As filed with the Securities and Exchange Commission on October 13, 1999.
Registration No. 333-____________
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
______________________________
FORM S-8/S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
______________________________
I-LINK INCORPORATED
(Exact name of registrant as specified in its charter)
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 (801) 576-5000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Various Written Compensation Contracts
(Full Title of Plan)
______________________________
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
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
______________________________
<PAGE>
Copies to:
Ralph V. De Martino, Esquire
De Martino Finkelstein Rosen & Virga
1818 N Street, NW, Suite 400
Washington, DC 20036-2492
(202) 659-0494 (Telephone)
(202) 659-1290 (Facsimile)
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, check the following box: [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
Proposed
Maximum Proposed
Recent Maximum
Market Aggregate Amount of
Title of Securities Amount to be Price Per Offering Registration
to be Registered Registered Share (1) Price (1) Fee (1)
- ------------------- ------------ --------- ------------- ------------
<S> <C> <C> <C> <C>
Options (2) 8,032,333 ----- ----- -----
Common Stock, $.007 8,032,333 $2.656 $21,333,876 $5,930.82
par value (2)
Total $5,930.82
</TABLE>
(1) Calculated in accordance with Rule 457(h) under the Securities Act of
1933, as amended, based upon the average of the bid and asked prices
for the common stock on October 7, 1999.
(2) Represents the maximum number of securities which may be granted
pursuant to the various written compensation contracts. See "The
Offering". In addition to such shares this registration statement
covers, pursuant to Rule 416, such additional number of shares as may
be required by reason of the operation of the antidilution provisions
of the respective contracts.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
The documents containing the information specified in Part I of the
registration statement will be sent or given to the holders of the written
compensation contracts (each a "Plan" and collectively referred to as the
"Plans") as specified by Rule 428(b)(1) of the Securities Act of 1933, as
amended (the "Securities Act"). Each Plan grants options to purchase
shares of common stock of I-Link Incorporated. These options and the
underlying shares of common stock are the subject of this registration
statement. Such documents are not required to be, and are not, filed with
the Securities and Exchange Commission (the "SEC") either as part of the
registration statement or as prospectuses or prospectus supplements
pursuant to Rule 424. These documents and the documents incorporated by
reference in this registration statement pursuant to Item 3 of Part II of
this registration statement, taken together, constitute a prospectus that
meets the requirements of Section 10(a) of the Securities Act.
Item 2. Registrant Information and Plan Information.
A copy of the documents or portions of documents containing the
information specified in Part I will be provided to Plan participants (each
a selling securityholder). Moreover, upon written or oral request, I-Link
shall provide to selling securityholders, any document or part thereof
incorporated by reference in Item 3 of Part II of the registration
statement (which are incorporated by reference in this Section 10(a)
prospectus), or other documents required to be delivered to selling
securityholders pursuant to Rule 428(b). Such requests may be made to the
attention of the following:
David E. Hardy, Esq.
I-Link Incorporated
13751 S. Wadsworth Park Drive
Suite 200
Draper, UT 84020
(801) 576-5000
<PAGE>
PROSPECTUS
[I-LINK INCORPORATED LOGO]
8,032,333 Options Issuable Pursuant to Various Written Compensation
Contracts and the 8,032,333 Shares of Common Stock Underlying Such Options
This prospectus covers issuance and exercise of up to 8,032,333
options to purchase shares of common stock, par value $.007, of I-Link
Incorporated (the successor of Medcross, Inc.), a Florida corporation, as
well as the offer and resale by the holders thereof of up to 8,032,333
shares of common stock. Such shares have been or may have been acquired by
certain employees, officers, directors and other eligible persons who may
or may not be deemed to be affiliates of I-Link pursuant to the terms of
each of the respective Plans. See "The Offering." In connection with such
resales or offers for sale, certain employees, officers, directors and
other eligible persons, as well as brokers through whom such shares may be
sold, may be deemed to be "underwriters" as that term is defined in Section
2(11) of the Securities Act of 1933, as amended.
The common stock is quoted on The Nasdaq Market, Inc's SmallCap Market
under the symbol "ILNK". On October 7, 1999, the average of the high and
low sale price of the common stock as reported on Nasdaq was $2.656. So
long as the registration statement of which this prospectus forms a part is
effective and disclosure set forth herein is current, the holders of
registered securities may sell such shares publicly. The shares offered by
this prospectus may be sold from time to time by the persons holding the
shares. 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 these securities. I-Link will
receive proceeds only when options are exercised and shares are issued;
I-Link will not receive any of the proceeds from the resale of any of the
registered securities by holders. All costs incurred in connection with
the registration of the shares are being borne by I-Link. See "The
Offering."
An investment in these securities involves a high degree of risk and
dilution. See "Risk Factors."
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon
the accuracy or adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
The date of this prospectus is October 13, 1999.
<PAGE>
AVAILABLE INFORMATION
I-Link is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, 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) with the SEC.
Such reports, proxy statements and other information are available at the
SEC's web site at http://www.sec.gov. They may also be inspected and
copied at the SEC's public reference room located in Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549; and at the SEC offices located at
Citicorp Center, 500 West Madison Street, Room 1400, Chicago, Illinois
60661, and 7 World Trade Center, 13th 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 SEC located at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549.
DOCUMENTS INCORPORATED BY REFERENCE
There is hereby incorporated in this Prospectus by reference I-Link's
most recent Annual Report on Form 10-K and I-Link's subsequent Quarterly
Reports on Form 10-Q filed with the SEC pursuant to the Exchange Act, to
which reference is hereby made.
All documents filed by I-Link 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.
I-Link 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: David E. Hardy, Esq.
THE COMPANY
I-Link was incorporated in the State of Florida in 1983. In January
1997, we acquired a subsidiary, I-Link Communications, an FCC-licensed long
distance carrier, and began providing telecommunications products and
services designed to surpass those offered by traditional
telecommunications products and services. In late 1997, we changed our
corporate name from Medcross, Inc. to I-Link Incorporated. I-Link'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. I-
Link markets its products and services primarily through independent
representatives to residential and small business subscribers throughout
<PAGE> 2
the United States. I-Link's enhanced products and services include lower
rate long-distance service, single number service, call screening,
conference calling without operator assistance, fax store and forwarding,
and voice mail.
