As filed with the Securities and Exchange Commission on September 4, 1998.
Registration No. 333-____________
________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________________________
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
______________________________
I-LINK INCORPORATED
(Exact name of registrant as specified in its charter)
(formerly Medcross, Inc.)
FLORIDA 59-2291344
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
13751 S. WADSWORTH PARK DRIVE, SUITE 200, DRAPER, UT 84020
TELEPHONE (801) 576-5000, FACSIMILE (801) 576-4295
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
______________________________
JOHN W. EDWARDS, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
I-LINK INCORPORATED
13751 S. WADSWORTH PARK DRIVE, SUITE 200, DRAPER, UT 84020
(801) 576-5000, FACSIMILE (801) 576-4295
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
______________________________
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, as amended ("Securities Act"), other than securities offered
only in connection with dividend or interest reinvestment plans, check the
following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
(cover continued overleaf)
<PAGE> i
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of each Class Maximum Maximum Amount of
of Securities to Amount to be Offering Aggregate Registration
be Registered Registered Price per Share Offering Price Fee
- ------------------- ------------ --------------- -------------- ------------
<S> <C> <C> <C> <C>
Common Stock (1) 6,481,481 $2.70 $17,499,999 $ 5,162.50
Common Stock (2) 972,222 $2.70 $ 2,624,999 774.37
Common Stock (3) 250,000 $5.873 $ 1,468,250 433.13
Common Stock (3) 100,000 $4.00 $ 400,000 118.00
Common Stock (3) 75,000 $4.894 $ 367,050 108.28
--------
Total $6,596.28
========
</TABLE>
(1) Issuable upon conversion of Series F Preferred Stock. Amount and price
calculated pursuant to the terms of the Series F Preferred Stock.
Pursuant to Rule 416, this Registration Statement also covers such
additional number of shares of Common Stock as may be issuable pursuant
to anti-dilution provisions of the Series F Preferred Stock.
(2) Issuable as dividends payable upon Series F Preferred Stock. Amount and
price calculated pursuant to the terms of the Series F Preferred Stock.
Pursuant to Rule 416, this Registration Statement also covers such
additional number of shares of Common Stock as may be issuable as
dividends pursuant to anti-dilution provisions of the Series F Preferred
Stock.
(3) Issuable upon exercise of Financing Warrants. Pursuant to Rule 416, this
Registration Statement also covers such additional number of shares of
Common Stock as may be issuable pursuant to anti-dilution provisions of
the Financing Warrants.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said
Section 8(a),may determine.
<PAGE> ii
PROSPECTUS
I-LINK INCORPORATED
7,878,703 SHARES OF COMMON STOCK
This Prospectus relates to the issuance to and the offer and resale by the
holders thereof of up to 6,481,481 shares ("Conversion Shares") of Common
Stock, par value $.007 per share ("Common Stock") issuable upon the
conversion of 1,000 shares of 5% Series F Convertible Preferred Stock, par
value $10.00 per share (the "Series F Preferred Stock") previously issued by
I-Link Incorporated, a Florida corporation (the "Company"). This Prospectus
also relates to the issuance to and the offer and resale by the holders
thereof of up to 972,222 shares (the "Dividend Shares") of Common Stock
issuable as dividends payable upon the Series F Preferred Stock, and to the
issuance to and the offer and resale by the holders thereof of up to 425,000
shares ("Financing Warrant Shares") issuable upon exercise of warrants (the
"Financing Warrants") issued by the Company to three entities. The
Conversion Shares, Dividend Shares and Financing Warrant Shares are referred
to collectively as the "Registered Securities." See "Description of
Securities." Holders of Series F Preferred Stock, Conversion Shares,
Dividend Shares, Financing Warrants or Financing Warrant Shares may be
referred to hereinafter as "Selling Securityholders."
On August 31, 1998 the closing sale price of the Company's Common Stock as
reported by the Nasdaq SmallCap Market ("Nasdaq") was $3.438. As of the same
date, the effective Conversion Price relating to the Series F Preferred Stock
was $2.70.
So long as the Registration Statement of which this Prospectus forms a part
is effective and the disclosure set forth herein is current, the holders of
Registered Securities may sell such shares publicly. The securities offered
by this Prospectus may be sold from time to time by the holders thereof. The
distribution of the Registered Securities by the holders thereof may be
effected in one or more transactions that may take place on the
over-the-counter market including ordinary broker's transactions, privately
negotiated transactions or through sales to one or more dealers for resale of
such securities as principals at market prices prevailing at the time of sale
at prices related to such prevailing market prices or at negotiated prices.
Usual and customary or specifically negotiated brokerage fees or commissions
may be paid by the holders of Registered Securities in connection with sales
of such securities.
The Company will not receive any of the proceeds from the resale of any of
the Registered Securities by the holders thereof. All costs incurred in the
registration of the Registered Securities offered hereby have been borne by
the Company. See "Use of Proceeds."
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK AND
DILUTION. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is September [], 1998
<PAGE> 1
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith, files reports, proxy statements and other information including
annual and quarterly reports on Forms 10-K and 10-Q (File No. 0-17973) (the
"Exchange Act Filings") with the Securities and Exchange Commission (the
"Commission"). The Company filed with the Commission in Washington, D.C. a
Registration Statement on Form S-3 under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the securities described
herein. This Prospectus does not contain all of the information set forth in
the Registration Statement and the exhibits thereto. For further information
about the Company and the securities described herein, reference is made to
the Registration Statement and to the exhibits filed therewith. The
statements contained in this Prospectus with respect to the contents of any
agreement or other document referred to herein are not necessarily complete
and, in each instance, reference is made to a copy of such agreement or
document as filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by reference to the provisions of
the relevant documents. The Registration Statement, including the exhibits
thereto, and the Company's Exchange Act Filings may be inspected at: (i) the
public reference facilities of the Commission located at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; and (ii) the offices
of the Commission located at Citicorp Center, 500 West Madison Street, Room
1400, Chicago, Illinois 60661, and (iii) the offices of the Commission
located at 7 World Trade Center, 13 Floor, New York, New York 10048. Copies
of such material may also be obtained upon request and payment of the
appropriate fee from the Public Reference Section of the Commission located
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, the Commission maintains a website on the Internet that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
address of the Commission's website is http://www.sec.gov.
DOCUMENTS INCORPORATED BY REFERENCE
There is hereby incorporated in this Prospectus by reference the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and
the Company's Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1998 and June 30, 1998 heretofore filed with the Commission
pursuant to the Exchange Act, to which reference is hereby made.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the securities offered hereby, shall be deemed
to be incorporated in this Prospectus by reference and to be a part hereof
from the date of filing of such documents.
The Company will provide without charge to each person who receives this
Prospectus, upon written or oral request of such person, a copy of any
information which has been incorporated by reference herein (not including
exhibits to the information incorporated by reference unless the exhibits are
themselves specifically incorporated by reference). Such requests should be
made to I-Link Incorporated, 13751 S. Wadsworth Park Drive, Suite 200,
Draper, Utah 84020, Attention: Corporate Secretary.
<PAGE> 2
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and
financial statements and notes thereto appearing elsewhere in this
Prospectus. Each prospective investor is urged to read this Prospectus in
its entirety.
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical fact included in this
Prospectus, including, without limitation, the statements under "Prospectus
Summary," "Risk Factors," "Management's Discussion and Analysis" and
"Business" are forward-looking statements. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable at this time, it can give no assurance that such expectations will
prove to have been correct.
THE COMPANY
I-Link Incorporated (formerly known as Medcross, Inc.), a Florida corporation
(the "Company"), was formed in 1983. In January 1997 the Company acquired
I-Link Communications (formerly Family Telecommunications, Inc. and referred
to herein as "ILC") and in August 1997 the Company acquired MiBridge, Inc.
("MiBridge"). In 1997, the Company launched operations of a network
marketing program through I-Link Worldwide, L.L.C., to market its products.
In the first quarter of 1998, the Company formed ViaNet Technologies, Ltd.
("ViaNet"). ViaNet, headquartered in Ramat Hasharon, Israel, operates as a
wholly owned subsidiary of I-Link. The subsidiary will focus on research and
development of new communications access devices. ViaNet is I-Link's third
research and development group.
The Company's principal operation is the development, sale and delivery of
enhanced communications products and services using its own private intranet
and both owned and leased network switching and transmission facilities. The
Company provides unique communications solutions through its use of
proprietary technology acquired and developed by its subsidiaries I-Link
Systems, Inc. (formerly I-Link Worldwide, Inc.), ViaNet and MiBridge, Inc.
Telecommunications services are marketed primarily through independent
representatives to subscribers throughout the United States. The Company's
telecommunication services operations began primarily with the acquisition of
ILC, an FCC licensed long-distance carrier.
The Company's corporate offices are located at 13751 S. Wadsworth Park Drive,
Suite 200, Draper, Utah 84020; telephone (801) 576-5000.
RISK FACTORS
THE SECURITIES DESCRIBED HEREIN ARE SPECULATIVE IN NATURE AND INVOLVE A HIGH
DEGREE OF RISK. SUCH SECURITIES SHOULD BE PURCHASED ONLY BY PROSPECTIVE
INVESTORS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. THEREFORE, EACH
PROSPECTIVE INVESTOR SHOULD, PRIOR TO PURCHASE, CONSIDER VERY CAREFULLY THE
FOLLOWING RISK FACTORS, AS WELL AS ALL OF THE OTHER INFORMATION SET FORTH
ELSEWHERE HEREIN AND IN THE INFORMATION CONTAINED IN THE FINANCIAL STATEMENTS
AND THE NOTES THERETO.
