-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F9iSXKHi+44DCHEO2+gpL8ugaQvDSV7O/R/gN7SI74JyptJOBGaOLXlm+NZwqEcs 6o2D8zXptgQW3Y1/roBj2w== 0001047469-99-015446.txt : 19990420 0001047469-99-015446.hdr.sgml : 19990420 ACCESSION NUMBER: 0001047469-99-015446 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990312 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990419 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROCKY MOUNTAIN INTERNET INC CENTRAL INDEX KEY: 0001003282 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 841322326 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-28738 FILM NUMBER: 99596968 BUSINESS ADDRESS: STREET 1: 1099 18TH STREET STREET 2: STE 3000 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3036720700 MAIL ADDRESS: STREET 1: 1099 18TH STREET STREET 2: STE 3000 CITY: DENVER STATE: CO ZIP: 80202 8-K/A 1 FORM 8-K/A 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) February 2, 1999 ------------------------------ Rocky Mountain Internet, Inc. - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in charter) Delaware - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 001-12063 84-1322326 - -------------------------------- --------------------------------- (Commission File Number) (IRS Employee Identification No.) 999 Eighteenth Street, Suite 2201 80202 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (303) 672-0700 ---------------------------- Not Applicable - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On February 17, 1999, Rocky Mountain Internet, Inc. (the "Company") filed a Current Report on Form 8-K (the "Dave's World Initial Report") dated February 2, 1999 (the date of the event requiring the filing of the Dave's World Initial Report). The Dave's World Initial Report describes the merger of August 5th Corporation, d/b/a Dave's World ("Dave' World") with and into the Company. This Current Report on Form 8-K/A (the "Form 8-K/A") amends the Dave's World Initial Report by including with this Form 8-K/A the financial statements and pro forma financial information required pursuant to Item 7. ITEM 5. OTHER EVENTS. On February 5, 1999, the Company also acquired substantially all of the assets of ImageWare Technologies, L.L.C., an Alabama limited liability company ("ImageWare"), and Communication Network Services, L.L.C., An Alabama limited liability company ("CNS") pursuant to the terms of an Asset Purchase Agreement that was previously filed with the Dave's World Initial Report. The Company intends to utilize the assets acquired from ImageWare and CNS in the same manner that ImageWare and CNS utilized the assets. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Dave's World - Audited Financial Statements: Independent Auditors' Report - Altschuler, Melvoin & Glasser LLP Balance Sheets as of December 31, 1998 and 1997 (Exhibit A) Statements of Operations for the Years Ended December 31, 1998 and 1997 (Exhibit B) Statements of Stockholders' Equity (Deficiency) for the Years Ended December 31, 1998 and 1997 (Exhibit C) Statements of Cash Flows for the Years Ended December 31, 1998 and 1997 (Exhibit D) Notes to Financial Statements (b) Pro Forma Financial Information Pro Forma Condensed Combined Balance Sheet as of December 31, 1998 Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 1998 (c) Exhibits Exhibit Number Description ----------------- ---------------------------------------------- 10.1 Agreement and Plan of Merger dated as of February 2, 1999 by and between Rocky Mountain Internet, Inc. and August 5th Corporation, d/b/a Dave's World. * 10.2 Asset Purchase Agreement by and among Rocky Mountain Internet, Inc. ImageWare Technologies, L.L.C., and Communication Network Services, L.L.C. * 20.1 News Release dated February 3, 1999 announcing the Dave's World Merger. * 20.2 News Release dated February 9, 1999 announcing the purchase of the assets of Image Ware and CNS. * * Previously filed. 