In 1997, I-Link launched a network marketing program for its products
and services through a subsidiary company, I-Link Worldwide, L.L.C. I-Link
Worldwide, Inc. was acquired in 1996. In August 1997, we acquired
MiBridge, Inc., and in the first quarter of 1998 formed the subsidiary
ViaNet Technologies, Ltd., which has headquarters in Ramat Hasharon,
Israel, to advance our research and development capabilities. We employ
proprietary technology acquired and developed by our subsidiaries I-Link
Systems, Inc. (formerly I-Link Worldwide, Inc.), ViaNet and MiBridge. The
software based technology allows us to provide enhanced communications
products and services.
I-Link'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.
Market-Related Risks
Current shareholdings will be significantly diluted if other options,
convertible securities and outstanding debt are converted into shares of
common stock.
"Dilution" refers to the reduction in the voting effect and
proportionate ownership interest of a given number of shares of common
stock as the total number of shares increases. I-Link's issuance of
additional stock, convertible preferred stock and convertible debt results
in dilution to the interests of shareholders and may also result in the
reduction of your stock price. The exercise of warrants and options,
including options granted pursuant to these and other I-Link option plans,
may result in additional dilution. The sale of a substantial number of
shares into the market, or even the perception that sales could occur,
could depress the price of the common stock.
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 interests of other shareholders. I-Link may find
it more difficult to raise additional equity capital if it should be needed
<PAGE> 3
for its business while the options and warrants are outstanding. At any
time at which the holders of the options, warrants or convertible
securities might be expected to exercise them, I-Link would probably be
able to obtain additional capital on terms more favorable than those
provided by those securities. Also, some holders of the 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 their options
and warrants. The cost to I-Link of effecting any required registration
may be substantial.
I-Link does not anticipate paying cash dividends on its securities.
I-Link has not paid any dividends on any of its outstanding
securities to date, except to the extent that accrued dividends have been
calculated and added to the value of the shares of Series F preferred stock
which have been already converted. I-Link does not anticipate paying any
cash dividends on its securities in the foreseeable future. I-Link
currently intends to retain all cash flow from operating activities, if
any, to finance its operations and to expand its businesses. I-Link's
future cash flow may be insufficient to enable payment of cash dividends.
As of September 30, 1999, the aggregate amount of undeclared and unpaid
cumulative dividends for each class of I-Link's preferred stock, and the
number of shares of common stock which could be issued in lieu of the cash
dividends, is as follows:
<TABLE>
<CAPTION>
Undeclared and Number of Shares of
Unpaid Cumulative Common Stock Issuable
Class of Security Dividends as Dividends
- ------------------------ ----------------- ---------------------
<S> <C> <C>
Class C preferred stock $ 482,292 105,854
Series F preferred stock $ 269,347 132,487
Series M preferred Stock $2,603,274 n/a
</TABLE>
Dividends on the Class C preferred stock will be payable when 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 I-Link as determined by the board of directors,
in shares of common stock. Dividends may be paid in shares of common stock
only if the shares have been registered under the Securities Act.
Dividends on the Series F preferred stock are payable in cash or shares
of common stock. In connection with the Winter Harbor equity investment
in I-Link, I-Link 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.
<PAGE> 4
Operational Risks.
I-Link must raise additional financing to meet its ongoing capital
requirements
I-Link currently has no material commitments for capital or other
expenditures. There is the risk that necessary additional financing may
not be available to I-Link on terms that it considers reasonable or
favorable; or needed financing may not be available at all. Failure to
secure necessary financing when needed would have a serious detrimental
effect on the continued growth of the business. However, it is I-Link's
intention to continue to implement the growth of our business and expand
our operations. We anticipate that revenues generated in 1999 from our
continuing operations will not be sufficient to fund our ongoing
operations, including the continued expansion of our private
telecommunications network facilities, product development and anticipated
growth in our subscriber base.
Additional funds will be necessary from public or private financing
markets to successfully integrate and finance the planned expansion of our
business communications services, and to discharge our financial
obligations.
I-Link will incur additional obligations if it fails to meet minimum
purchase requirements under its Sprint and other contracts.
I-Link has a contract with Sprint Communications Company for the
purchase of long distance services which are resold to some I-Link
customers. Our agreement with Sprint requires that we pay a minimum
monthly amount to Sprint, whether or not we need or use that amount of
service. If we are unable to resell enough long distance services to our
own customers which will cover the minimum contracted monthly level of
service, we will have a loss in that area of our business equal to the
difference. The original Sprint contract called for a monthly minimum
payment of $1,200,000. Because we moved many customers to services
provided exclusively on our own private network and no longer needed to
purchase higher volumes from Sprint, in late 1998 we negotiated an
amendment of the Sprint agreement, and now we are required to purchase and
pay for at least $550,000 in services from Sprint per month. As a result
of our negotiations, Sprint waived all prior shortfalls in reaching the
prior monthly minimum. Currently I-Link is meeting its monthly obligations
under the amended arrangement.
In January 1999, I-Link entered into an agreement with another
national carrier to lease local access spans. Local access spans allow
customers connectivity from their local dial-up service to I-Link's
network-supplied services. The three-year agreement includes minimum usage
commitments of $1,512,000 during the first year and $2,160,000 in the
second and third years. If we were to terminate the agreement early, we
would be required to pay any remaining first year minimum monthly usage
requirements and pay 25% of any remaining second and third year minimum
<PAGE> 5
monthly usage requirements. I-Link is currently meeting its monthly
obligations under this agreement.
I-Link must continue to exploit its network marketing sales program and
realize subscriber growth to compete with better capitalized enterprises.
I-Link's future subscription growth is largely dependent on the
subscriber base initially achieved through its network sales program
launched in June 1997. As an expanding business, I-Link must realize
subscriber growth in order to compete with larger, more mature, better
capitalized enterprises. In order to realize subscriber growth, I-Link must
be able to replace terminating subscribers and attract additional
subscribers. However, the sales and marketing expenses and other costs
associated with attracting new subscribers are substantial. Accordingly,
our ability to improve operating margins will depend in part on our ability
to attract new subscribers and retain existing subscribers. We plan to
invest significant resources in our telecommunications infrastructure,
customer support resources, sales and marketing expenses and subscriber
acquisition costs. There is no guarantee that our future efforts in this
area will improve subscriber growth and retention. Since the market for
our services is relatively 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.
