<PAGE>
 


               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                        
                                   FORM 10-K


(Mark One)


[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 (FEE REQUIRED)


                    For the Fiscal Year Ended June 30, 1997

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the Transition Period From ___________________ to ____________________

                         Commission file number 0-15187
                                                -------

                                IFX Corporation
                    (formerly Jack Carl/312-Futures, Inc.)
            (Exact name of registrant as specified in its charter)



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


   200 West Adams Street, Chicago, Illinois                             60606
  -----------------------------------------------------------------------------
    (Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code:               (312) 419-9530
                                                                  --------------

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

                         $.004 Par Value Common Stock

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes __X__   No  ____

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. __X__

     As of August 29, 1997, the aggregate market value of the voting stock held
by non-affiliates of the registrant was approximately $2,329,000.

     As of August 29, 1997, there were outstanding 31,395,649 shares of the
Registrant's common stock.
               

               This is page 1 of 47 sequentially numbered pages.
<PAGE>
 
                                     PART I
                                     ------

Item 1 - Business

(a)  General Development of Business.

     The Registrant was incorporated under the laws of the State of Illinois in
July, 1985, and in May, 1994, the Registrant changed its state of incorporation
to Delaware. Until July 1, 1996, the Registrant's primary business activity was
the conduct of commodity brokerage business through its principal operating
subsidiary, Index Futures Group, Inc. ("Index").

     On July 1, 1996, substantially all of the brokerage accounts maintained by
Index, together with all positions, securities, and other assets held in or for
such accounts and other agreed-upon assets used in the conduct of the brokerage
activities ("Sale of Assets") were sold to E.D.& F. Man International, Inc.
("MINC"). MINC is a unit of E.D.& F. Man Group, plc, a London-based
international trading and finance conglomerate.

     As a condition of the Sale of Assets, the Registrant has changed its name
to IFX Corporation, and Index has changed it's name to FX Chicago Inc. ("FX
Chicago").

     As a result of the Sale of Assets, 207 employees were offered employment at
MINC, including, Burton J. Meyer, formerly president and a director of the
Registrant, and Philip Tanzar, formerly General Counsel and a director of the
Registrant, both of whom accepted such employment, and 85 employees resigned or
were terminated.

     Another result of this transaction, is that FX Chicago no longer acts as a
futures broker for public customers and has withdrawn as a clearing member from
all commodity exchanges. FX Chicago's operations are currently limited to
earnings from the Sale of Assets.

     Currently, the Registrant's primary operating subsidiary is IFX Ltd.
(formerly Index FX, Ltd.), a British corporation. IFX Ltd. continues to conduct
foreign exchange business as a registrant of the British Securities and Futures
Authority ("SFA"). IFX Ltd. commenced trading operations in October, 1995 and
became an SFA registrant in November, 1996.

     Effective July 1, 1996, the Registrant's revenue stream consists of the
earnings from the Sale of Assets, as defined in the Sale of Assets agreement,
interest on its capital and income from operations of IFX Ltd. During fiscal
1997, FX Chicago earned $2,157,900 from the Sale of Assets.

     On August 1, 1997, the Company consummated documentation of a transaction,
effective as of April 1, 1997, whereby The Park Trust, an affiliate of IFX
Ltd.'s two principal salesmen, Graham Wellesley and Lorenzo Naldini, subscribed
for slightly less than 50% of the stock of IFX Ltd. The subscription price of
$2,448,464 was funded with $100,000 in cash and a subscription payable from The
Park Trust for the remaining $2,348,464 of the purchase price. The subscription
payable will be funded out of dividends from IFX Ltd. which would otherwise be
paid to The Park Trust, as provided in a stockholders agreement among the
Company, IFX Ltd. and The Park Trust (the "Agreement"). Following the
restructuring of IFX Ltd., the Company owns slightly greater than 50% of IFX
Ltd., and is deemed to have a controlling interest.

     The subscription by The Park Trust was effected through a restructuring of
IFX Ltd.'s capital. The 2,448,465 ordinary $1.00 par shares, already issued and
held by the Company, were redesignated as "A" ordinary $1.00 par


                                      -2-

<PAGE>
 
shares. In addition the authorized share capital of IFX Ltd. was increased by
the creation of 322,829 new "B" ordinary $1.00 par shares and the 2,125,635
unissued ordinary $1.00 par shares were converted into a like number of "B"
ordinary $1.00 par shares. The 2,448,464 "B" ordinary $1.00 par shares were then
subscribed for by The Park Trust as described above.

     Following the subscription by The Park Trust, the Company and The Park
Trust are entitled to profit distributions according to their respective
ownership percentages, based upon stipulations set forth in the Agreement.

     Prior to the subscription, under their original employment contracts, the
three principal salesmen of IFX Ltd., namely, Messrs. Wellesley and Naldini, and
a third individual whose employment with IFX Ltd. was terminated, who together
were primarily responsible for establishing the business of IFX Ltd., were
entitled to 50% of the pre-tax profits of IFX Ltd. One-half of such amount was
payable quarterly, with the remaining one-half payable at the end of the fiscal
year, adjusted for subsequent losses, if any. These salesmen were also entitled
to share in up to 50% of any premium, as defined, which might be generated if a
change in ownership of IFX Ltd. occurred, depending upon when such a change
happened. Since these contracts were entered into, business at the IFX Ltd. has
grown substantially, requiring that the Company provide additional capital for
regulatory purposes to IFX Ltd.

     In March, 1997, the Company and IFX Ltd. renegotiated the employment
contracts of Messrs. Wellesley and Naldini. As a result of this renegotiation,
their existing employment contracts were terminated, new ones were executed, and
the Company agreed, in principal, to issue shares of IFX Ltd. to The Park Trust
at book value. Under the new arrangement, the remaining two principal salesmen
receive a salary rather than a share of profits.

     In settlement of their original employment contracts, Messrs. Wellesley and
Naldini have agreed to accept the one-half of profit share which was payable to
them quarterly for the first nine months of the fiscal year ending June 30, 1997
($641,000) less any draws that had been previously taken) and to waive any
rights to the one-half profit share ($641,000) which would have otherwise been
due to them on June 30, 1997. As IFX Ltd. had been accruing the fiscal year-end
one-half profit share which would have been due to Messrs. Wellesley and Naldini
on June 30, 1997, it was able to reduce its compensation and related benefits
expenses by $641,000 for the quarter ended March 31, 1997 as a result of this
settlement. The third salesman who was terminated received full payment in
February 1997 for his deferred profit share under the terms of his employment
contract.


(b)  Narrative Description of Business.

General

     The Registrant is a holding company with its businesses conducted through
it's primary subsidiaries FX Chicago and IFX Ltd.

     Prior to the Sale of Assets, FX Chicago, formerly known as Index, was a
futures commission merchant registered with the United States Commodity Futures
Trading Commission ("CFTC") and the Securities and Futures Authority ("SFA") in
the United Kingdom and was a member of the National Futures Association ("NFA").
It was involved in all aspects of brokerage of futures and options on futures
contracts. It was a clearing member of the Chicago Mercantile Exchange, the
Chicago Board of Trade, the Mid-America Commodity Exchange, the Commodity
Exchange, Inc., the New York Mercantile Exchange, the New York Futures Exchange,
the New York Cotton Exchange and the Coffee, Sugar & Cocoa Exchange. It provided
a full-range of futures brokerage, clearing and


                                      -3-

<PAGE>
 
back office services for professional, institutional and public commodities
traders and, through a subsidiary, IMSI, Inc. (formerly Index Management
Services, Inc.), until July 1, 1996 acted as a commodity pool operator. Index,
until July 1, 1996, was the clearing agent for other non-clearing futures
commission merchants, financial institutions, regional brokerage houses and
introducing brokers. Operations at FX Chicago currently relate primarily to the
net income derived from the Sale of Assets.

     FX Chicago presently has one wholly-owned subsidiary, IMSI, Inc. IMSI, Inc.
which was organized in May, 1986, was registered with the CFTC as a commodity
pool operator and is a member of the NFA. IMSI was organized to create and offer
to the public, either by itself or in cooperation with others through joint
ventures, various commodity futures fund offerings which may be marketed through
broker-dealers or through participating regional brokerage houses. As of July 1,
1996, IMSI no longer operates commodity pools. Currently, IMSI, Inc. is a
partner with a 50% interest in a trading partnership.

     IFX Ltd. continues to conduct foreign exchange business as a registrant of
the British Securities and Futures Authority ("SFA"). IFX Ltd. commenced trading
operations in October, 1995 and became an SFA registrant in November, 1996. The
operations of IFX Ltd. are currently the Registrant's primary source of income,
other than income from the Sale of Assets.

     While the principal business of IFX Ltd. remains that of a primary market
maker in both spot and forward foreign exchange, IFX Ltd. has also now become a
recognized market maker for both Chicago Mercantile Exchange ("CME") currency
Exchange for Physical (EFP) transactions and OTC options.

     IFX Ltd. works closely with many U.S. commodity trading advisors, many of
whom, for historical reasons, track and trade currency futures contracts, rather
than the cash market. Due to the relative illiquidity of the international
monetary market ("IMM") of the CME, and the limited trading hours, both the
creditworthiness of the CME (assets $42 billion) and the liquidity of the cash
market (daily volume of $1,200 billion), make EFP execution through IFX Ltd., an
independent market maker, an increasingly practical solution.

     During fiscal 1997, in addition to FX Chicago and IFX Ltd., the Registrant
had two other wholly-owned subsidiaries, Index Securities Inc. ("ISI") and Jack
Carl Management and Trading, Inc. ("JCMT"). Stark Research, Inc. ("Stark") is a
majority owned subsidiary of the Registrant.

     ISI was organized in January, 1987 and was a registered securities broker-
dealer. In June, 1990, ISI sold all of its customer accounts to an unrelated
party and its activities were primarily limited to acting as the selling agent
for commodity pools. As a broker-dealer, ISI was regulated by the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc. ISI
was dissolved during fiscal 1997.

     JCMT was organized in January, 1992 to serve as a commodity trading advisor
("CTA") and was registered with the CFTC as a CTA. The operations of JCMT were
minimal during fiscal 1994 and 1995. There was no activity in 1996. JCMT was
dissolved in fiscal 1997.

     In September, 1993, the Registrant purchased a controlling interest in
Stark and became the majority shareholder in that company. Stark is an
investment research company which publishes monthly and quarterly magazines
regarding investments with a primary focus on funds investing in commodities.
Operations during fiscal 1997 were minimal. Stark is in the process of
liquidation.


                                      -4-

<PAGE>
 
Customers

     The Registrant is a holding company and as such, does not directly have
customers. Prior to the Sale of Assets, Index was the Registrant's principal
source of revenue and was the Registrant's principal operating subsidiary
responsible for commodity and futures related activities for customers.
Subsequent to the Sale of Assets, the Registrant's only operating subsidiary
with customers is IFX Ltd. IFX is a primary market maker and actively makes
competitive 24 hour markets in spot and forward foreign exchange, from the
opening of the market in New Zealand at the start of the week, at 8:00 pm London
time each Sunday continuously until the close of business in New York, at 10:00
pm London time, each Friday. IFX Ltd.'s customers are primarily non-private,
second tier banks, institutions, fund management companies, CTAs and high net
worth individuals.


