UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
----------------------------------------

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 001-12063
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INTERNET COMMERCE & COMMUNICATIONS, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

DELAWARE 84-1322326
------------------------------------- ----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

999 EIGHTEENTH STREET, SUITE 2201
DENVER, COLORADO 80202
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(Address of principal executive offices) (Zip Code)

(303) 672-0700
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(Registrant's telephone number, including area code)

RMI.NET, INC.
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(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports, and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

Class Shares Outstanding as of May 14, 2001
- -------------------------------------------------------------------------------
Common Stock, $0.001 par value 29,935,189

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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. In particular,
your attention is directed to Part I, Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operation and Part II, Item 1.
Legal Proceedings. The Company intends the disclosure in these sections and
throughout the Quarterly Report on Form 10-Q to be covered by the safe harbor
provisions for forward-looking statements. All statements regarding the
Company's expected financial position and operating results, its business
strategy, its financing plans and the outcome of any contingencies are
forward-looking statements. These statements can sometimes be identified by the
Company's 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 the Company believes that its expectations that are expressed in
these forward-looking statements are reasonable, the Company cannot promise that
its expectations will turn out to be correct. The Company's actual results could
be materially different from its expectations, due to a variety of factors,
including the following:

o the Company may lose customers or fail to grow its customer base;

o the Company may not be able to successfully integrate new customers or
assets obtained through acquisitions;

o the Company may fail to compete with existing and new competitors;

o the Company may not adequately respond to technological developments
impacting the Internet;

o the Company may fail to implement proper security measures to protect
its network from inappropriate use, which could overload its network's
capacity and cause the Company to experience a major system failure;

o the Company may issue a substantial number of shares of its common
stock upon exercise of Class B Warrants which it issued in a December
1999 Private Placement, certain warrants that it issued in connection
with the November 2000 acquisition of Internet Communications, Inc.,
and additional shares that may be issued in connection with the
Company's September 2000 acquisition of LanMinds, Inc., thereby
causing significant dilution in the value of your investment;

o the Company may fail to settle outstanding litigation;

o the Company may not be able to obtain needed financing; and

o the Company's common stock may cease to be listed on the Nasdaq Stock
Market.

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 the Company's business, and should be read in conjunction with the
more detailed cautionary statements included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000 under the caption "Item 1.
Business - Risk Factors" and in its other SEC filings and press releases.
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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Internet Commerce & Communications, Inc.

INDEX TO FINANCIAL STATEMENTS

Page
------

Consolidated Balance Sheets as of March 31, 2001
and December 31, 2000 ............................................ 1

Consolidated Statements of Operations for the Three Months Ended
March 31, 2001 and 2000 .......................................... 2

Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2001 and 2000 .......................................... 3

Notes to Consolidated Financial Statements .......................... 4

INTERNET COMMERCE & COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS

MARCH 31, DECEMBER 31,
2001 2000
------------- -------------
ASSETS (unaudited)

CURRENT ASSETS:
Cash and cash equivalents .................................................................... $ 2,043,721 $ --
Trade receivables, net of allowance for doubtful accounts .................................... 7,819,065 7,731,651
Other receivables ............................................................................ 3,265,941 --
Inventory .................................................................................... 795,540 1,401,959
Other ........................................................................................ 911,031 1,529,253
------------- -------------
Total current assets ..................................................................... $ 14,835,298 $ 10,662,863
------------- -------------
PROPERTY AND EQUIPMENT, NET ..................................................................... 7,940,517 9,054,172
GOODWILL, NET ................................................................................... 38,619,627 41,574,863
OTHER, NET ...................................................................................... 762,976 762,800
------------- -------------
Total assets ............................................................................. $ 62,158,418 $ 62,054,698
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ............................................................................. $ 9,122,841 $ 6,792,638
Current maturities of long-term debt and capital lease obligations ........................... 10,773,594 11,788,092
Deferred revenue ............................................................................. 4,812,532 4,871,764
Advance on pending sale of dial-up customers ................................................. 7,604,500 --
Accrued payroll and related taxes ............................................................ 950,400 1,463,813
Accrued expenses ............................................................................. 5,331,680 6,750,671
------------- -------------
Total current liabilities ................................................................ 38,595,547 31,666,978
------------- -------------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS .................................................... 300,616 538,189
------------- -------------
Total liabilities ........................................................................ 38,896,163 32,205,167
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COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Common stock, $.001 par value; 100,000,000 shares authorized, 29,945,064 and
29,820,361 issued, respectively, 29,924,943 and 29,801,619
outstanding, respectively .................................................................. 29,845 29,802
Additional paid-in capital ................................................................... 119,925,823 119,861,140
Accumulated deficit .......................................................................... (96,693,413) (90,041,411)
------------- -------------
Total stockholders' equity ............................................................... 23,262,255 29,849,531
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$ 62,158,418 $ 62,054,698
============= =============

