<PAGE>


                   UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                                 WASHINGTON, DC 20549
                                     FORM 10-QSB


[ X ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1997

         OR

[   ]    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

                             ROCKY MOUNTAIN INTERNET, INC
                 ----------------------------------------------------
                 Exact name of Registrant as specified in its charter

DELAWARE                                                   84-1322326
--------                                                   -----------
State or other jurisdiction of                             IRS Employer
incorporation or organization                              Identification

1099 18TH STREET, SUITE 3000  DENVER COLORADO              80202
---------------------------------------------              ------
Address of principal executive offices                     Zip Code

Registrant's telephone number, including area code:        303-672-0700
                                                           ------------
Former name, former address and former fiscal year, if changed since last
report:   NA

Indicate by check mark whether the Registrant (1) has filed all annual,
quarterly and other 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 periods 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 
                                       ---     ---
As of July 31, 1997, Rocky Mountain Internet, Inc. had 5,067,307 shares of
common stock, $.001 par value, outstanding.

Transitional Small Business Disclosure Format (check one) Yes [ ] No [X]

                                     Page 1
<PAGE>

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                         ROCKY MOUNTAIN INTERNET, INC.
                          CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)
                                     ASSETS

                                                 December 31,      June 30,   
                                                     1996            1997     
                                                    (Note)        (Unaudited) 
                                                 ------------     ----------- 
Current assets
  Cash and Cash equivalents                       $  348,978      $  439,299 
  Investments                                      1,356,629         576,918 
  Trade receivables, less allowance for
    doubtful accounts 12/31/1996 $115,700; 
    6/30/1997 $39,899                                518,827         613,040 
  Inventories                                         91,047          29,260 
  Other                                              143,753          30,267 
                                                  ----------      ---------- 
                                                  $2,459,234      $1,688,784 
                                                  ----------      ---------- 
Property and equipment
  Equipment                                        2,513,944       2,756,597 
  Computer software                                  202,501         231,737 
  Leasehold Improvements                             127,877         172,921 
  Furniture, fixtures, and office equipment          413,678         431,013 
                                                  ----------      ---------- 
                                                  $3,258,000      $3,592,268 
  Less accumulated depreciation and
  amortization                                       403,023         767,871 
                                                  ----------      ---------- 
                                                  $2,854,977      $2,824,397 
                                                  ----------      ---------- 
Other assets
  Customer Lists                                     145,444         529,465 
  Deposits                                            80,512          94,384 
                                                  ----------      ---------- 
                                                  $  225,956      $  623,849 
                                                  ----------      ---------- 
                                                  $5,540,167      $5,137,030 
                                                  ----------      ---------- 
                                                  ----------      ---------- 

Note: The consolidated Balance Sheet information as of December 31, 1996 has
      been derived from the Company's audited financial statements appearing
      in Form 10-KSB previously filed with the U.S. Securities and Exchange
      Commission.

                    See Notes to Consolidated Financial Statements

                                     Page 2

<PAGE>

                         ROCKY MOUNTAIN INTERNET, INC.
                          CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)
                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                   December 31,      June 30,
                                                      1996             1997
                                                     (Note)        (Unaudited)
                                                  -----------     ------------
Current liabilities
  Note payable                                    $     4,250     $    499,250 
  Current maturities of long-term debt and
  obligations under capital leases                    451,823          539,363 
  Accounts payable                                    425,160        1,437,639 
  Deferred revenue                                    218,121          256,983 
  Accrued payroll and related taxes                   528,160          136,057 
  Other accrued expense                               460,836          605,714 
                                                  -----------     ------------ 
    Total current liabilities                     $ 2,088,350     $  3,475,006 
                        
Long-term debt and obligations under capital
  leases, less current maturities                 $ 1,134,380     $  1,071,948 
                                                  -----------     ------------ 
Stockholders equity
  Preferred stock, $.001 par value; authorized
    1,000,000 shares; issued and outstanding
    1996, 250,000 shares and 1997 250,000 shares  $       250     $        250
  Common stock, $.001 par value; authorized
    10,000,000 shares; issued 1996 4,540,723
    shares; 6/30/97 4,880,160 shares and
    outstanding 1996 4,540,723 shares;
    6/30/1997 4,848,346 shares                          4,541            4,880
  Additional paid-in capital                        4,839,968        5,547,075
  Treasury stock                                                       (42,000)
  Accumulated deficit                              (2,527,322)      (4,920,129)
                                                  -----------     ------------
               Total stockholders' equity         $ 2,317,437     $    590,076
                                                  -----------     ------------
                                                  $ 5,540,167     $  5,137,030
                                                  -----------     ------------
                                                  -----------     ------------


                    See Notes to Consolidated Financial Statements

                                       Page 3

<PAGE>

                         ROCKY MOUNTAIN INTERNET, INC.
                           STATEMENTS OF OPERATIONS
                                 (UNAUDITED)