Marketing

     The Registrant's marketing activities are limited to promoting and
maintaining direct contact with IFX Ltd.'s customers. The expense associated
with such efforts is reflected in the Registrant's travel and entertainment
expenses.


Competition

     IFX Ltd.'s competitors are primarily the US and European futures
commissions merchants which have their own inter-bank foreign exchange desks, as
well as a growing number of clearing banks which have margin foreign exchange
operations. Competition among firms such as IFX Ltd. is intense and is primarily
based upon both price and service. Other institutions offer their customers the
same or more services than those provided by IFX Ltd. At the same time, the
number of active participants in the foreign exchange market is relatively small
when compared to those engaged in futures and securities trading.


Regulation

     In order to maintain its listing on the NASDAQ SmallCap Market the
Registrant must satisfy NASDAQ's revised entry and maintenance standards for
NASDAQ listed stocks. There is no assurance that the Registrant will be able to
maintain eligibility for NASDAQ.

     As a registrant, IFX Ltd. is subject to the financial resources
requirements adopted and administered by the SFA. As of June 30, 1997, IFX
Ltd.'s financial resources, as defined by the SFA, were $8,976,000, which was
$6,040,000 in excess of its requirements. The SFA requires all members to meet
and maintain specified financial requirements, and maintain segregated accounts
for all customers' funds, property and positions, and specified books and
records on customer transactions, all of which are open to inspection by the
staff of the SFA. Failure to meet its regulatory requirements could subject IFX
Ltd. to disciplinary actions including fines, censure, suspension or revocation
of registration.


Employees

     The Registrant currently has 30 full and part-time employees working for
it, FX Chicago and IFX Ltd. As of June 30, 1996, the Registrant and its
subsidiaries had 313 full and part-time employees. These employees included 105
floor operations employees, 80 back office employees, 41 discount department
employees, 60 sales employees and 27 administrative employees. Effective with
the Sale of Assets, 207 employees were offered employment at MINC and 85
employees resigned or were terminated.


                                      -5-

<PAGE>
 
Item 2 - Properties

     The Registrant leases office space at 200 West Adams Street, Chicago,
Illinois. This location serves as the Registrant's corporate headquarters. IFX
Ltd. leases office space at America House, 2 America Square, London, England,
which serves as the primary business location. Both of these facilities are
leased at rates competitive for the respective locations.


Item 3 - Legal Proceedings

     As a brokerage firm having numerous customers and correspondents, Index,
from time to time, was subject to various lawsuits, including civil litigation,
arbitrations and reparations proceedings and administrative proceedings by
regulators in the commodity futures industry relating to customers and
regulatory requirements incidental to carrying on such brokerage business. Such
matters range from those in which Index was a party plaintiff against customers
to collect deficit amounts due from customers, to customer complaints,
allegations by regulatory authorities of alleged improprieties by, or lack of
registration of, employees of Index and the like. It also may be likely in some
of these actions that allegations requesting such items as monetary penalties,
license suspensions or revocations and the like will be made. The number of such
complaints, matters of litigation and administrative proceedings amounted to a
small percentage of Index's total business. Management of the Registrant, after
consultation with legal counsel, is of the opinion that neither the Registrant,
nor any of the Registrant's subsidiaries, is involved in any current civil
litigation or administrative proceeding which it believes would have a material
adverse effect on the Registrant's, or its subsidiaries financial condition.

     Notwithstanding that the following matters are ordinary and routine
litigation incidental to the business, the Registrant believes it appropriate to
set forth the following information:

     On May 16, 1996, Index filed suit in the Circuit Court of Cook County--Law
Division against Doug Niemann, a former customer, for breach of contract,
seeking to recover a debit balance of $88,200 (Index Futures Group, Inc. v. Doug
Niemann, case no. 96L-5506). On January 14, 1997, Niemann filed a counterclaim
for $688,200. The Company believes that the counterclaim is without merit and
will defend vigourously.

     On September 29, 1992, the CFTC filed an administrative action against
Index alleging that on or about October 24, 1989, Index violated certain
sections of the Commodity Exchange Act and CFTC Regulations alleging the
conversion of funds of a commodity pool, and failure to properly segregate and
separately account for, treat and deal with customer funds. In April, 1994,
Index, without admitting or denying the allegations, paid a $100,000 penalty to
the CFTC, settling the administrative action. In a related action in the United
States District Court for the Northern District of Illinois entitled CFTC v.
Tobin, et al; John Troelstrup, Equity Receiver v. Index Futures Group, Inc. (89
C 8576), the equity receiver of the alleged commodity pool operator brought an
action to recover losses of approximately $600,000, alleging various theories
such as constructive trust, negligence, breach of fiduciary duty and conversion.
On May 29, 1996, the district judge dismissed the complaint in its entirety.
Supplemental Plaintiff filed a timely Notice of Appeal with the U.S. Court of
Appeals for the Seventh Circuit on May 16, 1997. The Seventh Circuit has yet to
rule on whether this case may be appealed.

     Edward Schwarz ("Schwarz"), a former executive of Index whose employment
was terminated as a result of the Sale of Assets, had rejected Index's severance
payment offer. Schwarz had made a demand for $500,000. The Registrant settled
this case in July, 1997 for $75,000.


                                      -6-

<PAGE>

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

     During the fourth quarter of the fiscal year ended June 30, 1997, no
matters were submitted to a vote of security holders.

                                    PART II
                                    -------

Item 5 - Market for Registrant's Common Equity and Related Stockholder Matters
------------------------------------------------------------------------------

     The Registrant's stock is traded on the NASDAQ SmallCap Market.

     Set forth below is the range of high and low, trade prices per share of the
common stock in the over-the-counter market as reported by NASDAQ for the
periods indicated. The quotations do not include retail markups, markdowns, or
commissions.

     On August 29, 1997, the closing representative bid price and ask price per
share of common stock, as reported through NASDAQ, in the over-the-counter
market was bid: 3/16; ask: 3/16.

<TABLE>
<CAPTION>
                      Quarter
Type of Security       Ended        High Trade  Low Trade
------------------    --------      ----------  ---------
<S>                   <C>           <C>         <C>

Common Stock           9/30/95        13/32       5/32
                      12/31/95         9/32       1/8
                       3/31/96         3/16       3/32
                       6/30/96        13/32       3/32
                       9/30/96         3/32       3/32
                      12/31/96         5/32       1/8
                       3/31/97         3/16       5/32
                       6/30/97         7/32       7/32
                       8/29/97(1)      3/16       3/16
----------------
</TABLE>
(1)  Includes the period July 1, 1996 through August 29, 1997.

Approximate Number of Holders of Securities

     As of August 29, 1997, there were 990 holders of record of the Registrant's
common stock. The Registrant believes it has a greater number of shareholders
because the Registrant believes that a substantial amount of its common stock is
held of record in street name by broker-dealers for their customers.

Dividends

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

                                      -7-
<PAGE>
 
Item 6 - Selected Financial Data
--------------------------------

                         Summary Financial Information

     The following table presents summary historical information for the
Registrant.  This summary information is derived from the historical financial
statements of the Registrant.

                        HISTORICAL FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                             IFX CORPORATION AND SUBSIDIARIES
                                                             --------------------------------

                                                                    Year Ended June 30,
                                            -------------------------------------------------------------------
                                                1997         1996          1995          1994          1993
                                                ----         ----          ----          ----          ----
<S>                                         <C>           <C>           <C>           <C>           <C>
Operating Data:
Revenues                                    $16,549,000   $41,134,900   $41,658,300   $37,565,300   $36,670,400
                                            ===========   ===========   ===========   ===========   ===========
Income (loss) before income taxes
  and minority interest                     $ 6,354,900   $(1,307,200)  $ 3,947,800   $   992,300   $   308,900
Income tax expense (benefit)                  2,235,500      (174,100)    1,536,200       406,200       149,600
                                            -----------   -----------   -----------   -----------   -----------

Income (loss) before minority interest        4,119,400    (1,133,100)    2,411,600       586,100       159,300
Minority interest (1)                          (935,600)            -             -             -             -
                                            -----------   -----------   -----------   -----------   -----------
  Net income (loss)                           3,183,800    (1,133,100)    2,411,600       586,100       159,300
Assumed cumulative dividend on
  Class A preferred stock                       (23,300)      (40,000)      (40,000)      (40,000)      (40,000)
                                            -----------   -----------   -----------   -----------   -----------
Net income (loss) applicable to
  common stock                              $ 3,160,500   $(1,173,100)  $ 2,371,600   $   546,100   $   119,300
                                            ===========   ===========   ===========   ===========   ===========
Primary earnings (loss) share as
  restated for the one-for-four
  reverse split of common stock (2):
  Income (loss) before minority interest    $       .12   $      (.03)  $       .08   $       .03   $       .01
                                            ===========   ===========   ===========   ===========   ===========
  Net income (loss)                         $       .10   $      (.03)  $       .08   $       .03   $       .01
                                            ===========   ===========   ===========   ===========   ===========
  Weighted average number of shares
    outstanding, as restated for the
    one-for-four reverse split of
    common stock                             33,084,467    33,721,179    30,680,524    20,175,612    20,178,239
                                            ===========   ===========   ===========   ===========   ===========
Fully diluted earnings (loss) per share
  as restated for the one-for-four
  reverse split of common stock (2):
  Income (loss) before minority interest    $       .12   $      (.03)  $       .08   $       .03   $       .01
                                            ===========   ===========   ===========   ===========   ===========
  Net income (loss)                         $       .10   $      (.03)  $       .08   $       .03   $       .01
                                            ===========   ===========   ===========   ===========   ===========
  Weighted average number of shares
    outstanding, as restated for the
    one-for-four reverse split of
    common stock                             33,084,467    33,721,179    30,680,524    20,175,612    20,178,239
                                            ===========   ===========   ===========   ===========   ===========
Balance Sheet Data:
                                                                       As of June 30,
                                            -------------------------------------------------------------------
                                               1997          1996          1995          1994          1993
                                               ----          ----          ----          ----          ----

Total assets                                $56,643,200  $239,887,700  $190,932,400  $202,806,200  $151,817,500
Notes payable                                 1,586,600     6,390,000     6,390,000     7,690,000     9,615,600
Subordinated debt                                     -     4,000,000     1,690,000     2,000,000         -
Stockholders' equity                          8,203,700     6,216,500     7,364,100     3,876,500     3,295,200
------------------------
</TABLE>


(1)  Represents minority interest from sale of interest in IFX Ltd., the
Registrant's London subsidiary.

(2)  Earnings per share are computed on the basis of the weighted average number
of shares of common stock outstanding during each year, adjusted for the effect
of common stock equivalents arising from the assumed exercise of stock options
and warrants if dilutive.

