IFX CORP, 10-K, 2000-09-28

IFX CORP
10-K, 2000-09-28
COMPUTER PROGRAMMING, DATA PROCESSING, ETC.

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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 June 30, 2000

[ ] 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 0-15187

IFX Corporation
(Exact name of registrant as specified in it's charter)

Delaware 36-3399452
------------------------------------------- ----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

707 Skokie Blvd Ste 580, Northbrook, Illinois 60062
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(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (847) 412-9411
--------------

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

$.02 Par Value Common Stock

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 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.

As of September 15, 2000, the aggregate market value of the voting stock held
by non-affiliates of the registrant was approximately $31,843,760.

As of September 15, 2000, there were 13,337,943 outstanding shares of the
Registrant's common stock.

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PART I

Item 1 - Business
--------------------------------------------------------------------------------

Overview

IFX Corporation, a Delaware corporation (IFX Corporation and its
subsidiaries are referred to herein as "IFX", "IFX Networks" or the "Company")
was incorporated in 1985. IFX's operations are headquartered in Miami, Florida.
Since November 1998, IFX has established a pan-regional Internet Protocol ("IP")
network through a series of acquisitions and Company-start-up operations. The
IFX network currently covers 15 countries: Argentina, Bolivia, Brazil, Chile,
Colombia, Costa Rica, El Salvador, Honduras, Guatemala, Mexico, Nicaragua,
Panama, Uruguay, Venezuela and the United States. IFX has over 450 employees in
the US and Latin America and a network that covers over 58 cities in the Latin
American region.

IFX's network infrastructure, which will be marketed under the IFX Networks
brand name, provides Internet network connectivity and a broad range of value-
added services to small and medium-sized businesses in Latin America. To
provide the best service, IFX has built up an extensive geographic network in
the region using the latest Lucent, Nortel, Cisco, Sun and IBM equipment. IFX
previously marketed its network offerings in Latin America under the Unete brand
name, but management believes that the name "IFX Networks" better reflects the
focus of the company and plans on using the IFX Networks name going forward.

During the past twelve months IFX has become a region-wide provider of
Internet access and value-added IP based services focused on offering network
solutions to small and medium-sized businesses throughout Latin America.
Offerings include region-wide wholesale and private label Internet access,
dedicated fixed wireline and wireless Internet access, unlimited dial-up roaming
access to IFX Network's Points of Presence or POPs throughout the region, Web
design, Web-hosting and collocation, dial-up local area network, or LAN services
as well as virtual private network, or VPN services, and full technical support.

The IFX network is composed of the following:

. Over 58 company-owned POPs. A POP is an interlinked group of
modems, routers and other computer equipment, located in a
particular city that allows a nearby subscriber to access the
Internet through a local telephone call.

. Approximately 39,500 Remote Access Servers, or RAS ports.

. Network Operating Centers in 14 Latin American countries and the
US.

Among the services offered by IFX Networks is the wholesaling of its IP
network infrastructure to parties that wish to offer Internet services in the
region, such as Tutopia.com, Inc, a leading provider of free Internet access on
a pan-regional level. Tutopia.com, which was a majority-owned subsidiary of IFX
until August 31, 2000, pioneered free Internet access on a regional basis
starting in January 2000 and currently operates in 10 countries - Argentina,
Brazil, Chile, Colombia, El Salvador, Guatemala, Honduras, Mexico, Panama and
Venezuela, with over 1,300,000 registered users in the region. IFX currently
has a 47% investment stake in Tutopia.

IFX Historical Background

IFX was founded in 1985 as a commodities brokerage house. Since its
initial public offering in 1985, IFX has been listed on The Nasdaq SmallCap
Market under the symbol "FUTR". Prior to July 1996, IFX's primary business was
providing commodity brokerage services. On July 1, 1996, IFX sold substantially
all of its brokerage assets (other than certain assets of its then majority-
owned U.K. subsidiary) to E.D. & F. Man International, Inc. ("MINC"), a unit of
E.D. & F. Man Group, plc, a London- based international trading and finance
conglomerate. The purchase price consisted of cash earn-out payments based upon
the sold business's profitability through December 31, 2001. From July 1996
through February 1999, IFX's revenues consisted primarily of earn-out payments
from the asset sale, interest income and income from operations of its former
majority-owned British subsidiary, IFX Ltd., which conducts foreign exchange
business as a registrant of the British Securities and Futures Authority. In
November 1998, IFX decided to pursue an Internet strategy in Latin America. IFX
opened an office in South Florida and started recruiting new management and
operational teams. In June 1999, IFX continued the

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divesture of its non-network business by selling its 50.1% interest in IFX Ltd.
The purchase price consisted of $2.45 million in cash, a note receivable, and a
redeemable preference share entitling IFX to quarterly payments equal to
approximately 30% of the net profits of IFX Ltd. through June 30, 2002. In
September 2000, IFX sold its IFX Ltd. redeemable preference share to the other
shareholders of IFX Ltd. for $2.4 million, thus terminating IFX's right to earn-
out payments from IFX Ltd.

The IFX Network

IFX owns and operates a region-wide Latin American IP-based network,
providing a reliable data transmission path connecting its customers to the
Internet. In order to develop a network with region-wide coverage, IFX has
pursued an extensive acquisition strategy focused on acquiring established ISPs
with POPs in the major markets in Latin America and with skilled local
management teams.

IFX currently offers one of the most extensive IP-based network coverages
available in Latin America. IFX believes that having its network infrastructure
in place provides us with important first-to-market competitive advantages
because of the time required to build a network in Latin America and the
difficulty of locating in Latin America acquisition candidates with suitable
network characteristics and skilled management. The time required to build an
IP network in Latin America is extensive due to the time it takes to secure real
estate, purchase and import equipment, lease local transmission capacity, obtain
international Internet access, secure necessary licenses, hire skilled
management, and customize billing and back-office support.

. Network Infrastructure. The IFX network infrastructure consists of three
primary tiers: local POPs; a middle tier, which connects the POPs to national
hubs; and a backbone tier, which connects the national hubs to the Internet. A
point of presence, or POP, is an interlinked group of modems, routers and
other computer equipment located in a particular city that allows a nearby
subscriber to access the Internet through a local telephone call or using a
dedicated connection. The IFX network currently includes approximately 58 POPs
owned by the Company and 32 virtual POPs operated by third-party network
providers. Each POP is connected to one of IFX's 14 national hubs in each
respective country through a dedicated point-to-point line, typically provided
by a local telecommunications carrier. Our POPs are connected to the Internet
by multiple leased, high-speed links, including both satellite-based
connections and fiber optic connections. IFX believes that its network
capacity is adequate for the provision of current and planned access and
value-added services, but IFX intends to opportunistically expand its network
as trans-oceanic and land-based network capacity becomes commercially
available and as the need for additional network capacity arises.

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IFX's network includes POPs in the following cities:

Argentina Porlamar
--------- Maturin
Buenos Aires Valencia
Cordoba
Mendoza Brazil
Rosario ------
Curitiba
Mexico Florianopolis
------ Salvador
Mexico City Porto Alegre
Monterrey Sao Paulo
Guadalajara Rio de Janeiro
Toluca Belo Horizonte
Cd Acuna Recife
Fortaleza
Chile Joinville
----- Canoas
Santiago Novo Hamburgo
Valparaiso Sao Leopoldo
Concepcion Pelotas
Antofagasta Santa Maria
Temuco Campmo Born
Rancagua
La Serena Bolivia
Talca -------
La Paz
Panama Santa Cruz
------
Panama City El Salvador
Colon -----------
San Salvador
Guatemala
--------- Costa Rica
Guatemala City ----------
San Jose
Colombia
-------- Nicaragua
Bogota ---------
Cali Managua
Medellin
Barranquilla Honduras
--------
Venezuela Tegucigalapa
--------- San Pedro Sula
Caracas
Coro Uruguay
Punto Fijo -------
Pto La Cruz Montevideo
Valera
Barquisimeto United States
-------------
Miami, Florida

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Since the end of 1998, IFX has made significant progress in implementing
its business plan by making the following acquisitions, strategic investments
and business start-ups:

Date Acquisition / Investment / Start-Up* Business Country / Region
--------------- ------------------------------------------- ----------------------------------- ----------------------
<S> <C> <C> <C>
December 1998 ePagos.com, Inc. (minority ownership) E-Commerce Merchant Services Latin America
March 1999 Argentine start-up ISP Argentina
April 1999 Interweb Mexico ISP Mexico
International Connection Service ISP Venezuela
Eldish Marketing ISP Venezuela
Yupi Internet (minority ownership) Spanish language portal Latin America
Costa Rican start-up Internet Services Costa Rica
May 1999 Interaccess ISP Chile
Zupernet ISP Bolivia
Colombian start-up ISP Colombia
July 1999 Sistemas de Diseno y Manufactura ISP Mexico
Interactiva ISP Chile
August 1999 Intermedia ISP Chile
E-Net Teleinformatica ISP Brazil
Vianet ISP El Salvador
ITS Networks ISP Honduras
October 1999 NetSpace ISP Mexico
The Conex Group ISP Brazil
November 1999 Sistemas Integrales, Servicios y ISP Mexico
Comunicaciones
December 1999 Panaweb Web design Panama
Networks de Mexico ISP Mexico
Zalhe Informatica ISP Brazil
Nicanet ISP Nicaragua
Parmil ISP Uruguay
January 2000 Brasilnet Comunicacoes ISP Brazil
Openway ISP Colombia
Tutopia.com launch (47% ownership) Free ISP Latin America
March 2000 Guatemalan start-up ISP Guatemala
April 2000 Centronet.com (minority ownership) Online travel agency Latin America
June 2000 Mr. Help Informatica Web Hosting Brazil
Ludix Internet ISP Brazil
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</TABLE>

* Current ownership is 100% of the equity interests except as otherwise
noted. Ownership amounts are approximate.

<PAGE>

. Network Management. IFX considers world-class network management
essential for monitoring its network in multiple countries, maintaining
high customer satisfaction and improving network quality. In addition to
region-wide network monitoring capability at its headquarters in Miami,
Florida, IFX has established network operating systems in multiple Latin
American countries, which monitor the performance of IFX's network
equipment. With these systems, IFX is able to efficiently identify and
correct network problems either remotely or by local dispatch.

IFX is currently implementing Infranet developed by Portal
Software, a customized software that provides a central, standardized
billing and administration platform. Through Portal, IFX's customer
service representatives will have access to current, detailed customer
profiles, which chronicle customer service and account histories. IFX
is currently implementing out this billing and administration platform
to its regional operations.

. Sales and Marketing. IFX offers its services through a consultative sales
approach that makes use of local technical talent who understand customer
applications to help provide bundled Internet solutions consisting of
Internet access and other value-added services. This localized approach
will allow us to provide end-to-end customer solutions and ongoing
support. IFX's direct sales force offers a core base of technically
competent, locally based and experienced Internet sales representatives.

IFX is focusing efforts on expanding its IFX Networks direct sales
force, developing indirect sales channels and optimizing lead generation
techniques to reduce the cost of new customer acquisitions. IFX is also
developing company-wide reseller and referral programs that will permit
us to increase the number of indirect sales channels available to us. IFX
expects to use these programs to expand the local relationships it
currently has to a region-wide basis.

IFX also has dedicated sales people who work with advertisers that
advertise on Tutopia's Web site. In February 2000, IFX launched a
substantial marketing initiative to build awareness of Tutopia and to
develop the Tutopia brand in Latin America. To achieve this, IFX has
advertised on billboards and through radio, television and magazine
advertisements. IFX also distributed free software to start an account
with Tutopia in locations throughout Latin America. These sales personnel
have now been transferred to Tutopia following the UBS-led investment,
discussed below.

. Customer Service. IFX provides business customers with technical support
and customer service through its local customer service representatives.
IFX's business customers can access customer service representatives by
dialing a toll free number. Through IFX's customized Portal software,
customer service representatives will have instant access to current,
detailed customer profiles, which chronicle customer service and account
histories.

Market Opportunity

Although divided by geographical and political boundaries, Latin Americans
share many cultural affinities, including common languages and religions, as
well as a similar heritage. Consequently, the Latin American market represents a
highly desirable demographic profile for advertisers and businesses and
encompasses some of the largest potential telecommunications markets in the
world.

The Internet experienced rapid growth in the 1990's and has emerged as a
global medium for communications and commerce. Internet access and services
represent two of the fastest growing segments of the telecommunications services
market. This growth is driven by a number of factors, including:

. The large and increasing number of personal computers and other devices,
in both offices and homes, that are linked to the Internet; Advances in
network design which allow for rapid retrieval of information from the
Internet;
. Increased availability of Internet-based software and applications;
. The emergence of useful content and e-commerce technologies; and
. Internet access becoming more widely available, convenient and
inexpensive.

<PAGE>

IFX believes that the Internet presents a compelling profit opportunity for
businesses by enabling them to reduce operating costs and reach new markets. A
company with Internet access is able to use e-mail, access valuable information,
and communicate and conduct transactions with employees, customers and
suppliers. A Web site provides a company with an identity and interactive
presence on the Internet, allowing it to post information and automate business
processes such as sales, order entry and customer service. Recently, the Latin
American market has seen the emergence of "free Internet" services allowing
access to the Internet at no charge. IFX believes that the advent of free
Internet access creates an opportunity for us because free access brings a large
number of Internet users on-line, which, in turn, makes it more important for
small and medium-sized businesses to have an Internet presence and access to
these new users.

Business Strategy

IFX's goal is to become a leading provider of Internet Protocol, or IP,
based network solutions to small and medium-sized businesses in Latin America
and, through the use of the Company's network, to grow the wholesale Internet
access.

. Deliver Single Source Internet Solutions. IFX believes that small and
medium-sized businesses are seeking to increase their use of the Internet
as a business tool and are integrating Web-based services into their
business processes. Many businesses desire economical Internet access for
both their corporate offices and their employees who travel, thereby
creating demand for region-wide dedicated and dial-up Internet access. In
addition, IFX believes that within the business marketplace there is a
significant opportunity to upgrade customers to increasingly higher margin
value-added services. IFX also believes businesses will continue to seek to
outsource certain information technology functions to full-service IP-based
network providers such as us in order to reduce costs and improve results.
To provide an easy and cost effective way for the Company's customers to
start or expand their Internet presence, IFX offers a suite of bundled
corporate Internet services under the IFX Networks brand. IFX believes
these services should allow it to attract new customers or strengthen its
relationships with its existing customers and offer them higher margin
services.

. Continue to Build a Capital Efficient Network Infrastructure. IFX intends
to improve and expand its network where economically justifiable and to
match its capital commitment with market demand. By using complementary
Internet access technologies including satellite, fiber optic and wireless
networks, IFX believes that it can provide low cost Internet solutions to
its customers while opportunistically expanding its network as trans-
oceanic and land-based network capacity becomes commercially available. IFX
believes that its strategy of utilizing a capital efficient network
infrastructure should enable us to exploit new and existing technologies as
cost or performance improvements become available. IFX continues to expand
its market opportunities by building new Internet POPs in Latin America and
by increasing its Web hosting, server collocation, data storage and
processing capacities in major urban centers.

. Provide Seamless Pan Latin-American IP Network Coverage. IFX believes that
there are numerous competitive advantages that should be realized through
the development of region-wide brand recognition and network coverage
including the ability to:

. provide region-wide wholesale Internet access services or
"outsourced POPs" to multinational and domestic customers;

. establish region-wide marketing programs and customer acquisition
channels through, for example, PC and product bundling; and

. provide local Internet access to users both in their home country
and across countries in Latin America through free "roaming"
services; and

. realize economies of scale with respect to management, marketing,
MIS and back-end support systems, including billing and network
monitoring.

. Provide superior customer service through continued investment in billing,
back office and customer care systems. IFX provides all its business
customers with technical support and customer service. In addition, IFX
is implementing a customized, multi-currency billing system and
administration software that was
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developed by Portal Software. Through Portal, IFX's customer service
representatives will have instant access to current, detailed customer
profiles, which chronicle customer service and account histories.

. Establish and Maintain Strategic Relationships. IFX believes that its IFX
Networks business unit should make it a partner of choice for stategic
alliances and marketing arrangements. IFX's region-wide IP network can
provide its local and international partners with a Latin American platform
that offers both extensive region-wide coverage and a large target
audience. IFX intends to pursue acquisitions, partnerships, strategic
alliances and joint ventures relating to companies, assets and technologies
that complement its current product and services offerings and enhance its
business.

Products and Services

Business Products and Services

IFX offers dedicated and dial-up Internet access, wholesale Internet access
and a broad range of value-added Internet products and services to small and
medium-sized businesses in Latin America under the IFX Networks brand.

. Dedicated and Dial-Up Internet Access. IFX provides Internet access
services through a variety of dedicated and dial-up access solutions. IFX's
principal focus for small and medium-sized business customers is its
dedicated Internet connection through both wire-line and wireless dedicated
connections. A dedicated line is a telecommunications line dedicated or
reserved for use by particular customers along predetermined routes. IFX
currently offers dedicated Internet access at speeds ranging from 64K to
2MB. IFX also offers premium dial-up services, which give its customers
unlimited access to its IFX Network throughout Latin America. Customers
typically subscribe for dial-up services on a month-to-month basis. Users
can dial into our network in over 100 cities in Latin America and most
major cities in the United States and Canada through a local number without
incurring roaming fees. IFX currently offers only a premium dial-up
Internet access service for a single fee. However, IFX has allowed
customers that were on various rate plans to continue those plans. IFX
intends to encourage these users to migrate to its premium dial-up plan, or
if they desire a more basic service, to use the free access services of
Tutopia. As of June 30, 2000, IFX had approximately 45,000 paying dial-up
Internet access customers.

. Wholesale Internet Access Services. IFX also provides wholesale services
that enable companies to provide Internet products and services on a
turnkey basis under a private or branded label to their customers without
the need to invest in their own technology, engineering, systems and
infrastructure. Potential wholesale Internet access customers include
multinational and consumer-oriented entities with existing sales and
marketing capabilities seeking to add Internet products and services to
their product offerings.

. Value-Added IP Products and Services. IFX also provides value-added IP
products and services to its small and medium-sized business customers. IFX
believes that providing these products and services should enable it to
grow revenues at higher margins and enhance customer retention as small and
medium-sized businesses will increasingly rely on these value-added
products and services to use the Internet as a business tool. IFX offers
the following value-added products and services:

. Web Hosting. IFX offers web hosting products and services allowing
its customers to use its web servers to maintain their own web
sites. With web hosting, businesses can create a presence on the
Internet, furthering their business, marketing and customer service
campaigns. IFX's web hosting products and services include web site
maintenance and ongoing consulting services by IFX. As of June 30,
2000, IFX hosted Web sites for approximately 6,000 customers.

. Server Collocation. IFX offers basic collocation services at its
local POPs. Using IFX's collocation services, its customers can own
their own web servers without having to maintain and manage the
related data facilities. IFX is implementing emerging content
distribution technologies such as local content replication, or
mirroring, and caching, for enhanced end user performance. IFX also
plans to develop regional data facilities where its customers can
co-locate their web servers.

<PAGE>

. Virtual Private Networks, or VPNs. A VPN is a public circuit-
switched data service that makes use of the public switched
telephone network. Circuit switching refers to the process of
setting up and keeping a circuit open between two or more users,
such that the users have exclusive and full use of the circuit
until the connection is released. The public switched telephone
network refers to the worldwide voice telephone network accessible
to all those with telephone and access privileges. IFX's VPN
service offerings provide companies with a secure transmission of
private Internet traffic at a lower cost than the alternative of
wide area network. IFX can also provide companies with intranet and
extranet products and services. Intranets are corporate networks
that rely on Internet-based technologies to provide secure links
between offices. Extranets expand that network to select businesses
through secured Internet links. These intranet and extranet
products and services allow customer employees to have remote
access to private networks from home or while traveling.

. Domain Name Registration. IFX processes all documentation necessary
to register a domain name in any of the countries in which it
operates.

. Region-wide Roaming. IFX offers the ability for its customers'
employees to access the Internet and their e-mail while they are
traveling. Most ISPs do not currently offer local access service
throughout the region, or if they do, they charge roaming fees.

. Other Value-Added Products and Services. IFX also has the capacity and
intends to offer the following value-added products and services for small
and medium-sized businesses in the next twelve months:

. Communication Products and Services. IFX intends to provide
Internet telephony, fax and audio and video conferencing products
and services. These products and services would also permit
customers to send and receive faxes over the Internet and to engage
in audio and video conferences over the Internet.

. Electronic commerce solutions. Electronic commerce, or e-commerce,
solutions provide businesses with the ability to process
transactions and perform business functions over the Internet.
Through its relationship with e-Pagos, IFX intends to provide e-
commerce solutions that should allow its customers to sell products
or services directly to their customers, purchase supplies,
coordinate inventory systems with suppliers, process electronic
payments, track shipments and perform other business functions, all
in a secure on-line environment. IFX intends to develop additional
single-source e-commerce applications and hosting environments
using its own software development capabilities and those of third-
party partners.

