<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

(Mark One)

 X   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
---  ACT OF 1934
For the fiscal year ended December 31, 2000
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
                                                ---------

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


                Delaware                                    84-1322326
----------------------------------------------          ------------------------
      (State or other jurisdiction of                      (I.R.S. Employer
       incorporation or organization)                      Identification No.)

999 18th Street, Suite 2201, Denver, Colorado                      80202
----------------------------------------------          ------------------------
  (Address of principal executive offices)                       (Zip Code)

Registrant's telephone number, including area code: 303-672-0700
                                                    ------------

Securities registered pursuant to Section 12(b) of the Act:

        Title of each class              Name of exchange on which registered
----------------------------------     ----------------------------------------
             None.                                  None.

Securities registered pursuant to section 12(g) of the Act:

                     Common Stock, par value $.001 per share
--------------------------------------------------------------------------------
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  X   No   .
                                       ---    ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 219.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]

The aggregate market value of the voting stock held by non-affiliates of the
registrant on March 23, 2001, based upon the closing price of the Common Stock
on the Nasdaq National Market, was approximately $8,312,402.

The number of outstanding shares of the registrant's Common Stock as of March
23, 2001, was approximately 29,935,189 shares.


<PAGE>   2



                       DOCUMENTS INCORPORATED BY REFERENCE

            Portions of the registrant's preliminary proxy statement, which will
be issued to stockholders in conjunction with the 2001 Annual Meeting of
Stockholders, are incorporated by reference in Part III.

                CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

            This Annual Report on Form 10-K and the information incorporated by
reference may include "forward-looking statements" within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. In particular, we
direct your attention to Item 1. Business, Item 2. Properties, Item 3. Legal
Proceedings, Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operation, and Item 7A. Quantitative and Qualitative Disclosures
About Market Risk, and Item 8. Financial Statements and Supplementary Data. We
intend the forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements in these sections. All statements
regarding our expected financial position and operating results, our business
strategy, our financing plans and the outcome of any contingencies are
forward-looking statements. These statements can sometimes be identified by our
use of forward-looking words such as "may," "believe," "plan," "will,"
"anticipate," "estimate," "expect," "intend", and other phrases of similar
meaning. Known and unknown risks, uncertainties and other factors could cause
the actual results to differ materially from those contemplated by the
statements. The forward-looking information is based on various factors and was
derived using numerous assumptions.

            Although we believe that our expectations that are expressed in
these forward-looking statements are reasonable, we cannot promise that our
expectations will turn out to be correct. Our actual results could be materially
different from our expectations, due to a variety of factors, including the
following:

               o    we may lose customers or fail to grow our customer base;

               o    we may not be able to successfully integrate new customers
                    or assets obtained through acquisitions;

               o    we may fail to compete with existing and new competitors;

               o    we may not adequately respond to technological developments
                    impacting the Internet;

               o    we may fail to implement proper security measures to protect
                    our network from inappropriate use, which could overload our
                    network's capacity and cause us to experience a major system
                    failure;

               o    we may issue a substantial number of shares of our common
                    stock upon exercise of Class B Warrants which we issued in a
                    December 1999 Private Placement, certain warrants that we
                    issued in connection with the November 2000 acquisition of
                    Internet Communications, Inc., and additional shares that
                    may be issued in connection with our September 2000
                    acquisition of LanMinds, Inc., thereby causing significant
                    dilution in the value of your investment;

               o    we may fail to settle outstanding litigation;

               o    we may not be able to obtain needed financing; and

               o    our common stock may cease to be listed on the Nasdaq Stock
                    Market.

This list is intended to identify some of the principal factors that could cause
actual results to differ materially from those described in the forward-looking
statements included elsewhere in this report. These factors are not intended to
represent a complete list of all risks and uncertainties inherent in our
business, and should be read in conjunction with the more detailed cautionary
statements included in this Annual Report on Form 10-K under the caption "Item
1. Business - Risk Factors," our other Securities and Exchange Commission
filings, and our press releases.


<PAGE>   3



                                TABLE OF CONTENTS

<TABLE>
<S>        <C>                                                                  <C>

                                     PART I

Item 1.     Business...............................................................    1

Item 2.     Description of Properties..............................................   22

Item 3.     Legal Proceedings......................................................   22

Item 4.     Submission of Matters to a Vote of Security Holders....................   23


                                     PART II

Item 5.     Market for Registrant's Common Equity and Related Stockholder
              Matters..............................................................   23

Item 6.     Selected Consolidated Financial Information............................   24

Item 7.     Management's Discussion and Analysis of Financial Condition and
              Results of Operation.................................................   25

Item 7A.    Quantitative and Qualitative Disclosure About Market Risk..............   31

Item 8.     Financial Statements and Supplementary Data............................   31

Item 9.     Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure.............................................   31


                                    PART III

Item 10.    Directors and Executive Officers, Promoters and Control Persons;
              Compliance with Section 16(A) of the Exchange Act of the
              Registrant...........................................................   31

Item 11.    Executive Compensation.................................................   31

Item 12.    Security Ownership of Certain Beneficial Owners and Management.........   31

Item 13.    Certain Relationships and Related Transactions.........................   31


                                     PART IV

Item 14.    Exhibits, Financial Statement and Schedules, and Reports on
              Form 8-K.............................................................   31

Signatures ........................................................................   36

Financial Statements...............................................................  F-1

Exhibits...........................................................................  E-1
</TABLE>



<PAGE>   4



                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

        Internet Commerce & Communications, Inc. ("IC&C"), formerly RMI.NET,
Inc., began offering Internet access services in 1994 and has grown from a
regional Internet service provider into a premier nationwide e-commerce, web
Solutions, and access services provider for small and medium-sized business
enterprises, as well as dial-up residential customers and DSL customers. We
monitor and control our network through our Network Control Center in Denver,
Colorado. Through our nationwide network of owned and leased dial-up access
sites, or "POPs" (points of presence), customers are able to access the Internet
in 100% of the strategic marketing areas in the United States via a local
telephone call. Our current customer base has grown to approximately 111,000
customers. We offer our customers access to value-added Web services, including:

               o    Web site design, development, consulting, hosting, and
                    marketing;

               o    a Web Portal constructed to provide multiple services,
                    including an online search engine with a large reference
                    database, an audio feed, a stock quote service, and
                    additional content;

               o    e-commerce products and services, including e-Sell;

               o    application-hosted products, including our IC&C branded and
                    hosted IncTools Intranet service;

               o    managed network access products, including ISDN, DSL, frame
                    relay, and dedicated facilities up to OC-level; and

               o    managed wide area and metropolitan networks.

            On November 29, 2000, IC&C (then known as RMI.NET, Inc.) acquired
via merger a company called Internet Communication Corporation ("INCC"). INCC
was an Internet technologies and integration company that specialized in the
design, implementation, and management of Web-based applications and
connections, wide-area networks, voice systems, and e-commerce solutions. INCC
was headquartered near Denver in Greenwood Village, Colorado. After completion
of the merger, IC&C has continued to operate INCC as a subsidiary, substantially
similar to the manner which INCC operated prior to the merger.

            Our executive offices are located at 999 Eighteenth Street, North
Tower, Suite 2201, Denver, Colorado 80202 and our telephone number at that
address is (303) 672-0700. Our Web address is http://www.iccx.net. Information
contained on our Web site is not, and should not be deemed to be, a part of this
Annual Report on Form 10-K.

IC&C'S STRATEGY

            Our mission is to become a premier nationwide e-commerce and access
services provider, distinguished by a comprehensive suite of products and
services, state-of-the-art network, and high quality customer service and
support. Often, large national companies do not offer individual customers the
level of support desired and many smaller regional companies do not have the
resources necessary to offer adequate customer support. We intend to fill this
void. Because user-friendly software and responsive customer service and
technical support are the foundation of our business, we believe that IC&C is
poised to capitalize on the growth in the network access and Internet services
segments of the telecommunications market.

            IC&C focuses on providing integration communication solutions to
small and medium-sized businesses. We believe, and market trends indicate, that
the demand for network access, Intranet, and value-added services in our target
customer markets will grow substantially from current levels. In addition to
demographic and economic trends driving the need for sophisticated
communications solutions for small to medium-sized businesses, markets are
expanding as a function of falling access costs, lower prices for access
devices, more simplified operational procedures, and improved content. Key
elements to our business strategy include the following.

            PROVIDE A BROAD ARRAY OF WEB SOLUTIONS AND ACCESS SERVICES TO OUR
CUSTOMERS. We have built a robust portfolio of products, services, and skill
sets to develop and deliver comprehensive communications solutions to both
business and residential customers. These products and services are organized
under three divisions: Access Services, Web Solutions, and Integration and
Installation Services. Based on our belief that a growing number of

                                       1

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businesses and consumers will demand that one company provide all of their
communications needs, we plan to continue to add products and services to our
portfolio. We refer to our strategy as a "One Point-of-Contact" service delivery
model. We believe that our model ensures:

               o    high-performance, cost-effective network management
                    planning, design, and implementation;

               o    maintenance of a single point of responsibility; and

               o    ongoing customer relationships as a technology partner for
                    communications applications.

            PROVIDE SUPERIOR CUSTOMER SERVICE AND TECHNICAL SUPPORT. Our
customer service philosophy is to understand our customers' needs so well that
we may deliver a very high level of value-added services and after-sales
support. We believe that highly differentiated customer service and technical
support is a key competitive asset in the communications industry. Because the
Internet is an evolving and complex medium, customers require significant
technical support. Consequently, we have developed a comprehensive strategy to
attain maximum customer satisfaction. This strategy consists of the following
elements:

               o    maintaining a sufficient number of qualified service and
                    technical support personnel through proactive recruitment,
                    retention, and training programs;

               o    utilizing our extranet to provide real-time, interactive
                    customer service;

               o    developing an online billing system enabling
                    customer-controlled account customization and analysis; and

               o    improving our service delivery standards.

We continually monitor our customer service strategy through customer
satisfaction surveys. Approximately 250 employees, consisting of engineers,
technicians, project managers, account managers, and customer service
representatives, are responsible for supporting our customers.

            MAXIMIZE NETWORK UTILIZATION. Through our network and agreements
with third-party providers, we provide Internet access to 100% of the strategic
marketing areas in the United States. Historically, communication service
providers have focused on business or residential customers. Our business
strategy is to maximize network utilization 24 hours a day by targeting both
daytime business users and evening-intensive residential users. In addition, we
operate a national backbone network, linking nine U.S. cities - Atlanta,
Chicago, Dallas, Denver, Los Angeles, McLean (Virginia), New York, San
Francisco, and Washington, D.C. and offering service from 12 cities -
Bloomington (Illinois), Colorado Springs, Kansas City, Las Vegas, Los Angeles,
Oklahoma City, Phoenix, Salt Lake City, San Francisco, Seattle, Tulsa, and
Tucson.

            TAKE ADVANTAGE OF SIGNIFICANT CONSOLIDATION AND ACQUISITION
OPPORTUNITIES. We believe that increased use of the Internet by businesses and
consumers for mission-critical applications creates demand for high quality
network operations, customer service, and technical support. We also believe
that there is a market opportunity for newly developed integrated communication
technologies. Although we are no longer actively seeking acquisitions, we
acquired all of the outstanding common stock or substantially all of the assets
of the following companies in 2000:

<TABLE>
<CAPTION>
                                    2000
-----------------------------------------------------------------------------------
         NAME OF COMPANY                      NATURE OF BUSINESS
-----------------------------------       -----------------------------------------
<S>                                       <C>
B&B Computers                             Internet Service Provider
Imagenet, Inc.                            Internet Service Provider
Internet Communications Corporation       Telecommunications and Network Management
                                          Services
LanMinds, Inc.                            Internet Access, Web Hosting and
                                          Design, and e-Commerce
</TABLE>




                                       2
<PAGE>   6

IC&C'S SERVICES

            OVERVIEW. The following chart summarizes the services we offer.

<TABLE>
<CAPTION>
                                           SERVICES                                              DESCRIPTION
                                        -------------------------   ----------------------------------------------------------------
<S>                                     <C>                         <C>
WEB SOLUTIONS                           Web Site Design             Design, development, and implementation of customer
                                          and Development           Web sites

                                        Web Site Hosting            A customer's Web site is "hosted" on IC&C's servers
                                                                    and connected to the Internet via a high-speed connection

                                        WebZone                     Portal constructed to provide multiple services, including
                                                                    a search engine with a large database of reference information,
                                                                    an audio feed, a stock quote service, and additional content

                                        e-Commerce or e-SELL        Turnkey solution for setting up an Internet store

                                        Web Site Marketing          Design and development of advertising and marketing strategies
                                                                    which result in increased traffic and viewing of customer Web
                                                                    sites

                                        Traffic Builder Plus        Unique Web site marketing program whereby customer Web
                                                                    sites are marketed exclusively to Internet users

                                        Web Training                Various levels of Internet training for customers, including
                                                                    basic access training

                                        Co-Location                 T-1 or greater Internet access provided to customer's server
                                                                    located at IC&C's POPs

                                        IncTools Intranet Service   IC&C branded and hosted Intranet service integrates
                                                                    Web-based email and provides contacts and calendars
                                                                    for public and private access, document storage,
                                                                    instant messaging, and company announcements

ACCESS SERVICES                         Dedicated Access            Fractional and full T-1, fractional and full T3, Metropolitan
                                                                    Area Ethernet, or greater Internet access provided to a
                                                                    customer's office

                                        Dial-Up Service             Nationwide Internet access for consumer and small business
                                                                    customers using modems to dial into IC&C's network

                                        Wireless Access             Evolving technology allowing up to 100 Mbps wireless Internet
                                                                    access (currently available only in the Denver, Tucson, and
                                                                    Phoenix metro areas)

                                        IdealDial                   Long distance calling using IP Telephony technology

                                        Long Distance               Traditional long distance services

                                        Local Phone
                                        Services(CLEC)              Traditional local exchange telephone service on a resale or
                                                                    facilities-owned basis throughout Colorado

                                        Dedicated Line Service      Dedicated, digital subscriber line ("DSL"), and frame-relay
                                                                    networks to carry voice and data for business customers

INTEGRATION & INSTALLATION              Network Management &        24 hours a day, seven days a week network monitoring and
   SERVICES                               Maintenance and           problem resolution and maintenance service plans
                                          Consulting Services       for customers' networks, including technical support,
                                                                    contracted response times, on-site trouble shooting, parts
                                                                    replacement, verification testing, and customer notification

                                        Professional Services       Network assessment and baseline, enterprise network architecture
                                                                    and system design, network security, and technology assessment
</TABLE>

                                       3
<PAGE>   7

<TABLE>
<CAPTION>
                                           SERVICES                                              DESCRIPTION
                                        -------------------------   ----------------------------------------------------------------
<S>                                     <C>                         <C>
                                        Project Management and      Facilitate and implement customer networks pursuant to design
                                           Network Integration      specifications

                                        Network Transport           Dedicated private lines, frame relay, Asynchronous Transfer
                                          Services                  Mode ("ATM") and Internet Protocol ("IP") for multi-location
                                                                    enterprise network access
</TABLE>

WEB SOLUTIONS

            WEB SITE DESIGN AND DEVELOPMENT. Web site design and development
encompasses the design, development, and implementation of customer Web sites.
These sites may be public domain sites or private sites, which are sometimes
referred to as extranets or intranets. The functionality of these sites will
continue to evolve and require a great deal of graphic design talent as well as
high end programming skills.

            WEB SITE HOSTING. Web site hosting (shared, dedicated, or
co-location) provides ongoing revenue from customers for whom we host a Web site
on Web servers located in our data center. The advantage to customers is
high-speed access to sites by their targeted audiences. Prices for Web site
hosting vary greatly, from $29.95 to $749.95 per month, with most falling in the
$49.95 to $99.95 range. We also charge a one-time set-up fee that generally
matches the hosting plan's monthly fee.

            www.webzone.com PORTAL. This is a Web Portal constructed to provide
multiple services, including:

               o    a search engine that contains a large and rapidly growing
                    database of reference information on the World Wide Web;

               o    an audio feed;

               o    a stock quote service; and

               o    additional content.

The search engine also contains certain features, including:

               o    Preview buttons - which permit users to see a site's content
                    without waiting for a full download of all the site's
                    graphics;

               o    Fuzzy Links - which provide visitors with a handy way to
                    search for related but perhaps not specifically targeted
                    information; and

               o    Site Mapping - which provides a simple and visual way to see
                    a site's structure.

Finally, the www.webzone.com portal also contains the ability to host numerous
banner advertisements, which we may sell to our customers as part of a Web
marketing package.

            e-COMMERCE OR e-SELL. We provide turnkey software package solutions
for e-commerce. Small to medium-sized businesses can sell their products and
services over the Internet, thereby reaching customers that are not
geographically accessible. Rather than simply offering a Web site, our
e-commerce customers can act as a true Internet store, providing:

               o    a dynamic, interactive shopping experience for the customer;

               o    secure credit card transactions;

               o    "behind the scenes" functionality, such as inventory
                    management and custom reporting; and

               o    fast, efficient, and low-cost implementation of a true,
                    database-driven Internet store.




                                       4
<PAGE>   8



Competing packages require the involvement of technical experts, consultants, or
developers to set up and configure a store. Because of these additional "soft
costs," implementation costs usually reach several times the basic cost of the
package and implementation time can be weeks or months. By contrast, an e-SELL
store can be up and running in hours. Furthermore, e-SELL is scalable and
expandable as a business grows, because it is based on an open architecture -
Microsoft Windows NT and BackOffice. While competing packages often utilize
proprietary programming languages or tools (and many started out as Macintosh or
Unix products), e-SELL is an extension to the industry-standard BackOffice
platform, enabling easy customization. In addition, any industry-standard
database can be connected, furthering the ease of integration with merchants'
existing information systems.

            WEB SITE MARKETING. Our sales and marketing department has developed
an advertising program that is designed to increase traffic and viewing of
customer Web sites. We believe that our Web site marketing program will blend
well with our other Web solution products.

            TRAFFIC BUILDER PLUS. Our Internet marketing program whereby
customer Web sites are marketed exclusively to Internet users. This service
includes sophisticated search engine submission and management techniques,
cross-linking related Web sites, posting to relevant news groups, and
customizing banner ad campaigns. The pricing for this service varies
dramatically based on a customer's budget and desired results.

            WEB TRAINING. We also provide a training program available for all
our customers. Customers can schedule their employees for various levels of
Internet training, ranging from basic access training to HTML programming. We
have a state-of-the-art training center in our office headquarters with multiple
workstations for interested customers. Customized, one-on-one training is also
available, either at our headquarters or at the customer's site.

            CO-LOCATION. As more people use the Internet to shop for products
and services, the demands on shared server resources are increasing. We offer
businesses an alternative to shared server resources by co-locating their
servers in our data center. Our business data center provides redundant
connections to the Internet through our Tier 1 backbone, redundant power
supplies, video monitoring, tape backups, locking cabinets, and 24 by 7 network
monitoring, customer service and support, providing customers with a
cost-effective alternative to maintaining their own server.

            INCTOOLS INTRANET SERVICE. We have joined forces with IncTools to
offer an IC&C branded and hosted Intranet service to our business and consumer
customers nationwide. IncTools Intranet offers small and medium- sized
businesses a cost effective alternative to enterprise software such as Microsoft
Exchange and Lotus Notes. Our IncTools Intranet platform integrates web-based
email and provides contact and calendars for both public and private access,
document storage, instant messaging, and company announcements, and is
completely WAP (wireless application protocol) enabled, creating easy access to
emails, contacts and schedules from the customer's palm device or cell phone.

ACCESS SERVICES

            INTERNET ACCESS. We provide nationwide Internet services through
more than 50 Internet POPs and through agreements with third party providers, in
100% of the strategic marketing areas in the United States.

            DEDICATED ACCESS SERVICE. Dedicated access services are provided
primarily to commercial and small business customers. They include a wide range
of access options tailored to the needs of the customer. These services include
a private port or dedicated modem, ISDN connections, 56 kbps frame-relay
connections, T-1 (1.54 Mbps) connections, and fractional T-1, T3 (45 Mbps), or
fractional T3 connections. This type of access ensures a dedicated connection
and is generally used to connect local area networks, wide area networks, or
server applications to the Internet. A dedicated connection requires a dedicated
telecommunications facility, ranging from an analog phone line, ISDN,
frame-relay circuit, leased line T-1, or leased line T3 and a router, and a
device to convert digital signal to serial interface, usually referred to as a
CSU/DSU. Dedicated services range in price from $100 per month to over $45,000
per month depending on the connection type. Installation fees generally range
from $300 to $5,000.




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            DSL (DIGITAL SUBSCRIBER LINE). DSL services are provided to both
residential and commercial customers in over 400 major markets nationwide. These
connections also include a wide range of options, primarily related to the type
of DSL provided and bandwidth associated with the connection. We provide
Asymmetric DSL (ADSL), with speeds ranging from 128kbps to 7.0Mbps; Symmetric
DSL (SDSL), with speeds ranging from 192kbps to 1.5Mbps; and ISDN DSL (IDSL),
with speeds of 128kbps to 144kbps. DSL provides users with a more affordable
dedicated connection, with speeds and guarantees comparable to traditional
dedicated access technologies. A DSL connection requires an unused copper pair
(traditional voice line) for SDSL and ADSL access, or an unused ISDN line for
IDSL access, and a DSL modem or router. DSL services range in price from $19.95
per month to $800 per month depending on both the connection speed and the
Service Level Agreement on each individual circuit. Hardware fees generally
range from $95 to $450 depending upon the service type and the functionality of
the hardware, but are currently waived for multi-year contracts. Installation
fees generally range from $99 to $250, but are also currently waived for
multi-year contracts.

            DIAL-UP SERVICE. We offer nationwide unlimited usage dial-up service
under our WebZone.com brand name. Standard service offerings begin with the Gold
Plan at $19.95 per month with a $15 one-time setup fee. This plan includes three
e-mail addresses and 5MB of personal Webspace. The Platinum Plan, at $24.95 per
month with a one-time $15 setup fee, offers five e-mail addresses and 10MB of
personal Webspace. All accounts include access to our www.webzone.com portal
site, which features Web-based e-mail access, search capability, e-commerce,
among other benefits. 56K modem access utilizing the v.90 standard is available
at most major POP locations. Nationwide coverage is achieved through a
combination of IC&C-owned POPs and an arrangement with PSINet. The future status
of our dial-up Internet access business will depend on the final implementation
of the EarthLink transaction, as described in the Management's Discussion and
Analysis of Financial Condition and Results of Operation-Liquidity and Capital
Resources section of this Annual Report on Form 10-K.

            INTERNET BACKBONE ACCESS. Since acquiring the assets of DataXchange
Network, Inc. in December 1998, we have further expanded our reach into the
national interconnects at MAE-East, MAE-West, a pending install at AADS-NAP in
Chicago, and scheduled installations at MAE-LA and MAE-Dallas. With these
locations and traffic peering agreements with some of today's largest providers,
IC&C is strongly positioned to provide its own fully independent Internet
backbone service.

            IDEALDIAL LONG DISTANCE SERVICE. We have recently renegotiated a
national contract with Global Crossing, which will significantly lower our costs
for our full line of traditional long distance services. We currently offer the
following services to business and residential customers:

               o    1+ long distance, switched and dedicated;

               o    1-800 service - switched and dedicated;

               o    pre-paid and standard calling cards;

               o    conference calling; and

               o    integrated voice response ("IVR").

IdealDial is certified to provide long distance services as an inter-exchange
carrier in 18 states.

            LOCAL PHONE SERVICES (CLEC). We have been certified as a competitive
local exchange carrier or CLEC in the states of Alabama, California, Colorado,
Illinois, Kansas, Missouri, Montana, Nevada, New York, Oregon, Washington, and
West Virginia.

            Certificates of authority can generally be conditioned, modified,
canceled, terminated, or revoked by state regulatory authorities for failure to
comply with state law and/or the rules, regulations, and policies of the state
regulatory authorities. Fines and other penalties also may be imposed for such
violations.

            DEDICATED LINE SERVICES. We operate extensive national dedicated and
frame-relay networks to carry voice and data traffic across the country and
across town for our business customers.




                                       6
<PAGE>   10



INTEGRATION & INSTALLATION SERVICES

            NETWORK MANAGEMENT SERVICES. As part of our service offerings, we
provide network management through our Network Control Center ("NCC"). The NCC
provides network management of SNMP-based communications devices as well as the
circuits associated with the network 24 hours a day, seven days a week. NCC
engineers can quickly identify, resolve, and often prevent network problems. In
addition, engineers are able to collect performance data to identify and analyze
performance trends. Such analysis permits us to take preventative measures
before the network experiences interruption or down time. We offer several
levels of service to help our customers maintain optimal network performance.

            We provide round-the-clock network monitoring and problem
resolution. The network management services include fault detection, diagnosis,
and customer reporting. Should an alarm signal a network problem, NCC engineers
quickly notify vendor contacts, coordinate repair, escalate if necessary, and
notify a designated customer contact. The objective is to facilitate the timely
and complete correction of problems as they arise.

            In addition, we offer a performance management service designed to
optimize network performance and to proactively prevent network failures from
occurring, thereby maximizing network up-time. By combining the collection and
reporting of information about network performance trends with expert analysis
of that information by NCC engineers, potential problems are identified before
they generate failures.

            PROFESSIONAL SERVICES. Our professional services group offers
in-depth thorough analysis of enterprise networks. Our consultants provide a
range of services that help customers determine if and how their network is
performing to meet business objectives. These services include:

               o    Network Assessment and Baseline, which provides a view of
                    the network through an audit process. We monitor the
                    customer's network to determine traffic/protocol
                    distribution, utilization, network congestion, application
                    usage, and performance inefficiencies.

               o    Enterprise Network Architecture and System Design, which
                    provides design and redesign of enterprise networks that
                    conform to current and future technology needs of the
                    customer. Access options such as remote access, dial-in,
                    Internet and wide-area access are evaluated. In addition, we
                    determine requirements for e-mail, groupware, thin client
                    applications, and then implement them, thus, creating a more
                    robust environment for sharing information across the
                    enterprise.

               o    Network Security, which provides security assessment,
                    security policy, and firewall evaluation for customers who
                    need a more demanding and comprehensive review of their
                    security requirements.

               o    Technology Assessment, which provides solutions to help
                    customers differentiate themselves and strengthen their
                    market position within their given industry. We take into
                    account the customers' business strategy and offer core
                    competencies in technologies such as Internet protocol
                    telephony and voice-over frame relay which support that
                    strategy.

            PROJECT MANAGEMENT AND NETWORK INTEGRATION SERVICES. We provide
project management and network integration services to facilitate the
implementation of customer networks pursuant to design specifications. Our
project management expertise encompasses legacy technologies and
state-of-the-art technologies enabling the rollout of turnkey solutions,
delivering fully operational enterprise networks. We also program and furnish
premise-based components of integrated networks utilizing complex network
technologies across multi-vendor environments.