                                      -8-
<PAGE>
 
Item 7 - Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
of Operations for the Year Ended June 30, 1997
----------------------------------------------
     IFX Corporation (formerly Jack Carl / 312-Futures, Inc.) (which when
consolidated with its subsidiaries is henceforth referred to as the
"Registrant") is a holding company which operates its business through its
subsidiaries.  Index Futures Group, Inc. ("Index"), until July 1, 1996, the
Registrant's principal operating subsidiary, provided a full range of futures
brokerage, clearing and back office services for institutional and public
commodity traders.  It was a clearing member of all major U.S. commodity
exchanges.  Effective July 1, 1996, Index sold, transferred and assigned
substantially all of its brokerage accounts ("Sale of Assets") to E.D.& F. Man
International, Inc. ("MINC").  As a result of the Sale of Assets, Index
immediately withdrew as a clearing member from all commodity exchanges, and
terminated its registration as a futures commission merchant in December, 1996.
In addition, as a condition of the Sale of Assets, Index changed its name to FX
Chicago, Inc.  IFX Ltd. (formerly Index FX, Ltd.), a British corporation and a
subsidiary of IFX Corporation, continues to conduct foreign exchange business as
a registrant of the British Securities and Futures Authority ("SFA").  IFX Ltd.
commenced trading operations in October, 1995 and became an SFA registrant in
November, 1996.  The other subsidiaries of IFX Corporation and FX Chicago
currently have minimal operations.

Liquidity and Capital Resources
-------------------------------

     The Registrant's cash and short-term investment portfolio totaled
$49,681,500 at June 30, 1997.  Included in this amount is $21,776,600 of funds
from IFX Ltd. customers, which have been invested by IFX Ltd. on the customers'
behalf or are held in segregated cash accounts, pursuant to rules of the SFA.
The Registrant's positions are generally liquid.  The portfolio is invested
primarily in U.S. dollar denominated securities, but also includes foreign
currency positions deposited by IFX Ltd. customers.

     As a registrant, IFX Ltd. is subject to the financial resources
requirements adopted and administered by the SFA.  As of June 30, 1997, IFX
Ltd.'s financial resources, as defined by the SFA, were $8,976,000, which was
$6,040,000 in excess of its requirements.

     For the year ended June 30,1997, cash provided by operations was $8,891,800
compared to cash used in operations of $1,504,500 for fiscal 1996.  The majority
of cash generated from operations is due to the Sale of Assets, as well as the
expanding business at IFX Ltd.  Cash generated from the Sale of Assets has been
used to repay notes payable and a subordinated loan, as well as to repurchase
shares of the Registrant's common stock.

     As of June 30, 1997, the Registrant had $1,586,600 of notes payable to its
principal stockholder or an affiliate, compared to $6,390,000 of notes payable
to its principal stockholder or an affiliate, and $4,000,000 of subordinated
loans at June 30, 1996.  As noted above, the majority of the debt outstanding as
of June 30, 1996 was paid during fiscal 1997, using cash generated from
operations.  Stockholders' equity at June 30, 1997 was $8,203,700.  On January
31, 1997, the Registrant redeemed and retired the 400,000 issued and outstanding
shares of its Class A preferred stock, all of which was owned by its principal
stockholder.  The preferred stock was redeemed at a price equal to the aggregate
par value thereof plus the accrued but undeclared and unpaid dividends thereon,
totaling $836,600.  As payment, the Registrant issued its principal stockholder
a promissory note bearing interest at the prime rate and maturing on January 31,
1998.  During the third and fourth quarters of fiscal 1997, the Registrant
repurchased and retired 2,228,881 shares of its common stock for $328,800
pursuant to a repurchase

                                      -9-
<PAGE>
 
program which allowed for the Registrant to purchase up to 5,000,000 shares of
common stock before June 30, 1997.

     Management believes existing cash and short-term investments together with
operating cash flows, access to equity capital, and borrowing capacity, provide
adequate resources to fund ongoing operating requirements and future capital
expenditures related to the expansion of existing businesses and development of
new projects.  As the business now exists subsequent to the Sale of Assets, the
Registrant's capital needs are significantly reduced

     The majority of the Registrant's assets are liquid in nature and are not
significantly affected by inflation.  However, the rate of inflation affects the
Registrant's expenses, such as employee compensation and other operating
expenses.

Results of Operations - Fiscal 1997 Compared to Fiscal 1996
-----------------------------------------------------------

     As a result of the Sale of Assets in July, 1996, FX Chicago (formerly
Index) no longer acts as a futures commission merchant.  Differences between
revenues and expenses for the years ending June 30, 1997 and June 30, 1996 are
primarily a result of the Sale of Assets, unless otherwise noted below.

     Revenues were $16,549,000 in  fiscal 1997, a decrease of 60% from fiscal
1996. The decrease in revenues as resulting from the Sale of Assets has been
offset somewhat by the increased revenues from IFX Ltd.

     Trading gains increased by $6,799,700 during the year ended June 30, 1997,
compared to the same period a year ago.  The primary component in trading gains
in fiscal 1997 is the revenue from IFX Ltd.

     Other revenue increased $3,072,400 during the year ended June 30, 1997,
compared to same period a year ago.  Included in other revenue for the year
ended June 30, 1997 is $2,157,900 from the Sale of Assets, and a net gain of
$737,700 on the sale of clearing corporation stock and exchange memberships.

     Total expenses were $10,194,100, or 76% lower than the prior fiscal year.
The decrease in expenses as resulting from the Sale of Assets has been offset
somewhat by the increasing expenses from the expanding operations of IFX Ltd..
The expenses for fiscal 1997 reflect the ongoing expenses of IFX Ltd., IFX
Corporation and FX Chicago, transitional expenses from the Sale of Assets, and
minimal expenses for other subsidiaries.

     The Board of Directors is exploring various business opportunities for the
Registrant now that FX Chicago no longer acts as a futures commission merchant,
and as a result has capital available for investment.

     As a result of the aforementioned revenues and expenses, net income for the
year ended June 30, 1997 is $3,183,800 or $.10 per share compared to a net loss
of $1,133,100 or $.03 per share for the year ended June 30, 1996.

Results of Operations - Fiscal 1996 Compared to Fiscal 1995
-----------------------------------------------------------

     The Registrant's commission revenues relate directly to the volume of its
customers' orders, generally irrespective of the underlying prices of futures
contracts.  Trading volume may be affected by price levels of commodities which
are directly affected by regional, national and international economic and
political conditions, broad trends in business and finance, inflation and supply
and demand of the commodities underlying futures and options contracts.

                                      -10-
<PAGE>
 
     In January, 1993, BRC, at the time a wholly-owned subsidiary of Index, and
a wholly-owned subsidiary of the Registrant until it was dissolved in May, 1996,
sold the majority of its guaranteed introducing broker business to an unrelated
entity in return for a portion of future earnings on such business through
January 15, 1995.

     The Company, during fiscal 1996, organized IFX Ltd. (formerly Index FX,
Ltd.) located in London, England to conduct foreign exchange business.  IFX Ltd.
incurred start up costs early in the year and commenced trading operations in
October, 1995.  The revenue generated by IFX Ltd. is recorded as trading gains.

     On May 31, 1996, an agreement was reached to sell, transfer and assign to
MINC substantially all of the brokerage accounts maintained by Index, together
with all positions, securities, and other assets held in or for such accounts
and other agreed-upon assets used in the conduct of the brokerage activities.
MINC is a unit of E.D.& F. Man Group, plc, a London-based international trading
and finance conglomerate.  This sale was completed as of July 1, 1996.  Shortly
thereafter, Index ceased being a clearing member at all exchanges, though it
remains a registered futures commission merchant.

     The purchase price payable by MINC in connection with this transaction is
based on a percentage of the net income (as defined in the sales agreement) of
the transferred activities during the sixty-six month period following the sale.
As the purchase price is contingent upon the future earnings of the customer
accounts sold, none of which is guaranteed, no gain on the sale was reflected in
the financial statements for the year ended June 30, 1996.  Rather, income will
be recognized as earned on a quarterly basis over the next five and one-half
years.  A condition of the Sale of Assets agreement required the principal
shareholder to sign a non-competition agreement.  As compensation for providing
such an agreement, a portion of the purchase price will be allocated to the
principal shareholder and recorded by the Registrant concurrently with its
recognition of income as described above.  Management does not believe this
amount will be significant.

     A net pre-tax, restructuring charge of $1,556,500, related to the Sale of
Assets, was reflected in the statement of operations for fiscal year 1996.
Additionally, a restructuring gain of $664,000, from the sale of Board of Trade
Clearing Corporation stock, will be reflected in income in fiscal 1997.

     Effective July 1, 1996, the Registrant's revenue stream will primarily
consist of the net income of the transferred activities, as defined in the Sale
of Assets agreement, interest on its capital and income from operations of IFX.

     Commission revenues, which generally are related to trading volume,
decreased $3,058,500 or 9% in 1996.  Included in commission revenue for 1995 is
$481,900 from the sale of BRC's introducing broker business.  Commission
revenue, excluding the affect of the BRC revenue, decreased 8% on an 8% increase
in trading volume.  The decrease in commission revenue compared to the increase
in trading volume is primarily attributable to the Registrant's business mix
which has changed toward business that generates higher trading volume and lower
revenues and expenses per trade than other types of retail business.  Included
in this type of business are accounts from non-clearing futures commission
merchants, other wholesale business and execution only business.

     Interest income increased $555,800 in 1996 compared to 1995.  The increase
in interest income is primarily attributable to the following factors.  The
Registrant's continuing to invest in longer term U.S. Government obligations
which increases the yield on its investments.  Such investments

                                      -11-
<PAGE>
 
are interest rate sensitive which cause fluctuation in income as interest rates
vary.  The change in the appreciation of these investments due to market value
fluctuations generated a $301,200 decrease in interest income in 1996 compared
to 1995.  Also, the Registrant during 1996, by increasing its customer base and
by increasing its subordinated debt borrowings, had additional funds available
to invest and those investments generally yielded higher returns because
interest rates, for the majority of fiscal 1996, continued their upward trend.

     Trading gains increased $2,246,500 during the year ended June 30, 1996.
Included in trading gains in fiscal 1996 is $2,058,900 of revenue generated from
IFX Ltd.

     Commissions, floor brokerage and clearing costs decreased $1,556,300 or 8%
in 1996.  The decrease in expense is the result of the gradual restructuring of
sales agreements to include the absorption of certain production related costs
by certain sales people before commissions are earned, thus reducing commission
expense.  Also, as part of the restructuring, certain sales people are being
compensated by salary in addition to commissions.  Another reason for the
decrease in commissions, floor brokerage and clearing costs is the change in
business mix toward business which generates higher trading volume and lower
commission revenues and expenses per trade than other types of retail business.
Included in this type of business are accounts from non-clearing futures
commission merchants, other wholesale business and execution only business.

     Compensation and related benefits increased $1,588,400 or 18% during fiscal
1996.  The increase is the result of an increase in the number of employees,
which includes employees at IFX Ltd., and salary increases.  Also contributing
to the increase is the restructuring of sales agreements which provide for
certain sales people to be compensated by salary in addition to commissions.

     Interest expense increased $915,900 during fiscal 1996 compared to fiscal
1995.  Included in interest expense during 1996 is a $100,000 interest accrual
related to the settlement of prior revenue agent reviews through 1992.  The
balance of the increases are the result of higher interest rates on the
Company's obligations during fiscal 1996 and increased customer deposits on
which the Company pays interest expense.

     Business promotion expense increased $493,900 during fiscal 1996 compared
to fiscal 1995.  The increase is primarily the result of a general increase in
print advertising, promotions and increased television advertising during fiscal
1996.

