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TYPE: 425
SEQUENCE: 1
DESCRIPTION: PRESS RELEASE FILED PURSUANT TO RULE 425
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Filed by: RMI.NET, Inc.
This communication is filed pursuant to
Rules 165 and 425, as promulgated under
the Securities Act of 1933, as amended.
Subject Company: Internet Communications
Corporation
Commission File No. 0-19578
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THIS COMMUNICATION IS FILED PURSUANT TO RULES 165 AND 425, AS PROMULGATED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. INVESTORS ARE URGED TO READ THE VARIOUS
FILINGS OF RMI.NET, INC AND INTERNET COMMUNICATIONS CORPORATION THAT WILL BE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO RMI.NET'S
PROPOSED ACQUISITION OF INTERNET COMMUNICATIONS CORPORATION, INCLUDING THE PROXY
STATEMENT/REGISTRATION STATEMENT THAT IS REQUIRED TO BE FILED WITH RESPECT TO
THE PROPOSED ACQUISITION. THE SECURITIES AND EXCHANGE COMMISSION FILINGS ARE
AVAILABLE TO THE PUBLIC AT THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT
http://www.sec.gov. INVESTORS CAN ALSO OBTAIN FREE COPIES OF THE DOCUMENTS
RELATING TO RMI.NET, INC. BY CONTACTING CHRISTOPHER J. MELCHER, VICE PRESIDENT
AND GENERAL COUNSEL, RMI.NET, INC. LEGAL DEPARTMENT, 999 EIGHTEENTH STREET,
SUITE 2201, DENVER, COLORADO 80202, (303) 672-0700, http://www.rmi.net.
Set forth below is a press release issued by RMI.NET, Inc. relating to RMI.NET,
Inc.'s first quarter 2000 financial results.
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[RMI.NET LOGO]
FOR IMMEDIATE RELEASE: PLEASE CONTACT:
May 3, 2000 Steven P. Eschbach, CFA
Vice President - Investor Relations
Phone: 303.308.2272
Email: steve.eschbach@corp.rmi.net
RMI.NET, INC. REPORTS RECORD QUARTERLY REVENUES
OF $12.4 MILLION FOR THE FIRST QUARTER 2000
GROSS MARGINS IMPROVE 12 PERCENTAGE POINTS AND
EBITDA PERFORMANCE IMPROVES 56 PERCENT OVER FOURTH QUARTER 1999
QUARTERLY HIGHLIGHTS TABLE
THREE MONTHS ENDED PERCENT CHANGE
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Mar. 31, 2000 Dec. 31, 1999
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Revenues
Communication Services $ 10,243 $ 8,004 28.0%
Web Solutions $ 2,145 $ 1,334 60.8%
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Total Revenues $ 12,388 $ 9,338 32.7%
Gross Margin $ 4,556 $ 2,365 92.6%
Selling, General & Admin. Expenses $ 8,128 $ 10,503 22.6%
EBITDA Loss $ (3,572) $ (8,138) 56.1%
EBITDA Loss Per Share $ (0.17) $ (0.42) 59.5%
Loss Per Share $ (0.35) $ (0.63) 44.4%
DENVER -- RMI.NET, Inc. (NASDAQ NMS: RMII), a national e-commerce and
connectivity company, today reported record quarterly revenues of $12.4 million
for the three months ended March 31, 2000, an increase of 135 percent from the
same period a year ago and up 33 percent from the fourth quarter of 1999.
RMI.NET reported an EBITDA(1) loss per share of $0.17 for the first quarter of
2000, a 15 percent improvement versus the same period in 1999 and a 60 percent
improvement over the fourth quarter of 1999.
On an earnings per share basis, the company reported a loss of $0.35 per share
for the three months ended March 31, 2000.
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(1) EBITDA represents operating loss before depreciation and amortization.
EBITDA is not a measurement of financial performance under generally accepted
accounting principles and should not be considered as an alternative to the net
income measure of performance.
-more-
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RMI.NET REPORTS RECORD QUARTERLY REVENUES - MAY 3, 2000 - PAGE 2 OF 5
"We are very pleased in every respect with our performance for the first quarter
of this year," said Douglas H. Hanson, RMI.NET's Chairman and Chief Executive
Officer. "The improvements in revenues, gross margin and bottom-line results are
consistent with our objective of achieving breakeven cash flow by December of
this year. We are confident that our financial performance will continue to
improve in subsequent quarters through successful renegotiations of vendor
contracts as well as other previously identified efficiencies."