I-Link's board of directors may issue additional shares of preferred stock
without shareholder approval.
Our articles of incorporation authorize the issuance of up to
10,000,000 shares of preferred stock with rights and preferences that may
be determined from time to time by the board of directors. To date,
513,500 shares of preferred stock have been designated. Accordingly, the
board of directors may, without stockholder approval, issue one or more new
series of preferred stock, 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 or change in control of I-Link. Although I-Link does not have
any current plans to issue any additional series or shares of preferred
stock, I-Link may do so in the future.
I-Link's classification of board of directors makes it difficult for
shareholders to effect changes in management.
The classification of the board of directors makes it difficult for
shareholders to effect a change in management. Our board of directors is
divided into three classes. Members of each class serve for staggered
three year terms, with members of one class coming up for election each
year.
<PAGE> 6
Winter Harbor has potential voting control over I-Link.
If Winter Harbor exercises all of its warrants and converts its
Series M preferred stock and Series N preferred stock to common stock, it
has the potential to own approximately 50,274,000 shares, or 69%, of I-
Link's then-outstanding common stock. These include:
* over 7,207,000 shares of common stock from the conversion of 4,400
shares of Series M preferred stock and accrued dividends;
* nearly 5,182,000 shares of common stock from the conversion of 14,404
shares of Series N preferred stock;
* nearly 9,345,000 shares of common stock directly and indirectly
available from the optional conversion by Winter Harbor of $7,768,000
in promissory notes issued in 1998 and accrued interest; and
* up to 28,540,000 shares of common stock underlying warrants which are
exercisable at any time.
Thus Winter Harbor could at any time obtain sufficient voting power
to take voting control of I-Link.
Winter Harbor can prevent I-Link from engaging in certain business matters.
I-Link is required to obtain Winter Harbor's prior approval before
engaging in certain business activities or opportunities. These include,
among other things: mergers, acquisitions and dispositions of corporate
assets and businesses, hiring or discharging key employees and auditors,
transactions with affiliates, commitments in excess of $500,000, the
adoption or settlement of employee benefit plans and filing for protection
from creditors.
Industry Risks
I-Link must stay current in industry standards and general economic trends
to compete in the communications services industry.
Our ability to compete in the communications services industry
requires that we stay current in industry standards and general economic
trends. Our ability to compete is dependent on maintaining the following:
the capacity, reliability, and security of our Intranet infrastructure; our
market presence; the timing of introductions of new products and services
into the market; our ability to support existing and emerging industry
standards; preserving the balance of network demand with our fixed
expenses. We believe that no competitor in North America currently provides
capabilities and an Internet Protocol (IP)-based platform for delivering
enhanced services in a manner comparable with I-Link. However, there are
many companies that offer communications services, including a few that
have recently introduced IP-based standard services or announced an
intention to do so, and therefore compete with I-Link on some level. These
entities include large telecommunications companies and carriers such as
AT&T, MCI WorldCom and Sprint, and smaller, regional resellers of telephone
line access. These companies and others, including manufacturers of
<PAGE> 7
hardware and software used in the business communications industry, could
in the future develop products and services that compete with I-Link on a
more direct basis, which would pose the risk of costing I-Link its
customers. In many instances these entities are better capitalized than I-
Link and control significant market share in their respective industry
segments. In addition, other businesses may be attempting to introduce
products similar to those used by I-Link for the transmission of business
information over the Internet. Our inability to compete in the
communications industry will negatively affect our profitability.
If I-Link cannot continue to provide a lower rate to customers it may lose
profits.
Our ability to undersell primary sellers is essential to our ability
to attract and retain customers. We are able to provide customers with
lower rates as a result of the volume discount offered to I-Link in
accordance with the terms of our contract with Sprint. Currently the total
charged to our customers for various long distance services is
comparatively less than the rates charged by a primary seller of similar
services. We believe that lower rates are essential to our ability to
attract and retain customers. Therefore, narrowing of the difference
between our rates and the cost of the bulk-rate long distance services we
purchase for resale to our customers could have a significant negative
effect on our profitability. To the extent this differential decreases, we
will need to spend even more effort to maintain and attract new customers.
If I-Link is unable to continue to lease telecommunication lines from major
suppliers its operations may be significantly impaired.
I-Link's ability to transmit long distance telephone calls on a cost
effective basis is dependent on transmission facilities leased from
carriers that compete with I-Link. A significant portion of these leased
telecommunications lines are currently provided by Sprint, MCI WorldCom, US
West, Pacific Telesis, Southwest Bell, IXC, Qwest Communications, and Level
III. Further, we use Sprint as our primary supplier of inbound and
outbound telephone services in geographic areas our own network does not
cover. I-Link, like other companies in its industry, is vulnerable to
changes in its lease arrangement. While I-Link has no prior history of
lease-related problems, if any of these suppliers are unable or unwilling
to provide or expand their current levels of service to us in the future,
our operations could be significantly impaired. Although leased
telecommunications lines are available from several alternative suppliers,
there can be no assurance of our being able to obtain substitute services
from them at reasonable or comparable prices or in a timely fashion. We
are also subject to those risks relating to the potential disruptions in
these telecommunications services that could occur in the future. Changes
in tariffs, regulations, or policies by any of our telecommunications
providers may impede our ability to continue to offer long distance service
on what we consider to be commercially reasonable or profitable terms.
<PAGE> 8
I-Link and the long-distance industry in general experience high rates of
customer attrition.
We believe 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, any
steps taken by I-Link to counter increased customer attrition could prove
to be unsuccessful.
Changes in regulations affecting I-Link's operations could have a material
adverse effect on the value of I-Link common stock.