See Notes to Consolidated Financial Statements

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INTERNET COMMERCE & COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED
MARCH 31,
2001 2000
------------ ------------
(unaudited)

Revenue
Access services ............................... $ 8,958,967 $ 9,842,062
Web solutions ................................. 1,675,800 2,111,243
Integration & installation services ........... 3,306,545 --
------------ ------------
13,941,312 11,953,305
------------ ------------
Costs and expenses
Operating expenses ............................ 8,611,008 7,831,594
Selling expenses .............................. 1,636,238 1,579,333
General and administrative expenses ........... 5,624,150 6,549,191
Depreciation and amortization ................. 4,200,032 3,852,974
------------ ------------
Total costs and expenses .................. 20,071,428 19,813,092
------------ ------------
Operating loss .......................... (6,130,116) (7,859,787)

Other income (expense)
Interest expense .............................. (461,357) (63,956)
Interest income ............................... 9,795 74,433
Other (expense) income, net ................... (70,324) 10,848
------------ ------------
Net loss ......................................... $ (6,652,002) (7,838,462)
============ ============
Basic and diluted loss per common share .......... (0.22) (0.37)
============ ============
Weighted average common shares outstanding ....... 29,933,000 21,019,000
============ ============

See Notes to Consolidated Financial Statements

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INTERNET COMMERCE & COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED
MARCH 31,
2001 2000
------------ ------------
(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ..................................................................... $ (6,652,002) $ (7,838,462)
Items not requiring cash:
Depreciation ............................................................... 1,054,818 1,124,119
Amortization ............................................................... 3,145,214 2,728,855
Stock contribution to pension plan ......................................... 64,726 36,877
Stock option compensation and stock bonus .................................. -- 45,417
Changes in operating assets and liabilities, net of effects from acquired
interests:
Trade receivables .......................................................... (90,393) (532,657)
Inventory .................................................................. 553,734 --
Prepaid expenses and other assets .......................................... 352,261 (121,945)
Accounts payable ........................................................... 2,320,200 (1,073,317)
Deferred revenue ........................................................... (59,232) (136,048)
Accrued payroll and related taxes .......................................... (513,413) (299,290)
Accrued expenses ........................................................... (1,418,991) (676,898)
------------ ------------
Net cash used in operating activities .................................... (1,243,078) (6,743,349)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Advance on pending sale of dial-up customers ................................. 4,607,500 --
Capital expenditures ......................................................... (68,454) (804,745)
Cash paid for investments and acquisitions ................................... -- (200,000)
------------ ------------
Net cash provided by (used in) investing activities ...................... 4,539,046 (1,004,745)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayments on financing agreement ........................................ (698,081) --
Proceeds from exercise of common stock options and warrants .................. -- 278,097
Increase in deferred investment costs ........................................ (176) (112,500)
Payments on long-term debt and capital lease obligations ..................... (553,990) (399,125)
------------ ------------
Net cash used in financing activities .................................... (1,252,247) (233,528)
------------ ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................................ 2,043,721 (7,981,622)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .................................. -- 11,238,188
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD ........................................ $ 2,043,721 $ 3,256,566
============ ============

See Notes to Consolidated Financial Statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

The interim financial data are unaudited; however, in the opinion of
management, the interim data include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results for the
interim periods. The financial statements included herein have been prepared by
Internet Commerce & Communications, Inc. (hereinafter, "the Company") pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures included herein
are adequate to make the information presented not misleading.

NOTE 2. NET LOSS PER SHARE

The Company follows the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings Per Share"(SFAS 128). Under SFAS 128, basic
Earnings Per Share ("EPS") excludes dilution for potential common stock and is
computed by dividing income or loss available to common shareholders by the
weighted average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
Basic and diluted EPS are the same for all periods presented as all common stock
instruments are antidilutive.

The Company has excluded any shares that may be issuable under the Class B
warrant issued to Koch Investment Group, Ltd. ("Koch") from the Company's
calculation of basic loss per share. The Class B warrants have an exercise price
of $0.01 per share. Koch is of the position it may be entitled to convert a
total of 8,387,504 shares of common stock under the Class B warrant, however no
more than 1,466,824 could be issued upon conversion to Koch at any time as a
result of a limitation in the Subscription Agreement that Koch may hold no more
than 4.9% of the Company's current outstanding shares at any one time. It is the
Company's position that the Class B warrant held by Koch has not become
exercisable. Although Koch has disposed of its initial share ownership in the
Company's common stock, the Company currently believes that Koch may not have
complied with the provisions of the Class B warrants and the original
Subscription Agreement. Therefore, the Company believes that the shares
underlying these warrants may never be issued in this amount, even though Koch
has fully disposed of the initial share ownership in the Company. The Company
has holders of another Class B warrant. However, the shares that could be
issuable pursuant to this Class B warrant have also been excluded from the basic
loss per share calculation as these warrant holders have not disposed of their
initial share ownership in the Company.

