to requests for
information to that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-6
<PAGE> 28
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-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of Denver, state of Colorado, on May 24, 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)
POWER OF ATTORNEY
We, the undersigned officers and directors of RMI.NET, Inc. hereby
severally constitute Douglas H. Hanson, Christopher J. Melcher, and Michael D.
Dingman, Jr., and each of them singly, our true and lawful attorneys with full
power to them, and each of them singly, to sign for us and in our names in the
capacities indicated below the Registration Statement filed herewith and any
and all amendments to said Registration Statement, and generally to do all such
things in our name and behalf in our capacities as officers and directors to
enable RMI.NET, Inc. to comply with the provisions of the Securities Act of
1933, as amended, and all requirements of the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be
signed by our said attorneys, or any of them, to said Registration Statement
and any and all amendments thereto.
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 May 24, 2000
- ----------------------------------------- and Chairman of the Board of
Douglas H. Hanson Directors (Principal Executive
Officer)
/s/ Michael D. Dingman, Jr. Treasurer (Principal Financial May 24, 2000
- ----------------------------------------- Officer and Principal Accounting
Michael D. Dingman, Jr. Officer)
/s/ D.D. Hock Director May 24, 2000
- -----------------------------------------
D.D. Hock
</TABLE>
II-7
<PAGE> 29
<TABLE>
<S> <C> <C>
/s/ Mary Beth Vitale Director May 24, 2000
- -----------------------------------------
Mary Beth Vitale
/s/ Robert W. Grabowski Director May 24, 2000
- -----------------------------------------
Robert W. Grabowski
/s/ Lewis H. Silverberg Director May 24, 2000
- -----------------------------------------
Lewis H. Silverberg
</TABLE>
II-8
<PAGE> 30
EXHIBIT INDEX *
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
5.01 Opinion and Consent of Christopher J. Melcher, Esq., as to legality of
securities being registered(1)
23.01 Consent of Ernst & Young LLP(1)
23.02 Consent of Baird, Kurtz & Dobson(1)
23.03 Consent of Christopher J. Melcher, Esq. (included in Exhibit 5.01)(1)
24.01 Power of Attorney (included in Part II of this Registration Statement
under the caption "Signatures")(1)
</TABLE>
- -----------
* Excludes exhibits incorporated by reference. For a list of exhibits
incorporated by reference, refer to "Item 16. Exhibits" above.
(1) Filed herewith.
<PAGE> 1
Exhibit 5.01
[LETTERHEAD OF RMI.NET, INC.]
May 23, 2000
RMI.NET, Inc.
999 Eighteenth Street, Suite 2201
Denver, Colorado 80202
Re: RMI.NET, Inc.
Registration Statement on Form S-4
Ladies and Gentlemen:
I have acted as counsel to RMI.NET, Inc., a Delaware corporation (the
"Registrant"), in connection with a Registration Statement on Form S-4 (the
"Registration Statement") filed by the Registrant with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"1933 Act"), relating to an offering by the Registrant (the "Offering") of up to
4,000,000 shares of the Registrant's common stock, par value $0.001 per share
and any additional shares of the Registrant's common stock that may be
registered in accordance with Rule 462(b) under the 1933 Act (collectively, the
"Shares").
In this capacity, I have examined and relied upon the originals, or
copies certified or otherwise identified to my satisfaction, of such records,
documents, certificates and other instruments as in my judgment are necessary or
appropriate to enable me to render the opinion expressed below.
In conducting my examination I have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to me as originals, the conformity to original documents of
all documents submitted to me 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 are duly authorized and, when issued and delivered against
payment therefor, will be validly issued, fully paid, and non-assessable under
the laws of the State of Delaware.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me as Vice President and General
Counsel of the Registrant under the heading "Legal Opinion" in the prospectus
constituting a part of the Registration Statement, and to any registration
statement filed in accordance with Rule 462(b) under the 1933 Act relating to
the Offering. In giving my consent, I do not thereby concede that I am within
the category of persons whose consent is required under Section 7 of the 1933
Act or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ CHRISTOPHER J. MELCHER
<PAGE> 1
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-4) and related Prospectus of RMI.NET, Inc. for
the registration of 4,000,000 shares of its common stock and to the
incorporation by reference therein of our report dated March 30, 2000, with
respect to the consolidated financial statements and schedule of RMI.NET, Inc.
as of December 31, 1999 and 1998 and for each of the two years in the period
ended December 31, 1999, included in its Annual Report (Form 10-K) for the year
ended December 31, 1999, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Denver, Colorado
May 23, 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 on Form S-4 of RMI.NET, Inc., of our report included in
Form 10-K, dated February 27, 1998, with respect to the statement of income,
stockholders' equity (deficit), and cash flows of RMI.NET, Inc. for the year
ended December 31, 1997. We also consent to the reference of us under the
heading "Experts" in such registration statement.
/s/ BAIRD, KURTZ & DOBSON
Denver, Colorado
May 23, 2000