Changes in the regulation of, or the enactment or changes in
interpretation of legislation affecting, our operations could have a
material adverse effect on I-Link and the value of the common stock. Some
of I-Link's operations are subject to regulation by the FCC. In addition,
some of our businesses are subject to regulation by state public utility or
public service commissions. Recently, the Federal Government enacted the
Telecommunications Act of 1996, which, among other things, allows the
Regional Bell Operating Companies and others to enter the long distance
business. Entry of the Regional Bell Operating Companies or other
entities, such as electric utilities and cable television companies, into
the long distance business may have a negative impact on I-Link or its
customers. We anticipate that some of those companies entering this
business will be strong competitors because, among other reasons, they may
enjoy one or more of the following advantages: they may (a) be well
capitalized; (b) already have substantial end user customer bases; or (c)
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 I-Link would face substantially increased
competition. This could have a material adverse effect on I-Link and the
value of our common stock. In addition, the Telecommunications Act
provides that state proceedings may in some instances determine access
charges I-Link is required to pay to the local exchange carriers. No
assurance can be given that these sorts of proceedings will not result in
increases in rates. Increases could have a material adverse effect on I-
Link or its customers, and on the value of the common stock.
I-Link Communications' activities are regulated by the public utility
commissions of the various states in which I-Link operates. Also,
decisions by the FCC with respect to the permissible business activities or
pricing practices may have an adverse impact on I-Link Communications'
operations. I-Link Communications could be subject to complaints seeking
damages and other relief filed by parties claiming to be harmed by I-Link
Communications' failure to file tariffs. Moreover, any significant change
in regulations by state governmental agencies could significantly increase
I-Link Communications' costs or otherwise have an adverse impact on I-Link
Communications' 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,
<PAGE> 9
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, to provide service in the long
distance market and allowing the long distance carriers such as AT&T, MCI
WorldCom, and I-Link 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 Bell Operating Companies into the long
distance market will not have a material adverse effect on I-Link's
business.
I-Link's Internet-related business may be subject to additional
governmental regulation.
I-Link has been moving its customers off the facilities of existing
long distance carriers, and has increased its reliance on its own
proprietary Internet protocol network, or I-Link Intranet, for transmission
in the hope of enjoying minimal federal regulation under current rules.
However, the FCC's potential jurisdiction over the Internet is broad given
that the Internet relies on wire and radio communication facilities over
which the FCC has long standing authority. While 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, and in May 1997 the FCC concluded
that information and enhanced service providers are not required to
contribute to federal universal service funding mechanisms, the FCC's
framework for "enhanced services" confirms that the FCC has authority to
regulate computer-enriched services.
I-Link faces continued exposure to tort liability in the medical industry
through its discontinued medical division.
I-Link directly or indirectly controls two business entities that
comprise I-Link's discontinued medical facilities. As such, I-Link is
exposed to general liability for contracts entered into by those businesses
and for torts committed by I-Link's agents and employees. I-Link is also
exposed to tort liability in the events of claims of harm to patients due
to the negligence of I-Link, its agents or employees. Any liability claim
could have a substantial negative effect on I-Link's financial position.
I-Link's discontinued medical division operated medical equipment which was
used to perform procedures on or diagnose disease in patients; however, I-
Link has sold substantially all of the assets of those businesses and only
operates them now in order to collect accounts receivable and pay
liabilities. I-Link currently maintains professional liability insurance
coverage in the amount of $1,000,000, and I-Link also maintains an umbrella
policy covering, among other things, workers compensation, general, and
automobile liability in an amount of $9,000,000 in coverage. There is no
assurance that I-Link will be able to continue to maintain similar
insurance coverage in the future.
<PAGE> 10
Technological Risks
The success of I-Link's operations requires continued adaptation to new
services and technological change.
Our success is highly dependent upon our ability to develop new
software and services, and network infrastructure to meet changing customer
requirements. The market for our services is characterized by rapidly
changing technology, evolving industry standards, emerging competition and
frequent new software and service introductions. Our future success will
depend, in part, on our ability to anticipate changes and to offer on a
timely basis market-responsive services that meet evolving industry
standards. Our pursuit of technological advances will require substantial
time and expense. In the event that we fail to develop new software and
network infrastructure expansion in a timely manner, it will adversely
affect our overall business, financial condition and results of operations
in the future.
Impact of Year 2000.
I-Link's Year 2000 program is designed to minimize the possibility of
serious Year 2000 interruptions. Possible worst case scenarios include the
interruption of significant parts of I-Link's business as a result of
critical telecommunication networks and/or information systems failure.
Any such interruption may have a material adverse impact on future results.
Since that possibility cannot be eliminated, I-Link formed a "Year 2000
Team" during 1998 to evaluate its information technology systems as well as
its non-information technology devices, such as building security, heating
and air-conditioning, safety devices and other devices containing embedded
electronic circuits. I-Link does not believe its non-information technology
systems will be significantly affected by Year 2000 problems.
Nevertheless, the Year 2000 project team is continuing to evaluate the
readiness of all of the facilities that we occupy to be certain that the
non-information technology systems will be compliant. I-Link anticipates
its information technology and non-information technology systems will be
Year 2000 compliant by November 30, 1999.
State of Readiness. Our approach to the Year 2000 issue includes six
major phases: Inventory, Assessment, Remediation, Testing, Implementation,
and Contingency Planning. Several phases of this methodology are well
underway. The Inventory and Assessment phases are nearly complete, and
efforts have begun in Remediation and Testing. Based upon the results of
the assessment, a significant portion of our software and hardware already
appears to be Year 2000 compliant, though we intend to confirm that opinion
in the Testing phase. As we began operations in 1996, much of the hardware
and software currently in use at I-Link was Year 2000 compliant when
acquired and implemented.
While we continue to assess various aspects of our Year 2000
vulnerability, the project team has begun the process of remediating or
replacing systems and devices that do not appear to be fully compliant.
<PAGE> 11
Much of this remediation effort involves readily available, simple upgrades
to hardware and software components, or relatively minor changes to I-
Link's in-house developed systems. We intend to complete the Remediation
phase, except for the billing system discussed below, by November 15,
1999. Total costs, past and future, of all remediations, including the
billing system discussed below, are not expected to exceed $250,000. We do
not believe that our use of internal resources will significantly delay any
other systems development efforts. We have initiated testing of some
systems to confirm that they can process calendar dates after December 31,
1999.
