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 June 30, 2001
-----------------------------------------

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------ ------------------

Commission file number 001-12063
---------

INTERNET COMMERCE & COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

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

7100 EAST BELLVIEW AVENUE, SUITE 201
GREENWOOD VILLAGE, COLORADO 80110
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)

(303) 414-7100
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)

999 EIGHTEENTH STREET, SUITE 2201, DENVER, COLORADO 80202
- --------------------------------------------------------------------------------
(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 August 20, 2001
- ------------------------------ ----------------------------------------
Common Stock, $0.001 par value 30,602,667

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 succeed in transferring its dial up
customers to EarthLink, which can have an adverse impact on
capital resources.

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 may not be successful in its attempt to
reorganize under Chapter 11.

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.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Internet Commerce & Communications, Inc.

INDEX TO FINANCIAL STATEMENTS

<Table>
<Caption>
Page
----

Consolidated Balance Sheets as of June 30, 2001
and December 31, 2000...........................................................................1

Consolidated Statements of Operations for the Three Months Ended
June 30, 2001 and 2000..........................................................................2

Consolidated Statements of Operations for the Six Months Ended
June 30, 2001 and 2000..........................................................................3

Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2001 and 2000..........................................................................4

Notes to Consolidated Financial Statements.........................................................5
</Table>

INTERNET COMMERCE & COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
ASSETS
JUNE 30, DECEMBER 31,
2001 2000
-------------- --------------
(unaudited)

CURRENT ASSETS:
Cash and cash equivalents ........................................................ $ -- $ --
Trade receivables, net of allowance for doubtful accounts ........................ 7,805,883 7,731,651
Other receivables ................................................................ 275,700 --
Inventory ........................................................................ 525,270 1,401,959
Other ............................................................................ 789,685 1,529,253
-------------- --------------
Total current assets ......................................................... $ 9,396,538 $ 10,662,863
-------------- --------------

PROPERTY AND EQUIPMENT, NET ......................................................... 6,878,314 9,054,172
GOODWILL, NET ....................................................................... 35,511,668 41,574,863
OTHER, NET .......................................................................... 947,276 762,800
-------------- --------------
Total assets ................................................................. $ 52,733,796 $ 62,054,698
============== ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ................................................................. $ 8,981,652 $ 6,792,638
Current maturities of long-term debt and capital lease obligations ............... 7,799,450 11,788,092
Deferred revenue ................................................................. 4,495,162 4,871,764
Deferred gain on sale of asset ................................................... 7,604,500 --
Accrued payroll and related taxes ................................................ 887,322 1,463,813
Accrued expenses ................................................................. 5,231,185 6,750,671
-------------- --------------
Total current liabilities .................................................... 34,999,271 31,666,978
-------------- --------------

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS ........................................ 190,939 538,189
-------------- --------------
Total liabilities ............................................................ 35,190,210 32,205,167
-------------- --------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Common stock, $.001 par value; 100,000,000 shares authorized, 30,604,061 and
29,820,361 issued, respectively, 30,583,940 and 29,801,619
outstanding, respectively ...................................................... 30,603 29,802
Additional paid-in capital ....................................................... 119,974,156 119,861,140
Accumulated deficit .............................................................. (102,461,173) (90,041,411)
-------------- --------------
Total stockholders' equity ................................................... 17,543,586 29,849,531
-------------- --------------

$ 52,733,796 $ 62,054,698
============== ==============
</Table>

See Notes to Consolidated Financial Statements

1
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INTERNET COMMERCE & COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>
THREE MONTHS ENDED
JUNE 30,
2001 2000
------------ ------------
(unaudited)

Revenue
Access services .......................... $ 8,767,719 $ 9,280,295
Web solutions ............................ 1,472,123 2,491,937
Integration & installation services ...... 2,780,854 --
------------ ------------
13,020,696 11,772,232
------------ ------------
Costs and expenses
Operating expenses ....................... 7,146,855 5,996,896
Selling expenses ......................... 1,204,427 2,062,944
General and administrative expenses ...... 5,609,119 7,409,553
Depreciation and amortization ............ 4,335,901 4,651,535
------------ ------------
Total costs and expenses ............. 18,296,302 20,120,928
------------ ------------