ONGOING CAPITAL REQUIREMENTS; NEED TO RAISE ADDITIONAL FINANCING
The conduct of the Company's business and the continued implementation of its
business plans and operations has required and will continue to require the
availability of substantial amounts of capital. While the Company currently
has no material commitments for capital or other expenditures, other than as
<PAGE> 3
set forth herein, it is the Company's intention to continue to implement the
growth of its business and expand its operations. The Company anticipates
that revenues generated from its continuing operations will not be sufficient
during 1998 to fund its ongoing operations, the continued expansion of its
private telecommunications network facilities, and anticipated growth in
subscriber base. To provide a portion of the required capital, the Company
has entered into two financing arrangements as follows: (1) during the first
six months of 1998, the Company obtained an aggregate of $7.768 million in
new interim debt financing from Winter Harbor, L.L.C. and (2) in July 1998,
the Company entered into an agreement for the sale of a new series of
Preferred Stock for consideration in the amount of $10,000,000 (net proceeds
received of $9.47 million) with JNC Opportunity Fund Ltd. ("JNC"). The
$7.768 million Winter Harbor debt financing is due on demand. The Company may
use up to $4,000,000 of the net proceeds from the sale of the Series F
Preferred Stock to JNC to retire indebtedness owed to Winter Harbor, LLC and
to satisfy the Company's arbitration settlement with MCI Communications, Inc.
The Company anticipates that additional funds will be necessary from public
or private financing markets to fund continued operations and to successfully
integrate and finance the planned expansion of the business communications
services and to discharge the financial obligations of the Company.
RELIANCE ON KEY PERSONNEL
The Company's operations are dependent upon the continued efforts and
employment of its senior management. The officers of the Company have the
principal responsibility for management of the Company and are responsible
for making recommendations to the Board of Directors which exercises final
uthority over business decisions. While the Company has entered into
employment agreements with senior management, the loss of the services of any
of the officers or directors could be detrimental to the Company.
Furthermore, the future performance of I-Link, ILC, ViaNet and MiBridge
depends in significant part upon their ability to attract and retain key
technical, systems and sales personnel, most of whom are not bound by an
employment agreement. Competition for such personnel is intense and there
can be no assurance that the Company will be able to retain its key
technical, systems and sales personnel or that it will be able to attract
highly qualified personnel in the future.
GROWTH STRATEGY AND ACQUISITION ACTIVITIES
The Company's ability to achieve planned levels of growth and the timing
thereof will be materially impacted by its ability to acquire business
communication companies and related businesses. The Company intends to
acquire such additional companies with cash and equity securities such as
common stock or preferred stock, and/or debt instruments. To the extent that
the Company issues equity securities in connection with acquisitions, the
equity interest of its then current stockholders will be diluted. There can
be no assurance, however, that the Company will be able to acquire such
additional companies or that it will be able to use its securities in
connection with such purchases or that it will have the necessary capital
resources to purchase such companies. Although the Company believes that its
acquisition strategy will make it attractive to acquisition candidates, there
can be no assurance that the Company will successfully implement its
acquisition program.
POTENTIAL LIABILITY IN CONNECTION WITH ACQUISITIONS
The Company could become subject to liabilities arising from any acquisition
which it has effected or may hereafter effect in the event that the Company
assumes unknown or contingent liabilities or in the event that such
liabilities are imposed on the Company under theories of successor liability.
<PAGE> 4
If the Company becomes subject to such a liability of sufficient magnitude,
such liability could have a material adverse effect on the financial
condition and results of operations of the Company.
EXPECTATION OF GROWTH
The Company plans to expand I-Link's network, which expansion will require
additional capital expenditures. There is no assurance that such capital will
be available or that it will be available on terms beneficial to the Company.
Moreover, the Company's ability to effectively achieve growth will require it
to implement and improve operational, financial and management information
systems and to train, motivate and manage employees, as well as to
successfully market its products and services. These demands require the
addition of new management personnel and the development of additional
expertise by existing management. Failure to enhance customer support
resources adequately to support increases in subscribers, or to adequately
expand and enhance telecommunications infrastructure, may adversely affect
the Company's ability to successfully conduct I-Link's business in the
future. There can be no assurance that customer support or other resources
will be sufficient to achieve future growth or that the Company will be able
to implement in whole or in part the planned expansion. Any failure to do so
could have a material adverse effect on the Company's future operating
results.
I-LINK BUSINESS COMPETITION
The market for telecommunications services is extremely competitive. The
Company believes that its ability to compete in I-Link's business
successfully will depend upon a number of factors, including the pricing
policies of competitors and suppliers; the capacity, reliability,
availability and security of I-Link's Intranet infrastructure; market
presence and channel development; the timing of introductions of new products
and services into the industry; ease of access to and navigation of the
Internet or other such Data Communication Networks; the Company's ability in
the future to support existing and emerging industry standards; the Company's
ability to balance network demand with the fixed expenses associated with
network capacity; and industry and general economic trends.
While the Company believes there is currently no competitor in the North
American market providing the same type of capabilities in the same manner as
I-Link will offer using the I-Link Intranet, there are many companies that
offer business communications services, and therefore compete with the
Company at some level. These range from large telecommunications companies
and carriers such as AT&T, MCI, Sprint and LDDS/WorldCom, to smaller,
regional resellers of telephone line access. These companies, as well as
others, including manufacturers of hardware and software used in the business
communications industry, could in the future develop products and services
that could compete with those of the Company on a more direct basis. These
entities are far better capitalized than the Company and control significant
market share in their respective industry segments. In addition, there may
be other businesses that are attempting to introduce products similar to the
Company's for the transmission of business information over the Internet.
There is no assurance that the Company will be able to successfully compete
with these market participants.
DEPENDENCE ON SUPPLIERS
I-Link relies on other companies to provide data communications capacity via
leased telecommunications lines. A significant portion of the leased
telecommunications lines used by I-Link are currently provided by Sprint, US
West, Pacific Telesis, Southwest Bell, and IXC. Further, the Company uses
Sprint as the primary supplier of inbound and outbound telephone services in
<PAGE> 5
geographic areas the Company's own network does not cover. If any of
Sprint, US West, Pacific Telesis, Southwest Bell, and IXC are unable or
unwilling to provide or expand their current levels of service to the Company
in the future, the Company's operations could be materially adversely
affected. Although leased telecommunications lines are available from
several alternative suppliers, there can be no assurance that the Company
could obtain substitute services from other providers at reasonable or
comparable prices or in a timely fashion. The Company is also subject to
risks relating to potential disruptions in such telecommunications services.
No assurance can be given that significant interruptions of
telecommunications services to the Company will not occur in the future.
Changes in tariffs, regulations, or policies by any of the Company's
telecommunications providers may adversely affect the Company's ability to
continue to offer long-distance service on what it considers to be
commercially reasonable or profitable terms.
I-Link is also dependent on certain third party suppliers of hardware
components. Although I-Link currently attempts to maintain a minimum of two
vendors for each required product, certain components used by I-Link in
providing networking services are currently acquired from only one source.
I-Link may from time to time experience delays in the receipt of certain
hardware components. A failure by a supplier to deliver quality products on
a timely basis, or the inability to develop alternative sources if and as
required, could result in delays which could materially adversely affect the
Company's ability to integrate, conduct and implement expansion of I-Link's
business.
SOFTWARE AND SERVICE DEVELOPMENT; TECHNOLOGICAL CHANGE
The Company's success in I-Link's business is highly dependent upon its
ability to develop new software and services that meet changing customer
requirements. The market for I-Link's services is characterized by rapidly
changing technology, evolving industry standards, emerging competition and
frequent new software and service introductions. There can be no assurance
that the Company can successfully identify new service opportunities and
develop and bring new software and services to the market in a timely manner,
or that software, services or technologies developed by others will not
render I-Link's software, services or technologies noncompetitive or obsolete
in the future. The Company's pursuit of technological advances may require
substantial time and expense, and there can be no assurance that the Company
will succeed in adapting the services currently provided by I-Link to
alternate access devices and conduits.
DEPENDENCE ON NETWORK INFRASTRUCTURE; RISK OF SYSTEM FAILURE; SECURITY RISKS
Key to the quality of I-Link services and the future success of the Company
is the capacity, reliability and security of its network infrastructure to
support the services. The Company must expand and adapt network
infrastructure as the number of users and the amount of information they wish
to transfer increases and to meet changing customer requirements. The
expansion and adaptation of the network infrastructure will require
substantial financial, operational and management resources. There can be no
assurance, however, that the Company will be able to expand or adapt the
network infrastructure to meet additional demand or subscribers' changing
requirements on a timely basis, at a commercially reasonable cost, or at all,
or that the Company will be able to deploy successfully the contemplated
network expansion. Any failure of the Company to expand the network
infrastructure, as needed, on a timely basis or to adapt to changing
subscriber requirements or evolving industry standards could have a material
adverse effect on the Company's overall business, financial condition and
results of operations in the future.
<PAGE> 6
NEW AND UNCERTAIN BUSINESS
I-Link is a young business enterprise that is subject to all of the risks
that present themselves to early stage companies, including but not limited
to limited infrastructure, managerial resources, capitalization and market
share. There can be no assurance that I-Link will be able to successfully
compete with larger, more mature, better capitalized enterprises.