<TABLE>
                                                     Three Months Ended       Six Months Ended         
                                                           June 30,                 June 30,           
                                                  ------------------------   ------------------------  
                                                     1996           1997         1996          1997    
                                                  -----------    ----------   ----------   ----------- 
<S>                                               <C>            <C>          <C>          <C>         
Revenue 
  Internet access and services                    $   593,692   $ 1,332,071   $1,102,147   $ 2,645,785 
  Equipment sales                                      40,835       120,342      101,217       203,586 
                                                  -----------   -----------   ----------   ----------- 
                                                      634,527     1,452,413    1,203,364     2,849,371 
                                                  -----------   -----------   ----------   ----------- 
Cost of revenue earned
  Internet access and services                        122,491       490,155      211,326       927,265 
  Equipment sales                                      33,980        97,263       85,178       161,128 
                                                  -----------   -----------   ----------   ----------- 
                                                      156,471       587,418      296,504     1,088,393 
                                                  -----------   -----------   ----------   ----------- 
      Gross Profit                                    478,056       864,995      906,860     1,760,978 

Selling, general and administrative 
  expenses                                            850,189     1,908,932    1,525,919     3,617,237 
Other operating expenses                                            334,371                    334,371 
                                                  -----------   -----------   ----------   ----------- 
  Operating (loss) income                            (372,133)   (1,378,308)    (619,059)   (2,190,630)

Other income (expense)
  Interest expense                                    (44,074)     (106,988)     (67,569)     (191,477)
  Other Income (Expense)                               (5,268)        1,211        1,879        (4,754)
  Interest income                                       2,813         6,009        2,813        18,637 
  Finance charges                                      11,115           229       11,115           416 
                                                  -----------   -----------   ----------   ----------- 
                                                      (35,414)      (99,539)     (51,762)     (177,178)
                                                  -----------   -----------   ----------   ----------- 
  Net (loss) income before income taxes           $  (407,547)  $(1,477,847)  $ (670,821)  $(2,367,808)
Income tax expense                                          0             0            0             0 
                                                  -----------   -----------   ----------   ----------- 
      Net (loss) income                           $  (407,547)  $(1,477,847)  $ (670,821)  $(2,367,808)
                                                  -----------   -----------   ----------   ----------- 
                                                  -----------   -----------   ----------   ----------- 
Primary and fully diluted loss per share
  Net earnings (loss) per share                   $    (0.090)  $    (0.298)  $    (0.19)  $    (0.477)
                                                  -----------   -----------   ----------   ----------- 
                                                  -----------   -----------   ----------   ----------- 
</TABLE>

                             See Notes to Consolidated Financial Statements


                                                 Page 4

<PAGE>

                               ROCKY MOUNTAIN INTERNET, INC.
                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                      (UNAUDITED)

                                                        Six Months Ended
                                                            June 30,
                                                 ----------------------------
                                                       1996           1997
                                                 ------------    ------------
Cash Flows from Operating Activities
  Net (loss) income                              $  (670,821)    $(2,367,808)

  Items not requiring (providing) cash:
    Depreciation and amortization                    111,875         413,074 
    Changes in assets and liabilities:
      Trade receivables                             (135,181)        (94,213)
      Inventories                                    (24,424)         61,788
      Other current assets                             1,107         113,486
      Accounts payable                               131,504       1,012,478 
      Deferred revenue                                30,863          38,862 
      Accrued payroll and related taxes              117,804        (392,103) 
      Other accrued expenses                         127,305         144,879 
                                                 -----------     ----------- 
        Net cash used in
        operating activities                     $  (309,968)    $(1,069,557)
                                                 -----------     ----------- 

Cash Flows from Investing Activities
  Proceeds from investments                                          779,711
  Acquisition of ONE, Inc. assets                                   (150,000)
  Purchase of property and equipment                 (99,855)       (200,950)
  (Additions) deletions to deposits                   49,905         (13,873)
                                                 -----------     ----------- 
      Net cash provided by (used in)
      investing activities                       $   (49,950)    $   414,888
                                                 -----------     ----------- 

Cash Flows from Financing Activities
  Proceeds from notes payable                                        495,000 
  Proceeds from long-term debt                       117,000         312,582 
  Proceeds from sale of preferred stock              406,000
  Proceeds from sale of common stock                                 400,500
  Additions to deferred offering cost               (108,170)
  Payment of Preferred Stock Dividend                                (25,000) 
  RMI stock purchase                                                 (42,000)
  Payments on notes payable                          (12,729)
  Payments on long-term debt and obligations
    under capital leases                             (99,020)       (396,092)
                                                 -----------     ----------- 
        Net cash provided by (used in) 
        financing activities                     $   303,081     $   744,990
                                                 -----------     ----------- 
        Increase (decrease) in cash and cash
          equivalents                            $   (56,837)    $    90,321 