Operating loss ..................... (5,275,606) (8,348,696)

Other income (expense)
Interest expense ......................... (490,838) (110,333)
Interest income .......................... 26,980 55,404
Other (expense) income, net .............. (28,297) (518)
------------ ------------
Net loss .................................... $ (5,767,761) $ (8,404,143)
============ ============

Basic and diluted loss per common share ..... (0.20) (0.39)
============ ============

Weighted average common shares outstanding .. 29,506,000 21,650,000
============ ============
</Table>

See Notes to Consolidated Financial Statements

2
6

INTERNET COMMERCE & COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
2001 2000
------------ ------------
(unaudited)

Revenue
Access services .......................... $ 17,726,687 $ 19,122,357
Web solutions ............................ 3,147,923 4,603,180
Integration & installation services ...... 6,087,399 --
------------ ------------
26,962,009 23,725,537
------------ ------------
Costs and expenses
Operating expenses ....................... 15,757,863 13,828,490
Selling expenses ......................... 2,840,665 3,642,277
General and administrative expenses ...... 11,233,268 13,958,744
Depreciation and amortization ............ 8,535,933 8,504,509
------------ ------------
Total costs and expenses ............. 38,367,729 39,934,020
------------ ------------

Operating loss ..................... (11,405,720) (16,208,483)

Other income (expense)
Interest expense ......................... (952,195) (174,289)
Interest income .......................... 36,775 129,837
Other income, net ........................ (98,621) 10,330
------------ ------------

Net loss applicable to common stockholders .. $(12,419,761) $(16,242,605)
============ ============

Basic and diluted loss per common share ..... $ (0.42) $ (0.76)
============ ============

Weighted average common shares outstanding .. 29,879,000 21,295,000
============ ============
</Table>

See Notes to Consolidated Financial Statements

3
7

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

<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
2001 2000
------------ ------------
(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss .................................................................... $(12,419,761) $(16,242,605)
Items not requiring cash:
Depreciation .............................................................. 2,062,202 1,279,960
Amortization .............................................................. 6,483,731 7,224,559
Stock contribution to pension plan ........................................ 113,817 75,058
Stock option compensation and stock bonus ................................. -- 55,834
Changes in operating assets and liabilities, net of effects from acquired
interests:
Trade receivables ......................................................... (79,470) (1,621,948)
Inventory ................................................................. 773,421 --
Prepaid expenses and other assets ......................................... 473,607 (189,131)
Accounts payable .......................................................... 2,179,012 118,506
Deferred revenue .......................................................... (376,602) (132,598)
Accrued payroll and related taxes ......................................... (576,491) 324,358
Accrued expenses .......................................................... (1,519,486) (519,882)
------------ ------------
Net cash used in operating activities ................................... (2,886,020) (9,627,889)
------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Advance on pending sale of dial-up customers ................................ 7,600,000 --
Capital expenditures ........................................................ (193,611) (863,104)
Cash paid for investments and acquisitions .................................. (210,000)
Additions to capitalized software ........................................... -- (1,206,967)
------------ ------------
Net cash provided by (used in) investing activities ..................... 7,406,389 (2,280,071)
------------ ------------

CASH FLOWS FROM FINANCING ACTIVITIES
Net repayments on financing agreement ....................................... (3,192,130) 4,399,799
Proceeds from exercise of common stock options and warrants ................. -- 278,097
Increase in deferred investment costs ....................................... (184,476) (280,093)
Payments on long-term debt and capital lease obligations .................... (1,143,762) (1,220,791)
------------ ------------
Net cash used in financing activities ................................... (4,520,368) 3,177,012
------------ ------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ............................... -- (8,730,948)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ................................. -- 11,238,188
------------ ------------

CASH AND CASH EQUIVALENTS, END OF PERIOD ....................................... $ -- $ 2,507,240
============ ============
</Table>

See Notes to Consolidated Financial Statements

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8

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.