Consumer Internet Products and Services

IFX's region-wide IP network provides a competitive advantage in the
offering of consumer Internet products and services in Latin America. IFX
intends to leverage its region-wide network presence and available capacity to
gain first-to-market advantages in the offering of consumer Internet products
and services.

Given the low fees for dial-up Internet access across Latin America and the
corresponding billing and servicing costs associated with dial-up subscribers,
IFX decided to pursue a business model that provides free, unlimited Internet
access to users and a powerful direct marketing tool for advertisers and
sponsors. To draw a distinction between its corporate network services and
consumer Internet services, in January 2000 IFX formed a subsidiary,
Tutopia.com, Inc., which offers users free, unlimited Internet access to users
in Argentina, Brazil, Chile, Colombia, El Salvador, Guatemala, Honduras, Mexico,
Panama and Venezuela. As of September 15, 2000, Tutopia had approximately 1.3
million registered users.

On August 31, 2000, Tutopia.com, Inc., received $20 million of private
equity financing from a group led by UBS Capital Americas III, L.P. ("UBS
Capital Americas"). An entity controlled by Mr. Lee Casty participated in this
group, and accounted for approximately $4.9 million of the group's investment.
Following this financing, assuming the exchange of the Tutopia Series A
Preferred Stock received by the group for Tutopia Common Stock, IFX will own
approximately 47% of the outstanding stock of Tutopia. UBS Capital Americas and
its affiliates which purchased Tutopia Series A Preferred Stock have the right
to appoint a majority of Tutopia's directors, the

<PAGE>

entity controlled by Mr. Casty has the right to appoint one director of Tutopia,
and IFX has the right to appoint one director of Tutopia. Prior to the UBS-led
investment, Tutopia represented one of our two major business lines. Following
the UBS-led investment, we anticipate that Tutopia will be our largest single
customer, accounting for approximately 50% of our revenues. IFX has entered into
an agreement with Tutopia to provide Internet connectivity services to Tutopia
for a period of three years. Either IFX or Tutopia can renew the
interconnectivity agreement for a fourth year. After that agreement terminates,
there can be no assurances that Tutopia will continue to use the IFX network
after the end of the three-year period.

Strategic Investments.

IFX has made various strategic investments in companies that are aligned
with its business models, including:

. Yupi Internet, Inc. In April 1999, IFX invested $3.1 million to purchase
approximately 12% of the then outstanding capital stock of Yupi, one of the
largest Spanish language portals on the Internet. Yupi offers its Spanish-
speaking users a broad range of products and services through its portal.
Yupi's services include directories, a search engine, e-mail, chat
services, homepage creation and web hosting. See Section "Recent
Developments" regarding "Sale of a portion of Yupi Shares."

. ePagos.com, Inc. In December 1998, IFX invested $200,000 to purchase
approximately 20% of the then outstanding equity interests in Telcom.net,
L.P. In January 2000, Telcom.net changed its name to ePagos, Inc. ePagos
provides merchant service solutions for the Latin American e-commerce
marketplace. IFX currently owns approximately 17% of ePagos' stock on a
fully-diluted basis. ePagos provides a comprehensive suite of high-
performance Internet-based software products that enable businesses to
engage in a full range of e-commerce and e-business transactions throughout
Latin America. At the ePagos web site, merchants can register a domain
name, create a customized Web site and advertise goods and services. Also,
merchants can use the Web site to accept orders, process credit card
payments, coordinate fulfillment of orders, calculate tariffs, taxes and
shipping charges, monitor and reorder inventory and generate financial
statements and sales reports.

Competition

The market for Internet access and value-added products and services has
become increasingly more competitive in Latin America as Internet usage has
grown, and we expect that this trend will continue. While Internet usage is
lower in Latin America than in more mature markets such as the United States,
many new entrants have been attracted by the large potential market size.

Though the Company's specific competitors vary from market to market, they
include the following types of businesses:

. Internet services providers. Depending on the market, IFX's primary
competitors may be small, local Internet service providers with limited
ranges of service and geographic reach, or large international or regional
service providers with broad service offerings, large network capacities
and wide geographic presence. The small, local providers often focus on
consumer dial-up Internet access and frequently do not have the services or
expertise to assist small and medium-sized businesses in establishing a
presence on the Internet or creating an Internet platform to support their
business processes. The large international and regional providers also
often focus on consumer dial-up Internet access. While these large Internet
service providers may have the range of services required to meet the needs
of small and medium-sized businesses, they may not have the local personnel
and market expertise to effectively implement solutions for this customer
base. IFX believes it can compete effectively with both large and small
Internet services providers by combining local market expertise and service
with IFX's region-wide network and a wide range of services targeted
towards small and medium-sized business customers.

<PAGE>

. Telecommunications companies. Many of the major international
telecommunications companies offer Internet services in the same markets as
the Company. Some telecommunications providers are subsidized or government
owned. In several markets in which the Company operates, former
telecommunications monopolies have been deregulated and privatized, and
have also become providers of Internet services. New telecommunications
company entrants to these markets are beginning to use high-speed wireless
technology to bypass overcrowded, existing networks and are offering
Internet and corporate data services as well. Generally, these network-
based companies focus on consumer dial-up Internet access, large corporate
accounts and customer bases that can generate high volume data traffic to
carry on their networks. IFX believes that its focus on providing products
and services that meet the Internet needs of small and medium-sized
businesses should allow us to compete effectively with telecommunications
company competitors.

. Cable television companies. Cable operators in some of the Company's
markets have either introduced or announced that they intend to introduce
Internet access services, both by upgrading their networks and using new,
cable modem technology. The existing customers of those cable operators are
primarily residential and their physical networks are largely limited to
residential areas. IFX therefore expects these companies to present
relatively little competition with respect to small and medium-sized
business customers in the Company's markets.

IFX believes that it can compete effectively in the Latin American Internet
market. However, any one of the following developments in Latin America could
materially and adversely affect IFX's business, financial condition and results
of operations:

. growth in the number or strength of strategic alliances among IFX's
competitors continues to grow,
. new platforms for Internet access arise from technological
developments,
. an increased number of global and local companies enter these markets,
. loss of users,
. reduced Internet advertising,
. loss of market share,
. reduced page views,
. price reductions and lower profit margins, and
. lower advertising rates.

IFX faces competition on both a country-specific and region-wide level.
IFX's competitors may develop products and services that are better than the
products and services that we offer or intend to develop or that achieve greater
market acceptance. It is also possible that new competitors may emerge and
acquire significant market share. Some of IFX's established competitors and
potential new competitors may also have better brand recognition and
significantly greater financial, technical and marketing resources than the
Company.

Government Regulation

To date, government regulations have not materially restricted the
Company's ability to offer our Internet products and services in our core target
countries. However, the legal and regulatory environment that pertains to the
Internet is uncertain and may change, especially in Latin America. New laws and
regulations may be adopted. Existing laws may be applied to the Internet and e-
commerce. New and existing laws may cover issues like:

. sales and other taxes,
. user privacy,
. pricing controls,
. characteristics and quality of products and services,
. consumer protection,
. cross-border restrictions,
. foreign investment restrictions,
. currency controls,
. licensing requirements,
. libel and defamation,

<PAGE>

. copyright, trademark and patent infringement,
. pornography, and
. nature and content of Internet materials.

Legislation in these areas could slow the growth in use of the Internet
generally and decrease the acceptance of the Internet as a communications and
commercial medium. It may take years to determine how existing laws such as
those governing intellectual property, privacy, libel and taxation apply to the
Internet. Any new legislation or regulation regarding the Internet, or the
application of existing laws and regulations to the Internet, could have an
adverse effect on our business.

The growth of the Internet, coupled with publicity regarding Internet
fraud, may also lead to the enactment of more stringent consumer protection
laws. These laws may impose additional burdens on IFX's business. IFX intends
to support proposals designed to enhance market access and competition in the
offering of both dial-up and high-speed interactive services in our target
markets and believe that the adoption of these proposals would have a beneficial
effect on the development of the interactive services medium. IFX is unable, at
this time, to predict whether any of these proposals will be adopted.

Employees

As of June 30, 2000, IFX employed approximately 450 employees, most of
which are based in Latin America. IFX believes that its success is dependent in
part upon our ability to attract and retain qualified, experienced employees.
IFX believes that its relations with its employees are good.

Intellectual Property and Proprietary Rights

IFX relies on trademark and copyright laws, laws restricting unfair
competition, laws relating to trade secret protection and confidentiality and/or
license agreements with the Company's employees, customers, partners and others
to protect its intellectual property rights. Courts and legislatures in each
country continue to address the issues of the applicability and enforceability
of legal principles concerning intellectual property rights in an Internet
context, which remain substantially uncertain. Many of the countries in which
IFX operates have signed international treaties relating to the protection of
intellectual property. However, the courts in many of these countries have not
had the opportunity to address the legal issues within the Internet context to
the same degree as courts in the United States. Therefore, IFX cannot determine
whether the intellectual property of its non-U.S. operations will be subject to
a lesser or different degree of protection than that generally afforded in the
United States.

The Company uses "IFX" as the primary business name for its operations.
The Company uses "IFX Networks" as a brand name for end products and services in
Latin America. In Latin America, we pursue the registration of our trademarks
for marks that we believe are unique and that will be used by us over an
extended period of time. IFX has initiated its registration of the IFX Networks
mark in most countries in Latin America. Where IFX has not registered our
marks, competitors with senior rights in marks similar to IFX's may be able to
argue successfully that IFX should be barred from continuing to use the IFX
Networks mark, or competitors may adopt product or service names similar to
IFX's, thereby impeding IFX's ability to build brand identity, which could lead
to customer confusion. It is also difficult and expensive to defend trademark
infringement litigation and to police the unauthorized use of marks.

IFX Networks starter software and installation programs are key parts of
the services we provide to dial-up subscribers. IFX's goal is to automatically
configure an individual user's Internet access programs after the user's initial
entry with this software. IFX has obtained permission and, where necessary,
licenses from the companies that manufacture the software that IFX uses.

<PAGE>

Item 2 - Properties
--------------------------------------------------------------------------------

The Company's corporate headquarters are at 707 Skokie Boulevard,
Northbrook, Illinois 60062. The Company's offices for coordinating and
supporting our Latin American operations are located in approximately 12,500
square feet of office space in Miami Lakes, Florida, under a lease that expires
in July 2004. This lease provides for aggregate payments totaling approximately
$1.2 million over the next 4 years.

The Company leases office space in 200 West Adams Street, Suite 1500,
Chicago, IL 60606. This space served as the Company's previous corporate
headquarters. However, this office space has been sub-leased in its entirety
until the end of the lease, and for an amount equal to the lease payments.

The Company also leases offices in 14 Latin America countries that are used
for general operations, for sales offices and for equipment collocation.

In August 1999, we signed a five-year lease for office new space in
Hallandale, Florida, commencing October 1, 1999. This lease provides for
aggregate payments totaling approximately $0.3 million over the next 5 years.

<PAGE>

Item 3 - Legal Proceedings
--------------------------------------------------------------------------------

Legal Proceedings With Respect To Discontinued Operations.

On May 16, 1996, Index Futures Group, Inc. ("Index") filed suit in the
Circuit Court of Cook County-Law Division against Doug Niemann, a former
customer, for breach of contract, seeking to recover a debit balance of $88,200
(Index Futures Group, Inc. v. Doug Niemann, case no. 96L-5506). On January 14,
1997, Niemann filed a counterclaim for $688,236.50. The parties agreed to
submit the matter to binding arbitration. A hearing was held on the merits, and
on May 25, 2000 the arbitrator dismissed Niemann's claims and awarded Index the
debit balance plus interest at 5%.

In April 1994, Index, without admitting or denying the allegations, paid
$100,000 to the CFTC, settling an administrative action filed on September 29,
1992. In a related action, the equity receiver of a commodity pool operator
brought an action to recover losses of approximately $600,000, alleging various
theories such as constructive trust, negligence, breach of fiduciary duty and
conversion. On May 29, 1996, the district judge dismissed the complaint in its
entirety. On December 4, 1997, the Court of Appeals affirmed the district
judge's dismissal of all claims against Index. On January 13, 1998, the Court of
Appeals denied the Supplemental Plaintiffs' request for a rehearing of its
appeal. On October 2, 1998, the attorney for the equity receiver of the
commodity pool filed a class-action suit on behalf of a putative class composed
of persons who had given money to the commodity pool operator to invest, some of
which was deposited in brokerage accounts at Index by the commodity pool
operator. (Wesselhoff v. FX Chicago, Inc. et al., Circuit Court of Cook County,
Chancery Division, case number 98-CH-13396). The plaintiff seeks damages of
$600,000 plus prejudgment interest, punitive damages, and lost investment
opportunity. The Company believes that the allegations in the complaint against
FX Chicago, Inc. and the Company are without merit and will defend vigorously.

A German citizen, seeking damages of 6,403,519.19 Deutschmark
(approximately $2.8 million given the exchange rate as of September 20, 2000),
filed a lawsuit in September 1998, in Germany, against an affiliate of MINC,
which is a unit of E.D.& F. Man Group. The complaint arouse out of transactions
that occurred in an account introduced by Index Futures Group, AG ("Index AG"),
an introducing broker of Index, prior to the asset sale. The Plaintiff alleges
that under German law, MINC's affiliate is successor to Index AG, and thus
assumed any liabilities of Index AG. Pursuant to the asset sale agreement with
E.D.&F Man Group, Index is responsible for any liability "arising out of any
state of facts with respect to such Assigned Contract existing on or prior to
the Closing Date". MINC has retained counsel in Germany to represent its
interests in this matter. As Index AG was an introducing broker of Index and
not a former subsidiary of the Company or Index, the Company does not believe
that it will ultimately be liable for damages. In April 1999, MINC's German
counsel reported that the Dusseldorf District Court dismissed all claims against
MINC. However, the plaintiff has filed an appeal with the Dusseldorf Court of
Appeals.

On December 28, 1998, John and Christina Blazina, filed an NFA arbitration
against Index and others, alleging breach of fiduciary duty, fraud, breach of
contract and negligence in the solicitation and trading of a series of managed
accounts opened at Index in 1995. Claimant seeks an award of $500,000, composed
of alleged actual damages of $262,500, punitive damages of $170,000 and various
other costs and fees. A hearing was held on the merits, and in November 1999
the arbitrator dismissed Blazina's claims and terminated proceeding, however, no
award was granted.

On August 23, 1999, a lawsuit was filed in the Circuit Court of Cook County
naming Index and two individuals as defendants (Craig Bordon v. Sean S. Mayo, et
al., 99L-09368). The complaint alleges breach of contract and damages "in
excess of" $50,000. The Company has not yet been served with the complaint.
Based upon the allegations as set forth in the complaint, the Company believes
that the claim is without merit.

<PAGE>

Item 4 - Submission of Matters to a Vote of Security Holders
--------------------------------------------------------------------------------

No matters were submitted to a vote of IFX's security holders, through
solicitation of proxies or otherwise, during the fourth quarter of fiscal year
2000.

<PAGE>

Part II
Item 5 - Market for IFX's Common Equity and Related Stockholder Matters
--------------------------------------------------------------------------------

IFX's stock is traded on the NASDAQ SmallCap Market under the symbol
"FUTR." Set forth below is the range of high and low trade prices per share of
the common stock in the Nasdaq SmallCap market as reported by NASDAQ for the
periods indicated. The quotations do not include retail markups, markdowns, or
commissions. All previously disclosed data has been restated for the one-for-
five reverse split of common stock effected on January 12, 1999.

On September 25, 2000, the closing price per share of common stock, as
reported through NASDAQ, in the over-the-counter market was $7.375.

<TABLE>
<CAPTION>
Fiscal Year 1998 (July 1, 1997 - June 30, 1998): High Low
---------------------------
<S> <C> <C>
First Quarter......................................... $ 1.09 $ 0.94
Second Quarter........................................ 2.50 0.94
Third Quarter......................................... 2.63 1.41
Fourth Quarter........................................ 2.94 1.81

Fiscal Year 1999 (July 1, 1998 - June 30, 1999): High Low
---------------------------
First Quarter......................................... $ 2.44 $ 1.81
Second Quarter........................................ 12.50 1.25
Third Quarter......................................... 12.63 5.88
Fourth Quarter........................................ 21.50 9.38

<CAPTION>
Fiscal Year 2000 (July 1, 1999 - June 30, 2000): High Low
---------------------------
First Quarter......................................... $24.38 $14.88
Second Quarter........................................ 34.75 16.13
Third Quarter......................................... 37.94 27.25
Fourth Quarter........................................ 35.00 11.25
</TABLE>

Approximate Number of Holders of Securities

As of September 25, 2000, there were 191 holders of record of the
Registrant's common stock. The Registrant believes it has a greater number of
stockholders because the Registrant believes that a substantial number of shares
of its common stock are held of record in street name by broker-dealers for
their customers.

Dividends

The Registrant has never paid a cash dividend on its common stock and does
not expect to pay a cash dividend in the foreseeable future, but intends to
devote all funds to the operation of its business.

<PAGE>

Item 6 - Selected Financial Data
--------------------------------------------------------------------------------

The following table summarizes selected historical financial information of
the Registrant and its subsidiaries for each of the last five years. All amounts
presented have been restated on a continuing operations basis. Accordingly, the
operating results of discontinued operations have been segregated from
continuing operations and reported as a separate line item on the statement of
operations. The selected financial information shown below has been derived from
the Registrant's consolidated financial statements. This table should be read in
conjunction with the other financial information of the Registrant, including
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial results included elsewhere herein.

<TABLE>
<CAPTION>
Year Ended June 30,
<S> <C> <C> <C> <C> <C>
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Statement Of Operations Data:
--------------------------------------------------------------------------------------------------------------------------------
Revenues from continuing operations..................... $ 9,685,900 $ 725,300 $ - $ - $ -
--------------------------------------------------------------------------------------------------------------------------------
Cost and expenses from continuing operations:
Cost of revenues........................................ 8,217,200 445,500 - - -
General and administrative.............................. 22,283,800 2,691,800 729,400 1,306,000 1,566,700
Sales and Marketing..................................... 9,177,400 247,600 3,700
Depreciation and amortization........................... 8,148,700 232,400 - - 62,300
Non-cash stock compensation............................. 6,359,100 39,000 - - -
Contract cancellation costs............................. 6,815,700 - - - -
--------------------------------------------------------------------------------------------------------------------------------

Total operating expenses................................ 61,001,900 3,656,300 733,100 1,306,000 1,629,000
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Operating loss from continuing operations............... (51,316,000) (2,931,000) (733,100) (1,306,000) (1,629,000)
--------------------------------------------------------------------------------------------------------------------------------

Other income (expense):
Interest income......................................... 414,800 376,100 290,100 410,600 5,028,700
Interest expense........................................ (595,300) - - - -
Minority interest in subsidiary......................... 1,110,100 - - - -
Loss on operations of equity investee................... (330,200) (107,700) - - -
Other................................................... 101,200 136,200 126,500 247,100 -
--------------------------------------------------------------------------------------------------------------------------------
Total other income...................................... 700,600 404,600 416,600 657,700 5,028,700
--------------------------------------------------------------------------------------------------------------------------------
(Loss) income from continuing operations
before income taxes..................................... (50,615,400) (2,526,400) (316,500) (648,300) 3,399,700
Income tax benefit (provision).......................... 2,771,400 811,000 108,000 220,000 (452,800)
--------------------------------------------------------------------------------------------------------------------------------
(Loss) income from continuing operations................ (47,844,000) (1,715,400) (208,500) (428,300) 2,946,900
--------------------------------------------------------------------------------------------------------------------------------
Discontinued operations, net of taxes................... 1,967,000 3,117,600 3,575,200 3,612,100 (4,080,000)
--------------------------------------------------------------------------------------------------------------------------------
Net (loss) income....................................... (45,877,000) 1,402,200 3,366,700 3,183,800 (1,133,100)
--------------------------------------------------------------------------------------------------------------------------------
Assumed cumulative dividend on
Class A preferred stock................................. - - - (23,300) (40,000)
--------------------------------------------------------------------------------------------------------------------------------
Net (loss) income available to
common stockholders..................................... $(45,877,000) $ 1,402,200 $ 3,366,700 $ 3,160,500 $(1,173,100)
==================================================================================================================================

Basic And Diluted (Loss) Income Per Share:
(Loss) income from continuing operations................ $ (4.71) $ (0.26) $ (0.03) $ (0.07) $ 0.44
(Loss) income from discontinued operations.............. $ 0.19 $ 0.48 $ 0.57 $ 0.55 $ (0.61)
--------------------------------------------------------------------------------------------------------------------------------
Net (loss) income....................................... $ (4.52) $ 0.22 $ 0.54 $ 0.48 $ (0.17)
==================================================================================================================================

Weighted Average Common Shares Outstanding:
Basic and Diluted....................................... 10,153,565 6,498,204 6,246,545 6,616,893 6,744,236
==================================================================================================================================

Balance Sheet Data:
Cash and cash equivalents............................... $ 15,049,300 $ 5,482,800 $ 5,633,200 $ 2,211,100 $ -
Total assets............................................ $ 62,530,900 $18,861,500 $11,543,400 $10,030,900 $ 6,331,000
Capital lease obligations............................... $ 10,967,800 $ - $ - $ - $ -
Total debt.............................................. $ 374,700 $ 316,900 $ - $ 1,586,600 $ -
</TABLE>

<PAGE>

Item 7 - Management's Discussion and Analysis of Financial Condition and Results
of Operations for the Year Ended June 30, 2000
--------------------------------------------------------------------------------

The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements and notes that are included elsewhere herein.
This discussion and analysis reflects the adjustments made to segregate the
discontinued operations ("discontinued operations") that resulted from the sale
of the Company's brokerage assets in July 1996 to E.D. & F. Man International,
Inc., a unit of E.D. & F. Man Group, plc, a London-based international trading
and finance conglomerate; and from divesture in June 1999 of IFX's 50.1%
interest in IFX Ltd. Discontinued operations are shown under a separate line
item on the Company's Consolidated Statements of Operations for Fiscal Years
2000, 1999 and 1998; and in the Company's Consolidated balance sheet for Fiscal
Years 2000 and 1999 included elsewhere herein.