     Doubtful accounts expense increased $726,600 in fiscal 1996 compared to
1995.  This increase is due to a $586,000 credit to bad debt expense in fiscal
1995.  The credit was primarily the result of the receipt of a bankruptcy
settlement for a bad debt which was previously written off, collection of
deficit accounts and a reduction in the Registrant's bad debt experience.

     During fiscal 1996, the Registrant took a net pre-tax restructuring charge
of $1,556,500, related to the sale of brokerage accounts to MINC.

     The aforementioned revenue and expenses resulted in a net loss of
$1,133,100 or $.03 per share for fiscal 1996 compared to net income of
$2,411,600 or $.08 per share for fiscal 1995.

                                      -12-
<PAGE>
 
Item 8 - Financial Statements and Supplementary Data

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

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

     The Registrant did not have any changes in, or any material disagreements
on accounting and financial disclosure with, its accountants in fiscal 1997 or
1996.

                                    PART III
                                    --------

Item 10 - Directors and Executive Officers

     The Directors and Executive Officers of the Registrant as of June 30, 1997
were as follows:

<TABLE>
<CAPTION>
 
       Name           Age                 Office
------------------    ---  -------------------------------------
<S>                   <C>  <C>

Joel M. Eidelstein     30  President and Director

Christina S. Donka     30  Chief Financial Officer and Secretary

Colleen M. Ruggio      34  Treasurer and Director

George A. Myers        46  Director

Zalman Lekach          30  Director
</TABLE>

     Joel M. Eidelstein was elected Director and President of the Registrant
effective November, 1990 and November, 1996, respectively.  Mr. Eidelstein
graduated from Brandeis University in May, 1988.  Since June, 1988, until
immediately prior to the Sale of Assets, he was an independent commodity futures
trader and a floor manager with Index.

     Christina S. Donka was the Assistant Chief Financial Officer of the
Registrant from November, 1996, until June, 1997, when she became the Chief
Financial Officer and Secretary.  Prior to joining the Registrant, she was an
experienced manager in the financial services division of Arthur Andersen LLP.
She is a Certified Public Accountant.

     Colleen M. Ruggio has been an employee at Index since January, 1985.  She
has been Director and Treasurer of the Registrant since February, 1997.  She is
pursuing a bachelors degree at DePaul University in Chicago, Illinois.

     George A. Myers was elected Director of the Registrant effective November
16, 1990.  Mr. Myers, since 1981, has been managing general partner of MC
Capital, a diversified real estate company with offices in Chicago, Illinois,
Phoenix, Arizona, and San Diego, California.

     Zalman Lekach has been a Director of the Registrant since February, 1997.
He is President and Chief Operating Officer of Parlux Fragrances, Inc.
("Parlux").  He became a director and an executive in Parlux, S.A., Parlux's
French subsidiary, in May 1990.  In May 1993, he resigned his executive position
and owned and operated a company exporting foods and health/beauty aids to South
America.  In January of 1995, he rejoined Parlux as its Chief Operating Officer
and a director.  In June 1996, Mr. Zalman Lekach also assumed the position of
President of Parlux.

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

                                      -13-
<PAGE>
 
Item 11 - Executive Compensation

  The following table sets forth all cash compensation paid by the Registrant as
well as the number of stock options earned by the Registrant's chief executive
officer and the three other most highly compensated executive officers,
exceeding $100,000, during the last three fiscal years.

<TABLE>
<CAPTION>  
                                             SUMMARY COMPENSATION TABLE

                                                Annual Compensation
                                   ---------------------------------------------
Name and                             Year                              Other
Principal                           Ended                              Annual       All Other
Position                           June 30,    Salary     Bonus     Compensation   Compensation
--------------------------         --------   --------   --------   ------------   ------------
<S>                                <C>        <C>        <C>        <C>            <C>
Joel M. Eidelstein                   1997     $ 16,000        -            -              -
 President and Director              1996     $ 68,000        -            -              -
                                     1995     $ 68,000        -            -              -

Burton J. Meyer (1)(5)               1997     $    -     $    -            -         $    -
 President and Director              1996     $300,000   $344,600          -          316,100
                                     1995     $300,000   $153,700          -              -

Michael J. Moss (2)(5)               1997          -          -            -              -
 President of Index                  1996          -          -       $538,800            -
                                     1995          -          -       $668,200            -

Allyson D. Laackman (3)(6)           1997     $223,300        -            -              -
 Chief Financial Officer             1996     $135,000    $74,700          -              -
                                     1995     $133,200    $14,100          -              -

Philip A. Tanzar (4)(5)              1997          -          -            -              -
 Director and Vice                   1996     $130,000    $14,300          -              -
    President and General Counsel    1995     $122,000    $16,700          -              -
</TABLE> 

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

(1)  Mr. Meyer's bonuses relate to the prior fiscal years. All Other
     Compensation is a severance payment. Mr. Meyer resigned as a Director as 
     of the close of business July 1, 1996.

(2)  Other annual compensation is commissions.

(3)  Ms. Laackman earned a $38,800 bonus for fiscal 1994 and 1995, $24,700 of
     which was paid in fiscal 1996. Also, Ms. Laackman earned a $50,000 bonus
     for fiscal 1996, which was paid in fiscal 1996.

(4)  Mr. Tanzar became a Director effective February, 1994. He resigned
     October 1, 1996.

(5)  Resigned from executive officer positions effective July 1, 1996.

(6)  Resigned as Chief Financial Officer in June, 1997.



                                      -14-

<PAGE>
 
Fiscal 1997 Option Grants Table

     No options were granted to the Registrant's chief executive officer or the
Registrant's three other most highly compensated executive officers during
fiscal 1997. In November, 1996, 1,250,000 options were issued to Burton J.
Meyer, the Registrant's former President. Mr. Meyer resigned as President
effective July 1, 1996.


Fiscal 1997 Option Exercises and Year-End Value Table

     There were no options exercised during fiscal 1997 or unexercised options
held by the Registrants' chief executive officer and three other most highly
compensated executive officers as of June 30, 1997.


Fiscal 1997 Long Term Incentive Plan Awards

     No long term incentive plan awards were granted to the Registrant's chief
executive officer or the Registrant's three other most highly compensated
executive officers during fiscal 1997.


Compensation of Directors

     Directors are not currently compensated in connection with their duties as
directors, but may be reimbursed for expenses incurred by them.


Executive Employment Contracts

     Mr. Meyer's employment agreement, effective July 1, 1994, provided, among
other things, that he serve as the Registrant's President and for a base annual
compensation of $300,000 for a term ending July 1, 1996. In addition to his base
annual compensation, Mr. Meyer was entitled to an incentive bonus if certain 
pre-tax earnings levels were achieved, or if such pre-tax earnings levels were
not achieved, Mr. Meyer was entitled to receive a discretionary bonus.

     In the event that the terms of Mr. Meyer's employment agreement were not
extended by the Registrant, for reasons other than "good cause", on terms
substantially equivalent to the current terms, the Registrant was obligated to
pay Mr. Meyer a severance of $300,000 plus an amount equal to the bonus for the
previous fiscal year.

     As a result of the Sale of Assets, Mr. Meyer's employment contract was not
extended. In settlement of his contract, Mr. Meyer received $316,100. Had Mr.
Meyer's position at MINC been terminated voluntarily or involuntarily prior to
July 1, 1997, Mr. Meyer would have been entitled to receive additional severance
of $316,100.

     Ms. Laackman's employment agreement, effective September 14, 1994,
provided, among other things, that she serve as the Registrant's Chief Financial
Officer for a base annual compensation of $135,000 for a term ending December
31, 1995. In addition to her base annual compensation, Ms. Laackman was entitled
to a discretionary bonus not to exceed 100% of her base salary.

     Effective July 1, 1995, Ms. Laackman signed another employment agreement
which superseded the September 14, 1994 agreement. This agreement provided,
among other things, that she serve as the Registrant's Chief Financial Officer
for a base annual compensation of $135,000 for a term ending June 30, 1996. In
addition to her base annual compensation, Ms. Laackman was entitled to an annual
bonus if certain pre-tax earnings levels were achieved.


                                      -15-

<PAGE>
 
     Effective July 1, 1996, a new employment agreement was entered into, which
supercedes the July 1, 1995 agreement. This agreement provided, among other
things, that she continue to serve as the Registrant's Chief Financial Officer
for compensation based upon $125.00 per hour, for a term ending June 30, 1997.
In addition, Ms. Laackman was entitled to an annual bonus if certain earnings
levels from the Sale of Assets were achieved.

     In June 1997, Ms. Laackman resigned as Chief Financial Officer. Effective
August 1, 1997, Ms. Laackman entered into an independent consulting contract
with the Registrant.

     Mr. Tanzar's employment agreement, effective November 1, 1993, provided,
among other things, that he serve as the Registrant's Vice President and General
Counsel and for a base annual compensation of $122,000 for a term ending
December 31, 1995. In addition to his base annual rate of compensation, Mr.
Tanzar was entitled to a guaranteed bonus of $5,000 per annum. However, such
bonus might exceed $5,000 as determined by the President of the Registrant.

     Mr. Tanzar's employment agreement, effective December 31, 1995, provided,
among other things, that he serve as the Registrant's Vice President and General
Counsel and for a base annual compensation of $138,200 for a term ending
December 31, 1996. In addition to his base annual rate of compensation, Mr.
Tanzar was entitled to a discretionary bonus.

     In the event that the terms of Mr. Tanzar's employment were not extended by
the Registrant for reasons other than "good cause", on terms substantially
equivalent to the current terms, the Registrant was obligated to pay Mr. Tanzar
a severance of $100,000.

     Effective July 1, 1996 Mr. Tanzar accepted employment at MINC, thereby
terminating his employment contract with the Registrant. As an inducement for
Mr. Tanzar to accept employment with MINC and as a settlement of his contract,
the Registrant has agreed to pay him up to $100,000 as severance if he is
terminated by MINC prior to January 1, 1999.

     Mr. Moss's letter of understanding dated August 4, 1993 provided, among
other things, that he serve as President of Index and for a monthly draw of
$20,000 against commissions earned for the term of employment ending June 30,
1995. Mr. Moss's agreement was extended, on July 1, 1995, until June 30, 1997.
In the event that the terms of Mr. Moss's letter of understanding were not
renewed under the same general terms or he was terminated without cause, Index
was obligated to pay Mr. Moss any commissions due him for the nine months
following the termination without cause or the expiration and non-renewal of the
letter of understanding. This agreement was terminated when Mr. Moss accepted
employment with MINC on July 1, 1996.

     The Registrant, through IFX Ltd., has employment contracts with several of
that subsidiaries employees. Such employees are not executive officers of the
Registrant.


Compensation Committee Interlocks and Insider Participation Compensation
Decisions

     The Registrant does not have a compensation committee. Prior to the Sale of
Assets, Mr. Burton J. Meyer, at the time, President and a Director of the
Registrant, participated in the negotiations of employment agreements for
executive officers of the Registrant.