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. Rocky Mountain Internet, Inc. ------------------------------------------- (Registrant) Date: April 16, 1999 By: /s/ PETER J. KUSHAR -------------------------------- Peter J. Kushar Chief Financial Officer and Treasurer AUGUST 5TH CORPORATION (D/B/A DAVE'S WORLD) INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENTS DECEMBER 31, 1998 AUGUST 5TH CORPORATION (D/B/A DAVE'S WORLD) TABLE OF CONTENTS Page INDEPENDENT AUDITORS' REPORT 2 FINANCIAL STATEMENTS: Balance Sheets, December 31, 1998 and 1997 (Exhibit A) 3 Statement of Operations, Years Ended December 31, 1998 and 1997 (Exhibit B) 4 Statement of Changes in Stockholders' Equity (Deficiency), Years Ended December 31, 1998 and 1997 (Exhibit C) 5 Statement of Cash Flows, Years Ended December 31, 1998 and 1997 (Exhibit D) 6 Notes to the Financial Statements 7 - 11 Altschuler, Melvoin & Glasser LLP [Letterhead] INDEPENDENT AUDITORS' REPORT To the Board of Directors of August 5th Corporation We have audited the accompanying balance sheets of AUGUST 5TH CORPORATION, (D/B/A DAVE'S WORLD) as of December 31, 1998 and 1997, and the related statements of operations, changes in stockholders' equity (deficiency) and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of August 5th Corporation, (d/b/a Dave's World) as of December 31, 1998 and 1997, and the results of its operations, changes in stockholders' equity (deficiency) and cash flows for the years then ended, in conformity with generally accepted accounting principles. /s/ Altschuler, Melvoin & Glasser LLP Chicago, Illinois January 27, 1999 Exhibit A AUGUST 5TH CORPORATION (d/b/a Dave's World) Balance Sheets December 31, 1998 and 1997
Assets 1998 1997 --------- --------- Current Assets: Cash $ 5,302 $ 126,359 Accounts receivable (Note 1) 128,202 51,456 Inventories (Note 1) 31,562 77,092 Receivable from related party (Note 3) 97,258 83,406 Other 370 3,485 --------- --------- 262,694 341,798 --------- --------- Property and Equipment (Notes 1 and 2): Cost 704,847 393,958 Less accumulated depreciation and amortization 334,232 211,226 --------- --------- 370,615 182,732 --------- --------- Other Assets: Unamortized loan costs 836 3,593 --------- --------- $ 634,145 $ 528,123 --------- --------- Liabilities and Stockholders' Equity (Deficiency) Current Liabilities: Accounts payable, trade $ 160,911 $ 95,183 Revolving loan indebtedness (Note 4) 100,000 100,000 Current maturities of long-term liabilities (Note 5) 92,315 49,697 Deferred revenue (Note 1) 119,669 70,394 Other 6,059 4,868 --------- --------- 478,954 320,142 --------- ---------
Long-term Liabilities (Note 5) 208,326 188,611 Stockholders' Equity (Deficiency): Common stock, no par value; authorized 1,000 shares; issued and outstanding 915 shares 1,000 1,000 Additional paid-in capital 355,000 355,000 Retained earnings (deficit) (409,135) (336,630) --------- --------- (53,135) 19,370 --------- --------- $ 634,145 $ 528,123 --------- ---------
The accompanying notes are an integral part of this statement. Exhibit B AUGUST 5TH CORPORATION (d/b/a Dave's World) Statement of Operations Years Ended December 31, 1998 and 1997
1998 1997 Revenue (Note 1): Internet access and services $ 1,487,798 $ 938,360 Equipment sales 507,556 49,343 ----------- ----------- 1,995,354 987,703 ----------- ----------- Cost of Revenue Earned: Internet access and services 582,330 353,121 Equipment sales 343,930 32,115 ----------- ----------- 926,260 385,236 ----------- ----------- Gross Margin 1,069,094 602,467 Depreciation and Amortization 133,672 101,589 Other General, Selling and Administrative Expense 972,521 453,252 ----------- ----------- 1,106,193 554,841 ----------- ----------- Operating Income (Loss) (37,099) 47,626 ----------- ----------- Other Income (Expenses): Interest expense (56,518) (38,332) Income from expired option (Note 3) 25,000 0 Loss on disposition of equipment (3,888) 0 ----------- ----------- (35,406) (38,332) ----------- ----------- Net Income (Loss) for Year (to Exhibit C) $ (72,505) $ 9,294 ----------- -----------
The accompanying notes are an integral part of this statement. Exhibit C AUGUST 5TH CORPORATION (d/b/a Dave's World) Statement of Changes in Stockholders' Equity (Deficiency) Years Ended December 31, 1998 and 1997