Cash and cash equivalents
  Beginning                                          274,661         348,978 
                                                 -----------     ----------- 
  Ending                                         $   217,824     $   439,299 
                                                 -----------     ----------- 
                                                 -----------     ----------- 

See Notes to Consolidated Financial Statements

                                     Page 5
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. - REPRESENTATION OF MANAGEMENT

The interim financial data is unaudited; however, in the opinion of management,
the interim data includes all adjustments, consisting only of normal recurring
adjustments necessary for a fair statement on the results for the interim
periods.  The financial statements included herein have been prepared by 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 generally accepted accounting
principals 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. - INVESTMENT

The Company has invested in Master Repurchase Agreements of US Treasury Notes as
follows;

    DESCRIPTION              MATURITY DATE            INVESTMENT
    -----------              -------------            ----------
    US Treasury Note         Oct. 31, 1997            $  276,918
    Repurchase Number 96-1   Sept. 10, 1997           $  300,000

NOTE 3. - LINE OF CREDIT

The Company has established a line of credit for $500,000 effective September
18, 1996 with a maturity of September 10, 1997. The line of credit is secured by
pledge of a $300,000 Master Repurchase Agreement of a US Treasury Note held with
the lender and by accounts receivable.  $495,000 of the $500,000 line of credit
is currently drawn down.  Additionally, as part of the acquisition of the
Information Exchange, the Company has an additional $4,250 drawn against another
line of credit.

NOTE 4. ACQUISITION OF ONLINE NETWORK ENTERPRISES, INC.

In January, 1997, the Company acquired the dedicated high speed and dial-up
subscribers from Online Network Enterprises, Inc. (ONE), headquartered in
Boulder, Colorado, a division of VR*1, Inc. The ONE acquisition netted RMI
approximately 47 dedicated and 732 dial-up subscribers and equipment valued at
approximately $24,700. The Company paid $150,000 cash and issued 116,932 shares
of the Company's common stock.

NOTE 5. PRIVATE PLACEMENT

The Company issued a Private Placement Memorandum on June 13, 1997 for the sale
of 600,000 Units.  Each unit is sold for $4.00 and consists of two shares of
Common Stock, $.001 par value per share, and one Warrant.  The $4.00 per Unit
purchase price is allocated $1.90 to each share of Common Stock and $.20 to the
Warrant.  Each Warrant entitles the registered holder to purchase one share of
Common Stock at an exercise price of $3.00 per share.  As of 6/30/97, gross
proceeds from the offering were $445,000 or 111,250 Units.  Refer to Exhibit
10.11 - Private Placement Memorandum for additional information.

                                     Page 6
<PAGE>

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

Certain information contained in this Form 10-QSB, including "Management's
Discussion and Analysis of Financial Condition and Results of Operations" ,
contain forward-looking statements. The forward-looking statements herein are
based on current expectations that involve a number of risks and uncertainties.
Such forward-looking statements are based on assumptions that the Company will
continue to design, market and provide successful new services, that competitive
conditions will not change materially, that demand for the Company's services
will continue to grow, that the Company will retain and add qualified personnel,
that the Company's forecasts will accurately anticipate revenue growth and the
costs of producing that growth, and that there will be no material adverse
change in the Company's business.  In light of the significant uncertainties
inherent in the forward-looking information included in this Form 10-QSB, actual
results could differ materially from the forward-looking information contained
in this Form 10-QSB.

The Company is implementing an operating plan calling for growth through
expansion of existing business categories, expansion of capabilities through
implementation of a frame relay switch backbone, expanding World Wide Web page
hosting and creation, and additional opportunities that fit within the Internet
business.

Effective January 16, 1997, the Company acquired dial-up and dedicated access
subscribers from Online Network Enterprises, Inc. (ONE), a Boulder, Colorado,
based provider of Internet access and Web services for consideration consisting
of $150,000 of cash and 116,932 shares of the Company's common stock.

The Company may experience fluctuations in operating results in the future
caused by various factors, some of which are outside of the Company's control,
including general economic conditions, specific economic conditions in the
Internet access industry, user demand for the Internet, capital expenditures and
other costs relating to the expansion of operations, the timing and number of
customer subscriptions, the introduction of new services by the Company or its
competitors, the mix of services sold and the mix of distribution channels
through which those services are sold.  In addition, the Company's expenses,
including but not limited to obligations under equipment leases, facilities
leases, telephone access lines, and Internet access are relatively fixed in the
short term, and therefore variations in the timing and amount of revenues could
have a material adverse effect on the Company's results of operations.