In order to realize subscriber growth, the Company must be able to replace
terminating subscribers and attract additional subscribers. However, the
sales and marketing expenses and subscriber acquisition costs associated with
attracting new subscribers are substantial. Accordingly, the Company's
ability to improve operating margins will depend in part on the ability to
retain subscribers. The Company plans to invest significant resources in the
telecommunications infrastructure, customer support resources, sales and
marketing expenses and subscriber acquisition costs. There can be no
assurance that the Company's future efforts in this area will improve
subscriber retention. Since the market for the Company's services is new and
the utility of available services is not well understood by new and potential
subscribers, it is not possible to predict future subscriber retention rates.
NETWORK MARKETING SALES PROGRAM
The Company has targeted all residential and small-business tele-
communications users through the establishment of a Network Marketing sales
program, providing individuals the opportunity to earn commissions on the
sale of the Company's products. The Company formally launched its Network
Marketing sales program in June 1997. A significant portion of the Company's
current subscriber base was recruited through the Network Marketing sales
program and future subscription growth depends in part on continued
exploitation of this sales channel.
CERTAIN RELATED PARTY TRANSACTIONS
During the first and second quarters of 1998 the Company obtained an
aggregate of $7.768 million in new interim debt financing from Winter Harbor,
L.L.C. As consideration for Winter Harbor's commitment to make the loan, the
Company agreed to issue 6,740,000 warrants to purchase common stock of the
Company at exercise prices ranging from $5.50 to $7.22 based upon 110% of the
closing price of the common stock on the day loan funds were advanced. The
warrants have exercise periods of 7.5 years from issuance. The Company also
agreed to extend the exercise period on all warrants previously issued to
Winter Harbor (10,800,000) to seven and one-half years. Pursuant to the
terms of the loan agreement with Winter Harbor, the initial borrowings of
$5,768,000 were payable upon demand by Winter Harbor no earlier than May 15,
1998, and were collateralized by essentially all of the assets of the
Company's subsidiaries. Because the loan was not repaid by May 15, 1998, the
total loan, including additional borrowings of $2,000,000 obtained in the
second quarter, continues on a demand basis with interest accruing at prime
plus four percent. Additionally, Winter Harbor has the right to elect at any
time until the loan is repaid to convert the unpaid balance of the loan into
additional shares of the Company's Series M Preferred Stock, reduce the
exercise price of the 6,740,000 Loan Warrants to $2.50 per share, and receive
an additional 5,000,000 warrants to purchase common stock of the Company at
an exercise price of $2.50 per share.
POTENTIAL ADVERSE EFFECTS OF RATE CHANGES
The Company bills its customers for the various long-distance
telecommunications services used by such customers. The total billing to each
customer is generally less than the telephone charges for the same
long-distance service that the customer would pay to a primary seller of such
<PAGE> 7
services, such as Sprint. I-Link's ability to undersell such primary seller
arises as a result of the volume discount offered to I-Link in accordance
with the terms of its contract with Sprint. The Company believes I-Link's
lower customer bills is one of the most important factors in its ability to
attract and retain customers. Therefore, narrowing of the differential
between the rates charged to the Company's customers and the cost of the
bulk-rate long-distance telecommunications services purchased by I-Link for
resale to such customers would have a significant adverse effect on I-Link.
To the extent this differential decreases, the savings I-Link is able to
obtain for its customers would decrease and I-Link would lose customers and
face increased difficulty in attracting new customers, and the Company's
operating results would also be adversely affected.
COMPETITION IN THE SWITCHED NETWORK MARKET
I-Link's competition in the switched network market is all other long-
distance providers. Due to the number of regional and local carriers, the
number of competitors varies by geographic region. However, the principal
competition is the big four carriers, AT&T, MCI, Sprint, LDDS/WorldCom and
local regional Bell companies. With these carriers controlling the majority
of the market share throughout the U.S., the majority of the potential
customers to which I-Link's products and services are marketed to are
customers of one of these carriers. The competitive advantages these four
largest carriers have are primarily pervasive nationwide networks, name
recognition, operating histories, and substantial advertising resources.
There can be no assurance that I-Link will be able to successfully compete
with such carriers.
FAILURE TO MEET SPRINT MINIMUM PURCHASE REQUIREMENTS; CONTINGENT LIABILITIES
In December 1997 the Company signed a two-year negotiated contract with
Sprint for the supply of inbound and outbound telephone services with volume
discounts in return for minimum monthly purchase requirements of $750,000 per
month after the first three months of service under the contract, $1.0
million after nine months of service under the contract and $1.2 million
after twelve months and through the remainder of service under the contract.
Failure to achieve the minimum will require shortfall payments by the
Company. There can be no assurance that the Company will be able to achieve
the required levels of sales.
TECHNOLOGICAL CHANGE AND NEW SERVICES
The telecommunications services industry has been characterized by steady
technological change, frequent new service introductions and evolving
industry standards. The Company believes that its future success will depend
in part on its ability to anticipate such changes and to offer on a timely
basis market responsive services that meet these evolving industry standards.
There can be no assurance that the Company will have sufficient resources to
introduce new services that would satisfy an expanded range of customer
needs.
CUSTOMER ATTRITION
The Company believes that a high level of customer attrition is common in the
direct dial, long-distance industry. I-Link does not have a long history of
operations and accordingly, the level of customer attrition experienced to
date may not be indicative of future attrition levels. In addition, there
can be no assurance that any steps taken by I-Link to counter increased
customer attrition will be successful.
<PAGE> 8
DEPENDENCE UPON THIRD PARTY TRANSMISSION FACILITIES
The future profitability of the Company is based upon its ability to transmit
its customers' long distance telephone calls on a cost effective basis over
transmission facilities leased from facilities based long distance carriers
that compete with the Company. The Company owns only a limited portion of
the transmission facilities needed to complete all of its customers' long
distance telephone calls. Accordingly, the Company is vulnerable to changes
in its lease arrangements and the Company's direct dial long distance
telephone business and the profitability thereof is dependent upon its
ability to enter into cost effective lease arrangements, both long and short
term, with facilities based carriers for the transmission of calls. While
the Company believes that it has ample access to transmission facilities at
attractive rates and expects to continue to have such access, there can be no
assurance that leased capacity will continue to be available at
cost-effective rates.
YEAR 2000 ISSUE
The "Year 2000" issue affects the Company's installed computer systems,
network elements, software applications, and other business systems that have
time-sensitive programs that may not properly reflect or recognize the year
2000. Because many computers and computer applications define dates by the
last two digits of the year, "00" may not be properly identified as the year
2000. This error could result in miscalculations or system failures. The
Company is continuing its evaluation and upgrade of its computer systems and
applications for the Year 2000. The Year 2000 issue may also affect the
systems and applications of the Company's customers, vendors or resellers.
The Company is seeking or has obtained confirmation from its primary vendors
that they are developing and implementing plans to minimize Year 2000
consequences. The Company's development of an enhanced services billing
platform is being designed to be Year 2000 compliant. In addition,
proprietary software and technology for both internal use and for resale has
been designed to be Year 2000 compliant.
The Company is using both internal and external resources to identify,
correct or reprogram, and test its systems for minimizing Year 2000
consequences and expects to incur internal labor as well as consulting and
other expenses related to infrastructure and facilities enhancements
necessary to prepare its systems for the Year 2000. The total cost of
modifications and conversions is not known at this time; however, it is not
expected to be material to the Company's financial position, results of
operations or cash flows and is being expensed as incurred. Also, the
Company is currently developing a contingency plan to deal with potential
Year 2000 related business interruptions that may occur on January 1, 2000 or
thereafter. The Company anticipates that the contingency plan will be
completed by June 30, 1999.
If compliance is not achieved in a timely manner, the Year 2000 issue could
have a material adverse effect on the Company's operations. However, the
Company is focusing on identifying and addressing all aspects of its
operations that may be affected by the Year 2000 issue and is addressing the
most critical applications first. As a result, Company management does not
believe its operations will be materially adversely affected.
EQUIPMENT FAILURES; NATURAL DISASTER
Although the Company carries "commercial property/business interruption"
insurance, such insurance does not include coverage of certain natural
disasters. A major equipment failure or a natural disaster affecting any one
of the Company's switching facilities could have a material adverse effect on
<PAGE> 9
the Company's operations.
GOVERNMENT REGULATION
Certain of the Company's operations are subject to regulation by the Federal
Communications Commission ("FCC") under the Communications Act of 1934, as
amended (the "Communications Act"). In addition, certain of the Company's
businesses are subject to regulation by state public utility or public
service commissions. Changes in the regulation of, or the enactment or
changes in interpretation of legislation affecting, the Company's operations
could have a material adverse effect on the Company and the value of the
Common Stock. Recently, the Federal Government enacted the
Telecommunications Act of 1996 (the "Telecommunications Act"), which, among
other things, allows the Regional Bell Operating Companies ("RBOCs") and
others to enter the long distance business. Entry of the RBOCs or other
entities, such as electric utilities and cable television companies, into the
long-distance business may have a negative impact on the Company or its
customers. The Company anticipates that certain of such entrants will be
strong competitors because, among other reasons, they may enjoy one or more
of the following advantages: they may (i) be well capitalized; (ii) already
have substantial end user customer bases; or (iii) enjoy cost advantages
relating to local loops and access charges. The introduction of additional
strong competitors into the switched long-distance business would mean that
the Company would face substantially increased competition. This could have
a material adverse effect on the Company and the value of the Common Stock.
In addition, the Telecommunications Act provides that state proceedings may
in certain instances determine access charges the Company is required to pay
to the local exchange carriers. No assurance can be given that such
proceedings will not result in increases in such rates. Such increases could
have a material adverse effect on the Company or its customers and on the
value of the Common Stock.
