1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 17, 2000
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RMI.NET, Inc.
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(Exact name of Registrant as specified in charter)
Delaware
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(State or other jurisdiction of incorporation)
001-12063 84-1322326
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(Commission File Number) (IRS Employee Identification No.)
999 Eighteenth Street, Suite 2201, Denver, Colorado 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 672-0700
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On April 3, 2000, the Registrant filed a Current Report on Form 8-K
(the "INCC Initial Report") describing the proposed acquisition of the assets of
Internet Communications Corporation ("INCC"). This Current Report on Form 8-K/A
amends the INCC Initial Report by including with this Form 8-K/A the pro forma
financial information prescribed by Item 7 of Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) INCC Financial Statements:
Incorporated by reference to INCC's Annual Report on Form 10-K
for the year ended December 31, 1999, as filed with the
Securities and Exchange Commission on March 30, 2000, INCC's
Amended Annual Report on Form 10-K/A for the year ended
December 31, 1999 as filed with the Securities and Exchange
Commission on April 28, 2000, and INCC's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000, as filed with
the Securities and Exchange Commission on May 15, 2000.
(b) Pro Forma Financial Information:
Unaudited Pro Forma Condensed Combined Balance Sheet as of
March 31, 2000
Unaudited Pro Forma Condensed Combined Statement of Operations
for the Three Months Ended March 31, 2000 and for the Year
Ended December 31, 1999
(c) Exhibits:
Exhibit Number Description
---------------- ------------------------------------------
2.1 Agreement and Plan of Merger, dated March
17, 2000, by and among RMI.NET, Inc.,
Internet Acquisition Corporation and
Internet Communications Corporation *
4.1 Form of Warrant Agreement *
4.2 Form of Warrant *
4.3 Form of Registration Rights Agreement
10.1 Exchange Agreement, dated March 17, 2000,
by and between RMI.NET, Inc. and Internet
Communications Corporation *
10.2 Shareholders Agreement, dated March 17,
2000, by and among RMI.NET, Inc.,
Internet Communications Corporation and
Interwest Group, Inc. *
20.1 RMI.NET News Release dated March 20, 2000 **
20.2 INCC News Release dated March 21, 2000 *
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* Incorporated by reference to INCC's Current Report on
Form 8-K, as filed with the Securities and Exchange
Commission on March 31, 2000.
** Previously filed.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RMI.NET, Inc.
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(Registrant)
Date: May 24, 2000 By: /s/ CHRISTOPHER J. MELCHER
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Christopher J. Melcher
Vice President, General Counsel and
Corporate Secretary
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SELECTIVE UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The selected unaudited pro forma condensed combined financial information
presented below has been derived from the unaudited or audited historical
financial statements of RMI.NET, Inc. (Company) and Internet Communications
Corporation (INCC) and reflects management's present estimate of pro forma
adjustments, including a preliminary estimate of the purchase price allocations,
which ultimately may be different.
The acquisition will be accounted for using the purchase method of accounting.
Accordingly, the purchase price will be allocated to assets acquired and
liabilities assumed, recorded at their estimated relative fair values, which
will be subject to adjustment based upon appraisals and other analysis.
Under the terms of the agreement, subject to certain conditions, the Company
agreed to issue a certain number of shares of the Company's common stock to
INCC's shareholders. The number of shares issued by the Company is subject to a
collar that ranges from a maximum RMI.NET share price of $12.89 and a minimum
RMI.NET share price of $6.19. The total number of shares issued may range
between 2.2 million and 4.5 million. Because RMI.NET's common stock is currently
trading below $6.19 per share, the Company used the minimum share price of $6.19
to calculate the number of shares issued. The final share price and the number
of shares issued ultimately may be different. In addition, in order to determine
the total number of shares issued, only INCC options and warrants with an
exercise price below $2.50 have been considered. INCC has additional options and
warrants with an exercise price above $2.50 that will expire unexercised at the
closing of the acquisition.