Termination Agreement - Joint Venture with Zero Error Networks

The Company and Zero Error Networks (ZEN), a Joint Venture partner signed a
"TERMINATION AGREEMENT" effective July 3, 1997, which affects four points of
presence (POP) located in Pueblo, Hayden, Leadville, and Alamosa, Colorado.
These POP's have been operated under a revenue and expense sharing agreement
between the two parties.  The Termination Agreement calls for ZEN to operate the
Hayden, Leadville, and Alamosa, Colorado locations and receive the rights to the
customer base currently existing in those locations while the Company will
operate and maintain

                                     Page 7
<PAGE>

the customer base in Pueblo and surrounding areas.  The transition is to occur
during the months of July and August, 1997. The Company has contracted for a
location (POP site) in Pueblo and installed approximately $35,000 of equipment
therein.  The Termination Agreement includes a limited non-compete clause
wherein neither party may directly solicit the existing customer base of the
other for a period of one year.  The net effect of the Termination Agreement
on net income is expected to be neutral in the shortrun and have a positive
long term result.  The Pueblo revenues are expected to grow at a faster rate
than the other three POP's combined and the Company plans to focus additional
effort to selling dedicated access in the Pueblo market.  See Exhibit 10.10
for specific terms and conditions of the agreement.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1996 AND 1997

The Company's revenues grew 129% from $634,526 to $1,452,413 for the three
months ended June 30, 1997 as compared to the comparable period in 1996.  Listed
below is a breakdown of the revenue billing categories.

                                            Three Months Ended
                                                 June 30,
                                     ---------------------------------
                                       1996         1997      % Change
                                     --------    ----------   --------
     REVENUE
     Dial-Up Service                 $349,239    $  570,992      63%
     Dedicated access Service         149,221       461,239     209%
     Web Services                      92,612       251,413     171%
     Equipment                         40,835       120,342     195%
     Other                              2,620        48,427    1748%
                                     --------    ----------    ----
        Total                        $634,527    $1,452,413     129%
                                     --------    ----------    ----
                                     --------    ----------    ----

Dial-Up Service

The Company's strategy is to provide an high quality service with few busy
signals.  In order to assure this service level, the Company does not provide
any unlimited access service price plans during the business day, since these
plans have a tendency to congest the network.  The Company does provide a range
of service offerings based on a set number of hours for a set rate with
additional hours billed as overage.  The table below shows the composite
weighted average billing rate for full service Internet access by quarter for
1995, 1996, and 1997.

                           For the Three Months Ended

   Mar     Jun     Sep     Dec     Mar     Jun     Sep     Dec     Mar     Jun
  1995    1995    1995    1995    1996    1996    1996    1996    1997    1997

 $20.52  $20.42  $20.88  $21.02  $20.97  $20.33  $20.41  $20.50  $20.10  $20.04

The Dial-up business continues to experience growth based on reputation, trade
show attendance, and marketing by joint venture partners in outlying areas of
Colorado. Dial-up Service has been split approximately evenly between commercial
and residential customers throughout 1995, 1996, and 1997. Dial-Up revenues
increased from $349,240 to $570,990 or 63% from the 3 months ending June 30,
1996 to the 3 months ending June 30, 1997.

                                     Page 8
<PAGE>

RMI has established business alliances with five, locally-based unrelated
parties for the purpose of providing Internet services in secondary markets in
the State of Colorado.  Each of these joint ventures are conducted under a
written agreement that provides for the locally-based party to provide equipment
and marketing services while the Company provides Internet access and
administrative services.  Dial-up revenues based on these joint ventures
generated $76,539 in revenues for the three month period ending June 1996 and 
$151,082 for the same period in 1997, for an increase of 97%. The joint venture
points of presence (POP) began in the second quarter of 1995 and grew to six
locations by the end of 1995 and eight locations by the end of 1996.  Effective
July 3, 1997, the joint venture relationship with Zero Error Networks (ZEN) was
terminated.  Under the termination agreement, the Company will operate the
Pueblo POP as a Company only location and ZEN will operate Alamosa, Leadville,
and Hayden locations.  (See Item 4, paragraph 7 for additional details).  The
Joint Venture in Grand Junction, Colorado was terminated by the Company
effective April 30, 1997. The marketing efforts by the locally-based joint
venture partner in this location were minimal and sales were less than $1,000
per month.  The Company is pursuing options to operate this facility and add
dedicated as well as Dial-Up customers.

Dedicated Access Service

Dedicated access services are primarily provided to commercial customers and
include a wide range of connectivity options tailored to the requirements of the
customer.  These services include private port (dedicated modem), Integrated
Services Digital Network (ISDN) connections, 56 Kbps frame relay connections,
T-1 (1.54 Mbps) frame relay connections, point to point connections, and T-3
(45 Mbps) or fractional T-3 connections.  The Company also offers a colocation
service in which the customer's equipment is located in the RMI data center,
thereby providing access to the Internet directly through the Company's
connection.