                                      -16-

<PAGE>
 
Item 12 - Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

     The following table sets forth as of August 29, 1997, certain information
regarding the common stock beneficially owned by each present director, the
Registrant's chief executive officer and the Registrant's three other most
highly compensated officers, each person known by the Registrant to own more
than five percent or more of the common stock of the Registrant and all present
officers and directors as a group:
<TABLE>
<CAPTION>

                                       Amount and Nature of     Approximate
     Name                              Beneficial Ownership  Percent of Class
     ----                              --------------------  -----------------
<S>                                    <C>                   <C>

Lee S. Casty(1)(2)                          15,464,453             49.26%
Burton J. Meyer(3)(5)                        2,821,064              8.99
Joel M. Eidelstein                             127,975               .41
George A. Myers                                  8,000               .03
Michael J. Moss(4)                           1,801,063              5.74
All officers and directors
  as a group (5 persons)                       135,975               .43
</TABLE>
(1)  Mr. Casty may be deemed a parent and promoter of the Registrant as those
     terms are defined under the Securities Act of 1933, as amended.

(2)  c/o French-American Securities, Inc., 200 West Adams Street, Suite 1500,
     Chicago, Illinois 60606.

(3)  Includes 1,250,000 exercisable options, of which beneficial ownership can
     be acquired.

(4)  Ceased to be an executive officer effective July 1, 1996.

(5)  Resigned as director and executive officer effective close of business July
     1, 1996.


Item 13 - Certain Transactions
------------------------------

     Effective November 30, 1985, Mr. Casty, the principal shareholder, loaned
the Registrant $400,000 evidenced by a "satisfactory subordination agreement"
approved by the regulatory authorities to which the Registrant was at that time
subject. This subordinated loan was due to mature on December 1, 1988. On March
5, 1986, the Registrant amended its Articles of Incorporation to authorize
400,000 shares of Preferred Stock, par value $1.00 per share, 10% cumulative,
all of which Preferred Stock was thereupon issued to Mr. Casty in satisfaction
of such subordinated loan. The Preferred Stock is redeemable, with cumulative
dividends, at the option of the Registrant under certain circumstances. No
liability for these dividends had been recorded as dividends are not payable
until declared. In 1986, the Articles of Incorporation of the Registrant were
amended and the Preferred Stock was redesignated "Class A Preferred Stock." On
January 31, 1997, the Registrant redeemed and retired the 400,000 issued and
outstanding shares of its Class A preferred stock. The preferred stock was
redeemed at a price equal to the aggregate par value thereof plus the cumulative
but previously undeclared and unpaid dividends thereon, totaling $836,600. As
payment, the Registrant issued to Mr. Casty a promissory note bearing interest
at the prime rate and maturing on January 31, 1998.

     In January, 1997, all notes payable (other than the note for the redemption
of the preferred stock) due to Mr. Casty aggregating $940,000 were repaid.

                                      -17-
<PAGE>
 
     The Registrant, during the year ended June 30, 1997, paid Mr. Casty,
approximately $91,100 in interest on notes payable.

     The Registrant, during the year ended June 30, 1996, earned $53,500 of
interest income on a note receivable from C. Adam, Ltd., a company wholly-owned
by Mr. Casty.

     In January, 1997, all notes payable to French-American Securities, Inc., a
company wholly-owned by Mr. Casty, aggregating $5,450,000 were extended to
January 31, 1998.

     In June and July, 1997, $4,700,000 and $750,000, respectively, of the notes
payable to French-American Securities, inc. were repaid.

     The Registrant, during the year ended June 30, 1997, paid French-American
Securities, Inc. $520,000 in interest on notes payable.

     In September, 1996, all notes payable to Mr. Meyer aggregating $900,000
were repaid.

     The Registrant during the year ended June 30, 1997 paid Mr. Meyer $23,800
in interest on notes payable.


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

(a)  The following documents are filed as a part of this report:

(1)  Financial Statements:
     The following financial statements are attached to this Form 10-K
     commencing on page 22.
                                                            Page
                                                            ----
 Report of Independent Public Accountants                     22
 Consolidated Statements of Financial Condition
   as of June 30, 1997 and 1996                               23
 Consolidated Statements of Operations for the Years
   Ended June 30, 1997, 1996 and 1995                         24
 Consolidated Statements of Changes in Stockholders'
   Equity for the Years Ended June 30, 1997, 1996 and
   1995                                                       25
 Consolidated Statements of Changes in Liabilities
   Subordinated to Claims of General Creditors for
   the Years Ended June 30, 1996, 1995 and 1994               26
 Consolidated Statements of Cash Flows for the Years
   Ended June 30, 1997, 1996 and 1995                         27
 Notes to Consolidated Financial Statements                   29

(2)  Schedules
     ---------
     Schedule II - Valuation and qualifying accounts

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

                                      -18-
<PAGE>

(3)  Exhibits
     --------

     The following exhibits required by Item 601 of Regulation S-K to be filed
herewith are incorporated by reference to previously filed documents:
<TABLE>
<CAPTION>
     Exhibit No.  Description
     -----------  -----------
     <C>          <S>
                  The following exhibits are hereby incorporated by reference
                  from Form 10-K for the Registrant as filed on September 28,
                  1994 with the Securities and Exchange Commission:

         3.1      Certificate of Incorporation of 312 Merger Corporation

         3.2      By-Laws of 312 Merger Corp.

         3.3      Certificate of Ownership and Merger of Jack Carl/312-Futures,
                  Inc. (an Illinois Corporation) into 312 Merger Corporation (a
                  Delaware Corporation)

        10.35     Employment agreement, dated November 1, 1993, between Jack
                  Carl/312-Futures, Inc. and Philip A. Tanzar.

        10.36     Employment agreement, dated January 7, 1994, between Jack
                  Carl/312-Futures, Inc. and Anthony J. Pecoraro.

        10.37     Employment agreement dated July 1, 1994, between Jack 
                  Carl/312-Futures, Inc. and Burton J. Meyer.

                  The following exhibits are hereby incorporated by reference
                  from Form 10-K for the Registrant as filed on September 27,
                  1995 with the Securities and Exchange Commission:

        10.38     Employment agreement, dated September 14, 1994, between Jack
                  Carl/312-Futures, Inc. and Allyson D. Laackman

        10.39     Employment agreement, dated July 1, 1995, between Jack
                  Carl/312-Futures, Inc. and Allyson D. Laackman

        10.40     Letter containing terms of employment, dated January 27, 1995,
                  between Index Futures Group (UK) Limited and Charles Romilly

        10.41     Letter of understanding, dated July 1, 1995, between Index
                  Futures Group, Inc. and Michael Moss

                  The following exhibits are hereby incorporated by reference
                  from Form 10-K/A for the Registrant as filed on January 14,
                  1997 with the Securities and Exchange Commission:

        10.42     Employment agreement, dated December 31, 1995, between Jack
                  Carl/312-Futures, Inc. and Philip A. Tanzar

        10.43     Heads of Agreement, dated July 19, 1995 between Jack 
                  Carl/312-Futures, Inc., Simon Drabble, Graham Wellesley and
                  Lorenzo Naldini
</TABLE>
                                      -19-

<PAGE>
<TABLE>
<CAPTION>
        <C>       <S>
        10.44     Service Agreement, dated July 19, 1995 between Index Forex
                  Limited and Simon Drabble, Graham Wellesley and Lorenzo
                  Naldini

                  The following exhibits are hereby incorporated by reference
                  from Form 10-Q for the Registrant as filed on May 14, 1997
                  with the Securities and Exchange Commission:

        10.51     Termination Letter dated November 28, 1996 between IFX and
                  Simon Drabble

        10.52     Terms of Employment dated January 1, 1997 between IFX and
                  Charles Romilly

        10.53     Memorandum of Agreement dated March 12, 1997 between IFX and
                  Lorenzo Naldini and Graham Wellesley

        10.54     Service Agreement dated March 12, 1997 between IFX and Graham
                  Wellesley

        10.55     Service Agreement dated March 12, 1997 between IFX and Lorenzo
                  Naldini

        10.56     Settlement Letter dated April 22, 1997 between IFX and Lorenzo
                  Naldini

        10.57     Settlement Letter dated April 22, 1997 between IFX and Graham
                  Wellesley

                  The following exhibits are hereby incorporated by reference
                  from Form 8-K for the registrant as filed on August 1, 1997
                  with the Securities and Exchange Commission:

        10.58     Stockholders Agreement between IFX Corporation, IFX Ltd. and
                  the Park Trust

                  The following exhibits are filed as part of this Form 10-K as
                  of June 30, 1997:

        11.1      Computation of Earnings per Common Share

        21.1      Subsidiaries of the Registrant

        24.1      Power of Attorney

        27        Financial Data Schedule (Edgar Version Only)
</TABLE>
                                      -20-
<PAGE>
 
(b)  Reports on Form 8-K:

During the fourth quarter, or subsequent to year-end, the Registrant filed the
following reports on Form 8-K:

June 2, 1997     Item 5, reporting Registrant's name change from "Jack 
                 Carl/312 Futures, Inc." to "IFX Corporation."

June 12, 1997    Item 5, reporting appointment of Christina S. Donka as Chief
                 Financial Officer and Secretary.

August 1, 1997   Item 2, reporting restructuring of capital of IFX Ltd., the
                 Registrant's London subsidiary, and subsequent sale of 50% of
                 the stock to The Park Trust.

                                      -21-
<PAGE>
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    ----------------------------------------



To the Stockholders of
IFX Corporation
and Subsidiaries:


  We have audited the accompanying consolidated statements of financial
condition of IFX Corporation (a Delaware corporation) and subsidiaries ("the
Company") as of June 30, 1997 and 1996, and the related consolidated statements
of operations, changes in stockholders' equity, changes in liabilities
subordinated to claims of general creditors and cash flows for the years ended
June 30, 1997, 1996 and 1995.  These financial statements are the responsibility
of the Company's management.  Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.

  We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

  In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of IFX Corporation and
Subsidiaries as of June 30, 1997 and 1996, and the results of their operations
and their cash flows for the years ended June 30, 1997, 1996 and 1995, in
conformity with generally accepted accounting principles.

  Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole.  The schedule listed in the index of
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not a part of the basic financial
statements.  This schedule has been subjected to the auditing procedures applied
in our audits of the basic financial statements and, in our opinion, fairly
states, in all material respects, the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.