            NETWORK TRANSPORT SERVICES. We provide a broad range of transport
services for multi-location enterprise network access. Services include
dedicated private line, frame relay, Asynchronous Transfer Mode ("ATM"), and
Internet Protocol ("IP"). These services are blended with our network management
and integration services. To provide transport services, we have agreements with
a number of long-distance carriers, including WorldCom, ICG, Global Crossing,
TCG, Sprint, and AT&T and with approximately thirty local exchange carriers,
including Qwest, across the country. We operate as an FCC approved
inter-exchange carrier and a PUC approved local exchange carrier. We operate
extensive dedicated and frame relay networks, and with affiliated network
resources, are able to provide, manage, and maintain service across the country.
Our competitive advantage is our track record in deploying voice-over-data for
enterprise networking in both frame relay and Internet protocol environments.


                                       7
<PAGE>   11

OUR SALES AND MARKETING DEPARTMENT

            DEDICATED ACCESS SERVICE CUSTOMERS. Our primary commercial target
market is small to medium-sized businesses with 25-5,000 work-stations, multiple
office locations, a dependence on communications technology, and with
headquarters located in Tier 1 or Tier 2 cities ranked in the top thirty
high-tech Buying Power Index ("BPI"). Our secondary target markets will be small
and medium-sized businesses located in smaller cities that are close to our
headquarters.

            Our ability to deliver an array of integrated communications and
Internet solutions, coupled with excellent technical knowledge and high quality
service, is our key selling point to commercial customers. We design, implement,
and maintain a complete enterprise network solution encompassing integrated
voice, data, video, and Internet services, that is able to address all facets of
internal and external communications for a business. A number of providers
promote themselves as "one-stop shops" or "turnkey providers" of these services,
but few have the ability to deliver, manage, and support all services
"in-house." We believe that our ability to package, price, brand, and
efficiently deliver our comprehensive set of products and services will allow us
to grow as we focus our sales and marketing efforts on small to medium-sized
businesses.

            Our commercial business sales and marketing efforts emphasize the
direct sales by our field sales representatives. Although each representative
has a specific product or service focus, each is assigned to an account team. We
believe that this account team approach allows us to cross-sell, package, and
blend all of our products and services to meet the needs of our customers. Our
sales teams intend to use strategic direct mail campaigns, public relations
efforts, and targeted industry advertising. Each marketing activity is designed
to generate company and brand recognition, provide product/service information,
and stimulate referral business from commercial businesses and residential
customers.

            DIAL-UP INTERNET ACCESS. Our dial-up customer base consists mainly
of residential consumers and small businesses. We believe that our competitive
advantage of packaging, pricing, branding, and promoting our wide range of
access services will also serve as a competitive advantage in the residential
consumer market, particularly as we extend our sales and marketing efforts
across the nation. We engage in targeted marketing and distribution efforts in
markets where there is an opportunity for substantial market penetration. We
believe that high geographic concentrations of customers improve network
economics and reduce customer acquisition costs, thereby resulting in higher
margins. The future status of our dial-up Internet access business will depend
on the final implementation of the EarthLink transaction, as described in the
Management's Discussion and Analysis of Financial Condition and Results of
Operation-Liquidity and Capital Resources section of this Annual Report on Form
10-K.

            Through the use of demographic market research data, we are
targeting our marketing and sales efforts towards new and current Internet
households and small businesses nationwide. Because we have experienced a
significant amount of dial-up sales through word-of-mouth advertising, we
operate an in-bound calling center and an out-bound telemarketing sales unit.
Our marketing efforts have been geared toward generating positive referrals and
stimulating customer growth and retention by providing high-quality service to
our existing customers. As of March 1, 2001, we had approximately 50 sales
representatives targeting both residential and business customers.

BILLING AND MANAGEMENT INFORMATION SYSTEMS

            We are in the process of completing the integration of our full
billing platform on an outsource basis with CSG Systems, Inc., resulting in an
online bill presentment and payment package, allowing customers to receive their
invoices and make payments online. Currently, our administrative office
functions are standardized on Microsoft Office products operating on Microsoft
NT Server Networks. Finance and accounting utilizes Oracle accounting software
products for general ledger, payables processing, and receivables collection and
management.

            One goal of implementing automated systems is to move customer
support functions to a Web interface which would allow customers to change
service types, review invoicing details, troubleshoot through online
information, and communicate with our technical support staff. These systems are
expected to provide enhanced customer support and reduce the cost of the
technical support function on a per customer basis. Enhanced billing systems are
expected to permit us to offer promotions and marketing programs to attract new
customers. The new


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<PAGE>   12

billing systems are expected to provide greater flexibility in offering
discounts for selecting a wide range of the product offerings.

COMPETITION

            COMPETITIVE FACTORS. The markets in which we operate and intend to
operate are extremely competitive and can be significantly influenced by
marketing and pricing decisions of competitors that have substantially greater
resources. We believe that competition will intensify in the future. Our ability
to compete successfully depends on a number of factors including:

               o    our market presence and geographic coverage;

               o    our reputation for reliability, service, and effective
                    customer support;

               o    the capacity, reliability, and security of our network
                    infrastructure;

               o    our packaging and pricing of our complete suite of products
                    and services compared to our competitors;

               o    the timing of new product and service roll-outs; and

               o    our ability to react to changes in the market and industry
                    and economic trends.

            INTERNET ACCESS AND WEB HOSTING. The markets for Internet access and
Web hosting services are extremely competitive and highly fragmented. We expect
competition to continue to intensify. Our current and prospective competitors
include many large companies that have substantially greater market presence and
financial, technical, operational, marketing, and other resources than we do. In
addition, every local market that we have entered or intend to enter is served
by multiple local ISPs. Increased competition could cause us to lower our
prices, increase our selling and marketing expenses, or lose customers. We may
not be able to offset increased costs with an increase in the number of our
customers or to increase revenues from enhanced services. Any of these
developments could adversely affect our business, financial condition, and
results of operations.

            We currently compete or expect to compete with the following types
of companies in the Internet services and Web hosting markets:

               o    established online services, such as America Online, the
                    Microsoft Network, CompuServe, and Prodigy;

               o    local, regional, and national Internet service providers,
                    such as EarthLink, Internet America, PSINet, and Verio;

               o    national telecommunications companies, such as AT&T (with
                    AT&T WorldNet), WorldCom, Sprint (SprintNet), and Qwest
                    Communications International;

               o    local telephone and regional Bell operating companies, such
                    as Verizon and SBC Communications;

               o    computer hardware and software companies, such as
                    International Business Machines and Microsoft;

               o    national and regional companies that focus primarily on
                    providing Web hosting services;

               o    cable television operators, such as AT&T Broadband, AOL Time
                    Warner, At Home, and Roadrunner; and

               o    nonprofit or educational ISPs.

Our competition could increase as large diversified telecommunications and media
companies acquire Internet service providers and as Internet service providers
consolidate into larger, more competitive companies. Diversified competitors may
bundle other services and products with Internet access services, potentially
placing us at a significant competitive disadvantage. In addition, competitors
may charge less than we do for Internet services, causing us to reduce or
preventing us from raising our fees. As a result, our business may suffer.

            BROADBAND TECHNOLOGIES. We also face competition from companies that
provide broadband connections to consumers' homes, including local and long
distance telephone companies, cable television companies, electric utility
companies, and wireless communications companies. These companies may include
Internet access or Web hosting using broadband technologies in their basic
bundle of services or may offer Internet access or Web hosting



                                       9
<PAGE>   13

services for a nominal additional charge. Broadband technologies enable
consumers to transmit and receive print, video, voice, and data in a digital
form at significantly faster speeds than existing dial-up modems.

            Companies that own these broadband networks could restrict our
ability to deliver competitive Internet access through the wire and cable
connections that they own. Cable television companies are currently considering
how to allow ISPs to access their broadband facilities and the terms and
conditions of ISP access to broadband local telephone company networks are under
continuing regulatory review. Our ability to compete with telephone and cable
television companies may depend on future regulation to guarantee open access to
the broadband networks. In addition to competing directly in the ISP market,
both cable and television facilities operators are also aligning themselves with
certain ISPs who may receive preferential use of broadband local connections to
end users. If high-speed, broadband facilities increasingly become the preferred
mode by which customers access the Internet and we are unable to gain access to
these facilities on reasonable terms, our business, financial condition, and
results of operations could be materially adversely affected.

            NO INTERNATIONAL OPERATIONS. We do not currently compete
internationally. If the ability to provide Internet access internationally
becomes a competitive advantage in the Internet access industry, we may be at a
competitive disadvantage relative to our competitors.

EMPLOYEES

            As of March 21, 2001, we have approximately 379 employees, of which
approximately 100 were added in acquisitions during 2000. None of our current
employees are represented by a labor organization, and we consider our relations
with our employees to be good.

PROPRIETARY RIGHTS

            GENERAL. Although we believe that our success is more a function of
our technical expertise and customer service than our proprietary rights, IC&C's
success and ability to compete depends in part upon our technology. We rely on a
combination of copyright, trademark and trade secret laws, and contractual
restrictions to establish and protect our technology. It is our policy to
require employees and consultants and, when possible, suppliers to execute
confidentiality agreements upon the commencement of their relationships with us.
These agreements provide that confidential information developed or made known
during the course of a relationship with IC&C must be kept confidential and not
disclosed to third parties except in specific circumstances. We cannot provide
any assurances that the steps we have taken will be adequate to prevent
misappropriation of our technology or that our competitors will not
independently develop technologies that are substantially equivalent or superior
to our technology.

            LICENSES. We have obtained authorization to use the products of each
manufacturer of software that we bundle in our front-end software product for
Windows and Macintosh customers. The particular applications included in the
IC&C starter-kit have, in some cases, been licensed. We currently intend to
maintain or negotiate renewals of, as the case may be, all existing software
licenses and authorizations as necessary. IC&C may also want or need to license
other applications in the future. License fees charged to IC&C upon enrollment
of additional customers are included in the cost of customer start-up fees.
Other applications included in the IC&C starter kit are shareware that we have
obtained permission to distribute or that are from the public domain and are
freely issuable. IC&C developed the front-end software programs in IC&C's
starter kit for Windows 3.1, Windows 95, and Macintosh. We have acquired some
software, trademarks, and other proprietary technology that we may continue to
use for acquired customers.




                                       10
<PAGE>   14



RISK FACTORS

            You should carefully consider the risks described below before
making an investment decision.

DURING OUR OPERATING HISTORY WE HAVE INCURRED NET LOSSES AND EXPECT FUTURE
LOSSES

            We started our business in 1993 and began offering Internet access
services in 1994. We have incurred operating losses in each year of our
existence. We incurred net losses of $10.7 million for year ended December 31,
1998, $24.9 million for the year ended December 31, 1999, and $47.5 million for
the year ended December 31, 2000. As of December 31, 2000, we have an
accumulated deficit of $90.0 million. We may never be profitable.

            In 1998, a proposed merger transaction with Internet Communications
Corporation ("INCC") and related financing transactions were terminated. In
March 2000, we again reached an agreement to acquire INCC and our stockholders
approved the acquisition at a Special Meeting held in November 2000. However,
claims by third parties unrelated to INCC allegedly arising from the terminated
1998 merger remain outstanding. We have not agreed that we are responsible for
these claims and have consistently disputed their validity. As a result, we
recorded costs, expenses, and related fees of approximately $6.1 million. Of
this amount, approximately $4.2 million relates to warrants that we issued. As
of December 31, 2000, approximately $126,000 were still accrued relating to the
termination of this merger, which approximates the amount of an offer to settle
all outstanding claims. Although we are attempting to agree on a resolution of
these disputes that is satisfactory to all parties, we cannot assure that we
will be able to reach an agreement with all parties.

IF WE ARE UNABLE TO RAISE FUNDS WE WILL NOT BE ABLE TO MAINTAIN OUR CURRENT
LEVEL OF OPERATIONS

            To expand our customer base nationwide, we will have to spend
significant amounts of money on additional equipment to maintain the high speed
and reliability of our Internet access services. We may also need to spend
significant amounts of cash to:

               o    fund growth, operating losses, and increased expenses;

               o    integrate prior acquisitions with our core businesses;

               o    take advantage of unanticipated opportunities, such as major
                    strategic alliances or other special marketing
                    opportunities, acquisitions of complementary businesses or
                    assets, or the development of new products; and

               o    respond to unanticipated developments or competitive
                    pressures.

We will require additional funds through equity, debt, or other external
financing in order to fund our current operations and to achieve our business
plan. We cannot assure that any additional capital resources will be available
to us, or, if available, will be on terms that will be acceptable to us. Any
additional equity financing will dilute the equity interests of existing
security holders. If adequate funds are not available or are not available on
acceptable terms, our ability to execute our business plan and our business
could be materially and adversely affected.

WE CURRENTLY HAVE SEVERAL LEGAL CLAIMS FILED AGAINST US, AND IF WE CANNOT
SUCCESSFULLY DEFEND OURSELVES, WE MAY BE REQUIRED TO PAY A MAXIMUM OF $4.3
MILLION OF DOLLARS IN DAMAGES OR ISSUE TWO MILLION SHARES OF COMMON STOCK.

            We have been named as a defendant in several legal claims brought in
arbitration proceedings and in state courts in several states across the
country. These claims seek compensation from us for damages allegedly suffered
as a result of our past actions, and ask courts and arbitrators to order us to
issue to them additional shares of common stock or provide them payment of
monies. We have asserted defenses and disputed these claims brought against us,
but we may not be successful in convincing the courts or the arbitrators that we
should not be held liable. If we are ordered to pay the all the damages
requested in these claims against us, we may have to pay monies in excess of
four million dollars to these claimants, and/or issue additional shares of stock
in excess of three million shares. If we are required to pay money damages, this
could reduce our working capital and make it more difficult for us to run our
business. If we are required to issue additional stock, this could increase the
dilution of our current shareholders and make it more difficulty to raise future
working capital through equity, debt, or other financings.


                                       11
<PAGE>   15

OUR COMMON STOCK MAY FAIL TO MEET THE CONTINUED LISTING REQUIREMENTS FOR THE
NASDAQ NATIONAL MARKET OR SMALLCAP MARKET EXCHANGES, AND MAY BE DELISTED AND
REMOVED FROM TRADING ON THOSE EXCHANGES BY NASDAQ.

            We received a letter from Nasdaq on December 29, 2000 which stated
that the Nasdaq Staff believed that our common stock had failed to comply with
the net tangible assets requirement for continued listing as set forth in the
Nasdaq Marketplace Rules. We received a letter from Nasdaq on February 21, 2001
which stated that the Nasdaq Staff believed that our common stock had failed to
comply with the minimum bid price requirement for continued listing as set forth
in Nasdaq Marketplace Rules. We believe that the Staff Determinations set forth
in the December 29, 2000 and the February 21, 2001 letters are wrong, and we
hope to be able to convince Nasdaq to allow our common stock to continue to be
listed and trading on the Nasdaq Exchange.

            We requested and attended a hearing before a Nasdaq Listing
Qualifications Panel (the "Panel") on February 22, 2001 to contest the Staff
Determination. We have presented information in support of our continued listing
of our common stock on the Nasdaq Exchange. However, there is no assurance the
Panel will grant our request for continued listing on the Nasdaq National
Market. If Nasdaq does not grant our request for continued listing on the Nasdaq
National Market or SmallCap Market Exchanges, our stock may only be listed for
trading on the OTC Bulletin Board. This may make it harder for you to sell your
stock, and may result in your stock being of lesser value. It may also make it
more difficult for us to raise future working capital through equity, debt, or
other financings. Additionally, if our stock is delisted and removed from
Nasdaq, we may face shareholder lawsuits bringing claims that the delisting of
our stock has caused millions of dollars in damages. If we lost those lawsuits,
we could be required to pay shareholders several millions of dollars in damages.

WE FACE INTENSE COMPETITION, AND IF WE ARE UNABLE TO COMPETE EFFECTIVELY, WE MAY
LOSE MARKET SHARE OR BE FORCED TO REDUCE PRICES

            We operate in the integrated communications and Internet services
market, which is extremely competitive. Our current and prospective competitors
include many large companies that have substantially greater market presence,
financial, technical, marketing, and other resources than we have. We compete
directly or indirectly with the following categories of companies:

               o    established online services, such as America Online, the
                    Microsoft Network, CompuServe, and Prodigy;

               o    local, regional, and national Internet service providers,
                    such as EarthLink, Internet America, PSINet, and Verio;

               o    national telecommunications companies, such as AT&T,
                    WorldCom., Sprint, and GTE;

               o    regional Bell operating companies, such as BellSouth, SBC
                    Communications, and Qwest;

               o    computer hardware and software companies, such as
                    International Business Machines and Microsoft; and

               o    online cable services, such as At Home and Roadrunner.

            Our competition is likely to increase. We believe this will probably
happen as large diversified telecommunications and media companies acquire
Internet service providers and as Internet service providers consolidate into
larger, more competitive companies. Diversified competitors may bundle other
services and products with Internet access services, potentially placing us at a
significant competitive disadvantage. In addition, competitors may charge less
than we do for Internet services, causing us to reduce or preventing us from
raising our fees. As a result, our business may suffer.

IF WE ARE UNABLE TO COMPETE IN THE LOCAL EXCHANGE AND LONG DISTANCE TELEPHONE
MARKET, OUR PROFITABILITY WILL BE ADVERSELY AFFECTED

            In 1998, we entered the long distance telephone market. We compete
directly with inter-exchange carriers and long distance carriers and other long
distance resellers and providers, including large carriers such as AT&T,
WorldCom, Sprint, and new entrants to the long distance market. Many of our
competitors are significantly larger



                                       12
<PAGE>   16

and have substantially greater market presence and financial, technical,
operational, marketing, and other resources. We face stiff price competition and
may not be able to compete.

            Moreover, the local exchange telephone services market in most
states was only recently opened to competition due to the passage of the 1996
Telecommunications Act and related regulatory rulings. Numerous operating
complexities are associated with providing these services. We will be required
to develop new products, services, and systems and will need to develop new
marketing initiatives to sell these services. Our inability to overcome any of
these operating complexities could have a material adverse effect on us.

IF WE FAIL TO KEEP PACE WITH TECHNOLOGICAL CHANGE AND EVOLVING INDUSTRY
STANDARDS, WE MAY LOSE CUSTOMERS

            The Internet services market is characterized by rapidly changing
technology, evolving industry standards, changes in customer needs, and frequent
new service and product introductions. Our future success depends, in part, on
our ability to:

               o    use leading technologies to develop our technical expertise;

               o    enhance our existing services; and

               o    develop new services that meet changing customer needs on a
                    timely and cost-effective basis.

In particular, we must provide customers with the appropriate products,
services, and guidance to best take advantage of the rapidly evolving Internet.
Our failure to respond in a timely and effective manner to new and evolving
technologies could have a negative impact on our business. Our ability to
compete will also depend upon the continued compatibility of our services with
products offered by various vendors. Although we intend to support emerging
standards in the market for dedicated Internet access, industry standards may
not be established. Moreover, if industry standards are established, we may not
be able to conform to these new standards in a timely fashion. Our competitors
may develop services and technologies that will render our services or
technology noncompetitive or obsolete.

            We are also at risk to fundamental changes in the way customers
access the Internet. Currently, most customers access Internet services through
computers connected by telephone lines. However, several companies have
developed cable television modems and other "broadband technologies" that
transmit data at substantially faster speeds than the modems that our customers
and we use. We must develop new technology or modify our existing technology to
accommodate new and faster sources of Internet access, including cable
television modems, screen-based telephones, wireless products, televisions, and
other consumer electronic devices. We may not succeed in adapting our Internet
access business to new and faster access devices.

ANY DECLINE IN OUR CUSTOMER RETENTION LEVELS OR OUR PRICES WILL ADVERSELY AFFECT
REVENUES AND PROFITABILITY

            Our new customer acquisition costs are substantial relative to the
monthly fees we charge. Accordingly, our long-term success largely depends on
our retention of existing customers. While we continue to invest significant
resources in our infrastructure and technical and customer support capabilities,
it is relatively easy for Internet users to switch to competing providers.
Consequently, our investments may not help customer retention. Any significant
loss of customers will substantially decrease our revenue and cause our business
to suffer.

            We expect that price pressures may cause us to reduce prices in
order to remain competitive, and we expect that such further price reductions
could adversely effect our results of operations, unless we can lower our costs
commensurate with such price decreases.

IF WE FAIL TO EFFECTIVELY MANAGE OUR GROWTH, THE QUALITY OF OUR SERVICE WILL
DECLINE AND WE WILL LOSE CUSTOMERS

            Our past growth has and will place a significant strain on our
managerial, operational, financial, and information systems resources. To
accommodate our increased size, we must continue to implement and improve these
systems and attract, train, manage, and retain qualified employees. These
demands will require us to add new management personnel and develop new
expertise. In order to successfully integrate newly acquired assets and continue
to implement a nationwide strategy and network, we must:



                                       13
<PAGE>   17

               o    closely monitor service quality, particularly through
                    services provided by third parties;

               o    acquire and install necessary equipment and
                    telecommunications facilities;

               o    create and implement marketing strategies in new and
                    existing markets;

               o    employ qualified personnel to provide technical and
                    marketing support for new sites; and

               o    continue to expand our managerial, operational, and
                    financial resources to support expansion.

Although we are taking steps to manage our increased size, we may not succeed.
If we fail, our ability to maintain and increase our customer base will be
impaired and our business will suffer.

IF WE FAIL TO INTEGRATE RESOURCES ACQUIRED THROUGH ACQUISITIONS, WE WILL LOSE
CUSTOMERS AND OUR LIQUIDITY, CAPITAL RESOURCES, AND PROFITABILITY WILL BE
ADVERSELY AFFECTED

            Since January 1999, we have acquired the stock or assets of 20
companies. Acquisitions often involve a number of special risks, including the
following:

               o    we may experience difficulty integrating acquired operations
                    and personnel;

               o    we may be unable to retain acquired customers;

               o    we may not be able to successfully incorporate acquired
                    technology and rights into our service offerings and
                    maintain uniform standards, controls, procedures, and
                    policies;

               o    the acquired businesses may fail to achieve anticipated
                    revenues and earnings;

               o    we may ultimately be liable for contingent and other
                    liabilities, including those not previously disclosed to us,
                    of the companies that we acquire; and

               o    our resources may be diverted in asserting and defending our
                    legal rights.

We may not successfully overcome problems encountered in connection with our
acquisitions. Our acquisitions could materially adversely affect our operating
results by:

               o    causing us to incur additional debt;

               o    increasing amortization expenses related to goodwill and
                    other intangible assets; and

               o    diluting your ownership interest.

Any of these factors could have a material adverse effect on our business.

IF WE ARE UNABLE TO OBTAIN SUFFICIENT NETWORK CAPACITY FROM OUR INTERNAL AND
LEASED NETWORK, OUR ABILITY TO GROW WILL BE SEVERELY CURTAILED

            Our success depends, in part, on the capacity, reliability, and
security of our network. Our network includes computers, servers, routers,
modems, broadband fiber systems, access to third party broadband systems, and
other related hardware and software. Network capacity constraints have occurred
in the past and may occur in the future, in connection with particular dial-up
POPs affecting only customers attempting to use that particular point of
presence and system wide services, such as e-mail and news services, which can
affect all customers. Capacity constraints result in slowdowns, delays, or
inaccessibility when customers try to use a particular service. Poor network
performance could cause customers to terminate their membership with us. To
reduce the probability of such problems, we will be required to expand and
improve our network. Such expansion and improvement will be very costly and time
consuming. We may not be able to expand or adapt our network to meet additional
demand or changing customer requirements on a timely basis or at a commercially
reasonable cost.

            In order to provide Internet access and other online services, we
lease access lines from multiple national telecommunications service providers.
We are dependent upon these providers of data communications facilities to
deliver service to our customers. Increased usage of these providers by other
Internet service providers and online service providers may negatively affect
access system performance.




                                       14
<PAGE>   18

SYSTEM FAILURES CAUSED BY NATURAL DISASTERS COULD INTERRUPT OUR SERVICE AND
ADVERSELY AFFECT OUR REVENUES

            We must protect our infrastructure against fire, earthquakes, power
loss, telecommunications failure, computer viruses, security breaches, and
similar events. We do not currently maintain a redundant or backup network hub
for all of our customers. Because we lease our lines from long distance
telecommunications companies and regional Bell operating companies, we are
dependent upon these companies for physical repair and maintenance of the leased
lines. We maintain multiple carrier agreements to reduce the risk of loss of
operations from damage, power failures, telecommunications failures, and similar
events. However, the occurrence of a natural disaster or other unanticipated
problems at our network operations center or any of our POPs may cause
interruptions in the services we provide. In addition, failure of our
telecommunications providers to provide the data communications capacity we
require as a result of a natural disaster, operational disruption, or for any
other reason could cause interruptions in the services we provide. Any damage or
failure that causes interruptions in our operations could have a material
adverse effect on us.

OUR NETWORK IS SUBJECT TO SECURITY RISKS AND INAPPROPRIATE USE BY INTERNET USERS
THAT COULD INTERRUPT OUR SERVICE AND CAUSE A DECLINE IN OUR PROFITABILITY

            The future success of our business will depend on the security of
our network and the networks of third parties over which we have no control.
Despite implementation of security measures, we remain vulnerable to computer
viruses, sabotage, break-ins, and similar disruptive problems caused by
customers or other Internet users. Any breach of our network security or other
inappropriate use of our network, such as the sending of excessive volumes of
unsolicited bulk e-mail or "spam," could lead to interruptions, delays, or
cessation of services to our customers. Our customers, in turn, could terminate
their membership or assert claims against us. Third parties could also
potentially jeopardize the security of confidential information stored in our
computer systems or our customers' computer systems by their inappropriate use
of the Internet, which could cause losses to our customers or us or deter
potential customers from subscribing to our services. Inappropriate use of the
Internet includes attempting to gain unauthorized access to information or
systems, commonly known as "cracking" or "hacking." Although we intend to
continue to implement security measures, "hackers" have circumvented such
measures in the past, and others may be able to circumvent our security measures
or the security measures of our third-party network providers in the future.

            To fix problems caused by computer viruses or other inappropriate
uses or security breaches, we may have to interrupt, delay, or cease service to
our customers, which could have a material adverse effect on our business. In
addition, we expect that our customers will increasingly use the Internet for
commercial transactions in the future. Any network malfunction or security
breach could cause these transactions to be delayed, not completed, or completed
with compromised security. As a result, customers or others may assert claims of
liability against us. Further, until more comprehensive security technologies
are developed, the security and privacy concerns of existing and potential
customers may inhibit the growth of the Internet service industry in general and
our customer base and revenue in particular.

IF WE ARE UNABLE TO DELIVER OUR SERVICES VIA TELECOMMUNICATIONS CARRIERS AND
OTHER SUPPLIERS, WE COULD EXPERIENCE SERVICE DELAYS AND LOSE CUSTOMERS

            We rely on traditional telecommunications carriers to transmit our
traffic over local and long distance networks. These networks may experience
disruptions and capacity constraints that are not easily remedied. We may have
no means of replacing these services. In addition, local phone service is
sometimes available only from one company. The benefits of competition and
alternative sources of supply are not present in these markets.