Dedicated business has grown based principally on ISDN and High Speed circuit
growth.  ISDN sales have grown from $6,800 to $150,300 from second quarter 1996
to second quarter 1997 for an increase of 2110%, while high speed circuits have
increased from $98,720 to $236,750 for the same periods for an increase of 140%.

                                     Page 9

<PAGE>

Web Services

Web services revenues are composed of Web page hosting and Web page 
production. Web page hosting provides ongoing revenue from customers for whom 
RMI hosts a Web site on Web servers in the RMI data center.  All access made 
to these Web Sites by the customer and the Internet community as a whole are 
processed on the RMI servers.  The advantage to customers is high speed 
access to sites by their targeted audiences.  The following is a summary of 
the number of Web hosting customers as of the dates indicated:

Mar 31  Jun 30  Sep 30  Dec 31  Mar 31  Jun 30  Sep 30  Dec 31  Mar 31  Jun 30
  1995    1995    1995    1995    1996    1996    1996    1996    1997    1997
     1      21      45      90     157     217     242     341     418     424

Web page hosting accounted for $52,600 of revenue in the second quarter of 
1996 and $114,700 in the second quarter of 1997 revenue for an increase of 
118%.  The increase resulted from increases in the direct sales force, 
increased server capacities and speed, and the increasing popularity of the 
Web as a business tool.

Web page production increased from $40,000 for the second quarter 1996 to 
$136,700 for the second quarter 1997 for an increase of 242%.  The Company 
increased the size of the Web production department as well as provided 
customers more complex applications. The growth in Web hosting business plus 
the activities of the Company's direct sales force helped to drive this part 
of the business.  The Company did not have a direct sales force until 
December, 1995.

Other Revenue

Other revenue includes training revenue ($2,570 increased to $9,040), network 
consulting ($0 increased to $10,750)and sales from the Information Exchange, 
a voice messaging subsidiary ($0 increased to $27,400).  The Information 
Exchange was acquired in a stock transaction in late 1996.

Gross Profit

Gross profit consists of total revenue less the cost of delivering services 
and equipment.  The gross profit (exclusive of equipment sales) was 79.4% for 
the three months ended June 30, 1996 and 63.2% for the same period in 1997.  
In late December, 1996, the Company implemented a frame relay network using 
Cascade switches.  The switches are connected with a T-3 fiber optic network 
to provide a high speed and highly reliable connection.  The implementation 
of this network has provided very high capacities for connections and has 
resulted in a short term erosion of gross margin while the capacity is sold.  
Future circuits sold on this network should have high yields because the 
capacity is in place.  Gross profits on equipment sales were 16.8% and 19.2% 
for the 3 month periods ending June 30, 1996 and 1997 respectively.  Sale of 
equipment is provided as an accommodation to the Company's customers. 

                                   Page 10
<PAGE>

Selling, General, and Administrative Expenses

Selling, general and administrative expenses increased by 125% from the three 
months ended June 30, 1997 over the same period of 1996. This increase 
resulted from the overall expansion of the business and is in keeping with 
the strategy of building an organization capable of handling rapid growth and 
expansion. Compensation and related personnel costs increased from $542,200 
to $1,084,300 or 100% from the three month period in 1996 to 1997.  
Personnel were added in all areas to expand the Company's sales efforts, 
technical support, and administrative capabilities.  The Company believes 
that future revenue growth will not require a proportional increase in 
personnel expense as the Company is positioned to experience economies of 
scale.  Advertising, trade shows, and marketing expenses increased from 
$59,450 to $81,620 or 37% for the three months ended June 30, 1996 as compared
to the same period for 1997.  Outside services expense increased from $21,060 
to $148,400 or 605% for the second quarter of 1997 over the second quarter of 
1996.  The largest components of the increase are professional services for 
consultants ($58,200), legal expenses ($33,800), and clerical accounting 
staff and customer technical support staff hired on a temporary to permanent 
basis ($36,520).  Depreciation and amortization in regards to equipment, 
software, furnishings, and capital leases increased by $149,800 or 201% due 
to establishing a state of the art data center, implementing the frame relay 
network with Cascade switches, expansion of equipment for dial up 
connections, plus equipment for administrative use. Communication expense in 
the form of 800 number lines, long distance, and general administration 
increased to $72,900 or 70% for the three months ended June 30, 1997 to the 
same period in 1996.  This increase is reflective of the Company's growth 
plus the increase of toll free 800 technical support service offered for dial 
in customers.

Other Operating Expenses

During the three months ended June 30, 1997, the Company incurred one time 
expenses for: a write-off of Joint Venture project costs in Grand Junction 
and Burlington, Colorado in the amount of $45,113, a write down of inventory 
for sale in the amount of $23,031, an expense of $158,994 relating to 
termination of employees, and $107,233 of legal expenses relating to the 
terminations and defense of the lawsuit referenced in Part II, Item 1 of this 
document.