                
                                        /s/ Arthur Andersen LLP


Chicago, Illinois,
September 5, 1997
 
                                     -22-
<PAGE>
 
                        IFX CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                             JUNE 30, 1997 AND 1996

                                     ASSETS
                                     ------
<TABLE>
<CAPTION>
 
                                                                                           1997          1996
                                                                                       -----------   ------------
<S>                                                          <C>          <C>          <C>           <C>
 
Cash                                                                                   $ 3,279,300   $  1,587,300
Cash segregated or secured under Commodity Exchange Act                                          -      2,009,500
U.S. Government obligations                                                              1,527,100    144,328,800
Other short term investments                                                            44,875,100     28,856,100
Deposits with clearing organizations                                                             -     43,488,500
Warehouse receipts                                                                               -        959,500
Receivables:
 Brokers and dealers                                                                     2,911,600      2,291,900
 Clearing organizations                                                                          -     12,383,200
 
                                                                1997         1996
                                                             -----------   ----------
 Customers                                                   $1,422,900   $1,138,400
 Affiliates                                                           -        1,000
 Other                                                        1,503,300    1,061,800
 Less - Allowance for doubtful accounts                        (430,000)    (409,300)    2,496,200      1,791,900
                                                             ----------   ----------
 
Investments in and advances to affiliated partnerships                                      50,000              -
Notes receivable                                                                           618,900        627,200
Exchange memberships, at cost (market value of
 $960,400 in 1996)                                                                               -        781,300
Furniture, equipment, and leasehold improvements, net of
 accumulated depreciation and amortization of $2,326,000
 in 1997 and $2,213,400 in 1996                                                            269,000        279,500
Other assets                                                                               616,000        503,000
                                                                                       -----------   ------------
 
  Total                                                                                $56,643,200   $239,887,700
                                                                                       ===========   ============
 
                                               LIABILITIES AND STOCKHOLDERS' EQUITY
 
Payables:
 Clearing organizations                                                                $       -     $    165,900
 Brokers and dealers                                                                     1,068,200              -
 Customers and counterparties                                                           41,284,600    216,705,300
 Affiliates and employees                                                                   57,900      2,865,000
Accounts payable and accrued expenses                                                    3,406,600      3,545,000
Notes payable                                                                            1,586,600      6,390,000
                                                                                       -----------   ------------
 
  Total                                                                                 47,403,900    229,671,200
                                                                                        -----------   ------------
Minority Interest                                                                        1,035,600              -
                                                                                       -----------   ------------
 
Liabilities subordinated to claims of general creditors                                          -      4,000,000
                                                                                       -----------   ------------
 
Stockholders' equity:
Class A preferred stock, $1 par value; 10% cumulative,
 redeemable, 400,000 shares authorized and outstanding                                           -        400,000
Common stock, $.004 par value;
 150,000,000 shares authorized, 31,395,649 and 33,624,530
 shares issued and outstanding in 1997 and 1996, respectively                              125,600        134,500
Paid-in capital                                                                          8,123,800      8,395,300
Cumulative translation adjustment                                                          (45,700)       (14,500)
                                                                                       -----------   ------------
 
  Total stockholders' equity                                                             8,203,700      6,216,500
                                                                                       -----------   ------------
  Total                                                                                $56,643,200   $239,887,700
                                                                                       ===========   ============
</TABLE>


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

                                      -23-
<PAGE>

                        IFX CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED JUNE 30, 1997, 1996 AND 1995

<TABLE>
<CAPTION>


                                                           1997          1996          1995
                                                       ------------  ------------  ------------
<S>                                                    <C>           <C>           <C>

Revenues:
  Commissions                                          $   199,200   $30,606,500   $33,665,000
  Interest                                               3,870,100     7,920,800     7,365,000
  Trading gains, net                                     9,211,100     2,411,400       164,900
  Other (Note 17)                                        3,268,600       196,200       463,400
                                                       -----------   -----------   -----------

          Total revenues                                16,549,000    41,134,900    41,658,300
                                                       -----------   -----------   -----------

Expenses:
  Commissions, floor brokerage and clearing costs          365,700    16,825,600    18,381,900
  Compensation and related benefits                      3,622,400    10,536,500     8,948,100
  Interest                                               3,013,600     4,238 900     3,323,000
  Communications                                           735,700     2,066,800     1,672,000
  Business promotion                                       478,600     2,173,900     1,680,000
  Rent and other occupancy costs                           629,800     1,546,300     1,465,900
  Professional and consulting fees                         624,900       670,400       451,100
  Depreciation                                             111,800       320,800       234,800
  Amortization of goodwill                                       -        53,600        53,600
  Doubtful accounts expense (benefit)                     (119,300)      140,600      (586,000)
  Other                                                    730,900     2,312,200     2,086,100
  Restructuring charge, net                                      -     1,556,500             -
                                                       -----------   -----------   -----------

          Total expenses                                10,194,100    42,442,100    37,710,500
                                                       -----------   -----------   -----------

Income (loss) before income taxes
  and minority interest                                  6,354,900    (1,307,200)    3,947,800
Income tax expense (benefit)                             2,235,500      (174,100)    1,536,200
                                                       -----------   -----------   -----------

Net income (loss) before minority interest               4,119,400    (1,133,100)    2,411,600
Minority Interest                                         (935,600)            -             -
                                                       -----------   -----------   -----------

Net income (loss)                                        3,183,800    (1,133,100)    2,411,600

Assumed cumulative dividend on Class A preferred stock     (23,300)      (40,000)      (40,000)
                                                       -----------   -----------   -----------

Net income (loss) applicable to common stock           $ 3,160,500   $(1,173,100)  $ 2,371,600
                                                       ===========   ===========   ===========

Primary earnings (loss) per share, restated
  for reverse split:

  Net income (loss)                                    $       .10   $      (.03)  $      $.08
                                                       ===========   ===========   ===========

  Weighted average number of shares outstanding         33,084,467    33,721,179    30,680,524
                                                       ===========   ===========   ===========

Fully diluted earnings (loss) per share, restated
  for reverse split:

  Net income (loss)                                    $       .10   $      (.03)  $       .08
                                                       ===========   ===========   ===========

  Weighted average number of shares outstanding         33,084,467    33,721,179    30,680,524
                                                       ===========   ===========   ===========

</TABLE>


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

                                      -24-
<PAGE>

                        IFX CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                FOR THE YEARS ENDED JUNE 30, 1997, 1996 AND 1995

<TABLE>  
<CAPTION> 
                              Class A         Common Stock                      Retained    Cumulative
                              Preferred       ------------        Paid-In       Earnings    Translation
                              Stock        Shares      Amount     Capital      (Deficit)    Adjustment      Total
                              ---------    ------      ------     -------      ---------    -----------     -----
<S>                          <C>          <C>         <C>        <C>          <C>          <C>           <C>
Balance June 30, 1994          $400,000   20,174,739 $ 80,700   $7,373,100   $(3,977,300)           -     $3,876,500
                                                                          
Issuance of common stock                                                                               
  pursuant to rights offering             13,449,826   53,800    1,022,200           -              -      1,076,000               
                                                                                                       
Repurchase of common stock                                                                             
  pursuant to reverse split         -            (33)     -            -             -              -            - 
                                                                                                       
Net income                          -            -        -            -       2,411,600            -      2,411,600
                               --------   ---------- --------   ----------   -----------    -----------   ----------  
Balance June 30, 1995          $400,000   33,624,532 $134,500   $8,395,300   $(1,565,700)           -     $7,364,100
                                                                                                       
Repurchase of common                                                                                   
  stock pursuant to                                                                                    
  reverse split                     -             (2)     -            -             -              -            -
                                                                                                       
Net (loss)                          -            -        -            -      (1,133,100)           -     (1,133,100) 
                                                                          
Foreign currency translation        -            -        -            -             -          (14,500)     (14,500)
                               --------   ---------- --------   ----------   -----------    -----------   ----------  
Balance June 30, 1996          $400,000   33,624,530 $134,500   $8,395,300   $(2,698,800)      $(14,500)  $6,216,500     
                               ========   ========== ========   ==========   ===========    ===========   ==========  
Repurchase of common stock                (2,228,881)  (8,900)    (319,900)          -              -       (328,800)
                                                                                                      
Retirement of Class A                                                                                 
 Preferred Stock               (400,000)         -        -            -             -              -       (400,000)  
                                                                                                        
Payment of Preferred                                                                                  
 Stock dividends                    -            -        -            -        (436,600)           -       (436,600)
                                                                                                        
Net income                          -            -        -            -       3,183,800            -      3,183,800
                                                                                                        
Foreign currency                                                                                        
 translation                        -            -        -            -             -          (31,200)     (31,200)
                               --------   ---------- --------   ----------   -----------    -----------   ----------
Balance June 30, 1997          $    -     31,395,649 $125,600   $8,075,400   $    48,400       ($45,700)  $8,203,700
                               ========   ========== ========   ==========   ===========    ===========   ==========  

                       The accompanying notes are an integral part of the consolidated financial statements.
</TABLE> 
                                      -25-
<PAGE>
 
                       IFX CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CHANGES IN LIABILITIES
                  SUBORDINATED TO CLAIMS OF GENERAL CREDITORS
               FOR THE YEARS ENDED JUNE 30, 1997, 1996 AND 1995
                                        



Balance, June 30, 1994                                          $ 2,000,000

New borrowings                                                    1,190,000

Reissuance                                                        2,000,000

Reductions:

  Repayments                                                     (1,500,000)

  Maturities                                                     (2,000,000)
                                                                ----------- 

Balance, June 30, 1995                                          $ 1,690,000

New borrowings                                                    4,000,000

Maturities                                                       (1,690,000)
                                                                ------------ 

Balance, June 30, 1996                                          $ 4,000,000

  Repayments                                                     (4,000,000)
                                                                ----------- 

Balance, June 30, 1997                                          $      -0-
                                                                ===========



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

                                      -26-
<PAGE>
 
                        IFX CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED JUNE 30, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
 
 
                                                              1997          1996           1995
                                                              ----          ----           ----      
<S>                                                       <C>           <C>            <C>
Cash Flows From Operating Activities:
  Net income (loss)                                       $ 3,183,800    $(1,133,100)  $  2,411,600
    Adjustments to reconcile net income (loss) to
      net cash provided by (used in) operating
      activities:
    Depreciation and amortization                              83,200        374,400        288,400
    Deferred taxes                                             26,200       (272,300)       315,600
    Doubtful accounts expense (benefit)                        20,700        140,600       (586,000)
    Equity in net (gain) loss of affiliated
    partnerships                                                    -         (6,400)        18,700
    Gain on sale of clearing corporation stock               (664,000)             -              -
    Gain on sale of exchange memberships, net                 (73,700)             -              -
    Restructuring charge, net                                       -      1,556,500              -
 
  Changes in:
    Cash segregated or secured under
      Commodity Exchange Act                                2,009,500       (827,800)     2,098,100
    U.S. Government obligations                           142,801,700    (61,443,200)    40,898,300
    Other short term investments                          (16,019,000)   (28,856,100)             -
    Deposits with clearing organizations                   43,128,500     34,542,200    (25,147,900)
    Warehouse receipts                                        959,500        577,700       (573,500)
    Receivables                                            11,041,800      6,620,400     (5,633,200)
    Other assets                                             (139,200)        92,800       (188,500)
    Payables                                             (177,328,800)    48,828,800    (14,577,900)
    Accounts payable and accrued expenses                    (138,400)    (1,699,000)       826,500
                                                          -----------    -----------    ------------
     Cash provided by (used in) operating
       activities                                           8,891,800     (1,504,500)       150,200
                                                          -----------    -----------   ------------
Cash Flows From Investing Activities:
  (Increase) decrease in investments in and advances
    to affiliated partnerships                                (50,000)        45,500        (13,400)
  Decrease in notes receivable                                  8,300          6,500          7,600
  Purchase of exchange membership                                   -              -       (130,000)
  Proceeds from sale of exchange memberships                  855,000              -              -
  Purchase of furniture, equipment and leasehold
    improvements                                             (188,900)      (290,600)      (357,800)
  Rebate from purchase of equipment                                 -              -         50,000
  Proceeds from sale of furniture and equipment               116,200              -              -
  Proceeds from sale of clearing corporation stock          1,024,000              -              -
                                                          -----------    -----------   ------------
     Cash provided by (used in) investing activities        1,764,600       (238,600)      (443,600)
                                                          -----------    -----------   ------------
Cash Flows From Financing Activities:
  Increase in short term advance                                    -      1,000,000              -
  Repayment of short term advance                                   -     (1,000,000)             -
  Increase in liabilities subordinated
    to claims of general creditors                                  -      3,000,000      1,190,000
  Repayment of liabilities subordinated to claims of
    general creditors                                      (4,000,000)      (690,000)    (1,500,000)
  Repayments of notes payable                              (5,640,000)             -     (1,300,000)
  Issuance of common stock pursuant to rights offering              -              -      1,076,000
  Repurchase of common stock                                 (328,800)             -              -
  Sale of minority interest                                 1,035,600              -              -
                                                          -----------    -----------   ------------
     Cash provided by (used in) financing activities       (8,933,200)     2,310,000       (534,000)
                                                          -----------    -----------   ------------
Effect of exchange rate changes on cash                       (31,200)       (14,500)             -
                                                          -----------    -----------   ------------
Increase (decrease) in cash                                 1,692,000        552,400       (827,400)
Cash, beginning of period                                   1,587,300      1,034,900      1,862,300
                                                          -----------    -----------   ------------
Cash, end of period                                       $ 3,279,300    $ 1,587,300   $  1,034,900
                                                          ===========    ===========   ============
</TABLE>
   The accompanying notes are an integral part of the consolidated financial
   statements.