            We also depend on certain suppliers of hardware and software
components. We acquire a majority of our networking service components,
including terminal servers and high-performance routers, from Cisco Systems,
Inc., Sun Microsystems, Inc., and Lucent Technologies, Inc. The expansion of our
network places a significant demand on our suppliers, some of which have limited
production capacity. In the past, we have experienced delays in delivery of new
telephone lines, modems, terminal servers, and other equipment. If delays are
severe, all incoming modem lines may become full during peak times, resulting in
busy signals for customers who are trying to connect to IC&C. If our suppliers
cannot meet increased demand and we are not able to develop alternative sources
of supply,


                                       15
<PAGE>   19

we could experience delays and increased costs, difficulty in providing our
services and the loss of dissatisfied customers.

TO PROTECT OUR PROPRIETARY RIGHTS OR TO AVOID CLAIMS THAT WE INFRINGE THE
PROPRIETARY RIGHTS OF OTHERS, WE MAY BE FORCED TO INCUR SUBSTANTIAL COSTS AND TO
DIVERT VALUABLE MANAGERIAL RESOURCES AWAY FROM OUR BUSINESS OPERATIONS

            Our success is dependent in part on our technology and other
proprietary rights. To protect our rights, we rely on a combination of
copyright, trademark, patent and trade secret laws, and contractual
restrictions. We cannot be sure that these steps will be adequate to prevent
misappropriation or infringement of our intellectual property. Nor can we be
sure that competitors will not independently develop technologies that are
substantially equivalent or superior to our proprietary property and technology.

            In our industry, competitors often assert intellectual property
claims against one another. The success of our business depends on our ability
to assert and defend our intellectual property rights. Future litigation may
have an adverse impact on our financial condition. These claims could result in
substantial costs and diversion of resources, even if the claim is ultimately
decided in our favor. If a claim is asserted alleging that we infringed the
proprietary technology or information of a third party, we may be required to
seek licenses for such intellectual property. We cannot be sure that such
licenses would be offered or obtained on commercially reasonable terms, if at
all. The failure to obtain the necessary licenses or other rights could have a
material adverse affect on our business.

MR. HANSON HAS A CONTROLLING INTEREST IN IC&C. THAT MAY PREVENT YOU FROM
REALIZING A PREMIUM RETURN ON YOUR INVESTMENT

            Our CEO, President, and Chairman of the Board of Directors, Douglas
Hanson, has a controlling interest in IC&C through his direct ownership of
common stock, voting rights over shares held by Interwest Group, ability to
exercise outstanding options, and his status as CEO and Chairman of the Board.
As a result, Mr. Hanson has significant influence over shareholder votes for
IC&C, and can influence all matters that require stockholder approval. Mr.
Hanson may designate the members of our Board of Directors and can decide our
operations and business strategy. You may disagree with Mr. Hanson's management
decisions.

            As a controlling stockholder, Mr. Hanson also has the power to
approve or reject significant corporate matters, such as mergers, acquisitions,
and other change-in-control transactions. Mr. Hanson's controlling interest
could make it more difficult for a third party to acquire us, even if the
acquisition would be beneficial to you. You may not realize the premium return
that stockholders may realize in conjunction with corporate takeovers.

FUTURE ISSUANCE OF OUR COMMON STOCK PURSUANT TO STOCK OPTION PLANS AND EXERCISE
OF WARRANTS WILL DILUTE YOUR OWNERSHIP INTEREST, AND THE SALE OF SUCH SHARES MAY
NEGATIVELY AFFECT OUR STOCK PRICE

            As of March 23, 2001, we have approximately 29,935,189 shares of
common stock outstanding, and have reserved approximately 6.3 million additional
shares for issuance upon exercise of outstanding warrants and options, not
including additional shares that may be issued in connection with:

               o    the Class B Warrants issued in our December 1999 private
                    placement (the "Class B Warrants");

               o    certain warrants issued to Interwest Group Warrant in our
                    November 2000 acquisition of INCC (the "Interwest Group
                    Warrant"); and

               o    our September 2000 acquisition of LanMinds, Inc. (the
                    "LanMinds Acquisition Shares").

The final total of common stock issuable in connection with the Class B
Warrants, the Interwest Group Warrant, and the LanMinds, Inc. acquisition will
vary with the market price of our common stock. If our stockholders sell
substantial amounts of our common stock in the public market, the market price
of our common stock could fall. Such sales also might make it more difficult for
us to sell equity or equity-related securities in the future at a price it deems
appropriate. Also, we have issued and plan to issue additional convertible
equity and debt securities. If these securities are exercised or converted, you
may experience significant dilution in the market value of your IC&C common
stock. Our stock price is highly volatile.



                                       16
<PAGE>   20
OUR OUTSTANDING CLASS B WARRANTS, THE INTERWEST GROUP WARRANT, AND THE LANMINDS
ACQUISITION SHARES COULD RESULT IN SUBSTANTIAL DILUTION OF YOUR INVESTMENT, A
DETRIMENTAL EFFECT ON OUR ABILITY TO RAISE ADDITIONAL CAPITAL, AND A SIGNIFICANT
DECLINE IN THE VALUE OF OUR COMMON STOCK

The outstanding Class B Warrants, the Interwest Group warrant, and the LanMinds
Acquisition Shares carry certain risks, including the potential for:

            o     substantial dilution of your investment in IC&C;

            o     a detrimental effect on our ability to raise additional funds;
                  and

            o     a decline in the market value of our common stock as a result
                  of the exercise of the Class B Warrants and subsequent sales
                  of the common stock.

            Because of the potential for dilution, as outlined above, we may
find it more difficult to raise additional equity capital while the Class B
Warrants, the Interwest Group Warrant, and the LanMinds Acquisition Shares are
outstanding. Sources of equity capital may be reluctant to provide needed
operating capital, which could have an adverse affect on our ability to finance
growth opportunities and on our liquidity.

            CLASS B WARRANT DILUTION. The number of shares that we may issue to
holders of the Class B Warrants is based on the market price of our common stock
from May 2000 through November 2002. In effect, the holders of the Class B
Warrants have the opportunity to profit from a rise in the market price of our
common stock, if any, thereby reducing the risk of loss on their initial
investment resulting from a decline in our stock price. If the market price of
our common stock decreases, we may issue a greater number of shares upon
exercise of the Class B Warrants. There is theoretically no limit on the number
of shares of common stock that we may be required to issue upon exercise of the
Class B Warrants. Your percentage ownership of our common stock could be diluted
substantially. Moreover, because the exercise price of the Class B Warrants is
only $0.01 per share we will not receive material cash proceeds from the
exercise of the Class B Warrants.

            To assist you in understanding the potential dilution that may
result from exercise of the Class B Warrants from now until the expiration date,
we have set forth the maximum number of shares of common stock we would be
required to issue through December 2002 in the following chart. We have assumed
that the closing bid price of the common stock is equal to 200%, 100%, 66.7%,
and 33.3% of the closing price of our common stock on February 15, 2001 ($0.8125
per share) and stays at that level through the end of the Adjustment Period.

<TABLE>
<CAPTION>
                                                     MAXIMUM NUMBER OF SHARES
                                                  ISSUABLE UPON EXERCISE OF CLASS B         PERCENTAGE OF
                                                     WARRANTS AT $0.01 PER SHARE         OUTSTANDING SHARES AT
ASSUMED CLOSING BID PRICE                            (THROUGH DECEMBER 2002)             FEBRUARY 21, 2001 (1)
-------------------------                         ---------------------------------      ---------------------
<S>                                               <C>                                    <C>
$1.625 - 200% of closing price on 2/15/2001                  6,822,104                           19%


$0.8125 - 100% of closing price on 2/15/2001                13,644,208                           32%


$0.5417 - 66.7% of closing price on 2/15/2001               20,465,053                           41%


$0.2708 - 33.3% of closing price on 2/15/2001               40,937,664                           58%
</TABLE>

----------

(1)   Assumes that all shares to be issued upon exercise of Class B Warrants are
      issued and outstanding. However, under the terms of both the Class A and
      Class B warrants, the holders, at any given time, may not beneficially own
      more than 4.9% of our outstanding common stock.

            THE INTERWEST GROUP WARRANT DILUTION. In connection with our
November 2000 merger with Internet Communications, Inc., we issued a warrant to
Interwest Group that is exercisable on November 30, 2001 (one year and one day
after the closing of the merger). The number of shares for which this warrant
will be exercisable, if any, depends on the trading price of our common stock at
that time. If the market price of our common stock decreases, we may issue a
greater number of shares upon exercise of the Interwest Group Warrant. The
Interwest Group



                                       17
<PAGE>   21
Warrant is exercisable if the market value of our common stock received by
Interwest Group upon conversion of the Interwest Group loan on the date that is
one year and one day after the date of conversion is less than the original
amount of the Interwest Group loan converted into our common stock. Accordingly,
if the market price of our common stock decreases, we may issue a greater number
of shares upon exercise of the Interwest Group warrant.

            To assist you in understanding the potential dilution that may
result from exercise of the Interwest Group Warrant, in the following chart we
have set forth the maximum number of shares of common stock we would be required
to issue at the time the Interwest Group Warrant is exercised. We have assumed
that the closing bid price of the common stock is equal to 200%, 100%, 66.7%,
and 33.3% of the closing price of our common stock on February 15, 2001 ($0.8125
per share) and stays at that level through the end of the Adjustment Period.

<TABLE>
<CAPTION>
                                                        MAXIMUM NUMBER OF SHARES
                                                      ISSUABLE UPON EXERCISE OF THE           PERCENTAGE OF
                                                    INTERWEST GROUP WARRANT AT $0.001     OUTSTANDING SHARES AT
ASSUMED CLOSING BID PRICE                                      PER SHARE                  FEBRUARY 21, 2001 (1)
------------------------------------------------    ---------------------------------     ---------------------
<S>                                                  <C>                                  <C>
$1.625 - 200% of closing price on 2/15/2001                     2,562,837                              8%

$0.8125 - 100% of closing price on 2/15/2001                    6,054,008                             17%

$0.5417 - 66.7% of closing price on 2/15/2001                   9,544,535                             25%

$0.2708 - 33.3% of closing price on 2/15/2001                  20,021,271                             40%
</TABLE>

----------

Because the exercise price of the Interwest Group warrants is only $0.001 per
share we will not receive material cash proceeds from the exercise of the
Interwest Group warrants.

            THE LANMINDS ACQUISITION SHARES DILUTION. On September 21, 2000, we
entered into an Asset Transfer Agreement with LanMinds, Inc. ("LanMinds"), a
California corporation headquartered in Berkeley, California, pursuant to which
we acquired the assets of LanMinds. Pursuant to the terms of the LanMinds Asset
Transfer Agreement, we agreed to provide consideration to LanMinds in an amount
equal to approximately $6 million, payable in the form of shares of our common
stock over the next five years. At closing, we provided LanMinds consideration
equal to $2 million, in the form of 916,031 shares of common stock, with the
number of shares to be issued based on the 15-day average closing price prior to
September 21, 2000 ($2.1833 per share). As partial payment of the remaining
consideration due to LanMinds, we also agreed to issue 591,237 shares which will
be held in escrow, subject to later adjustment and release to LanMinds. The
ultimate number of shares we are required to issue depends on various factors
set forth in the LanMinds Asset Transfer Agreement, including the following,
among others: (a) the ability of LanMinds' to generate sufficient revenues, (b)
LanMinds' liquidity, as measured by the difference between LanMinds' current
assets and current liabilities, (c) claims that may be brought against LanMinds,
and (d) the market price of our common stock. Due to these contingencies, only
505,447 shares have been recorded to equity at December 31, 2000. Any
significant increase in additional shares to be issued would not occur for five
years. At that time, on the fifth anniversary of the closing, there would
theoretically be no limit to the number of shares of common stock that we may be
required to issue if the market price of the Registrant's common stock at that
time was trading below $7.50 per share. As of December 31, 2000, if we were to
issue the shares to LanMinds under the LanMinds Asset Transfer Agreement, we
would have been required to issue an additional 13,976,603 shares. The
consideration that we agreed to pay to LanMinds was determined through arm's
length negotiation. There was no material relationship between us and LanMinds
prior to the acquisition. LanMinds is a business-focused Internet Access and web
solutions provider with customers in California, Colorado, and Japan.



                                       18
<PAGE>   22


IF INSTITUTIONAL INVESTORS AND OTHER STOCKHOLDERS SELL LARGE VOLUMES OF THEIR
COMMON STOCK WITHIN A RELATIVELY SHORT PERIOD OF TIME, INCLUDING SHARES TO BE
ISSUED UPON CONVERSION OF THEIR WARRANTS, THE VALUE OF OUR COMMON STOCK MAY
DECLINE

            If the institutional investors and other stockholders sell large
volumes of our common stock within a relatively short period of time, the market
price of our common stock may decrease and allow the warrant holders to convert
their warrants into a greater amount of our common stock. Further sales of the
common stock issued upon conversion of the warrants could cause even greater
declines in the price of our common stock. Although warrant holders are
restricted in their ability to engage in short sales and similar transactions,
the downward pressure on the market price caused by conversion of warrants and
sale of the underlying common stock could encourage short sales by other
investors and further undermine the value of our common stock.

IF WE ARE UNABLE TO OBTAIN STOCKHOLDER APPROVAL TO ISSUE THE CLASS B WARRANT
SHARES, WE MAY BE REQUIRED TO REQUEST DELISTING OF OUR COMMON STOCK FROM THE
NASDAQ STOCK MARKET OR REDEEM THE OUTSTANDING CLASS B WARRANTS AT A PREMIUM

            Under the rules of the Nasdaq Stock Market, we are required to
obtain stockholder approval for the issuance of common stock upon exercise of
the Class B Warrants if the number of shares issuable upon exercise of the Class
B Warrants equals or exceeds 20% of the number of shares of common stock
outstanding before the Class B Warrants were issued (the "Nasdaq 20%
Limitation"). On the date the Class B Warrants were issued, we had 18,865,448
shares of common stock outstanding. Thus, we will be able to issue 3,773,089
shares upon exercise of Class B Warrants without obtaining stockholder approval.

            However, based on the current market price of our common stock, the
number of shares of common stock issuable upon exercise of Class B Warrants will
exceed the Nasdaq 20% Limitation. We intend to seek stockholder approval to
issue these shares at the Annual Meeting of Shareholders scheduled for June
2001. If we fail to obtain stockholder approval, we would then have to:

            o     delist our common stock from the Nasdaq Stock Market; and/or

            o     pay a redemption fee equal to 120% of the average market value
                  of the unissued common stock over a five-day period
                  immediately preceding the holder's request for redemption.

Redemption of the underlying common stock that cannot be issued due to the
Nasdaq 20% Limitation at a premium could severely diminish our working capital
and harm its ability to raise additional capital. Furthermore, if we are
required to delist our shares from the Nasdaq National Market, you may have more
difficulty in attempting to sell your IC&C common stock.

THE PRICE OF OUR COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY, WHICH COULD LEAD TO
LOSSES FOR INDIVIDUAL INVESTORS AND COULD DAMAGE OUR REPUTATION AND LEAD TO
COSTLY AND TIME CONSUMING SECURITIES CLASS ACTION LITIGATION

            Our financial results may fluctuate significantly because of several
factors, many of which are beyond our control. These factors include:

            o     costs associated with gaining and retaining customers and
                  capital expenditures for upgrading systems and infrastructure;

            o     timing and market acceptance of new and upgraded Internet
                  service introductions, technologies, and services by us and
                  our competitors;

            o     loss of customers and seasonal fluctuations in demand for our
                  services;

            o     downward pressure on prices due to increased competition;

            o     changes in our operating expenses, including
                  telecommunications costs; and

            o     the effect of potential acquisitions.



                                       19
<PAGE>   23
            In the past, there have been class action law suits filed against
companies after periods of fluctuations in the market price of their securities.
If we were subject to this type of litigation, it would be a strain on our
personnel and financial resources, and divert management's attention from
running our company. Litigation could also negatively affect our public image
and reputation.

            Historically, the trading prices of our common stock have been
volatile. We believe that the market prices will continue to be subject to
significant fluctuations due to various factors and events that may or may not
be related to our performance. If the market value of our common stock decreased
substantially, the common stock could be delisted from the Nasdaq National
Market. Consequently, you could find it difficult or impossible to sell your
stock or to determine the value of your stock. In addition, the stock market has
from time to time experienced significant price and volume fluctuations, which
have particularly affected the market prices of the stocks of Internet-sector
companies and which may be unrelated to the operating performance of such
companies. Furthermore, our operating results and prospects from time to time
may be below the expectations of public market analysts and investors. Any such
event could result in a material decline in the price of your stock.

WE HAVE NO INTENTION TO PAY DIVIDENDS

            We have never paid any cash dividends on our common stock. We
currently intend to retain all future earnings, if any, for use in our business
and do not expect to pay any dividends in the foreseeable future.

WE FACE POTENTIAL COSTS AND LIABILITY IN CONNECTION WITH THE INFORMATION WE HOST
AND THAT IS DISSEMINATED THROUGH OUR NETWORK

            We are not currently subject to direct federal, state, or local
government regulation, other than regulations applicable to businesses
generally. There currently is only a small body of laws and regulations directly
applicable to the provision of access to or commerce services on the Internet.
For example, in late 1998, Congress enacted the Digital Millennium Copyright
Act, which includes a limitation on liability of online service providers for
copyright infringement for transmitting, routing, or providing connections,
storage or caching of data at the direction of a user. This limitation on
liability applies if the service provider has no actual knowledge that the
particular data infringed on third party intellectual property rights and if
certain other conditions are met. Because this law is relatively new, we are not
sure how it will be applied to limit any liability that it may face in the
future for possible copyright infringement-related issues that arise in
connection with the services we provide. This law also requires that service
providers follow certain notice and take-down procedures with respect to
allegedly infringing materials in order to take advantage of the limitation on
liability provided by the Digital Millennium Copyright Act. We are in the
process of implementing these sorts of procedures across its operations. Certain
provisions of the Communications Decency Act, which imposes criminal penalties
for using an interactive computer service for transmitting obscene or indecent
communications, have been found unconstitutional by the U.S. Supreme Court.
Other federal legislation that was enacted to require limitations on access to
pornography and other material deemed harmful to minors was determined to
violate the First Amendment, but that decision is on appeal. We are unable to
predict the outcome of this appeal or whether other similar legislation will be
enacted or enforced. In addition, the Federal Trade Commission adopted final
rules, effective April 21, 2000, regarding the Children's Online Privacy
Protection Act's prohibition of unfair and deceptive acts and practices in
connection with the collection and use of personal information from and about
children on the Internet. The rules provide that Web sites directed at children
under 13 years of age must obtain verifiable parental consent before collecting
personal information from children and must take other measures intended to
safeguard children's privacy. Additional requirements may be imposed on Web site
operations relating to the use, dissemination, and collection of personal
information. We have adopted a standard acceptable use policy that applies to
all of our customers and that prohibits them from posting, transmitting, or
storing material on or through our services that we determine to be in violation
of third party intellectual property rights. Our acceptable use policy also
imposes other restrictions on our customers in connection with the use of our
services, including prohibitions on illegal activity or other activity that is
destructive or potentially destructive to our business or reputation or to our
customers. We initially designed and continue to evolve our acceptable use
policy to promote the security, reliability, and privacy of our systems and
network. However, we cannot assure you that our policy will accomplish this goal
or shield us from liability under the Digital Millennium Copyright Act or
otherwise with respect to the activities of, or the content hosted or
transmitted by, our customers or other Internet users.



                                       20
<PAGE>   24

            Because of the increased popularity and use of the Internet, it is
likely that a number of additional laws and regulations may be adopted at the
federal, state, and local levels, governing such issues as user privacy, freedom
of expression, pricing, taxation, advertising, intellectual property rights,
information security, and the convergence of traditional telecommunications
services with online services and Internet communications. Legislation
addressing such things as online security, privacy, mass unsolicited commercial
e-mail messages, and the regulation of sales of products, such as
pharmaceuticals, firearms, drug paraphernalia, and gambling, is proposed
regularly in many states and in Congress. The implementation of any such
legislation could result in direct or indirect regulation of online service
providers generally, including us. In that case, it is likely that we will have
to implement additional policies and procedures designed to assure our
compliance with the particular legislation.

            The imposition on Internet service providers or Web hosting
providers of potential liability for materials carried on or disseminated
through their systems could require us to implement measures to reduce its
exposure to such liability. These measures may require that we spend substantial
resources or discontinue certain product or service offerings. Any of these
actions could have a material adverse effect on our business, financial
condition and results of operations. Further, the adoption of such laws and
regulations might decrease growth of the Internet generally, which in turn could
negatively impact our business. In addition, applicability to the Internet of
existing laws governing such things as property ownership, intellectual property
rights, taxation, obscenity, defamation, libel, and personal property is
uncertain. Because so many of the existing laws on these topics were adopted
prior to the advent of the Internet and related technologies, they do not
contemplate, address, or readily apply to the unique issues that the Internet
and its use create.

            The law relating to the regulation and liability of Internet access
providers in relation to information carried or disseminated is also developing
in other countries. For example, the European Union has enacted its own data
privacy regulations, and Australia has imposed new obligations on Internet
service providers to block access to certain types of content. Decisions, laws,
regulations, and other activities regarding regulation and content liability may
significantly affect the development and profitability of companies offering
online and Internet access services.

            We carry an errors and omissions insurance policy. This insurance
may not be adequate or available to compensate us for all liability that may be
imposed.

WE MAY BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATION THAT COULD DECREASE
OUR REVENUES AND INCREASE OUR COSTS

            Although as an Internet access provider we are not currently subject
to direct federal governmental regulation other than regulations applicable to
businesses generally, changes in the regulatory environment relating to the
Internet Access market could affect our business, financial condition, and
results of operations. For example, regulations at the Federal Communications
Commission require discounted Internet access rates for schools and libraries.
Due to the increasingly widespread use of the Internet for the hosting, use, and
transmission of content, it is likely that additional laws and regulations will
be adopted at the federal, state, and local level, especially that is content
related, that will apply directly or indirectly to us. For example, legislation
concerning unsolicited commercial e-mail messages, online gambling, online sales
of pharmaceuticals, drug paraphernalia, and other illegal or controlled goods
and services, privacy, libel, intellectual property protection and infringement,
technology export, and other controls is pending and, in some cases, has been
adopted in various states as well as at the federal level. We may be subject to
similar or other laws and regulations in non-U.S. jurisdictions.

            Moreover, the Federal Communications Commission continues to review
its regulatory position on the usage of the basic network and communications
facilities by Internet service providers. Although the Federal Communications
Commission determined that Internet service providers should not be treated as
telecommunications carriers and, therefore, need not be regulated, in an April
1998 report, the regulatory status of Internet service providers remains
uncertain. Indeed, in its 1998 report, the Federal Communications Commission
concluded that certain services offered over the Internet, such as
phone-to-phone Internet protocol telephony, may be functionally
indistinguishable from traditional telecommunications service offerings and
their non-regulated status may have to be re-examined.



                                       21
<PAGE>   25
            Changes in the regulatory structure and environment affecting the
Internet access market, including regulatory changes that directly or indirectly
affect telecommunications costs or increase the likelihood of competition from
regional bell operating companies or other telecommunications companies, could
adversely affect us. Although the Federal Communications Commission has decided
not to allow local telephone companies to impose per-minute access charges on
Internet service providers, and that decision has been upheld by a reviewing
court, further regulatory and legislative consideration of this issue is likely.
In addition, some telephone companies are seeking relief through the Federal
Communications Commission and state regulatory agencies. Such rules, if adopted,
are likely to have a greater impact on consumer-oriented Internet access
providers than on business-oriented Internet service providers such as us.
Nonetheless, the imposition of access charges would affect our costs of serving
dial-up customers and could have a material adverse effect on our business,
financial condition, and results of operations.

IF WE ARE UNABLE TO RETAIN KEY EXECUTIVES, OUR GROWTH POTENTIAL AND OPERATING
RESULTS WILL BE ADVERSELY AFFECTED

            Our success greatly depends on our ability to attract and retain key
technical, sales, marketing, information systems, financial, and executive
personnel. We are especially dependent on the continued services of our senior
management team, particularly Douglas H. Hanson, our Chief Executive Officer,
President, and Chairman of the Board of Directors. The loss of Mr. Hanson or
other senior managers could have a materially detrimental effect on us. All
members of our senior management team can terminate their employment at any
time. We do not maintain key person life insurance on any of our personnel. If
we fail to attract, hire, or retain the necessary personnel, or if we lose the
services of any member of our senior management team, our business could be
adversely affected.

ITEM 2. DESCRIPTION OF PROPERTIES

            Our corporate headquarters is located in Denver, Colorado at 999
Eighteenth Street, Suite 2201, where the executive, and administrative functions
exist. We lease approximately 27,893 square feet in Englewood, Colorado at 7100
East Belleview Avenue, Suite 201, where our integration and installation
business is located, under a lease that expires October 31, 2002. We also lease
approximately 4,000 square feet in Denver at 1800 Glenarm. This facility has
been sub-let for the remainder of the lease term, which concludes January 7,
2001. We also have leased POP locations in Colorado Springs, Denver, Grand
Junction, Loveland, and Pueblo, Colorado. Through third-party contracts, we
lease two additional POP locations in Durango and Montrose, Colorado. Through
acquisitions we have assumed or negotiated operating leases for office locations
in Opelika, Alabama, Phoenix, Arizona, Tucson, Arizona, Berkeley, California,
San Francisco, California, Burlington, Colorado, Colorado Springs, Colorado,
Denver, Colorado, Englewood, Colorado, La Junta, Colorado, Loveland, Colorado,
Steamboat Springs, Colorado, Bloomington, Illinois, Champaign, Illinois, Normal,
Illinois, Schaumburg, Illinois, Overland Park, Kansas, Walkersville, Maryland,
Tulsa, Oklahoma, Salt Lake City, Utah, and Seattle, Washington. We do not own
any real estate.

ITEM 3. LEGAL PROCEEDINGS

            Although we resolved a prior dispute with INCC in conjunction with a
failed 1998 merger attempt and subsequently completed the merger in November
2000 claims by third parties allegedly arising from the terminated 1998 merger
remain outstanding. We have incurred costs, expenses, and related fees of $6.1
million, a portion of which are in dispute. Of the $6.1 million expense,
approximately $4.2 million relates to a non-cash item regarding warrants that we
issued. Related to this dispute, certain third parties filed suit on June 12,
2000 in New York state court claiming they were entitled to approximately
$794,000 in fees. We filed an answer and counterclaim on July 13, 2000,
disputing all such claims. At this time, we have received an offer to settle all
outstanding claims in this matter in an amount of approximately $125,000. We
have this settlement offer under active consideration, but are unable to
determine the possible outcome of this dispute.