SIX MONTHS ENDED JUNE 30, 1996 AND 1997

The Company's revenues grew 137% from $1,203,364 to $2,849,371 for the six 
months ended June 30, 1997 as compared to the comparable period in 1996.  
Listed below is a breakdown of the revenue billing categories.  

                                   Page 11
<PAGE>

                                           Six Months Ended
                                               June 30,
                                      --------------------------------------
                                         1996            1997       % Change
                                      ----------     -----------    --------
     REVENUE
     Dial-Up Service                  $  667,143      $1,166,678        75%
     Dedicated access Service            275,083         808,832       194%
     Web Services                        147,096         467,886       218%
     Equipment                           101,217         203,586       101%
     Other                                12,825         202,389      1478%
                                      ----------      ----------      -----
        Total                         $1,203,364      $2,849,371       137%
                                      ----------      ----------      -----
                                      ----------      ----------      -----

Dial-Up Service

The Dial up business continues to experience growth based on reputation, 
trade show attendance, and marketing by joint venture partners in outlying 
areas of Colorado. Revenues increased from $667,140 to $1,166,680 or 75% from 
the 6 months ending June 30, 1996 to the 6 months ending June 30, 1997.   
Dial-up Service has been split approximately evenly between commercial and 
residential customers throughout 1995, 1996, and 1997.  

RMI has established business alliances with five unrelated parties for the 
purpose of providing Internet Services in secondary markets in the State of 
Colorado.  These joint venture agreements provide for the local party to 
provide equipment and marketing services while the Company provides Internet 
access and administrative services.  Dial-up revenues based on these joint 
ventures generated $138,290 in revenues for the six month period ending June 
1996 and $283,240 for the same period in 1997 for an increase of 105%. 

Dedicated Access Service

Dedicated business has grown based principally on ISDN and High Speed circuit 
growth.  ISDN sales have grown from $9,840 to $258,220 from the first half of 
1996 to first half of 1997 for an increase of 2524%, while high speed 
circuits have increased from $180,120 to $410,170 for the same periods for an 
increase of 128%.

Web Services

Web page hosting accounted for $82,810 of revenue in the six months ending 
June 30, 1996 and $218,300 for the same period in 1997 for an increase of 
164%.  The increase resulted from increases in the direct sales force, 
increased server capacities and speed, and the increasing popularity of the 
Web as a business tool.

Web page production increased from $64,280 to $249,580 or 288% for the first 
six months of 1996 as compared to the same period in 1997. The Company 
increased the size of the Web production department as well as provided 
customers more complex applications. The growth in Web hosting business plus 
the activities of the Company's direct sales force helped to drive this part 
of the business.

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<PAGE>

Other Revenue

Other revenue includes training revenue ($12,780 increased to $16,860), 
consulting ($0 increased to $121,470)and sales from the Information Exchange 
($0 increased to $63,700), a voice messaging subsidiary.  The Information 
Exchange was acquired in a stock transaction in late 1996.

Gross Profit

Gross profit consists of total revenue less the cost of delivering services 
and equipment.  The gross profit (exclusive of equipment sales) was 80.8% for 
the six months ended June 30, 1996 and 65.0% for the same period in 1997.  In 
late December, 1996, the Company implemented a frame relay network using 
Cascade switches.  The switches are connected with a T-3 fiber optic network 
to provide a high speed and highly reliable connection.  The implementation 
of this network has provided very high capacities for connections and has 
resulted in a short term erosion of gross margin while the capacity is sold.  
Future circuits sold on this network should have high yields because the 
capacity is in place.  Gross profits on equipment sales were 15.8% and 20.9% 
for the 6 month periods ending June 30, 1996 and 1997 respectively.  Sale of 
equipment is provided as an accommodation to the Company's customers.

Selling, General, and Administrative Expenses

Selling, general and administrative expenses increased by 137% from the six 
months ended June 30, 1997 over the same period of 1996. This increase 
resulted from the overall expansion of the business and is in keeping with 
the strategy of building an organization capable of handling rapid growth and 
expansion. Compensation and related personnel costs increased from $932,300 
to $2,042,250 or 119% from the six month period in 1996.  Personnel 
were added in all areas to expand the Company's sales efforts, technical 
support, and administrative capabilities.  The Company believes that future 
revenue growth will not require a proportional increase in personnel expense 
as the Company is positioned to experience economies of scale.  Advertising, 
trade shows, and marketing expenses increased from $106,850 to $129,300 or 
21% for the six months ended June 30, 1997 as compared to the same period for 
1996.  Outside services expense increased from $44,100 to $315,550 or 615% 
for the first half of 1997 over the first half of 1996.  The largest 
components of the increase are professional services for consultants 
($104,980), legal expenses ($64,400), accounting services for the year end 
audit and SEC reporting assistance ($44,580), and clerical accounting staff  
and customer technical support staff hired on a temporary to permanent basis 
($89,650).  Depreciation and amortization in regards to equipment, software, 
furnishings, and capital leases increased by $305,130 or 273% due to 
establishing a state of the art data center, implementing the frame relay 
network with Cascade switches, expansion of equipment for dial up 
connections, plus equipment for administrative use. Communication expense in 
the form of 800 number lines, long distance, and general administration 
increased to $147,100 or 80% for the six months ended June 30, 1996 to the 
same period in 1997.  This increase is reflective of the companies growth 
plus the increase of toll free 800 technical support service offered for dial 
in customers.