Total Common Stock Additional Retained Stockholders' Share Paid-in Earnings Equity Outstanding Amount Capital (Deficit) (Deficiency) ----------- ------ ------- --------- ------------ Balances, January 1, 1997 608 $ 1,000 $ 50,000 $(162,286) $(111,286) 1997: Net income (Exhibit B) 0 0 0 9,294 9,294 Shares issued for cash 305 0 305,000 0 305,000 Net deficit of Advanced Micro Systems Inc. upon merger (Note 8) 2 0 0 (183,638) (183,638) ------ -------- -------- --------- --------- Balances, December 31, 1997 915 1,000 355,000 (336,630) 19,370 1998: Net loss (Exhibit B) 0 0 0 (72,505) (72,505) Balance, December 31, 1998 915 $ 1,000 $ 355,000 $(409,135) $ (53,135) ------ -------- -------- --------- ---------
The accompanying notes are an integral part of this statement. Exhibit D AUGUST 5TH CORPORATION (d/b/a Dave's World) Statement of Cash Flows Years Ended December 31, 1998 and 1997
1998 1997 --------- --------- Cash Flows from Operating Activities: Net Income (loss) $ (72,505) $ 9,294 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 133,672 101,589 Loss from disposition of equipment 3,888 0 Income from expired option (25,000) 0 Changes in assets and liabilities: Increase in accounts receivable (76,745) (2,942) Decrease (Increase) in inventories 45,530 (13,050) Increase in related party receivable (13,851) (83,406) Decrease in other assets 115 0 Increase (Decrease)in accounts payable 65,728 (17,775) Increase in deferred revenues 49,276 30,581 Increase in other liabilities 1,188 0 Net cash provided by operating activities 111,296 24,291 Cash Flows from Investing Activities: Acquisition of property and equipment (172,006) (100,776) Proceeds from sales of equipment 3,000 0 Cash received upon merger (Note 5) 0 1,307 Proceeds from expired option 25,000 0 Net cash used in investing activities (144,006) (99,469) Cash Flows from Financing Activities: Repayments of capital lease obligations (41,650) (15,796) Repayments of notes payable (49,697) (101,780) Payment of stock subscriptions 3,000 302,000 Net cash (used in) provided by financing activities (88,347) 184,424 Net Increase (Decrease) in Cash (121,057) 109,246 Cash, Beginning of Year 126,359 17,113 Cash, End of Year $ 5,302 $ 126,359 Supplemental Disclosures of Cash Flow Information: Cash paid during the year for: Interest $ 56,518 $ 38,332 Supplemental Disclosures of Noncash Investing and Financing Activities: Acquisitions of equipment through capitalized leases $ 153,680 $ 21,679 Liabilities in excess of assets, other than cash, assumed upon merger (Note 8) $ 0 $ 184,945
The accompanying notes are an integral part of this statement. Note 1--Nature of Activities and Summary of Significant Accounting Policies August 5th Corporation, (d/b/a Dave's World), ("the Company") is an internet service provider in central Illinois. The Company also is engaged in the sales and repairs of computer hardware, operating from leased premises in Bloomington, Illinois. A summary of significant accounting policies followed by the Company is as follows: Accounts Receivable--The Company considers all accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. The Company bills in advance of providing the internet service access. The revenue, for financial reporting purposes, is recognized as earned concurrent with the actual period of internet service. For income tax purposes, such revenue is recorded as billed. Inventories--Inventories of computer hardware held for resale are stated at the lower of cost or market, with cost determined under the average cost method. Depreciation--Provisions for depreciation of property and equipment have been computed (for both financial and income tax reporting purposes) over the estimated useful lives of the assets under accelerated methods. Leasehold improvements are amortized for financial reporting purposes over the statutory recovery period for income tax reporting. The estimated lives for equipment range from 3 to 5 years while an estimated life of 3 to 5 years is used for software and related assets. Income Taxes--See Note 6 regarding income taxes. Estimates--In preparing financial statements in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Note 2--Property and Equipment Property and equipment, and related accumulated depreciation at December 31, 1998 and 1997 consisted of:
1998 1997 --------- --------- Equipment $ 392,676 $ 246,798 Office furniture and fixtures 6,687 6,687 Office equipment 19,599 19,599 Leasehold improvements 19,507 19,507 Equipment software 11,331 0 Capitalized leased equipment 255,047 101,367 --------- --------- 704,847 393,958 Accumulated depreciation (235,486) (165,453) Amortization of capitalized lease equipment (98,746) (45,773) --------- --------- $ 370,615 $ 182,732 --------- ---------
Note 3--Related-Party Receivable At December 31, 1998 and 1997 the Company had receivables from a related party, Websoft, Inc., in which the Company owns a 33 1/3% interest. Amounts due were:
1998 1997 Note Receivable $55,000 $55,000 Accounts Receivable 34,381 28,406 Interest Receivable 7,877 0 $97,258 $83,406
The above note is due on July 10,1999, is unsecured and bears interest at 9.25% per annum. The stock interest in Websoft, Inc., is carried at zero. In 1998 the Company received $25,000 in exchange for an option to sell a portion of its interest in Websoft, Inc. Such option expired in 1998 and the Company recognized $25,000 of income. Note 4--Revolving Loan Indebtedness Secured revolving loan indebtedness as of December 31, 1998 was $100,000. The revolving loan agreement, dated July 10, 1998, with Pontiac National Bank provides for maximum borrowings of $100,000. The revolving loan facility bears interest at a rate of 9.25%, is due on July 10, 1999 and is secured by the Company's inventory and equipment. Note 5--Long-term Borrowings At December 31, 1998 and 1997 long-term borrowings consisted of the following:
1998 1997 Capital lease obligations (a) $193,303 $ 81,273 Note Payable - Lenhardt (b) 31,287 43,262 Note Payable - National City Bank (c) 19,912 30,887 Note Payable - Central Illinois Bank(d) 56,139 69,786 Note Payable - Stockholder 0 13,100 300,641 238,308 Less current portion 92,315 49,697 Long-term portion $208,326 $188,611
Note 5--Long-term Borrowings, Continued Maturities of debt are as follows at December 31, 1998:
Capital Lease Obligations Other -------------- -------- 1999 $ 88,929 $ 36,451 2000 85,929 39,735 2001 61,566 24,459 2002 14,812 6,693 -------- -------- 251,236 $107,338 Less imputed interest 57,933 0 -------- -------- $193,303 $ 0 -------- --------
(a) At December 31, 1998 the Company has leased equipment with an original cost of $255,047 under 6 separate leases expiring from 2001 to 2002. Monthly payments, inclusive of interest (ranging from 14% to 33%) are approximately $7,334 for 1999. Lease obligations are secured by related assets and certain personal guarantees by corporate officers. (b) At December 31, 1998, the Company was obligated to Gary Lenhardt for $31,287 assumed upon a merger in 1997 of the Company and an affiliate (Note 8). This loan bears an interest rate at 8.00% and is repayable including interest, at $1,250 per month. (c) At December 31, 1998, the Company was obligated to National City Bank on a note in the amount of $19,912, with the maturity date of August 28, 2000. The loan bears an interest rate of 10.5% and is repayable including interest, at $1,074 per month. The collateral on this loan consists of certain assets. (d) At December 31, 1998, the Company was obligated to Central Illinois Bank for a "Small Business Loan" in the amount of $57,257 which has an interest rate of 9.75% and a maturity date of April 12, 2002. The monthly payments, including interest, are $1,720 with the collateral on this loan consisting of certain assets. Note 6--Income Taxes Deferred tax assets and liabilities are recognized for temporary differences between the financial reporting basis and tax basis of the Company's assets and liabilities. At December 31, 1998 and 1997, the Company's net deferred income tax assets consisted of:
1998 1997 Gross deferred tax assets $75,000 $37,000 Less - Valuation allowance 75,000 37,000 Net deferred tax assets $ 0 $ 0