ILC's activities are regulated by the public utility commissions of the
various states in which the Company operates. Also, decisions by the FCC
with respect to the permissible business activities or pricing practices may
have an adverse impact on ILC's operations. ILC could be subject to
complaints seeking damages and other relief filed by parties claiming to be
harmed by ILC's failure to file tariffs. Moreover, any significant change in
regulations by state governmental agencies could significantly increase ILC's
costs or otherwise have an adverse impact on ILC's activities and on its
expansion efforts. The FCC has recently taken or is currently considering
action on various proposals, including proposals relating to interstate
access transport services, public filing of rates, proprietary calling cards
and billed party preference. Additionally, legislation has recently been
enacted in Congress further liberalizing the telecommunications industry,
specifically by permitting the Bell Operating Companies (BOCs) to provide
service in the long-distance market and allowing the long-distance carriers
such as AT&T, MCI and the Company into the local markets. Although
safeguards have been inserted into the legislation to ensure fair
competition, there can be no assurance that the entry of the BOCs into the
long-distance market will not have a material adverse effect on the Company's
business.
GOVERNMENT REGULATION OF INTERNET-RELATED BUSINESS
I-Link has been moving its customers off the facilities of existing long
distance carriers, and has increased its reliance on a proprietary Internet
protocol network for transmission in the hope of enjoying minimal federal
regulation under current rules. Historically, the FCC has not regulated
companies that provide the software and hardware for Internet telephony, or
other Internet data functions, as common carriers or telecommunications
service providers. Moreover, in May 1997 the FCC concluded that information
<PAGE> 10
and enhanced service providers are not required to contribute to federal
universal service funding mechanisms. Notwithstanding the current state of
the rules, the FCC's potential jurisdiction over the Internet is broad
because the Internet relies on wire and radio communications facilities and
services over which the FCC has long-standing authority. The FCC's framework
for "enhanced services" confirms that the FCC has authority to regulate
computer-enriched services, but provides that carrier-type regulation would
not serve the public interest. Only recently has this general approach been
questioned within the industry.
DISCONTINUED MEDICAL OPERATIONS
The majority of the Company's revenue in 1996 and 1995 was derived from
owning and operating outpatient diagnostic imaging facilities in Florida.
This revenue was primarily generated from two subsidiaries operating magnetic
resonance imaging ("MRI") facilities. Effective December 31, 1997, the
Company made the decision to sell its Medical Imaging Division. The Board of
Directors approved the plan of disposal on March 23, 1998. Consequently, the
Medical Imaging Division has been accounted for as a discontinued operation
in the financial statements included herein. To the extent that the proceeds
from such disposition are less than the expected disposition value, that will
contribute further to the loss from discontinued operations.
EXPOSURE TO TORT LIABILITY IN MEDICAL INDUSTRY
The Company's discontinued medical operation operates, and has operated,
medical equipment used to perform procedures on or diagnose disease in
patients. The Company is exposed to tort liability in the event of harm to
patients due to the negligence of the Company, its agents, and employees.
The Company currently maintains professional liability insurance coverage in
the amount of $1,000,000. The Company also maintains an umbrella policy
covering, among other things, workers' compensation, general, and automobile
liability in an amount of $9,000,000 in coverage. Any claims could have a
material adverse effect on the Company. In addition, there is no assurance
that the Company will be able to continue to maintain such insurance coverage
in the future. The Company acts as general partner of a limited partnership
controlled by the Company that directly owns, controls and operates the
Company's discontinued medical facilities. As such, the Company is exposed
to general liability for torts committed by such partnership and its agents
and employees and for contracts entered into by those partnerships.
DILUTION
Holders of Common Stock of the Company will suffer significant dilution in
the event that any of the Company's outstanding convertible securities,
including outstanding shares of Preferred Stock, warrants and options are
converted by the holders thereof. See "Dilution" and "Description of
Securities." Additional dilution may result in the event of the exercise of
warrants and options, including options granted pursuant to the Company's
stock option and purchase plans and employment agreements.
DIVIDENDS
The Company has not paid any dividends on any of its outstanding securities
to date and, other than as set forth herein, does not anticipate paying any
cash dividends on its securities in the foreseeable future. As of August 15,
1998, undeclared and unpaid cumulative dividends on all shares of Preferred
Stock totaled $2,605,206. The Company currently intends to retain all working
capital and earnings, if any, to finance the operations of its businesses and
to expand its businesses.
Dividends on the Class C Preferred Stock will be payable when, as and if
<PAGE> 11
declared by the Board of Directors, to the extent permissible under the
Florida Business Corporation Act, to the holders of the Class C Preferred
Stock in cash or, at the option of the Company as determined by the Board of
Directors, in shares of Common Stock. Dividends may be paid in shares of
Common Stock only if such shares have been registered under the Securities
Act. In connection with the Winter Harbor equity investment in the Company,
the Company has issued an aggregate of 4,400 shares of Series M Preferred
Stock. The Series M Preferred Stock will be entitled to receive cumulative
dividends in the amount of 10% per annum. The Company's future cash flow and
legal capital may be insufficient to enable the Company to pay dividends.
FUTURE ISSUANCES OF STOCK BY THE COMPANY; POTENTIAL ANTI-TAKEOVER EFFECT
The Company has authorized capital stock of 75,000,000 shares of Common
Stock, $.007 par value per share and 10,000,000 shares of preferred stock,
$10.00 par value per share (the "Preferred Stock"). As of August 19, 1998,
there were 18,556,384 shares of Common Stock issued and outstanding; 52,208
shares of Class C Preferred Stock were issued and outstanding; 4,400 shares
of Series M Preferred Stock were issued and outstanding; and 1,000 shares of
Series F Preferred Stock were issued and outstanding. Although, other than
as disclosed herein, there are no present plans, agreements or undertakings
with respect to the Company's issuance of any shares of stock or related
convertible securities, the issuance of any of such securities by the Company
could have anti-takeover effects insofar as such securities could be used as
a method of discouraging, delaying or preventing a change in control of the
Company. Such issuance could also dilute the public ownership of the
Company. Inasmuch as the Company may, in the future, issue authorized shares
of Common Stock or Preferred Stock without prior stockholder approval, there
may be substantial dilution to the interests of the Company's stockholders.
However, given that the Company is authorized to issue more stock, there can
be no assurance that the Company will not do so. In addition, a
stockholder's pro rata ownership interest in the Company may be reduced to
the extent of the issuance and/or exercise of any options or warrants
relating to the Common Stock or Preferred Stock. The issuance of additional
shares of Common Stock may have the effect of rendering more difficult or
discouraging an acquisition or change in control of the Company. See
"Description of Securities."
FUTURE SALES OF STOCK BY STOCKHOLDERS
As of August 19, 1998, approximately 5,723,000 shares of Common Stock issued
and outstanding were "restricted securities" as that term is defined under
the Securities Act and in the future may only be sold in compliance with Rule
144 promulgated under the Securities Act or pursuant to an effective
registration statement. Rule 144 provides, in essence, that a person
(including a group of persons whose shares are aggregated) who has satisfied
a one-year holding period for such restricted securities may sell within any
three-month period, under certain circumstances, an amount of restricted
securities which does not exceed the greater of 1% of that class of the
Company's outstanding securities or the average weekly trading volume of that
class of securities during the four calendar weeks prior to such sale. In
addition, pursuant to Rule 144, persons who are not affiliated with the
Company and who have held their restricted securities for at least two years
are not subject to the quantity limitations or the manner of sale
restrictions of the rule. As of the date hereof, substantially all of the
Company's restricted securities are available for resale pursuant to Rule 144
or pursuant to a currently effective registration statement (separate from
the registration statement of which this Prospectus forms a part), which will
allow such shares to be resold into the market.
In the event that the shares of Common Stock which are not currently salable
become salable by means of registration, eligibility for sale under Rule 144
<PAGE> 12
or otherwise and the holders of such securities elect to sell such securities
in the public market, there is likely to be a negative effect on the market
price of the Company's securities and on the ability of the Company to obtain
additional equity financing. In addition, to the extent that such securities
enter the market, the value of the Company's securities in the over-the
counter market may be reduced. No predictions can be made as to the effect,
if any, that sales of such securities (or the availability of such securities
for sale) will have on the market price of any of such securities which may
prevail from time to time. Nevertheless, the foregoing could adversely
affect such prevailing market prices.
AUTHORIZATION OF PREFERRED STOCK
The Company's Amended and Restated Articles of Incorporation, as further
amended (the "Articles of Incorporation"), authorize the issuance of up to
10,000,000 shares of Preferred Stock with such rights and preferences as may
be determined from time to time by the Board of Directors. Accordingly, the
Board of Directors may, without stockholder approval, issue shares of
Preferred Stock with dividend, liquidation, conversion, voting or other
rights which are senior to other shares or which could adversely affect the
voting power or other rights of the holders of outstanding shares of
Preferred Stock or Common Stock. In addition, the issuance of additional
shares of Preferred Stock may have the effect of rendering more difficult, or
discouraging, an acquisition of the Company or changes in control of the
Company. Although, other than as set forth herein, the Company does not
currently intend to issue any additional shares of Preferred Stock, there can
be no assurance that the Company will not do so in the future. See "Risk
Factors -- Future Issuances of Stock by the Company; Potential Anti-Takeover
Effect," "Risk Factors -- Certain Provisions of Articles of Incorporation and
Bylaws."