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<PAGE>

Other Operating Expense

During the six months ended June 30, 1997, the Company incurred one time 
expenses for: a write-off of Joint Venture project costs in Grand Junction 
and Burlington, Colorado in the amount of $45,113, a write down of inventory 
for sale in the amount of $23,031, an expense of $158,994 relating to 
termination of employees, and $107,233 of legal expenses relating to the 
terminations and defense of the lawsuit referenced in Part II, Item 1 of this 
document.

LIQUIDITY AND CAPITAL RESOURCES

The initial public offering was completed on September 5, 1996.  Operating 
cash flow and earnings for the remainder of 1997 are projected to be 
negative.  The Company continues to build infrastructure and human resources 
to position itself to be a prominent Internet provider in the regional 
market.  The Company will utilize lease financing, as available, for capital 
acquisitions.  The Company is in the process of a Private Placement with a 
stated value of $2,400,000 with a net to the Company of $2,160,000 if the 
offering is fully subscribed.  As of June 30, 1997, gross proceeds of 
$445,000 had been received and as of July 31, 1997, an additional  $447,000 
had been received.  The Company has incurred losses since inception and has 
experienced negative operating cash flow in the first half of 1997.  The 
Company's operations used net cash of approximately $1,069,557 for this 
period.  The cash used by operating activities is primarily attributable to 
the Company's continued expansion of its facilities and employee base in 
anticipation of continued growth in revenues.  

The Company acquired $334,270 of property and equipment during the first half 
of 1997 primarily to complete the Operations Data Center and for various 
other needs.  Additionally, the Company acquired ONE, Inc. for a combination 
of stock and cash.  The cash portion was $150,000 of which, $24,700 was 
allocated to equipment acquisition.

The Company has a bank line of credit in the amount of $500,000 of which 
$495,000 is drawn at June 30, 1997.  The line of credit is secured by a 
pledge of a $300,000 treasury bill repurchase agreement and by the Company's 
accounts receivable.  The Company's office lease is also secured by a pledge 
of a treasury bill of $250,000.

As of  June 30, 1997, the Company had negative working capital of $1,786,222. 
This included $436,299 of cash and cash equivalents and $576,918 of 
investments in financial instruments convertible to cash.  Trade receivables 
as of that date were $613,040.  Current liabilities as of that date were 
approximately $3,475,006, including $1,437,639 of accounts payable, $539,363 
of current maturities of long-term debt and capital lease obligations, 
$136,057 of accrued payroll and related taxes, and $605,714 of accrued 
expenses attributable primarily to a payable on office furniture, deferred 
office rent, preferred stock dividend payable, accrual for unbilled circuit 
costs, and amounts due joint venture partners pending cash collections.  Also 
included in current liabilities as of that date is $256,983 of deferred 
revenue, which represents differences in the timing of payments by customers 
and recognition of the related revenue.  

                                   Page 14
<PAGE>

RMI is an Internet Service Provider (ISP) with an high growth rate (as 
discussed elsewhere in this document).  The Company's growth is dependent on 
building a strong infrastructure and hiring high quality sales, technical, 
and administrative personnel.  In order to build the infrastructure and 
acquire the human resources needed to maintain an high growth rate, the 
Company has operated with a negative cash flow from operations during 1996 
and projects to continue to do so through 1997.  The Company's cash 
requirements are relatively fixed for the near term and the Company expects 
to generate positive operating cash flows in 1998 if revenues continue to 
increase according to expectations without any significant cost increases. 
Should revenues not continue to increase according to expectations, in the 
near term the Company may have to seek additional financing to fund operating 
losses or implement additional reductions in operating expenses. Reductions 
in operating expenses, if effected, could adversely affect revenues and 
therefore not result in the expected increase in cash flow.