Excluded from the Company's basic loss per share are approximately
101,817,101 shares that could be issued to the Class B warrant holders if the
Company's share price is $.10. However, the Subscription Agreement does not
allow any Class B warrant holder to hold more than 4.9% of the Company's current
outstanding shares at any one time. As of June 30, 2001, any Class B warrant
holder could not hold more than 1,499,530 shares of the Company's stock.

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.

5
9

<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
(unaudited)

NET SALES:
Access Services ........................ $ 8,767,719 $ 9,280,295 $ 17,726,687 $ 19,122,357
Web Solutions .......................... 1,472,123 2,491,937 3,147,923 4,603,180
Integration & installation services .... 2,780,854 -- 6,087,399 --
------------ ------------ ------------ ------------
$ 13,020,696 $ 11,772,232 $ 26,962,009 $ 23,725,537
============ ============ ============ ============

OPERATING EXPENSES:
Access Services ........................ $ 5,078,263 $ 5,626,231 $ 10,556,924 $ 12,936,939
Web Solutions .......................... 104,026 370,665 261,207 891,551
Integration & Installation Services .... 1,964,566 -- 4,939,732 --
------------ ------------ ------------ ------------
$ 7,146,855 $ 5,996,896 $ 15,757,863 $ 13,828,490
============ ============ ============ ============

SG&A:
Access Services ........................ $ 4,588,023 $ 7,427,173 $ 9,253,176 $ 14,193,893
Web Solutions .......................... 770,341 2,045,324 1,643,188 3,407,128
Integration & Installation Services .... 1,455,182 -- 3,177,569 --
------------ ------------ ------------ ------------
$ 6,813,546 $ 9,472,497 $ 14,073,933 $ 17,601,021
============ ============ ============ ============

OPERATING INCOME/(LOSS) BEFORE
DEPRECIATION AND AMORTIZATION:
Access Services ........................ $ (898,567) $ (3,773,109) $ (2,083,413) $ (8,008,475)
Web Solutions .......................... 597,756 75,948 1,243,528 304,501
Integration & Installation Services .... (638,894) -- (2,029,902) --
------------ ------------ ------------ ------------
$ (939,705) $ (3,697,161) $ (2,869,787) $ (7,703,974)
============ ============ ============ ============
</Table>

NOTE 4. COMMITMENTS AND CONTINGENCIES

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 an 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 June
30, 2001. The Company had $6,000,000 outstanding at June 30, 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. Due to the reclassification of the credit facility to
short term debt and the liability associated with the EarthLink transaction, the
Company is not in compliance with the RFC credit facility current ratio
covenant. On August 20, 2001, the Company received a waiver for the current
ratio covenant. The Company expects to repay a portion of the RFC Capital
Corporation credit facility as the Company receives proceeds from the EarthLink
agreement.

6
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NOTE 5. COMMON STOCK TRANSACTIONS

The increase in the Company's common stock issued and outstanding as of June 30,
2001 is primarily a result of:

o On May 22, 2001, the Company issued 100,000 shares of common stock (valued
at $29,000) to MicroCap Analyst for consulting services rendered by
MicroCap Analyst.

o On May 25, 2001, the Company issued 171,973 shares of common stock (valued
at approximately $45,200) pursuant to the Class B Warrant agreement.

o On June 13, 2001, the Company issued 396,337 shares of common stock (valued
at approximately $95,100) pursuant to the Class B Warrant agreement.

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.

In December 1999, the staff of the Securities and Exchange Commission
issued its Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition." SAB
No. 101 provides guidance on the measurement and timing of the revenue
recognition in financial statements of public companies. SAB No. 101 has been
implemented by the Company and had no material effect on the Company's financial
statements.