NOTE 3. SEGMENT INFORMATION

The Company's management regularly evaluates its performance by reviewing
the operating results of its three segments: Access Services, Web Solutions, and
Integration and Installation Services. The Company considers each division to be
an operating segment as they have separate management teams, offer different
products and services, and utilize different marketing strategies to target
different types of customers. Access Services consists of dedicated and dial-up
Internet services and long distance and related services. The Company believes
that all telecommunications services within this segment should be aggregated as
the services provided are all telecommunications related, are offered to the
same class of customer, and are regulated by similar governmental authorities.
Web Solutions provides web site design and development, hosting, marketing, and
data center co-location services. Integration and Installation Services consists
of Central Office Installation, Network Transport Services, and Network
Management Services. The Integration and Installation Services division was
added in 2000 through the November 2000 merger between Internet Communications
Corporation and the Company.

In making operating decisions and allocating resources, the Company's
management specifically focuses on the revenues and operating costs generated by
each operating segment, as summarized in the following tables. Certain shared
costs of the segments have been allocated to each segment based upon the
particular segment's share of the consolidated revenues for the period reported.

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THREE MONTHS ENDED
MARCH 31,
2001 2000
------------ ------------
(unaudited)

NET SALES:
Access Services .......................... $ 8,958,967 $ 9,842,062
Web Solutions ............................ 1,675,800 2,111,243
Integration & Installation Services ...... 3,306,545 --
------------ ------------
$ 13,941,312 $ 11,953,305
============ ============
OPERATING EXPENSES:
Access Services .......................... $ 5,478,661 $ 7,310,708
Web Solutions ............................ 157,181 520,886
Integration & Installation Services ...... 2,975,166 --
------------ ------------
$ 8,611,008 $ 7,831,594
============ ============

SG&A:
Access Services .......................... $ 4,665,671 $ 7,198,355
Web Solutions ............................ 872,726 930,169
Integration & Installation Services ...... 1,721,991 --
------------ ------------
$ 7,260,388 $ 8,128,524
============ ============
OPERATING INCOME/(LOSS) BEFORE
DEPRECIATION AND AMORTIZATION:
Access Services .......................... $ (1,185,365) $ (4,667,001)
Web Solutions ............................ 645,893 660,188
Integration & Installation Services ...... (1,390,612) --
------------ ------------
$ (1,930,084) $ (4,006,813)
============ ============

NOTE 4. COMMITMENTS AND CONTINGENCIES

COMMITMENTS

The Company has several agreements whereby service providers grant
discounts to the Company based on anticipated volume over specified periods with
monthly minimums.

The Company has a service agreement with Worldcom for certain network data
services through August 2002. The service agreement was assumed as part of the
Company's purchase of DataXchange. The terms of the agreement currently provide
for a remaining aggregate minimum commitment of approximately $2.4 million
subject to a monthly minimum of $75,000. Historically, the Company has met its
monthly minimums.

The Company entered into a new amended service agreement with Global
Crossing Bandwidth, Inc. for Dedicated Carrier Termination, Carrier Toll Free,
NOS Switched and Dedicated, Inbound and Outbound, Calling Card, 800 PIN, and
International Services on July 31, 2000. The original service agreement was
assumed as part of the Company's purchase of Idealdial Corporation. The terms of
the amended agreement currently provide for an aggregate minimum commitment of
approximately $46 million, subject to certain monthly minimums, for the term of
the agreement through March 2006. The Company's minimum monthly usage began in
August 2000 as $150,000, and increases at certain regular intervals over the
term of the agreement.

The Company entered into a revolving credit facility with RFC Capital
Corporation in May 2000. The maximum amount of the loan outstanding may not
exceed a specified multiple of the Company's eligible monthly cash collections.
The borrowing available to the Company will fluctuate based on cash collections.
There were minimal additional borrowings available under the facility at March
31, 2001. The Company had $8,762,215 outstanding at March 31, 2001. Interest for
this Agreement is calculated at (i) LIBOR plus 6.15% per annum, or (ii) $3,000
per month. The Agreement is scheduled to continue until May 22, 2002. This
agreement also restricts the Company's ability to pay dividends. The Company
also issued to RFC Capital Corporation a warrant to purchase 252,255 shares of
common stock at $4.03125 per share. A Second Amendment with RFC Capital
Corporation was signed on April 5, 2001, which included new financial covenants
for 2001, and beyond. As a result of this new amendment and considering the
expected proceeds from the Earthlink agreement (see Note 7), the Company
believes it will be in compliance with all financial covenants.