The Company's common stock is traded on the Nasdaq SmallCap Market.  The 
Directors of The Nasdaq Stock Market, Inc. recently proposed changes to 
Nasdaq Listing Requirements.  These changes are pending approval by the SEC.  
If approved, the Nasdaq will give companies six months to comply with the new 
requirements.  A minimum maintenance standard of $2 million in net tangible 
assets is included in these proposed changes. The current requirement is 
$1,000,000 of net equity in order to be listed with Nasdaq.  As of June 30, 
1997, the Company had less than $2,000,000 in net tangible assets and less 
than $1,000,000 of net equity. The Company is in the process of a Private 
Placement in the amount of $2,400,000 of which $445,000 had been received by 
June 30, 1997 and an additional $447,000 had been received as of July 31, 
1997. The successful completion of the Company's private placement offering 
would not satisfy the proposed Nasdaq Listing Requirements.  Although the 
existing Nasdaq Listing Requirements would be satisfied by the successful 
completion of the private placement offering, there can be no assurances that 
the Company can continue to satisfy these Listing Requirements. If the 
proposed changes to the SmallCap Market listing criteria are approved by the 
SEC and if the Company fails to meet such requirements, the Company's common 
stock would no longer trade in the SmallCap Market, which would adversely 
affect the liquidity and price of the Company's common stock.  There can be 
no assurance that the Private Placement will be completed in full.  The 
Private Placement Memorandum is attached as Exhibit 10.11.
                                       
                        PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

On September 6, 1996, Robert Lewis and Storefronts in Cyberspace, L.L.C., 
filed a complaint in Denver District Court naming the Company and the 
Colorado Rockies Baseball Club, Ltd., as defendants.  All claims against the 
Company have since been dismissed except for a breach of contract claim 
seeking $25,000 in damages. The Company's management believes the breach of 
contract claim is without merit and intends to vigorously defend against it.  
The Company is not a party to any other litigation. 

                                   Page 15
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K
    (a) Exhibits required by Item 601 of Regulation S-B

Exhibit 
Number   Description of Exhibits

  3.1    Certificate of Incorporation *
  3.2    Bylaws of Rocky Mountain Internet, Inc. *    
  4.1    Form of Warrant Agreement dated September 5, 1996 between Rocky
         Mountain Internet, Inc. and American Securities Transfer, Inc. *
  4.2    Form of Subordinated Convertible Promissory Note *
  4.3    Form of Lock-Up Agreement for Shareholders *
  4.4    Form of Lock-Up Agreement for Preferred Stockholders *
  4.5    Form of Lock-Up Agreement for Debenture Holders *
  4.6    Form of Stock Certificate *
  4.7    Form of Warrant Certificate *
 10.1    Agreement of Lease between Denver-Stellar Associates Limited
         Partnership, Landlord and Rocky Mountain Internet, Inc., Tenant ** 
 10.2    Asset Purchase Agreement - Acquisition of Compunerd, Inc. **
 10.3    Confirmation of $2.0 million lease line of credit **
 10.4    Agreement between MCI and Rocky Mountain Internet, Inc. governing the 
         provision of professional information system development services for
         the design and development of the MCI internal Intranet project
         referred to as Electronic Advice. **
 10.5    Sublease Agreement- 2/26/97 - 1800 Glenarm, Denver, Colorado  
 10.6    Acquisition of The Information Exchange ****
 10.7    Asset purchase of On-Line Network Enterprises  ****
 10.8    1996 Incentive Compensation Plan - Annual Bonus Incentive  **** 
 10.9    1997 Incentive Compensation Plan - Annual Bonus Incentive  **** 
 10.10   TERMINATION AGREEMENT of joint venture between Rocky Mountain Internet,
         Inc. and Zero Error Networks, Inc.
 10.11   Private Placement Memorandum
 16.1    Letter re change in certifying accountant  ***
 23.1    Consent of McGladrey & Pullen, LLP  ****    
 23.2    Consent of Baird Kurtz & Dobson  ****
 27.1    Financial Data Schedule

*     Incorporated by reference from the Company's registration statement
      on Form SB-2 filed with the Commission on August 30, 1996,
      registration number 333-05040C.
**    Incorporated by reference from the Company's Form 10-QSB filing dated
      11/14/96.
***   Incorporated by reference to the Company's Form 8-K filing dated
      1/28/97.
****  Incorporated by reference to the Company's Form 10-KSB dated March
        31, 1997

(b)  Reports on 8-K.  State whether any reports on Form 8-K were filed during
     the last quarter of the period covered by this report, listing the items
     reported, any financial statements filed and the dates of such reports.

    None

                                   Page 16
<PAGE>

In accordance with the requirements of the Exchange Act, the registrant 
caused this report to be signed on its behalf by the undersigned, hereunto 
duly authorized.


Date: August, 14 1997             By:  /s/ DAVID L. EVANS                   
                                       -------------------------------------
                                       David L. Evans
                                       Chief Financial Officer
                                       and Executive Vice President




                                       /s/ ROY J. DIMOFF                    
                                       -------------------------------------
                                       Roy J. Dimoff
                                       President and Chief Executive Officer


                                   Page 17