IFX Corporation, a Delaware corporation (IFX Corporation and its
subsidiaries are referred to herein as "IFX", "IFX Networks" or the "Company")
was incorporated in 1985. IFX has created an extensive pan-regional Internet
platform as a leading provider of Internet-based products and services
throughout Latin America. IFX's operations are headquartered in Miami, Florida.
Since November 1998, IFX has established a pan-regional Internet Protocol ("IP")
network through a series of acquisitions and Company-start-up operations. The
IFX network currently covers 15 countries: Argentina, Bolivia, Brazil, Chile,
Colombia, Costa Rica, El Salvador, Honduras, Guatemala, Mexico, Nicaragua,
Panama, Uruguay, Venezuela and the United States. IFX has over 450 employees in
the US and Latin America and a network that covers over 58 cities in the Latin
American region.

IFX was founded in 1985 as a commodities brokerage house. Since its
initial public offering in 1985, IFX has been listed on The Nasdaq SmallCap
Market under the symbol "FUTR". Prior to July 1996, IFX's primary business was
providing commodity brokerage services. On July 1, 1996, IFX sold substantially
all of its brokerage assets (other than certain assets of its then majority-
owned U.K. subsidiary) to E.D. & F. Man International, Inc. ("MINC"), a unit of
E.D. & F. Man Group, plc, a London- based international trading and finance
conglomerate. The purchase price consisted of cash earn-out payments based upon
the sold business's profitability through December 31, 2001. From July 1996
thorough February 1999, IFX's revenues consisted primarily of earn-out payments
from the asset sale, interest income and income from operations of its former
majority-owned British subsidiary, IFX Ltd., which conducts foreign exchange
business as a registrant of the British Securities and Futures Authority. In
November 1998, IFX decided to pursue an Internet strategy in Latin America. IFX
opened an office in South Florida and started recruiting new management and
operational teams. In June 1999, IFX continued the divesture of its non-network
business by selling its 50.1% interest in IFX Ltd. The purchase price consisted
of $2.45 million in cash, a note receivable, and a redeemable preference share
entitling IFX to quarterly payments equal to approximately 30% of the net
profits of IFX Ltd. through June 30, 2002. In September 2000, IFX sold its IFX
Ltd. redeemable preference share to the other shareholders of IFX Ltd. for $2.4
million, thus terminating IFX's right to earn-out payments from IFX Ltd.

The IFX network is composed of the following:

. Over 58 company-owned POPs. A POP is an interlinked group of modems,
routers and other computer equipment, located in a particular city
that allows a nearby subscriber to access the Internet through a local
telephone call.

. Approximately 39,500 Remote Access Servers, or RAS ports.

. Network Operating Centers in 14 Latin American countries and the US.

<PAGE>

In addition, IFX has minority holdings in the following companies:

. Yupi Internet, Inc. IFX holds a minority interest in this Latin
American Internet portal, currently believed to be one of the largest
regional Spanish-language portals in the world.

. ePagos.com, Inc. IFX currently has a minority ownership stake in this
Internet software development company that specializes in Internet-
based merchant services for the Latin American e-commerce marketplace.

Recent Developments

Agreement with International Technology Investments, LC. In November 1998,
IFX entered into an agreement with International Technology Investments, LC
("International Technology") with respect to the provision of Internet services
and the acquisition of existing Internet service providers (ISPs) and related
businesses, primarily in Latin America and other international markets. IFX
pursued this agreement because it believed that International Technology had
extensive experience and existing business relationships with participants in
the computer distribution industry in Latin America, which relationships would
be useful in developing IFX's Internet access and related services business in
these markets. As part of the agreement, International Technology contributed an
initial $1 million to IFX in exchange for 500,000 shares of common stock and
options to purchase an additional 5,500,000 shares of IFX common stock, at a
price of $2.00 per share. During fiscal year 2000, International Technology
exercised the 5,500,000 options at $2.00 per share, which resulted in proceeds
to IFX of $11 million. In total, International Technology has received 6,000,000
shares of Common Stock from IFX, at a purchase price of $2.00 per share. Michael
Shalom, the Company's Chief Executive Officer and a director of the Company, is
an affiliate of International Technology.

Credit line with Lucent Technologies. In August 1999 the Company entered
into a conditional sale agreement with Lucent Technologies, Inc., providing the
Company with the option to purchase up to $10 million of Lucent networking
equipment. The equipment will be used to expand and to upgrade our Internet
operations. Through June 30, 2000, IFX has purchased approximately $7.3 million
of equipment under the agreement.

In April 2000, IFX received $2.7 million from Lucent Technologies to
finance Lucent equipment that IFX had acquired in Brazil. The amounts will go
under the existing $10 million credit line that IFX has established with Lucent
and will be repaid in 30 equal monthly installments of principal and interest
beginning on the first day of the month which is six months following the date
of the first scheduled interest payment.

Credit agreement with Softech Financial. During July 1999, the Company
entered into an $0.5 million lease agreement with Softech Financial (the
"Softech Lease"), a division of EAB Leasing Corporation, to provide the
financing for the cost of the Company's implementation of Portal Software.

Graham Group. In January 2000, the Company signed a four-year lease
agreement with the Graham Group for 12,500 square feet of office space in Miami
Lakes, Florida. This lease commenced in January 2000 and it provides for
aggregate payments totaling approximately $1.2 million over the next 4 years.

Sale of a portion of the Yupi Shares. On February 24, 2000, IFX Online, a
wholly-owned subsidiary of IFX, entered into a Stock Purchase Agreement
("agreement") with Lee Casty, a significant shareholder of IFX. The agreement is
for the sale to Mr. Casty of a certain number shares of Yupi Internet, Inc.
("Yupi") Preferred Stock owned by IFX. The sale proceeds of $5,000,000 were used
for the Company's working capital. On June 12, 2000, we amended the Yupi Stock
Purchase Agreement dated February 24, 2000 with Lee Casty, to reflect certain
provisions that were not originally contained in that agreement nor contemplated
by the parties at the time of the original agreement. The exact number of Yupi
preferred shares to be transferred by IFX to Mr. Casty will be fixed upon the
initial public offering of Yupi shares, or, in the absence of a Yupi public
offering, then upon the occurrence of certain other valuation events, but in no
event will the number of shares be fixed later than February 24, 2001.

<PAGE>

IBM Global Financing. In March 2000, IFX entered into a leasing agreement
with IBM Credit Corporation. The agreement provided IFX with the financing to
purchase approximately $0.4 million of IBM equipment. During August 2000, IBM
increased the amount of financing available under this agreement by $2.2
million subject to certain conditions.

UBS Capital Americas III, L.P., $25 million investment in IFX. On June 16,
2000, IFX announced that it had secured a $25 million round of private equity
financing lead by UBS Capital Americas III, L.P. ("UBS Capital Americas"). On
that date, the Company received $14.9 million and the remaining $10.1 was
received on July 17, 2000. In exchange, IFX issued a total of 2,030,869
Preferred Shares. Each Series A Preferred Share is currently exchangeable for 1
share of IFX common stock. The proceeds will be used in part to further the
integration of IFX's information systems infrastructure, to increase marketing
activities and to expand the Company's direct sales force to service the small
and medium enterprise market in Latin America. In addition, IFX plans to use the
proceeds to further increase the number of company-owned POPs in Latin America
as well as broaden its value-added service offerings to its growing corporate
customers.

Prior to the UBS-led investment, Tutopia represented one of our two major
business lines. Following the UBS-led investment, we expect that Tutopia will be
our largest single customer, accounting for approximately 50% of our revenues.
IFX has entered into an agreement with Tutopia to provide Internet connectivity
services to Tutopia for a period of three years. Either IFX or Tutopia can renew
the interconnectivity agreement for a fourth year. After that agreement
terminates, there can be no assurances that we will be the sole supplier of
Internet connectivity services to Tutopia.

Speedcom Wireless International Corporation. During July 2000, the Company
entered into an $1.2 million lease agreement with Speedcom, a wireless equipment
provider. Under the terms of the agreement, IFX will lease up to $1.2 million of
wireless equipment from Speedcom to help develop the Company's network across
all Latin America. As of August 31, 2000, IFX has leased approximately $0.6
million under this agreement.

Network Appliance. During September 2000, IFX entered into a $1.4 million
lease agreement with Network Appliance, a storage and caching provider. Under
the terms of the agreement, IFX has the option to lease up to $1.4 million of
storage and caching equipment from Network Appliance. As of September 15, 2000,
IFX had utilized approximately $0.4 million under this lease agreement.

<PAGE>

RESULTS OF OPERATIONS - FISCAL YEAR 2000 COMPARED TO FISCAL YEAR 1999 AND FISCAL
YEAR 1999 COMPARED TO FISCAL YEAR 1998
--------------------------------------------------------------------------------

Revenues

The companies that we have acquired generally had both business and
consumer customers at the time we acquired them. We plan to grow IFX's customer
base and revenues primarily by marketing Internet access and value-added
services to the small and medium sized businesses in our markets. In light of
our focus, we expect the number of our business customers to grow more rapidly
than the number of our consumer customers. We also expect that revenue from the
sale of our value-added services will increase more rapidly than revenue from
the sale of Internet access services. As a result, our current customer and
revenue mix is not expected to be indicative of our future customer and revenue
mix.

We provide Internet access service to our customers under contracts that
typically range from one month for dial-up access services to one year or more
for dedicated access services. Existing dial-up subscribers will continue to pay
at the end of each subscription month. Following the introduction of our Portal
software, all new dial-up access customers will pay their subscription fees in
advance. We currently offer only a premium dial-up Internet access service for a
single fee. However, we have allowed customers that were on various rate plans
to continue those plans. We intend to encourage these users to migrate to our
premium dial-up plan or, if they desire a more basic service, to use free access
services through Tutopia. If a significant number of users migrate to free
Tutopia access services, revenues from dial-up subscribers will decrease. All of
our access revenues are recognized as they are earned.

We also derive revenues from providing wholesale Internet access to
businesses that resell such access on a branded or private label basis. Fees
for wholesale access are generally billed on a monthly basis after services are
rendered. Wholesale access customers are billed on either a per port basis or a
per hour basis. Revenues from our wholesale Internet access services are
recognized in the period in which the services are provided.

Our revenues from value-added Internet services come from web hosting,
domain name registration and collocation services. Services such as web hosting
and collocation services are sold on a monthly subscription basis and are paid
for in advance. Our domain name registration service is billed through a one-
time fee. These revenues are recognized in the period in which the services are
provided.

Internet access charges and fees for value-added services vary among the
countries in which we do business, depending on competition, economic and
regulatory environments and other market factors. In some markets, we have
reduced prices, especially for access services, as a result of competitive
pressure. We expect that this pressure will continue in our markets as the
demand for, and supply of, Internet services continue to grow. The period-to-
period comparisons of our results of operations set forth below reflect
acquisitions that we made during the applicable period. Results of operations
from acquisitions effected during a period have been included from the time of
the closing of the acquisition.

Revenues from continuing operations increased to $9.7 million for the year
ended June 30, 2000, from $0.7 million for the year ended June 30, 1999. The
increase in revenues was related to the Company's expansion of its user base
resulting from its acquisitions in Latin America and the growth in value added
services such as dedicated access.

<TABLE>
<CAPTION>
Revenue in 2000 Revenue in 1999 % Increase
-----------------------------------------------------------------------
<S> <C> <C> <C>
Dial-up $7,250,600 $616,300 1,076%

Dedicated line services 1,351,100 28,200 4,691%

Web hosting and design services 379,000 80,800 369%

Other 705,200 - -

---------------------------------------------------------------------------------------------------------------
Total $9,685,900 $725,300 1,235%
</TABLE>

<PAGE>

Revenues for the year ended June 30, 1999 were $0.7 million compared to $0
for the year ended June 30, 1998. The increase in revenues was related to the
Company's acquisitions of ISPs in Latin America and the discontinuance of the
Company's prior business. In 1998, the Company had no Internet operations.
<TABLE>
<CAPTION>
Revenue in 1999 Revenue in 1998 % increase
-----------------------------------------------------------------------
<S> <C> <C> <C>
Dial-up $616,300 $ - NA

Dedicated line services 28,200 - NA

Web hosting and design services 80,800 - NA

Other - - NA
---------------------------------------------------------------------------------------------------------------
Total 725,300 $ - NA
</TABLE>

Costs of Revenues

Our cost of revenues from providing Internet services are the costs we
incur to carry customer traffic to and over the Internet. We lease lines that
connect our POPs to our national hubs. We pay other network providers for
transit, which allows us to transmit our customers' information to or from the
Internet over their networks. We also have other recurring telecommunications
costs, including the cost of local telephone lines our customers use to reach
our POPs and access our services, and satellite bandwidth costs to connect the
national hubs to the Internet backbone via our Miami facilities. We expect that
our operating costs from providing Internet services will increase as we
increase capacity to meet customer demand. We expect that these costs will
decline as a percentage of revenue, however, as we expand our owned network
facilities and as competition drives the overall price we pay for network
capacity down. We also expect it to go down as wireless technology usage
expands and the telecommunication markets in Latin America deregulate.

Cost of revenues increased to $8.2 million for the year ended June 30, 2000
from $0.4 million for the year ended June 30, 1999. The increase was related to
our network expansion in order to accommodate the growth in the user base,
especially for Tutopia and for dedicated access.

Cost of revenues were $0.4 million for the year ended June 30, 1999
compared to $0 for the year ended June 30, 1998. The increase was related to
Internet connectivity expenses we had as we entered the ISP market.

General and Administrative Expenses

Our general and administrative expenses are comprised primarily of
compensation costs. Compensation costs include salaries and related benefits,
commissions and bonuses. Other general and administrative expenses include the
costs of travel, rent, utilities, insurance and professional fees. We expect
that our general and administrative expenses will increase to support our
growth.

General and administrative expenses increased to $22.3 million for the year
ended June 30, 2000 from $2.7 million for the year ended June 30, 1999. General
and administrative expenses increased primarily because of the increase in
payroll, which was increased to support the Company's revenue; and for the
legal, the accounting and the consulting fees related to the Company's continued
expansion in Latin America.

General and administrative expenses increased to $2.7 million for the year
ended June 30, 1999 from $0.7 million for the year ended June 30, 1998. General
and administrative expenses increased primarily because of the increase in
payroll, for the legal, accounting and consulting fees related to the Company's
expansion in Latin America.

Sales and Marketing

Sales and marketing expenses consist primarily of advertising costs,
distribution costs and related production costs. The amount increased between
years due primarily to costs associated with our growth in advertising designed
to increase awareness of the Tutopia brand, including costs associated with our
launch of a television, radio and newspaper advertising campaign. Sales and
marketing expenses increased to $9.2 million for

<PAGE>

the year ended June 30, 2000 from $0.2 million for the year ended June 30, 1999
and from $0 for the year ended June 30, 1998.

Depreciation and amortization

A large component of our depreciation and amortization expense is the
amortization of our acquired customer base. The value of our acquired customer
bases, which we amortize over three years using the straight-line method, was
created as a result of the allocation of the price we paid to acquire a company
which was in excess of the value of its tangible assets. We also recognize
depreciation expense primarily related to telecommunications equipment,
computers and network infrastructure. We depreciate these assets over their
useful lives, generally ranging from three to five years. We expect that our
depreciation expense will increase as we expand our network infrastructure.

Depreciation and amortization expenses increased to $8.1 million for the
year ended June 30, 2000 from $0.2 million for the year ended June 30, 1999.
The increase in depreciation is attributable to the increase in fixed assets,
capitalized software and capital leases of approximately $16.6 million.
Amortization expenses are related to approximately $26.7 million in acquired
customer base due to acquisitions the Company completed in Latin America.

Depreciation and amortization expenses increased to $0.2 million for the
year ended June 30, 1999 from $0, for the year ended June 30, 1998. The dollar
increase in depreciation is attributable to the increase in fixed assets and
capital leases of approximately $2.3 million. Amortization expenses are related
to approximately $3.0 million in acquired customer base due to acquisitions the
Company completed in Latin America.

Non-Cash Stock-Based Compensation Expense

For the fiscal year ended June 30, 2000, we recorded non-cash stock
compensation expense of approximately $6.4 million, of which approximately $1.1
million was related to variable option grants. For the fiscal year ended June
30, 1999, our non-cash stock compensation expense was approximately $39,000. The
increase is attributable predominantly to the current-year amortization related
to the issuance of additional employee option grants during the year. Also, as
of June 30, 2000, we reflected as a reduction of Stockholders Equity
approximately $12.1 million of deferred compensation, which will be amortized in
future years over the vesting period of the individual options (generally 3
years).

Contract cancellation costs

During fiscal 2000, we recorded $6.8 million relating to the cancellation
of certain contracts, which represented one-time charges of a non-recurring
nature for certain items including:

. the acceleration and settlement of certain consulting agreements. The
amounts were paid in shares of IFX common stock with an approximated value
of $4.1 million at the time of the issuance.
. the termination of the agreement between Tutopia and Spinway related to the
use of the Spinway's technology with Tutopia's users. The expense was for
$250,000 paid in cash and the non-cash expense for the fair value of the
210,000 warrants issued to settle the agreement was calculated using the
Black-Scholes model for approximately $1.7 million

Interest Income

We earn interest income primarily by investing available cash in short term
securities. We expect to incur interest expense in the future from purchase and
lease financing.

Interest income increased slightly to $0.41 million for the year ended June
30, 2000 from $0.38 million for the year ended June 30, 1999. Interest income
increased as a result of the in increase in interest earning cash equivalents.

<PAGE>

Interest income increased to $0.38 million for the year ended June 30,
1999, compared to $0.29 million for the year ended June 30, 1998. Interest
income increased as a result of the in increase in interest earning cash
equivalents.

Income from discontinued operations, net

For the year ended June 30, 2000, the Company earned net of taxes
approximately $2 million from its discontinued operations. That compares to $3.1
earned for the year ended June 30, 1999. The decrease was related to lower
profitability of the businesses sold and the lower earn-out percentage the
Company receives.

For the year ended June 30, 1999, the Company earned net of taxes
approximately $3.1 million from its discontinued operations. That compares to
$3.6 earned for the year ended June 30, 1999. The decrease was related to lower
profitability of the businesses sold and the lower earn-out percentage the
Company receives.

Income tax provision

For the year ended June 30, 2000, the Company recorded a tax benefit of
approximately $2.8 million from its continuing operations compared to a benefit
of $0.8 million for the year ended June 30, 1999. The effective tax rate for
fiscal 2000 and 1999 was 5% and 32%, respectively. The benefit consists of
amounts to be received from the utilization of net operating loss carry-backs to
periods in which the Company incurred a tax liability. Operating losses which
could not be utilized to recover prior year tax liabilities have been fully
reserved with a valuation allowance at June 30, 2000 and 1999.

For the year ended June 30, 1999, the Company recorded a tax benefit of
approximately $0.8 million from its continuing operations compared to a benefit
of $0.1 million for the year ended June 30, 1998. The effective tax rate for
1999 and 1998 was 32% and 34%, respectively.

Net income (loss) and income (loss) per share

As a result of the factors discussed above, IFX's loss from continuing
operations for the year ended June 30, 2000 was approximately $47.8 million, or
$(4.71) per share, compared to a net loss of $1.7 million, or $(0.26) per share,
for the year ended June 30, 1999. The loss of $47.8 million includes non-cash
charges of $20.3 million related to depreciation, amortization, stock
compensation, and certain contract cancellation costs. Including discontinued
operations, the Company lost $45.9 million, or $(4.52) per share, compared to a
net income of $1.4 million, or $0.22 per share, for the year ended June 30,
1999.

IFX's loss from continuing operations for the year ended June 30, 1999 was
approximately $1.7 million, or $(0.26) per share, compared to a net loss of $0.2
million, or $(0.03) per share, for the year ended June 30, 1998. Including
discontinued operations, the Company earned $1.4 million, or $0.22 per share for
the year ended June 30, 1999, compared to a net income of $3.4 million, or $0.54
per share, for the year ended June 30, 1998.