NOTE 5. COMMON STOCK TRANSACTIONS

The increase in the Company's common stock issued and outstanding as of
March 31, 2001 is primarily a result of

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the Company's January 14, 2001 issuance of 42,741 shares of common stock and
commitment to issue 9,448 shares of common stock (valued at approximately
$29,400, representing a portion of the Company's contribution to the 401K plan
for the fourth quarter of 2000 and the first quarter of 2001.

NOTE 6. RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133 Accounting for Derivative Instruments and Hedging Activities (SFAS 133).
SFAS 133 became effective for the Company on January 1, 2001. SFAS 133 requires
that all derivative instruments be recorded on the balance sheet at their fair
value. Changes in the fair value of derivatives are recorded each period in
current earnings or other comprehensive income, depending on whether a
derivative is designed as part of a hedge transaction and, if it is, the type of
hedge transaction. SFAS 133 does not have a material impact on the Company's
consolidated financial statements because the Company does not currently hold
any derivative instruments.

NOTE 7. SALE OF DIAL-UP CUSTOMERS

In March 2001, the Company entered into an agreement with EarthLink
Enterprises, Inc. to sell its dial-up Internet access business division in
exchange for cash. Under the Agreement, the Company will work with EarthLink to
transition all of its dial-up Internet access customers to EarthLink. The
Company expects the transition will begin May of 2001 and will continue for
several months. EarthLink has agreed to pay the Company a specific dollar amount
for each customer that is successfully transitioned and becomes a customer of
EarthLink. EarthLink has the right to decide not to accept certain customers
from areas of the country that are difficult for them to provide service.

The agreement provides for payment in three installments. Under the
Agreement, EarthLink has provided the Company with the first two installment
payments totaling $7.6 million ($3.0 million of which was received subsequent to
March 31, 2001). The Company expects to receive the final installment sometime
later in 2001. The Company expects to generate $12.0 to $18.0 million from the
sale of its dial-up customers. The Company has received approval from RFC
Capital Corporation, its lender under a revolving line of credit, regarding
their release of any lien they may have on this portion of the Company's
business. The Company will be reducing its borrowing line from RFC to reflect
the sale of the actual revenue that is transitioned to EarthLink, and will be
using a portion of the payments from EarthLink (approximately $3.8 million) to
make payment on its outstanding borrowings from RFC. Revenue relating to the
Company's dial-up business for the three month periods ended March 31, 2001 and
2000 were $4,039,000 and $4,365,000, respectively.

NOTE 8. PRO FORMA RESULTS

On November 28, 2000, the stockholders of the Company approved the merger
between the Company and Internet Communications Corporation and the merger was
completed on November 30, 2000. The Company issued approximately 5.3 million
shares of common stock valued at approximately $11.7 million and approximately
2.5 million warrants valued at approximately $433,000.

Results of acquired entities are included in the Company's operations on
the acquisition date. All acquisitions have been accounted for utilizing the
purchase method of accounting.

Unaudited pro forma consolidated operations for the three months ended
March 31, 2000 assuming these acquisitions were completed on January 1, 2000:

THREE MONTHS ENDED,
MARCH 31, 2000
-----------------------

Net sales........................... $ 18,282,000
Net loss............................ $ (8,916,000)
Net loss per share.................. $ (.33)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION

The following discussion of the results of operations and financial
condition of Internet Commerce & Communications, Inc. (the "Company") should be
read in conjunction with the Company's Consolidated Financial Statements and the
Notes thereto included elsewhere in this Quarterly Report.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2001 COMPARED WITH THREE MONTHS ENDED
MARCH 31, 2000

TOTAL REVENUE

The Company's total revenues increased to $13,941,000 for the three months
ended March 31, 2001 as compared to $11,953,000 for the three months ended March
31, 2000. This increase is primarily due to the acquisition of Internet
Communications Corporation in November 2000.

ACCESS SERVICES

Communication Services is comprised predominately of dial-up, dedicated
access, and telecommunication services. The Company offers a broad range of
connectivity options to its customers including dedicated, Digital Subscriber
Line ("DSL"), Integrated Services Digital Network ("ISDN"),

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and dial-up connections as well as long distance voice services. Connectivity
customers typically pay fixed, monthly recurring service charges. The charges
vary depending on the type of service, the length of the contract, and local
market conditions. Amounts billed relating to future periods are recorded as
deferred revenue and amortized monthly as the services are rendered.