The Company's gross deferred income tax assets consist primarily of (a) the tax effects of the net operating loss carryforward (amounting at December 31, 1998 to $77,000, expiring in 2012 and 2013) and (b) revenue deferred for financial reporting purposes only. (Note 1). Note 7--Commitments The Company has entered into a lease agreement whereby it rents office space in Bloomington, Illinois, for $2,127 per month until March 31, 1999 when the rent increases to $2,195 per month until March 31, 2000. However, the Company has the option to renew the lease for one additional three-year term. Future lease commitments under this agreement are as follows at December 31, 1998: 1999 $ 26,138 2000 6,586 -------- $ 32,724 --------
The Company has another lease agreement whereby it rents space in Peoria, Illinois at $450 per month through January 1999. Note 8--Advanced Micro Systems, Inc. In December 1997, the Company merged with an affiliate, Advanced Micro Systems, Inc. ("Advanced") whereby the Company acquired all of the assets and liabilities of Advanced in exchange for two shares of its own common stock. Since this merger involved entities under common control, it was accounted for in a manner similar to a pooling-of-interests. At historical cost the transaction was recorded as follows: Fair value of assets acquired (including $1,307 cash) $ 96,787 Liabilities assigned 280,425 --------- Net deficit, charged to retained earnings $ 183,638 ---------
Note 9--Potential Merger The Company is currently in negotiation with Rocky Mountain Internet, Inc., (a publicly held company) whereby the latter's common stock would be exchanged for all of the Company's stock. Such transaction is expected to close in early February 1999. AUGUST 5TH CORPORATION (d/b/a Dave's World) Notes to the Financial Statements December 31, 1998 and 1997 SELECTIVE UNAUDITED PRO FORMA COMBINED FINANCIAL DATA The following selected unaudited pro forma combined financial information presented below has been derived from the unaudited or audited historical financial statements of the company and August 5th Corporation (d/b/a Dave's World) 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 pro forma financial data given effect to the proposed acquisition of August 5th Corporation (d/b/a Dave's World). The acquisition is being accounted for using the purchase method of accounting. Accordingly, assets acquired and liabilities assumed are recorded at their estimated fair values, which are subject to further adjustment based upon appraisals and other analysis, with appropriate recognition given to the effect of the Company's borrowing rates and income tax rates. The unaudited pro forma combined statement of operations for the years ended December 31, 1998 and 1997 gives effect to the acquisition as if it had been consummated at the beginning of such year. This pro forma statement of operations combines the historical consolidated statement of operations for the years ended December 31, 1998 and 1997 for the Company and August 5th Corporation (d/b/a Dave's World). The unaudited pro forma condensed combined balance sheet as of December 31,1998 gives effect to the acquisition as if it had been consummated on that date. This pro forma balance sheet combines the historical consolidated balance sheet at that date for the Company and for August 5th Corporation (d/b/a Dave's World). 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 and unaudited historical financial statements and related notes thereto of the Company. Pro Forma Condensed Combined Balance Sheet As of December 31, 1998 (Unaudited)