Acquisitions and Productivity Fuel Revenue Increase
Three acquisitions late last year - Phoenix-based Future One, LaJunta,
Colo.-based Western Regional Networks and Schaumburg, Ill.-based AIS Network -
were the major drivers behind the sequential quarterly revenue growth.
Additional revenue improvements over the previous quarter came from increased
customers for the company's high bandwidth digital subscriber line (DSL) service
as well as custom web production and web hosting/co-location services.
Communications services revenues in the first quarter of 2000 were up 28 percent
over the fourth quarter of 1999; web solutions revenues for the first quarter of
2000 were up 61 percent over the fourth quarter of 1999.
Year-over-year revenue growth was attributable primarily to acquisitions.
Fourteen of the company's 16 acquisitions last year were completed in the
second, third and fourth quarters. Both communications services and web
solutions revenues for the three months ended March 31, 2000 more than doubled
the amounts reported for the same period a year ago.
Gross Margins Improve Sequentially
Gross margin for the three months ended March 31, 2000 was 37 percent, a 10
percentage point decline from the same period a year ago but a 12 percentage
point improvement from the three months ended December 31, 1999. The margin
decline from the year ago quarter was reflective of the product mix resulting
from acquisitions. Margin improvement over the previous quarter was driven by
revenue improvements both in communication services and web solutions.
Selling, General and Administrative Expenses Decline as a Percent of Revenues
Selling, general and administrative expenses (SG&A) also showed improvements -
both over the same period a year ago and the fourth quarter of 1999. SG&A as a
percent of revenue in the first quarter of 2000 of 66 percent improved from 112
percent reported for the three months ended December 31, 1999 and from 85
percent reported from the same period a year ago. The improvement in SG&A in the
first quarter 2000 versus the fourth quarter of 1999 was due to reduced costs
due to the national marketing campaign completed in December. The year-over-year
quarterly improvement in SG&A was attributable primarily to productivity derived
from sales force expansion and the increased availability of DSL service.
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RMI.NET REPORTS RECORD QUARTERLY REVENUES - MAY 3, 2000 - PAGE 3 OF 5
Future Outlook
"Investors are taking a closer look at fundamentals, and we are doing the same
thing to enhance shareholder value," added Hanson. "Our near-term focus is
directed on reducing and eliminating our cash burn as soon as possible while
maintaining the tenets of our strategic vision. We will continue to expand both
organically and through additional acquisitions that are consistent with our
positive cash flow objective. We have identified initiatives that will enhance
the financial performance of our business plan and efforts are being carried out
to effect all efficiency action items as soon as possible."
First Quarter Milestones and Recent Developments
o Key Acquisitions:
o Announced a definitive agreement to acquire Denver-based Internet
Communications Corp. (NASDAQ: INCC), an integrated communications
solution provider and network services company, for $28 million in
stock and warrants. Upon successful completion of this transaction,
RMI.NET's annualized revenue run rate will exceed $70 million, with
business-related revenues representing 65 percent of the total.
o Acquired a 19.9 percent stake in Platformix (formerly
enginenumber9.com), a vertical market applications service provider
(ASP) and developer of "private label" virtual desktops for businesses
and associations. As part of the agreement, Platformix agreed to work
exclusively with RMI.NET for the development and maintenance of its
wholly owned web company, tribeside.com, a vertical web portal geared
toward high school and college students.
o DSL Growth: Added 1,000 new digital subscriber line (DSL) customers,
bringing the total to 4,300 installed and pending customers. With the
announcement of its partnership with New Edge Networks on April 12, 2000,
the company expanded its reach and opportunities for continued DSL customer
additions.
o Partnerships
o Utilizing the industry-leading Persona(TM) software technology
developed by PrivaSeek, Inc., RMI.NET became the first Internet
company in the nation to allow business and residential customers to
control the content they receive from Internet advertisers, marketers,
content providers and companies utilizing e-Commerce capabilities.
o Became the first commerce services provider (CSP) to employ
PromulGate(TM) "latent time" technology, developed by The DelFin
Project(TM), Inc., to provide dial-up customers with information as
they authenticate their access to the World Wide Web. This technology
is an advertising-delivery system that offers customers interaction
with personalized content rather than a blank screen.
Initiatives for the Remainder of 2000
o Aggressively increase the sales force from 100 currently to 200 by
September 30, 2000 with greater emphasis on higher priced and higher margin
products and services.