Communication Services revenue decreased 9%, from $9,842,000 for the three
months ended March 31, 2000, to $8,959,000 for the comparable three month period
in 2001. Included in the three months ended March 31, 2001 is $4,039,000 of
revenue that is attributable to dial up customers that are being sold to
EarthLink.

WEB SOLUTIONS

Web Solutions revenues are comprised of three major products: Web site
hosting and co-location, Web site production, and Web site marketing. Web
hosting customers typically pay fixed, recurring monthly service charges.
Revenue from Web site production and Web marketing customers is recognized as
the service is provided.

Web Solutions revenue decreased 21%, from $2,111,000 for the three months
ended March 31, 2000, to $1,676,000 for the comparable three-month period in
2001. Web site hosting and co-location revenue accounted for $842,000 of revenue
in 2000 and $1,345,000 in 2001, for an increase of 60%, as a result of better
market penetration. Web site production decreased from $1,119,000 in 2000 to
$206,000 in 2001, for a decrease of 82%. This decrease is primarily attributable
to a one-time sale that occurred in the first quarter of 2000.

INTEGRATION AND INSTALLATION SERVICES

Integration and Installation Services revenues are comprised of the
following products: Central Office Installation, Network Transport Services, and
Network Management Services.

Integration and Installation Services revenue was $3,307,000 in the first
quarter of 2001. This is due to the addition of Integration and Installation
Services as a result of the Company's November 2000 acquisition of Internet
Communications Corporation. On a proforma basis, revenue decreased from
$5,592,000 for the three months ended March 31, 2000, to $3,307,000 for the
comparable period in 2001. This change is a result of a decrease in central
office equipment sales due to industry slow down.

OPERATING EXPENSES

Operating expenses related to Communication Services customers consist
primarily of costs for circuit and local line charges to provide service to
customers. The operating expenses related to Web solutions customers consist
primarily of payroll expense related to Web-site design services and
sub-contracting costs. Operating expenses for Integration and Installation
services primarily consist of equipment costs, circuit charges to provide
service to customers, and payroll expense related to installations.

Operating expenses increased 10%, from $7,832,000 for the three months
ended March 31, 2000, to $8,611,000 for the comparable period in 2001, primarily
due to the acquisition of Internet Communications Corporation in November 2000.
In addition, the operating expenses as a percent of revenue increased from 66%
in 2000 to 72% in 2001.

SELLING EXPENSES

Selling expenses consist primarily of salaries, commission, advertising,
and marketing. Selling expenses increased 4%, from $1,579,000 for the three
months ended March 31, 2000, to $1,636,000 for the comparable period in 2001.
The increase in selling expenses is primarily due to the addition of sales
personnel related to the 2000 acquisitions.

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GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses ("G & A") consist primarily of salaries
and related benefits, and include the expenses of general management,
engineering, customer service, technical support, accounting, billing, and
office facilities. G & A expenses decreased 14%, from $6,549,000 for the three
months ended March 31, 2000, to $5,624,000 for the comparable period in 2001.
This decrease is primarily the result of lower payroll costs and benefits
primarily related to headcount reductions in 2000 and first quarter 2001 and a
decrease in bad debt expense in the first quarter of 2001 compared to the first
quarter of 2000 due to better collection results.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization is provided for over the estimated useful
lives of assets ranging from three to seven years using the straight-line
method. The excess of cost over the fair value of net assets acquired, or
goodwill, is amortized using the straight-line method over a five-year period.
Depreciation and amortization increased 9%, from $3,853,000 for the three months
ended March 31, 2000, to $4,200,000 for the comparable period in 2001 primarily
due to the acquisition of Internet Communications Corporation.

INTEREST EXPENSE

Interest expense increased from $64,000 for the three months ended March
31, 2000 to $461,000 for the three months ended March 31, 2001. The increase is
due to increased debt balances in the first quarter of 2001 compared to the
first quarter of 2000.

EFFECTS OF INFLATION

Historically, inflation has not had a material effect on the Company.

LIQUIDITY AND CAPITAL RESOURCES

For the three months ended March 31, 2001, the Company used $1,243,000 in
operations, as compared to $6,743,000 for the three months ended March 31, 2000.
The decrease in cash used in operations is attributable to the decrease in
the net loss after depreciation and amortization and an increase in accounts
payable of approximately $2,320,000.