In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation - an Interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB Opinion No. 25 with regard to the following:
The definition of an employee for purposes of applying noncompensatory plan; the
accounting consequence of various modifications to the terms of previously fixed
stock options or awards; and the accounting for an exchange of stock
compensation awards in a business combination. FIN 44 was effective for the
Company on July 1, 2000, but certain conclusions in FIN 44 covers specific
events that occurred after either December 15, 1998 or January 12, 2000. To the
extent the Company's stock-based compensation awards are or become subject to
"variable accounting" in the future because of FIN 44, significant periodic
fluctuations in the price of the Company's common stock may cause the
application of FIN 44 to have a material impact on stock-based compensation
reported in future results of operations.

In February 2001, the FASB issued a limited revision exposure draft of
proposed Statement of Financial Accounting Standard "Business Combinations and
Intangible Assets - Accounting for Goodwill". The proposed statement would
establish a new accounting standard for goodwill acquired in a business
combination. It would continue to require recognition of goodwill as an asset
but would not permit amortization of goodwill as currently required by APB
Opinion No. 17. "Intangible Assets". Furthermore, certain intangible assets that
are not separable from goodwill will also be amortized.

This proposed statement would also establish a new method of testing
goodwill for impairment. It would require that goodwill be separately tested for
impairment using a fair method approach. Entities would be required to initially
apply provisions of this Statement as of the beginning of the first fiscal
quarter following issuance of the

7
11

final statement. Those provisions would apply not only to goodwill arising from
acquisitions completed after the issuance date of the final statement but also
to the unamortized balance of goodwill at the date of adoption. The Company will
determine the impact, if any, upon the issuance of the final standard.

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 be completed by the end of August 2001.
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. 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 reduced 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 six month periods ended June 30, 2001 and
2000 were $7,589,000 and $8,514,000, 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 and
six months ended June 30, 2000 assuming these acquisitions were completed on
January 1, 2000:

<Table>
<Caption>
THREE MONTHS ENDED, SIX MONTHS ENDED,
JUNE 30, 2000 JUNE 30, 2000
---------------------- -----------------------

Net sales......................... $ 18,706,000 $ 36,988,000
Net loss.......................... $ (8,997,000) $ (17,913,000)
Net loss per share................ $ (.33) $ (.66)
</Table>

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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 JUNE 30, 2001 COMPARED WITH THREE MONTHS ENDED JUNE 30, 2000

TOTAL REVENUE

The Company's total revenues increased 11% from $11,772,000 for the
three months ended June 30, 2000 as compared to $13,021,000 for the three months
ended June 30, 2001. This increase is primarily due to the acquisition of
Internet Communications Corporation in November 2000.

ACCESS SERVICES

Access 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"), and dial-up
connections as well as long distance voice services. Access service 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.

Access Services revenue decreased 6%, from $9,280,000 for the three
months ended June 30, 2000, to $8,767,000 for the comparable three month period
in 2001

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 41%, from $2,492,000 for the three
months ended June 30, 2000, to $1,472,000 for the comparable three-month period
in 2001. The decline is primarily attributable to the decline in Web production.
However, Web site hosting and co-location revenue increased 11% from $1,150,000
of revenue in 2000 and $1,276,000 in 2001, as a result of better market
penetration.

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 $2,780,000 in the
three months ended June 30, 2001. This segment of business was added through the
Company's November 2000 acquisition of Internet Communications Corporation.

OPERATING EXPENSES

Operating expenses related to Access 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.

9
13

Operating expenses increased 19%, from $5,997,000 for the three months
ended June 30, 2000, to $7,147,000 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 51%
in 2000 to 55% in 2001.

SELLING EXPENSES

Selling expenses consist primarily of salaries, commission,
advertising, and marketing. Selling expenses decreased 42%, from $2,063,000 for
the three months ended June 30, 2000, to $1,204,000 for the comparable period in
2001. This reduction is due to the Company streamlining its current operations.