The unaudited pro forma condensed combined statements of operations for the year
ended December 31, 1999 and the three months ended March 31, 2000 give effect to
the acquisition as if it had been consummated at January 1, 1999. These pro
forma statements of operations combine the historical consolidated statements of
operations for the periods reported for the Company and INCC.
The unaudited pro forma condensed combined balance sheet as of March 31, 2000
gives effect to the acquisition as if it had been consummated on that date. The
pro forma balance sheet combines the historical consolidated balance sheets at
that date for the Company and INCC.
The unaudited pro forma condensed combined financial statements may not be
indicative of the results that actually would have occurred if the transaction
described above had been completed and in effect for the periods indicated or
the results that may be obtained in the future. The unaudited pro forma
condensed combined financial data presented below should be read in conjunction
with the audited historical financial statements and related notes thereto of
the Company and INCC.
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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 2000
Historical
Internet Pro Forma Pro Forma Pro Forma
RMI.NET, Inc. Communications Subtotal Adjustments(A) Combined
------------- -------------- ---------- --------------- ----------
(Dollars in Thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,256 $ 279 3,535 $ -- $ 3,535
Trade receivables less allowance for
doubtful accounts 4,847 3,475 8,322 -- 8,322
Prepaid expenses and other 946 2,930 3,876 -- 3,876
---------- ---------- ---------- ---------- ----------
Total Current Assets 9,049 6,684 15,733 -- 15,733
---------- ---------- ---------- ---------- ----------
PROPERTY AND EQUIPMENT, net 10,111 946 11,057 -- 11,057
Goodwill, net 41,599 746 42,345 21,688 (1) 64,033
Other assets, net 4,593 438 5,031 -- 5,031
---------- ---------- ---------- ---------- ----------
Total Assets $ 65,352 $ 8,814 $ 74,166 $ 21,688 $ 95,854
========== ========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,239 $ 2,290 $ 4,529 $ -- $ 4,529
Current maturities of long term debt and
capital lease obligations 1,869 3,556 5,425 (3,500)(4) 1,925
Deferred revenue 2,362 663 3,025 -- 3,025
Accrued expenses and other 5,313 1,043 6,356 -- 6,356
---------- ---------- ---------- ---------- ----------
Total Current Liabilities 11,783 7,552 19,335 (3,500) 15,835
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 1,906 14 1,920 -- 1,920
DEFERRED REVENUE -- 111 111 -- 111
---------- ---------- ---------- ---------- ----------
Total Liabilities 13,689 7,677 21,366 (3,500) 17,866
STOCKHOLDERS' EQUITY
Preferred stock, Series A -- 5,000 5,000 (5,000)(5) --
Preferred stock, Series B -- 1,816 1,816 (1,816)(5) --
Common stock 21 15,409 15,430 -- 25
3,500 (4)
6,816 (5)
268 (6)
4 (1)
(25,993)(2)
Additional paid in capital 101,713 101,713 -- 128,034
26,321 (1)(3)
Dividends payable -- 268 268 (268)(6) --
Accumulated deficit (49,988) (21,356) (71,344) 21,356 (2) (49,988)
Unearned compensation (83) -- (83) -- (83)
---------- ---------- ---------- ---------- ----------
51,663 1,137 52,800 25,188 77,988
---------- ---------- ---------- ---------- ----------
Total Liabilities and Stockholders' Equity $ 65,352 $ 8,814 $ 74,166 $ 21,688 $ 95,854
========== ========== ========== ========== ==========
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
Historical
Internet Pro Forma Pro Forma Pro Forma
RMI.NET, Inc. Communications Subtotal Adjustments(A) Combined
------------- -------------- --------- --------------- ---------
(Amount in Thousands, Except Per Share Data)
Revenue:
Communication Services $ 10,243 $ -- $ 10,243 $ -- $ 10,243
Web Solutions 2,144 -- 2,144 -- 2,144
Network Integration -- 3,023 3,023 -- 3,023