For the three months ended March 31, 2001, cash provided from investing
activities was $4,539,000, as compared to net cash used of $1,005,000 for the
three months ended March 31, 2000. Cash provided by investing activities is due
to the down payment by EarthLink of $4.6 million for the pending sale of the
Company's dial-up customers.

For the three months ended March 31, 2001, the Company used $1,252,000 in
financing activities, as compared to $234,000 used for the three months ended
March 31, 2000. This increase was primarily the result of net repayments on the
revolving credit facility with RFC Capital in the first quarter of 2001 of
approximately $700,000.

In the Company's December 1999 private placement, the Company 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;

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o a detrimental effect on the Company's ability to raise additional
funds; and

o a decline in the market value of the Company's common stock as a
result of the exercise of the Class B Warrants and subsequent sales of
the common stock.

The number of shares that the Company may issue to holders of the Company's
Class B Warrants is based on the market price of the Company's 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 the Company's
common stock, if any, without assuming the risk of loss from a decline in the
stock price. If the market price of the Company's common stock decreases, the
Company may issue a greater number of shares upon conversion of the Class B
Warrants. There is theoretically no limit on the number of shares of common
stock that the Company may be required to issue upon conversion of the Class B
Warrants, however, the Class B Warrant holders cannot hold more than 4.9% of the
Company's outstanding shares at any one time. A stockholder's percentage
ownership could be diluted substantially. Moreover, because the exercise price
of the Class B Warrants is only $0.01 per share, the Company will not receive
material cash proceeds from the exercise of the Class B Warrants.

In connection with its November 2000 merger with Internet Communications
Corporation, the Company issued a warrant to Interwest Group that is exercisable
on November 30, 2001 (one year and one day after the closing of the merger). The
number of shares for which this warrant will be exercisable, if any, depends on
the trading price of the Company's common stock at that time. If the market
price of its common stock decreases, the Company may issue a greater number of
shares upon exercise of the Interwest Group Warrant. The Interwest Group
Warrant is exercisable if the market value of the Company's common stock
received by Interwest Group upon conversion of the Interwest Group loan on the
date that is one year and one day after the date of conversion is less than the
original amount of the Interwest Group loan converted into the Company's common
stock. Accordingly, if the market price of its common stock decreases, the
Company may issue a greater number of shares upon exercise of the Interwest
Group warrant.

On September 21, 2000, the Company entered into an Asset Transfer Agreement
with LanMinds, Inc. ("LanMinds"), a California corporation headquartered in
Berkeley, California, where the Company acquired the assets of LanMinds.
Pursuant to the terms of the LanMinds Asset Transfer Agreement, the Company
agreed to provide consideration to LanMinds in an amount equal to approximately
$6 million, payable in the form of shares of the Company's common stock over the
next five years. At closing, the Company provided LanMinds consideration equal
to $2 million, in the form of 916,031 shares of common stock. The ultimate
number of shares the Company is required to issue depends on various factors set
forth in the LanMinds Asset Transfer Agreement, including the following, among
others: (a) the ability of LanMinds' to generate sufficient revenues, (b)
LanMinds' liquidity, as measured by the difference between LanMinds' current
assets and current liabilities, (c) claims that may be brought against LanMinds,
and (d) the market price of the Company's common stock. Due to these
contingencies, only 505,447 shares have been recorded to equity at December 31,
2000. Any significant increase in additional shares to be issued would not occur
for five years. At that time, on the fifth anniversary of the closing, there
would theoretically be no limit to the number of shares of common stock that the
Company may be required to issue if the market price of its common stock at that
time were trading below $7.50 per share.

The Company entered into a revolving credit facility with RFC Capital
Corporation in May 2000. The maximum amount of the loan outstanding may not
exceed a specified multiple of the Company's eligible monthly cash collections.
The borrowing available to the Company will fluctuate based on cash collections.
There were minimal borrowings available under the facility at March 31, 2001.
The Company had $8,762,215 outstanding at March 31, 2001. Interest for this
Agreement is calculated at (i) LIBOR plus 6.15% per annum, or (ii) $3,000 per
month. The Agreement is scheduled to continue until May 22, 2002. This agreement
also restricts the Company's ability to pay dividends. The Company also issued
to RFC Capital Corporation a warrant to purchase 252,255 shares of common stock
at $4.03125 per share. A Second Amendment with RFC Capital Corporation was
signed on April 5, 2001, which included new financial covenants for 2001, and
beyond. As a result of this new amendment, the Company believes it will be in
compliance with all financial covenants.

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Since its inception, the Company has funded its operations and working
capital needs through the public and private placement of its equity securities
and through a revolving line of credit. In addition, a significant portion of
its capital expenditures have been financed through capital lease obligations
payable to finance companies. The Company also borrowed amounts from its CEO in
order to fund working capital requirements.