CONTINUED NASDAQ LISTING
The Common Stock is traded on the Nasdaq SmallCap Market tier of The Nasdaq
Stock Market ("Nasdaq") under the symbol "ILNK." While the Common Stock is
currently listed for quotation on Nasdaq, there can be no assurance given
that the Company will be able to continue to satisfy the requirements for
maintaining quotation on Nasdaq or that such quotation will otherwise
continue. If, for any reason, the Common Stock becomes ineligible for
continued listing and quotation, holders of the Company's securities may have
difficulty selling their securities should they desire to do so.
Under applicable Nasdaq rules, in order to qualify for continued listing on
Nasdaq, a company must have, among other things: (1) net tangible assets of
at least $2,000,000 or market capitalization of at least $35,000,000 or net
income in two of the previous three years of at least $500,000; (2) 500,000
or more publicly trading shares (not counting shares held by affiliates of
the Company); (3) market value of public float of at least $1,000,000; (4)
minimum bid price of $1.00; (5) not fewer than two marketmakers; and (6) not
fewer than 300 shareholders. Although the Company was able initially to
satisfy the requirements for listing of its securities on Nasdaq, the Company
may be unable to continue to satisfy the requirements for maintaining
quotation of its securities thereon, and trading, if any, in the Company's
securities would be conducted in the over-the-counter market in what are
commonly referred to as the "pink sheets" of the National Quotation Bureau,
Inc. or on the NASD OTC Electronic Bulletin Board. As a result, an investor
may find it more difficult to dispose of or to obtain accurate quotations as
to the price of such securities.
"PENNY STOCK" REGULATIONS
The Commission has adopted regulations which define a "penny stock" to be any
<PAGE> 13
equity security that has a market price (as defined) of less than $5.00 per
share, subject to certain exceptions. For any transaction involving a penny
stock, unless exempt, the rules require the delivery, prior to the
transaction, of a disclosure schedule prepared by the Commission relating to
the penny stock market. The broker-dealer also must disclose the commissions
payable to both the broker-dealer and the registered representative, current
quotations for the securities, and information on the limited market in penny
stocks. In addition, the broker-dealer must obtain a written acknowledgement
from the customer that such disclosure information was provided and must
retain such acknowledgement for at least three years. Further, monthly
statements must be sent to the customer disclosing current price information
for the penny stock held in the account. While many Nasdaq-listed securities
would otherwise be covered by the definition of penny stock, transactions in
a Nasdaq-listed security would be exempt from all but the sole marketmaker
provision for: (i) issuers who have $2,000,000 in tangible assets
($6,000,000 if the issuer has not been in continuous operation for three
years); (ii) transactions in which the customer is an institutional
accredited investor; and (iii) transactions that are not recommended by the
broker-dealer. In addition, transactions in a Nasdaq-listed security
directly with a Nasdaq marketmaker for such securities would be subject only
to the disclosure with respect to commissions to be paid to the broker-dealer
and the registered representative. The foregoing rules may materially
adversely affect the liquidity for the market of the Company's securities.
Such rules may also affect the ability of broker-dealers to sell the
Company's securities and may impede the ability of holders of the Company's
securities to sell such securities in the secondary market.
CERTAIN PROVISIONS OF ARTICLES OF INCORPORATION AND BYLAWS
Pursuant to the Articles of Incorporation, the Board of Directors has the
authority to issue up to 10,000,000 shares of Preferred Stock without action
by the stockholders in one or more series having such preferences, rights and
other provisions as the Board of Directors may designate in providing for the
issuance of such series. The Articles of Incorporation and Bylaws contain
provisions which may discourage certain transactions which involve an actual
or threatened change in control of the Company. See "Description of
Securities -- Anti-Takeover Measures."
CLASSIFICATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company is classified into three classes.
Members of each class serve for staggered three year terms, with members of
one class coming up for election each year. The classification of the Board
of Directors may make it difficult for shareholders to effect a change in
management.
VOTING CONTROL
Winter Harbor owns 4,400 shares of Series M Preferred
Stock, which are convertible at any time into 4,400,000 shares of Common
Stock, and it holds $7.768 million in promissory notes, which are convertible
into 2,824.727 shares of Series M Preferred Stock, which in turn are
convertible at any time into 2,824,727 shares of Common Stock. Winter Harbor
also holds warrants, exercisable at any time, for the purchase of up to
17,540,000 shares of Common Stock. In addition, should Winter Harbor elect
to convert its $7.768 million in promissory notes into additional shares of
Series M Preferred Stock, it is entitled to receive additional warrants to
purchase 5,000,000 shares of Common Stock. Upon the conversion of the Series
M Preferred Stock, conversion of the convertible promissory notes and the
exercise of all of its warrants, securities then held by Winter Harbor would
represent up to 61.6% of the voting securities of the Company. Mr. Keenan
serves on the Board of Directors as the designee of Winter Harbor. As a
<PAGE> 14
group, the officers and directors of the Company may be deemed to
beneficially own an aggregate of 3,054,896 shares, or approximately 14.2% of
the outstanding voting securities. By virtue of their ownership of the
Company's issued and outstanding Common Stock, the officers and directors of
the Company have the ability to influence the election of directors and,
consequently, influence the Company's business and affairs. See "Security
Ownership of Certain Beneficial Owners and Management."
LACK OF PATENT PROTECTION
The Company does not currently hold any patents, although I-Link has filed
patent applications for its technology for fax and voice communications over
an internet environment. To the extent any technology included in such
products is patentable, there can be no assurance that any patent will in
fact be issued or that such patents will be effective to protect the
Company's products from duplication by other developers. In addition, there
can be no assurance that the Company will be able to afford the expense of
any litigation that may be necessary to enforce its right under any patent.
NEW PRODUCTS
New products are subject to substantial risks, including high costs of
introduction, market acceptance and duplication by other developers. See
"Risk Factors -- I-Link Business Competition."
DILUTIVE IMPACT OF OUTSTANDING OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES
The holders of outstanding options, warrants and convertible securities have
the opportunity to profit from a rise in the market price of the Common
Stock, if any, without assuming the risk of ownership, with a resulting
dilution in the interest of other shareholders. The Company may find it more
difficult to raise additional equity capital if it should be needed for the
business of the Company while such options and warrants are outstanding. At
any time at which the holders thereof might be expected to exercise them, the
Company would probably be able to obtain additional capital on terms more
favorable than those provided by such options and warrants. The holders of
such options and warrants have the right to require registration under the
Securities Act of the shares of Common Stock that are issuable upon exercise
of such options and warrants and have certain demand and/or "piggy-back"
registration rights. The cost to the Company of effecting any such
registration may be substantial.
USE OF PROCEEDS
The Company previously issued 1,000 shares of Series F Preferred Stock, into
which the Conversion Shares are convertible, and the Financing Warrants. The
Company will not receive any cash proceeds from the issuance, offer or resale
of the Conversion Shares, Dividend Shares or the offer or resale of Financing
Warrant Shares offered hereby. To the extent the issued and outstanding
Financing Warrants are exercised, the Company may realize proceeds of up to
$2,235,300, all of which would be used for working capital purposes.
DETERMINATION OF OFFERING PRICE
The purchase price, conversion ratios and other terms of the Series F
Preferred Stock and the exercise price of the Financing Warrants were
determined by arms length negotiation with the Selling Securityholders. The
total purchase price of the Series F Preferred Stock was paid in cash to the
Company by JNC.
<PAGE> 15
DILUTION
Holders of Common Stock of the Company may suffer significant dilution in the
event that any of the Company's outstanding convertible securities, including
Series F Preferred Stock and Financing Warrants, are converted or exercised
by the holders thereof. See "Description of Securities." Additional
dilution may result in the event of the exercise of other outstanding
warrants and options, including options granted pursuant to the Company's
stock option and purchase plans and employment agreements.
SELLING SECURITYHOLDERS
The following table sets forth the beneficial ownership of the Registered
Securities by each person who is a Selling Securityholder. The table assumes
that each Selling Securityholder is offering for sale securities previously
issued or issuable by the Company and/or shares of Common Stock issuable in
the event of conversion or exercise of outstanding securities. The Company
has agreed to pay all expenses in connection therewith (other than brokerage
commissions and fees and expenses of their respective counsel). None of the
Selling Securityholders has ever held any position with the Company or had
any other material relationship with the Company. By its terms, the Series
F Preferred Stock is subject to specific provisions that would prevent any
issuance of Conversion Shares or Dividend Shares at a price below the market
or book value of the Common Stock if and to the extent that such shares
would equal or exceed in the aggregate 20% percent of the number of shares of
Common Stock outstanding on the Original Issue Date, absent shareholder
approval as contemplated by the Nasdaq Stock Market Non-Quantitative
Designation Criteria. The Company will not receive any proceeds from the
sale of such securities by the Selling Securityholders.
<TABLE>
<CAPTION>
Common Common Percent of
Stock Stock Common Stock
Beneficially Being Owned After
Name of Selling Securityholder Owned Offered (1) Offering (2)
- ------------------------------- ------------ ------------- ------------
<S> <C> <C> <C>
JNC Opportunity Fund Ltd. 994,863 (3) 7,803,703 (4) -0-
Wharton Capital Partners, Ltd. 37,500 (5) 37,500 (5) -0-
Alpine Capital Partners, Ltd. 37,500 (5) 37,500 (5) -0-
</TABLE>
________
(1) As to each entity named as beneficial owners, such entity's percentage
of ownership is determined by assuming that any warrants or convertible
securities held by such person or entity which are exercisable or
convertible within 60 days from the date hereof have been exercised or
converted, as the case may be.
(2) Unless otherwise indicated, assumes the conversion, exercise and/or sale
of the entirety of the securities being offered by the named Selling
Securityholder.