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 24% from $7,410,000 for the three
months ended June 30, 2000, to $5,609,110 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 a decrease in bad debt
expense in the first half of 2001 compared to the first half 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 decreased 7%, from $4,652,000 for the three months
ended June 30, 2000, to $4,336,000 for the comparable period in 2001. The
decrease in primarily attributable to a one time write down of goodwill of
approximately $730,000 in June 2000.

INTEREST EXPENSE

Interest expense increased from $110,000 for the three months ended
June 30, 2000 to $491,000 for the three months ended June 30, 2001. The increase
is due to increased debt balances in the second quarter of 2001 compared to the
second quarter of 2000.

EFFECTS OF INFLATION

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

SIX MONTHS ENDED JUNE 30, 2001 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2000

TOTAL REVENUE

The Company's total revenues grew 14%, from $23,726,000 for the six
months ended June 30, 2000, to $26,962,000 for the six months ended June 30,
2001. Revenue growth is attributable to the acquisition of Internet
Communications Corporation in November 2000.

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ACCESS SERVICES

Access Services revenue decreased 7%, from $19,122,000 for the six
months ended June 30, 2000, to $17,727,000 for the comparable six month period
in 2001.

WEB SOLUTIONS

Web Solutions revenue decreased 32%, from $4,604,000 for the six months
ended June 30, 2000 to $3,148,000 for the comparable six month period in 2001.
The decrease is attributable to the decrease in Web production. However, Web
site hosting and co-location revenue has increased 32% from $1,992,000 for the
six months ended June 30, 2000, to $2,621,000 for the six months ended June 30,
2001.

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 $6,087,000 in the six
months ended June 30, 2001. This segment of business was added through the
Company's November 2000 acquisition of Internet Communications Corporation.

OPERATING EXPENSES

Operating expenses related to Access 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 14%, from $13,828,000 for the six months
ended June 30, 2000, to $15,758,000 for the comparable period in 2001, primarily
due to acquisitions. In addition, the operating expenses as a percent of revenue
remained consistent at 58%.

SELLING EXPENSES

Selling expenses consist primarily of salaries, commission,
advertising, and marketing. Selling expenses decreased 22%, from $3,642,000 for
the six months ended June 30, 2000, to $2,841,000 for the comparable period in
2001. This reduction is due to the Company streamlining its current operations.

GENERAL AND ADMINISTRATIVE EXPENSES

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and office facilities. G & A expenses decreased 20%, from $13,959,000 for the
six months ended June 30, 2000, to $11,233,000 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.

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 from $8,505,000 for the six months ended
June 30, 2000 to $8,536,000 for the comparable period in 2001.

INTEREST EXPENSE

Interest expense increased from $174,000 for the six months ended June
30, 2000 to $953,000 for the three months ended June 30, 2001. The increase is
due to increased debt balances for the six months ended June 30, 2001 compared
to the six months ended June 30, 2000.

EFFECTS OF INFLATION

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

LIQUIDITY AND CAPITAL RESOURCES

For the six months ended June 30, 2001, the Company used $2,886,000 in
operations, as compared to $9,628,000 for the six months ended June 30, 2000.
The decrease in cash used in operations is attributable to the streamlining of
operations which caused a decrease in the net loss after depreciation and
amortization of approximately $3,800,000 and an increase in accounts payable of
approximately $2,180,000.

For the six months ended June 30, 2001, cash provided from investing
activities was $7,406,000, as compared to net cash used of $2,280,000 for the
six months ended June 30, 2000. Cash provided by investing activities is due to
the down payment by EarthLink of $7.6 million for the pending sale of the
Company's dial-up customers.

For the six months ended June 30, 2001, the Company used $4,520,000 in
financing activities, as compared to cash provided of $3,177,000 for the six
months ended June 30, 2000. This increase in cash used was primarily the result
of net repayments on the revolving credit facility with RFC Capital in the first
half of 2001 of approximately $3.2 million compared to net cash provided by the
revolving credit facility with RFC of approximately $4.4 million.