I-Link believes that reliance on other telecommunications providers
represents our greatest Year 2000 exposure and is the primary third-party
relationship that is critical to our ongoing operations. While we have our
own communications network to carry much of our traffic, our network is
dependent upon significant third-party carriers, such as Sprint, and all
local exchange carriers, such as U.S. West and PacBell. These entities
originate and terminate local and long-distance caller traffic which
accesses the I-Link communications network or services areas not covered by
I-Link's network. This is substantially the same risk faced by other
telecommunications providers. I-Link is in the process of evaluating the
Year 2000 preparedness of its carriers and the many local exchange
carriers. I-Link's carriers have indicated they intend to be Year 2000
compliant in public filings and other notifications. In the event that
these carriers do not become Year 2000 compliant prior to December 31,
1999, we would need to switch to carriers who were Year 2000 compliant or
face a significant impact on our ability to deliver telecommunications
services. In the event our current carriers do not become Year 2000
compliant and we are unable to switch to a carrier(s) that is Year 2000
compliant, we would not be able to deliver our services, which would have a
substantial negative impact on I-Link and its results of operations,
liquidity, and financial position. In the event that certain local
exchange carriers are not Year 2000 compliant, I-Link's customers would not
be able to originate or terminate a call in geographic areas serviced by
that local exchange carrier, which would negatively impact the financial
condition of I-Link.
In order to assess the preparedness of third party vendors including
I-Link's carriers and local exchange carriers, we are surveying the vendors
and their public statements and Web sites. At the conclusion of our
internal and third party assessments, we intend to complete contingency
plans to address various scenarios in which key vendors and suppliers may
not be Year 2000 compliant.
The internal system I-Link believes most vulnerable to Year 2000
problems is the existing billing system which: (1) gathers call detail
records; (2) processes the call detail records into billable call detail
records; (3) rates the call detail records; (4) prepares invoices to
customers; and (5) records payments received. The inability of our billing
system to operate in the Year 2000 would adversely impact the recognition
and collection of revenue, and therefore, could negatively impact the
<PAGE> 12
results of operations and financial position. The current billing system
contains some programs that are not Year 2000 compliant. I-Link has
discontinued its project with an outside consulting company that would have
replaced the existing billing system with a Year 2000 compliant system.
The rating and taxing components of the billing system will be compliant
by October 15, 1999, and the accounts receivable aging component will be
compliant by November 30, 1999. The cost of these modifications to the
existing billing system are not anticipated to exceed $50,000, and would
involve internal resources only such as salaries and benefits.
Costs. I-Link is primarily using internal resources to identify,
assess, correct, test, and implement solutions for minimizing Year 2000
consequences, but expects to incur some additional consulting, upgrade, and
other expenses. We have already expended approximately $45,000 to date for
upgrades, and approximately $55,000 on internal resources for Year 2000
preparation. We estimate the remaining expenditures for outside services
and upgrades should not exceed $85,000 and internal resources should not
exceed $65,000. However, the ultimate final cost of modifications and
conversions could change and is not definitively known at this time. I-
Link expects to fund such expenditures from public or private financing
markets.
Risks. The failure to correct a material Year 2000 problem could
result in an interruption of normal business activities. Such a disruption
could materially and adversely affect our results of operations, liquidity
and financial condition. Our assessment of Year 2000 risk does not cover
all possible catastrophic events, such as the failure of electrical power
grids or the general telecommunications infrastructure. The following
reasonably likely worst case scenario is based upon conceivable, though not
probable, worst-case disruptions to I-Link's revenue cycle.
I-Link's revenue cycle is dependent on the ability to complete
customer calls and integrate the related call detail records into the
billing system described above. Our ability to complete calls is
contingent upon the Year 2000 compliance of our underlying carriers and
local exchange carriers, which have represented that they will be ready.
Barring a long-term, catastrophic failure of electrical services or the
telecommunications industry in general, the most likely worst-case scenario
would be a general failure of I-Link's own communications network, which
carries its call traffic. In that case, we would not be able to provide
enhanced services, such as V-Link, but customers could still complete long-
distance calls as those calls would be routed over I-Link's carriers'
networks. However unlikely, such an event would seriously and adversely
affect operating margins, but operations could continue until repairs were
made. Continuing with the worst-case scenario, a failure of our ability to
collect call detail records might prevent the timely billing of services.
Such a failure would result in a cash-flow exposure to I-Link for as long
as it may require to correct call detail record collection programs. Since
the billing process occurs two to three weeks after the close of any
period, minor problems would probably have minimal financial impact.
Nevertheless, if corrections required a significantly longer time period,
<PAGE> 13
customer billing, revenue collection and cash flows could be delayed and
bad debts increased to the extent that material damages to I-Link could
result. We intend to test various components of this scenario to reduce
exposure to this reasonably likely worst case scenario.
Milestones and implementation dates and the costs of our Year 2000
readiness program are subject to change based on new circumstances that may
arise or new information becoming available that may alter underlying
assumptions or requirements.
Statements included in this prospectus under the heading "Risk
Factors," in addition to statements contained elsewhere in this prospectus
or incorporated by reference, that are not statements of fact are "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995, and are thus prospective. The forward-looking
statements are subject to risks, uncertainties and other factors that could
cause actual results to differ materially from future results expressed or
implied by any forward-looking statements. Forward-looking statements can
be identified by the use of forward-looking terminology such as "may,"
"will," "should," "expect," "intend," "estimate" or "continue" or the
negative thereof or comparable terminology. The matters set forth under
the caption "Risk Factors" in the prospectus constitute cautionary
statements identifying important factors with respect to forward-looking
statements. Undue reliance should not be placed on these forward-looking
statements, which speak only as of the date of this prospectus, and I-Link
undertakes no obligation to update these forward-looking statements.
THE OFFERING
This prospectus relates to the options and the underlying shares of
common stock which have been or may be acquired by certain officers,
employees and consultants named below who may or may not be deemed
affiliates of I-Link or who acquired shares upon the exercise by them of
options granted pursuant to the terms of each respective Plan prior to the
effective date of a registration statement covering securities issued under
that Plan.