            On September 28, 2000, we received a Demand for Arbitration and
Statement of Claim by Roger L. Penner, a former employee of the Company. Mr.
Penner was terminated for cause by us on June 12, 2000. Mr. Penner is the former
owner of CommerceGate Corporation, which was acquired by us on June 24, 1999
pursuant to a merger agreement. The Penner demand asserts a claim that he was
terminated without cause, and that we breached the merger agreement. The Penner
demand seeks damages, in the form of our common stock and monies, in excess of
$2 million. We filed an answer and counterclaim on October 27, 2000, disputing
all claims set forth in the Penner




                                       22
<PAGE>   26

demand, and asserting claims that Penner was terminated for cause, that Penner
breached the merger agreement, and that Penner through fraud and willful
misconduct caused material damage to us. Our counterclaim seeks damages from
Penner in excess of $4 million. The matter is currently in arbitration. At this
time, we are unable to determine the possible outcome of this remaining dispute.

            On February 20, 2001, a lawsuit was filed against us in the Alabama
State Court by the Opelika Industrial Authority, which asserted claims against
us for non-payment on a Promissory Note, totaling approximately $1,086,939. We
are currently reviewing the complaint, and determining whether to file an answer
and/or counterclaim, and whether to agree to jurisdiction to this dispute in
Alabama. At this time, we are unable to determine the possible outcome of this
dispute.

            On February 15, 2001, a lawsuit was filed against us in the Colorado
State Court by the Vitria Technology, Inc., which asserted claims against us for
non-payment on a purchase of financial software, totaling approximately
$560,000. We did not install or utilize the Vitria software at any time, and
returned such software intact and unused in June 2000, with a statement that we
were revoking the purchase. We are currently reviewing the complaint, and
determining whether to file counterclaims in addition to an answer. At this
time, we are unable to determine the possible outcome of this dispute.

            On March 1, 2001, a Demand for Arbitration was filed against us with
the American Arbitration Association by Novo MediaGroup, Inc., which asserted
claims against us for failure to deliver the shares of our common stock that
were held in escrow subject to the parties' Asset Purchase Agreement, dated
August 1999, totaling a sum value of approximately $510,000. We believe that
Novo MediaGroup did not honor all obligations and warranties of the Asset
Purchase Agreement, which put in question whether they were entitled to receipt
of the shares held in escrow. We are currently reviewing the Demand for
Arbitration, and determining whether to file counterclaims in addition to an
answer. At this time, we are unable to determine the possible outcome of this
dispute.

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

            The following two matters were submitted to a vote of security
holders at the Special Meeting of Shareholders held on November 28, 2000.
Specifically, stockholders approved:

1.    the Amended and Restated Agreement and Plan of Merger dated as of October
      18, 2000, by and among IC&C (then known as RMI.NET, Inc.), Internet
      Acquisition Corporation, our wholly owned subsidiary, and Internet
      Communications, Inc. As a result of the merger, Internet Communications
      became a wholly owned subsidiary of IC&C. There were 13,257,474 votes cast
      for approval of the proposal, 179,249 votes cast against approval of the
      proposal, 24,248 abstentions, and 9,888,604 shares not voted; and

2.    an amendment to Article 1 of our Amended and Restated Certificate of
      Incorporation, as amended, to change our name from RMI.NET, Inc. to
      Internet Commerce & Communications, Inc., subject to completion of the
      proposed merger with INCC. There were 13,161,553 votes cast for approval
      of the amendment, 271,635 votes cast against approval of the amendment,
      27,783 abstentions, and 9,888,604 shares not voted.

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

            Our common stock is traded on the Nasdaq National Market under the
symbol "ICCX."

            The following table sets forth the closing high and low closing
prices of our common stock as reported on the Nasdaq SmallCap Market from
January 1, 1998 through December 31, 2000. On March 5, 1999, our common stock
began trading on the Nasdaq National Market.



                                       23
<PAGE>   27


<TABLE>
<CAPTION>
                                                               STOCK PRICE
                                                    ----------------------------------
                             2001                      HIGH                   LOW
      ---------------------------------             ------------         -------------
<S>                                                 <C>                  <C>
      January 1, 2001 - March 23, 2001              $      1.500         $       0.281

                   2000
      ---------------------------------
      First Quarter                                 $     12.500         $       7.313
      Second Quarter                                $      7.063         $       2.875
      Third Quarter                                 $      3.375         $       1.250
      Fourth Quarter                                $      1.688         $       0.281

                   1999
      ---------------------------------
      First Quarter                                 $     15.875         $      10.500
      Second Quarter                                $     16.625         $      10.938
      Third Quarter                                 $     13.625         $       6.688
      Fourth Quarter                                $     10.000         $       6.094
</TABLE>

            At March 23, 2001, the last reported sales price of our common stock
was $0.406 per share. Based on information supplied by certain of record holders
of our common stock, we estimate that there are approximately 13,881 beneficial
owners of our common stock. We have never declared or paid any dividends on our
common stock. Because we currently intend to retain future earnings to finance
growth, we do not anticipate paying any cash dividends in the foreseeable
future.

            For a description of unregistered securities issued by IC&C in 2000,
refer to Notes 8 and 9 of Notes to Consolidated Financial Statements. In each of
these transactions, we relied on the exemption from registration provided by
Rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933.

            From January 1, 2000 through December 31, 2000, we granted options
to purchase 1,846,850 shares of common stock under our stock option plans with a
weighted average exercise price of $2.23 per share. Our directors and employees
exercised options to purchase 54,862 shares of common stock with a weighted
average exercise price of $5.20 per share.

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL INFORMATION

            The following is a summary of selected consolidated financial data
of IC&C as of and for the five years ended December 31, 2000. This data should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our Consolidated Financial Statements
and the Notes thereto appearing elsewhere in this Annual Report on Form 10-K.



                                       24
<PAGE>   28

<TABLE>
<CAPTION>
                                             2000              1999              1998              1997              1996
                                         ------------      ------------      ------------      ------------      ------------
<S>                                      <C>               <C>               <C>               <C>               <C>
STATEMENT OF OPERATIONS DATA(1):
Revenues ...........................     $ 45,410,098      $ 30,122,004      $ 10,087,015      $  6,127,111      $  3,281,579
Impairment of intangible assets ....       (5,331,795)               --                --                --                --
Operating loss .....................      (42,561,763)      (24,545,868)      (10,478,162)       (3,800,706)       (2,281,194)
Net loss ...........................      (47,457,609)      (24,927,652)      (10,668,802)       (4,152,853)       (2,342,571)
Basic and diluted loss per share ...            (2.12)            (1.83)            (1.39)            (0.79)            (1.03)


BALANCE SHEET DATA:
Cash and cash equivalents ..........     $         --      $ 11,238,188      $  5,729,346      $  1,053,189      $    348,978
Working capital (deficit) ..........      (21,004,115)        2,004,051         1,986,513          (209,003)          370,884
Total assets .......................       62,054,698        70,719,030        24,681,801         5,082,119         5,540,167
Long term debt and capital lease
  obligations ......................          538,189         2,222,373           493,963           904,627         1,134,380
Redeemable, Convertible Preferred
  Stock ............................               --                --         6,747,843                --                --
Total stockholders' equity
  (deficit) ........................     $ 29,849,531      $ 54,445,345      $ 11,817,614      $  2,083,370      $  2,317,437
</TABLE>

------------
(1)  The Company's operating results have been influenced by a significant
     number of acquisitions which have occurred from 1996 to 2000. See Note 11
     to the consolidated financial statements for a description of certain of
     these acquisitions.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2000 COMPARED WITH YEAR ENDED DECEMBER 31, 1999

     The following table presents operating data, as a percentage of total
revenue, for the years ended December 31, 2000, 1999, and 1998. This information
is from our consolidated audited financial statements included in this Annual
Report on Form 10-K and this information should be read in conjunction with the
Consolidated Financial Statements and Notes thereto.

<TABLE>
<CAPTION>
                                                           YEAR ENDED DECEMBER 31,
                                                         --------------------------
                                                         2000       1999       1998
                                                         ----       ----       ----
<S>                                                      <C>        <C>        <C>
Revenue:
     Access services ...............................       79%        86%        79%
     Web solutions .................................       17%        14%        21%
     Integration and installation services .........        4%        --%        --%
                                                         ----       ----       ----
         Total revenue .............................      100%       100%       100%

Costs and expenses:
     Cost of services ..............................       60%        59%        35%
     Selling expenses ..............................       14%        20%        20%
     General and administrative expenses ...........       65%        73%        71%
     Costs related to unsuccessful merger attempt ..       --%        --%        60%
     Depreciation and amortization .................       43%        29%        18%
     Impairment of intangible assets ...............       12%        --%        --%
                                                         ----       ----       ----
         Total costs and expenses ..................      194%       181%       204%
                                                         ----       ----       ----
              Operating loss .......................      (94)%      (81)%     (104)%

Other income (expense):
     Interest expense ..............................       (2)%       (2)%       (3)%
     Interest income ...............................        1%        --%         1%
     Loss on write off of investment................       (8)%       --%        --%
     Other income (expense) ........................       (1)%       --%         1%
                                                         ----       ----       ----

Net loss ...........................................     (104)%      (83)%     (105)%
                                                         ====       ====       ====
</TABLE>



                                       25
<PAGE>   29
            TOTAL REVENUE

            Our total revenues grew 51% from $30,122,000 in 1999 to $45,410,000
in 2000. Acquisitions completed in the second half of 1999 primarily contributed
to the increase in revenue. In addition, for the year ended December 31, 2000,
we completed four acquisitions which contributed revenue of approximately $3.2
million.

            ACCESS SERVICES

            Access Services is comprised predominately of dial-up, dedicated
access and telecommunication services. We offer a broad range of access options
to our customers including dedicated, Digital Subscriber Line ("DSL"),
Integrated Services Digital Network ("ISDN"), dial-up connections as well as
long distance voice services. Access Services customers typically pay fixed,
monthly recurring service charges plus a one-time setup fee, which are being
recognized over the longer of the contract term or the expected life of the
customer relationship. The charges vary depending on the type of service, the
length of the contract and local market conditions. Amounts billed relating to
future periods are recorded as deferred revenue and amortized monthly as the
services are rendered.

            Access Services revenue increased 38% from $25,864,000 in 1999 to
$35,766,000 in 2000. In addition, Access Services revenue as a percentage of
total revenue decreased from 86% in 1999 to 79% in 2000. Acquisitions completed
in the second half of 1999 and in 2000 contributed significantly to this
increase.

            The future revenues of our dial-up Internet access business will
depend on the final implementation of the EarthLink transaction, as described in
the Management's Discussion and Analysis of Financial Condition and Results of
Operation-Liquidity and Capital Resources section of this Annual Report on Form
10-K. Dial-up revenue represented $15,923,167 or 35% of total revenue for the
year ended December 31, 2000.

            WEB SOLUTIONS

            Web Solutions revenues are comprised of three major products: Web
site hosting, Web site design and development, and Web site marketing. Web
hosting customers typically pay fixed, recurring monthly service charges plus a
one-time setup fee. Revenue from Web site design and development and Web
marketing customers is recognized as the service is provided.

            Web Solutions revenue grew 83% from $4,258,000 in 1999 to $7,787,000
in 2000. Web site hosting accounted for $1,285,000 of revenue in 1999 and
$2,503,039 in 2000, for an increase of 95% due to an increase in the number of
hosted Web sites as a result of acquisitions completed in the second half of
1999 and in 2000. Web site design and development increased from $2,452,000 in
1999 to $3,296,452 in 2000, for an increase of 34%. The increase in Web
production revenue is primarily due to Web production revenue contributed
through the acquired companies.

            INTEGRATION AND INSTALLATION SERVICES

            Integration and Installation Services revenues are comprised of
these products: Central Office Installation, Network Transport Services, and
Network Management Services.

            Integration and Installation Services revenue grew from $0 in 1999
to $1,857,000 in 2000. This is due to the addition of Integration and
Installation Services as a result of our November 2000 acquisition of Internet
Communications, Inc.

            OPERATING EXPENSES

            Operating expenses consist primarily of costs for circuit and local
line charges to provide service to our customers. The operating expenses related
to Web solutions customers consist primarily of payroll expense related to
Web-site design services and sub-contracting costs.

            Operating expenses increased 54%, from $17,816,000 in 1999, to
$27,363,000 in 2000, primarily due to acquisitions. In addition, the operating
expenses as a percent of revenue increased from 59% in 1999 to 60% in 2000.



                                       26
<PAGE>   30
            SELLING EXPENSES

            Selling expenses consist primarily of salaries, commission,
advertising, and marketing. Selling expenses increased 9%, from $6,005,000 in
1999 to $6,567,000 in 2000. The increase in selling expenses is due primarily to
the addition of sales personnel related to the current year acquisitions and an
increase in advertising expense.

            GENERAL AND ADMINISTRATIVE EXPENSES

            General and administrative expenses ("G & A") consist primarily of
salaries and related benefits, and includes the expenses of general management,
engineering, customer service, technical support, accounting, billing, and
office facilities. G&A expenses increased 36% from $21,995,000 in 1999 to
$29,824,000 in 2000.

            DEPRECIATION AND AMORTIZATION

            Depreciation and amortization is provided for over the estimated
useful lives of assets ranging from three to seven years using the straight-line
method. The excess of cost over the fair value of net assets acquired, or
goodwill, is amortized using the straight-line method over a five-year period.
Depreciation and amortization increased 121% from $8,852,000 in 1999 to
$19,574,000 in 2000. The increase was due to higher goodwill amortization
associated with our acquisition of four companies during 2000 and 16 companies
in 1999. In addition, depreciation and amortization increased due to our
decision to write off capitalized and purchased software of approximately $2.0
million due to the uncertainty as to the ultimate realization of these amounts.

            IMPAIRMENT OF INTANGIBLE ASSETS

            During the year ended December 31, 2000 and as a result of
determination of revised values for our dial-up Internet access service due to
the March 2001 EarthLink transaction, as described in Management's Discussion
and Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources, we have recorded a write-down of goodwill of $5,332,000. A
similar write-down did not occur in 1999.

            INTEREST EXPENSE

            Interest expense increased from $542,000 in 1999 to $1,023,000 in
2000. The increase is due to increased borrowings in 2000 compared to 1999.

            LOSS ON WRITE OFF OF INVESTMENTS

            During the fourth quarter of 2000, we purchased a 19.9% interest in
a content portal and ASP delivery system. We intended to further develop and
sell this system to others. Due to the investee's inability to generate
sufficient operating results, we were unable to realize expected profits from
this investment. Accordingly, we determined that it was uncertain whether
adequate sales of this system would be realized and wrote off the investment
balance of approximately $3.6 million.

     YEAR ENDED DECEMBER 31, 1999 COMPARED WITH YEAR ENDED DECEMBER 31, 1998

            TOTAL REVENUE

            Our total revenues grew 199% from $10,087,000 in 1998 to $30,122,000
in 1999. Revenue growth performance is attributable to an increase in the number
of our customers which were added primarily through



                                       27
<PAGE>   31

acquisition. During the year ended December 31, 1999, we completed 16
acquisitions which contributed revenue of approximately $13.8 million. In
addition, we intensified our sales and marketing efforts in 1999 versus 1998 by
launching a national advertising campaign in September 1999 as well as
increasing the size of our sales force.

            ACCESS SERVICES

            Access Services is comprised predominately of dial-up, dedicated
access and telecommunication services. We offer a broad range of access options
to our customers including dedicated, Digital Subscriber Line ("DSL"),
Integrated Services Digital Network ("ISDN"), dial-up connections as well as
long distance voice services. Access Services customers typically pay fixed,
monthly recurring service charges plus a one-time setup fee. The charges vary
depending on the type of service, the length of the contract and local market
conditions. Amounts billed relating to future periods are recorded as deferred
revenue and amortized monthly as the services are rendered.

            Access Services revenue increased 224% from $7,974,000 in 1998 to
$25,864,000 in 1999. In addition, Access Services revenue as a percentage of
total revenue increased from 79% in 1998 to 86% in 1999. Acquisitions completed
in 1999 contributed significantly to this increase, adding approximately $13.8
million of the $18 million increase.

            WEB SOLUTIONS

            Web Solutions revenues are comprised of three major products: Web
site hosting, Web site design and development, and Web site marketing. Web
hosting customers typically pay fixed, recurring monthly service charges plus a
one-time setup fee. Revenue from Web site design and development and Web
marketing customers is recognized as the service is provided.

            Web Solutions revenue grew 102% from $2,113,000 in 1998 to
$4,258,000 in 1999. Web site hosting accounted for $601,000 of revenue in 1998
and $1,285,000 in 1999, for an increase of 114% due to an increase in the number
of hosted Web sites as a result of acquisitions. Web site design and development
increased from $1,287,000 in 1998 to $2,452,000 in 1999, for an increase of 91%.
The increase in Web production revenue is primarily due to Web production
revenue contributed through the acquired companies.

            OPERATING EXPENSES

            Operating expenses consists primarily of costs for circuit and local
line charges to provide service to our customers. The operating expenses related
to Web solutions customers consist primarily of payroll expense related to
Web-site design services and sub-contracting costs.

            Operating expenses increased 406%, from $3,522,000 in 1998, to
$17,816,000 in 1999, primarily due to acquisitions. In addition, the operating
expenses as a percent of revenue increased from 35% in 1998 to 59% in 1999.
Operating expenses as a percent of revenues increased in 1999 relative to 1998
due to changes in Access Services product mix, resulting from increased
telephony operations and increased costs directly related to production services
within the Web Solutions line of business.

            SELLING EXPENSES

            Selling expenses consist primarily of salaries, commission,
advertising, and marketing. Selling expenses increased 192%, from $2,054,000 in
1998 to $6,005,000 in 1999. The increase in selling expenses is due primarily to
the addition of sales personnel related to the current year acquisitions. In
addition, in September 1999, we launched a national advertising campaign to
support our growing national presence and expanding line of products and
services.

            GENERAL AND ADMINISTRATIVE EXPENSES

            General and administrative expenses ("G & A") consist primarily of
salaries and related benefits, and includes the expenses of general management,
engineering, customer service, technical support, accounting, billing,



                                       28
<PAGE>   32

and office facilities. G&A expenses increased 208% from $7,130,000 in 1998 to
$21,995,000 in 1999. This increase was partially the result of higher payroll
costs and benefits primarily related to the acquisition of 16 companies during
1999. Payroll and benefits cost increased 107% from $5,990,000 in 1998 to
$12,405,000 in 1999, as a result of increasing our headcount. Outside services,
which include "temporary to hire" staff and professional services, increased 91%
from $1,139,000 in 1998 to $2,170,000 in 1999. In late 1998, we began hiring
many of the technical support call center staff and the Web production staff on
a "temp to hire" program, wherein the new employee remains on the temporary
employment agency's payroll for approximately ninety days.

            COSTS RELATED TO UNSUCCESSFUL MERGER ATTEMPT

            In 1998, we accrued approximately $6 million in costs related to an
unsuccessful merger attempt. See Legal Proceedings and footnote 4 in the
financial statements for more information.

            DEPRECIATION AND AMORTIZATION

            Depreciation and amortization is provided for over the estimated
useful lives of assets ranging from three to seven years using the straight-line
method. The excess of cost over the fair value of net assets acquired, or
goodwill, is amortized using the straight-line method over a five-year period.
Depreciation and amortization increased 395% from $1,789,000 in 1998 to
$8,852,000 in 1999. The increase was due to higher goodwill amortization
associated with our acquisition of 16 companies during 1999 and six companies in
1998. Additional acquisitions and investments are likely to cause depreciation
and goodwill amortization to increase in the future.

            INTEREST EXPENSE

            Interest expense increased from $320,000 in 1998 to $542,000 in
1999. The increase is due to higher long-term debt and capital lease obligations
in 1999 compared to 1998.

EFFECTS OF INFLATION

            Historically, inflation has not had a material effect on us.

LIQUIDITY AND CAPITAL RESOURCES

            In 2000, we used $16.4 million in operations, as compared to $13.6
million in 1999. The increase in cash used is due primarily to the net loss
generated after depreciation, amortization, loss on write-off of investment, and
impairment of intangible assets of $18.9 million.

            In 2000, we used $2.8 million in investing activities as compared to
$2.6 million in 1999. Investing activities consisted primarily of purchases of
property and equipment in both years and additions made to capitalized software
in 2000. These additions to capitalized software were subsequently written-off
in 2000 when the realization of the amounts capitalized became in doubt.

            In 2000, we generated $8.0 million from financing activities, as
compared to $21.7 million in 1999. This decrease is due to a reduction in
proceeds from the sale of our common stock and common stock options and warrants
from 1999 to 2000. This reduction has been partially offset by net borrowings
advanced under the revolving credit facility with RFC Capital of $8.9 million.

            We entered into the RFC revolving credit facility in May 2000. The
maximum amount of the loan outstanding may not exceed a specified multiple of
our eligible monthly cash collections. The borrowing available to us will
fluctuate based on cash collections. We had $8,917,866 outstanding and
approximately $335,000 available at December 31, 2000. Interest for this
Agreement shall be at a rate equal to the greater of (i) LIBOR plus 6.15% per
annum, or (ii) $3,000 per month. The Agreement is scheduled to continue until
May 22, 2002. This agreement also restricts our ability to pay dividends. We
have also issued to RFC Capital Corporation a warrant to purchase 252,255 shares
of common stock at $4.03125 per share. We are currently in default in relation
to certain covenants of the RFC borrowing agreement. We have obtained a waiver
for these defaults through April 2, 2001. We are in the process of restructuring
the financial covenants to help ensure future compliance. However, this
agreement has not been finalized. Accordingly, we will reflect the outstanding
balance on the line as current until the restructured agreement is finalized.
<PAGE>   33
            Since its inception, we have funded our operations and working
capital needs through the public and private placement of our equity securities
and through a revolving line of credit. In addition, a significant portion of
the our capital expenditures have been financed through capital lease
obligations payable to finance companies. We have also borrowed amounts from our
CEO in order to fund working capital requirements.

            We have no cash and cash equivalents at December 31, 2000. We could
borrow an additional $335,000 under its Revolving Credit Facility with RFC
Capital at December 31, 2000. A default exists on the Revolving Credit Facility
which has been waived through April 2, 2001. We expect to revise its financial
covenants to cure the default. Until the revision occurs, however, our ability
to borrow on the facility could become impaired. Management estimates that based
upon its current expectations for growth and anticipated funds received from the
EarthLink Enterprises, Inc. transaction (see below), we will require no
additional funding through the end of 2001 for the execution of our current
business plan, including the financing of our anticipated capital expenditures
and operating losses. Should we require additional funding, we would obtain this
funding from one or more of the following sources:

            (1) a private placement of common or preferred stock.

            (2) establishing a new credit facility to finance working capital
                and capital expenditures.

            (3) renegotiation of the revolving line of credit with RFC Capital
                to allow for borrowing up to the maximum borrowing base of $12
                million (see Note 4).

            (4) calling the approximately 2.5 million warrants that were issued
                upon completion of the purchase of Internet Communications
                Corporation, which could yield approximately $20.0 million in
                proceeds. In order to call the warrants, the share price of IC&C
                common stock must exceed $8.00 for a consecutive five
                trading-day period. Currently the conditions for the call are
                not met.

            (5) sale of assets.

            In March 2001, we entered into an agreement with EarthLink
Enterprises, Inc. to sell all or a portion of our dial-up Internet access
business division in exchange for cash. Under the Agreement, we will work with
EarthLink to transition all of our dial-up Internet access customers to
EarthLink, and we will retain and continue to serve any customers that cannot be
transitioned to EarthLink. We expect the transition will begin May of 2001 and
to continue for several months. EarthLink has agreed to pay us a certain dollar
amount for each customer that is successfully transitioned and becomes a
customer of EarthLink. EarthLink has the right to decide not to accept certain
customers from areas of the country that are difficult for them to provide
service.

            The agreement provides for payment in three installments. Under the
Agreement, EarthLink has provided us with the first installment payment in the
amount of $4.6 million. We expect to receive the second installment payment in
May or June of 2001 and the last installment received later in 2001. We expect
to generate $12 to $18 million on the sale of our dial-up customers. We have
received approval from RFC Capital Corporation, our lender under a revolving
line of credit, regarding their release of any lien they may have on this
portion of our business. We will be reducing our borrowing line from RFC to
reflect the sale of the actual revenue that is transitioned to EarthLink, and we
will be using a portion of the payments from EarthLink to make payment on our
outstanding borrowings from RFC.

            Once we have completed this transaction, we will have an opportunity
to achieve a number of efficiencies in our future operations. These benefits
will include the reduction of a significant portion of our employee headcount,
reducing or eliminating a significant amount of our current circuit and carrier
expenses, and having an opportunity to narrow the scope of our corporate
operations to provide the same level of service at lesser cost. Additionally, as
a result of this transaction we will be able to focus our sales, marketing, and
operations efforts on the business customers in the future, which will provide
us with higher margins and a greater return on our investment of working
capital. In conjunction with the transaction, we may incur certain one time
charges related to severance and other costs. This amount has not yet been
quantified.

            The sale of additional equity or convertible debt securities could
result in additional dilution to our stockholders. In addition, we will, from
time to time, consider the acquisition of or investment in complementary
businesses, products, services, and technologies, and the repurchase and
retirement of debt, which might impact our liquidity requirements or cause us to
issue additional equity or debt securities. Our ability to access capital could
also be impaired due to the significant dilution associated with the Class B
Warrants, the Interwest Group Warrant, and the additional shares which could be
issued pursuant to the LanMinds, Inc. acquisition. There can be no assurance
that

<PAGE>   34
financing will be available in amounts or on terms acceptable to us, if at all.
Should we be unsuccessful in our efforts to raise capital, we may be required to
modify or curtail our plans for growth.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

            We do not have any derivative financial instruments as of December
31, 2000. Our interest income and expense are sensitive to changes in the
general level of interest rates. In this regard, changes in interest rates can
affect the interest earned on our cash equivalents. Our long-term debt typically
has fixed interest rates and the fair value of these instruments is affected by
changes in market interest rates. However, our revolving line of credit with RFC
Capital carries a variable interest rate based on LIBOR. To mitigate the impact
of fluctuations in interest rates, we generally enter into fixed rate investing
and borrowing arrangements. As a result, we believe that the market risk arising
from holdings of its financial instruments is not material and the fair market
value of these instruments approximates their recorded book values.

ITEM 8. FINANCIAL STATEMENTS

            The information required by this item appears in a subsequent
section of this Annual Report on Form 10-K. Please see pages F-1 through F-25.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

            Not applicable.

                                    PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

            Information required by this item is included in our Proxy Statement
relating to the 2001 Annual Meeting of Stockholders, and is incorporated herein
by reference.

ITEM 11. EXECUTIVE COMPENSATION

            Information required by this item is included in our Proxy Statement
relating to the 2001 Annual Meeting of Stockholders, and is incorporated herein
by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

            Information required by this item is included in our Proxy Statement
relating to the 2001 Annual Meeting of Stockholders, and is incorporated herein
by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

            Information required by this item is included in our Proxy Statement
relating to the 2001 Annual Meeting of Stockholders, and is incorporated herein
by reference.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)   Documents filed as a part of this report:

      (1)   Financial Statements



                                       31
<PAGE>   35
            Report of Ernst & Young, Independent Auditors

            Consolidated Balance Sheets as of December 31, 2000 and 1999
            Consolidated Statements of Operations for the Years Ended December
               31, 2000, 1999, and 1998
            Consolidated Statements of Stockholders' Equity for the Years Ended
               December 31, 2000, 1999, and 1998
            Consolidated Statements of Cash Flows for the Years Ended December
               31, 2000, 1999, and 1998
            Summary of Accounting Policies
            Notes to Consolidated Financial Statements

      (2)   Financial Statement Schedules:

            Schedule II - Valuation and Qualifying Accounts

All other schedules are omitted, either because they are not applicable or
because the required information is shown in the financial statements or the
notes thereto.