                                      -27-
<PAGE>
 
                       IFX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               For the years ended June 30, 1997, 1996 and 1995
                                        

                  Supplemental Schedule of Non Cash Investing
                           and Financing Activities



1997

     In January, 1997, notes payable aggregating $5,450,000 due January 31, 1997
were extended to January 31, 1998. $4,700,000 of these notes payable were repaid
prior to June 30, 1997.

     Also in January, 1997, a note payable for $836,600 was issued to the
Company's principal stockholder as payment for the redemption of preferred stock
and dividends accrued thereon.


1996

     Notes payable aggregating $6,390,000 due January 31, 1996 were extended to
January 31, 1997.

     In February, 1996, $1,000,000 of a $1,690,000 subordinated loan was
extended to February 24, 1997. The remaining $690,000 was repaid.


1995

     Notes payable aggregating $7,590,000, due January 31, 1995 were extended to
January 31, 1996, of which $1,200,000 was subsequently repaid.

     In March, 1995 a subordinated loan in the amount of $2,000,000 was extended
to February 28, 1996.

                                     -28-
<PAGE>
 
                       IFX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                        

NOTE 1 - ORGANIZATION OF JACK CARL/312-FUTURES, INC.

     Until July 1, 1996, IFX Corporation ("formerly Jack Carl/312-Futures,
Inc."), through its subsidiaries, engaged principally in the business of
effecting transactions in futures and options on futures contracts for the
accounts of customers and the operation of commodity pools. Index Futures Group,
Inc. ("Index"), until July 1, 1996, was the principal operating subsidiary of
Jack Carl/312-Futures, Inc. Effective July 1, 1996, Index sold, transferred and
assigned substantially all of its brokerage accounts ("Sale of Assets") to E.D.
& F. Man International Inc. ("MINC"). Index ceased being a registered futures
commission merchant with the Commodity Futures Trading Commission ("CFTC") in
December, 1996. As a condition of the Sale, Index changed its name to FX
Chicago, Inc. ("FX Chicago"). IFX Ltd., (formerly Index FX, Ltd.), a British
corporation and a wholly owned subsidiary of IFX Corporation, continues to
conduct foreign exchange business as a registrant of the British Securities and
Futures Authority. Another subsidiary of IFX Corporation was a registered 
broker-dealer until it withdrew its registration in April 1997.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation

     The consolidated financial statements include the accounts of IFX
Corporation and its wholly-owned subsidiaries, FX Chicago, and IFX Ltd. as well
as those of its majority-owned subsidiary, Stark Research, Inc. All material
intercompany accounts and transactions are eliminated in consolidation. Brokers
Resource Corp., Index Securities, Inc. and Jack Carl Management and Trading,
Inc., all former subsidiaries of IFX Corporation, were dissolved during fiscal
1996 and 1997.

     Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

     Revenue Recognition

     Foreign exchange revenue is recorded on a per transaction basis, based upon
marking underlying positions to market. Such revenue is included in trading
gains on the Statements of Operations.

     Commission revenues on commodity futures and options transactions and
related commission expenses are recorded on a half-turn basis.

     U.S. Government Obligations

     U.S. Government obligations are valued at market. The change in unrealized
appreciation on house and customer funds invested in U.S. Government obligations
is reflected in interest income.

                                     -29-
<PAGE>
 
                       IFX CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                        

     Investments in Partnerships

     The investments in partnerships are accounted for on the equity method.

     Furniture, Equipment and Leasehold Improvements

     Furniture and equipment are depreciated using the straight-line method over
the estimated useful lives of the assets. Leasehold improvements are amortized
using the straight-line method over the lesser of their useful lives or the
remaining terms of the leases. See Note 17 for the effect of the Sale of Assets
on furniture, equipment and leasehold improvements.

     Goodwill

     Prior to the Sale of Assets, the excess of cost over estimated fair value
of net assets acquired was reflected as goodwill and was being amortized over
twenty years. Goodwill arose as a result of business combinations which occurred
in 1985 and 1986. As a result of the Sale of Assets, the remaining goodwill was
written off as of June 30, 1996. See Note 17 for further information.

     Customer-Owned Securities

     Customer-owned securities are reflected at market value in the consolidated
statements of financial condition. This presentation has no effect on
stockholders' equity. At June 30, 1997 and 1996, the total market value of
customer-owned securities included in the consolidated statements of financial
condition as both assets and liabilities was $0 and $46,891,300, respectively.

     Income Taxes

     Deferred income taxes are provided to reflect the tax effects of timing
differences between financial and tax reporting. The nature of the timing
differences are discussed in Note 11.

     Earnings Per Share

     Earnings per share are computed on the basis of the weighted average number
of shares of common stock outstanding during each year, adjusted for the effect
of common stock equivalents arising from the assumed exercise of stock options,
if dilutive.

     Reclassification

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

     Recent Accounting Developments

     In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 118. "Earnings Per Share" (FAS No. 128),
which establishes standards for computing and presenting earnings per share
("EPS"). FAS No. 128 replaces the presentation of primary EPS with a
presentation of basic EPS. Basic EPS excludes dilution and is

                                     -30-
<PAGE>
 
                       IFX CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                        
computed by dividing income available to common shareholders by the weighted-
average number of common shares outstanding for the period. FAS No. 128 also
requires presentation of diluted EPS which is computed similarly to fully
diluted EPS currently presented. The statement is effective for financial
statements issued for periods ending after December 15, 1997, including interim
periods. On adoption, it will require the restatement of all prior period EPS
date. The Company will adopt FAS No. 128 in the second quarter of fiscal 1998.
At such time, all prior period EPS data will be restated. The Company believes
the adoption of FAS No. 128 will not have a material impact on its EPS or EPS
trends and comparisons.


NOTE 3 - ASSETS SEGREGATED AND SECURED UNDER COMMODITY EXCHANGE ACT

     Under the Commodity Exchange Act, as amended, Index was required to
segregate all balance due to customers in connection with transactions in
regulated commodities. In addition, in accordance with CFTC Regulation 30.7,
Index was to secure all balances due to U.S. customers for activities in foreign
futures or options. Effective July 1, 1996, pursuant to the Sale of Assets,
Index transferred all such balances to MINC. Segregated and secured assets
included in the consolidated statements of financial condition at June 30, 1996
are as follows:
<TABLE>
<CAPTION>


                                            1997            1996
                                        ------------    ------------
<S>                                     <C>             <C>

Cash                                     $     -        $   2,009,500
U.S. Government obligations                    -          142,898,700
Deposits with clearing
  organizations                                -           37,464,000
Receivables from clearing
  organizations, net                           -           12,223,000
Receivables from brokers and dealers           -            1,879,000
Warehouse receipts                             -              959,500
                                         -----------     ------------

     Total segregated and
       secured assets                    $     -         $197,433,700
                                         ===========     ============
 
      Amount required to be
       segregated and secured            $     -         $189,564,200
                                         ===========     ============
</TABLE>


NOTE 4 - OTHER SHORT TERM INVESTMENTS

     Other short term investments consist of $44,875,100 of time deposits at
June 30, 1997, due at various dates through July, 1997, and $28,856,100 of time
deposits at June 30, 1996, due July 1, 1996.

                                     -31-
<PAGE>
 
                        IFX CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                        

NOTE 5 - DEPOSITS WITH CLEARING ORGANIZATIONS

     Deposits with clearing organizations, including house and customer funds,
at June 30, are as follows:
<TABLE>
<CAPTION>
 
                                                          1997        1996
                                                       ----------  -----------
<S>                                                    <C>         <C>
 
U.S. Government obligations                            $      -    $37,961,600
Guarantee deposits                                            -      1,232,300
Stock in exchange clearing organization
  at cost (market value of $1,024,000 in
  1996 and $960,000 in 1995)                                  -        360,000
Cash margins                                                  -      3,934,600
                                                       ----------  -----------
 
       Total                                           $      -    $43,488,500
                                                       ==========  ===========
 
NOTE 6 - NOTES PAYABLE
 
       Notes payable at June 30, consist of the following:
 
                                                          1997        1996
                                                       ----------  -----------
Principal stockholder,
  interest at prime plus 4%, due:
  January 31, 1998 and January 31, 1997                $      -    $   540,000
  January 31, 1998 and January 31, 1997                       -        400,000
 
Principal stockholder, interest at prime,
  due January 31, 1998                                    836,600          -
 
Affiliates and other related parties,
  interest at prime plus 4%, due:
  January 31, 1998 and January 31, 1997                       -      2,000,000
  January 31, 1998 and January 31, 1997                       -      1,800,000
  January 31, 1998 and January 31, 1997                   750,000      750,000
  January 31, 1998 and January 31, 1997                       -        750,000
  January 31, 1998 and January 31, 1997                       -        150,000
                                                       ----------  -----------
 
       Total                                           $1,586,600  $ 6,390,000
                                                       ==========  ===========
</TABLE>

     Interest paid on notes payable during the years ended June 30, 1997, 1996
and 1995 was $634,900, $801,400 and $894,100, respectively, substantially all of
which was paid to related parties.

     The weighted average interest rates on short-term borrowings outstanding at
June 30, 1997 and 1996 are 10.4% and 11.8%, respectively. Short-term borrowings
include notes payable and liabilities subordinated to claims of general
creditors. The weighted average interest rate was calculated by dividing
interest expense by the related average amount outstanding in June.

     At June 30, 1997, all notes payable mature during the year ended June 30,
1998. In July, 1997, $750,000 of notes payable to affiliate and other related
parties were repaid.

                                     -32-
<PAGE>
 
                       IFX CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                        

NOTE 7 - LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS

     Liabilities subordinated to claims of general creditors were borrowed in
accordance with the terms of a revolving subordinated debt line totalling
$4,000,000 as of June 30, 1996. The full amount of the borrowing was repaid in
August, 1996, and the line was canceled.

     Interest expense on liabilities subordinated to claims of general creditors
during the years ended June 30, 1997, 1996, and 1995 was $38,100, $352,000 and
$234,100, respectively.