<PAGE> 14
<TABLE>
Exercise Expiration
Name of Plan Participant Options Price Date
- ------------------------ --------- ---------- --------------
<S> <C> <C> <C>
John W. Edwards 1,000,000 $ 3.90 4/08/06
250,000 $ 3.90 8/21/06
500,000 $ 3.90 8/29/07
200,000 $ 3.563 9/09/09
Karl S. Ryser, Jr. 250,000 $ 3.90 10/15/06
250,000 $ 3.90 8/29/07
David E. Hardy 250,000 $ 3.90 2/18/07
250,000 $ 3.90 8/29/07
John M. Ames 350,000 $ 3.125 8/28/08
William H. Flury 250,000 $ 3.90 10/15/06
250,000 $ 3.90 8/29/07
James A. Giauque III 60,000 $ 3.90 1/02/07
40,000 $ 3.90 8/29/07
75,000 $ 2.563 12/13/08
Mark S. Hewitt 250,000 $ 2.50 3/29/09
Jonathan S. McKillip 150,000 $ 3.90 8/29/07
100,000 $ 2.563 12/13/08
Dror Nahumi 200,000 $ 3.00 3/01/09
Scott Olsen 5,000 $ 4.25 5/17/09
Alexsandar P. Radulovic 500,000 $ 7.00 6/30/02
180,000 $ 2.563 12/13/08
Clay Wilkes 1,500,000 $ 7.00 6/30/02
Robert W. Edwards Jr. 500,000 $ 3.90 8/29/07
Joseph A. Cohen 64,000 $ 3.90 9/30/06
100,000 $ 3.90 8/29/07
100,000 $ 3.00 3/01/09
Steven D. Campbell 150,000 $ 3.90 5/15/07
Steven J. Little 33,333 $ 3.90 5/15/07
Robert A. Bryson 95,000 $ 3.90 8/29/07
130,000 $ 2.563 12/13/08
</TABLE>
<PAGE> 15
USE OF PROCEEDS AND PLAN OF DISTRIBUTION
I-Link could receive up to $35,920,753 upon exercise of the options
underlying the Plans. Proceeds from the exercise of the options underlying
the Plans could be significantly reduced if many Plan holders use the
cashless exercise provisions of their respective Plans. All proceeds will
be used for general corporate purposes. All costs incurred in connection
with the registration of the securities are being borne by I-Link. I-Link
will pay all of the fees and expenses incident to the registration of the
securities (other than any fees or expenses of any counsel retained by a
selling securityholder and any out-of-pocket expenses incurred by the
selling securityholder or any person retained by the selling securityholder
in connection with the registration of the shares) and fees and expenses of
compliance with state securities or blue sky laws and commissions. The
expenses payable by I-Link are estimated to be approximately $13,000.
Shares of common stock covered by this prospectus may be reoffered and
resold from time to time through brokers in the over-the-counter market or
otherwise at prices acceptable to the selling securityholders. To I-Link's
knowledge, no specific brokers or dealers have been designated by any
selling securityholder nor has any agreement been entered into in respect
of brokerage commissions or for the exclusive sale of any securities which
may be offered pursuant to this prospectus. Alternatively, the selling
securityholder may from time to time offer the shares through underwriters,
dealers, or agents, which may receive compensation in the form of
underwriting discounts, concessions, or commissions from the selling
securityholders and/or the purchasers of the shares for whom they may act
as agents. The selling securityholder and any underwriters, dealers, or
agents that participate in the distribution of the shares may be deemed
"underwriters" under the Securities Act and any profit on the sale of the
shares by them and any discounts, commissions, or concessions received by
any such underwriters, dealers, or agents might be deemed to be
underwriting discounts and commissions under the Securities Act.
Under applicable rules and regulations promulgated under the Exchange
Act, any person engaged in a distribution of securities may not
simultaneously bid for or purchase securities of the same class for a
period of two business days prior to the commencement of such distribution.
In addition, and without limiting the foregoing, the selling
securityholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including without limitation
Rule 10b-5 and Regulation M, in connection with transactions in the shares
during the effectiveness of the registration statement of which this
prospectus is a part. All of the foregoing may affect the marketability of
the shares.
DETERMINATION OF OFFERING PRICES
Except for the special case explained below, the offering prices for
options granted under the respective Plans were originally determined using
the market price of common stock on the date of grant. On December 13,
<PAGE> 16
1998, the board determined that all prior stock options granted and issued
to employees, directors and consultants with exercise prices above $3.90
per share would be amended to reduce the exercise price to $3.90 per share,
provided that the re-pricing would apply only to employees who were then
working for and actively providing employee services to I-Link, to
directors who were then serving on the board, and to consultants who were
then associated with and actively providing services to I-Link. Compared
to the $2.56 market value of a share of common stock on December 13, 1998,
the new exercise price was more reflective of, but still materially above,
the market price on that date. It was the consensus of the board that this
re-pricing would provide renewed and realistic incentive and motivation to
I-Link's current and active employees, directors and consultants and would
be in the best interests of I-Link and its shareholders. However, the
board specifically provided that the option re-pricing would not apply to
the aggregate 2,000,000 options previously granted to Clay Wilkes and Alex
Radulovic (at an exercise price of $7.00 per share) in connection with the
1996 acquisition of I-Link Worldwide, Inc. from those individuals and in
consideration of the transfer of certain patent rights by them to I-Link.
This was because those options were considered to be a portion of the
overall purchase price paid by I-Link to Messrs. Wilkes and Radulovic in
connection with their sale of I-Link Worldwide, Inc. and its assets to I-
Link, and therefore fell outside of the scope of the re-pricing.
DILUTION
Dilution may result in the event of the exercise of other outstanding
warrants and options, including options granted pursuant to I-Link's stock
option and purchase plans and employment agreements (including the Plans
being registered under this registration statement). I-Link has four
other formal options plans in effect: 1992 Director Stock Option Plan, the
1995 Director Stock Option and Appreciation Rights Plan, the 1995 Employee
Stock Option and Appreciation Rights Plan, and the 1997 Recruitment
Stock Option Plan.
SELLING SECURITYHOLDERS
The following table sets forth the beneficial ownership of I-Link
securities as of September 30, 1999 by each person who is a selling
securityholder.