FINANCIAL CONDITION

Liquidity and Capital Resources

For the year ended June 30, 2000, cash used by ongoing and discontinued
operations was approximately $19.7 million compared to cash provided by ongoing
and discontinued operations of $3.6 million for fiscal 1999. The majority of
cash in fiscal 2000 was provided by the revenues from the Internet operations
and the earn-out payments related to discontinued operations. The cash used in
operations is mainly related to the connectivity expenses of our network,
operating leases, payroll and advertising. In addition, the Company invests cash
not needed for operations at any of its subsidiaries in short-term investments
such as U.S. Government obligations and overnight time deposits. As of June 30,
2000, the Company held approximately $15.0 million in cash and equivalents.

For the year ended June 30, 2000, cash used in investing activities was
approximately $2.9 million compared to cash used in investing activities of $4.8
million for the same period in fiscal 1999. Cash used in investing activities
was related to the $5 million in proceeds from the sale of some Yupi Internet,
Inc. shares, of which $4.5 was recorded as a deferred gain, to the purchase of
property and equipment of approximately $4.6 million, and to the $2.4 million
paid in cash for the Company's acquisitions.

For the year ended June 30, 2000, cash provided by financing activities was
approximately $32.5 million compared to cash provided by financing activities of
$1.0 million for fiscal 1999. The increase is primarily related to the $14.9
million investment by UBS Capital Americas, the $11 million investment received
from International Technology Investments in exchange for 5,500,000 shares, and
the $5.5 million received for the Tutopia private placement held in April, 2000.
The Company entered into capital leases of approximately $11 million.

<PAGE>

Management believes existing cash and cash-equivalents together with
operating cash flows from the earn-out payments from the sale of assets and
amounts to be paid by Tutopia should provide adequate resources to fund ongoing
operating requirements and future capital expenditures related to the expansion
of existing businesses and development of new projects through June 30, 2001.

<PAGE>

Forward-Looking Statements

The statements contained herein that are not historical facts are "forward-
looking statements" (within the meaning of the Private Securities Litigation
Reform Act of 1995). The safe harbor provisions provided in Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), apply to
forward-looking statements the Company makes. These statements can be identified
by the use of forward-looking terminology such as "believes," "expects," "may,"
"will," "should," or "anticipates" or the negative thereof or other variations
thereon or comparable terminology, or by discussions of strategy that involve
risks and uncertainties. The Company wishes to caution you that these forward-
looking statements addressing the timing, costs and scope of the Company's
acquisition of, or investments in, existing or future ISPs, the revenue and
profitability levels of the ISPs in which the Company invests, the anticipated
reduction in operating costs resulting from the integration and optimization of
those ISPs, and other matters contained herein regarding matters that are not
historical facts, are only predictions. The Company can give no assurance that
the future results indicated, whether expressed or implied, will be achieved.
These projections and other forward-looking statements are based upon a variety
of assumptions relating to the Company's business, which, although the Company
considered reasonable, may not be realized. Because of the number and
uncertainties of the assumptions underlying the Company's projections and
forward-looking statements, some of the assumptions may not materialize and
unanticipated events and circumstances may occur subsequent to the date of this
report. These forward-looking statements are based on current expectations, and
the Company assumes no obligation to update this information. The inclusion of
projections and other forward-looking statements should not be regarded as a
representation by the Company or any person that these estimates and projections
will be realized, and actual results may vary materially.

<PAGE>

Item 7A - Quantitative and Qualitative Disclosures About Market Risk
--------------------------------------------------------------------------------

Exchange Rate and Inflation Risk

The Company's continuing operations are focused primarily in Latin America,
subjecting the Company to certain political, economic and commercial risks and
uncertainty not typically found in the U.S. The Company's exposure to market
risk is directly related to its role as a Latin American Internet services
company. The Company's primary market risk exposure relates to foreign exchange
rate risk. Foreign exchange rate risk arises from the possibility that changes
in foreign currency exchange rates will adversely impact the value of the
Company's assets, liabilities and/or equity. When the Company operates in a
foreign country, the value of the local currency will probably fluctuate. This
fluctuation can cause the Company to gain or lose on the translation to US
Dollars.

Interest Rate Risk

The Company's short-term investments are classified as cash and cash
equivalents with original maturities of three month or less. Therefore, changes
in the market's interest rates do not affect the value of the investments as
recorded by IFX.

Item 8 - Financial Statements and Supplementary Data
--------------------------------------------------------------------------------

For financial information, see the financial statements and notes thereto
set forth at Item 14 hereof.

Item 9 - Changes In and Disagreements With Accountants On Accounting and
Financial Disclosures
--------------------------------------------------------------------------------

On July 1, 1999, IFX filed a Current Report on Form 8-K with the Securities
and Exchange Commission to disclose that on June 28, 1999 it had dismissed
Arthur Andersen LLP and appointed Ernst & Young LLP as its independent auditors
for the fiscal year ending June 30, 1999. The decision to dismiss Arthur
Andersen LLP was not based upon any disagreement between IFX and Arthur Andersen
LLP on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure. The reports of Arthur Andersen LLP as
of and for the fiscal years ended June 30, 1998 and 1997 did not contain an
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or application of accounting principles. During the
registrant's fiscal years ended June 30, 1998 and 1997, and during the
subsequent interim periods prior to June 28, 1999, there were no (i)
disagreements between the registrant and Arthur Andersen LLP on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure which disagreements, if not resolved to the satisfaction of
Arthur Andersen LLP, would have caused it to make reference to the subject
matter of the disagreement in connection with its reports on the registrant's
financial statements, or (ii) "reportable events" within the meaning of Item
304(a)(1)(v) of Regulation S-K promulgated under the Securities Act of 1933, as
amended.

<PAGE>

PART III
-------------------------------------------------------------------------------
Item 10 - Directors and Executive Officers

The Directors and Executive Officers of IFX as of September 15, 2000 are as
follows:

<TABLE>
<CAPTION>
Name Age Office
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Joel M. Eidelstein 33 Chairman of the Board, President and Director
Michael Shalom 29 Chief Executive Officer and Director
Jose Leiman 40 Chief Financial Officer
Zalman Lekach 33 Chief Operating Officer, Vice President of Mergers and Acquisitions, and Director
George A. Myers 50 Director
Burton J. Meyer 53 Director
Mark O. Lama 38 Director
Charles Moore 35 Director

</TABLE>

Joel M. Eidelstein has served as a director of the Company since November
1990 and, since November 9, 1996, he has served as the President of the Company.
Mr. Eidelstein graduated from Brandeis University in May 1988. From June 1988
until June 1996, he was an independent commodity futures trader and a floor
manager with Index Futures Group, Inc. Mr. Eidelstein also is a principal
shareholder of ePagos, Inc., an Internet communications software development
company in which IFX owns an interest.

Michael Shalom was elected as IFX's Chief Executive Officer on September 8,
1999 and has served as a director of Emerging Networks, Inc., a subsidiary of
IFX, since November 1998. Prior to July 1999, Mr. Shalom was a principal of,
and was actively involved in the management of the INTCOMEX group of companies,
which group is a Latin American wholesale distributor of microcomputers,
networking products, mass storage products, multimedia products, computer
peripheral equipment and computer components. Mr. Shalom is also a principal at
International Technology Investments ("ITI").

Jose Leiman has served as Chief Financial Officer of the Company since July
1, 1999. From March 1996 to June 1999, Mr. Leiman was a CPA and tax attorney
with Ernst & Young LLP, an international accounting firm. Prior to joining Ernst
& Young LLP, Mr. Leiman was an attorney with Dewey Ballantine LLP, an
international law firm. Mr. Leiman has also worked as a CPA with Price
Waterhouse. Mr. Leiman holds J.D. (magna cum laude and order of the coif) and
L.L.M. degrees from Georgetown University Law Center in Washington, D.C. and a
B.B.A. degree with high honors from Florida International University. Mr. Leiman
is admitted to practice law in Florida and Washington, D.C., and is also a
Certified Management Accountant as well as a Certified Public Accountant.

Zalman Lekach has served as a director of the Company since February 1997.
Mr. Lekach has served as the Company's Vice President of Mergers and
Acquisitions since May 24, 1999 and, since February 2000, as the Company's Chief
Operating Officer. Prior to joining IFX, Mr. Lekach served as President and
Chief Operating Officer of Parlux Fragrances, Inc., an international designer,
manufacturer and marketer of fragrances ("Parlux") from 1995 until December
1998. He became a director and an executive officer of Parlux, S.A., Parlux's
French subsidiary, in May 1990. Mr. Lekach received a B.A. from Cornell
University.

George A. Myers has served as a director of the Company since November
1990. Mr. Myers has been managing general partner of MC Capital, a diversified
real estate company with offices in Chicago, Illinois, Phoenix, Arizona, and San
Diego, California since 1981.

Burton J. Meyer has served as a director of the Company since May 1999.
Mr. Meyer previously served as director of the Company from August 1986 until
July 1, 1996 and as President of the Company from July 1987 until July 1, 1996.
Mr. Meyer served as an Executive Vice President of E.D. & F. Man International,
an international futures and conglomerate brokerage, from July 1996 to June 30,
2000.

Mark O. Lama was elected to the board of directors IFX in June 2000 and
Tutopia in August 2000. Mr. Lama is a principal of UBS Capital Americas which
manages $1.5 billion in private equity commitments dedicated to investments in
North and South America, including investments in the telecommunications,
software, and Internet sectors. Prior to joining UBS Capital Americas in 1998,
he worked in the U.S. and Latin America groups of Chase Capital Partners (a
private equity firm), the Banking and Corporate Finance Group of Chemical Bank
and the

<PAGE>

Emerging Markets group at Salomon Brothers, Inc. Mr. Lama holds an M.B.A. from
Harvard Business School, a B.S. from Columbia University and a B.A. from Colgate
University.

Charles W. Moore was elected to the board of directors of IFX in June 2000
and Tutopia in August 2000. Mr. Moore is partner of UBS Capital Americas which
manages $1.5 billion in private equity commitments dedicated to investments in
North and South America, including investments in the telecommunications,
software, and Internet sectors. In this role, Mr. Moore has senior
responsibility for all telecommunications-related investments of UBS Capital
Americas. Prior to joining UBS Capital Americas, Mr. Moore invested for
Greenwich Street Capital Partners, LP from November 1994 to March 1997 and prior
thereto worked at Morgan Stanley & Co. in their investment banking division.
Other boards of directors on which Mr. Moore serves include: Aduronet, Ltd.
(London, UK); WorkNet Communications (St. Louis, MO); Netstream Communications
(Roseville, CA); eYak, Inc. (Boston, MA); PF.Net (Reston, VA); Netrail,
Inc.(Atlanta, GA); Dynamicsoft, Inc. (East Hanover, NJ); and Tutopia.com, Inc.,
(Miami, FL Pan-Latin ISP), a former subsidiary of the Company. Mr. Moore is a
graduate of the University of Michigan and the University of Chicago Graduate
School of Business.

Directors are elected and serve until the next annual meeting or until
their successors are elected and qualified. Officers are elected annually by the
Board of Directors.

Pursuant to a Stockholders' Agreement dated as of June 16, 2000, as amended
as of July 28, 2000, among IFX, UBS Capital Americas III, L.P. ("UBS Capital
Americas III"), UBS Capital LLC ("UBS LLC," and, together with UBS Capital
Americas IV, "UBS Capital Americas"), the Casty Grantor Subtrust, Joel M.
Eidelstein and Lee S. Casty, UBS Capital Americas, ITI and the Casty Grantor
Subtrust agree to use their reasonable best efforts to vote their IFX shares to
elect to our Board of Directors two individuals nominated by UBS Capital
Americas (currently, Mark O. Lama and Charles W. Moore), one individual
nominated by ITI (currently, Michael Shalom), one individual nominated by Joel
M. Eidelstein (currently, Joel M. Eidelstein), and one individual nominated
jointly by Mr. Eidelstein and ITI (currently, Zalman Lekach).

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of the Company's Common Stock, to
file with the Securities and Exchange Commission reports of ownership and
changes in ownership and to provide copies of such reports to the Company and to
the Nasdaq Stock Market. Based solely on a review of the copies of such reports
furnished to the Company, or written representations that no reports on Form 5
were required, the Company believes that all officers, directors and 10%
beneficial owners complied with all Section 16(a) filing requirements during
fiscal year 2000, except for Burton G. Meyer, George A. Meyers, Joel M.
Eidelstein, Mike Shalom and Jose Leiman, each of whom filed one late report
required to be filed on Form 5, and Zalman Lekach, who has filed one late report
required to be filed on Form 5 and one late report required to be filed on Form
4.

<PAGE>

Item 11 - Executive Compensation
--------------------------------------------------------------------------------

Compensation Committee Interlocks and Insider Participation

The Company's board of directors has established a standing compensation
committee. The current members of the compensation committee are George A.
Myers, Burton J. Meyer, Charles W. Moore and Mark O. Lama. Mr. Meyer previously
served as an officer of IFX from 1987 to June 1996.

On July 1, 1996, IFX sold assets to E.D.& F. Man International, Inc.
Burton J. Meyer, a director of IFX and a member of IFX's Compensation Committee,
served as Executive Vice President of E.D.& F. Man International, Inc. from July
1996 to June 30, 2000.

Mr. Moore is a partner and Mr. Lama a principal of UBS Capital Americas,
LLC, an affiliate of UBS Capital Americas III, L.P. and UBS Capital LLC, which
together purchased $25 million of IFX Preferred Stock in June and July 2000 and
$20 million of preferred stock in Tutopia.com, Inc. in August 2000. Mr. Moore
and Mr. Lama have an investment interest in UBS and thus may benefit from both
sides of transactions involving UBS and IFX-related entities.

Director Compensation

The Company grants stock options under our Directors Stock Option Plan to
each director who is not an IFX employee. Under this plan, we grant each non-
employee director an option to buy 450 shares of our common stock when the
director is first elected and an option to buy an additional 450 shares of
common stock at each annual meeting until he or she is no longer a director. If
a director serves on a committee of the board, he or she is granted an
additional option to buy 75 shares for each year of service. The exercise price
for the options is equal to 100% of the fair market value of our common stock on
the date of grant. The options cannot be exercised until six months after the
date of grant. Each option terminates on the earlier of a director's
termination for cause, one year after a director's death, or ten years from the
date of grant. Each of Burton J. Meyer and George A. Myers were granted an
option to buy 600 shares of common stock, as of November 9, 1999. Mr.
Eidelstein, Mr. Lekach and Mr. Shalom, as employees, did not receive any options
under the plan.

Executive Compensation

The following table presents the total compensation paid or accrued during
fiscal years 2000, 1999 and 1998 to each of our executive officers.

Summary Compensation Table

<TABLE>
<CAPTION>
Annual Long Term All other
Compensation Compensation Compensation
----------------------- ------------------ -------------
Securities
Name and Principal Year Ended Salary Bonus Underlying Options
Position June 30 ($) ($) (#)
---------------------- ---------- ----------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Michael F. Shalom, CEO 2000 $162,500 $ 50,000 30,000 --
1999 -- -- -- --
1998 -- -- -- --
Joel M. Eidelstein, 2000 $150,000 $ 50,000 300,000 --
President 1999 $ 50,000 -- 300,000 --
1998 $ 24,000 -- -- --

Jose Leiman, CFO 2000 $225,000 $ 25,000 227,500 --
1999 -- -- -- --
1998 -- -- -- --
Zalman Lekach, COO 2000 $151,200 $225,000 374,167 --
1999 $ 24,600 -- -- --
1998 -- -- --
</TABLE>

<PAGE>

Option Grants and Exercises in Fiscal Year 2000-

The following table sets forth information with respect to options that
were granted in fiscal year 2000 to our executive officers.

Option Grants Table

<TABLE>
<CAPTION>
Option Grants in Fiscal Year 2000
------------------------------------------------------------------------------------------------------------------
Number of Percent of Total Potential Realizable Value at
Securities Options Granted Exercise Assumed Annual Rates of
Underlying To Employees Price Stock
Options in Expiration Price Appreciation for Option
Name Granted Fiscal Year ($/Share) Date (1) Term (2)
-------------- ----------- -------------- --------- ----------- ------------------------------------
0% 5% 10%
-- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Michael F. Shalom 12,892 1% 8.75 01/01/2010 298,128 556,559 953,047
17,108 1% 8.75 06/12/2010 46,512 169,905 359,216

Joel M. Eidelstein 128,924 7% 8.75 01/01/2010 2,981,368 5,565,761 9,530,766
171,076 9% 8.75 06/12/2010 465,113 1,699,013 3,592,075

Jose Leiman 33,333 2% 12.00 07/01/2009 210,415 594,296 1,183,250
15,000 1% 15.00 07/01/2009 49,688 222,436 487,468
33,333 2% 15.00 07/01/2009 110,416 494,297 1,083,252
33,334 2% 18.00 07/01/2009 10,417 394,309 983,282
12,500 1% 20.00 12/01/2009 -- 141,952 374,119
42,975 2% 8.75 01/01/2010 116,812 1,855,268 3,176,947
57,025 3% 8.75 06/12/2010 155,037 566,334 1,197,351

Zalman Lekach 15,000 1% 15.00 05/24/2009 51,563 225,490 492,331
8,308 - 8.75 07/01/2009 79,445 175,125 321,917
19,134 1% 8.75 10/01/2009 263,093 533,839 949,221
12,500 1% 20.00 12/01/2009 -- 141,952 374,119
19,225 1% 8.75 01/01/2010 444,578 829,960 1,421,217
128,924 7% 8.75 01/01/2010 2,981,368 5,565,761 9,530,766
171,076 9% 8.75 06/12/2010 465,010 1,699,013 3,592,075
</TABLE>

(1) Options that expire on June 12, 2010 are subject to stockholder approval of
additional options under the stock option plan.

(2) The amounts shown in these columns are the result of calculations at assumed
annual rates required by the SEC and are not intended to forecast possible
future appreciation, if any, of the price of the Company's Common Stock. The
Company did not use an alternative formula for a grant date valuation, as the
Company is not aware of any formula that will determine with reasonable
accuracy a present value based on future unknown or volatile factors.

The following table sets forth information with respect to options to
purchase shares of the Company's Common Stock that were granted in fiscal year
2000 to each of the executive officers named in the Summary Compensation Table
above. No stock appreciation rights ("SARs") were granted to any of the persons
listed on the table below during fiscal year 2000. No stock options were
exercised by any of our directors or executive officers during fiscal year 2000.

Individual Grants
-----------------

<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised
Options/SARs at June 30,
------------------------
2000
----
Name Shares Acquired on Value Realized ($)
------------------- ------------------ ---------------------
Exercise Exercisable/Unexercisable
-------------------- -------------------------

<S> <C> <C> <C>
Michael F. Shalom 0 0 0 / 30,000
Joel M. Eidelstein 0 0 201,000 / 399,000
Jose Leiman 0 0 39,102 / 188,398
Zalman Lekach 0 0 14,546 / 359,621
</TABLE>

<PAGE>

Employee Stock Option Plan

In February 1999, IFX adopted the Employee Stock Option and Incentive Plan
and reserved 900,000 shares for issuance under the Plan. On November 9, 1999,
IFX's stockholders approved an increase in the number of shares available for
issuance under the Plan to 1,800,000 shares. On June 12, 2000, the Board of
Directors voted to increase the number of shares available under the Plan to
2,400,000 shares, subject to stockholders' approval. We have not yet received
stockholder's approval. The Plan permits option grants to be made to employees
subject to stockholders' approval. Under the Plan, IFX can grant incentive
stock options, nonqualified stock options, shares of phantom stock, stock
appreciation rights and issue shares of restricted common stock to the Company's
officers, employees, non-employee directors, independent contractors,
consultants, or candidates for employment. Stock options, stock appreciation
rights, and restricted shares of our common stock may be granted under the plan
from time to time when hiring new personnel, as incentive compensation or to
reward employees for outstanding performance. The options granted under the
Plan generally vest in fixed increments over a three-year period and terminate
10 years after the date of grant The Compensation Committee of the Company's
board of directors administers the Plan.

Options are granted on a routine basis. Restricted shares are not granted
on a routine basis. Employee compensation is predominantly cash-based. As of
June 30, 2000, options to purchase approximately 2.3 million shares had been
granted and 9,033 shares of our common stock had been issued under the Plan.

Employment and Change of Control Agreements

Mr. Eidelstein serves as the President of the Company pursuant to a three-
year employment agreement which commenced on January 1, 2000. The term of the
employment agreement is subject to automatic extensions unless notified
otherwise by either the Company or Mr. Eidelstein. Mr. Eidelstein's base salary
is $225,000 per year for the year 2000 and $250,000 per year thereafter. He is
eligible to receive a $50,000 bonus per year if certain performance criteria are
met. If Mr. Eidelstein is involuntarily terminated during the term of the
employment agreement (except for cause) he receives a lump sum amount of accrued
but unpaid salary and a pro-rata bonus. All of his options immediately vest.
He also receives an amount equal to the product of the number of whole and
fractional years remaining until the end of the employment agreement's term
multiplied by his annualized current salary plus bonus for the prior year. If
Mr. Eidelstein is terminated within two years after a "Change of Control", he
receives an amount equal to the product of the number of whole and fractional
years remaining until the end of the employment agreement's term multiplied by
three times his annualized current salary and highest previous annual bonus.
The agreement prohibits Mr. Eidelstein from disclosing confidential information
regarding the Company, and during the period of his employment with the Company
and for one year thereafter, being involved in any capacity with any business
competitive with the Company in the United States, Latin America or in any other
market in which the Company is then conducting business.