Network Services -- 2,569 2,569 -- 2,569
-------- -------- -------- -------- --------
12,387 5,592 17,979 -- 17,979
-------- -------- -------- -------- --------
Costs and expenses:
Operating expenses 7,832 4,496 12,328 -- 12,328
Selling expenses 1,579 711 2,290 -- 2,290
General and administrative expenses 6,549 1,154 7,703 -- 7,703
Depreciation and amortization 3,853 212 4,065 1,084 (7) 5,149
-------- -------- -------- -------- --------
Total costs and expenses 19,813 6,573 26,386 1,084 27,470
-------- -------- -------- -------- --------
Operating loss (7,426) (981) (8,407) (1,084) (9,499)
-------- -------- -------- -------- --------
Other income (expense):
Interest expense (64) (95) (159) 65 (8) (94)
Interest income 75 -- 75 -- 75
Other income (expense), net 11 -- 11 -- 11
-------- -------- -------- -------- --------
22 (95) (73) 65 (8)
-------- -------- -------- -------- --------
Net loss (7,404) (1,076) (8,480) (1,019) (9,499)
Preferred stock dividends -- 124 124 (124)(9) --
-------- -------- -------- -------- --------
Net loss applicable to common stockholders $ (7,404) $ (1,200) $ (8,604) $ (895) $ (9,499)
======== ======== ======== ======== ========
Loss per share to common stockholders:
Weighted average number of common shares (5,788)
outstanding(10) 21,019 5,788 4,075 25,094
======== ======== ======== ========
Basic and Diluted loss per share(10) $ (0.35) $ (0.21) $ (0.38)
======== ======== ========
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
Historical
Internet Pro Forma Pro Forma Pro Forma
RMI.NET, Inc. Communications Subtotal Adjustments(A) Combined
------------- -------------- --------- -------------- ---------
(Amount in Thousands, Except Per Share Data)
Revenue:
Communication Services $ 25,864 $ -- $ 25,864 $ -- $ 25,864
Web Solutions 4,258 -- 4,258 -- 4,258
Network Integration -- 12,575 12,575 -- 12,575
Network Services -- 11,875 11,875 -- 11,875
-------- -------- -------- -------- --------
30,122 24,450 54,572 -- 54,572
-------- -------- -------- -------- --------
Costs and expenses:
Operating expenses 17,816 18,798 36,614 -- 36,614
Selling expenses 6,005 3,367 9,372 -- 9,372
General and administrative expenses 21,995 5,131 27,126 -- 27,126
Depreciation and amortization 8,852 961 9,813 4,338 (7) 14,151
-------- -------- -------- -------- --------
Total costs and expenses 54,668 28,257 82,925 4,338 87,263
-------- -------- -------- -------- --------
Operating loss (24,546) (3,807) (28,353) (4,338) (32,691)
-------- -------- -------- -------- --------
Other income (expense):
Interest expense (542) (258) (800) 262 (8) (538)
Interest income 174 -- 174 -- 174
Other income (expense), net (14) -- (14) -- (14)
-------- -------- -------- -------- --------
(382) (258) (640) 262 (378)
-------- -------- -------- -------- --------
Net loss from continuing operations (24,928) (4,065) (28,993) (4,076) (33,069)
Preferred stock dividends 207 412 619 (412)(9) 207
-------- -------- -------- -------- --------
Net loss from continuing operations
applicable to common stockholders $(25,135) $ (4,477) $(29,612) $ (3,664) $(33,276)
======== ======== ======== ======== ========
Loss per share from continuing operations
to common stockholders:
Weighted average number of common shares (5,647)
outstanding(10) 13,736 5,647 4,075 17,811
======== ======== ======== ========
Basic and Diluted loss per share(10) $ (1.83) $ (0.79) $ (1.87)
======== ======== ========
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NOTES TO THE PRO FORMA CONDENSED
COMBINED FINANCIAL DATA
(UNAUDITED)
BASIS OF PRESENTATION
The accompanying unaudited pro forma condensed combined balance sheet is
presented as of March 31, 2000. The accompanying unaudited pro forma condensed
combined statement of operations is presented for the year ended December 31,
1999 and the three months ended March 31, 2000.
