IFX CORP, 10-K/A, 2000-11-20

IFX CORP
10-K/A, 2000-11-20
COMPUTER PROGRAMMING, DATA PROCESSING, ETC.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

----------------

FORM 10-K/A

(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

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IFX Corporation
(Exact name of registrant as specified in its charter)

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

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

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

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

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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:

<TABLE>
<CAPTION>
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
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
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
</TABLE>
--------
*Current ownership is 100% of the equity interests except as otherwise noted.
Ownership amounts are approximate.

. 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.

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. 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.

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.

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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 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.

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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.

. 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

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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 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.

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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.

. 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.

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. 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,

. copyright, trademark and patent infringement,

. pornography, and

. nature and content of Internet materials.

11
<PAGE>

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.

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.

12
<PAGE>

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.

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 arose 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.

13
<PAGE>

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.

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.

14
<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>
High Low
------ ------
<S> <C> <C>
Fiscal Year 1998 (July 1, 1997--June 30, 1998):
First Quarter............................................... $ 1.09 $ 0.94
Second Quarter.............................................. 2.50 0.94
Third Quarter............................................... 2.63 1.41
Fourth Quarter.............................................. 2.94 1.81

<CAPTION>
High Low
------ ------
<S> <C> <C>
Fiscal Year 1999 (July 1, 1998--June 30, 1999):
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>
High Low
------ ------
<S> <C> <C>
Fiscal Year 2000 (July 1, 1999--June 30, 2000):
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.

15
<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,
----------------------------------------------------------------
2000(1) 1999 1998 1997 1996
------------ ----------- ----------- ----------- -----------
(Restated)
<S> <C> <C> <C> <C> <C>
Statement Of Operations
Data:
Revenues from
continuing
operations............ $ 10,689,300 $ 725,300 $ -- $ -- $ --
Cost and expenses from
continuing operations:
Cost of revenues....... 8,487,000 445,500 -- -- --
General and
administrative........ 22,940,100 2,691,800 729,400 1,306,000 1,566,700
Sales and Marketing.... 9,238,700 247,600 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............ 61,989,300 3,656,300 733,100 1,306,000 1,629,000
------------ ----------- ----------- ----------- -----------
Operating loss from
continuing operations.. (51,300,000) (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....... (611,300) -- -- -- --
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... 684,600 404,600 416,600 657,700 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>
--------
(1) See Note 1 to financial statements for further discussion relating to
restatement of certain revenues and certain expenses in the year ended
June 30, 2000.

16
<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.

17
<PAGE>

The IFX network is composed of the following:

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

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

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.

18
<PAGE>

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.

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.

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 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 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, 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.

19
<PAGE>

$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.

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

Restatement

Subsequent to the issuance of the Company's June 30, 2000 consolidated
financial statements, management determined certain of the Company's revenues
and expenses were understated for the year ended June 30, 2000. There was no
effect on the Company's loss or loss per share as previously reported as a
result of this understatement.

The accompanying consolidated financial statements for the year ended June
30, 2000 have been restated to reflect the changed amounts for these
consolidated statement of operations line items.

The following table summarizes the effects of the restatement on the
Company's June 30, 2000 consolidated statement of operations line items
affected:

<TABLE>
<CAPTION>
As
Previously
Reported As Restated
----------- -----------
<S> <C> <C>
Dial-up revenues................................. $ 7,250,600 $ 8,249,600
Other revenues................................... 705,200 709,600
Cost of revenues................................. 8,217,200 8,487,000
General and administrative....................... 22,283,800 22,940,100
Sales and marketing.............................. 9,177,400 9,238,700
Interest expense................................. $ 595,300 $ 611,300
</TABLE>

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.

20
<PAGE>

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 $10.7 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....................... $ 8,249,600 $616,300 1,239%
Dedicated line services....... 1,351,100 28,200 4,691%
Web hosting and design
services..................... 379,000 80,800 369%
Other......................... 709,600 -- --
----------- -------- -----
Total....................... $10,689,300 $725,300 1,374%
=========== ======== =====
</TABLE>

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 Revenue
in 1999 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 $8.5 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

21
<PAGE>

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 $22.9 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 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).

22
<PAGE>

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.

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.

23
<PAGE>

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.

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.

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

24
<PAGE>

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.