The Company has no cash or cash equivalents at June 30, 2001. As a
result of filing a voluntary petition for protection under Chapter 11 of the
Bankruptcy Code, the Company is not currently paying any of its debt obligations
as of July 31, 2001. In addition, future payments of debt and related interest
will be subject to court approval and may be paid in part or in whole with
proceeds from the court approved plan for reorganization. There is no assurance
that any amounts owed to creditors will be paid or will be paid in full.

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:

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o substantial dilution;

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.

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

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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 completed by the end
of August 2001. 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 has reduced 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not have any derivative financial instruments as of
June 30, 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, which was 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.

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On January 26, 2001, a lawsuit was filed against the Company in the
Alabama State Court by 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 or counterclaim because it believes jurisdiction for this
dispute is proper only in Colorado, and there is no jurisdiction in Alabama. On
April 6, 2001, the state court in Alabama signed an Order for Default Judgment
against the Company, and awarded PLT a judgment of approximately $405,000. If
this claim is brought before a court in Colorado, the Company believes it has
meritorious defenses and will vigorously defend against such claim. By virtue of
the institution of Chapter 11 proceedings by the Company, all efforts to collect
upon this judgment have been temporarily stayed and will be determined by the
Chapter 11 plan of reorganization.

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
$1.1 million. The Company did not file an answer or counterclaim because it
believes jurisdiction for this dispute is proper only in Colorado, and there is
no jurisdiction 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 of approximately $1.3 million. If this claim is
brought before a court in Colorado, the Company believes it has meritorious
defenses and will vigorously defend against such claim. By virtue of the
institution of Chapter 11 proceedings by the Company, all efforts to collect
upon this judgment have been temporarily stayed and will be determined by the
Chapter 11 plan of reorganization.

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. By order
of the Court entered May 2, 2001, this case was dismissed without prejudice.

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 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.

On April 18, 2001, in the case of Today's Staffing, Inc. v. Internet
Commerce & Communications, Inc., District Court, City and County of Denver,
Colorado, a Default judgment in the amount of approximately $90,000 was entered
against the Company. By virtue of the institution of Chapter 11 proceedings by
the Company all efforts to collect upon this judgment have been temporarily
stayed and will be determined by the Chapter 11 plan of reorganization.

On July 31, 2001, Internet Commerce & Communications, Inc., a Delaware
corporation, filed a voluntary petition for relief under Chapter 11, Title 11 of
the United States Bankruptcy Code with the United States Bankruptcy Court for
the District of Colorado (the "Court"). The Chapter 11 filing is intended to
allow the Company, as debtor-in-possession, to continue to manage and operate
its assets and businesses in the ordinary course of business subject to the
supervision and orders of the Court.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

During the three months ended June 30, 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 May 22, 2001, the Company issued 100,000 shares of common
stock (valued at approximately $29,000) to MicroCap Analyst
for consulting services rendered by MicroCap Analyst.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

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

None.

ITEM 5. OTHER EVENTS

On July 18, 2001, the Company common stock, which was previously traded
on the Nasdaq National Market, began trading on the Nasdaq SmallCap Market. On
August 1, 2001, trading of the Company's common stock on the Nasdaq SmallCap
Market was halted and subsequently delisted. The Company's common stock is
currently trading on the over-the-counter market, commonly referred to as the
"pink sheets."

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

Exhibit Number Description
-------------- ----------------------------------------------------------------------------------

16.1 Letter from Ernst & Young LLP to the Securities and Exchange Commission concerning
the Registrant's disclosure of Ernst & Young LLP's resignation as independent
auditor.

(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: August 20, 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)

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INDEX TO EXHIBITS

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------- -----------

16.1 Letter from Ernst & Young LLP to the Securities and
Exchange Commission concerning the Registrant's
disclosure of Ernst & Young LLP's resignation as
independent auditor.
</Table>