(b) Reports on Form 8-K. The following represents a summary of Current Reports
on Form 8-K that the we filed with the Securities and Exchange Commission during
the last quarter of the period covered by this report.

      (1)   On December 1, 2000, the we filed a Current Report on Form 8-K to
            report that the common stockholders, at a Special Meeting of the
            Shareholders held on November 28, 2000, approved the following:

            o     our merger with Internet Communications Corporation pursuant
                  to an Amended and Restated Agreement and Plan of Merger dated
                  as of October 18, 2000. Internet Communications Corporation is
                  now our wholly owned; and

            o     a change of our name from RMI.NET, Inc. to Internet Commerce &
                  Communications, Inc.

            We also reported that an Amended and Restated Certificate of
            Incorporation had been filed with the Delaware Secretary of State on
            November 30, 2000, thereby completing the change of our name to
            Internet Commerce & Communications and the change of the our trading
            symbol on the Nasdaq National Market from "RMII" to "ICCX."

      (2)   On October 5, 2000, we filed a Current Report on Form 8-K announcing
            that the we had acquired the assets of LanMinds, Inc., a California
            corporation headquartered in Berkeley, California ("LanMinds"),
            pursuant to an Asset Transfer Agreement dated September 21, 2000.
            Pursuant to the terms of the Asset Transfer Agreement, we agreed to
            provide consideration to LanMinds in an amount equal to
            approximately $6 million, payable in the form of shares of our
            common stock over the next five years. The acquisition was
            inadvertently reported under Item 2 of Form 8-K, but should have
            been reported under Item 5 of Form 8-K. Details about the
            consideration paid and to be paid are disclosed under the caption
            "Note 11. Acquisitions" in the Notes to Consolidated Financial
            Statements of this Annual Report on Form 10-K.




                                       32
<PAGE>   36

Exhibits:

<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                          DESCRIPTION OF DOCUMENT
 -------                                         -----------------------
<S>          <C>
   2.01      Agreement and Plan of Merger, dated March 17, 2000, by and among RMI.NET, Inc., Internet Acquisition
             Corporation and Internet Communications Corporation (29)
   3.01      Amended and Restated Certificate of Incorporation (15)
   3.02      Certificate of Amendment of Certificate of Incorporation (30)
   3.03      Bylaws (1)
   3.04      Certificate of Designations of Series B Convertible Preferred Stock (13)
   4.01      Form of Stock Certificate (1)
   4.02      Warrant Agreement between Rocky Mountain Internet, Inc. and Douglas H. Hanson dated October 1, 1997 (5)
   4.03      1996 Employees' Stock Option Plan (1)
   4.04      1996 Non-Employee Directors' Stock Option Plan (1)
   4.05      1997 Non-Qualified Stock Option Plan (4)
   4.06      1997 Stock Option Plan (6)
   4.06.1    First Amendment to Non-Qualified Stock Option Agreement pursuant to the 1997 Stock Option Plan (13)
   4.06.2    First Amendment to Incentive Stock Option Agreement pursuant to the 1997 Stock Option Plan (13)
   4.07      1998 Employees' Stock Option Plan, as amended (10)
   4.08      1998 Non-Employee Directors' Stock Option Plan (8)
   4.09      Subscription Agreement, dated as of December 10, 1998, by and between Rocky Mountain Internet, Inc. and
             Koch Industries, Inc. (12)
   4.10      Subscription Agreement, dated as of December 10, 1998, by and between Rocky Mountain Internet, Inc. and
             Advantage Fund II Ltd. (12)
   4.11      Form of Common Stock Purchase Warrant issued to Koch Industries, Inc., Advantage Fund II Ltd., Wharton
             Capital Partners Ltd., Leslie Bines, and Neidiger Tucker Bruner Inc. (12)
   4.12      Form of Registration Rights Agreement between Rocky Mountain Internet, Inc. and (i) Koch Industries,
             Inc.; and (ii) Advantage Fund II Ltd. (12)
   4.13      Form of Registration Rights Agreement between Rocky Mountain Internet and (i) Wharton Capital Partners
             Ltd.; (ii) Leslie Bines; and (iii) Neidiger Tucker Bruner Inc. (12)
   4.14      Form of Subscription Agreement dated as of December 7, 1999 (27)
   4.15      Form of Class A Warrant (Annex I to Subscription Agreement) (27)
   4.16      Form of Class B Warrant (Annex II to Subscription Agreement) (27)
   4.17      Form of Registration Rights Agreement (Annex IV to Subscription Agreement) (27)
   4.18      2000 Employees' Stock Option Plan (28)
   4.19      Employees' Stock Purchase Plan (28)
   4.20      Form of Warrant Agreement (including the related Form of Warrant attached thereto), between RMI.NET,
             Inc. and American Securities Transfer & Trust Company, as warrant agent (29)
   10.01     Agreement of Lease between Denver-Stellar Associates Limited Partnership, Landlord and Rocky Mountain
             Internet, Inc., Tenant (2)
   10.02     Sublease Agreement-February 26, 1997-1800 Glenarm, Denver, CO (3)
   10.03     Carrier Services Switchless Agreement Between Frontier Communications of the West, Inc. and Rocky
             Mountain Broadband, Inc.** (12)
   10.04     Wholesale Usage Agreement Between PSINet Inc. and Rocky Mountain Internet, Inc.** (12)
   10.05     PacNet Reseller Agreement between PacNet Inc. and Rocky Mountain Internet, Inc.** (12)
   10.06     Operating Agreement of The Mountain Area EXchange LLC (12)
   10.07     Software License and Consulting Services Agreement Between Rocky Mountain Internet, Inc. and Novazen
             Inc.** (12)
   10.08     Merger Agreement among Rocky Mountain Internet, Inc., RMI-INI, Internet Now, Hutchinson Persons, Leslie
             Kelly, Taufik Islam, Susan Coupal, and Gary Kim, dated November 20, 1998 (9)
   10.09     Asset Purchase Agreement between Rocky Mountain Internet, Inc. and Unicom Communications Corporation
             dated as of November 24, 1998 (9)
   10.10     Asset Purchase Agreement among Rocky Mountain Internet, Inc., Stonehenge Business Systems Corporation,
             Todd Keener, and Danette Keener, dated as of November 30, 1998 (9)
</TABLE>

                                       33
<PAGE>   37
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                          DESCRIPTION OF DOCUMENT
 -------                                         -----------------------
<S>          <C>
   10.11     Commitment letter dated December 10, 1998 from Advantage Fund Ltd. to Rocky Mountain Internet, Inc. (12)
   10.12     Agreement and Plan of Merger by and between Rocky Mountain Internet, Inc. and August 5th Corporation,
             d/b/a Dave's World dated February 2, 1999 (14)
   10.13     Asset Purchase Agreement by and among Rocky Mountain Internet, Inc., ImageWare Technologies, L.L.C.,
             and Communication Network Services, L.L.C. dated February 5, 1999 (14)
   10.14     Agreement and Plan of Merger by and among Rocky Mountain Internet, Inc. d/b/a/ RMI.NET, Inc. and
             IdealDial Corporation. (16)
   10.15     Agreement and Plan of Merger by and among Rocky Mountain Internet, Inc. d/b/a/ RMI.NET, Inc. and
             Internet Connect, Inc. (16)
   10.16     Agreement and Plan of Merger and Reorganization by and among Rocky Mountain Internet, Inc. d/b/a/
             RMI.NET, Inc. and Colorado Mountain Net, Inc. dated June 16, 1999 (17)
   10.17     Stock Exchange Agreement between Rocky Mountain Internet, Inc. d/b/a RMI.NET, Inc. and Roger L. Penner
             (CommerceGate) dated June 24, 1999 (18)
   10.18     Asset Purchase Agreement by and between Rocky Mountain Internet, Inc. d/b/a RMI.NET, Inc. and
             CyberDesic Communications Corporation, Inc. dated June 28, 1999 (19)
   10.19     Asset Purchase Agreement by and among RMI.NET, Inc. f/k/a Rocky Mountain Internet, Inc. and Triad
             Resources, LLC dated July 30, 1999 (20)
   10.20     Asset Purchase Agreement by and among RMI.NET, Inc. and ACES Research, Inc. dated July 30, 1999 (21)
   10.21     Asset Purchase Agreement by and among RMI.NET, Inc. and Novo Media Group, Inc. dated August 30, 1999
             (22)
   10.22     Asset Purchase Agreement by and among RMI.NET, Inc. and Wolfe Internet Access, LLC dated August 31,
             1999 (23)
   10.23     Asset Purchase Agreement by and among RMI.NET, Inc. and Networld.com, Inc. and FutureOne, Inc. dated
             November 19, 1999 (24)
   10.24     Asset Purchase Agreement by and among RMI.NET, Inc. and Western Regional Networks, Inc. dated November
             24, 1999 (25)
   10.25     Asset Purchase Agreement by and among RMI.NET, Inc. and AIS Network Corporation dated December 23, 1999
             (26)
   10.26     Exchange Agreement, dated March 17, 2000, by and between RMI.NET, Inc. and Internet Communications
             Corporation (29)
   10.27     Shareholders Agreement, dated March 17, 2000, by and among RMI.NET, Inc., Internet Communications
             Corporation and Interwest Group, Inc. (29)
   16.01     Letter re change in certifying accountant (11)
   21.01     Subsidiaries of the Registrant *
   23.01     Consent of Ernst & Young LLP *
</TABLE>
------------------
*      Filed herein.
**     Portions of these documents have been omitted pursuant to a request for
       confidential treatment.
(1)    Incorporated by reference from the Registrant's Registration Statement on
       Form SB-2 (Reg. No. 333-05040C) and amendments thereto, as previously
       filed with the Securities and Exchange Commission.
(2)    Incorporated by reference from the Registrant's Quarterly Report on Form
       10-QSB for the quarter ended September 30, 1996.
(3)    Incorporated by reference to the Registrant's Annual Report on Form
       10-KSB for the fiscal year ended December 31, 1996.
(4)    Incorporated by reference to the Registrant's Registration Statement on
       Form S-8, as previously filed with the Securities and Exchange Commission
       on September 26, 1997.
(5)    Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated October 6, 1997.

(6)    Incorporated by reference to the Registrant's Definitive Proxy Statement
       (Appendix A) on Schedule 14A, as previously filed with the Securities and
       Exchange Commission on February 13, 1998.

                                       34
<PAGE>   38

(7)    Incorporated by reference to the Registrant's Definitive Proxy Statement
       (Appendix B) on Schedule 14A, as previously filed with the Securities and
       Exchange Commission on February 13, 1998.
(8)    Incorporated by reference to the Registrant's Definitive Proxy Statement
       (Appendix C) on Schedule 14A, as previously filed with the Securities and
       Exchange Commission on February 13, 1998.
(9)    Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated November 20, 1998.
(10)   Incorporated by reference to the Registrant's Definitive Revised Proxy
       Statement on Schedule 14A, as previously filed with the Securities and
       Exchange Commission on May 27, 1999.
(11)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated December 9, 1998.
(12)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated December 10, 1998.
(13)   Incorporated by reference from the Registrant's Registration Statement on
       Form S-1 (Reg. No. 333-52731) and amendments thereto, as previously filed
       with the Securities and Exchange Commission.
(14)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated February 2, 1999.
(15)   Incorporated by reference to the Registrant's Quarterly Report on Form
       10-Q for the quarter ended June 30, 1999.
(16)   Incorporated by reference to the Registrant's Current Report on Form
       8-K/A dated June 11, 1999.
(17)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated June 16, 1999.
(18)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated June 23, 1999.
(19)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated June 28, 1999.
(20)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated July 30, 1999.
(21)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated July 30, 1999.
(22)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated August 30, 1999.
(23)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated August 31, 1999.
(24)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated November 19, 1999.
(25)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated November 24, 1999.
(26)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated December 23, 1999.
(27)   Incorporated by reference to the Registrant's Registration Statement on
       Form S-3 (Reg. No. 333-95185), as previously filed with the Securities
       and Exchange Commission.
(28)   Incorporated by reference to the Registrant's Definitive Proxy Statement
       on Schedule 14A, as previously filed with the Securities and Exchange
       Commission on May 1, 2000.
(29)   Incorporated by reference to Internet Communications Corporation's
       Current Report on Form 8-K dated March 17, 2000.
(30)   Incorporated by reference to the Registrant's Quarterly Report on Form
       10-Q for the quarter ended September 30, 2000.


                                       35
<PAGE>   39
                                   SIGNATURES

            Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
city of Denver, state of Colorado, on March 30, 2001.

                                     INTERNET COMMERCE & COMMUNICATIONS, INC.
                                     a Delaware corporation

                                     By: /s/ Douglas H. Hanson
                                        ----------------------------------------
                                     Name: Douglas H. Hanson
                                           Title: Chief Executive Officer,
                                                  President, and Chairman of
                                                  the Board of Directors
                                                  (Principal Executive Officer)

            Pursuant to the requirements of the Securities Exchange Act of 1934,
report has been signed below by the following persons in the capacities and on
the dates indicated:

<TABLE>
<CAPTION>
NAME                             TITLE                                                DATE
----                             -----                                                ----
<S>                              <C>                                                  <C>
/s/ Douglas H. Hanson            Chief Executive Officer, President, and Chairman     March 30, 2001
------------------------------   of the Board of Directors (Principal Executive,
    Douglas H. Hanson            Financial, and Accounting Officer)

/s/ Lewis H. Silverberg          Director                                             March 30, 2001
------------------------------
    Lewis H. Silverberg

/s/ D.D. Hock                    Director                                             March 30, 2001
------------------------------
    D.D. Hock

/s/ Robert W. Grabowski          Director                                             March 30, 2001
------------------------------
    Robert W. Grabowski

                                 Director                                             March 30, 2001
------------------------------
    Michael T. Victor
</TABLE>




                                       36
<PAGE>   40
                    INTERNET COMMERCE & COMMUNICATIONS, INC.


                              Auditor's Report and

                        Consolidated Financial Statements


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                               Page
                                                                               ----
<S>                                                                               <C>
CONSOLIDATED FINANCIAL STATEMENTS

     Report of Ernst & Young, Independent Auditors..............................F-2

     Consolidated Balance Sheets as of December 31, 2000 and 1999...............F-3

     Consolidated Statements of Operations for the Years Ended
     December 31, 2000, 1999, and 1998..........................................F-4

     Consolidated Statements of Stockholders' Equity for the Years Ended
     December 31, 2000, 1999, and 1998..........................................F-5

     Consolidated Statements of Cash Flows for the Years Ended
     December 31, 2000, 1999, and 1998..........................................F-6

     Notes to Consolidated Financial Statements.................................F-7


Schedule -

     II  Valuation and Qualifying Accounts.....................................F-25
</TABLE>




                                      F-1
<PAGE>   41
                  REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Internet Commerce & Communications, Inc.

     We have audited the accompanying consolidated balance sheets of Internet
Commerce & Communications, Inc. (formerly RMI.NET, Inc.) as of December 31, 2000
and 1999, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 2000. Our audits also included the financial statement schedule listed in
the Index at page F-1. These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Internet Commerce & Communications, Inc. at December 31, 2000 and 1999, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

     The accompanying financial statements have been prepared assuming that
Internet Commerce & Communications, Inc. (the "Company") will continue as a
going concern. As more fully described in Note 1 under "Management's Plans", the
Company has incurred recurring operating losses and has a working capital
deficiency. In addition, the Company has not complied with certain covenants of
loan agreements and is delinquent in making certain payments. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 1 under "Management's Plans. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.


                                              /s/ ERNST & YOUNG LLP
Denver, Colorado
March 30, 2001



                                      F-2
<PAGE>   42
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2000 AND 1999

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                             2000               1999
                                                                                        -------------      -------------
<S>                                                                                     <C>                <C>
CURRENT ASSETS:
     Cash and cash equivalents ....................................................     $          --      $  11,238,188
     Trade receivables, net of allowance for doubtful accounts; 2000-$3,292,698;
          1999-$2,018,800..........................................................         7,731,651          3,931,983
     Inventory ....................................................................         1,401,959             10,049
     Prepaid expenses and other ...................................................         1,529,253            875,142
                                                                                        -------------      -------------
              Total current assets ................................................        10,662,863         16,055,362

PROPERTY AND EQUIPMENT, NET (NOTE 3) ..............................................         9,054,172         10,746,914
GOODWILL, NET OF ACCUMULATED AMORTIZATION;
     2000-$20,214,377; 1999-$7,174,445 ............................................        41,574,863         43,648,461
OTHER .............................................................................           762,800            268,293
                                                                                        -------------      -------------
              Total assets ........................................................     $  62,054,698      $  70,719,030
                                                                                        =============      =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable .............................................................     $   6,792,638      $   3,312,576
     Current maturities of long-term debt and capital lease obligations (Note 4) ..        11,788,092          1,952,597
     Deferred revenue .............................................................         4,871,764          2,497,632
     Accrued payroll and related benefits .........................................         1,463,813          1,030,019
     Accrued terminated merger fees ...............................................           125,943            793,943
     Accrued circuit costs ........................................................         3,924,890          2,926,277
     Accrued expenses .............................................................         2,699,838          1,538,268
                                                                                        -------------      -------------
              Total current liabilities ...........................................        31,666,978         14,051,312

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (NOTE 4) .............................           538,189          2,222,373
                                                                                        -------------      -------------
              Total liabilities ...................................................        32,205,167         16,273,685
                                                                                        -------------      -------------

COMMITMENTS AND CONTINGENCIES (NOTE 5)
STOCKHOLDERS' EQUITY
     Common stock, $.001 par value; 100,000,000 shares authorized, 29,820,361
         shares in 2000 and 21,125,172 shares in 1999 issued, respectively,
         29,801,619 shares in 2000 and 21,069,355 shares in 1999 outstanding,
         respectively .............................................................            29,802             21,069
     Additional paid-in capital ...................................................       119,861,140         97,101,828
     Accumulated deficit ..........................................................       (90,041,411)       (42,583,802)
     Unearned compensation ........................................................                --            (93,750)
                                                                                        -------------      -------------
                                                                                           29,849,531         54,445,345
                                                                                        -------------      -------------
                                                                                        $  62,054,698      $  70,719,030
                                                                                        =============      =============
</TABLE>

See Notes to Consolidated Financial Statements


                                      F-3
<PAGE>   43
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

<TABLE>
<CAPTION>
                                                             2000              1999              1998
                                                         ------------      ------------      ------------
<S>                                                      <C>               <C>               <C>
Revenue
     Access services ...............................     $ 35,766,302      $ 25,863,616      $  7,974,449
     Web solutions .................................        7,786,782         4,258,388         2,112,561
     Integration & installation services ...........        1,857,014                --                --
                                                         ------------      ------------      ------------
                                                           45,410,098        30,122,004        10,087,010
                                                         ------------      ------------      ------------

Cost and expenses:
     Operating expenses ............................       27,363,071        17,816,131         3,521,522
     Selling expenses ..............................        6,566,789         6,004,920         2,053,542
     General and administrative expenses ...........       29,823,823        21,994,849         7,130,490
     Costs related to unsuccessful merger attempt ..         (688,000)               --         6,071,106
     Depreciation and amortization .................       19,574,383         8,851,972         1,788,512
     Impairment of intangible assets ...............        5,331,795                --                --
                                                         ------------      ------------      ------------
              Total costs and expenses .............       87,971,861        54,667,872        20,565,172
                                                         ------------      ------------      ------------
              Operating loss .......................      (42,561,763)      (24,545,868)      (10,478,162)
                                                         ------------      ------------      ------------

Other income (expense)
     Interest expense ..............................       (1,023,055)         (541,936)         (319,665)
     Interest income ...............................          266,208           174,217            51,432
     Loss on write off of investment ...............       (3,634,840)               --                --
     Other income (expense), net ...................         (504,159)          (14,065)           77,593
                                                         ------------      ------------      ------------
                                                           (4,895,846)         (381,784)         (190,640)
                                                         ------------      ------------      ------------
Net loss ...........................................      (47,457,609)      (24,927,652)      (10,668,802)
Preferred stock dividends ..........................               --           206,965            33,333
                                                         ------------      ------------      ------------

Net loss applicable to common stockholders .........     $(47,457,609)     $(25,134,617)     $(10,702,135)
                                                         ============      ============      ============

Basic and diluted loss per common share ............     $      (2.12)     $      (1.83)     $      (1.39)
                                                         ============      ============      ============

Weighted average common shares outstanding .........       22,402,649        13,736,000         7,690,000
                                                         ============      ============      ============
</TABLE>

                 See Notes to Consolidated Financial Statements



                                      F-4
<PAGE>   44
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
       CONSOLIDATED STATEMENTS OF REDEEMABLE, CONVERTIBLE PREFERRED STOCK
                            AND STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                                            STOCKHOLDERS' EQUITY
                                                            REDEEMABLE, CONVERTIBLE  ---------------------------------------
                                                               PREFERRED STOCK       PREFERRED STOCK      COMMON STOCK
                                                            -----------------------  ---------------  ---------------------
                                                            SHARES        AMOUNT     SHARES   AMOUNT   SHARES       AMOUNT
                                                            ------      -----------  -------  ------  ----------   --------
<S>                                                         <C>         <C>           <C>      <C>     <C>         <C>
BALANCE, JANUARY 1, 1998 ..................................     --      $        --   40,000   $ 40    6,677,846   $  6,677
  Conversion of Series B Preferred to common stock ........     --               --  (40,000)   (40)      40,150         40
  Issuance of common stock for Acquisitions (Note 11) .....     --               --       --     --    1,222,418      1,222
  Issuance of Series B preferred stock and related warrants
    in private placement ..................................  8,000        6,747,843       --     --           --         --
  Dividends on Series B preferred stock ...................     --               --       --     --           --         --
  Stock option compensation ...............................     --               --       --     --           --         --
  Stock issued for purchased software .....................     --               --       --     --       25,000         25
  Warrants issued in connection with unsuccessful merger ..     --               --       --     --           --         --
  Purchase of treasury stock ..............................     --               --       --     --      (13,629)       (13)
  Stock options and warrants exercised ....................     --               --       --     --    1,421,814      1,422
  Common stock contribution to pension plan ...............     --               --       --     --       11,078         11
    Net loss ..............................................     --               --       --     --           --         --
                                                            ------      -----------  -------   ----   ----------   --------

BALANCE, DECEMBER 31, 1998 ................................  8,000        6,747,843       --     --    9,384,677      9,384
  Conversion of Series B preferred stock to common stock .. (8,000)      (6,747,843)      --     --      963,865        964
  Dividends on Series B preferred stock ...................     --               --       --     --           --         --
  Issuance of common stock and common stock warrants
    for acquisitions (Note 11) ............................     --               --       --     --    3,700,357      3,700
  Stock options and warrants exercised, (net) .............     --               --       --     --    6,249,863      6,250
  Common stock contribution to pension plan ...............     --               --       --     --        8,983          9
  Issuance of common stock in private placement ...........     --               --       --     --      761,610        762
  Stock option compensation ...............................     --               --       --     --           --         --
    Net loss ..............................................     --               --       --     --           --         --
                                                            ------      -----------  -------   ----   ----------   --------

BALANCE, DECEMBER 31, 1999 ................................     --               --       --     --   21,069,355     21,069
  Issuance of common stock in private placement ...........     --               --       --     --      972,797        973
  Stock option compensation ...............................     --               --       --     --           --         --
  Employee bonuses paid in stock ..........................     --               --       --     --       11,537         12
  Issuance of common stock for acquisitions (Note 11) .....     --               --       --     --    7,659,299      7,659
  Common stock contribution to pension plan ...............     --               --       --     --       33,769         34
  Stock options exercised .................................     --               --       --     --       54,862         55
  Warrants issued in connection with merger ...............     --               --       --     --           --         --
  Warrants issued in connection with debt financing .......     --               --       --     --           --         --
    Net loss ..............................................     --               --       --     --           --         --
                                                            ------      -----------  -------   ----   ----------   --------
BALANCE, DECEMBER 31, 2000 ................................     --      $        --       --   $ --   29,801,619   $ 29,802
                                                            ======      ===========  =======   ====   ==========   ========
<CAPTION>
                                                                           STOCKHOLDERS' EQUITY
                                                            ------------------------------------------------------
                                                             ADDITIONAL
                                                              PAID-IN     ACCUMULATED    UNEARNED
                                                              CAPITAL       DEFICIT     COMPENSATION     TOTAL
                                                            -----------   ------------   ------------  ------------
<S>                                                         <C>          <C>              <C>         <C>
BALANCE, JANUARY 1, 1998 .................................. $  9,206,780  $ (6,747,050)    $(383,077)  $  2,083,370
  Conversion of Series B Preferred to common stock ........           --            --            --             --
  Issuance of common stock for Acquisitions (Note 11) .....   12,713,904            --            --     12,715,126
  Issuance of Series B preferred stock and related warrants
    in private placement ..................................      662,019            --            --        662,019
  Dividends on Series B preferred stock ...................           --       (33,333)           --        (33,333)
  Stock option compensation ...............................           --            --       383,077        383,077
  Stock issued for purchased software .....................      302,725            --            --        302,750
  Warrants issued in connection with unsuccessful merger ..    4,161,618            --            --      4,161,618
  Purchase of treasury stock ..............................      (17,987)           --            --        (18,000)
  Stock options and warrants exercised ....................    2,160,949            --            --      2,162,371
  Common stock contribution to pension plan ...............       67,407            --            --         67,418
    Net loss ..............................................           --   (10,668,802)           --    (10,668,802)
                                                            ------------  ------------     ---------   ------------

BALANCE, DECEMBER 31, 1998 ................................   29,257,415   (17,449,185)           --     11,817,614
  Conversion of Series B preferred stock to common stock ..    6,986,617            --            --      6,987,581
  Dividends on Series B preferred stock ...................           --      (206,965)           --       (206,965)
  Issuance of common stock and common stock warrants
    for acquisitions (Note 11) ............................   37,319,260            --            --     37,322,960
  Stock options and warrants exercised, (net) .............   13,661,344            --            --     13,667,594
  Common stock contribution to pension plan ...............       83,054            --            --         83,063
  Issuance of common stock in private placement ...........    9,669,138            --            --      9,669,900
  Stock option compensation ...............................      125,000            --       (93,750)        31,250
    Net loss ..............................................           --   (24,927,652)           --    (24,927,652)
                                                            ------------  ------------     ---------   ------------