(A) PRO FORMA ADJUSTMENTS: The following pro forma adjustments have been
made to the unaudited condensed combined balance sheet as of March 31,
2000 and the unaudited condensed combined statements of operations for
the year ended December 31, 1999 and the three months ended March 31,
2000.
(1) To reflect the issuance of 4,075,000 shares of RMI.NET common
stock, valued at $26.3 million, in connection with the
acquisition of INCC. Of the $26.3 million purchase price, $1.1
million has been attributed to warrants allowing the former INCC
shareholders to purchase approximately 2,410,000 shares of
RMI.NET common stock at an exercise price of $11.50 per share for
the period beginning 30 days following the merger and ending 24
months from the date of the merger. These warrants are callable
at the option of RMI.NET if the daily closing price of RMI.NET
stock equals or exceeds $13.00 per share for five consecutive
trading days. The $21.7 million excess of the purchase price over
the fair value of the assets acquired has been allocated to
goodwill. Shares of common stock issued for the acquisition are
recorded assuming an RMI.NET share price of $6.19. The final
allocation of the purchase price will be made after the
appropriate appraisals or analyses are performed. Upon completion
of the appraisals or analyses, and in accordance with the terms
thereof, the excess purchase price currently allocated to
goodwill will be allocated to the appropriate asset
classifications, including customer list and goodwill. While
goodwill will be amortized over a period of five years, other
identified intangibles may be amortized over shorter periods,
which would therefore increase amortization expense.
(2) To eliminate the equity accounts of the acquired company.
(3) The 4,075,000 includes the conversion of the INCC stock options
which have an exercise price below $2.50 per share. The
conversion is based on the terms set forth in the Agreement and
Plan of Merger. The unexercised stock options will expire upon
completion of the proposed acquisition.
(4) To record the conversion of the $3.5 million loan from Interwest
Group, Inc., INCC's controlling shareholder, to equity. Under the
terms of the acquisition agreement, immediately prior to
completion of the acquisition, the loan will be converted to INCC
equity at the rate of $2.50 per share that will then be converted
into RMI.NET common stock.
(5) To record the conversion of the Series A and Series B Preferred
Stock to common stock.
(6) To convert the dividends payable of acquired company to common
stock.
(7) To adjust amortization expense for the increase in goodwill,
using a life of five years, as if such acquisition had been
completed as of the beginning of such periods.
(8) To reduce interest expense for the reduction in the outstanding
INCC line of credit balance. The outstanding line of credit was
repaid with the $3.5 million loan received from Interwest Group,
Inc.
(9) To eliminate preferred stock dividends as a result of the
conversion of INCC preferred stock into RMI.NET common stock.
(10) The Basic and Diluted loss per share from continuing operations
and the average number of common shares outstanding for the pro
forma combined amounts give effect to the results as if the
acquisition of Internet Communications Corporation had been
completed at the beginning of the period.
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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2.1 Agreement and Plan of Merger, dated March
17, 2000, by and among RMI.NET, Inc.,
Internet Acquisition Corporation and
Internet Communications Corporation *
4.1 Form of Warrant Agreement *
4.2 Form of Warrant *
4.3 Form of Registration Rights Agreement
10.1 Exchange Agreement, dated March 17, 2000,
by and between RMI.NET, Inc. and Internet
Communications Corporation *
10.2 Shareholders Agreement, dated March 17,
2000, by and among RMI.NET, Inc.,
Internet Communications Corporation and
Interwest Group, Inc. *
20.1 RMI.NET News Release dated March 20, 2000 **
20.2 INCC News Release dated March 21, 2000 *
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* Incorporated by reference to INCC's Current Report on
Form 8-K, as filed with the Securities and Exchange
Commission on March 31, 2000.
** Previously filed.