Historical --------------------------- Rocky August 5th Mountain Corporation Pro Forma Pro Forma Pro Forma Internet, INC. Subtotal Adjustments (B) Combined ------------------------------------------------------------------------------- (Dollars in Thousands) ASSETS CURRENT ASSETS Cash and cash equivalents 5,729 5 5,734 -- 5,734 Trade receivables less allowance for doubtful accounts 1,599 226 1,825 -- 1,825 Inventories 56 32 88 -- 88 Other 225 -- 225 -- 225 ------------------------------------------------------------------------------- Total Current Assets 7,609 263 7,872 -- 7,872 ------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT, net 3,540 371 3,911 -- 3,911 Goodwill, net 13,102 -- 13,102 3,053 (1) 16,155 Other 431 -- 431 -- 431 ------------------------------------------------------------------------------- Total Assets 24,682 634 25,316 3,053 28,369 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES Accounts payable 2,280 261 2,541 -- 2,541 Current maturities of long term debt and capital lease obligations 915 92 1,007 -- 1,007 Deferred revenue 513 126 639 -- 639 Accrued payroll & related taxes 303 303 -- 303 Accrued expenses 1,611 1,611 -- 1,611 ------------------------------------------------------------------------------- Total Current Liabilites 5,622 479 6,101 -- 6,101 ------------------------------------------------------------------------------- LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 494 208 702 -- 702 ------------------------------------------------------------------------------- TotaL liabilites 6,116 687 6,803 -- 6,803 REDEEMABLE CONVERTIBLE PREFERRED STOCK 6,748 -- 6,748 -- 6,748 Stockholders' Equity Common Stock 9 -- 9 -- 9 Additional paid in capital 29,258 356 29,614 2,644 (3) 32,258 Accumulated deficit (17,449) (409) (17,858) 409 (2) (17,449) Unearned compesation -- -- -- -- -- ------------------------------------------------------------------------------- 11,818 (53) 11,765 3,053 14,818 ------------------------------------------------------------------------------- 24,682 634 25,316 3,053 28,369 ------------------------------------------------------------------------------- -------------------------------------------------------------------------------
Pro Forma Condensed Combined Statement of Operations For the Year Ended December 31, 1998 (Unaudited)
Historical ---------------------------- Rocky August 5th Mountain Corporation Pro Forma Pro Forma Pro Forma Internet, INC. Subtotal Adjustments (B) Combined --------------------------------------------------------------------------- (Amount in Thousands, Except Per Share Data) Revenue Communication Services 7,974 1,995 9,969 0 9,969 Web Solutions 2,113 0 2,113 0 2,113 --------------------------------------------------------------------------- 10,087 1,995 12,082 0 12,082 --------------------------------------------------------------------------- Cost of revenue earned Communication Services 3,471 926 4,397 0 4,397 Web Solutions 50 0 50 0 50 --------------------------------------------------------------------------- 3,521 926 4,447 0 4,447 --------------------------------------------------------------------------- Gross profit 6,566 1,069 7,635 0 7,635 --------------------------------------------------------------------------- General, selling and administrative expenses 9,184 972 10,156 0 10,156 Cost related to unsuccessful merger attempt 6,071 0 6,071 0 6,071 Depreciation and amortization 1,789 134 1,923 576 (4) 2,499 --------------------------------------------------------------------------- Operating loss (10,478) (37) (10,515) (576) (11,091) --------------------------------------------------------------------------- Other income (expense) Interest expense (320) (57) (377) 0 (377) Interest Income 51 0 51 0 51 Other income (expense), net 78 21 99 0 99 --------------------------------------------------------------------------- (191) (36) (227) 0 (227) --------------------------------------------------------------------------- Net loss (10,669) (73) (10,742) (576) (11,318) Preferred stock dividends 33 33 Net loss applicable to common Stockholders (10,702) (10,702) Basic and Diluted loss per share from continuing operations (1.39) (1.43) ----------- --------- ----------- --------- Average number of common shares outstanding (5) 7,690 7,914 ----------- --------- ----------- ---------
Pro Forma Condensed Combined Statement of Operations For the Year Ended December 31, 1997 (Unaudited)