<PAGE> 17
<TABLE>
<CAPTION>
Percent of Common
Securities Being Offered Stock Owned
------------------------ ------------------
Common Stock Prior to After
Underlying Offering Offering
Name of Beneficial Owner Options Options (1) (2)
- ------------------------ --------- ------------ -------- --------
<S> <C> <C> <C> <C>
John M. Ames (4) 350,000 350,000 1.5% *
Robert A. Bryson 225,000 225,000 1.1% *
Steven D. Campbell 150,000 150,000 * *
Joseph A. Cohen (3) 264,000 264,000 2.1% *
John W. Edwards (3)(4) 1,950,000 1,950,000 8.2% *
Robert W. Edwards Jr. 500,000 500,000 3.4% 1.2%
William H. Flury 500,000 500,000 2.3% *
James A. Giauque III 175,000 175,000 * *
David E. Hardy (4) 500,000 500,000 4.4% 2.2%
Mark S. Hewitt 250,000 250,000 1.1% -0-
Steven J. Little 33,333 33,333 * *
Jonathan S. McKillip 250,000 250,000 1.1% -0-
Dror Nahumi 200,000 200,000 4.5% 3.6%
Scott Olsen 5,000 5,000 * -0-
Alexsandar P. Radulovic 680,000 680,000 5.0% 2.1%
Karl S. Ryser, Jr. (4) 500,000 500,000 3.6% 1.5%
Clay Wilkes (3)(4) 1,500,000 1,500,000 8.8% 2.6%
</TABLE>
___________
* Less than one percent.
(1) As to each person or entity named as a beneficial owner, such person
or entity's percentage of ownership is determined by assuming that
all of the options being registered are exercisable into shares of
common stock as of the date hereof, regardless of vesting schedules
or conditions which may pertain to the respective options.
(2) Unless otherwise indicated, assumes the exercise and/or sale of the
entirety of the securities being offered by the noted shareholder.
(3) Director (or former Director).
(4) Executive officer (or former executive officer).
DESCRIPTION OF SECURITIES TO BE REGISTERED
Common Stock
I-Link is currently authorized to issue 150,000,000 shares of common
stock, par value $.007 per share. As of September 30, 1999, there were
22,717,469 shares of common stock issued and outstanding and
approximately 530 holders of record of the common stock, and approximately
11,300 beneficial owners. Each share of common stock entitles the holder
thereof to one vote on each matter submitted to the stockholders of I-Link
for a vote thereon. The holders of common stock: (a) have equal ratable
<PAGE> 18
rights to dividends from funds legally available therefor when, as and if
declared by the board of directors; (b) are entitled to share ratably in
all of the assets of I-Link available for distribution to holders of common
stock upon liquidation, dissolution or winding up of the affairs of I-Link;
(c) do not have preemptive, subscription or conversion rights, or
redemption or applicable sinking fund provisions; and (d) 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.
I-Link 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 I-Link.
Anti-Takeover Measures
Although there are no present plans, agreements or undertakings with
respect to I-Link's issuance of any shares of stock or related convertible
securities, any issuance such as these could have anti-takeover effects
insofar as the securities could be used as a method of discouraging,
delaying or preventing a change in I-Link's control. 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 I-Link.
Moreover, the articles of incorporation and bylaws contain provisions
that could discourage potential takeover attempts and prevent shareholders
from changing I-Link'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 the 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 I-Link 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 the proposing 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, the 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 those reports, no new
<PAGE> 19
business proposed by a stockholder (acting in that capacity) shall be acted
upon at an 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 I-Link's common stock.
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 I-Link or any of its
subsidiaries, nor was any such party connected with I-Link 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 I-Link by De Martino
Finkelstein Rosen & Virga, Washington, D.C.
EXPERTS
The consolidated balance sheets of I-Link Incorporated and
Subsidiaries as of December 31, 1998 and 1997, 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, 1998
incorporated in this prospectus by reference have been included herein in
reliance on the reports of PricewaterhouseCoopers LLP, independent
accountants, given the authority of that firm as experts in accounting and
auditing.
<PAGE> 20
No dealer, salesman or any other Options to Purchase 8,032,333
person has been authorized in Shares of Common Stock; 8,032,333
connection with this offering to give Shares of Common Stock
any information or to make any
representations other than those
contained in this Prospectus. The
Prospectus does not constitute an
offer or a solicitation in any
jurisdiction to any person to whom it [I-LINK INCORPORATED LOGO]
is unlawful to 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 I-Link or the facts
herein set forth since the date
hereof.
______________
PROSPECTUS
______________
TABLE OF CONTENTS
Page
Available Information [xx]
Documents Incorporated by
Reference [xx]
The Company [xx]
Risk Factors [xx]
The Offering [xx]
Use of Proceeds and Plan of
Distribution [xx]
Determination of Offering Prices [xx]
Dilution [xx]
Selling Securityholders [xx]
Description of Securities to be
Registered [xx]
Interests of Named Experts and
Counsel [xx]
Legal Matters [xx]
Experts [xx]
October 8, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. Incorporation of Documents by Reference.
The following documents, including any amendments thereto, filed by I-
Link with the SEC are incorporated by reference in this registration
statement and shall be deemed to be a part hereof from the date of filing
such documents.
(a) I-Link's latest annual report, whether or not filed pursuant to
Section 13(a) or 15(d) of the Exchange Act of 1934, as amended
(the "Exchange Act").
(b) All documents filed by I-Link pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act subsequent to the date of this
registration statement and prior to the filing of a post-
effective amendment which indicates that all of the securities
offered hereby have been sold or which deregisters all securities
then remaining unsold.
(c) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covering documents
referred to in paragraph (b) above.
(d) The description of I-Link's common stock contained in I-Link's
registration statement on Form S-2 filed pursuant to the
Securities Act (File No. 333-70645) and reports filed for the
purpose of updating that description.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
None.
Item 6. 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.
Moreover, indemnification of officers, directors, employees or agents of I-
Link is only appropriate when determined to be proper under the applicable
<PAGE> II-1
standard of conduct by a majority vote of a quorum of I-Link's board of
directors, excluding any directors seeking indemnification.
Indemnification is not exclusive under the Florida Business
Corporation Act, however, indemnification is not permitted to be made on
behalf of any person if a judgment or final adjudication establishes: (1) 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; (2) such person derived an improper personal benefit
from the transaction; (3) as to any director, such proceeding arose from an
unlawful distribution under Section 607.0834 of the Florida Business
Corporation Act; or (4) willful misconduct or a conscious disregard for the
best interests of I-Link in a proceeding by the corporation or a
stockholder.
I-Link's bylaws provide that I-Link shall indemnify any such person to
the fullest extent provided by law and empowers I-Link to purchase and
maintain insurance on behalf of any such person.