BALANCE, DECEMBER 31, 1999 ................................   97,101,828   (42,583,802)      (93,750)    54,445,345
  Issuance of common stock in private placement ...........    4,383,867            --            --      4,384,840
  Stock option compensation ...............................     (125,000)           --        93,750        (31,250)
  Employee bonuses paid in stock ..........................       69,991            --            --         70,003
  Issuance of common stock for acquisitions (Note 11) .....   17,166,994            --            --     17,174,653
  Common stock contribution to pension plan ...............      141,738            --            --        141,772
  Stock options exercised .................................      284,961            --            --        285,016
  Warrants issued in connection with merger ...............      433,153            --            --        433,153
  Warrants issued in connection with debt financing .......      403,608            --            --        403,608
    Net loss ..............................................           --   (47,457,609)           --    (47,457,609)
                                                            ------------  ------------     ---------   ------------
BALANCE, DECEMBER 31, 2000 ................................ $119,861,140  $(90,041,411)    $      --   $ 29,849,531
                                                            ============  ============     =========   ============
</TABLE>

                 See Notes to Consolidated Financial Statements




                                      F-5
<PAGE>   45
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

<TABLE>
<CAPTION>
                                                                                            2000           1999           1998
                                                                                        ------------   ------------   ------------
<S>                                                                                     <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss .....................................................................     $(47,457,609)  $(24,927,652)  $(10,668,802)
     Adjustments to reconcile net loss to net cash used in operating activities:
         Depreciation .............................................................        3,454,138      2,105,563      1,062,892
         Amortization .............................................................       16,120,245      6,746,409        725,620
         Loss on write off of investment ..........................................        3,634,840         33,783             --
         Impairment of intangible assets ..........................................        5,331,795
         Issuance of warrants for services related to unsuccessful
              merger ..............................................................               --             --      4,161,618
         Stock option compensation ................................................          (31,250)        31,250        383,077
         Stock contribution to pension plan .......................................          141,772         83,063         67,418
         Stock bonus compensation .................................................           70,003             --             --
     Changes in operating assets and liabilities net of effects from acquired
         interests (Note 11):
         Trade receivables ........................................................         (916,398)       (63,653)      (433,597)
         Other current assets .....................................................         (682,542)       107,821         59,720
         Accounts payable .........................................................        1,405,387     (1,918,080)     1,027,052
         Deferred revenue .........................................................        1,238,365        686,804       (181,542)
         Accrued payroll and related taxes ........................................          (85,688)       637,795        120,091
         Accrued expenses .........................................................        1,352,593      2,914,325      1,172,512
                                                                                        ------------   ------------   ------------
         Net cash used in operating activities ....................................      (16,424,349)   (13,562,572)    (2,623,381)
                                                                                        ------------   ------------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES
     Purchases of property and equipment ..........................................       (1,511,469)    (2,362,596)      (638,813)
     Additions to capitalized software ............................................       (1,418,157)            --             --
     Cash paid for acquisitions, net of cash acquired .............................          141,535       (240,242)       (40,878)
                                                                                        ------------   ------------   ------------
         Net cash used in investing activities ....................................       (2,788,091)    (2,602,838)      (679,691)
                                                                                        ------------   ------------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from sale of common stock (net) .....................................          750,000      9,669,900             --
     Proceeds from sale of preferred stock and related warrants ...................               --             --      7,409,862
     Proceeds from stock options and warrants exercised ...........................          285,016     13,667,594      2,162,371
     Net borrowings on RFC Capital line of credit .................................        8,917,866             --             --
     Purchase of treasury stock ...................................................               --             --        (18,000)
     Payments for deferred stock issuance costs ...................................               --             --       (322,423)
     Payments on other long-term debt and capital lease obligations ...............       (1,978,630)    (1,663,242)    (1,252,581)
                                                                                        ------------   ------------   ------------
         Net cash provided by financing activities ................................        7,974,252     21,674,252      7,979,229
                                                                                        ------------   ------------   ------------
 INCREASE IN CASH AND CASH EQUIVALENTS ............................................      (11,238,188)     5,508,842      4,676,157
 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR .....................................       11,238,188      5,729,346      1,053,189
                                                                                        ------------   ------------   ------------
 CASH AND CASH EQUIVALENTS, END OF YEAR ...........................................     $         --   $ 11,238,188   $  5,729,346
                                                                                        ============   ============   ============

ADDITIONAL CASH PAYMENTS INFORMATION
     Interest paid ................................................................     $    814,823   $    456,877   $    296,293
NONCASH INVESTING AND FINANCING ACTIVITIES
     Capital lease obligations incurred for equipment .............................        1,091,410        821,025        310,287
     Common stock issued to purchase software .....................................               --             --        302,750
     Accrual of preferred stock dividend ..........................................               --        206,965         33,333
     Common stock and warrants issued in connection with acquisitions .............       17,607,806     37,322,960     12,715,126
     Conversion of Series B Preferred Stock .......................................               --      6,747,843             --
     Warrants issued in connection with debt financing.............................          403,608             --             --
</TABLE>


                 See Notes to Consolidated Financial Statements



                                      F-6
<PAGE>   46
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

            Internet Commerce & Communications, Inc., formerly RMI.NET, Inc.,
("the Company" or "IC&C") is a premier nationwide e-commerce and access services
provider for small and medium-sized business enterprises, as well as DSL
customers and dial-up residential customers. The Company operates more than 50
Internet points of presence ("POPs") and through agreements with third-party
providers provides Internet access to 100% of the strategic marketing areas in
the United States. The Company monitors and controls its network through its
Network Operations Center in Denver, Colorado. The Company also offers services
through its offices located in Arizona, California, Illinois, Kansas, Oklahoma,
Utah, Virginia, and Washington. The Company intends to provide comprehensive
nationwide access services to its customers, including:

            o     nationwide DSL services;

            o     dedicated Internet access;

            o     dial-up Internet access;

            o     point-to-point private line;

            o     frame-relay;

            o     local and long distance telephone service;

            o     integration of internet technologies;

            o     design, implementation and management of web-based
                  applications and connections;

            o     implementation and management of wide-area networks and
                  local-area networks; and

            o     implementation and management of voice systems including
                  equipment and software.

The Company also offers its customers a full range of value-added Web Solutions
services, including Web site hosting, Web site design and development and
marketing, e-commerce, and Web training. In addition, the Company is developing
a mature Webzone.com portal which provides a variety of services for Internet
users.

PRINCIPLES OF CONSOLIDATION

            The financial statements include the accounts of the Company and its
wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.

USE OF ESTIMATES

            The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

CASH EQUIVALENTS

            The Company considers all highly liquid investments with an original
maturity date of three months or less to be cash equivalents. Cash and cash
equivalents are stated at cost, which approximates fair value.

FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK

            Financial instruments, which potentially subject the Company to
concentrations of credit risk consist principally of cash and cash equivalents
and trade accounts receivable.

            The Company places its cash and temporary cash investments with
quality financial institutions. Concentrations of credit risk with respect to
trade accounts receivable are limited due to the large number of customers and
markets which comprise the Company's customer base. The Company generally does
not require collateral and receivables are generally due within 30 days. The
provision for doubtful accounts was $2.5 million, $2.0 million and $0.2 million
for 2000, 1999, and 1998 respectively.



                                      F-7
<PAGE>   47
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


            The carrying amounts of financial instruments including cash and
cash equivalents, accounts receivable, accounts payable, and accrued expenses
approximated fair value because of the immediate or short-term maturity of these
instruments. The difference between the carrying amount and fair value of the
Company's long-term debt is not significant.

REVENUE RECOGNITION

            The Company charges customers monthly access fees to the Internet
and recognizes the revenue in the month the access is provided. For certain
customers billed in advance, the Company recognizes the revenue over the period
the billing covers. Revenue for other services provided, except for activation
fees and set-up fees, are recognized as the service is performed.

            Equipment sales are recognized upon delivery and installation of the
related equipment.

            Most of the Company's integration and installation service contracts
are short-term in nature. The Company utilizes the percentage-of-completion
method for these contracts under which revenue is recognized by measuring the
percentage of costs incurred to date to estimated total costs for each contract.
Contract costs include direct material and labor costs and those indirect costs
related to contract performance, such as indirect labor and supplies. Operating
costs are charged to expense as incurred. Provisions for estimated losses on
incomplete contracts are made in the period in which such losses are determined.

            During fiscal year 2000, the Company has deferred all activation and
set-up fees over the longer of the contract term or the expected life of the
customer relationship. Prior to 2000, these fees were recognized in the period
when customer accounts were activated. Deferred revenues related to these
activation and set-up fees were $307,776 at December 31, 2000.

INVESTMENT

            During 2000, the Company purchased a 19.9% interest in a content
portal and ASP delivery system. The Company intended to further develop and sell
this system to others. Due to the investee's inability to generate sufficient
operating results, the Company was unable to realize expected profits from this
investment. The Company determined in fourth quarter 2000 that it was uncertain
whether adequate sales of this system would recover its investment and
accordingly wrote off the investment balance of approximately $3.6 million.

PROPERTY AND EQUIPMENT

            Property and equipment are stated at cost. Depreciation and
amortization of property and equipment are computed using the straight-line
method over the estimated useful lives of the assets, ranging from five to seven
years. Certain equipment obtained through capital lease obligations are
amortized over the life of the lease. Improvements to leased property are
amortized over the lesser of the life of the lease or life of the improvements.

LONG-LIVED ASSETS

            The Company evaluates the carrying value of its long-lived assets,
including goodwill and covenants not to Compete, under the provisions of
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of
(SFAS 121). SFAS 121 requires impairment losses to be recorded on long-lived
assets used in operations when indications of impairment are present and the
undiscounted future cash flows estimated to be generated by those assets are
less than the assets' carrying amount. In addition, the recoverability of
goodwill is further evaluated under the provisions of APB Opinion No. 17,
Intangible Assets, based upon undiscounted cash flows. If such assets are
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the estimated fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying value or fair
value, less costs to sell (see Note 2).

CAPITALIZED SOFTWARE

            During 2000, the Company capitalized approximately $1.4 million of
software development costs related to the development of software products,
which were either intended to be sold to others or utilized by the Company in
developing web sites for its customers. Subsequently, in the fourth quarter of
2000, the Company determined that it was uncertain as to whether these products
would ever be sold or utilized in the development of future web sites.
Accordingly, the Company has written off the software development costs
previously capitalized.




                                      F-8
<PAGE>   48
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


ADVERTISING

            The Company expenses advertising costs as incurred. During the years
ended December 31, 2000, 1999, and 1998, the Company incurred $1,329,000,
$1,562,000, and $268,000, respectively, in advertising costs.

INVENTORY

            Inventory, which consists primarily of finished goods
(communications equipment), is stated at average cost. Spares inventory consists
of finished parts used in servicing customer maintenance contracts and is
depreciated over a five-year period. These amounts are stated at the lower of
cost or market and a provision is provided for expected obsolescence.

GOODWILL

            The excess of the purchase price over the fair value of net assets
acquired in business acquisitions is recorded as goodwill and is being amortized
on a straight-line basis not to exceed five years.

INCOME TAXES

            The Company recognizes deferred tax liabilities and assets for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the difference is expected to reverse.

STOCK-BASED COMPENSATION

            The Company accounts for its stock-based compensation plans using
the intrinsic value based method prescribed by Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations (APB 25). The Company has provided pro forma disclosures of net
loss and loss per share as if the fair value based method of accounting for the
plans, as prescribed by Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation (SFAS 123), had been applied.

LOSS PER SHARE

            Loss per share is presented in accordance with the provisions of
Statement of Financial Accounting Standards No. 128, Earnings Per Share (SFAS
128). Under SFAS 128, basic Earnings Per Share ("EPS") excludes dilution for
potential common stock and is computed by dividing income or loss available to
common shareholders by the weighted average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock. Basic and diluted EPS are the same in 2000, 1999, and 1998,
as all potential common stock instruments are antidilutive. The Company has
excluded the Class B Warrants (see Note 9) having an exercise price of $0.01 per
share from its calculation of basic loss per share. Although the Class B
Warrants became exercisable in June 2000, the shares underlying these warrants
may not be issued until the warrant holders fully dispose of their initial share
ownership in the Company. Had these warrants been included in the Company's EPS
calculations at December 31, 2000, an additional 9,353,344 shares would have
been included.

RECENT ACCOUNTING PRONOUNCEMENTS

            In June 1998, the FASB issued SFAS No. 133 Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 is effective for the Company in
2001. SFAS No. 133 requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designed as part of a hedge transaction
and, if it is, the type of hedge transaction. The Company does not expect that
the adoption of SFAS No. 133 will have a material impact on its consolidated
financial statements because the Company does not currently hold any derivative
instruments.



                                      F-9
<PAGE>   49
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


            In December 1999, the Securities and Exchange Commission (SEC)
issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" (SAB 101), which the Company adopted as of the fourth fiscal quarter
for the year ended December 31, 2000. SAB 101 addresses, among other items, when
revenue relating to nonrefundable, up-front fees should be recognized. Upon
adoption, the Company performed a detailed analysis of activation and other
set-up fees and recorded deferred revenues accordingly. These deferred amounts
will be recognized over the average customer life for dial-up customers and
dedicated access customers. The cumulative effect of applying the change in
method to prior years during 2000 was not material.

MANAGEMENT'S PLANS

            The accompanying consolidated financial statements have been
prepared assuming the Company will continue as a going concern. The Company has
incurred a net loss of approximately $47.5 million for the year ended December
31, 2000 and has a working capital deficiency of approximately $21.0 million at
December 31, 2000. In addition, the Company anticipates incurring a net loss for
the year ended December 31, 2001. Continuation of the Company as a going concern
is dependent upon its ability to generate sufficient cash flow to fund working
capital and to ultimately sustain profitability. The consolidated financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.

            Through increased sales goals and continuing cost reductions plans,
the Company is positioning itself to be able to generate sufficient cash flow to
fund working capital and investment activities by mid-2001. If the Company does
attain its sales goals, it believes that it will be able to raise additional
capital under its current line of credit as needed in the future. In addition,
management of the Company intends to fund the anticipated net loss by utilizing
its additional private placement of equity, continuing a credit facility to
finance working capital and capital expenditures, the sale of certain customers
of the Company to EarthLink Enterprise, Inc. (see Note 13), and proceeds
received from potential exercise of the Company's approximately 2.5 million
warrants to be issued in connection with the purchase of Internet Communications
Corporation ("INCC") (see Note 11) assuming the Company's stock price exceeds
$8.00. Currently, the conditions for the call are not met. Management believes
these resources will be adequate to fund its operating and capital requirements
through the end of 2001. There can be no assurance financing will be available
in amounts or on terms acceptable to us, if at all. Should we be unsuccessful in
our efforts to raise capital, we may be required to modify or curtail our plans
for growth.

RECLASSIFICATIONS

            Certain amounts in the prior year financial statements have been
reclassified to conform to the current year presentation.

NOTE 2: ASSET IMPAIRMENT

            Pursuant to SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," the Company has
evaluated the recoverability of the long-lived assets, including intangibles.
Due to continued operating losses, the Company reexamined the carrying value of
the assets acquired through acquisitions that have been made and revised the
value attributed to certain assets as a result of the impending sale to
EarthLink of certain of the Company's dial-up customers (see Note 13). In
addition, the Company is refocusing its efforts on providing integration
communication solutions to small and medium-sized businesses. The Company
believes the need for sophisticated communications solutions for small to
medium-sized business markets are expanding and will offer better opportunities
for realizing higher rates of return than its consumer dial-up businesses in the
long-term. In the fourth quarter of 2000, the Company determined that its
estimated future cash flows for certain of its divisions were below the carrying
value of the divisions' long-lived assets. Accordingly, during the fourth
quarter of 2000, the Company adjusted the carrying value of its intangibles,
primarily goodwill, to its estimated fair value of approximately $41,575,000,
resulting in a non-cash impairment loss in fourth quarter of 2000 of
approximately $5,332,000 ($0.24 per share). In valuing the long-lived assets
associated with the Company's dial-up consumer base, the sale to EarthLink (see
Note 13) was considered in the analysis.

NOTE 3: PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                    2000            1999
                                                ------------    ------------
<S>                                             <C>             <C>
Equipment ...................................   $ 14,112,622    $ 10,734,072
Computer software ...........................      1,829,318       3,060,394
Leasehold improvements ......................        440,527         368,722
Furniture, fixtures, and office equipment ...      1,152,983         960,736
                                                ------------    ------------
                                                  17,535,450      15,123,924
Less accumulated depreciation ...............     (8,481,278)     (4,377,010)
                                                ------------    ------------
                                                $  9,054,172    $ 10,746,914
                                                ============    ============
</TABLE>


                                      F-10
<PAGE>   50

                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Equipment acquired under capital lease obligations had a cost of $3,969,630 and
$2,835,210 and accumulated depreciation of $3,320,016 and $2,156,912 at December
31, 2000 and 1999, respectively.

NOTE 4: LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

            Long-term debt and capital lease obligations at December 31, 2000
and 1999, consisted of the following:

<TABLE>
<CAPTION>
                                                                                   2000            1999
                                                                                ------------    ------------
<S>                                                                             <C>             <C>
Capital lease obligations payable to finance companies, due in
  monthly installments aggregating $135,631 including interest ranging
  from 5.9% to 29% through April 2003, collateralized by equipment.
  A former officer and shareholder of the Company has guaranteed
  certain of the leases and one of the leases restricts the payment
  of preferred stock dividends ..............................................   $  1,423,575    $  1,913,321

Revolving line of credit from RFC Capital, not to exceed a specific
  multiple of the Company's eligible monthly cash collections. Interest
  shall be equal to the greater of (i) LIBOR plus 6.15% per annum,
  or (ii) $3,000 per month (12.9% at December 31, 2000) .....................      8,917,866              --

Notes payable to a long distance carrier, due in monthly installments of
  $25,000 through August 2001, interest imputed at 10% ......................        861,458         906,890

Notes payable to Opelika Industrial Development Authority, due in monthly
  installments of $16,845, including 8.25% interest through February 2002,
  collateralized by equipment, furniture, and fixtures in Opelika, Alabama ..      1,056,716       1,150,956

Notes payable to others, due in monthly installments aggregating $16,256,
  including interest ranging from 8% to 10.75% through April 2002,
  collateralized by equipment ...............................................   $     66,666    $    203,803
                                                                                ------------    ------------
                                                                                  12,326,281       4,174,970
Less current maturities .....................................................    (11,788,092)     (1,952,597)
                                                                                ------------    ------------
                                                                                $    538,189    $  2,222,373
                                                                                ============    ============
</TABLE>

            The RFC Capital Corporation revolving line of credit was entered
into on May 22, 2000 and provides the Company with a maximum borrowing base of
up to $12,000,000 through May 22, 2002. The Company can elect to increase the
maximum borrowing base by incurring a commitment fee of 1.5% for every
$1,000,000 increase in the maximum borrowing base. However, under no conditions
is the maximum borrowing base to exceed $20,000,000. The actual borrowing base
available to the Company at a specific point in time is computed on the
Company's average monthly collection percentage and a collection multiple of
between 2.25 and 3.00. The actual borrowing base was $9,720,566 at December 31,
2000. The revolving line of credit is secured by substantially all assets of the
Company. This agreement also restricts the payment of dividends. The Company has
also issued to RFC Capital Corporation a warrant to purchase 252,255 shares of
common stock at $4.03125 per share. At the date of issuance, this warrant was
valued at $433,153.

            At December 31, 2000 and subsequently, the Company was in violation
of certain covenants specified in the line of credit agreement. The Company has
obtained a waiver dated March 12, 2001 which cured all identified defaults
prior to April 2, 2001. However, the Company continues to be in violation of
financial covenants requiring a minimum tangible net worth and a minimum
current ratio. The Company is in the process of negotiating a restructuring of
the financial covenants in order to help ensure future compliance. However,
this agreement has not yet been finalized. Accordingly, the entire line of
credit to RFC Capital Corporation has been reflected as current in the
financial statements.

            The Company has also not made all scheduled payments on the notes
payable owed to the Opelika Industrial Development Authority and a suit has
been filed against the Company by the Opelika Industrial Development Authority.
Accordingly, this entire not payable has been classified as current at December
31, 2000 due to the uncertainty of this suit (see Note 5).

            All long-term debt has been classified as current. Aggregate
maturities required on obligations under capital leases at December 31, 2000,
are as follows:

<TABLE>
<CAPTION>
                                                       CAPITAL LEASES
                                                     ------------------
<S>                                                  <C>
Years ending December 31:
   2001...........................................   $          984,830
   2002...........................................              474,123
   2003 ..........................................              105,964
                                                     ------------------
   Total payments.................................            1,564,917
   Less amounts representing interest.............             (141,342)
                                                     ------------------
   Principal payments.............................            1,423,575
   Less current maturities........................             (885,386)
                                                     ------------------
      Total long-term debt........................   $          538,189
                                                     ==================
</TABLE>

NOTE 5: COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

            The Company leases operating facilities and equipment under
operating lease agreements expiring through 2005. Certain of these lease
agreements require the Company to pay operating expenses, contain renewal
clauses and/or provide for escalation of annual rentals if the lessor's
operating costs increase.



                                      F-11
<PAGE>   51

                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


            At December 31, 2000, the future minimum payments under these
leases, exclusive of sublease payments, are as follows:

<TABLE>
<CAPTION>
                                                                AMOUNT
                                                         ------------------
<S>                                                       <C>
                 Years ending December 31:
                    2001...............................   $      2,626,981
                    2002...............................          1,858,687
                    2003...............................          1,373,511
                    2004...............................          1,368,818
                    2005...............................            666,634
                                                          ----------------
                    Total..............................   $      7,894,631
                                                          ================
</TABLE>

In February 1997, the Company subleased one of its operating facilities. Minimum
future rentals receivable under this noncancellable operating sublease are
$2,465, covering the period through January 2001, which have not been deducted
from the above future minimum payments.

            Rent expense was $2,165,000, $1,021,000, and $496,000 for the years
ended December 31, 2000, 1999, and 1998, respectively.

LETTER OF CREDIT

            At December 31, 2000, the Company had an outstanding letter of
credit in the amount of $100,000 to be used in case of default on its main
operating facilities lease. The letter of credit was secured by $101,000
currently invested in a money market account.

COMMITMENTS

            On June 7, 2000, the Company acquired assets of ImageNet, Inc. and
agreed to lend to the former owner of ImageNet, Inc., $20,000 per month for a
period of six months following the closing date. According to the agreement, the
principal amount is to be repaid within thirty (30) calendar days following the
issuance of the six-month lock-up shares.

            The Company has several agreements with its service providers
whereby it is granted certain discounts on services based on anticipated volume
over specified periods with monthly minimums.

            The Company has a new service agreement with Global Crossing
Bandwidth, Inc., dated July 31, 2000, for all voice and data services. The
service agreement was originally assumed as part of the Company's purchase of
Idealdial Corporation, and was renegotiated on September 29, 1999 and again on
July 31, 2000. The terms of the amended agreement currently provide for an
aggregate minimum commitment of approximately $45 million subject to certain
monthly minimums. Monthly minimums escalate over the term of the agreement until
the earlier of the expiration of the agreement or when the Company has paid an
aggregate of approximately $45 million in usage charges. The Company is
currently meeting all commitments under the agreement.

            The Company has a service agreement with WorldCom, Inc. for certain
network data services through July 2003. The terms of the agreement require the
Company to purchase a minimum of approximately $6.8 million, subject to a
monthly minimum of $250,000 beginning April 2001. The Company is in compliance
with all material terms of the agreement.

            The Company has a service agreement with MCI/Worldcom for certain
network data services through August 2002. The service agreement was assumed as
part of the Company's purchase of DataXchange. The terms of the agreement
currently provide for a remaining aggregate minimum commitment of approximately
$2.4 million subject to a monthly minimum of $75,000. Historically, the Company
has met its monthly minimums.




                                      F-12
<PAGE>   52
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


TERMINATED MERGER FEES

            In June 1998, the Company announced it had entered into a merger
agreement to acquire Internet Communication Corporation ("INCC"). The closing of
the acquisition was subject to various closing conditions, and the merger
agreement contained certain rights of termination. On October 13, 1998, the
Company announced that it terminated the merger agreement due to, among other
things, INCC's failure to satisfy certain obligations under the merger
agreement. On October 14, 1998, INCC filed a complaint against the Company in
Denver District Court claiming $30 million in damages.

            On August 6, 1999, INCC agreed to dismiss with prejudice all claims
brought in their lawsuit against the Company, and entered into a Settlement
Agreement resolving all current and future claims related to the terminated
merger. Under the Settlement Agreement, the Company made no payment of any
monies or anything of value to INCC as a result of the claims.

            On November 30, 2000, the stockholders of the Company voted to
acquire INCC. However, as of December 31, 2000, claims by third parties
unrelated to INCC allegedly arising from the terminated 1998 merger remain
outstanding. As a result of the 1998 merger attempt and the related financing
transaction, the Company incurred costs, expenses, and related fees of $6.1
million. Of this amount, approximately $4.2 million relates to a non-cash item
regarding warrants issued by the Company. At December 31, 2000, the Company had
an accrual of approximately $126,000 related to the terminated merger.

LITIGATION

            On September 28, 2000, the Company received a Demand for Arbitration
and Statement of Claim by Roger L. Penner, a former employee of the Company. Mr.
Penner was terminated for cause by the Company on June 12, 2000. Mr. Penner is
the former owner of CommerceGate Corporation, which was acquired by the Company
on June 24, 1999 pursuant to a merger agreement. The Penner demand asserts a
claim that he was terminated without cause, and that the Company breached the
merger agreement. The Penner demand seeks damages, in the form of the Company's
common stock and monies, in excess of $2 million. The Company filed an answer
and counterclaim on October 27, 2000, disputing all claims set forth in the
Penner demand, and asserting claims that Penner was terminated for cause, that
Penner breached the merger agreement, and that Penner through fraud and willful
misconduct caused material damage to the Company. The Company's counterclaim
seeks damages from Penner in excess of $4 million. The matter is currently in
arbitration. At this time, the Company is unable to determine the possible
outcome of this remaining dispute.

            On February 20, 2001, a lawsuit was filed against the Company in the
Alabama State Court by the Opelika Industrial Authority, which asserted claims
against the Company for non-payment on a Promissory Note, totaling approximately
$1,086,939 (see Note 4). The Company is currently reviewing the complaint, and
determining whether to file an answer and/or counterclaim, and whether to agree
to jurisdiction to this dispute in Alabama. At this time, the Company is unable
to determine the possible outcome of this dispute.

            On February 15, 2001, a lawsuit was filed against the Company in the
Colorado State Court by the Vitria Technology, Inc., which asserted claims
against the Company for non-payment on a purchase of financial software,
totaling approximately $560,000. The Company did not install or utilize the
Vitria software at any time, and returned such software intact and unused in
June 2000, with a statement that they were revoking the purchase. The Company is
currently reviewing the complaint, and determining whether to file counterclaims
in addition to an answer. At this time, the Company is unable to determine the
possible outcome of this dispute.

            On March 1, 2001, a Demand for Arbitration was filed against the
Company with the American Arbitration Association by Novo MediaGroup, Inc.,
which asserted claims against them for failure to deliver the shares of the
Company's common stock that were held in escrow subject to the parties' Asset
Purchase Agreement, dated August 1999, totaling a sum value of approximately
$510,000. The Company believes that Novo MediaGroup did not honor all
obligations and warranties of the Asset Purchase Agreement, which put in
question whether they were entitled to receipt of the shares held in escrow. The
Company is currently reviewing the Demand for Arbitration, and determining
whether to file counterclaims in addition to an answer. At this time, the
Company is unable to determine the possible outcome of this dispute.