Mr. Shalom serves as the Chief Executive Officer of the Company pursuant to
a three-year employment agreement that which commenced on January 1, 2000. The
term of the employment agreement is subject to automatic extensions unless
notified otherwise by either the Company or Mr. Shalom. Mr. Shalom's base
salary is $225,000 per year for the year 2000 and $250,000 per year thereafter.
He is eligible to receive a $50,000 bonus per year if certain performance
criteria are met. If Mr. Shalom is involuntarily terminated during the term of
the employment agreement (except for cause) he receives a lump sum amount of
accrued but unpaid salary and a pro-rata bonus. All of his options immediately
vest. He also receives an amount equal to the product of the number of whole
and fractional years remaining until the end of the employment agreement's term
multiplied by his annualized current salary plus bonus for the prior year. If
Mr. Shalom is terminated within two years after a "Change of Control", he
receives an amount equal to the product of the number of whole and fractional
years remaining until the end of the employment agreement's term multiplied by
three times his annualized current salary and highest previous annual bonus.
The agreement prohibits Mr. Shalom from disclosing confidential information
regarding the Company, and during the period of his employment with the Company
and for one year thereafter being involved in any capacity with any business
competitive with the Company in the United States, Latin America or in any other
market in which the Company is then conducting business.

Under the agreements of Messrs. Eidelstein and Shalom, a "Change of
Control" is defined as occurrence of any one of the following events: (a) any
consolidation, merger or other similar transaction involving IFX, if IFX is not
the continuing or surviving corporation, or which contemplates that all or
substantially all of the business and/or assets of IFX will be controlled by
another corporation; (b) any sale, lease, exchange or transfer (in one
transaction or series of related transactions) of all or substantially all of
the assets of IFX; (c) approval by the stockholders of

<PAGE>

IFX of any plan or proposal for the liquidation or dissolution of IFX, unless
such plan or proposal is abandoned within 60 days following such approval; (d)
the acquisition by any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934), or two or more Persons acting
in concert, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of the outstanding shares of
voting stock of IFX; provided, however, that for purposes of the foregoing,
-----------------
"person" excludes Lee S. Casty, International Technology Investments, LC or any
of their Affiliates, any underwriter purchasing shares of IFX with the intent of
reselling them, or any sale to GEM (or its affiliates); or (e) if, during any
period of 24 consecutive calendar months commencing on the date of this
Agreement, those individuals (the "Continuing Directors") who either (i) were
--------------------
directors of IFX on the first day of each such period, or (ii) subsequently
became directors of IFX and whose actual election or initial nomination for
election subsequent to that date was approved by a majority of the Continuing
Directors then on the board of directors of IFX, cease to constitute a majority
of the board of directors of IFX.

Mr. Leiman serves as the Chief Financial Officer of the Company pursuant to
an employment agreement which commenced on July 1, 2000 and terminates on June
30, 2001. Mr. Leiman's base salary is $225,000 per year. He is eligible to
receive a bonus based on the discretion of the Board of Directors. If Mr.
Leiman is involuntarily terminated during the term of the employment agreement
(except for cause) he receives a lump sum amount of all remaining base salary
until the end of the term and all of his options immediately vest. In the event
of a "Change of Control", he receives a lump sum amount equal to twice his
annual base salary and his options become exercisable immediately prior to the
date of the Change of Control. A "Change of Control" is defined as (i) the
dissolution or liquidation of IFX, (ii) either A) the occurrence of a merger or
consolidation, B) a transaction in which IFX becomes a subsidiary of another
corporation, and in either case, in which the voting securities of IFX which are
outstanding immediately prior thereto do not continue to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting securities of IFX or such
surviving entity immediately after such merger or consolidation, (iii) such time
that Lee S. Casty and his affiliates and ITI and its affiliates own less than
one-third of the outstanding voting securities of IFX, (iv) an acquisition by a
person or entity of voting securities of IFX entitling such person to the same
voting power (or greater voting power) as held by Lee S. Casty and ITI combined,
or (v) the sale of all or substantially all of the assets of the Employer. The
agreement prohibits Mr. Leiman from disclosing confidential information
regarding the Company, and during the period of his employment with the Company
and for one year thereafter (unless he is involuntarily terminated without
cause) being involved in any capacity with any business competitive with the
Company in the United States, Latin America or in any other market in which the
Company is then conducting business.

Mr. Lekach serves as the Chief Operating Officer of the Company pursuant to
an employment agreement dated as of May 24, 1999, as amended on April 1, 2000.
The agreement terminates on May 23, 2001 but is automatically extended for a
period of two years unless prior notice is given by either party. Mr. Lekach's
current base salary is $185,000 per year and shall be increased to $200,000 per
year on December 1, 2000. If Mr. Lekach is involuntarily terminated during the
term of the employment agreement (except for cause) he receives all of his
remaining base salary for the entire length of the term and all of his options
immediately vest. The agreement prohibits Mr. Lekach from disclosing
confidential information regarding the Company, and during the period of his
employment with the Company and for one year thereafter (unless he is
involuntarily terminated without cause) being involved in any capacity with any
business competitive with the Company in the United States, Latin America or in
any other market in which the Company is then conducting business.

<PAGE>

Item 12 - Security Ownership of Certain Beneficial Owners and Management
-------------------------------------------------------------------------------

The following table sets forth, as of September 15, 2000, certain
information regarding the Common Stock beneficially owned by (i) each director
of the Company, (ii) each executive officer of the Company, (iii) each person
known by the Company to own more than five percent of the Common Stock of the
Company, and (iv) the executive officers and directors of the Company, as a
group.

<TABLE>
<CAPTION>
Amount and Nature of Beneficial Approximate Percent of Class
Name / Address (1) Ownership

<S> <C> <C>
Michael Shalom 6,000,000 (2) 44.98 %
Joel Eidelstein 225,000 (3) 1.66 %
Jose Leiman 46,090 (4) *
Zalman Lekach 42,774 (5) *
Burton J. Meyer 365,412 (6) 2.63 %
George A. Myers 1,333 (7) *
Casty Grantor Sub-Trust(8) 3,060,282 (9) 22.94 %
International Technology 6,000,000 44.98 %
Investments(10)
Mark Lama(11) 2,030,869 (12) 13.21 %
Charles Moore(11) 2,030,869 (12) 13.21 %
UBS Capital Americas III(11) 2,030,869 (12) 13.21 %
----------------------------------------------------------------------------------------------

ALL OFFICERS AND DIRECTORS AS A 8,706,478 39.50 %
GROUP
</TABLE>

* Less than one percent.

(1) The business address for Messrs. Eidelstein, Lekach, Shalom, Meyer, and
Myers is in care of IFX, 707 Skokie Blvd., 5th Floor, Northbrook, IL 60062.
(2) Includes 6,000,000 shares of Common Stock held by International Technology.
Mr. Shalom may be deemed to be an affiliate of International Technology
and, accordingly, Mr. Shalom may be deemed to beneficially own the shares
of Common Stock held by such entity.
(3) Includes 225,000 shares of Common Stock subject to an option granted to Mr.
Eidelstein pursuant to the IFX 1999 Stock Option and Incentive Plan, which
option currently is exercisable.
(4) Consists of 46,090 shares of Common Stock that Mr. Leiman may acquire upon
exercise of currently exercisable options granted to him pursuant to the
IFX 1999 Stock Option Plan.
(5) Includes 34,198 shares of Common Stock that Mr. Lekach may acquire upon
exercise of currently exercisable options granted to him pursuant to the
IFX 1999 Stock Option Plan.
(6) Includes 100,000 shares of Common Stock that Mr. Meyer may acquire upon
exercise of an option granted to him by Lee S. Casty, which option
currently is exercisable and 600 shares of Common Stock that Mr. Meyer may
acquire upon exercise of an option granted to him by the Company, which
option is currently exercisable. Also includes 237,812 shares of Common
Stock that Mr. Meyer owns jointly with his spouse and 27,000 shares of
Common Stock owned by Mr. Myer's Individual Retirement Account.
(7) Consists of 333 shares of Common Stock held by Mr. Myers' spouse as
custodian for Mr. Myers' minor children, 400 shares of Common Stock held by
Mr. Myers under the Uniform Gifts to Minors Act as custodian for two of his
minor children, and 600 shares of Common Stock that Mr. Myers may acquire
upon exercise of an option granted to by the Company, which option is
currently exercisable.
(8) The Casty Grantor Sub-Trust's address is 2 North LaSalle, Suite 2200,
Chicago, IL 60602.
(9) Includes 100,000 shares subject to an option granted to Burton J. Meyer.
(10) International Technology's address is in care of Adorno & Zeder, 2801 S.
Bayshore Drive, Suite 1600, Miami, Florida 33133.
(11) The address of Messrs. Lama, Moore and UBS Capital Americas III is 299 Park
Avenue, New York, New York 10171.
(12) These shares are preferred shares which are convertible on a one-for-one
basis into Common Stock. Includes 101,544 preferred shares owned by UBS
Capital LLC, an affiliate of UBS Capital Americas III. Messrs. Lama and
Moore as principals of an affiliate of UBS Capital Americas may be deemed
to beneficially own the shares held by UBS. Messrs. Lama and Moore disclaim
such ownership.
<PAGE>

Item 13 - Certain Relationships and Related Transactions
-------------------------------------------------------------------------------

C. Adams Note Receivable. Prior to fiscal year 1996, FX Chicago, Inc. made
loans of $611,400 to C. Adam Ltd. (successor in interest to SRC, Inc.), an
entity affiliated with Lee Casty, a then significant stockholder of IFX. The
loans were evidenced by a demand note bearing interest at 8%, which rate
subsequently was amended to equal the prime rate. On May 10, 2000, the amounts
outstanding under the note were repaid by transferring to FX Chicago, Inc.
31,480 shares of IFX Common Stock with an aggregate fair market value equal to
the amount outstanding. The fair market value of shares tendered to repay the
note were valued at the average of the closing bid and ask price of Common Stock
as reported by the Nasdaq SmallCap Market on each of the three trading days
ending on the trading date immediately prior to the delivery of the Common Stock
to FX Chicago, Inc. The Company earned interest income of $29,800, $39,400 and
$52,400 on this note, on a consolidated basis, during the fiscal years ended
June 30, 2000, 1999, and 1998, respectively.

Loans to ePagos, Inc. During fiscal year 2000, the Company made a short-
term loan to ePagos, Inc. (formerly Telcom.Net, L.P.) in the amount of $50,000
and paid expenses of approximately $65,000 on their behalf. As of June 30, 2000,
all amounts owed to the Company had been collected. Joel Eidelstein, President
of the Company, indirectly owns a minority interest in ePagos. IFX currently
owns approximately 17% of ePagos' stock on a fully-diluted basis.

International Technology Investments. Each of Joseph M. Matalon, a former
director of the Company, and Michael Shalom, the Company's Chief Executive
Officer, is an affiliate of International Technology Investments, LC
("International Technology" or "ITI"). In November 1998, IFX entered into an
agreement with International Technology in which ITI contributed $1 million to
IFX and International Technology received 500,000 shares of Common Stock from
IFX, at a price of $2.00 per share, for its contribution and the option to
acquire 5.5 million IFX shares. As of the date of this report, International
Technology has contributed $11 million in additional capital to IFX in exchange
for 5,500,000 additional shares of Common Stock from IFX, at a purchase price of
$2.00 per share.

In January 2000, in connection with the exercise of its options to purchase
IFX shares, ITI issued a note to the Company in the principal amount of
$4,950,000, with an interest rate of 7%. The note was repaid in its entirety in
May 2000.

Facilito.com IFX owns approximately a 49.9% interest in Facilito, a
company which provides e-commerce solutions. The remaining 50.1% interest in
Facilito is held by The Intcomex Group. The Intcomex Group is owned by family
members of Michael Shalom, IFX's Chief Executive Officer. Facilito intends to
source a significant portion of its merchandise for its e-commerce sales from
Intcomex. In addition, during April 2000, IFX entered into an agreement with
Facilito in which it agreed to provide Facilito with web referrals from its
Tutopia customers and network services in exchange for certain fees.

Yupi Shares. Pursuant to an Amended and Restated Stock Purchase
Agreement, dated as of June 12, between IFX Online, a subsidiary of the Company,
and Lee Casty, a then significant stockholder of IFX, IFX Online sold a part of
its shares of Yupi Preferred Stock to Mr. Casty for a total purchase price of $5
million. The proceeds were used for the Company's working capital. The exact
number of Yupi preferred shares to be transferred by IFX to Mr. Casty will be
fixed upon the initial public offering of Yupi shares, or, in the absence of a
Yupi public offering, then upon the occurrence of certain other valuation
events, but in no event will the number of shares be fixed later than February
24, 2001.

Tutopia.com, Inc. On August 31, 2000, an entity controlled by Lee Casty
purchased approximately 2,317,500 preferred shares of Tutopia.com, Inc. in
exchange for $4.9 million. At the time of this transaction, IFX controlled
approximately 85% of the Tutopia.com, Inc. stock.

UBS Capital Americas. Mr. Moore is a director and Mr. Lama a principal of
UBS Capital Americas, LLC, an affiliate of UBS Capital Americas III, L.P. and
UBS Capital LLC, which together purchased $25 million of IFX Preferred Stock in
June and July 2000 and $15 million of preferred stock in Tutopia.com, Inc., a
former subsidiary of IFX, in August 2000. Mr. Moore and Mr. Lama have an
investment interest in UBS and thus may benefit from transactions between UBS on
the one hand and IFX and its subsidiaries on the other.

IFX's legal counsel. Scott J. Bakal is the trustee of the Casty Grantor
Subtrust, which owns 22.94% of the outstanding stock of IFX. Mr. Bakal is a
partner in the law firm of Neal, Gerber & Eisenberg which provides legal
services on a regular basis to IFX.

<PAGE>

Tutopia Share Purchases. During the past fiscal year, James Casty, a trust
established for Scott Casty, and Nikrey Investment Group LP, a company
substantially all of which is owned by Ronald Casty, purchased shares of Class B
Common Stock of Tutopia at a price of $3.00 per share. James Casty, Scott Casty
and Ronald Casty are brothers of Lee Casty, who was then a significant
stockholder of IFX. The purchases were made pursuant to a private placement of
$4,500,000 of Class B Common Stock of Tutopia. James Casty purchased 53,333
shares in the offering; the trust benefiting Scott Casty purchased 53,333
shares; and Nikrey purchased 26,667 shares. Additionally, on August 31, 2000,
James Casty purchased 53,591 shares of preferred stock of Tutopia. The purchase
was made pursuant to a private placement of $20,000,000 of preferred stock of
Tutopia.

The Company believes that all transactions disclosed above have been, and
the Company's board of directors intends that any future transactions with its
officers, directors, affiliates or principal stockholders will be, on terms that
are no less favorable to the Company than those that are obtainable in arm's
length transactions with unaffiliated third parties.

<PAGE>

PART IV
-------------------------------------------------------------------------------

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

(a) 1. Financial Statements:
The following financial statements are attached to this Form 10-K
commencing on page 39.

Page No
-------

Report of Independent Certified Public Accountants............. 39

Report of Independent Certified Public Accountants............. 40

Consolidated Balance Sheets as of June 30, 2000 and 1999....... 41

Consolidated Statements of Operations for the Years

ended June 30, 2000, 1999 and 1998............................ 42

Consolidated Statements of Changes in Stockholders'

Equity for the Years Ended June 30, 2000, 1999 and 1998....... 43

Consolidated Statements of Cash Flows for the Years

ended June 30, 2000, 1999 and 1998........................... 44

Notes to Consolidated Financial Statements..................... 45

2. Financial Statement Schedules
Schedule II - Valuation and qualifying accounts

All other schedules called for under Regulation S-X are not submitted
because they are not applicable or not required or because the required
information is not material or is included in the financial statements or notes
thereto.

3. Exhibits

The exhibits to this report are listed in the Exhibit Index included
elsewhere herein.

(b) Report on Form 8-K dated June 15, 2000 regarding the UBS Capital Americas
preferred stock investment.

<PAGE>

IFX Corporation Exhibit Index
-----------------------------

Exhibit Number Description of Exhibit
-------------- ----------------------
<S> <C>
3(i)/1/ Restated Certificate of Incorporation of the Registrant

3(ii)/1/ By-laws, effective June 15, 2000

4.1/1/ Certificate of Designation, Powers, Preferences and Rights
of Series A Convertible Preferred Stock of the Registrant

4.2/1/ Registration Rights Agreement dated as of June 15, 2000
among the Registrant, UBS Capital Americas III, L.P., UBS
Capital LLC, International Technology Investments, LC and
Lee S. Casty

10.1/1/ Stockholders Agreement dated as of June 15, 2000 among
Registrant, UBS Capital Americas III, L.P., UBS Capital
LLC, International Technology Investments, LC, Joel
Eidelstein, Michael Shalom and Lee S. Casty

10.2/1/ Stock Purchase Agreement dated as of June 15, 2000 among
the Registrant, UBS Capital Americas III, L.P. and UBS
Capital LLC

10.3/1/ Form of Non-Qualified Stock Option Agreement between the
Registrant and employee with attached schedule describing
actual option grants

10.4/1/ Employment Agreement dated as of January 1, 2000 between
Joel Eidelstein and the Registrant

10.5/1/ Stock Option Agreement dated as of November 10, 1998,
between Joel Eidelstein and the Registrant

10.6/1/ Employment Agreement dated as of January 1, 2000 between
Michael Shalom and the Registrant

10.7/1/ Amendment to Employment Agreement dated as of April 1, 2000
between Zalman Lekach and the Registrant

10.8/1/ Stock Option Agreement dated as of January 1, 2000, between
Zalman Lekach and the Registrant

10.9/1/ Employment Agreement dated as of June 26, 1999 between Jose
Leiman and the Registrant

10.10/1/ Amended and Restated Stock Purchase Agreement dated as of
June 12, 2000 between the Registrant and Lee S. Casty

10.11/1/ Form of Directors Stock Option Agreement with attached
schedule describing actual option grants

10.12 Termination of Co-Branded Free ISP Agreement, effective as
of June 1, 2000 Tutopia.com, Inc. and Spinway, Inc.

10.13 Amendment No. 1 to Stockholders Agreement among the
Registrant, UBS Capital Americas III, L.P., UBS Capital
LLC, International Technology Investments, LC, Joel
Eidelstein, Michael Shalom and Lee S. Casty dated as of
July 28, 2000 among the Registrant, UBS Capital Americas
III, L.P., UBS Capital LLC, International Technology
Investments, LC, Joel Eidelstein, Michael Shalom, Lee S.
Casty and the Casty Grantor Subtrust

10.14 Stock Purchase Agreement dated as of August 7, 2000 among
Tutopia.com, Inc., the Registrant, UBS Capital Americas,
III, L.P., UBS Capital LLC, LSC, LLC, Glacier Internet
Investments, Ltd. and William and Brenda Viner, Beth Ann
Viner, Andy Eli Viner and Steven Shenitzer

10.15 Dial Access Agreement dated as of August 31, 2000 between
Tutopia.com, Inc. and the Registrant

10.16 Revenue Sharing Agreement dated as of August 31, 2000
between Tutopia.com, Inc. and the Registrant

10.17 Inter-Company Services Agreement dated as of August 31,
2000 between Tutopia.com, Inc. and the Registrant

10.18 Share Sale Agreement, dated August 24, 2000, between Duncan
Lawrie Offshore Services Limited in its capacity as trustee
for The IFX Group Trust and the Registrant

11.2/2/ Lucent Technologies Agreement

21.1 List of subsidiaries of the Company

23.1 Consent of Ernst & Young LLP

23.2 Consent of Arthur Andersen LLP

27 Financial Data Schedule
</TABLE>

-------------------------
/1/ Incorporated by reference to Registrant's Report on Form 8-K filed on
July 5, 2000

/2/ Incorporated by reference to Registrant's Report on Form 10-Q filed on
November 15, 1999

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
-------------------------------------------------------------------------------

To the Stockholders of
IFX Corporation
and Subsidiaries

We have audited the accompanying consolidated balance sheets of IFX
Corporation and subsidiaries as of June 30, 2000 and 1999, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the years then ended. Our audits also included the financial statement
schedule for the years ended June 30, 2000 and 1999 and listed in the Index at
Item 14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of IFX Corporation
and subsidiaries as of June 30, 2000 and 1999, and the consolidated results of
their operations and their cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule for the years ended June 30,
2000 and 1999, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the information set
forth therein.

/s/ ERNST & YOUNG LLP

Miami, Florida
September 22, 2000

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------

To the Stockholders of
IFX Corporation
and Subsidiaries:

We have audited the accompanying consolidated statements of operations,
changes in stockholders' equity and cash flows of IFX Corporation (a Delaware
corporation) and subsidiaries ("the Company") for the year ended June 30, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audit.