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.

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>

25
<PAGE>

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 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.

26
<PAGE>

(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.

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

27
<PAGE>

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
Compensation Compensation
----------------- ------------------
Securities
Name and Principal Year Ended Salary Bonus Underlying Options All other
Position June 30 ($) ($) (#) Compensation
------------------ ---------- ------ -------- ------------------ ------------
<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>

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
-------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Number of Assumed Annual Rates of Stock
Securities Percent of Total Price Appreciation for Option
Underlying Options Granted Exercise Term (2)
Options To Employees in Price Expiration -----------------------------
Name Granted Fiscal Year ($/Share) Date (1) 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>

28
<PAGE>

--------
(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
Shares Acquired Options/SARs at June 30, 2000
Name on Exercise Value Realized ($) 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>

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

29
<PAGE>

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 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)

30
<PAGE>

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.

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 Approximate
Name / Address (1) of Beneficial Ownership Percent of Class
------------------ ----------------------- ----------------
<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
Investments(10)........................ 6,000,000 44.98%
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 GROUP... 8,706,478 39.50%
</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.

31
<PAGE>

(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.

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.

32
<PAGE>

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.

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.

33
<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.

<TABLE>
<CAPTION>
Page No
-------
<S> <C>
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
</TABLE>

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.

34
<PAGE>

IFX Corporation Exhibit Index

<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
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
</TABLE>

35
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
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

36
<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.

As discussed in Note 1, certain revenues and expenses in the accompanying
consolidated financial statements have been restated for the year ended June
30, 2000.

/s/ Ernst & Young LLP

Miami, Florida
September 22, 2000, except for
the last paragraph of Note 1
as to which the date is
November 15, 2000.

37
<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

38
<PAGE>

IFX Corporation and Subsidiaries

Consolidated Balance Sheets

<TABLE>
<CAPTION>
June 30, June 30,
2000 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 $80,100 at June 30, 2000
and 1999, respectively........................... 1,295,900 458,300
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,
respectively..................................... 21,220,500 2,686,600
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.

39
<PAGE>

IFX Corporation and Subsidiaries

Consolidated Statements Of Operations

<TABLE>
<CAPTION>
12 Months Ended
June 30,
------------------------------------
2000 1999 1998
------------ ---------- ----------
(Restated)
<S> <C> <C> <C>
REVENUES:
Dial-up................................ $ 8,249,600 $ 616,300 $ --
Dedicated line services................ 1,351,100 28,200 --
Web hosting and design services........ 379,000 80,800 --
Other.................................. 709,600 -- --
------------ ---------- ----------
Total revenues....................... 10,689,000 725,300 --
------------ ---------- ----------
COSTS AND EXPENSES:
Cost of revenues....................... 8,487,000 445,500 --
General and administrative............. 22,940,100 2,691,800 729,400
Sales and marketing.................... 9,238,700 247,600 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............. 61,989,300 3,656,300 733,100
------------ ---------- ----------
Operating loss from continuing opera-
tions................................. (51,300,000) (2,931,000) (733,100)
------------ ---------- ----------
OTHER INCOME (EXPENSE):
Interest income........................ 414,800 376,100 290,100
Interest expense....................... (611,300) -- --
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.............. 684,600 404,600 416,600
------------ ---------- ----------
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.

40
<PAGE>

IFX Corporation and Subsidiaries

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

<TABLE>
<CAPTION>
Accumulated
Common Stock 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.

41
<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 basis........................ (528,500) (229,000) 219,200
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.

42
<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.

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,

43
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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.

44
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

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.

45
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

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

46
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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.

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.

Restatement

47
<PAGE>

The accompanying consolidated financial statements for year ended June 30,
2000 have been restated to reflect the changed amounts for these consolidated
statement of operations line items.

The following table summarizes the effects of the restatement on the
Company's June 30, 2000 consolidated statement of operations line items
affected:

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.

48
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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:

<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................................. $ 14,306,500 $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

49
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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 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
Cancelled..................................... -- --
--------- ------
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:

<TABLE>
<CAPTION>
Weighted Average
Number of Weighted Average Remaining Contractual Number Weighted Average
Exercise Price 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>

50
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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.

<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>

51
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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.

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.

52
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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.

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.

53
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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.