(3) Pursuant to the terms of the Series F Preferred Stock, the named Selling
Securityholder may not convert shares of Series F Preferred Stock (or
receive Dividend Shares relating thereto) to the extent that the number
of shares of Common Stock beneficially owned by it and its affiliates
after such conversion would exceed 4.999% of the issued and outstanding
shares of Common Stock following such conversion. The number of shares
of Common Stock listed as beneficially owned represents the number of
shares of Common Stock issuable to the named Selling Securityholder, (i)
subject to the limitation set forth in the first sentence of this
Footnote, upon conversion of the Series F Preferred Stock at an assumed
<PAGE> 16
conversion price of $2.70 per share of Common Stock; and (ii) upon
exercise of its Financing Warrants. Because the conversion price
applicable to the Series F Preferred Stock is dependent in part upon the
market price of the Common Stock prior to a conversion, the actual number
of shares of Common Stock that will, subject to the limitation set forth in
the first sentence of this Footnote, be issued in respect of such
conversions or dividend payments, and consequently the number of shares
of Common Stock that will be beneficially owned by the Selling
Securityholder, will fluctuate and cannot be determined as of the date
hereof.
(4) Includes shares of Common Stock reflected herein as beneficially owned
by the named Selling Securityholder. Subject to the limitation expressed
in the first sentence of Footnote 3, because the number of shares of
Common Stock issuable upon conversion of Series F Preferred Stock and as
payment of dividends thereon is dependent in part upon the market price
of the Common Stock prior to a conversion, the actual number of shares
of Common Stock that will be issued in respect of such conversions or
dividend payments and, consequently, offered for sale under this
Registration Statement, cannot be determined as of the date hereof.
However, to provide for such fluctuations, the Company has contractually
agreed to include herein an aggregate of 7,803,703 shares of Common
Stock issuable upon conversion of the Series F Preferred Stock, payment
of dividends thereunder and upon exercise of Financing Warrants held by
the named Selling Securityholder.
(5) Represents Financing Warrant Shares.
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is currently authorized to issue 75,000,000 shares of Common
Stock, par value $.007 per share. As of August 19, 1998, there are
18,556,384 shares of Common Stock issued and outstanding and approximately
420 holders of record of the Common Stock, and approximately 7,100 beneficial
owners. Each share of Common Stock entitles the holder thereof to one vote
on each matter submitted to the stockholders of the Company for a vote
thereon. The holders of Common Stock: (i) have equal ratable rights to
dividends from funds legally available therefor when, as and if declared by
the Board of Directors; (ii) are entitled to share ratably in all of the
assets of the Company available for distribution to holders of Common Stock
upon liquidation, dissolution or winding up of the affairs of the Company;
(iii) do not have preemptive, subscription or conversion rights, or
redemption or sinking fund provisions applicable thereto; and (iv) as noted
above, are entitled to one non-cumulative vote per share on all matters
submitted to stockholders for a vote at any meeting of stockholders. Prior
to any payment of dividends to the holders of Common Stock, all accrued and
unpaid dividends on any outstanding shares of Preferred Stock must be paid.
Other than as set forth herein, the Company anticipates that, for the
foreseeable future, it will retain earnings, if any, to finance the
operations of its businesses. The payment of dividends in the future will
depend upon, among other things, the capital requirements and the operating
and financial conditions of the Company.
PREFERRED STOCK
The Articles of Incorporation authorize the issuance of up to 10,000,000
shares of preferred stock, $10.00 par value per share (previously defined as
the "Preferred Stock"). The Board of Directors is authorized to issue shares
of Preferred Stock from time to time in one or more series and, subject to
the limitations contained in the Articles of Incorporation and any
limitations prescribed by law, to establish and designate any such series and
to fix the number of shares and the relative conversion rights, voting rights
<PAGE> 17
and terms of redemption (including sinking fund provisions) and liquidation
preferences. New issuances of shares of Preferred Stock with voting rights
can affect the voting rights of the holders of outstanding shares of
Preferred Stock and Common Stock by increasing the number of outstanding
shares having voting rights, and by the creation of class or series voting
rights. Furthermore, additional issuances of shares of Preferred Stock with
conversion rights can have the effect of increasing the number of shares of
Common Stock outstanding up to the amount of Common Stock authorized by the
Articles of Incorporation and can also, under certain circumstances, have the
effect of delaying or preventing a change in control of the Company and/or
otherwise adversely affect the rights of holders of outstanding shares of
Preferred Stock and Common Stock. To the extent permitted by the Articles of
Incorporation, such shares of Preferred Stock may have preferences over the
Common Stock (and other series of Preferred Stock) with respect to dividends
and liquidation rights. As of August 19, 1998, 240,000 shares of Preferred
Stock had been designated Class C Preferred Stock (of which 52,008 are issued
and outstanding); 29,000 shares of Preferred Stock had been designated Series
M Preferred Stock (of which 4,400 are outstanding); and 1,000 shares of
Preferred Stock had been designated Series F Preferred Stock (of which all
1,000 are outstanding).
SERIES F PREFERRED STOCK
There are 1,000 shares of 5% Series F Convertible Preferred Stock ("Series F
Preferred Stock") designated, all of which were issued on July 28, 1998 (the
"Original Issuance Date") in consideration of $10,000,000. All 1,000 shares
of Series F Preferred Stock remain outstanding as of the date hereof.
Commencing on September 30, 1998, the holders of the Series F Preferred Stock
("Holders") are entitled to cumulative preferential dividends, when, as and
if declared by the Board of Directors, on a quarterly basis on March 31, June
30, September 30 and December 31 each year in an amount equal to 5% per annum
of the stated value per share of $10,000 (the "Stated Value"). Dividends will
be paid, to the extent permissible under the Florida Business Corporation
Act, to the Holders of the Series F Preferred Stock in cash or, at the option
of the Company, in shares of Common Stock ("Dividend Shares"), provided,
however, that no payment of dividends in Common Stock may occur if (a) (1)
the Dividend Shares are not the subject of an effective registration
statement under the Securities Act or (2) the Dividend Shares may not be sold
without volume restrictions pursuant to Rule 144 under the Securities Act,
(b) there are not sufficient shares of Common Stock authorized and reserved
for issuance for such dividend, (c) the Company shall have failed to timely
satisfy its conversion obligations or shall have defaulted on any of the
covenants and obligations of the Series F Preferred Stock, (d) to the extent
such dividend payment would result in the Holder of the Series F Preferred
Stock beneficially owning, in the aggregate, in excess of 4.999% of the then
issued and outstanding shares of Common Stock, or (e) the Common Stock is not
listed on Nasdaq. (The conditions set forth in clauses (a), (b), (c), (d)
and (e) of the preceding sentence shall be referred to herein as "Impeding
Conditions.") All overdue accrued and unpaid dividends and other amounts due
on Series F Preferred Stock will entail a late fee at the rate of 15% per
annum. Except as otherwise provided by law, shares of Series F Preferred
Stock have no voting rights.
Conversion Rights. Unless previously redeemed, the Series F Preferred Stock
is convertible into shares of Common Stock ("Conversion Shares"), at any time
and from time to time, at the option of the holder. The ratio ("Conversion
Ratio") which determines the number of Conversion Shares issuable upon such
conversion is equal to a fraction, the numerator of which is $10,000 plus
accrued but unpaid dividends (including any accrued but unpaid late fees
thereon) and the denominator of which is the Conversion Price at the time of
conversion. The "Conversion Price" in effect on any conversion date shall be
the lesser of (a) $4.00 (the "Initial Conversion Price") and (b) 87% (the
<PAGE> 18
"Discount Rate") of the average of the three lowest per share market values
during the twenty-two trading day period immediately preceding the applicable
conversion date; provided, however, that the Conversion Price shall not be
less than $2.50 (the "Floor Price"). The Floor Price is subject to downward
adjustment in certain events.
A Holder of Series F Preferred Stock may not convert shares of Series F
Preferred Stock to the extent such conversion would result in such Holder
beneficially owning, in the aggregate, in excess of 4.999% of the then issued
and outstanding shares of Common Stock following such conversion; provided,
however, that such percentage limitation may be waived by the Holder of the
Series F Preferred Stock upon 75 days written notice to the Company. The
Series F Preferred Stock is subject to specific provisions that would prevent
any issuance of Conversion Shares or Dividend Shares at a price below the
market or book value of the Common Stock if and to the extent that such
shares would equal or exceed in the aggregate 20% percent of the number of
shares of Common Stock outstanding on the Original Issue Date, absent
shareholder approval as contemplated by the Nasdaq Stock Market
Non-Quantitative Designation Criteria.