We conducted our audit in accordance with accounting principles 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 audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of IFX
Corporation and subsidiaries for the year ended June 30, 1998, in conformity
with accounting principles generally accepted in the United States.

/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois,
September 24, 1999

<PAGE>

IFX Corporation and Subsidiaries
Consolidated Balance Sheets

<TABLE>
<CAPTION>
June 30, 2000 June 30, 1999
-------------- --------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................................................ $ 15,049,300 $ 5,482,800
Receivables, net of allowance for doubtful accounts of $922,500 and 1,295,900 458,300
$80,100 at June 30, 2000 and 1999, respectively.................................
Net assets of discontinued operations.................................................... 952,600 3,726,900
Income taxes receivable.................................................................. 1,632,600 --
--------------------------------------------------------------------------------------------------------------------------
Total current assets............................................................. 18,930,400 9,668,000
--------------------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, NET................................................................ 15,505,400 1,884,200
--------------------------------------------------------------------------------------------------------------------------

OTHER ASSETS:
Acquired customer base, net of accumulated amortization of $5,511,800 and $155,500, 21,220,500 2,686,600
respectively.....................................................................
Investments, cost basis.................................................................. 2,865,500 3,113,500
Investments, equity basis................................................................ 315,100 241,500
Prepaid expenses......................................................................... 749,500 --
Notes receivable......................................................................... -- 612,500
Foreign taxes recoverable................................................................ 1,637,500 --
Other assets............................................................................. 1,307,000 655,200
--------------------------------------------------------------------------------------------------------------------------
Total other assets............................................................... 28,095,100 7,309,300
--------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS............................................................................... $ 62,530,900 $18,861,500
==========================================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable......................................................................... $ 7,534,000 $ 1,152,100
Accrued expenses......................................................................... 4,393,800 1,295,100
Deferred revenues........................................................................ 391,100 --
Liabilities related to acquisitions...................................................... 1,568,000 --
Current portion of capital lease obligations............................................. 1,935,300 --
--------------------------------------------------------------------------------------------------------------------------
Total current liabilities........................................................ 15,822,200 2,447,200
--------------------------------------------------------------------------------------------------------------------------

LONG-TERM LIABILITIES:
Notes payable............................................................................ 374,700 316,900
Deferred gain on sale of investment...................................................... 4,451,900 --
Capital lease obligations, less current portion.......................................... 9,032,500 --
--------------------------------------------------------------------------------------------------------------------------
Total long-term liabilities...................................................... 13,859,100 316,900
--------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES.......................................................................... 29,681,300 2,764,100
==========================================================================================================================
--------------------------------------------------------------------------------------------------------------------------
Minority interest in subsidiary.......................................................... 4,394,900 --
--------------------------------------------------------------------------------------------------------------------------

STOCKHOLDERS EQUITY:
Preferred Stock, $.02 par value; 10,000,000 shares authorized, 1,210,398
issued and outstanding at June 30, 2000.......................................... 14,900,000 --
Common stock, $.02 par value; 50,000,000 shares authorized, 13,295,183 and
6,830,240 shares issued and outstanding at June 30, 2000 and 1999, respectively 265,900 136,600
Additional paid-in capital............................................................... 66,818,300 11,299,100
(Accumulated deficit) retained earnings.................................................. (41,059,800) 4,817,200
Accumulated other comprehensive loss..................................................... (337,200) (26,000)
Deferred compensation.................................................................... (12,132,500) (129,500)
--------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY................................................................. 28,454,700 16,097,400
==========================================================================================================================
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................................................. $ 62,530,900 $18,861,500
==========================================================================================================================
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

<PAGE>

IFX Corporation and Subsidiaries
Consolidated Statements Of Operations

-------------------------------------------------------------------------------------------------------
12 Months Ended
June 30,
-------------------------------------------
2000 1999 1998
-------------------------------------------
<S> <C> <C> <C>
REVENUES:
Dial-up.................................................... $ 7,250,600 $ 616,300 $ -
Dedicated line services.................................... 1,351,100 28,200 -
Web hosting and design services............................ 379,000 80,800 -
Other...................................................... 705,200 - -
-------------------------------------------------------------------------------------------------------
Total revenues........................................ 9,685,900 725,300 -
-------------------------------------------------------------------------------------------------------

COSTS AND EXPENSES:
Cost of revenues........................................... 8,217,200 445,500 -
General and administrative................................. 22,283,800 2,691,800 729,400
Sales and marketing........................................ 9,177,400 247,600 3,700
Depreciation and amortization.............................. 8,148,700 232,400 -
Non-cash stock compensation............................. 6,359,100 39,000 -
Contract cancellation costs............................. 6,815,700 - -
-------------------------------------------------------------------------------------------------------
Total operating expenses........................... 61,001,900 3,656,300 733,100
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Operating loss from continuing operations.......... (51,316,000) (2,931,000) (733,100)
-------------------------------------------------------------------------------------------------------

OTHER INCOME (EXPENSE):
Interest income............................................ 414,800 376,100 290,100
Interest expense........................................... (595,300) - -
Minority interest in subsidiary............................ 1,110,100 - -
Loss from operations of equity investees................... (330,200) (107,700) -
Other................................................... 101,200 136,200 126,500
-------------------------------------------------------------------------------------------------------
Total other income, net.............................. 700,600 404,600 416,600
-------------------------------------------------------------------------------------------------------

Loss from continuing operations before income taxes......... (50,615,400) (2,526,400) (316,500)
Income tax benefit.......................................... 2,771,400 811,000 108,000
-------------------------------------------------------------------------------------------------------
Loss from continuing operations............................. (47,844,000) (1,715,400) (208,500)
-------------------------------------------------------------------------------------------------------
Income from discontinued operations, net of taxes........... 1,967,000 3,117,600 3,575,200
-------------------------------------------------------------------------------------------------------
Net (loss) income.................................... $(45,877,000) $ 1,402,200 $3,366,700
-------------------------------------------------------------------------------------------------------

BASIC AND DILUTED (LOSS) INCOME PER SHARE:
Continuing operations...................................... $(4.71) $(0.26) $ (0.03)
Discontinued operations.................................... $0.19 $0.48 $ 0.57
-------------------------------------------------------------------------------------------------------
Net (loss) income.................................... $(4.52) $0.22 $ 0.54
=======================================================================================================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted.......................................... 10,153,565 6,498,204 6,246,545
=======================================================================================================
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

<PAGE>

IFX Corporation and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
For the Years Ended June 30, 2000, 1999 and 1998

<TABLE>
<CAPTION>
Common Stock
------------------------ Accumulated
Retained Other
Preferred Paid-in Deferred Earnings Comprehensive
Stock Shares Amount Capital Compensation (Deficit) Income (loss) Total
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance June 30,
1997............. 6,279,130 $125,600 $ 8,075,500 $ - $ 48,300 $(45,700) $ 8,203,700
Repurchase of
fractional shares
pursuant to
one-for five
reverse split.... - (10) - - - - -
Repurchase of
common stock and
odd lots......... - (123,580) (2,500) (232,800) - - (235,300)
Net and
comprehensive
income........... - - - - 3,366,700 - 3,366,700
------------------------------------------------------------------------------------------------------------------
Balance June 30,
1998.............. - 6,155,540 123,100 7,842,700 3,415,000 (45,700) 11,335,100
==================================================================================================================
Stock issued for
cash............. - 500,000 10,000 990,000 - - 1,000,000
Stock and options
issued for
acquisitions...... - 174,700 3,500 2,297,900 - - 2,301,400
Compensation
associated with
grant of stock
options and
warrants......... - 39,000 - - 39,000
Deferred
compensation
associated with
grant of stock
options.......... - - - 129,500 (129,500) - - -
Net
income........... - - - - 1,402,200 1,402,200
Foreign currency
translation...... - - - - - 19,700 19,700
Comprehensive ---------------
income........... 1,421,900
------------------------------------------------------------------------------------------------------------------
Balance June 30,
1999............. - 6,830,240 136,600 11,299,100 (129,500) 4,817,200 (26,000) 16,097,400
==================================================================================================================
Stock issued for
cash............. - 5,541,511 110,800 11,020,800 - - - 11,131,600
Stock issued for
acquisitions..... - 835,598 16,700 20,938,200 - - - 20,954,900
Stock issued for
contract
termination...... - 119,314 2,400 4,154,300 - - - 4,156,700
Issuance of
preferred
stock.......... 14,900,000 - - - - - - 14,900,000
Compensation
expense
associated with
warrants for
contract
termination...... - - - 1,659,000 - - - 1,659,000
Compensation
expense
associated with
variable stock
options.......... - - - 1,144,400 - - - 1,144,400
Deferred
compensation
associated with
grant of stock
options.......... - - - 17,217,700 (12,003,000) - 5,214,700
Common stock
retired.......... - (31,480) (600) (615,200) - - - (615,800)
Net loss......... - - - - - (45,877,000) - (45,877,000)
Foreign currency
translation... - - - - - - (311,200) (311,200)
---------------
Comprehensive
loss............. - - - - - - - (46,188,200)
------------------------------------------------------------------------------------------------------------------
Balance June 30,
2000............. $14,900,000 13,295,183 $265,900 $66,818,300 $(12,132,500) $(41,059,800) $(337,200) $ 28,454,700
==================================================================================================================
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

<PAGE>

IFX Corporation and Subsidiaries
Consolidated Statements Of Cash Flows

<TABLE>
<CAPTION>
For the Year Ended June 30,
2000 1999 1998
------------ ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income.............................. $(45,877,000) $ 1,402,200 $ 3,366,700
Adjustments to reconcile net (loss) income to -
net cash (used in) provided by operating
activities:
Depreciation.............................. 2,792,400 76,900 1,700
Amortization.............................. 5,356,300 155,500 -
Bad debt expense.......................... 842,400 80,100 -
Compensation associated with stock options 6,359,100 39,000 -
Compensation associated with consulting
agreements............................... 4,156,700 - -
Expense associated with stock warrants.... 1,659,000 - -
Equity in net (income) loss of equity
investees................................ 330,200 107,700 (70,200)
Minority interest in subsidiary........... (1,110,100) - -

Change in net assets of discontinued
operations..................................... 2,774,300 1,307,600 1,853,500

Changes in operating asset and liabilities:
Foreign taxes recoverable................. (1,637,500) - -
Receivables............................... (1,188,900) (218,700) (89,500)
Income taxes receivable................... (1,632,600) - -
Other assets.............................. (1,237,600) (129,500) 1,900
Due from affiliates....................... 114,100 - -
Deferred revenues......................... 391,100 - -
Accrued expenses.......................... 3,098,700 - -
Accounts payable.......................... 5,139,100 800,700 (32,400)
-------------------------------------------------------------------------------------------------
Cash (used) provided by operating activities... (19,670,300) 3,621,500 5,031,700
-------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale Yupi Internet, Inc. shares.. 5,000,000 (3,113,500) -
Investment, cost basis......................... (300,000) - -
Acquisitions, primarily customer base.......... (2,443,900) (443,800) -
(Increase) decrease in investments, equity (528,500) (229,000) 219,200
basis.........................................
Increase (decrease) in notes receivable........ (2,700) (1,100) 7,500
Purchases of property and equipment............ (4,646,900) (991,200) (14,400)
-------------------------------------------------------------------------------------------------
Cash (used) provided by investing activities... (2,922,000) (4,778,600) 212,300
-------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (payments) of notes payable........... 34,900 (13,000) (1,586,600)
Proceeds from short-term vendor financing...... 898,500 - -
Issuance (repurchase) of common stock.......... 11,131,600 1,000,000 (235,300)
Issuance of preferred stock.................... 14,900,000 - -
Minority interest.............................. 5,505,000 - -
-------------------------------------------------------------------------------------------------
Cash provided (used) by financing activities... 32,470,000 987,000 (1,821,900)
-------------------------------------------------------------------------------------------------

Effect of exchange rate changes on cash and
cash equivalents.............................. (311,200) (19,700) -
-------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents................................... 9,566,500 (150,400) 3,422,100
Cash and cash equivalents, beginning of period. 5,482,800 5,633,200 2,211,100
-------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period....... $ 15,049,300 $ 5,482,800 $ 5,633,200
=================================================================================================
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended June 30, 2000, 1999 and 1998

Supplemental Information of Non-Cash Investing and Financing Activities and
Other Cash Flow Data

2000

During the year ended June 30, 2000, the Company acquired several entities
(see note 3). In connection with those acquisitions, the Company assumed
liabilities in the amount of $0.7 million and issued stock valued at
approximately $20.9 million. The non-cash effects of the acquisitions is
excluded from the accompanying consolidated statement of cash flows.

Interest paid during the year ended June 30, 2000 was approximately $0.6
million, which was mostly related to capital leases. Income tax refund
received during the year ended June 30, 2000 was approximately $0.5 million.

The Company acquired equipment of approximately $11 million under capital
leases. The majority of the capital leases is related to Lucent Technologies.

Prior to fiscal year 1996, FX Chicago, Inc. made loans of approximately
$0.6 million to C. Adam Ltd. an entity affiliated with Lee Casty, a then
significant stockholder of IFX. The loans were evidenced by a demand note
bearing interest at 8%, which rate subsequently was amended to equal the prime
rate. On May 10, 2000, the amounts outstanding under the note were repaid by
transferring to FX Chicago, Inc. 31,480 shares of IFX Common Stock with an
aggregate fair market value equal to the amount outstanding. The fair market
value of shares tendered to repay the note were valued at the average of the
closing bid and ask price of Common Stock as reported by the Nasdaq SmallCap
Market on each of the three trading days ending on the trading date immediately
prior to the delivery of the Common Stock to FX Chicago, Inc.

1999

During the year ended June 30, 1999, the Company acquired several entities.
In connection with those acquisitions, the Company assumed liabilities in the
amount of $1.8 million and issued stock valued at approximately $2.3 million.
The non-cash effects of the acquisitions is excluded from the accompanying
consolidated statements of cash flows.

Interest paid during the year ended June 30, 1999, was $1,000,
substantially all of which was paid to related parties. Income taxes paid
during the year ended June 30, 1999, was approximately $1 million. Interest
payments to customers related to discontinued operations during the years ended
June 30, 2000, was approximately $0.8 million.

1998

Interest paid during the year ended June 30, 1998 was $53,900,
substantially all of which was paid to related parties. Income taxes paid
during the year ended June 30, 1998 was $0.8 million. Interest payments to
customers related to discontinued operations during the year ended June 30, 1998
was approximately $1.9 million.

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Description of Business

The consolidated financial statements include the accounts of IFX
Corporation and its wholly-owned subsidiaries and majority-owned subsidiary,
Tutopia.com, in which the Company had an 85% interest at June 30, 2000.
(collectively referred to herein as "IFX", "IFX Networks" or the "Company") for
which it has a controlling financial interest. All intercompany accounts and
transactions are eliminated in consolidation. IFX was incorporated under
Illinois law in 1985 and changed its state of incorporation to Delaware in 1995.
The Company's fiscal year end is June 30. References herein to fiscal 2000, 1999
and 1998 refer to the twelve-month periods ended June 30, 2000, 1999 and 1998,
respectively.

IFX has created an extensive pan-regional Internet platform as a leading
provider of Internet-based network products and services throughout Latin
America. IFX's Internet operations are based in Miami, Florida. Since November
1998, IFX has acquired 24 ISPs and Internet businesses and has commenced four
ISP operations. The IFX network currently covers 15 countries: Argentina,
Bolivia, Brazil, Chile, Colombia, Costa Rica, El Salvador, Honduras, Guatemala,
Mexico, Nicaragua, Panama, Uruguay, Venezuela and the United States. IFX has
over 450 employees, and has offices and a network that covers over 58 cities in
the Latin American region.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles 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.

Revenue Recognition

Revenue from customer contracts related to dial-up access, dedicated phone
line and web hosting fees is recognized ratably over the term of the underlying
contract, which is generally from one month to three years. Cash received in
advance of revenues earned is recorded as deferred revenues. Incremental
revenues derived from other services is recognized as earned. Revenues from the
earn-out payments related to the discontinued operations are recorded as they
are earned.

In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements". SAB 101 explains how the SEC staff applies by analogy the existing
rules on revenue recognition to other transactions not covered by such rules.
The four criteria that must be met to recognise revenue are: (a) persuasive
evidence of an arrangement exists, (b) delivery has occurred or services have
been rendered, (c) the price is fixed or determinable, and (d) collectibility is
reasonably assured. In June 2000, the SEC issued SAB 101B delays the effective
date of SAB 101 until no later than the fourth fiscal quarter of fiscal years
beginning after December 15, 1999 (fourth quarter of 2000 for calendar year
companies). The Company does not believe the adoption of SAB 101 will have a
material impact on the Company's results of operations. However, the Company
understands the SEC staff will issue additional guidance in the form of a
Frequently Asked Questions (FAQ) document in the third quarter of 2000, at which
time the Company will reevaluate the impact of SAB 101.

Credit Risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash investments and trade
accounts receivable.

The Company maintains cash and cash equivalents with various financial
institutions. These financial institutions are located throughout the country
and the Company's policy is designed to limit exposure to any one institution.

The Company's receivables potentially subject the Company to credit risk,
as collateral is generally not required. The Company's risk of loss is limited
to billings to customers for services. The use of pre-approved charges to
customer credit cards and the ability of IFX to terminate Internet access on
delinquent accounts, limits the risks of these losses. In addition, the
concentration of credit risk is mitigated by the large number of customers
comprising the Company's customer base.

Sources of Supplies

The Company relies on third-party networks, local telephone companies and
other companies to provide data communications capacity. Although management
feels alternative telecommunications facilities could be found in a timely
manner, any disruption of these services could have an adverse effect on the
Company's operating results.

Cash and Cash Equivalents

The Company considers all financial instruments with a maturity of three
months or less when purchased to be cash equivalents.

Fair Value of Financial Instruments

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The carrying amounts of the Company's cash and cash equivalents,
receivables, accounts payable and notes payable approximate fair value.

Long-Lived Assets

In the event that facts and circumstances indicate that the costs of assets
may be impaired, an evaluation of the recoverability is performed. If an
evaluation is required, the estimated future undiscounted cash flow associated
with the asset is compared to the asset's carrying amount to determine if a
write-down to market value is required. The Company evaluates the possible
impairment of long-lived assets by reviewing cash flows generated on a country-
by-country basis, which is consistent with the way the Company's segments are
reported. In addition, during fiscal 2000, the Company's Tutopia subsidiary
began offering free Internet access to subscribers. The Company included in its
analysis of recoverability the Company's proportionate share of the fair value
or future cash flows to be derived from the free users of Tutopia. The Company
does not believe that any impairment has occurred at June 30, 2000.

Investments

The Company has investments in ePagos.com, Inc., Yupi Internet, Inc and
Centronet.com, Inc., in which the Company does not have the ability to exercise
significant influence over either investee. Accordingly, the Company accounts
for these investments under the cost method.

The Company has a 49.9% investment in Facilito.com, Inc. Accordingly, the
Company accounts for this investment under the equity method.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization is
provided using the straight-line method over the estimated useful lives of the
assets, commencing when assets are installed or placed in service. Leasehold
improvements are amortized using the straight-line method over the lesser of
their useful lives or the remaining terms of the leases. The estimated useful
lives generally range between 3 and 10 years.

Acquired Customer Base

Acquired Customer Base consists of the excess of the purchase price paid
over the tangible net assets of acquired companies. The Company capitalizes
specific costs incurred for the purchase of customer bases from other Internet
Service Providers ("ISPs"). Subscriber acquisition costs capitalized at June
30, 2000 were approximately $26.7 million.

Amortization is provided using the straight-line method over three years
commencing when the customer base is acquired. Amortization expense for the year
ended June 30, 2000, was approximately $5.5 million and for the year ended
June 30, 1999 was $0.2 million.

Advertising and Marketing Expenses

The Company expenses all advertising and marketing costs as they are
incurred. Advertising expense was $9.2 million, $0.2 million and $0 during
fiscal 2000, 1999 and 1998, respectively.

Income Taxes

The Company uses the liability method of accounting for income taxes,
whereby deferred income taxes are provided on items recognized for the
differences in the basis of assets and liabilities for financial reporting and
income tax purposes.

Risks and Uncertainties

The Company's operations are subject to certain risks and uncertainties,
including those associated with: a brief history operating in the Internet
network business; loss from continuing operations; negative cash flow and
fluctuations in operating results; funding expansion and acquisitions;
international operations; dependence on key personnel; dependence on suppliers;
financing arrangement terms that may restrict operations; and pending litigation
related to the discontinued operations.

Reclassification

Certain amounts previously reported have been reclassified to conform to
the current method of presentation.

Stock-Based Compensation

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company grants stock options generally for a fixed number of shares
with an exercise price equal to or below the fair value of the shares at the
date of grant. The Company accounts for stock option grants to employees in
accordance with Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees", and, accordingly, recognizes compensation
expense only if the market value on the date of the grant is above the exercise
prize of the options.