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"). 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.

54
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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.

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.

55
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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
-------------------------------------------------- ------------------------------------------------
Loss from Loss from
Depreciation continuing Depreciation continuing
and operations Total and operations Total
Revenues Amortization before taxes Assets Revenues Amortization before taxes Assets
----------- ------------ ------------ ----------- -------- ------------ ------------ -----------
(Restated)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Brazil................. $ 3,767,800 $ 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................. $10,689,300 $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.

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.

56
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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:

<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>

57
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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>
<S> <C>
Losses expiring in fiscal 2001-2003
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>

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>

58
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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.

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>
Capital
Operating Lease Sublease Net Operating Lease Total
Fiscal Year Obligations Rentals Lease Obligations Obligations 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 pay-
ments................ $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.

59
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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.

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,

60
<PAGE>

IFX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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.

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.

<TABLE>
<CAPTION>
IFX Tutopia IFX
Consolidated Adjustments Pro Forma
------------ ------------ ------------
(Restated)
<S> <C> <C> <C>
REVENUES:
Dial-up............................ $ 8,249,600 $ -- $ 8,249,600
Dedicated line services............ 1,351,100 -- 1,351,100
Web hosting and design services.... 379,000 -- 379,000
Other.............................. 709,600 4,060,600 4,770,200
------------ ------------ ------------
Total revenues................... 10,689,300 4,060,600 14,749,900
------------ ------------ ------------
COSTS AND EXPENSES:
Cost of revenues................... 8,487,000 -- 8,487,000
General and administrative......... 22,940,100 (3,635,800) 19,304,300
Sales and marketing................ 9,238,700 (6,986,700) 2,252,000
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......... 61,989,300 (12,627,100) 49,362,200
------------ ------------ ------------
Operating loss from continuing
operations...................... (51,300,000) 16,687,700 (34,612,300)
------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest income.................... 414,800 (71,500) 343,300
Interest expense................... (611,300) -- (611,300)
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.......... 684,600 (8,991,200) (8,306,600)
------------ ------------ ------------
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) $ 0.76 $ (3.95)
Discontinued operations............ 0.19 -- 0.19
------------ ------------ ------------
Net (loss) income................ $ (4.52) $ 0.76 $ (3.76)
------------ ------------ ------------
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic and diluted.................. 10,153,565 -- 10,153,565
============ ============ ============
</TABLE>

61
<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 6/30/00 Total
----------- ----------- ------------ ------------ ------------ ------------
(As (As
restated) reported)
<S> <C> <C> <C> <C> <C> <C>
Revenue................. $ 1,218,600 $ 2,598,000 $ 3,269,200 $ 3,603,500 $ 2,599,200 $ 10,689,300
Operating loss.......... (5,101,000) (7,036,700) (13,696,600) (25,465,700) (25,481,700) (51,300,000)
Loss from continuing
operations............. (4,131,500) (6,396,400) (11,461,300) (25,854,800) (25,854,800) (47,844,000)
Income from discontinued
operations, net........ 442,300 497,700 494,600 532,400 532,400 1,967,000
Net loss................ (3,689,200) (5,898,700) (10,966,700) (25,322,400) (25,322,400) (45,877,000)
Per share--basic and
diluted:
Continuing operations. $ (0.56) $ (0.74) $ (1.01) $ (2.40) $ (2.40) $ (4.71)
Discontinued
operations........... $ 0.06 $ 0.06 $ 0.04 $ 0.03 $ 0.03 $ 0.19
Net loss.............. $ (0.50) $ (0.68) $ (0.97) $ (2.37) $ (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> <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>

62
<PAGE>

SCHEDULE II

IFX CORPORATION AND SUBSIDIARIES

Valuation and Qualifying Accounts
(For Continuing Operations)

<TABLE>
<CAPTION>
Additions
---------------------------------
Balance at Charged to Charged to Balance
Beginning (Benefits Against) Other Accounts Deductions at End
Description of Period Costs and Expenses (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.

63
<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:

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
/s/ Michael Shalom Chief Executive Officer September 28, 2000
____________________________________ (Principal Executive
Michael Shalom Officer)

/s/ Jose Leiman Chief Financial Officer September 28, 2000
____________________________________ (Principal Financial and
Jose Leiman 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>