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RMI.NET REPORTS RECORD QUARTERLY REVENUES - MAY 3, 2000 - PAGE 4 OF 5
o Continue negotiations with vendors to obtain more favorable pricing and
thus lower cost of sales. Cost reductions have been identified and actions
are being taken to secure these savings, with further opportunities to be
acted upon through September 30, 2000.
o Complete the integration of the financial back office accounting and
billing system to enhance both internal management and external customer
reporting.
o Build upon the upgrades to our backbone routers, improved peering and added
OC-3 transit in Seattle achieved in the last six months. Looking ahead six
months, complete the network integration of acquisitions and eliminate
unneeded duplication while increasing critical component and circuit
redundancy.
o Continue the development and enhancement of established reusable
object-oriented software code to allow better delivery of software
solutions with less programming effort. This will benefit our customers
because the time to market and cost for their solutions is lessened while
at the same time making RMI.NET more price competitive with improved
margins.
o Achieve additional economies of scale through acquisitions that enhance
geographic density in the markets where we have an existing presence.
ABOUT RMI.NET
Denver-based RMI.NET, Inc., formerly Rocky Mountain Internet, is a national
e-commerce and connectivity company focusing on solutions for small and
medium-sized businesses. The company specializes in e-business applications; web
solutions, including design, hosting and marketing; and high-speed Internet
access, including digital subscriber line (DSL). RMI.NET has an annualized
revenue run rate of more than $50 million and more than 100,000 nationwide
customers. The company wholly owns a proprietary portal site and search engine,
INFOHIWAY, at www.infohiway.com. For more information, call (800) 864-4327, or
visit RMI.NET's web site at www.rmi.net.
This press release may contain forward-looking statements within the scope of
the Securities Act of 1933 and the Securities Exchange Act of 1934. Although the
company believes these statements are based on reasonable assumptions, it can
give no assurance that its goals will be achieved. Differences between assumed
facts and actual results can be material depending on the circumstances and
investors should be aware of the important factors that could have a material
impact on future results. Please refer to the company's cautionary statements
section of RMI.NET's 10-K dated December 31, 1999 and other Securities and
Exchange Commission (SEC) filings subsequent to this date.
NOTE - RMI.NET intends to file its Form 10-Q for the quarter ended March 31,
2000 on or before May 10, 2000. The company believes the financial results
contained in this release are accurate as of today and has no reason to expect
these results to change prior to the filing of the Form 10-Q. However, RMI.NET
can give no assurance or guarantee that changes will not occur with its SEC
filing.
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RMI.NET REPORTS RECORD QUARTERLY REVENUES - MAY 3, 2000 - PAGE 5 OF 5
OPERATING RESULTS
THREE MONTHS ENDED (000S EXCEPT FOR PER SHARE AMOUNTS)
MARCH 31, 2000 DECEMBER 31, 1999 MARCH 31, 1999
-------------------------- -------------------------- --------------------------
Amount % of Rev. Amount % of Rev. Amount % of Rev.
REVENUES
Comm. Services $ 10,243 82.7% $ 8,004 85.7% $ 4,339 82.4%
Web Solutions $ 2,145 17.3% $ 1,334 14.3% $ 924 17.6%
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TOTAL REVENUES $ 12,388 $ 9,338 $ 5,263
COST OF REVENUES
Comm. Services $ 7,311 $ 6,548 $ 2,548
Web Solutions $ 521 $ 425 $ 222
---------- ---------- ----------
TOTAL COST OF REVENUES $ 7,832 63.2% $ 6,973 74.7% $ 2,770 52.6%
GROSS MARGIN $ 4,556 36.8% $ 2,365 25.3% $ 2,493 47.4%
OPERATING EXPENSES
Selling $ 1,579 12.7% $ 2,279 24.4% $ 856 16.3%
General & Admin. $ 6,549 52.9% $ 8,224 88.1% $ 3,618 68.7%
Depreciation & Amort. $ 3,853 31.1% $ 3,972 42.5% $ 1,143 21.7%
---------- ---------- ---------- ---------- ---------- ----------
Total Operating Expenses $ 11,981 96.7% $ 14,475 155.0% $ 5,617 106.7%
OPERATING LOSS $ (7,425) (59.9)% $ (12,110) (129.7)% $ (3,124) (59.4)%
EBITDA $ (3,572) (28.8)% $ (8,138) (87.1)% $ (1,981) (37.6)%
OTHER INCOME (EXPENSE), NET $ 21 $ (133) $ (63)
PREFERRED DIVIDENDS $ -- $ -- $ 99
NET LOSS $ (7,404) (59.8)% $ (12,243) (131.1)% $ (3,286) (62.4)%
LOSS PER SHARE $ (0.35) $ (0.63) $ (0.34)
EBITDA PER SHARE $ (0.17) $ (0.42) $ (0.20)
WEIGHTED AVERAGE SHARES 21,019 19,360 9,767
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