Adjustments of Conversion Price or Discount Rate; Certain Cash Payments. The
Series F Preferred Stock is protected by anti-dilution and price-protection
features. In certain events (each, an "Adjustment Event"), the Initial
Conversion Price or the Discount Rate, as applicable, shall be decreased by
two percentage points on the Event Date and on each monthly anniversary
thereof until the earlier to occur of the second month anniversary after the
Event Date or such time as the applicable Adjustment Event is cured. The
method of calculation of the date of occurrence of an Adjustment Event (an
"Event Date") varies with each Adjustment Event. Commencing on the second
month anniversary after the Event Date, the Holder shall have the option to
either (x) require further cumulative two percent discounts to continue or
(y) require the Company to pay to the Holder two percent of the aggregate
Stated Values of the shares of Series F Preferred Stock then held by such
Holder, in cash, as liquidated damages, on the first day of each monthly
anniversary of the Event Date, until such time as the applicable Adjustment
Event is cured. An Adjustment Event will occur when (a) a registration
statement relating to the Registrable Securities is not filed with the
Commission by the 30th day after the Closing Date (as that term is defined in
the Registration Rights Agreement between the Company and JNC), (b) the
Company fails to request acceleration of the effectiveness of such
registration statement should the staff of the Commission advise the Company
that the registration statement will not be reviewed or is not subject to
further review, (c) the registration statement fails to be declared effective
by the Commission by the 90th day after the Closing Date, (d) the
registration statement, after it is filed and declared effective, thereafter
ceases to be effective as to all Registrable Securities at any time prior to
the date which is three years after the date that such registration statement
is originally declared effective by the Commission, or such earlier date when
all Registrable Securities covered by such registration statement have been
sold or may be sold without volume restrictions pursuant to Rule 144(k) (the
"Effectiveness Period"), provided that such lapsed registration statement is
not succeeded within ten days by a subsequent registration statement filed
and declared effective by the Commission, (e) trading of the Common Stock is
suspended from Nasdaq or any subsequent trading market for more than three
business days (which need not be consecutive days) (f) conversion rights are
suspended for any reason, or (g) an amendment to the registration statement
is not filed by the Company within ten days of the Commission's notifying the
Company that such amendment is required in order for the registration
statement to be declared effective. Any decrease in the Initial Conversion
Price and the Discount Rate pursuant to the events described in this
paragraph shall remain in effect notwithstanding the fact that the Adjustment
Event causing such decrease has been subsequently cured and further monthly
<PAGE> 19
decreases have ceased.
Other instances in which the Conversion Price or the Discount Rate may be
adjusted during any period while Series F Preferred Stock is outstanding
include (i) payments of stock dividends or other distributions on securities
junior in rank to the Series F Preferred Stock, (ii) subdivision of the
outstanding shares of Common Stock into a larger number of shares, (iii)
combination of the outstanding shares of Common Stock into a smaller number
of shares, (iv) issuance by reclassification of shares of Common Stock any
shares of capital stock of the Company, (v) issuance of rights, warrants or
options to all holders of Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share which is less than the
per share market value of Common Stock at the record date for such
transaction, (vi) issuance of shares of Common Stock or rights, warrants,
options or other securities or debt that is convertible into or exchangeable
for shares of Common Stock entitling any person to acquire shares of Common
Stock at a price per share less than the Conversion Price, or (vii)
distribution to all holders of Common Stock (but not to Holders) of evidences
of indebtedness or assets or rights or warrants to subscribe for or purchase
any securities of the Company (other than those referred to previously in
this paragraph).
Automatic Conversion. Unless previously redeemed or converted, the Series F
Preferred Stock shall be automatically converted into Conversion Shares on
the third anniversary of the Original Issuance Date at a Conversion Price
determined as of such date. However, if certain Impeding Conditions are in
effect, such automatic conversion may not then occur. Further, automatic
conversion shall be postponed for such amount of time that the Holder is
unable to sell Conversion Shares because they are not listed on Nasdaq or
because they are not subject of a current registration statement.
Redemption. The Series F Preferred Stock is redeemable at any time or from
time to time, at the option of the Company, on twenty trading days written
notice to the holders thereof at a redemption price equal to the sum of (i)
the product of (A) the number of shares of Series F Preferred Stock to be
redeemed and (B) the product of (1) the average per share market value for
the five trading days immediately preceding (x) the date of the redemption
notice or (y) the date of payment in full by the Company of the redemption
price, whichever is greater, and (2) the Conversion Ratio calculated on the
date of the redemption notice, and (ii) all other amounts, costs, expenses
and liquidated damages due in respect to such shares of Series F Preferred
Stock. In certain instances (each an "Triggering Event"), including the
Company's failure to have a registration statement covering the Conversion
Shares declared effective within 180 days of the Original Issuance Date, the
holders of the Series F Preferred Stock may require that the Company redeem
their Series F Preferred Stock. In such case, the redemption price for each
such share will be no less than the sum of (i) the greater of (A) 130% of the
Stated Value and all accrued dividends with respect to any such share, and
(B) the product of (a) the per share market value on the trading day
immediately preceding (x) the date of the Triggering Event or the conversion
date, as the case may be, or (y) the date of payment in full by the Company
of the applicable redemption price, which ever is greater, and (b) the
Conversion Ratio calculated on the date of the Triggering Event, or the
conversion date, as the case may be, and (ii) all other amounts, costs,
expenses and liquidated damages due in respect of such shares of Series F
Preferred Stock.
Registration Rights. The Company is required to file with the Commission,
within 30 days of the Closing Date, a registration statement covering (i)
175% of the Conversion Shares and the Dividend Shares, and (ii) the Financing
Warrant Shares (collectively, the "Registrable Securities"). Such
registration statement shall be for a "shelf registration" of the Registrable
<PAGE> 20
Securities, to be offered on a continuing basis pursuant to Rule 415
promulgated under the Exchange Act. The Company is obligated to use its best
efforts to cause the registration statement to be declared effective under
the Securities Act as promptly as possible after the filing thereof, but in
any event prior to the 90th day following the Closing Date, and to use its
best efforts to keep such registration statement continuously effective
under the Securities Act until the expiration of the Effectiveness Period.
FINANCING WARRANTS
On July 9, 1998 the Company issued warrants to purchase 250,000 shares of
Common Stock to JNC Opportunity Fund Ltd. ("JNC"). The JNC warrants were
issued as partial consideration for JNC's commitment to purchase 1,000 shares
of Series E Preferred Stock, and are exercisable for $5.8725 per share for a
term of five years. Also on July 9, 1998, Financing Warrants to purchase
37,500 shares were issued to each of Wharton Capital Partners, Ltd.
("Wharton") and Alpine Capital Partners, Ltd. ("Alpine"); each of such
warrants are exercisable for $4.89375 per share for a term of five years.
The warrants issued to Wharton and Alpine were in connection with financial
consulting services provided to the Company related to the investment by JNC.
On July 28, 1998 the Company issued additional warrants to JNC for the
purchase of 100,000 shares of Common Stock, exercisable for $4.00 per share
for a five year term. The additional warrants were issued to JNC as an
inducement to JNC to enter into the Exchange Agreement, whereby JNC exchanged
its 1,000 shares of Series E Preferred Stock for 1,000 shares of Series F
Preferred Stock.
ANTI-TAKEOVER MEASURES
The Articles of Incorporation and Bylaws contain provisions that could
discourage potential takeover attempts and prevent shareholders from changing
the Company's management. The Articles of Incorporation provide for a
classified Board of Directors and that vacancies on the Board of Directors
shall be filled only by a majority of the remaining directors then in office.
In addition, the Bylaws provide, among other things, that no proposal by a
stockholder shall be presented for vote at a special or annual meeting of
stockholders unless such stockholder shall, not later than the close of
business on the fifth day following the date on which notice of the meeting
is first given to stockholders, provide the Board of Directors or the
Secretary of the Company with written notice of intention to present a
proposal for action at the forthcoming meeting of stockholders, which notice
shall include the name and address of such stockholder, the number of voting
securities he or she holds of record and which he or she holds beneficially,
the text of the proposal to be presented at the meeting and a statement in
support of the proposal. Any stockholder may make any other proposal at an
annual meeting or special meeting of stockholders and the same may be
discussed and considered, but unless stated in writing and filed with the
Board of Directors or the Secretary prior to the date set forth above, such
proposal shall be laid over for action at an adjourned, special, or annual
meeting of the stockholders taking place sixty days or more thereafter.
This provision shall not prevent the consideration and approval or
disapproval at the annual meeting of reports of officers, directors, and
committees; but in connection with such reports, no new business proposed by
a stockholder (acting in such capacity) shall be acted upon at such annual
meeting unless stated and filed as described above.
TRANSFER AGENT
American Stock Transfer & Trust Company, New York, New York is the Registrar
and Transfer Agent for the Company's Common Stock.
<PAGE> 21
PLAN OF DISTRIBUTION
The Selling Securityholders, their pledgees, donees, transferees or other
successors-in-interest, may, from time to time, sell all or a portion of the
Registered Securities in privately negotiated transactions or otherwise, at
fixed prices that may be changed, at market prices prevailing at the time of
sale, at prices related to such market prices or at negotiated prices. The
Registered Securities may be sold by the Selling Securityholders by one or
more of the following methods, without limitation: (a) block trades in which
the broker or dealer so engaged will attempt to sell the Registered
Securities as agent but may position and resell a portion of the block as
principal to facilitate the transaction, (b) purchases by a broker or dealer
as principal and resale by such broker or dealer for its account pursuant to
this Prospectus, (c) an exchange distribution in accordance with the rules of
the applicable exchange, (d) ordinary brokerage transactions and transactions
in which the broker solicits purchasers, (e) privately negotiated
transactions, (f) short sales, (g) a combination of any such methods of sale
and (h) any other method permitted pursuant to applicable law.
From time to time the Selling Securityholders may engage in short sales,
short sales against the box, puts and calls and other transactions in
securities of the Company or derivatives thereof, and may sell and deliver
the Registered Securities in connection therewith or in settlement of
securities loans. If the Selling Securityholders engage in such
transactions, the applicable conversion price may be affected. From time to
time the Selling Securityholders may pledge their Registered Securities
pursuant to the margin provisions of its customer agreements with its
brokers. Upon a default by the Selling Securityholders, the broker may offer
and sell the pledged Registered Securities from time to time.