Computation of Earnings or Loss per Common Share

Basic earnings per share is computed using the weighted average number of
common shares outstanding during the period. Diluted earnings per common share
is calculated based upon the sum of the weighted average number of shares
outstanding and the weighted average number of potentially dilutive securities
consist of stock options and common shares issuable upon the conversion of the
Preferred Stock. Potentially dilutive securities have been excluded from the
calculation of diluted loss from continued operations since their effect would
have been anti-dilutive. Approximately 2.3 million such potentially dilutive
securities were excluded from the June 30, 2000, earnings per share calculation.

New Pronouncements

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133 "Accounting for Derivative Instruments and Hedging Activities". In June
1999, the FASB issued SFAS No. 137 "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133"
which amended SFAS No. 133 to delay the effective date to fiscal quarters of
fiscal years beginning after June 15, 2000. SFAS No. 133 establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. The
Company plans to adopt SFAS No. 133, as amended, in fiscal 2001 and is currently
assessing the impact this statement will have on its consolidated financial
statements.

Cost of Computer Software

Effective July 1, 1999, the Company adopted SOP 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use", which
requires that certain costs for the development of internal use software should
be capitalized, including the costs of coding, software configuration, upgrades
and enhancements. For the year ended June 30, 2000, the Company capitalized
$2.5 million of software that was developed for internal use.

Foreign Currency Translation

The functional currency of the Company's active subsidiaries is the local
currency. Foreign currency transactions and financial statements (except for
those relating to countries with highly inflationary economies) are translated
into U.S. dollars at the rate in effect on the date of the transaction or the
date of the financial statements, except that revenues, costs and expenses are
translated at average exchange rates during each reporting period. Resulting
translation adjustments and transaction gains or losses attributable to certain
intercompany transactions that are of a long-term investment nature are excluded
from results of operations and accumulated in accumulated other comprehensive
income (loss), a separate component of consolidated stockholders' equity. Gains
and losses attributable to other intercompany transactions are included in
results of operations. The financial statements of subsidiaries located in
countries with highly inflationary economies are re-measured as if the
functional currency were the U.S. Dollar. The re-measurement creates translation
adjustments that are reflected in net income.

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Comprehensive Income

As of July 1, 1999, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income". The adoption of SFAS No. 130 had no impact on the
Company's net (loss) income or stockholders' equity. SFAS No. 130 establishes
new rules for the reporting and display of comprehensive income and its
components. SFAS No. 130 requires foreign currency translation adjustments to be
included in other comprehensive income.

2. DISCONTINUED OPERATIONS

In June 1999, IFX divested its 50.1% interest in IFX Ltd. in exchange for
approximately $2.45 million and a redeemable preference share entitling IFX to
quarterly payments equal to approximately 30% of the net profits, as
specifically defined, of IFX Ltd. through June 30, 2002. Following the sale of
its U.K. subsidiary, IFX decided not to invest the sales proceeds in the trading
business and, instead, decided to continue to develop businesses in the Internet
industry. Accordingly, the Company has accounted for this disposal, and the
disposal of operations related to the same business segment made in prior years,
as noted below, as discontinued operations. In September 2000, IFX sold its IFX
Ltd. redeemable preference share to the other shareholders of IFX Ltd. for $2.4
million, thus terminating IFX's right to earn-out payments from IFX Ltd.

On May 31, 1996, the Company sold substantially all of its brokerage
accounts and related assets maintained by Index, one of its subsidiaries. The
purchase price is payable by the buyer based on a percentage of net income (as
defined by the sales agreement) during a sixty-six month period following the
sale. The sales contract required Lee S. Casty to sign a non-competition
agreement. As compensation for providing such an agreement, a portion of the
purchase price was to be paid to Lee S. Casty. Mr. Casty irrevocably transferred
his right to receive payments under such agreement to the Company. Accordingly,
a portion of the purchase price which would otherwise have been received by Lee
S. Casty is being included in revenue by the Company. In addition, in
conjunction with the sale, the Company issued a limited indemnification
agreement to the buyer. The agreement covers potential customer claims arising
from activity prior to the sale.

The following table summarizes financial information related to the
Company's discontinued operations:

<TABLE>
<CAPTION>
Year Ended
June 30,
---------------------------------------
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Income from discontinued operations before income taxes.............. $ 3,026,100 $ 4,785,500 $ 5,852,400

Income tax provision on discontinued operation....................... (1,059,100) (1,667,900) (2,277,200)
---------------------------------------
Income from discontinued operations, net of taxes.................... $ 1,967,000 $ 3,117,600 $ 3,575,200
=======================================
</TABLE>

The information set forth in the remaining Notes to Consolidated Financial
Statements relates to continuing operations unless otherwise specified.

3. ACQUISITIONS

During fiscal 2000, the Company acquired 18 companies for a total purchase
price of approximately $26 million, of which approximately $2.8 million was paid
in cash, approximately $20.9 million was paid by issuing 835,598 shares of the
Company's common stock, approximately $1.6 million will be paid with cash or
shares of common stock of the Company and the Company assumed approximately $0.7
million in liabilities.

The Company accounted for the acquisitions under the purchase method of
accounting and the results of operations of the acquired entities have been
included in the financial statements of the Company from the respective dates of
acquisition. The excess purchase price over the fair value of the net assets
acquired has been allocated to Acquired Customer Base. Acquired Customer Base
resulting from such acquisitions of approximately $23.9 million is being
amortized using the straight-line method over three years.

The following table summarizes the Company's acquisitions during fiscal
year 2000:

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Date Acquisition/Investment/ Business Country
---------------- --------------------------------------------------- ------------ -------------------
<S> <C> <C> <C>
July 1999 Sistemas de Diseno y Manufactura ISP Mexico
Interactiva ISP Chile
August 1999 Intermedia ISP Chile
E-Net Teleinformatica ISP Brazil
Vianet ISP El Salvador
ITS Networks ISP Honduras
October 1999 NetSpace ISP Mexico
The Conex Group ISP Brazil
November 1999 Sistemas Integrales, Servicios y Comunicaciones ISP Mexico
December 1999 Panaweb Web design Panama
Networks de Mexico ISP Mexico
Zalhe Informatica ISP Brazil
Nicanet ISP Nicaragua
Parmil ISP Uruguay
January 2000 Brasilnet Comunicacoes ISP Brazil
Openway ISP Colombia
June 2000 Mr. Help Informatica Web hosting Brazil
Ludix Internet ISP Brazil
</TABLE>

The following unaudited pro forma data summarizes the results of operations
for the periods indicated as if all of the Company's acquisitions had been
completed on July 1, 1998, the beginning of fiscal 1999. The pro forma data
gives effect to actual operating results prior to the acquisitions and
adjustments to goodwill amortization and income taxes. These pro forma amounts
do not purport to be indicative of the results that would have actually been
obtained if the acquisitions had occurred on July 1, 1998 or that may be
obtained in the future. The pro forma data does not give effect to acquisitions
completed subsequent to June 30, 2000.

<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------------
2000 1999
------------ -----------
(Unaudited)
<S> <C> <C>
Total revenues.............................................. $ 13,303,100 $12,181,100
Net loss.................................................... (54,978,400) (7,511,800)
Basic and diluted net loss per common share................. $ (5.41) $ (0.74)
</TABLE>

4. STOCK-BASED COMPENSATION PLANS

Directors Stock Option Plan

On October 13, 1999, the Company filed a Proxy Statement pursuant to
Section 14(a) of the Securities Exchange Act of 1934, in which, among other
things, it requested shareholder approval for the IFX Corporation Directors
Stock Option Plan (the "Directors Plan"). The purpose of the Directors Plan is
to assist the Company in securing individuals who are not already employees or
officers of the Company to serve on its Board of Directors, and to provide
financial incentives to such directors to exert their best efforts on behalf of
the Company. In general, the Directors Plan provides that each eligible
director automatically will receive an option to purchase (i) 450 shares of
Common Stock upon such director's initial election to the Board of Directors of
the Company, provided such director is elected after the effective date of the
Directors Plan, and (ii) for each year thereafter and on the date of each annual
meeting of the stockholders of the Company, 450 shares of Common Stock for
service as a director and 75 shares of Common Stock for each Committee of the
Board of Directors upon which such director serves. On November 9, the
shareholders voted in favor of the Directors Plan.

Employee Stock Option Plan

On October 13, 1999, the Company filed a Proxy Statement Pursuant to
Section 14(a) of the Securities Exchange Act of 1934, in which, among other
things, it requested shareholder approval for an amendment to the

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

IFX Corporation 1998 Stock Option and Incentive Plan (the "Option Plan") to
increase the number of shares of common stock available for issuance under the
Option Plan. On November 9, 1999, the shareholders voted in favor of the
amendment increasing the number of common shares available under the Option Plan
from 900,000 to 1,800,000. In June 2000, the directors voted to increase the
size of the Option Plan by an additional 600,000 shares, subject to stockholder
approval, and an additional 600,000 shares were reserved for issuance pursuant
to the 1998 Stock Option Plan. Options generally vest thirty four percent (34%)
one year after the date granted, and eight and one quarter percent (8.25%) on
the last day of each of the following quarters.

In connection with the granting of stock options to employees in fiscal
2000 and 1999, the Company recorded deferred compensation of approximately $17.2
million and $0.1 million, respectively. Deferred compensation is being
amortized for financial reporting purposes over the vesting period of the
options. The amortization amount recognized as expense during fiscal 2000 and
1999 amounted to approximately $5.2 million and $3,700, respectively. In
addition, the Company has recognized as expense for variable options $1.1
million and $35,300 during fiscal 2000 and 1999, respectively.

The following table summarizes the Company's stock option activity:

<TABLE>
<CAPTION>
Weighted Average
Shares Exercise Price
----------------------------------------------
<S> <C> <C>
Outstanding at June 30, 1998 - $ -
Granted 442,500 5.97
Canceled - -
----------------------------------------------
Outstanding at June 30, 1999 442,500 5.97
Granted 1,896,167 12.54
Cancelled (34,750) 18.21
Exercised (9,033) 9.71
----------------------------------------------
Outstanding at June 30, 2000 2,294,884 $10.05
==============================================
</TABLE>

The following table summarizes information concerning outstanding options
at June 30, 2000:

Weighted Average
Exercise Price Number of Weighted Average Remaining Contractual Number Weighted Average
Range Shares Exercise Price Life (in years) Exercisable Exercise Price
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$3.00 to 5.00 301,000 $ 3.01 8.3 years 225,333 $ 3.00
5.01 to 10.00 1,037,634 8.57 9.7 years 97,475 7.86
10.01 to 15.00 398,916 14.12 9.1 years 103,583 13.20
15.01 to 20.00 537,334 19.28 9.4 years 78,500 17.29
20.01 to 30.00 20,000 26.25 9.2 years 20,000 26.25
--------------- ---------------
2,294,884 11.47 9.3 years 524,891 9.16
=============== ===============
</TABLE>

Statement of Financial Accounting Standards No. 123

The Company has elected to account for its stock-based compensation plans
under APB No. 25, however, the Company has computed for pro forma disclosure
purposes the fair value of all options granted using the Black-Scholes option-
pricing model as prescribed by SFAS No. 123 using the following weighted-average
assumptions. No options were granted during fiscal 1998.

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
Year Ended June 30,
-------------------------------------------
2000 1999
-------------------------------------------
<S> <C> <C>
Risk-Free Interest Rate 6.00% 5.50%
Expected Dividend Yield 0.00% 0.00%
Expected Lives 5.0 years 5.0 years
Expected Volatility 0.96 1.25
</TABLE>

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the 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 per share
weighted average fair value of options granted during fiscal 2000 and 1999 was
$13.76 and $3.59, respectively.

If compensation cost for IFX's stock-based compensation plans had been
determined under SFAS No. 123 "Accounting for Stock-Based Compensation," IFX's
net income and earnings per share would have been the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
Year Ended June 30,
---------------------------------------------
2000 1999
---------------------------------------------
<S> <C> <C> <C>
Net (loss) Income As reported $(45,877,000) $1,402,200
Pro forma $(55,119,000) $1,288,600

Basic and diluted earnings (loss) per share As reported $ (4.52) $ 0.22
Pro forma $ (5.43) $ 0.20
</TABLE>

5. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
June 30,
2000 1999
--------------------------------------------
<S> <C> <C>
Computer equipment........................................... $ 5,207,700 $1,833,100
Furniture and fixtures....................................... 671,800 176,600
Leasehold improvements....................................... 728,600 243,800
Assets under capital lease agreements........................ 9,569,300 --
Software..................................................... 2,472,400 --
Other........................................................ 162,500 --
--------------------------------------------
18,812,300 2,253,500
Less accumulated depreciation and amortization............... (3,306,900) (369,300)
--------------------------------------------
Property and equipment, net.................................. $15,505,400 $1,884,200
============================================
</TABLE>

Accumulated amortization of assets under capital lease agreements was
approximately $1.2 million at June 30, 2000.

6. NOTES PAYABLE

In connection with certain acquisitions, the Company assumed notes payable
aggregating to a principal amount of approximately $0.4 million.

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. ACCRUED EXPENSES

The accrued expenses consist of the following:

<TABLE>
<CAPTION>
Fiscal year end
--------------------------------------------
2000 1999
--------------------------------------------
<S> <C> <C>
Salaries and employee benefits.................... $ 603,200 $ 189,000
Advertising....................................... 396,600 -
Legal and professional fees....................... 1,327,900 303,200
Telecommunications................................ 763,600 114,900
Accrued taxes..................................... 915,900 223,400
All other......................................... 386,600 464,600
--------------------------------------------
Total...................................... $4,393,800 $1,295,100
============================================
</TABLE>

8. STOCKHOLDERS' EQUITY

General

IFX's certificate of incorporation provides that it may issue up to
50,000,000 shares of common stock, par value $.02 per share and 10,000,000
shares of preferred stock. As of June 30, 2000, IFX had approximately 191
holders of record of its common stock with a total of 13,295,183 shares of
common stock outstanding, and 1,210,398 shares of preferred stock outstanding.
IFX's common stock is listed on The Nasdaq SmallCap Market under the symbol
"FUTR."

Common Stock

On January 8, 1998, the Company authorized a one-for-five reverse split of
its common stock, par value $.004, effective on January 12, 1998 (the "Effective
Date"). Each five shares of such common stock was reclassified and reflected as
one share of common stock having a par value of $.02, as of January 12, 1998.
Outstanding shares of the Company's common stock were reduced to 6,279,130
shares from 31,395,649 shares outstanding before the split.

In November 1998, IFX entered into an agreement ("Agreement") with
International Technology Investments, LC ("ITI"), a then unrelated third party,
and another major shareholder, pursuant to which the Company formed Emerging
Networks Inc., a wholly-owned subsidiary of IFX, and other related companies to
pursue opportunities in providing Internet services in Latin America and other
international locales. During fiscal 2000, in connection with the Agreement, the
Company issued to ITI 5,500,000 shares of Common Stock for $2.00 per share (the
"Purchase Right"), for total proceeds to the Company of $11 million.

The Company has issued approximately 6,496,400 and has retired 31,480
common shares in fiscal 2000. As of June 30, 2000, there were 13,295,183
outstanding shares of common stock, approximately 2,460,000 shares of the
Company's common stock reserved for stock options and warrants, and 210,000
warrants had been issued in order to terminate a certain agreement with Spinway.

Preferred Stock

The Company is authorized to issue shares of preferred stock in series with
such preferences and designations as the Company's Board of Directors may
determine. The Board can, without shareholder approval, issue preferred stock
with voting, dividend, liquidation, and conversion rights. This could dilute
the voting strength of the holders of the common stock and may help IFX's
management impede a takeover or attempted change in control.

On November 9, 1999, the shareholders approved an amendment to the
Company's Restated Certificate of Incorporation providing the Company the
authority to issue up to 10,000,000 shares of preferred stock and, with respect
to such shares, to establish among other things, the price and the rate and
nature of dividends, the terms and conditions on which shares may be redeemed,
the terms and conditions for conversion or exchange into any other class or
series of the stock and the voting rights.

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

On June 16, 2000, IFX entered into a stock purchase agreement (the "Stock
Purchase Agreement") for $25 million in funding, of which $14.9 million was
received by the Company on June 16, 2000 and $10.1 million was received on July
17, 2000, from UBS Capital Americas III, L.P. and UBS Capital LLC (collectively,
"UBS Capital Americas"), to be used for working capital purposes. Pursuant to
the Stock Purchase Agreement, IFX has issued 1,210,398 shares of IFX Class I
Series A Preferred Stock and IFX Class II Series A Preferred Stock to UBS
Capital Americas III, L.P. and UBS Capital LLC in exchange for $25 million.
Each share is exchangeable for 1 share of common stock, subject to adjustment if
IFX issues shares of common stock (or certain common stock equivalents) at less
than $12.31 per share. Each share of preferred stock has a liquidation
preference equal to the sum of: a) $12.31 per share and b) $12.31 for each year
that the preferred share is outstanding. The liquidation preference is payable
both on a liquidation of IFX as well as a merger, recapitalization,
reorganization, sale of voting control to a single buyer or a group of related
buyers in one or a series of related transactions, or other business combination
transaction involving IFX in which the shareholders of IFX immediately prior to
the consummation of such transaction do not own at least a majority of the
outstanding shares of the surviving corporation or IFX (as applicable)
immediately following the consummation of such transaction or sale of all or
substantially all of the assets of IFX. Dividends accrue on the shares at the
same rate that dividends accrue on shares of IFX common stock. The holders of
the preferred stock have the right to elect one director to IFX's Board of
Directors. In addition, under a Stockholders Agreement entered into as of June
15, 2000, as amended, UBS Capital Americas, International Technology and the
Casty Grantor Subtrust have agreed to vote for the election of an additional
director designated by UBS Capital Americas, a director designated by Mr.
Eidelstein, a director designated by International Technology, a director
jointly designated by International Technology and Mr. Eidelstein, and two
independent directors reasonably acceptable to the UBS Capital Americas.

In accordance with the terms of the Stock Purchase Agreement, the number of
members of the Board of Directors of IFX was increased from six to seven. Under
the terms of the Certificate of Designation, UBS Capital Americas are entitled
to elect one director to the Board of Directors of IFX. Under a Stockholders
Agreement entered into as of June 16, 2000, as amended on July 25, 2000, the
parties thereto have agreed to vote for the election of an additional director
designated by UBS Capital Americas, a director designated by Mr. Eidelstein (the
Company's President), a director designated by ITI, a director jointly
designated by ITI and Mr. Eidelstein, and two independent directors reasonably
acceptable to UBS Capital Americas. The Stockholders Agreement replaces a
terminated agreement among Messrs. Casty, Shalom and ITI regarding voting for
directors.

9. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted
earnings per share:

<TABLE>
<CAPTION>
Year ended June 30,
-------------------------------------------
2000 1999 1998
-------------------------------------------
<S> <C> <C> <C>
Loss from continuing operations........................................ $(47,844,000) $(1,715,400) $ (208,500)
Income from discontinued operations, net of taxes...................... 1,967,000 3,117,600 3,575,200
------------------------------------------------------------------------------------------------------------------
Net (loss) income $(45,877,000) 1,402,200 3,366,700

Weighted average shares of common stock outstanding.................... 10,153,565 6,498,204 6,246,545

Basic and diluted (loss) earnings per share:
Continued operations........................................... $ (4.71) $ (0.26) $ (0.03)
Discontinued operations........................................ 0.19 0.48 0.57
------------------------------------------------------------------------------------------------------------------
(Loss) earnings per share.............................................. $ (4.52) $ 0.22 $ 0.54
------------------------------------------------------------------------------------------------------------------
</TABLE>

Outstanding options and warrants to purchase shares of the Company's Common
Stock at June 30, 2000, 1999 and 1998 were excluded from the computation of
diluted earnings per share because their effect on loss per share from
continuing operations was antidilutive.

10. RELATED PARTY TRANSACTIONS

Loans to ePagos, Inc. During fiscal year 1999, the Company made a short-
term loan to ePagos, Inc. (formerly Telcom.Net, L.P.) in the amount of $50,000
and paid expenses of approximately $65,000 on their behalf. As of June 30, 2000,
all amounts owed to the Company had been collected. Joel Eidelstein, President
of the Company, indirectly owns a minority interest in ePagos. IFX currently
owns approximately 17% of ePagos' stock on a fully-diluted basis.

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Technology in which ITI contributed $1 million to IFX and International
Technology received 500,000 shares of Common Stock from IFX, at a price of $2.00
per share, for its contribution and the option to acquire 5.5 million IFX
shares. As of the date of this report, International Technology has contributed
$11 million in additional capital to IFX in exchange for 5,500,000 additional
shares of Common Stock from IFX, at a purchase price of $2.00 per share.

Tutopia.com, Inc. On August 31, 2000, an entity controlled by Lee Casty,
purchased approximately 2,317,500 preferred shares of Tutopia.com, Inc. in
exchange for $4.9 million. At the time of this transaction, IFX controlled
approximately 85% of the Tutopia.com, Inc. stock.