I-Link previously entered into indemnification agreements with certain
officers and directors of I-Link 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 I-Link; provided that no indemnification will be made in
respect of any acts or omissions: (1) involving gross negligence or willful
misconduct, (2) involving libel or slander, or (3) 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
may be permitted to directors, officers or persons controlling I-Link
pursuant to the foregoing provisions, I-Link has been informed that in the
opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
Item 7. Exemption from Registration Claimed.
I-Link believes that the options issued under the Plans were exempt
from registration pursuant to Section 4(2) of the Securities Act as
transactions by an issuer not involving any public offering.
Item 8. Exhibits.
The following exhibits are filed as part of this registration
statement pursuant to Item 601 of Regulation S-K and are specifically
incorporated herein by reference:
<PAGE> II-2
Exhibit No. Exhibit
----------- -----------------------------------------------
5 Opinion of Counsel
23.1 Consent of PricewaterhouseCoopers, LLP
23.2 Consent of Counsel (included in Exhibit 5)
24 Power of Attorney (included in signature page)
Item 9. Undertakings
I-Link hereby undertakes:
(a) Rule 415 Offering.
(1) To file, during any period in which it offers or sells
securities, 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.
I-Link hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of I-Link'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) Indemnification.
(1) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of I-Link pursuant to the foregoing provisions, or otherwise, I-
Link has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by I-Link of expenses
incurred or paid by a director, officer, or controlling person of I-Link in
the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the
<PAGE> II-3
securities being registered, I-Link 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 Securities Act and will
be governed by the final adjudication of such issue.
<PAGE> II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, I-Link
certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 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 October 8, 1999.
I-LINK INCORPORATED
By: /s/ John W. Edwards
John W. Edwards, Chairman of the Board,
President and Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed below by the following
persons in the capacities and on the date indicated.
Each person whose signature appears below in so signing constitutes
and appoints John W. Edwards and David E. Hardy and each of them acting
alone, his true and lawful attorney-in-fact, with full power of
substitution, for him in any and all capacities, to execute and cause to be
filed with the Securities and Exchange Commission any and all amendments
and exhibits thereto and other documents in connection therewith, and
hereby ratifies and confirms all that said attorney-in-fact or his
substitute or substitutes may do or cause to be done by virtue hereof.
Signature Title Date
/s/ John W. Edwards Chairman of the Board, President October 8, 1999
John W. Edwards and Chief Executive Officer
/s/ John M. Ames Senior Vice President, Chief October 8, 1999
John M. Ames Operating Officer and Acting
Chief Financial Officer
/s/ David E. Hardy Secretary October 8, 1999
David E. Hardy
/s/ Henry Y.L. Toh Director and Assistant Secretary October 8, 1999
Henry Y.L. Toh
/s/ Thomas A. Keenan Director October 8, 1999
Thomas A. Keenan
/s/ Joseph A. Cohen Director October 8, 1999
Joseph A. Cohen
/s/ David R. Bradford Director October 8, 1999
David R. Bradford
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DE MARTINO FINKELSTEIN ROSEN & VIRGA
A PARTNERSHIP CONSISTING OF PROFESSIONAL CORPORATIONS
1818 N STREET, N.W., SUITE 400
WASHINGTON, D.C. 20036-2492
___
TELEPHONE (202) 659-0494 * TELECOPIER (202) 659-1290
E-MAIL ADDRESS: [email protected]
PAULA A. ARGENTO NEW YORK OFFICE
NEIL R.E. CARR _____
RALPH V. DE MARTINO 90 BROAD STREET, SUITE 1700
STEVEN R. FINKELSTEIN* NEW YORK, NEW YORK 10004-2205
CAROLINE GEORGE TELEPHONE (212) 363-2500
B. HENRY PEREZ TELECOPIER (212) 363-2723
KEITH H. PETERSON*
JEFFREY S. ROSEN
GERARD A. VIRGA*
*NOT ADMITTED TO DISTRICT OF COLUMBIA BAR
October 13, 1999
Board of Directors
I-Link Incorporated
13751 S. Wadsworth Park Drive, Suite 200
Draper, Utah 84020
Re: Registration Statement on Form S-8/S-3
Gentlemen:
We have acted as counsel to I-Link Incorporated, a Florida corporation
(the "Company"), in connection with the preparation and filing by the
Company of a registration statement on Form S-8/S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended, relating to stock
options (the "Options") to purchase up to 8,032,333 shares of Common Stock,
$.007 par value (the "Common Stock") and relating to a maximum of 8,032,333
shares of Common Stock issuable upon exercise of Options granted or to be
granted by the Company pursuant to various written compensation contracts
(each a "Plan" and collectively referred to as the "Plans").
We have examined the Plans, the Articles of Incorporation, as amended,
and the By-Laws of the Company, the minutes of the various meetings and
consents of the Company's Board of Directors, originals or copies of such
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Board of Directors
I-Link Incorporated
October 8, 1999
Page 2
records of the Company, agreements, certificates of public officials,
certificates of officers and representatives of the Company and others, and
such other documents, certificates, records, authorizations, proceedings,
statutes and judicial decisions as we have deemed necessary to form the
basis of the opinion expressed below. In such examination, we have assumed
the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, and the conformity to originals of all
documents submitted to us as copies thereof. As to various questions of
fact material to such opinion, we have relied upon statements and
certificates of officers and representatives of the Company and others.
Based upon the foregoing, we are of the opinion that the Options to
purchase up to 8,032,333 shares of Common Stock which are the subject of
the Registration Statement have been duly authorized and when issued in
accordance with the respective Plans, will be enforceable in accordance
with their terms; the 8,032,333 shares of Common Stock which are the
subject of the Registration Statement have been duly authorized and when
issued and paid for in accordance with the terms of the Options and the
Plans under which the Options are issued will be duly authorized, fully
paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name appearing
in said Registration Statement and amendments thereto.
Very truly yours,
DE MARTINO FINKELSTEIN ROSEN & VIRGA
/s/ Ralph V. De Martino
Ralph V. De Martino, a Principal
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Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8/S-3 of our report dated April 15, 1999, relating to
the financial statements, which appears in I-Link Incorporated's amended
Annual Report on Form 10-K, for the year ended December 31, 1998. We also
consent to the incorporation by reference of our report dated April 15,
1999 relating to the financial statement schedule, which appears in such
amended Annual Report on Form 10-K.
/s/ PricewaterhouseCoopers LLP
Salt Lake City, Utah
October 12, 1999
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