                                      F-13
<PAGE>   53
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


            The Company is subject to litigation from matters in addition to
those above from time to time in the ordinary course of business. Management
does not believe that any of those matters would have a material adverse effect
on the Company's financial position or results of operations.

NOTE 6: BUSINESS ALLIANCES

            The Company has entered into various contracts with unrelated
entities to enable the Company to provide customers Internet service within
certain areas of Colorado. The unrelated entities own equipment in "points of
presence" (POP) sites which the Company utilizes to provide service to
customers. The Company pays a portion of the revenues (generally 50%) generated
through the use of the unrelated parties' equipment. The contracts can be
cancelled with notice and if cancelled by the other party the Company has the
right, but not the obligation, to acquire the equipment owned by the unrelated
parties. The revenues to the Company related to these arrangements amounted to
$369,322, $384,475, and $302,303 for the years ended December 31, 2000, 1999,
and 1998, respectively, and are included in "Access Services" revenues in the
accompanying consolidated statements of operations.

NOTE 7: INCOME TAXES

            Under the provisions of the Internal Revenue Code, the Company has
available for federal income tax purposes, a net operating loss carryforward of
approximately $59,232,000, which expires in the years 2010 through 2020. As a
result of a change of control in 1997, a portion of these loss carryforwards may
be limited pursuant to Internal Revenue Code Section 382. Additional changes in
the ownership of the Company since that date could further limit the Company's
ability to utilize these losses. The tax effects of this and other temporary
differences related to deferred taxes were:

<TABLE>
<CAPTION>
                                                                          2000                    1999
                                                                 ------------------       ---------------------
<S>                                                              <C>                      <C>
            Deferred tax assets:
               Net operating loss............................    $      22,560,000        $        12,415,000
               Deferred stock issuance costs ................               48,000                    302,000
               Allowance for doubtful accounts ..............            1,254,000                    769,000
               Goodwill .....................................            3,542,000                    685,000
               Accrued expenses .............................              263,000                    287,000
               Loss on investment ...........................            1,385,000                         --
               Other ........................................              313,000                     16,000
                                                                 ------------------       ---------------------
                                                                        29,365,000                 14,474,000
                                                                 ==================       =====================
            Deferred tax liabilities:
               Capitalized software .........................                   --                    (16,000)
               Accumulated depreciation .....................              335,000                   (564,000)
                                                                 ------------------       ---------------------
            Net deferred tax asset before valuation
               allowance ....................................           29,030,000                 13,894,000
            Valuation allowance .............................          (29,030,000)               (13,894,000)
                                                                 ------------------       ---------------------
                  Net deferred tax asset ....................     $             --           $             --
                                                                 ==================       =====================
</TABLE>

The actual provisions (credits) for income taxes varied from the expected
provision (computed by applying the statutory U.S. federal income tax rates to
loss before taxes) because the tax benefits of the net operating losses for the
periods ended December 31, 2000, 1999, and 1998, are offset by the valuation
allowance.

NOTE 8: PREFERRED STOCK

SERIES B REDEEMABLE, CONVERTIBLE

            On December 10, 1998, the Company issued 8,000 shares of its Series
B Redeemable, Convertible Preferred Stock ("Series B Preferred Stock") through a
private placement to two institutional investors. The Company received




                                      F-14
<PAGE>   54
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


$8.0 million in gross proceeds from the issuance of the Series B Preferred
Stock. The Series B Preferred Stock provided for dividends at a rate of $50 per
annum per share. These dividends were cumulative and were payable semiannually
commencing May 15, 1999 and could be paid with either cash or by the Company
issuing additional shares of Series B Preferred Stock. On June 3, 1999, the
Company issued 113 shares of Series B Preferred Stock as dividends. The Series B
Preferred Stock was convertible, subject to certain restrictions, into shares of
the Company's common stock at a variable rate, based on a formula linked to the
market price at the time of conversion and did not have voting rights.

            During 1999, the Company issued 963,865 shares of common stock to
the Series B Preferred Stock Shareholders, upon conversion of 8,113 shares of
Series B Preferred Stock. No shares of Series B Preferred Stock were outstanding
as of December 31, 1999 and December 31, 2000.

            In addition, the Company issued warrants to purchase 155,000 shares
of common stock with an exercise price of $13.21, subject to adjustment,
exercisable at any time over the next five years, to the purchasers of the
Series B Preferred Stock and warrants to purchase 100,000 shares of common stock
with an exercise price of $12.20, subject to adjustment, exercisable until
December 10, 2003, to certain brokers in connection with the transaction. The
Company registered the common stock issuable upon conversion of the Series B
Preferred Stock and the exercise of the warrants pursuant to registration rights
agreements. In 1998, the Company designated $662,019 of the Series B Preferred
Stock proceeds to the value of these warrants.

NOTE 9: COMMON STOCK TRANSACTIONS

CALL AND EXERCISE OF 1996 IPO WARRANTS

            In May of 1999, the Company exercised its right to call the
unexercised warrants that were issued in the Company's 1996 initial public
offering (the "IPO Warrants"). Primarily as a result of the call, 100% of the
remaining warrants were exercised or retired in 1999. The Company issued a total
of 1,468,964 shares of common stock and received approximately $4.5 million of
proceeds upon exercise of the remaining IPO warrants. There is no remaining
obligation from the Company related to the 1996 IPO Warrants.

1997 PRIVATE PLACEMENT

            On September 14, 1997, the Company completed a private placement of
units consisting of two shares of common stock and a warrant to purchase one
share of common stock. The per unit price was $4.00 and was allocated $1.90 to
each share of common stock and $0.20 to the warrant to purchase a share of
common stock. The warrants entitle the holder to purchase a share of common
stock for $3.00 and expire on June 13, 2000. The net proceeds to the Company
from the sale of 310,500 units amounted to $1,117,920 after deducting offering
expenses of $124,080. The terms of the offering requires the issuance of
additional shares of common stock in the event the Company sells common stock in
the future at a cash price, net of discounts and commissions of less than $1.80
per share, exclusive of shares issued upon the exercise of employee stock
options. The number of shares issuable under this provision equates to the
number of shares by which purchasers would have been diluted if shares are sold
at net price of less than $1.80.

            In connection with the 1997 private placement, the Company agreed to
issue to the placement agent warrants to purchase units of securities, each unit
consisting of two shares of common stock and one common stock purchase warrant
for nominal consideration. The Company issued 62,100 shares of common stock and
warrants to purchase 31,050 shares of common stock to the placement agent. These
warrants have an exercise price of $4.00 per unit (consisting of two shares of
common stock and one warrant to purchase one share of common stock at an
exercise price of $3.00), subject to anti-dilution provisions, and expire in
September of 2002.

            In May of 1999, the Company issued 362,285 shares of common stock
upon the exercise of 1997 private placement warrants. The exercise price of the
warrants, adjusted for dilution, was $2.56 per share. Proceeds from the exercise
of private placement warrants totaled approximately $1.2 million. As of December
31, 1999, no private placement warrants remain outstanding.




                                      F-15
<PAGE>   55
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1997 STOCK PURCHASE AGREEMENT

            On October 1, 1997, the current Chief Executive Officer of the
Company acquired directly from the Company 1,225,000 shares of the Company's
common stock and a warrant to purchase 4,000,000 shares of the Company's common
stock for $2,450,000. In August of 1999, the Company's CEO had exercised
3,950,000 warrants to purchase the Company's common stock, providing the Company
with net proceeds of $7.5 million. As of December 31, 1999, the CEO exercised
all of his warrants.

1999 PRIVATE PLACEMENT

            In a December 1999 private placement, the Company issued the
following securities to two institutional investors, Advantage Fund II Ltd. and
Koch Investment Group Limited, for aggregate consideration of $10 million:

            o     761,610 shares of common stock;

            o     Class A Warrants to purchase 182,786 shares of common stock;
                  and

            o     Class B Warrants to purchase a variable number of shares of
                  common stock. The conversion ratio increases if the Company's
                  stock price declines.

The terms of the Private Placement subscription agreement restrict the holders
from engaging in short sales and other hedging transactions. Subject to timely
notice from the Company, the common stock issued pursuant to the Private
Placement and shares issued pursuant to exercise of the Class B Warrant may be
redeemed by the Company at any time at a price equal to 120% of the five-day
average value of the underlying common stock if the Company is in compliance
with certain covenants.

            The Class A Warrants expire on December 7, 2004 and have an exercise
price of $9.8476 per share.

            The Class B Warrants become exercisable on June 4, 2000, expire on
November 26, 2002 and have an exercise price of $0.01 per share. Shares of
Common Stock issuable upon exercise of the Class B Warrants are not available to
the Warrant holders until all the holders shall have sold or transferred all of
the Initial Shares to one or more unaffiliated purchasers or transferees.

            The Class B Warrants are exercisable, subject to certain
restrictions, into a variable number of shares of the Company's common stock
based on a formula calculated on a quarterly basis and linked to the market
price of the common stock during a period beginning May 2000 and ending in
November 2002. For example, the maximum number of shares issuable upon exercise
of the Class B Warrants (through December 2002) could be 6,822,104 shares if the
Company's stock price is $1.625, or 40,937,664 shares if the Company's stock
price is $0.2708. The Company may also pay a redemption fee equal to 120% of the
average market value of the underlying common stock over a five-day period
immediately preceding the holder's request for redemption rather than issuing
the additional shares, if the need to issue common stock is in excess of the
NASDAQ 20% limitation.

RESERVED SHARES

            The Company has reserved approximately 6.3 million shares of its
common stock for issuance upon exercise of outstanding options and warrants, not
including the Class B Warrants, Interwest Group Warrant, and additional shares
that may be issued in connection with the Company's September 2000 acquisition
of LanMinds, Inc. The final total of common stock issuable in connection with
the Class B Warrants, the Interwest Group Warrant, and the LanMinds, Inc.
acquisition will vary with the market price of the Company's common stock.




                                      F-16
<PAGE>   56
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10: BENEFIT PLANS

STOCK OPTION PLANS

            In July 1996, the Company adopted the 1996 Employee Stock Option
Plan (the Employee Plan) and the Non-Employee Directors' Stock Option Plan (the
Directors' Plan). The Employee Plan provides for an authorization of 471,300
shares of Common Stock for issuance upon exercise of stock options granted under
the Plan. The Employee Plan is administered by the Board of Directors, which
determines the persons to whom options are granted, the type, number, vesting
schedule, exercise price, and term of options granted. Under this plan, both
incentive and nonqualified options can be granted.

            An aggregate of 18,000 shares of Common Stock are reserved for
issuance under the 1996 Directors' Plan. All nonemployee directors are
automatically granted nonqualified stock options to purchase 1,500 shares
initially and additional 1,500 shares for each subsequent year that they serve
up to a maximum of 6,000 shares per director.

            In September 1997, the Company adopted the 1997 Stock Option Plan
(1997 Plan). The 1997 Plan provides for an authorization of 50,000 shares of
Common Stock for issuance upon exercise of stock options granted under the Plan.

            In October 1997, the Company granted the Company's Chief Executive
Officer (see Note 12) incentive stock options to purchase 191,385 shares of
Common Stock at $2.6125 per share and nonqualified stock options to purchase
408,615 shares of Common Stock at $1.00 per share. The options vested one year
from the date of grant. Compensation expense of $383,077 relating to the
nonqualified stock options was recorded during the year ended December 31, 1998.

            The Board of Directors previously approved the 1998 Employees' Stock
Option Plan (the "1998 Employees' Plan"). The 1998 Employees' Plan currently
reserves 1.5 million shares of common stock for issuance over the ten-year term
of the plan. The 1998 Employees' Plan provides for the issuance of both
incentive stock options and nonqualified stock options. The 1998 Employees' Plan
provides that all options shall have a life no greater than ten years, and
leaves to the discretion of the Compensation Committee the vesting schedules for
particular option grants.

            In 1998, the stockholders of the Company approved the adoption of
the Rocky Mountain Internet, Inc. 1998 Non-Employee Directors' Stock Option Plan
(the "1998 Directors' Plan"), effective as of January 22, 1998. A total of
68,000 shares of common stock have been reserved for issuance over the
three-year term of the 1998 Directors' Plan.

            The option exercise price of any option granted under the 1998
Directors' Plan may not be less than the fair market value of the common stock
on the date of grant of the option. Upon the effective date of the 1998
Directors' Plan, each non-employee director of the Company was granted options
to purchase 8,500 shares of common stock, subject to certain adjustments. On
December 31,1998, options to purchase 1,500 shares of common stock vested for
each director; if he or she continues to serve as a director for the entire
calendar year ending December 31, 1999, options to purchase 3,500 shares of
common stock will vest; and if he or she continues to serve as a director for
the entire calendar year ending December 31, 2000, options to purchase 3,500
shares of common stock will vest. Notwithstanding the foregoing, in the event of
a change in control of the Company (as defined in the 1998 Directors' Plan),
each outstanding option under the 1998 Directors' Plan vests immediately. In
addition, in the event of a change in control of the Company, the Administrative
Committee (or the board of directors in the absence of such a committee) may:
(i) grant a cash bonus award to any optionee in an amount equal to the exercise
price of all or any portion of the options then held by the optionee; (ii) pay
cash to any or all optionees in exchange for the cancellation of their
outstanding options in an amount equal to the difference between the exercise
price and the greater of the tender offer price for the common stock underlying
such options (in the event of a tender offer for the securities of the Company)
or the fair market value of the stock on the date of cancellation; and (iii)
make any other adjustments or amendments to the outstanding options.

            Each option granted under the 1998 Directors' Plan shall expire not
more than five years from the date of grant. The 1998 Directors' Plan terminated
on December 31, 2000.

            In 2000, the stockholders of the Company approved the adoption of
the IC&C, Inc. 2000 Employees' Stock Option Plan (the "2000 Employees' Plan").
The 2000 Employees' Plan currently reserves 1.5 million shares of




                                      F-17
<PAGE>   57

                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


common stock for issuance over the ten year term of the plan. The 2000
Employees' Plan provides for the issuance of both incentive stock options and
nonqualified stock options. The 2000 Employees' Plan provides that all options
shall have a life no greater than ten years, and leaves to the discretion of the
Compensation Committee the vesting schedules for particular option grants.

            The following is a summary of the status of the Company's Incentive
Stock Option Plans at December 31, 2000, 1999, and 1998, and the changes during
the years then ended:

<TABLE>
<CAPTION>
                                                 2000                         1999                         1998
                                      --------------------------   --------------------------   --------------------------
                                                      WEIGHTED                     WEIGHTED                      WEIGHTED
                                                       AVERAGE                     AVERAGE                        AVERAGE
                                                      EXERCISE                     EXERCISE                      EXERCISE
                                         SHARES         PRICE        SHARES          PRICE        SHARES          PRICE
                                      -----------    -----------   -----------    -----------   -----------    -----------
<S>                                   <C>            <C>           <C>            <C>           <C>            <C>
Outstanding, beginning of year ....     1,647,497           6.20       630,693    $      3.43     1,089,670    $      1.67
Options granted ...................     1,574,836           2.16     1,401,956           7.27       240,000           5.70
Options forfeited .................    (1,166,969)          5.16      (278,019)          7.39       (59,989)          2.56
Options exercised .................       (54,862)          5.20      (107,133)          2.60      (638,988)          1.37
                                      -----------    -----------   -----------    -----------   -----------    -----------

Outstanding, end of year ..........     2,000,502           3.65     1,647,497    $      6.20       630,693    $      3.43
                                      ===========    ===========   ===========    ===========   ===========    ===========

Options exercisable, end of year ..       458,223                      409,917                      396,193
</TABLE>


            The following is a summary of the status of the Company's
Non-Qualified Stock Option Plan at December 31, 2000, 1999 and 1998, and the
changes during the years then ended:

<TABLE>
<CAPTION>
                                                 2000                         1999                        1998
                                      --------------------------   -------------------------   -------------------------
                                                      WEIGHTED                    WEIGHTED                     WEIGHTED
                                                       AVERAGE                    AVERAGE                       AVERAGE
                                                      EXERCISE                    EXERCISE                     EXERCISE
                                         SHARES         PRICE        SHARES         PRICE        SHARES         PRICE
                                      -----------    -----------   -----------   -----------   -----------   -----------
<S>                                   <C>            <C>           <C>            <C>          <C>           <C>
Outstanding, beginning of year ....       504,000           9.43       304,000   $      9.06            --   $        --
Options granted ...................       272,014           2.65       200,000         10.00       304,000          9.06
Options forfeited .................      (340,000)          9.61            --            --            --            --
Options exercised .................            --             --            --            --            --            --
                                      -----------    -----------   -----------   -----------   -----------   -----------

Outstanding, end of year ..........       436,014           5.06       504,000   $      9.43       304,000   $      9.06
                                      ===========    ===========   ===========   ===========   ===========   ===========

Options exercisable, end of year ..       149,000                      128,000                          --
</TABLE>

For purposes of applying SFAS No. 123, the fair value of each option granted is
estimated on the date of the grant using the Black-Scholes method with the
following weighted-average assumptions:

<TABLE>
<CAPTION>
                                                      2000        1999        1998
                                                    --------    --------    --------
<S>                                                 <C>         <C>         <C>
Dividend per share ..............................   $   0.00    $   0.00    $   0.00
Risk-free interest rate .........................        4.6%        6.0%       5.50%
Expected life of options ........................    5 years     5 years     5 years
Weighted-average fair value of options granted ..   $   2.16    $   7.73    $   5.19
</TABLE>



                                      F-18
<PAGE>   58

                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Had compensation cost been determined based upon the fair value at the grant
dates for all awards pursuant to the method set forth in SFAS No. 123, the
Company would have increased its net loss to the pro forma amounts indicated
below:

<TABLE>
<CAPTION>
                                            2000                      1999                      1998
                                       ----------------         -----------------        -----------------
<S>                                    <C>                      <C>                      <C>
Net loss:
   As reported........................ $  (47,457,609)          $   (24,927,652)         $   (10,668,802)
                                       ================         =================        =================
   Pro forma.......................... $  (49,820,061)          $   (27,362,703)         $   (11,825,776)
                                       ================         =================        =================
Net loss per common share:
   As reported........................ $        (2.12)          $         (1.83)         $         (1.39)
                                       ================         =================        =================
   Pro forma.......................... $        (2.22)          $         (1.99)         $         (1.54)
                                       ================         =================        =================
</TABLE>

The Black-Scholes method option valuation model was developed for use in
estimating the fair value of options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions such as expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

           The following table summarizes information about stock options under
the plans outstanding at December 31, 2000:

<TABLE>
<CAPTION>
                                               OPTIONS OUTSTANDING                                       OPTIONS EXERCISABLE
                      -------------------------------------------------------------------    --------------------------------------
                                                   WEIGHTED-
                                                    AVERAGE                  WEIGHTED-
                                                   REMAINING                  AVERAGE                                  WEIGHTED-
     RANGE OF                NUMBER               CONTRACTUAL                EXERCISE            NUMBER                 AVERAGE
  EXERCISE PRICES          OUTSTANDING                LIFE                     PRICE           EXERCISABLE          EXERCISE PRICE
-----------------     -----------------     -----------------------    ------------------    ---------------    -------------------
<S>                   <C>                   <C>                        <C>                    <C>                <C>
$ 1.00-2.41            1,241,450             8.31 years                  $1.94                 25,500            $2.31
$ 2.42-3.88              386,551             5.93 years                  $2.82                180,551            $2.65
$3.89-13.31              808,515             7.39 years                  $7.50                401,172            $7.80
</TABLE>

One nonqualified stock option to purchase 200,000 shares at $10.00 per share was
granted under the Employee plan in 1999. Compensation of $31,250 was recorded in
1999. The option was scheduled to vest over three years but the employee to whom
the option was granted was no longer employed by the Company upon the date of
initial vesting. Accordingly, the company reversed the expense previously
recorded on the option grant in 2000.

STOCK PURCHASE PLANS

            In June 2000, the Company's stockholders approved the IC&C
Employees' Stock Purchase Plan (the "ESPP"). Subject to adjustment as provided
in the ESPP, the number of shares of common stock that may be purchased by
participating employees under the ESPP will not in the aggregate exceed
1,000,000 shares, which may be originally issued or reacquired shares, including
shares bought in the market or otherwise for the purposes of the ESPP. Although
the ESPP was approved by stockholders at the Company's annual meeting held in
June 2000, as of March 23, 2001 the Company has not implemented the ESPP and no
shares have been issued under the ESPP.

401(k) PLAN

            The Board of Directors approved a 401(k) Savings and Retirement Plan
that covers substantially all employees effective January 16, 1998. The
Company's contributions to the Plan are determined annually by the Board of
Directors. For 2000, 1999, and 1998 the Company recorded expense of $160,937,
$83,063, and $67,418, respectively, related to its contributions of the
Company's common stock to the plan. At December 31, 2000, the Plan held 80,066
shares of the Company's common stock valued at $30,025 using the December 31,
2000 closing stock price.



                                      F-19
<PAGE>   59
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11: ACQUISITIONS

2000 ACQUISITIONS

            On March 16, 2000, the Company issued 11,809 shares of common stock
(valued at approximately $117,000) in the acquisition of the assets of B&B
Computers, headquartered in Burlington, Colorado.

            On June 7, 2000, the Company agreed to issue, subject to completion
of certain conditions, 166,000 shares of common stock (valued at approximately
$646,000) in the acquisition of the assets of ImageNet, Inc., an Internet
service provider based in Loveland, Colorado.

            On September 21, 2000, the Company entered into an Asset Transfer
Agreement with LanMinds, Inc. ("LanMinds"), a California corporation
headquartered in Berkeley, California, pursuant to which the Company acquired
the assets of LanMinds. Pursuant to the terms of the LanMinds Asset Transfer
Agreement, the Company agreed to provide consideration to LanMinds in an amount
equal to approximately $6 million, payable in the form of shares of IC&C common
stock over the next five years. At closing, the Company provided LanMinds
consideration equal to $2 million, in the form of 916,031 shares of common
stock, with the number of shares to be issued based on the 15-day average
closing price prior to September 21, 2000 ($2.1833 per share). As partial
payment of the remaining consideration due to LanMinds, IC&C also agreed to
issue 591,237 shares which will be held in escrow, subject to later adjustment
and release to LanMinds. The ultimate number of shares required to be issued by
IC&C depends on various factors set forth in the LanMinds Asset Transfer
Agreement, including the following, among others: (a) the ability of LanMinds'
to generate sufficient revenues, (b) LanMinds' liquidity, as measured by the
difference between LanMinds' current assets and current liabilities, (c) claims
that may be brought against LanMinds, and (d) the market price of IC&C's common
stock. Due to these contingencies, only 505,447 shares have been recorded to
equity at September 30, 2000. Any significant increase in additional shares to
be issued would not occur for five years. At that time, on the fifth anniversary
of the closing, there would theoretically be no limit to the number of shares of
common stock that IC&C may be required to issue if the market price of the
Registrant's common stock at that time was trading below $7.50 per share. The
consideration that the Registrant agreed to pay to LanMinds was determined
through arm's length negotiation. There was no material relationship between the
Registrant and LanMinds prior to the acquisition. LanMinds is a business-focused
Internet Access and web solutions provider with customers in California,
Colorado, and Japan. As of December 31, 2000, if the Company were to issue the
shares to LanMinds under the LanMinds Asset Transfer Agreement, the Company
would have been required to issue an additional 13,976,603 shares.

            On November 28, 2000, the stockholders of the Company approved the
merger between IC&C (then known as RMI.NET, Inc.) and INCC and the merger was
completed on November 30, 2000. The Company issued approximately 5.3 million
shares of common stock valued at approximately $11.7 million and approximately
2.5 million warrants valued at approximately $433,000. Each warrant is
exercisable for one share of the Company's common stock at $7.00. The warrants
are cancelable on 30-days' notice by the Company if the Company's closing share
price exceeds $8.00 for five consecutive trading days. In addition, Interwest
Group (former majority shareholders of INCC) will receive a warrant that may
become exercisable one year from the closing, which may provide Interwest Group
with additional shares of the Company's common stock, depending on the value of
the Company's common stock at the time of exercise. For example, the maximum
number of shares issuable upon exercise of the Interwest Group warrant could be
2,562,837 shares if the Company's common stock price is $1.625, whereas the
shares issuable could total to 20,021,271 shares if the Company's stock price is
$0.2708. The Interwest Group warrant carries an exercise price of $0.001 per
share. Based on the Company's stock price at December 31, 2000, 12,939,375
shares would be issuable under this warrant if this warrant were exercisable at
this date.

1999 ACQUISITIONS

            On February 2, 1999, the Company acquired all of the outstanding
common stock of the August 5th Corporation, doing business as Dave's World, a
full-service Internet communications solutions provider headquartered in
Bloomington, Illinois. The Company issued approximately 235,710 shares of common
stock valued at approximately $3.1 million.

            On June 10, 1999, the Company acquired substantially all of the
assets of Internet Connect, Inc., an Internet service provider headquartered in
Salt Lake City, Utah. The Company issued approximately 123,420 shares of common
stock valued at approximately $1.4 million.



                                      F-20
<PAGE>   60
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


            On June 11, 1999, the Company acquired all of the outstanding common
stock of IdealDial Corporation, an enhanced full-service telecommunications
provider headquartered in Denver, Colorado. The Company issued approximately
224,090 shares of common stock valued at approximately $2.6 million.

            On June 16, 1999, the Company acquired all of the outstanding common
stock of Colorado Mountain Net, Inc., a Web hosting and Internet service
provider headquartered in Steamboat Springs, Colorado. The Company issued
approximately 84,010 shares of common stock valued at approximately $1.0
million.

            On June 23, 1999, the Company acquired all of the outstanding common
stock of CommerceGate Corporation, an e-commerce software development and
consulting services firm headquartered in Seattle, Washington. The Company
issued approximately 108,790 shares of common stock valued at approximately $1.3
million and has reserved approximately an additional 267,790 shares of common
stock pursuant to certain contingent earn-out conditions , as defined in the
acquisition agreement, which as of March 24, 2000, have not been met.

            On June 25, 1999, the Company acquired substantially all of the
assets of CyberDesic Communications Corporation, Inc., an Internet service
provider headquartered in Peoria, Illinois. The Company issued approximately
48,390 shares of common stock valued at approximately $0.6 million.

           On July 28, 1999, the Company acquired certain Web hosting assets of
Net One Communications, Inc., a Web hosting provider located in Denver,
Colorado. The Company issued approximately 5,100 shares of common stock valued
at approximately $0.06 million.

            On July 30, 1999, the Company acquired all of the outstanding common
stock of Triad Resources, L.L.C., an Internet service provider headquartered in
Tulsa, Oklahoma and doing business as "WebZone." The Company issued
approximately 441,180 shares of common stock valued at approximately $4.6
million.