Historical --------------------------- Rocky August 5th Mountain Corporation Pro Forma Pro Forma Pro Forma Internet, INC. Subtotal Adjustments (B) Combined --------------------------------------------------------------------------- (Amount in Thousands, Except Per Share Data) Revenue Communication Services 5,076 988 6,064 0 6,064 Web Solutions 1,051 0 1,051 0 1,051 --------------------------------------------------------------------------- 6,127 988 7,115 0 7,115 --------------------------------------------------------------------------- Cost of revenue earned Communication Services 2,060 385 2,445 0 2,445 Web Solutions 0 0 0 0 0 --------------------------------------------------------------------------- 2,060 385 2,445 0 2,445 --------------------------------------------------------------------------- Gross profit 4,067 603 4,670 0 4,670 --------------------------------------------------------------------------- General, selling and administrative expenses 6,980 453 7,433 0 7,433 Depreciation and amortization 887 102 989 576 (5) 1,565 --------------------------------------------------------------------------- Operating loss (3,800) 48 (3,752) (576) (4,328) --------------------------------------------------------------------------- Other income (expense) Interest expense (402) (38) (440) 0 (440) Interest Income 54 0 54 0 54 Other income (expense), net (5) 0 (5) 0 (5) --------------------------------------------------------------------------- (353) (38) (391) 0 (391) --------------------------------------------------------------------------- Net loss (4,153) 10 (4,143) (576) (4,719) --------------------------------------------------------------------------- --------------------------------------------------------------------------- Preferred stock dividends 27 27 Net loss applicable to common Stockholders (4,180) (4,180) Basic and Diluted loss per share from continuing operations (0.79) (0.86) ----------- --------- ----------- --------- Average number of common shares outstanding (5) 5,268 5,492 ----------- --------- ----------- ---------
NOTES TO THE PRO FORMA CONSENSED COMBINED FINANCIAL DATA (UNAUDITED) (A) BASIS OF PRESENTATION The accompanying unaudited pro forma condensed combined balance sheet is presented as of December 31, 1998. The accompanying unaudited pro forma condensed combined statements of operations are presented for the year ended December 31, 1998 and December 31, 1997. (B) PRO FORMA ADJUSTMENTS The following pro forma adjustments have been made to the unaudited condensed combined balance sheet as of December 31, 1998 and the unaudited condensed combined statements of operations for the year ended December 31, 1998 and year ended December 31, 1997: (1) To reflect the 223,989 shares of RMI stock valued at $3,000,000 which is the number of shares anticipated to be issued in connection with the acquisition of August 5th Corporation (d/b/a Dave's World). The excess purchase price over the fair value of the assets acquired has been allocated to goodwill. The pro forma adjustment reflects the incremental goodwill in the amount of $2,879,000. Shares of Common Stock anticipated to be issued for acquisitions were recorded at fair market value as based on the current market price of RMI's publicly traded stock. The final allocation of the purchase price will be made after the appropriate appraisals or analyses are performed. Upon completion of the appraisals 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, customer list or other identified intangibles may be amortized over shorter periods, which would therefore increase amortization expense. (2) To eliminate the equity accounts of the acquisition. (3) To adjust amortization expense due to increase in the carrying value of goodwill, using a life of five years, as if such acquisitions had been completed as of January 1, 1997. (4) To adjust for revenues and expenses for the acquisition of August 5th Corporation (d/b/a Dave's World) as if such acquisitions had been completed as of January 1, 1998. (5) To adjust for revenues and expenses for the acquisition of August 5th Corporation (d/b/a Dave's World) as if such acquisitions had been completed as of January 1, 1997. -----END PRIVACY-ENHANCED MESSAGE-----