Tutopia Share Purchases. During the past fiscal year, James Casty, a trust
established for Scott Casty, and Nikrey Investment Group LP, a company
substantially all of which is owned by Ronald Casty and James Casty, purchased
shares of Class B Common Stock of Tutopia at a price of $3.00 per share. James
Casty, Scott Casty and Ronald Casty are brothers of Lee Casty, who was then a
significant stockholder of IFX. The purchases were made pursuant to a private
placement of $5,000,000 of Class B Common Stock of Tutopia. James Casty
purchased 53,333 shares in the offering; the trust benefiting Scott Casty
purchased 53,333 shares; and Nikrey purchased 53,333 shares. Additionally, on
August 31, 2000, James Casty purchased 53,591 shares of preferred stock of
Tutopia. The purchase was made pursuant to a private placement of $20,000,000 of
preferred stock of Tutopia.

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. GEOGRAPHIC INFORMATION

In fiscal 1999, the Company adopted SFAS No. 131, "Disclosure About
Segments of an Enterprise and Related Information". The new standard changes the
information the Company reports about its operating segments. Operating segment
information for prior years has been restated to conform to the 2000
presentation.

The Company is structured primarily around the geographic markets it serves
and operates reportable segments in Argentina, Bolivia, Brazil, Chile, Mexico,
United States and Venezuela. All of the segments provide Internet related
services. The accounting policies of the segments are the same as those
described in footnote 1. The Company evaluates performance based on profit or
loss from operations before income taxes excluding interest income and expense,
income (loss) from investees accounted for under the equity method, and gains or
losses from securities and other investments. The Company did not derive more
than 10% of its revenue from any individual customer.

Selected financial information for the years ended June 30, 2000 and 1999
by segment is presented below:

<TABLE>
<CAPTION>
2000 1999
------------------------------------------------------------- ----------------------------------------------------------

Depreciation Loss Depreciation Loss
and from continuing Total and from continuing Total
Revenues Amortization operations Assets Revenues Amortization operations Assets
before taxes before taxes
------------------------------------------------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Brazil $2,764,400 $ 124,100 $ (4,813,800) $19,627,800 $ - $ - $ - $ -
Chile 1,974,300 279,900 (1,965,400) 7,139,700 200,200 2,800 (77,800) 1,623,300
Mexico 1,461,900 104,700 (2,804,900) 8,530,200 137,600 7,600 (104,400) 990,600
Venezuela 1,633,300 121,200 (573,800) 3,237,900 335,000 23,600 (16,000) 1,785,400
Bolivia 660,100 194,900 (816,200) 1,366,100 61,500 5,100 (7,300) 1,015,600
Argentina 70,300 128,600 (3,226,800) 988,200 - 600 (141,900) 134,500
United
States 67,200 407,300 (24,775,900) 19,063,900 - 27,700 (1,394,700) 11,242,400
All Other 1,054,400 6,788,000 (11,638,600) 2,577,100 (9,000) 165,000 (784,300) 2,069,700
------------------------------------------------------------- ----------------------------------------------------------
Total $9,685,900 $8,148,700 $(50,615,400) $62,530,900 $725,300 $232,400 $(2,526,400) $18,861,500
============================================================= ==========================================================
</TABLE>

12. LIABILITIES RELATED TO ACQUISITIONS

On most of IFX's acquisitions, the Company pays a certain amount at the
closing ("first payment") and another amount 60 to 360 days after closing
("second payment"). The amounts owed by IFX to the ISP's it has acquired are
classified as liabilities related to acquisitions. As of June 30, 2000, IFX had
accrued liabilities on acquisitions of approximately $1.6 million payable in
cash or payable in common stock of the Company at the fair market value on the
date the obligation is settled.

13. FOREIGN TAXES RECOVERABLE

In general, IFX's foreign subsidiaries pay a Foreign Value Added Tax
("VAT") on their purchases. The foreign taxes recoverable is the difference
between what IFX has paid in VAT Taxes and what it has collected in VAT from the
Company's customers. At June 30, 2000, IFX had a net difference of approximately
$1.6 million which is classified as Foreign Taxes Recoverable in the
accompanying consolidated balance sheets.

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14. INCOME TAXES

The Company accounts for income taxes under FASB Statement No. 109,
"Accounting for Income Taxes (FASB 109)." Deferred income tax assets and
liabilities are determined based upon differences between financial reporting
and tax bases of assets and liabilities and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected to
reverse.

The benefit for relating to income taxes for each of the years ended June
30, is as follows:

<TABLE>
<CAPTION>
Year ended June 30,
-----------------------------------------
2000 1999 1998
-----------------------------------------
<S> <C> <C> <C>
Current $2,771,400 $811,000 $108,000
Deferred - - -
-----------------------------------------
Total Benefit $2,771,400 $811,000 $108,000
=========================================
</TABLE>

The benefit reflected is due to the carry-back of current year net
operating losses to recover prior year taxes paid.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's net deferred income taxes are as follows:

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
Fiscal Year End
----------------------------------------------
2000 1999
----------------------------------------------
<S> <C> <C>
DEFERRED TAX ASSETS:
Bad debt reserve $ 347,100 $ 62,500
Depreciation 59,600 59,600
Other accruals 56,100 38,300
Amortization 1,390,500 43,800
Gain on investment 1,674,500 --
Other assets -- 179,300
Tax credits 761,400 --
NOL carry-forward 9,639,100 --
----------------------------------------------
Deferred tax assets 13,928,300 383,500
Less valuation allowance (13,702,900) -
----------------------------------------------
Total deferred tax assets $ 225,400 $ 383,500

Deferred tax liabilities:
Other liabilities (225,400) (383,500)
Total deferred tax liabilities (225,400) (383,500)
----------------------------------------------
Total net deferred taxes $ (0) $ (0)
==============================================
</TABLE>

SFAS 109 requires a valuation allowance to reduce the deferred tax assets
reported if, based on the weight of the evidence, it is more likely than not
that some portion or all of the deferred tax assets will not be realized. After
consideration of all the evidence, both positive and negative, management has
determined that a $13.7 million valuation allowance is appropriate. The change
in the valuation allowance for the current year is $13.7 million. At June 30,
2000, the Company has available net operating loss carry forwards as follows:

<TABLE>
<CAPTION>
Losses expiring in fiscal 2001-2003
-----------------------------------
<S> <C>
El Salvador $ (419,900)
Guatemala (202,700)
Costa Rica (296,100)
Honduras (248,100)
Uruguay (46,000)
Venezuela (573,800)

Losses expiring in fiscal 2004-2005
-----------------------------------
Nicaragua $ (27,200)
Argentina (3,226,800)
Colombia (1,127,900)
Panama (256,400)

Losses expiring after 2010
--------------------------
Mexico $ (3,320,600)
United States (35,682,900)

Losses with indefinite life:
----------------------------
Bolivia $ (710,300)
Brazil (4,813,800)
Chile (1,965,400)
</TABLE>

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The United States and foreign components of loss from continuing operations
before income taxes are as follows:

<TABLE>
<CAPTION>
For the Year Ending June 30,
--------------------------------------------------
2000 1999 1998
--------------------------------------------------
<S> <C> <C> <C>

United States $(24,775,900) $(1,458,500) $(316,500)
Foreign (25,839,500) (1,067,900) -
--------------------------------------------------
Total $(50,615,400) $(2,526,400) $(316,500)
==================================================
</TABLE>

Reconciliation of the total provision for income taxes to the Federal
statutory rate for the years ended June 30, is as follows:

<TABLE>
<CAPTION>
Years ended June 30
------------------------------------------------------------------
2000 1999 1998
------------------------------------------------------------------
<S> <C> <C> <C>
Tax at U.S. statutory rate (34)% (34)% (34)%
State taxes, net of federal benefit (2)% -- --
Stock option expense 3% -- --
Warrant expense 1% -- --
Other -- 2% --
Change in valuation allowance 27% -- --
(5)% (32)% (34)%
==================================================================
</TABLE>

During fiscal year 2000, IFX received a refund of approximately $0.5
million related to the carry back of net operating loss which were recorded in
fiscal 1999.

15. COMMITMENTS AND CONTINGENCIES

Operating and Capital Leases

The Company maintains facilities and offices at various locations
throughout the United States and Latin America for general corporate purposes,
including technology centers, customer call centers, office space and
headquarters. In addition, the company leases satellite bandwidth from various
vendors. At June 30, 2000, the operating lease commitments for these facilities
and for satellite bandwidth were approximately $4.8 million through the year
2005. The majority of this commitment is related to office space leased in Miami
Lakes, Florida, which serves as the Company's base operations for Latin America,
and amounts paid to lease satellite bandwidth.

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company also leases office space in Chicago, Illinois, but subsequent
to August 28, 1998, this space was subleased through the end of the lease term
for an amount equal to the lease payments.

Lease expense related to continuing operations, amounted to $2 million,
$60,400 and $28,800 in fiscal 2000, 1999 and 1998, respectively. In fiscal
2000, the Company entered into lease agreements in the United States for offices
in Miami Lakes, Florida; and internationally, for offices in a majority of its
Latin American operations.

At June 30, 2000, the Company had capital lease obligations of
approximately $13.9 million. All the capital leases entered into by the Company
were to finance equipment and software for the Company's Latin American network.
The majority of those payments are made to Lucent Technologies, Softech
Financial, and IBM Global Financing.

Future minimum payments under capital leases and non-cancelable operating
leases with initial terms of one year or more consisted of the following at June
30, 2000:

<TABLE>
<CAPTION>
Operating Lease Net Operating Lease Capital Lease
Fiscal Year Obligations Sublease Rentals Obligations Obligations Total Obligations
----------- --------------- ---------------- ------------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
2001 $3,059,000 $ (385,800) $2,673,200 $ 3,265,000 $ 5,938,200
2002 1,328,200 (397,500) 930,700 4,448,900 5,379,600
2003 822,600 (66,600) 756,000 4,704,100 5,460,100
2004 391,200 - 391,200 1,377,300 1,768,500
2005 57,400 - 57,400 72,400 129,800
-----------------------------------------------------------------------------------------------------------
Total lease obligations $5,658,400 $ (849,900) $4,808,500 $13,867,700 $18,676,200
Amount representing
interest 2,899,900
-----------------
Present value of net
minimum lease payments $10,967,800
=================
</TABLE>

Acquisition Agreements

The Company is liable to the former shareholders of certain entities which
were acquired in fiscal 2000 for approximately $1.6 million. The amount is
payable in common stock of the Company at the fair market value on the date the
obligation is settled.

Other

A limited indemnification agreement was issued to a buyer of the Company's
brokerage assets. This agreement covers potential customer claims arising from
activity prior to the sale.

Employment agreements

The Company has employment agreements with several of its officers. The
agreements generally require continuation of salary of between $200,000-$250,000
per year, each, and provide other benefits subsequent to termination or change
of control in the Company. In addition, any unvested stock options held by the
officers immediately vest upon employment termination or change in control of
the Company.

16. LITIGATION

The Company is a defendant in, and may be threatened with, various legal
proceedings arising from its regular business activities. Management, after
consultation with legal counsel, is of the opinion that the ultimate liability,
if any, resulting from any pending action or proceedings will not have a
material effect on the financial position or results of operations of the
Company. In addition, certain of the Company's discontinued operations are
involved in litigation which may impact the Company in the event of an
unfavorable outcome. The Company believes that any loss which may be incurred
will not have a material effect in the Company's financial position or results
of operations.

17. SUBSEQUENT EVENTS

IBM Global Financing. During August 2000, IBM Global financing increased
the amount of borrowings available under the lease agreement from $0.4 million
to $2.2 million subject to certain conditions.

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Speedcom Wireless International Corporation. During July 2000, the
Company entered into an $1.2 million lease agreement with Speedcom, a wireless
equipment provider. Under the terms of the agreement, IFX will lease up to $1.2
million of wireless equipment from Speedcom to develop the Company's network
across all Latin America. As of August 31, 2000, IFX has leased approximately
$0.6 million under this agreement.

Network Appliance. During September 2000, IFX entered into a $1.4 million
lease agreement with Network Appliance, a storage and caching provider. Under
the terms of the agreement, IFX has the option to lease up to $1.4 million of
storage and caching equipment from Network Appliance. As of September 15, 2000,
IFX had approximately $0.4 million under this lease agreement.

UBS Capital Americas III, L.P., $25 million investment in IFX. On June
16, 2000, IFX announced that it had secured a $25 million round of private
equity financing lead by UBS Capital Americas III, L.P. ("UBS Capital
Americas"). On that date, the Company received $14.9 million and the
remaining $10.1 was received on July 21, 2000. In exchange, IFX issued a total
of 2,030,869 Preferred Shares. Each Series A Preferred Share is currently
exchangeable for 1 share of IFX common stock. The proceeds will be used in part
to further the integration of IFX's information systems infrastructure, to
increase marketing activities and to expand the Company's direct sales force to
service the small and medium enterprise market in Latin America. In addition,
IFX plans to use the proceeds to expand further to increase the number of
company-owned POPs in Latin America as well as broaden its value-added service
offerings to its growing corporate customers.

UBS Capital Americas III, L.P. led $20 million investment in Tutopia.com.
On August 31, 2000, Tutopia.com, Inc., received $20 million of private equity
financing from a group led by UBS Capital Americas. An entity controlled by Mr.
Lee Casty participated in this group, and accounted for approximately $4.9
million of the group's investment. Following this financing, assuming the
exchange of the Tutopia Series A Preferred Stock received by the group for
Tutopia Common Stock, IFX will own approximately 47% of the outstanding stock of
Tutopia. UBS Capital Americas and its affiliates which purchased Tutopia Series
A Preferred Stock have the right to appoint a majority of Tutopia's directors,
the entity controlled by Mr. Casty has the right to appoint one director of
Tutopia, and IFX has the right to appoint one director of Tutopia. Prior to the
UBS-led investment, Tutopia represented one of our two major business lines.
Following the UBS-led investment, we expect that Tutopia will be our largest
single customer. IFX has entered into am agreement with Tutopia to provide
Internet connectivity services to Tutopia for a period of three years. Either
IFX or Tutopia can renew the interconnectivity agreement for a fourth year.
After that agreement terminates, there can be no assurances that we will be the
sole supplier of Internet connectivity services to Tutopia.

<PAGE>

The following pro forma statement of operations reflects how IFX's
statement of operations would look if Tutopia had been treated as a minority
subsidiary of IFX as of July 1, 1999.

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
IFX Consolidated Tutopia Adjustments IFX Pro Forma
---------------- ------------------- --------------
<S> <C> <C> <C>
REVENUES:
Dial-up.................................................... $ 7,250,600 $ - $ 7,250,600
Dedicated line services.................................... 1,351,100 - 1,351,100
Web hosting and design services............................ 379,000 - 379,000
Other...................................................... 705,200 4,060,600 4,765,800
-------------------------------------------------------------------------------------------------------------------------
Total revenues........................................ 9,685,900 4,060,600 13,746,500
-------------------------------------------------------------------------------------------------------------------------

COSTS AND EXPENSES:
Cost of revenues........................................... 8,217,200 - 8,217,200
General and administrative................................. 22,283,800 (3,635,800) 18,648,000
Sales and marketing........................................ 9,177,400 (6,986,700) 2,190,700
Depreciation and amortization.............................. 8,148,700 (95,600) 8,053,100
Non-cash stock compensation................................ 6,359,100 - 6,359,100
Contract cancellation costs................................ 6,815,700 (1,909,000) 4,906,700
-------------------------------------------------------------------------------------------------------------------------
Total operating expenses........................... 61,001,900 (12,627,100) 48,374,800
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Operating loss from continuing operations.......... (51,316,000) 16,687,700 (34,628,300)
-------------------------------------------------------------------------------------------------------------------------

OTHER INCOME (EXPENSE):
Interest income............................................ 414,800 (71,500) 343,300
Interest expense........................................... (595,300) - (595,300)
Minority interest in subsidiary............................ 1,110,100 (8,919,700) (7,809,600)
Loss from operations of equity investees................... (330,200) - (330,200)
Other................................................... 101,200 - 101,200
-------------------------------------------------------------------------------------------------------------------------
Total other income, net.............................. 700,600 (8,991,200) (8,290,600)
-------------------------------------------------------------------------------------------------------------------------

Loss from continuing operations before income taxes......... (50,615,400) 7,696,500 (42,918,900)
Income tax benefit.......................................... 2,771,400 - 2,771,400
-------------------------------------------------------------------------------------------------------------------------
Loss from continuing operations............................. (47,844,000) 7,696,500 (40,147,500)
-------------------------------------------------------------------------------------------------------------------------
Income from discontinued operations, net of taxes........... 1,967,000 - 1,967,000
-------------------------------------------------------------------------------------------------------------------------
Net (loss) income.................................... $(45,877,000) 7,696,500 $(38,180,500)
-------------------------------------------------------------------------------------------------------------------------

BASIC AND DILUTED (LOSS) INCOME PER SHARE:
Continuing operations...................................... $(4.71) - $(3.95)
Discontinued operations.................................... 0.19 - 0.19
-------------------------------------------------------------------------------------------------------------------------
Net (loss) income.................................... $(4.52) - $(3.76)
-------------------------------------------------------------------------------------------------------------------------

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted.......................................... 10,153,565 - 10,153,565
=========================================================================================================================
</TABLE>

<PAGE>

IFX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

18. QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
Quarters ended
9/30/99 12/31/99 3/31/00 6/30/00 Total
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue $ 1,218,600 $ 2,598,000 $ 3,269,200 $ 2,599,200 $ 9,685,000
Operating loss (5,101,000) (7,036,700) (13,696,600) (25,481,700) (51,316,000)
Loss from continuing operations (4,131,500) (6,396,400) (11,762,900) (25,553,200) (47,844,000)
Income from discontinued operations, net 442,300 497,700 494,600 532,400 1,967,000
Net loss (3,689,200) (5,898,700) (10,966,700) (25,322,400) (45,877,000)

Per share - basic and diluted:
Continuing operations $ (0.56) $ (0.74) $ (1.01) $ (2.40) $ (4.71)
Discontinued operations $ 0.06 $ 0.06 $ 0.04 $ 0.03 $ 0.19
Net loss $ (0.50) $ (0.68) $ (0.97) $ (2.37) $ (4.52)

<CAPTION>
Quarters ended
9/30/98 12/31/98 3/31/99 6/30/99 Total
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue $ - $ - $ - $ 725,300 $ 725,300
Operating loss (150,300) (302,200) (647,800) (1,830,700) (2,931,000)
Loss from continuing operations (123,500) (135,700) (542,000) (914,200) (1,715,400)
Income from discontinued operations, net 946,700 784,800 1,036,000 350,100 3,117,600
Net income (loss) $ 823,200 $ 649,100 $ 494,000 $ (564,100) $ 1,402,200

Per share - basic and diluted:
Continuing operations $ (0.02) $ (0.02) $ (0.08) $ (0.14) $ (0.26)
Discontinued operations $ 0.15 $ 0.12 $ 0.16 $ 0.05 $ 0.48
Net income (loss) $ 0.13 $ 0.10 $ 0.07 $ (0.08) $ 0.22
</TABLE>

<PAGE>

SCHEDULE II

IFX CORPORATION AND SUBSIDIARIES

Valuation and Qualifying Accounts
(For Continuing Operations)

<TABLE>
<CAPTION>
Additions
------------------------------------------
Balance at Charged to
Beginning of (Benefits Against) Charged to Other Deductions Balance at End
Description Period Costs and Expenses Accounts (Describe) (Describe) of Period
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Allowance for Doubtful Accounts
For the year ended June 30, 2000 $80,100 $842,400 $ -- $ -- $ 922,500
For the year ended June 30, 1999 (a) -- 80,100 -- -- $ 80,100
For the year ended June 30, 1998 (a) -- -- -- -- $ --
</TABLE>
-------------------

(a) Reclassified to net assets of discontinued operations.

<PAGE>

SIGNATURES
--------------------------------------------------------------------------------

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form 10-K and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Miami, State of Florida, on September 27, 2000.

IFX CORPORATION

/s/ Jose Leiman
By:_______________________
Jose Leiman,
Chief Financial Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jose Leiman, and each of them, his/her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, to sign, execute and file with the Securities and Exchange
Commission (or any other governmental or regulatory authority), for us and in
our names in the capacities indicated below, this registration statement on Form
10-K (including all amendments thereto) with all exhibits and any and all
documents required to be filed with respect thereto, granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do
and to perform each and every act and thing necessary and/or desirable to be
done in and about the premises in order to effectuate the same as fully to all
intents and purposes as he himself/she herself might or could do if personally
present, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and the on the dates indicated:

Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael Shalom
______________________________ Chief Executive Officer September 28, 2000
Michael Shalom (Principal Executive Officer)

/s/ Jose Leiman
_____________________________ Chief Financial Officer September 28, 2000
Jose Leiman (Principal Financial and Accounting
Officer)
/s/ Joel M. Eidelstein
______________________________ President and Director September 28, 2000
Joel M. Eidelstein

/s/ Charles Moore
______________________________ Director September 28, 2000
Charles Moore

/s/ Mark O. Lama
______________________________ Director September 28, 2000
Mark O. Lama

/s/ George A. Myers
______________________________ Director September 28, 2000
George A. Myers

/s/ Zalman Lekach
______________________________ Vice President and Director September 28, 2000
Zalman Lekach

/s/ Burton J. Meyer
______________________________ Director September 28, 2000
Burton J. Meyer
</TABLE>