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RMI.NET Acquisition Underscores Hunt For Profits

Entry into Japan's growing e-commerce industry and an increased reliance on its successful Internet connectivity business were key factors in RMI.NET's Tuesday acquisition of Berkeley, Calif.-based LanMinds Inc.

LanMinds, with $3 million in annualized revenues, is an Internet connectivity and web solutions provider with customers located throughout the San Francisco Bay Area, Colorado and Japan.

With a goal of getting out of negative earnings before interest, taxes, depreciation and amoritization (EBITDA) by December, RMI.NET has been looking beyond it's earlier business plan as an e-business and convergent communications company and going back to its roots providing Internet connectivity.

Before changing its name and business plan to enter the growing e-commerce and converging technologies industry last year, RMI.NET was Rocky Mountain Internet, Inc., an Internet service provider based out of Denver. A string of acquisitions positioned the company to enter the new market, but stiff competition in the emerging market left little profit for RMI.NET, prompting a re-emphasis with connectivity.

Earlier this month, RMI.NET won a $1 million contract with the University of Arizona to provide bandwidth, netting the company $350,000 in yearly revenues.

Douglas Hanson, RMI.NET chairman and chief executive officer, said the acquisition puts them on pace to reach its end of year goal.

"This is an exciting and very strategic acquisition," Hanson said. "Merging LanMinds into RMI.NET creates value for our shareholder in three key ways. First, the management team at LanMinds will help us maximize the performance of our existing assets, including our premier Internet Data Center in San Francisco.

"Second, we gain entry into the lucrative Japanese market through LanMinds' fast-growing web hosting and co-location business there," Hanson continued, "and third, the company accelerates us toward our goal of EBITDA neutrality in December, 2000."

With annual revenues of $50 million last year and more than 100,000 customers nationwide, RMI.NET's acquisition expands its presence overseas to Japan's virtually virgin commercial and consumer Internet industry.

Japan's residential Internet community is made up mostly of wireless Internet phone users, mainly because the government is just now forcing Nippon Telegraph and Telephone Corp. to open up its telephone lines to competition.

The acquisition is good timing for RMI.NET, which can enter the Japanese market with a full plate of options for small- to medium-sized businesses, from digital subscriber line access to Web hosting and site design.

Gary Morrell, LanMinds co-founder and president, said the acquisition gives his former company a font of experience to the services it offers.

"We are eager to bring RMI.NET's wider range of products and services, as well as our shared commitment to quality customer service, to our growing customer base," Morrell said. "Having access to REMI.NET's seasoned web development team, national Internet backbone, mirrored data centers, and 24-hour technical support will allow us to deliver a more robust solution and generate more profitable revenue."

Morrell and key staff will stay on with RMI.NET as part of its San Francisco Bay Area operations.



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