            On July 30, 1999, the Company acquired all of the outstanding common
stock of ACES Research, Inc., an Internet service provider headquartered in
Tucson, Arizona. The Company issued approximately 174,630 shares of common stock
valued at approximately $1.8 million.

            On August 30, 1999, the Company acquired the high-end Web hosting
and dedicated access assets of Novo Media Group, Inc., which is headquartered in
San Francisco, California. The Company issued approximately 174,000 shares of
common stock valued at approximately $1.4 million.

            On August 31, 1999, the Company acquired substantially all of the
assets of Wolfe Internet Access, L.L.C., an Internet service provider
headquartered in Seattle, Washington and doing business as "WolfeNet." The
Company issued approximately 837,100 shares of common stock valued at
approximately $6.6 million.

           On September 1, 1999, the Company acquired certain dial-up and
dedicated Internet access and Web hosting assets of Sterling Online Services,
Inc., an Internet access, Web hosting and design, and e-commerce company located
in Sterling, Colorado. The Company issued approximately 21,840 shares of common
stock valued at approximately $0.2 million.

            On November 19, 1999, the Company acquired the assets of the
FutureOne Internet Service provider, an operation of Networld.com, Inc., a
wholly owned subsidiary of FutureOne, Inc. Networld, which is headquartered in
Phoenix, Arizona, is an Internet communications and commerce company providing
dedicated and dial-up Internet access and Web hosting services. The Company
issued approximately 364,130 shares of common stock valued at approximately $3.0
million.

            On November 24, 1999, the Company acquired substantially all of the
assets of Western Regional Networks, Inc., an Internet communications and
commerce company providing dedicated and dial-up Internet access and Web hosting
services. Western Regional is headquartered in La Junta, Colorado. The Company
issued approximately 324,320 shares of common stock valued at approximately $3.0
million.



                                      F-21
<PAGE>   61
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


            On December 23, 1999, the Company acquired substantially all of the
assets of AIS Network Corporation, a business-to-business, full-service
solutions company, including dedicated and dial-up Internet access, Web design
and Web hosting, e-commerce, and network integration. AIS is headquartered in
Schaumburg, Illinois. The Company issued approximately 425,970 shares of common
stock valued at approximately $3.7 million.

            On December 30, 1999, the Company acquired the Internet and Web
related assets of ServerCom, a regional Internet Service provider and Web
hosting company headquartered in Normal, Illinois for a cash payment of
$300,000.

1998 ACQUISITIONS

            On June 5, 1998, the Company acquired all of the outstanding common
stock of Infohiway Inc. Infohiway Inc. has developed a search engine which the
Company believes has unique data searching features. The Company issued
approximately 150,000 shares of common stock valued at approximately $1.3
million.

            On June 30, 1998, the Company acquired all of the outstanding common
stock of Application Methods, Inc., which develops software and has developed
e-Commerce products. The Company issued approximately 286,400 shares of common
stock valued at approximately $3.2 million. Additionally, the shareholders are
entitled to receive an additional number of shares of the Company's common stock
to be earned (30% of the net income of the Application Methods subsidiary for a
three year period following closing up to a maximum of $2,500,000) based upon
the surviving corporation obtaining certain financial performance criteria in
six month intervals over the three year period following closing. For the six
month interval between July 1, 1999 and December 31, 1999, the surviving
corporation has experienced a loss, thus, no contingent shares have been earned
as of December 31, 1999.

            On November 24, 1998 the Company purchased certain assets and
assumed certain liabilities from Unicom Communications, a Kansas City based
Internet access and Web hosting provider. The Company issued approximately
172,150 shares of common stock valued at approximately $1.7 million.

            On November 30, 1998 the Company purchased certain assets and
assumed certain liabilities from Stonehenge Internet Communications, a Denver
based ISP. The Company issued approximately 49,860 shares of the Company's
common stock valued at approximately $0.5 million.

            On November 20, 1998 the Company, acquired all of the outstanding
capital stock of Internet Now, a Phoenix based ISP. The Company paid cash of
$150,000 and issued approximately 171,250 shares of the Company's common shares
valued at approximately $1.7 million.

            On December 4, 1998 the Company acquired certain assets and
liabilities of DataXchange Network, an Internet backbone network provider. The
Company issued 410,000 shares of the Company's common stock valued at
approximately $4.3 million, as well as 410,000 warrants to purchase the
Company's common stock. The 410,000 warrants all have an exercise price of
$10.88, and one half of the warrants expired on December 4, 1999 with the
remaining warrants to expire on December 4, 2000. In addition, up to 125,000
shares of the Company's common stock and 125,000 warrants to purchase the
Company's common stock may be issued upon the achievement of certain financial
thresholds. The exercise price for all of the 125,000 warrants is also $10.88.
In June 1999, the Company issued 40,000 shares of the Company's common stock and
40,000 warrants to purchase the Company's common stock as a result of the
partial achievement of those financial thresholds. As of December 31, 1999, the
remaining financial thresholds have not been met.

ACCOUNTING TREATMENT AND UNAUDITED PRO FORMA RESULTS

           Results of acquired entities are included in the Company's operations
upon the acquisition date. All acquisitions have been accounted for utilizing
the purchase method of accounting. The Company allocated most of the purchase
price for all acquisitions consummated to goodwill. Certain of these purchase
price allocations are preliminary. For each acquisition, a certain number of
shares of the Company's common stock to be provided to the sellers have been
reserved and placed in escrow to ensure that all representations and warranties
of the sellers are satisfied during the escrow period.

            Unaudited pro forma consolidated operations for the years ended
December 31, 2000 and 1999, assuming the acquisitions were completed on January
1 of each year and the immediately preceding year:

<TABLE>
<CAPTION>
                                                            2000                   1999
                                                   --------------------    -----------------------
<S>                                                <C>                     <C>
                       Net sales                   $       68,725,000      $          67,349,000
                       Net loss                    $      (54,202,000)     $         (37,081,000)
                       Net loss per share          $            (2.30)     $               (1.60)
</TABLE>


NOTE 12:    RELATED PARTY TRANSACTIONS

            In October 1997, the Company issued to the current CEO, Douglas H.
Hanson:

            o     1,225,000 shares of Common Stock for a purchase price of
                  $2,450,000, or $2.00 per share;

            o     warrants to purchase 4,000,000 shares of Common Stock for an
                  exercise price of $1.90 per share, subject to adjustment; and

            o     incentive stock options to purchase 191,385 shares of Common
                  Stock for an exercise price of $2.6125 per share and
                  non-qualified stock options to purchase 408,615 shares of
                  Common Stock for an exercise price of $1.00 per share
                  (collectively, the "Options") pursuant to the Company's 1997
                  Stock Option Plan (the "1997 Plan").

As the result of the transaction, Mr. Hanson also became the Company's President
and Chairman of the Board of Directors. In March 1998, Mr. Hanson exercised
50,000 of the warrants to purchase the Company's Common Stock. In August 1999,
Mr. Hanson exercised the remaining 3,950,000 warrants to purchase the Company's
Common Stock yielding net proceeds of approximately $7.5 million.

            In August 1998, Mr. Hanson loaned $400,000 to the Company for
various working capital needs, on October 20, 1998 he loaned another $400,000
for working capital needs and in November 1998 Mr. Hanson loaned an additional
$200,000. Such loans were consolidated and were evidenced by one promissory
note. The principal amount of the promissory note, together with interest at the
rate of 11% per annum, was scheduled to be payable in full 90 days after
November 19, 1998. Mr. Hanson was repaid in full plus interest in December 1998.

            In 2000, the Company loaned $75,000 to a then employee to be used in
relocating that employee pursuant to a transfer to Denver. The employee has
since resigned from the Company. The note is due and payable as of March 1,
2001, and is secured by a lien on the employee's home.



                                      F-22
<PAGE>   62
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 13: SUBSEQUENT EVENTS

            On March 15, 2001, the Company entered into an Agreement with
EarthLink Enterprises, Inc. to sell all or a portion of its dial-up Internet
access business division in exchange for cash. Under the Agreement, the Company
will work with EarthLink to transition all of its dial-up Internet access
customers from its services to the EarthLink services, and will retain and
continue to serve any customers that cannot be transitioned to EarthLink
services. The transition will begin in approximately sixty (60) days from the
signing of the Agreement, and will continue for several months after that date.
EarthLink has agreed to pay the Company a certain dollar amount for each
customer that is successfully transitioned and becomes a customer of EarthLink.
EarthLink has the right decide not to accept certain customers from areas of the
country that are difficult for them to provide service.

            The sale provides for payment of monies from EarthLink to the
Company in three installments. The first installment provides for a payment of
monies to the Company in an amount equal to twenty-five percent (25%) of the
total sum that would be due if all of its customers, based on the Company's best
estimate of its actual customers, were transitioned to EarthLink. The second
installment provides for a payment of monies to the Company in an amount equal
to another twenty-five percent (25%) of the total sum that would be due if all
of its customers, as described in an actual customer database, were transitioned
to EarthLink. The final installment provides for a payment of all monies that
remain due to the Company after the transition has been completed, and will be
based on the actual number of customers transitioned to EarthLink. The Company
expects to receive proceeds of between $12 and $15 million and expects to use
the proceeds from this sale towards prior debt, working capital, and other
operating expenses. The Company's consumer dial-up revenues for the years ended
December 31, 2000, 1999, and 1998, were $15,923,162, $10,928,233, and
$3,280,403, respectively.

            The Company received a Nasdaq Staff Determination Letter on December
29, 2000 which stated a Staff belief that the Company has failed to comply with
the net tangible assets requirement for continued listing set forth in Nasdaq
Marketplace Rule 4450(a)(3), and a Staff belief that the Company's common stock
may be subject to delisting from the Nasdaq National Market. The Company
believes that the Staff Determination as set forth in the December 29, 2000
Letter is based upon an erroneous interpretation of the relevant rules, and is
in conflict with past Nasdaq practices.

            The Company requested and attended a hearing before a Nasdaq Listing
Qualifications Panel (the "Panel") on February 22, 2001 to contest the Staff
Determination. The Company believes it has presented information that would
justify continued listing of its common stock on the Nasdaq Exchange. However,
there is no assurance the Panel will grant its request for continued listing on
the Nasdaq National Market. If Nasdaq does not grant its request for continued
listing on the Nasdaq National Market, the Company has a reasonable basis to
request that its common stock continue to be listed on either the Nasdaq
SmallCap Market or on the OTC Bulletin Board. As of March 30, 2001, the Company
has not received a decision or notification from Nasdaq on the continued listing
of its common stock.

            The Company has entered into an Agreement with Global Crossing
Bandwidth, Inc. ("Global") which provides that Global will agree to eliminate
certain sums due from the Company to Global in exchange of the Company issuing
preferred stock to Global. This Agreement will eliminate approximately $1.68
million of amounts due and payable to Global from the Company under its Carrier
Services Contract. In exchange, the Company will issue to Global approximately
4.2 million shares of preferred stock. The preferred stock will be redeemed by
the Company, on a quarterly basis, from any profit it earns. Until all the
shares of preferred stock have been redeemed by the Company, Global will have
the right at any time to convert some or all of the shares of preferred stock on
a one-for-one basis into shares of the Company's common stock. The Agreement
provides further that Global will be permitted to have a non-voting seat on the
Board of Directors, and will have the right to review and approve certain future
transactions or issuances of equity by the Company before the Company enters
into them.

NOTE 14: SEGMENT INFORMATION

            The Company's management regularly evaluates the performance of the
company by reviewing the operating results of its three segments: Access
Services, Web Solutions, and Integration and Installation Services. The Company
considers each division to be an operating segment as they have separate
management teams, offer different products and services, and utilize different
marketing strategies to target different types of customers. Access Services
consists of dedicated and dial-up internet services and long distance and
related services. The Company believes that all telecommunications services
within this segment should be aggregated as the services contained therein are
all telecommunications related, are offered to the same class of customer, and
are regulated by similar governmental authorities. Web Solutions provides web
site design and development, hosting, marketing, and data center co-location
services. Integration and Installation Services consists of Central Office
Installation, Network Transport Services, and



                                      F-23
<PAGE>   63
                    INTERNET COMMERCE & COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Network Management Services. The Integration and Installation Services division
was added in 2000 through the November 2000 merger between IC&C and INCC.

            In making operating decisions and allocating resources, the
Company's management specifically focuses on the revenues and operating costs
generated by each operating segment, as summarized in the following tables.
Certain shared costs of the segments have been allocated to each segment based
upon its share of the consolidated revenues for the period reported. Excluded
from the operating loss of the segment is expense $6,071,106 related to an
unsuccessful merger attempt in 1998.

<TABLE>
<CAPTION>
                                                2000            1999            1998
                                            ------------    ------------    ------------
<S>                                         <C>             <C>             <C>
NET SALES:
Access Services .........................   $ 35,766,302    $ 25,863,616    $  7,974,449
Web Solutions ...........................      7,786,782       4,258,388       2,112,561
Integration and Installation Services ...      1,857,014              --              --
                                            ------------    ------------    ------------
                                            $ 45,410,098    $ 30,122,004    $ 10,087,010
                                            ============    ============    ============
OPERATING EXPENSES:
Access Services .........................   $ 24,500,456    $ 16,518,034    $  3,470,933
Web Solutions ...........................      1,420,007       1,298,097          50,589
Integration and Installation Services ...      1,442,608              --              --
                                            ------------    ------------    ------------
                                              27,363,071      17,816,131       3,521,522
                                            ============    ============    ============
SG&A:
Access Services .........................   $ 29,541,237    $ 23,988,031    $  6,020,787
Web Solutions ...........................      6,388,266       4,011,738       3,163,245
Integration and Installation Services ...        461,109              --              --
                                            ------------    ------------    ------------
                                            $ 36,390,612    $ 27,999,769    $  9,184,032
                                            ============    ============    ============
OPERATING LOSS BEFORE DEPRECIATION AND
  AMORTIZATION:
Access Services .........................   $(17,713,470)   $(14,642,449)   $ (1,517,271)
Web Solutions ...........................        104,588      (1,051,447)     (1,101,273)
Integration and Installation Services ...        (46,703)             --              --
                                            ------------    ------------    ------------
                                            $(17,655,585)   $(15,693,896)   $ (2,618,544)
                                            ============    ============    ============
</TABLE>

NOTE 15: QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                          QUARTERS ENDED
                                                  MARCH 31           JUNE 30        SEPTEMBER 30       DECEMBER 31
                                                ------------      ------------      ------------      ------------
<S>                                             <C>               <C>               <C>               <C>
2000
Net sales .................................     $ 12,387,385      $ 11,772,232      $ 10,686,827      $ 10,563,654
Operating loss ............................     $ (7,425,707)     $ (8,348,696)     $ (6,891,546)     $(19,895,814)
Net loss ..................................     $ (7,404,382)     $ (8,404,143)     $ (7,121,328)     $(24,527,756)
Basic and diluted loss per common share ...            (0.35)            (0.39)            (0.33)            (1.00)

1999
Net sales .................................     $  5,263,000      $  6,388,758      $  9,131,601      $  9,338,645
Operating loss ............................     $ (3,124,249)     $ (3,967,823)     $ (5,343,892)     $(12,109,904)
Net loss ..................................     $ (3,187,188)     $ (4,064,922)     $ (5,432,065)     $(12,243,477)
Basic and diluted loss per common share ...            (0.33)            (0.39)            (0.35)            (0.75)
</TABLE>

In the fourth quarter, we recorded costs of $5,331,795 related to the impairment
of goodwill, $2,013,157 related to the write off of capitalized and purchased
software, and $3,634,840 related to the write off of investments.


                                      F-24
<PAGE>   64


SCHEDULE II - INTERNET COMMERCE & COMMUNICATIONS, INC. VALUATION AND QUALIFYING
ACCOUNTS

ALLOWANCE FOR DOUBTFUL ACCOUNTS

<TABLE>
<CAPTION>
Description                             BALANCE AT               CHARGED TO                                        BALANCE AT
                                       BEGINNING OF               COST AND                                          END OF
                                          PERIOD                  EXPENSES                 DEDUCTIONS               PERIOD
                                   ----------------------   ---------------------    ---------------------  ----------------------
<S>                                <C>                      <C>                      <C>                     <C>
Year Ended December 31, 2000        $          2,018,800    $          2,474,588     $          1,199,690    $          3,292,698
Year Ended December 31, 1999        $            265,000    $          2,368,600     $            614,800    $          2,018,800
Year Ended December 31, 1998        $            176,000    $            248,000     $            159,000    $            265,000
</TABLE>




                                      F-25
<PAGE>   65

                                 EXHIBIT INDEX *

<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                          DESCRIPTION OF DOCUMENT
 -------                                         -----------------------
<S>          <C>
   2.01      Agreement and Plan of Merger, dated March 17, 2000, by and among RMI.NET, Inc., Internet Acquisition
             Corporation and Internet Communications Corporation (29)
   3.01      Amended and Restated Certificate of Incorporation (15)
   3.02      Certificate of Amendment of Certificate of Incorporation (30)
   3.03      Bylaws (1)
   3.04      Certificate of Designations of Series B Convertible Preferred Stock (13)
   4.01      Form of Stock Certificate (1)
   4.02      Warrant Agreement between Rocky Mountain Internet, Inc. and Douglas H. Hanson dated October 1, 1997 (5)
   4.03      1996 Employees' Stock Option Plan (1)
   4.04      1996 Non-Employee Directors' Stock Option Plan (1)
   4.05      1997 Non-Qualified Stock Option Plan (4)
   4.06      1997 Stock Option Plan (6)
   4.06.1    First Amendment to Non-Qualified Stock Option Agreement pursuant to the 1997 Stock Option Plan (13)
   4.06.2    First Amendment to Incentive Stock Option Agreement pursuant to the 1997 Stock Option Plan (13)
   4.07      1998 Employees' Stock Option Plan, as amended (10)
   4.08      1998 Non-Employee Directors' Stock Option Plan (8)
   4.09      Subscription Agreement, dated as of December 10, 1998, by and between Rocky Mountain Internet, Inc. and
             Koch Industries, Inc. (12)
   4.10      Subscription Agreement, dated as of December 10, 1998, by and between Rocky Mountain Internet, Inc. and
             Advantage Fund II Ltd. (12)
   4.11      Form of Common Stock Purchase Warrant issued to Koch Industries, Inc., Advantage Fund II Ltd., Wharton
             Capital Partners Ltd., Leslie Bines, and Neidiger Tucker Bruner Inc. (12)
   4.12      Form of Registration Rights Agreement between Rocky Mountain Internet, Inc. and (i) Koch Industries,
             Inc.; and (ii) Advantage Fund II Ltd. (12)
   4.13      Form of Registration Rights Agreement between Rocky Mountain Internet and (i) Wharton Capital Partners
             Ltd.; (ii) Leslie Bines; and (iii) Neidiger Tucker Bruner Inc. (12)
   4.14      Form of Subscription Agreement dated as of December 7, 1999 (27)
   4.15      Form of Class A Warrant (Annex I to Subscription Agreement) (27)
   4.16      Form of Class B Warrant (Annex II to Subscription Agreement) (27)
   4.17      Form of Registration Rights Agreement (Annex IV to Subscription Agreement) (27)
   4.18      2000 Employees' Stock Option Plan (28)
   4.19      Employees' Stock Purchase Plan (28)
   4.20      Form of Warrant Agreement (including the related Form of Warrant attached thereto), between RMI.NET,
             Inc. and American Securities Transfer & Trust Company, as warrant agent (29)
   10.01     Agreement of Lease between Denver-Stellar Associates Limited Partnership, Landlord and Rocky Mountain
             Internet, Inc., Tenant (2)
   10.02     Sublease Agreement-February 26, 1997-1800 Glenarm, Denver, CO (3)
   10.03     Carrier Services Switchless Agreement Between Frontier Communications of the West, Inc. and Rocky
             Mountain Broadband, Inc.** (12)
   10.04     Wholesale Usage Agreement Between PSINet Inc. and Rocky Mountain Internet, Inc.** (12)
   10.05     PacNet Reseller Agreement between PacNet Inc. and Rocky Mountain Internet, Inc.** (12)
   10.06     Operating Agreement of The Mountain Area EXchange LLC (12)
   10.07     Software License and Consulting Services Agreement Between Rocky Mountain Internet, Inc. and Novazen
             Inc.** (12)
   10.08     Merger Agreement among Rocky Mountain Internet, Inc., RMI-INI, Internet Now, Hutchinson Persons, Leslie
             Kelly, Taufik Islam, Susan Coupal, and Gary Kim, dated November 20, 1998 (9)
   10.09     Asset Purchase Agreement between Rocky Mountain Internet, Inc. and Unicom Communications Corporation
             dated as of November 24, 1998 (9)
   10.10     Asset Purchase Agreement among Rocky Mountain Internet, Inc., Stonehenge Business Systems Corporation,
             Todd Keener, and Danette Keener, dated as of November 30, 1998 (9)
</TABLE>


                                      E-1
<PAGE>   66
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                          DESCRIPTION OF DOCUMENT
 -------                                         -----------------------
<S>          <C>
   10.11     Commitment letter dated December 10, 1998 from Advantage Fund Ltd. to Rocky Mountain Internet, Inc. (12)
   10.12     Agreement and Plan of Merger by and between Rocky Mountain Internet, Inc. and August 5th Corporation,
             d/b/a Dave's World dated February 2, 1999 (14)
   10.13     Asset Purchase Agreement by and among Rocky Mountain Internet, Inc., ImageWare Technologies, L.L.C.,
             and Communication Network Services, L.L.C. dated February 5, 1999 (14)
   10.14     Agreement and Plan of Merger by and among Rocky Mountain Internet, Inc. d/b/a/ RMI.NET, Inc. and
             IdealDial Corporation. (16)
   10.15     Agreement and Plan of Merger by and among Rocky Mountain Internet, Inc. d/b/a/ RMI.NET, Inc. and
             Internet Connect, Inc. (16)
   10.16     Agreement and Plan of Merger and Reorganization by and among Rocky Mountain Internet, Inc. d/b/a/
             RMI.NET, Inc. and Colorado Mountain Net, Inc. dated June 16, 1999 (17)
   10.17     Stock Exchange Agreement between Rocky Mountain Internet, Inc. d/b/a RMI.NET, Inc. and Roger L. Penner
             (CommerceGate) dated June 24, 1999 (18)
   10.18     Asset Purchase Agreement by and between Rocky Mountain Internet, Inc. d/b/a RMI.NET, Inc. and
             CyberDesic Communications Corporation, Inc. dated June 28, 1999 (19)
   10.19     Asset Purchase Agreement by and among RMI.NET, Inc. f/k/a Rocky Mountain Internet, Inc. and Triad
             Resources, LLC dated July 30, 1999 (20)
   10.20     Asset Purchase Agreement by and among RMI.NET, Inc. and ACES Research, Inc. dated July 30, 1999 (21)
   10.21     Asset Purchase Agreement by and among RMI.NET, Inc. and Novo Media Group, Inc. dated August 30, 1999
             (22)
   10.22     Asset Purchase Agreement by and among RMI.NET, Inc. and Wolfe Internet Access, LLC dated August 31,
             1999 (23)
   10.23     Asset Purchase Agreement by and among RMI.NET, Inc. and Networld.com, Inc. and FutureOne, Inc. dated
             November 19, 1999 (24)
   10.24     Asset Purchase Agreement by and among RMI.NET, Inc. and Western Regional Networks, Inc. dated November
             24, 1999 (25)
   10.25     Asset Purchase Agreement by and among RMI.NET, Inc. and AIS Network Corporation dated December 23, 1999
             (26)
   10.26     Exchange Agreement, dated March 17, 2000, by and between RMI.NET, Inc. and Internet Communications
             Corporation (29)
   10.27     Shareholders Agreement, dated March 17, 2000, by and among RMI.NET, Inc., Internet Communications
             Corporation and Interwest Group, Inc. (29)
   16.01     Letter re change in certifying accountant (11)
   21.01     Subsidiaries of the Registrant *
   23.01     Consent of Ernst & Young LLP *
</TABLE>
------------------
*      Filed herein.
**     Portions of these documents have been omitted pursuant to a request for
       confidential treatment.
(1)    Incorporated by reference from the Registrant's Registration Statement on
       Form SB-2 (Reg. No. 333-05040C) and amendments thereto, as previously
       filed with the Securities and Exchange Commission.
(2)    Incorporated by reference from the Registrant's Quarterly Report on Form
       10-QSB for the quarter ended September 30, 1996.
(3)    Incorporated by reference to the Registrant's Annual Report on Form
       10-KSB for the fiscal year ended December 31, 1996.
(4)    Incorporated by reference to the Registrant's Registration Statement on
       Form S-8, as previously filed with the Securities and Exchange Commission
       on September 26, 1997.
(5)    Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated October 6, 1997.

(6)    Incorporated by reference to the Registrant's Definitive Proxy Statement
       (Appendix A) on Schedule 14A, as previously filed with the Securities and
       Exchange Commission on February 13, 1998.

                                      E-2
<PAGE>   67

(7)    Incorporated by reference to the Registrant's Definitive Proxy Statement
       (Appendix B) on Schedule 14A, as previously filed with the Securities and
       Exchange Commission on February 13, 1998.
(8)    Incorporated by reference to the Registrant's Definitive Proxy Statement
       (Appendix C) on Schedule 14A, as previously filed with the Securities and
       Exchange Commission on February 13, 1998.
(9)    Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated November 20, 1998.
(10)   Incorporated by reference to the Registrant's Definitive Revised Proxy
       Statement on Schedule 14A, as previously filed with the Securities and
       Exchange Commission on May 27, 1999.
(11)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated December 9, 1998.
(12)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated December 10, 1998.
(13)   Incorporated by reference from the Registrant's Registration Statement on
       Form S-1 (Reg. No. 333-52731) and amendments thereto, as previously filed
       with the Securities and Exchange Commission.
(14)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated February 2, 1999.
(15)   Incorporated by reference to the Registrant's Quarterly Report on Form
       10-Q for the quarter ended June 30, 1999.
(16)   Incorporated by reference to the Registrant's Current Report on Form
       8-K/A dated June 11, 1999.
(17)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated June 16, 1999.
(18)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated June 23, 1999.
(19)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated June 28, 1999.
(20)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated July 30, 1999.
(21)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated July 30, 1999.
(22)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated August 30, 1999.
(23)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated August 31, 1999.
(24)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated November 19, 1999.
(25)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated November 24, 1999.
(26)   Incorporated by reference to the Registrant's Current Report on Form 8-K
       dated December 23, 1999.
(27)   Incorporated by reference to the Registrant's Registration Statement on
       Form S-3 (Reg. No. 333-95185), as previously filed with the Securities
       and Exchange Commission.
(28)   Incorporated by reference to the Registrant's Definitive Proxy Statement
       on Schedule 14A, as previously filed with the Securities and Exchange
       Commission on May 1, 2000.
(29)   Incorporated by reference to Internet Communications Corporation's
       Current Report on Form 8-K dated March 17, 2000.
(30)   Incorporated by reference to the Registrant's Quarterly Report on Form
       10-Q for the quarter ended September 30, 2000.


                                      E-3