In March 2001, the Company entered into an agreement with EarthLink
Enterprises, Inc. to sell all or a portion of its dial-up Internet access
business division in exchange for cash. Under the Agreement, the Company will
work with EarthLink to transition all of its dial-up Internet access customers
to EarthLink. The Company expects the transition will begin May of 2001 and will
continue for several months. EarthLink has agreed to pay the Company a specific
dollar amount for each customer that is successfully transitioned and becomes a
customer of EarthLink. EarthLink has the right to decide not to accept certain
customers from areas of the country that are difficult for them to provide
service.

The agreement provides for payment in three installments. Under the
Agreement, EarthLink has provided the Company with the first installment payment
in the amount of $4.6 million. The Company received the second installment
payment of $3.0 million in May 2001 and expects to receive the last installment
later in 2001. The Company expects to generate $12 to $18 million on the sale of
its dial-up customers. The Company has received approval from RFC Capital
Corporation, its lender under a revolving line of credit, regarding their
release of any lien they may have on this portion of the Company's business. The
Company will be reducing its borrowing line from RFC to reflect the sale of the
actual revenue that is transitioned to EarthLink, and will be using a portion of
the payments from EarthLink (approximately $3.8 million) to make payment on its
outstanding borrowings from RFC.

Once the Company has completed this transaction, it will have an
opportunity to achieve a number of efficiencies in its future operations. These
benefits will include the reduction of a significant portion of its employee
headcount, reducing or eliminating a significant amount of its current circuit
and carrier expenses, and having an opportunity to narrow the scope of its
corporate operations to provide the same level of service at lesser cost.
Additionally, as a result of this transaction the Company will be able to focus
its sales, marketing, and operations efforts on the business customers in the
future, which will provide it with higher margins and a greater return on its
investment of working capital. In conjunction with the transaction, the Company
may incur certain one time charges related to severance and other costs. This
amount has not yet been quantified.

The Company has $2,043,721 in cash and cash equivalents at March 31, 2001.
Management estimates that based upon its current expectations for growth and
anticipated funds received from the EarthLink Enterprises, Inc. transaction, the
Company believes it will have adequate cash from existing operations to operate
through the end of 2001 for the execution of its current business plan,
including the financing of its anticipated capital expenditures and operating
losses. Should the Company require additional funding, it would seek to obtain
this funding from one or more of the following sources:

(1) a private placement of common or preferred stock.

(2) establishing a new credit facility to finance working capital and
capital expenditures.

(3) potential renegotiation of the revolving line of credit with RFC
Capital to allow for increased borrowings.

(4) calling the approximately 2.5 million warrants that were issued upon
completion of the purchase of Internet Communications Corporation,
which could yield approximately $20.0 million in proceeds. In order to
call the warrants, the share price of the Company's common stock must
exceed $8.00 for a consecutive five trading-day period. Currently the
conditions for the call are not met.

(5) sale of assets.

There can be no assurance that financing, as described above, will be
available in amounts or on terms acceptable to the Company, if at all. Should
the Company be unsuccessful in its efforts to raise capital, it may be required
to modify or curtail its plans for growth. The sale of additional equity or
convertible debt securities could result in additional dilution to the Company's
stockholders. In addition, the Company will, from time to time, consider the
acquisition of or investment in complementary businesses, products, services,
and technologies, and the repurchase and retirement of debt, which might impact
its liquidity requirements or cause it to issue additional equity or debt
securities. The Company's ability to access capital could also be impaired due
to the significant dilution associated with the Class B Warrants, the Interwest
Group Warrant, and the additional shares which could be issued pursuant to the
LanMinds, Inc. acquisition.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not have any derivative financial instruments as of March
31, 2001. The Company's interest income and expense are sensitive to changes in
the general level of interest rates. In this regard, changes in interest rates
can affect the interest earned on the Company's cash equivalents. The Company's
long-term debt has fixed interest rates and the fair value of these instruments
is affected by changes in market interest rates. To mitigate the impact of
fluctuations in interest rates, the Company generally enters into fixed rate
investing and borrowing arrangements. As a result, the Company believes that the
market risk arising from holding of its financial instruments is not material.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On September 28, 2000, the Company received a Demand for Arbitration and
Statement of Claim by Roger L. Penner, a former employee of the Company. Mr.
Penner, the former owner of CommerceGate Corporation, acquired by the Company on
June 24, 1999 pursuant to a merger agreement, was terminated for cause on June
12, 2000. The Penner demand asserts a claim that he was terminated without
cause, and that the Company breached the merger agreement. The Penner demand
seeks damages, in the form of the Company's common stock and cash, in excess of
$2 million. The Company filed an answer and counterclaim on October 27, 2000,
disputing all claims set forth in the Penner demand, and asserting that Penner
was terminated for cause, that Penner breached the merger agreement, and that
Penner through fraud and willful misconduct caused material damage to the
Company. The Company's counterclaims seek damages from Penner in excess of $4
million. The matter is currently in arbitration. At this time, the Company is
unable to determine the possible outcome of this remaining dispute.