In effecting sales, brokers and dealers engaged by the Selling Security-
holders may arrange for other brokers or dealers to participate in such
sales. Brokers or dealers may receive commissions or discounts from the
Selling Securityholders (or, if any such broker-dealer acts as agent for the
purchaser of such shares, from such purchaser) in amounts to be negotiated
which are not expected to exceed those customary in the types of transactions
involved. Broker-dealers may agree with the Selling Securityholders to sell
a specified number of such Registered Securities at a stipulated price per
share, and, to the extent such broker-dealer is unable to do so acting as
agent for a Selling Securityholder, to purchase as principal any unsold
Registered Securities at the price required to fulfill the broker-dealer
commitment to the Selling Securityholders. Broker-dealers who acquire
Registered Securities as principal may thereafter resell such Registered
Securities from time to time in transactions (which may involve block
transactions and sales to and through other broker-dealers, including
transactions of the nature described above) in the over-the- counter market
or otherwise at prices and on terms then prevailing at the time of sale, at
prices then related to the then-current market price or in negotiated
transactions and, in connection with such resales, may pay to or receive from
the purchasers of such Registered Securities commissions as described above.
The Selling Securityholders may also sell the Registered Securities in
accordance with Rule 144 under the Securities Act, rather than pursuant to
this Prospectus.
The Selling Securityholders and any broker-dealers or agents that participate
with the Selling Securityholders in sales of the Registered Securities may be
deemed to be "underwriters" within the meaning of the Securities Act in
connection with such sales. In such event, any commissions received by such
broker-dealers or agents and any profit on the resale of the Registered
Securities purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
<PAGE> 22
The Company is required to pay all fees and expenses incident to the
registration of the Registered Securities, including fees and disbursements
of counsel to the Selling Securityholders. The Company has agreed to
indemnify the Selling Securityholders against certain losses, claims, damages
and liabilities, including liabilities under the Securities Act.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named herein has or is to receive in connection with
this offering any interest, direct or indirect, in the Company or any of its
subsidiaries, nor was any such party connected with the Company or any of its
subsidiaries as a promoter, underwriter, voting trustee, director, officer or
employee.
LEGAL MATTERS
Certain legal matters in connection with the registration of the securities
offered hereby will be passed upon for the Company by Hardy & Allen, Salt
Lake City, Utah.
EXPERTS
The consolidated balance sheets of I-Link Incorporated and Subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, changes in stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1997 incorporated in this
prospectus by reference have been included herein in reliance on the reports
of PricewaterhouseCoopers LLP (formerly Coopers & Lybrand L.L.P.),
independent accountants, given the authority of that firm as experts in
accounting and auditing.
<PAGE> 23
NO DEALER, SALESMAN OR ANY OTHER PERSON
HAS BEEN AUTHORIZED IN CONNECTION WITH
THIS OFFERING TO GIVE ANY INFORMATION OR 7,878,703 SHARES OF
TO MAKE ANY REPRESENTATIONS OTHER THAN COMMON STOCK
THOSE CONTAINED IN THIS PROSPECTUS. THE
PROSPECTUS DOES NOT CONSTITUTE AN OFFER
OR A SOLICITATION IN ANY JURISDICTION TO
ANY PERSON TO I-LINK WHOM IT IS UNLAWFUL
TO INCORPORATED MAKE SUCH AN OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN
NO CHANGE IN THE CIRCUMSTANCES OF THE
COMPANY OR THE FACTS HEREIN SET FORTH
SINCE THE DATE HEREOF.
I-LINK
INCORPORATED
TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION . . . 2
DOCUMENTS INCORPORATED
BY REFERENCE . . . . . . 2
PROSPECTUS SUMMARY. . . . . 3
RISK FACTORS. . . . . . . . 3 -------------
USE OF PROCEEDS . . . . . . 15
DETERMINATION OF OFFERING PROSPECTUS
PRICE . . . . . . . . . . 15
DILUTION. . . . . . . . . . 16 -------------
SELLING SECURITY HOLDERS. . 16
DESCRIPTION OF SECURITIES . 17
PLAN OF DISTRIBUTION. . . . 22
INTERESTS OF NAMED EXPERTS
AND COUNSEL . . . . . . . 23
LEGAL MATTERS . . . . . . . 23
EXPERTS . . . . . . . . . . 23
September [___], 1998
<PAGE>
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses to be incurred by the Company in connection with the
registration of the securities subject of this registration statement, other
than underwriting discounts and commissions, are estimated as follows:
SEC Registration Fee . . . . . . . . . . . $ 6,596
Printing and Engraving Expenses. . . . . . . 1,000
Registrant's Counsel Fees and Expenses . . . 10,000
Accountant's Fees and Expenses . . . . . . . 5,000
Miscellaneous Expenses . . . . . . . . . . . 1,000
------
Estimated Total. . . . . . . . . . . . . . $23,596
======
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 607.0850 of the Florida Business Corporation Act empowers a
corporation to indemnify any person who was or is a party to a proceeding by
reason of the fact that he was or is an officer, director, employee or agent
of the corporation against liability incurred in connection with such
proceeding. Such person must have acted in good faith and in a manner
reasonably believed to be in or not opposed to, the best interests of the
corporation. With respect to any criminal proceeding, such person must have
had no reasonable cause to believe his conduct was unlawful. Any such
indemnification may only be made upon a determination by the corporation that
such indemnification is proper because the person met the applicable standard
of conduct.
The Florida Business Corporation Act provides further that the
indemnification permitted thereunder is not exclusive; provided, however,
indemnification is not permitted to be made on behalf of any such person if
a judgment or final adjudication establishes (i) a violation of the criminal
law unless such person had reasonable cause to believe his conduct was lawful
or no reasonable cause to believe his conduct was unlawful; (ii) such person
derived an improper personal benefit from the transaction; (iii) as to any
director such proceeding arose from an unlawful distribution under Section
607.0834; or (iv) willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by the corporation or a
shareholder.
The Company's Bylaws provide that the Company shall indemnify any such person
to the fullest extent provided by law and empowers the Company to purchase
and maintain insurance on behalf of any such person.
The Company previously entered into indemnification agreements with certain
officers and directors of the Company for indemnification against expenses
(including attorneys' fees, through all proceedings, trials, and appeals),
judgments, and amounts paid in settlement actually and reasonably incurred in
connection with any threatened, pending, or contemplated action, suit, or
proceeding, whether civil, criminal, administrative, or investigative,
arising from any actual or alleged breach of duty, neglect, effort, or other
action taken or omitted, solely in the capacity as an officer and/or a
director of the Company; provided that no indemnification will be made in
respect of any acts or omissions (a) involving gross negligence or willful
misconduct, (b) involving libel or slander, or (c) based upon or attributable
to gaining, directly or indirectly, any profit or advantage to which he was
not legally entitled.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT
<PAGE> II-1
MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE COMPANY
PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED THAT IN
THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, SUCH INDEMNIFICATION
IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT AND IS THEREFORE
UNENFORCEABLE.
ITEM 16. EXHIBITS.
3.1 Amended and Restated Articles of Incorporation, as futher amended,
incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997, File Number 0-17973.
3.7 Articles of Amendment to the Company's Amended and Restated
Articles of Incorporation, establishing the terms of Series F
Preferred Stock, incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 1998,
File Number 0-17973.
4.1 Specimen Common Stock Certificate, incorporated herein by reference
to the Company's Registration Statement on Form S-18, File Number
33-27978-A.
5.1 Opinion of Counsel, to be filed by amendment.
23.1 Consent of PricewaterhouseCoopers L.L.P., filed herewith.
23.2 Consent of Counsel, to be filed by amendment.
ITEM 17. UNDERTAKINGS
The Company hereby undertakes:
(a) Rule 415 Offering.
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) Subsequent Exchange Act Documents Incorporated by Reference.
The Company hereby undertakes that, for purposes of determining any liability
under the Securities Act, each filing of the Company's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Incorporated Annual and Quarterly Reports
The Company hereby undertakes to deliver or cause to be delivered with the
<PAGE> II-2
prospectus, to each person to whom the prospectus is sent or given, the
latest annual report to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the requirements of Rule
14a-3 or Rule 14c-3 under the Exchange Act; and, where interim financial
information required to be presented by Article 3 of Regulation S-X are note
set forth in the prospectus, to deliver, or cause to be delivered to each
person to whom the prospectus is sent or given, the latest quarterly report
that is specifically incorporated y reference in the prospectus to provide
such interim financial information.
(d) Indemnification.
(1) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise,
the Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer, or controlling person of the Company
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
<PAGE> II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Draper, Utah, on September 4, 1998.
I-LINK INCORPORATED
By: /s/ John W. Edwards
John W. Edwards, Chairman of the
Board, President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on
the dates indicated.
Signature Title Date
/s/ John W. Edwards Chairman of the Board, September 4, 1998
John W. Edwards President and Chief
Executive Officer
/s/ Karl S. Ryser, Jr. Treasurer, Chief Financial September 4, 1998
Karl S. Ryser, Jr. Officer and Chief
Accounting Officer
/s/ David E. Hardy Secretary September 4, 1998
David E. Hardy
/s/ Henry Y.L. Toh Director September 4, 1998
Henry Y.L. Toh
/s/ Thomas A. Keenan Director September 4, 1998
Thomas A. Keenan
/s/ Joseph A. Cohen Director September 4, 1998
Joseph A. Cohen
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement on
Form S-3 of our report dated April 9, 1998, on our audits of the financial
statements of I-Link Incorporated and Subsidiaries. We also consent to the
reference to our firm under the caption "EXPERTS."
PRICEWATERHOUSECOOPERS LLP
Salt Lake City, Utah
September 4, 1998
<PAGE>