On January 26, 2001, a lawsuit was filed against the Company in the Alabama
State Court by the PLT, LLC, an Alabama company, which asserted claims against
the Company for a lease totaling approximately $400,000. The Company did not
file an answer and/or counterclaim because it believes jurisdiction for this
dispute is proper only in Colorado, and there is no jurisdiction in Alabama.
PLT, LLC has pursued the claim in Alabama. On April 6, 2001, the state court in
Alabama signed an Order for Default Judgment against the Company, and awarded
PLT, LLC a judgment in excess of $400,000. If this claim is brought before a
court in Colorado, the Company believes it has meritorious defenses and will
vigorously defend against such claim. At this time, the Company is unable to
determine the possible outcome of this dispute.

On February 20, 2001, a lawsuit was filed against the Company in the
Alabama State Court by the Opelika Industrial Authority, which asserted claims
against the Company for non-payment on a promissory note, totaling approximately
$1,086,939. The Company did not file an answer and/or counterclaim because it
believes jurisdiction for this dispute is proper only in Colorado, and there is
no jurisdiction in Alabama. The Opelika Industrial Authority has pursued the
claim in Alabama. On April 5, 2001, the state court in Alabama signed an Order
for Default Judgment against the Company, and awarded the Opelika Industrial
Authority a judgment in excess of $1,100,000. If this claim is brought before a
court in Colorado, the Company believes it has meritorious defenses and will
vigorously defend against such claim. At this time, the Company is unable to
determine the possible outcome of this dispute.

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On February 15, 2001, Vitria Technology, Inc. filed a lawsuit in the
Colorado State Court asserting claims for non-payment on a purchase of financial
software totaling approximately $560,000. The Company did not install or utilize
the Vitria software at any time, and returned such software intact and unused in
June 2000, with a statement that the Company was revoking the purchase. The
Company believes it has meritorious defenses to such claim, and will vigorously
defend against such claim. At this time, the Company is unable to determine the
possible outcome of this dispute.

On March 1, 2001, Novo MediaGroup, Inc. filed a Demand for Arbitration with
the American Arbitration Association asserting claims for failure to deliver
shares of the Company's common stock that were held in escrow subject to the
parties' Asset Purchase Agreement, dated August 1999, totaling a value of
approximately $510,000. The Company believes that Novo MediaGroup did not honor
all obligations and warranties of the Asset Purchase Agreement, which put in
question whether they were entitled to receipt of the shares held in escrow.
This matter is currently in arbitration. The Company believes it has meritorious
defenses to such claim, and will vigorously defend against such claim. At this
time, the Company is unable to determine the possible outcome of this dispute.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

During the three months ended March 31, 2001, the Company issued, committed
to issue, and/or sold the following equity securities that were not registered
under the Securities Act of 1933:

o On January 14, 2001, the Company issued 42,741 shares of common
stock and committed to issue 9,448 shares of common stock (valued
at approximately $29,400), representing a portion of the
Company's contribution to the 401K plan for the fourth quarter of
2000 and the first quarter of 2001.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER EVENTS

The Company entered into an agreement with Global Crossing
Telecommunications, to convert $1.6 million of debt into Preferred Stock,
subject to approval by the Company's Board of Directors. The agreement further
defines how the Company shall retire the Preferred Stock at a specified per
share price made on a quarterly basis from Excess Cash Flow, defined as gross
profits less amortization of debt plus depreciation and amortization. In
addition, the Company shall pay Global Crossing a quarterly dividend equal to
two and one-half percent (2 1/2%) of the per share value of the Preferred Stock
starting April 10, 2001.

On May 10, 2001, pursuant to the Company's agreement to sell its dial-up
database to EarthLink, the Company received a second installment payment of
$2,997,000.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

None.

(b) Reports on Form 8-K.

None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date: May 18, 2001.

INTERNET COMMERCE & COMMUNICATIONS, INC.
A Delaware corporation

By: /s/ Douglas H. Hanson
--------------------------------------------------
Name: Douglas H. Hanson
Title: Chairman of the Board, Chief Executive
Officer and Director (Principal Executive
Officer and Principal Financial and
Accounting Officer)