NOTE 8 - STOCKHOLDERS' EQUITY

     Rights Offering

     In July, 1994, the Company offered to its common stockholders the non-
transferable right to purchase, at a subscription price of $.02 per share, two-
thirds of a share of common stock for each one share of common stock owned of
record on July 15, 1994. 53,799,304 shares of common stock were available and
purchased in the Rights Offering. The gross proceeds of the Rights Offering were
$1,076,000.

     Class A Preferred Stock

     On January 31, 1997, the Company redeemed and retired the 400,000 issued
and outstanding shares of its Class A preferred stock, all of which were owned
by its principal stockholder. The preferred stock was redeemed at a price equal
to the aggregate par value thereof plus the cumulative but previously undeclared
and unpaid dividends thereon, totaling $836,600. As payment, the Company issued
its principal stockholder a promissory note bearing interest at the prime rate
and maturing on January 31, 1998.

     Common Stock

     Effective at the close of business November 4, 1994, the Company effected a
one-for-four reverse split of its common stock, par value $.001. Each four
shares of such common stock were reclassified and changed into one share of
common stock having a par value of $.004. Pursuant to the reverse split, the
Company is obligated to pay any holder of fractional shares resulting from the
reverse split $.05 per share of common stock up to a maximum of $.15 for three
shares. At the close of business on November 4, 1994, the outstanding shares of
common stock were reduced to approximately 33,624,565 shares from 134,498,260
shares before the reverse split. During the third and fourth quarters of fiscal,
1997, the Company repurchased and retired 2,228,881 shares of its common stock
for $328,800. The purchase was done pursuant to a repurchase program which
permits the Company to purchase up to 5,000,000 shares of common stock before
June 30, 1997. As the result of the repurchase of fractional shares and the
repurchase and retirement of shares, there are 31,395,649 shares of common stock
outstanding as of June 30, 1997.

     All outstanding share, earnings per share and weighted average information
has been restated to reflect the one-for-four reverse split of common stock.

                                     -33-
<PAGE>
 
                       IFX CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                        

     Stock Option Plan

     In March, 1986, the Company adopted an incentive stock option plan
reserving 500,000 shares of common stock. In December, 1990, the Company granted
options for 410,000 shares at the then market price exercisable through
December, 2000. The Company also has granted options other than in accordance
with the March 1986 incentive stock option plan.

     In November, 1996, the Board of Directors authorized the issuance of
options for 1,250,000 shares of common stock at $.24 per share, terminating June
30, 1998. These options replace those that were originally issued in February,
1994 and terminated upon the former President accepting employment with MINC.
All other previously issued options expired upon termination of former
employees.

The following summarizes, after restatement for the November 4, 1994 one-for-
four reverse stock split, all outstanding options at June 30, 1997.
<TABLE> 
<CAPTION> 
Shares           Shares           Shares       Shares     Shares    
                 Granted  Price  Exercisable   Forfeited  Cancelled   Remaining
                 -------  -----  -----------   ---------  ---------   ---------
<S>            <C>        <C>    <C>          <C>         <C>         <C> 
December 1990    410,000  $.60         -        390,469     19,531          -
                                                                    
February 1992    125,000  $.25         -        125,000        -            -
                                                                    
May 1992          75,000  $.60         -         75,000        -            -
                                                                    
September 1992   125,000  $.375        -        125,000        -            -
                                                                    
February 1994  1,250,000  $.24         -      1,250,000        -            -
                                                                     
January 1995     250,000  $.125        -        250,000        -            - 
                                                                    
November 1996  1,250,000  $.24    1,250,000         -          -      1,250,000
               ----------         ---------    ---------     ------   ---------
                                                                    
    Total      3,485,000          1,250,000    2,215,469     19,531   1,250,000
               =========          =========    =========     ======   =========
</TABLE> 

NOTE 9 - RELATED PARTY TRANSACTIONS

     A note receivable in the amount of $618,900 arose in connection with
advances made by the Company to an affiliated entity. These demand receivables
were converted into a demand note bearing interest at 8% and was subsequently
changed to the prime rate of interest. The Company earned $51,700, $53,500, and
$52,400 of interest income on this note during the years ended June 30, 1997,
1996 and 1995, respectively.

    Before the Sale of Assets, the Company rented from an officer and director,
an exchange membership having a market value at June 30, 1996 of approximately
$525,000. Rent expense for the years ended June 30, 1997, 1996 and 1995 was $0,
$61,500, and $64,000, respectively.

                                      -34-
<PAGE>
 
                       IFX CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                        

     Before the Sale of Assets, certain exchange memberships owned by officers
and others, having an aggregate market value of $4,870,000, had been pledged to
various exchange clearinghouses or corporations on behalf of the Company and
could have been used by them under certain circumstances to fulfill the
Company's obligations to those clearinghouses or corporations. These exchange
memberships were not included in the Company's consolidated statements of
financial condition. The Company in the ordinary course of business, guaranteed
certain loans which were secured by exchange memberships owned by an individual
who was an officer and director, and by the principal shareholder.

     The Company receives funds, in the form of loans, from its principal
shareholder, an affiliated company and, prior to the Sale of Assets, an officer
and director of the Company. See Note 6 for the terms and balances at June 30,
1997 and 1996.

     In August, 1995, the principal stockholder made a $1,000,000 short term
advance to the Company. The Company repaid the advance in September, 1995.

     Pursuant to the Rights Offering, the principal shareholder, the president
of the Company and the president of Index, immediately following the expiration
of the Rights Offering, purchased, in addition to their allocable number of
shares in the Rights Offering, 9,768,516, 4,884,259 and 4,884,259 shares,
respectively, of the Registrant's common stock at the subscription price of $.02
per share. Such shares were the shares not purchased by other shareholders
during the Rights Offering.


NOTE 10 - SALE OF BRC ASSETS

     In January, 1993, Brokers Resource Corp. ("BRC"), at the time a wholly-
owned subsidiary of Index and until it was dissolved in May, 1996, a wholly-
owned subsidiary of the Company, sold the majority of its guaranteed introducing
broker business to an unrelated entity in return for a portion of future
earnings on such business through January 15, 1995. No gain was recognized at
the date of the sale due to the uncertainty of future earnings. During the year
ended June 30, 1995, the Company earned $481,900 respectively from the
transaction, which is included in commission income. The revenue stream from
this transaction ended effective January 15, 1995.


NOTE 11 - INCOME TAXES

     The provision for Federal income taxes for each of the years ended June 30,
is as follows:
<TABLE>
<CAPTION>
                           1997        1996        1995
                        ----------  ----------  ----------
<S>                     <C>         <C>         <C>
   Current              $2,209,300  $  98,200   $1,220,600
   Deferred                 26,200   (272,300)     315,600
                        ----------  ---------   ----------
     Total provision    $2,235,500  $(174,100)  $1,536,200
                        ==========  =========   ==========
</TABLE>

  State income tax expense is immaterial for the years ended June 30, 1997, 1996
and 1995.

                                      -35-
<PAGE>
 
                       IFX CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
<TABLE> 
<CAPTION>                       

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

                                     1997               1996            1995
                                     ----               ----            ----
                                 Amount   %         Amount  %       Amount   %
                             ---------------- ----------------  ----------------
<S>                          <C>              <C>                <C> 
At Federal statutory rate    $2,160,700 34.0% $ (444,400) 34.0  $1,342,300  34.0

Dividends from
  foreign subsidiary             60,000  1.0         -      -          -      -

Amortization of goodwill            -     -      184,300 (14.1)     18,200    .5

Non-taxable translation
  gain                              -     -      (10,600)   .8         -      -

Additional tax due IRS
  for 1987-1989 settlement          -     -       30,300  (2.3)     49,500   1.2

Non-deductible travel
  and entertainment              14,800   .2      18,000  (1.4)      8,600    .2

Non-deductible loss of
  majority-owned subsidiary         -              6,000   (.5)     41,200   1.0

Additional provision for
  current and deferred taxes        -     -       32,500  (2.4)      8,800    .9

Penalties                           -     -          -      -       45,100    .5

Other, net                          -     -        9,800   (.8)     22,500    .6
                             ---------- ----   ---------  -----  ---------  ----

     Net amounts             $2,235,500 35.2% $ (174,100) 13.3  $1,536,200  38.9
                             ========== ====  ==========  ====  ==========  ====
</TABLE> 
                                      -36-
<PAGE>
 
                       IFX CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                        

     Effective July 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 - Accounting for Income Taxes. Under this standard,
deferred tax is recognized using the liability method, whereby tax rates are
applied to cumulative temporary differences based on when and how they are
expected affect the tax return. Deferred tax assets and liabilities are adjusted
for tax rate changes. The primary components of the Company's deferred tax
assets and liabilities are as follows:
<TABLE>
<CAPTION>
 
                                      June 30,   June 30,
                                        1997       1996
                                      ---------  ---------
<S>                                   <C>        <C>
Deferred income tax assets:
  Bad debt reserve                    $ 61,600   $ 38,600
  Book and tax depreciation
     difference                         54,600    235,800
  Accrued operating expenses           120,800     41,900
  Accrued legal expense                 29,000          -
                                      --------   --------
 
     Total deferred tax assets        $266,000   $316,300
                                      --------   --------
 
Deferred income tax liabilities:
  Unrealized gain on U.S.
     Government obligations           $      -   $ (4,500)
  Partnership income                         -    (34,900)
  Prepaid rent                               -     (4,900)
  State and foreign taxes              (19,700)         -
  Other, net                            (3,300)    (2,800)
                                      --------   --------
 
     Total deferred tax liabilities   $(23,000)  $(47,100)
                                      --------   --------
 
     Net deferred tax assets          $243,000   $269,200
                                      ========   ========
</TABLE>

     No valuation allowance has been provided as management believes deferred
tax assets are realizable.


NOTE 12 - COMMITMENTS AND CONTINGENCIES

     The Company has two noncancellable leases for office space which expire in
the years 1998 and 2002. Minimum annual rentals, excluding escalations and
increases in operating expenses and taxes, are as follows:
<TABLE> 
<CAPTION> 
               Year Ending June 30,           Amount
               --------------------          ---------
<S>            <C>                         <C> 
                1998                       $  443,900
                1999                          350,500
                2000                          362,300
                2001                          374,000
                2002 and thereafter           849,900
                                            ---------

                     Total                 $2,380,600
                                            =========
</TABLE> 
     Other office space leases the Company had at June 30, 1996 were transferred
to MINC effective July 1, 1996, and have not been included in the above amounts.

                                     -37-
<PAGE>
 
                       IFX CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                        
     The Company has entered into employment agreements which expire at varying
dates through fiscal 1998 with certain of its employees, providing for aggregate
minimum annual payments for the year ending 1998 of approximately $435,000. The
Company has also entered into a consulting contract which expires during fiscal
1999, providing for aggregate minimum payments totalling $117,000.

     As a result of the Sale of Assets, if certain conditions occur over the
next two years, the Company may be subject to additional severance payments of
up to $100,000.

     The Company has guaranteed performance under the Commodity Exchange Act of
certain introducing brokers with respect to their customer accounts. These
introducing broker guarantees were transferred to MINC effective July 1, 1996.

     Index and BRC issued a limited indemnification agreement to the purchaser
of the BRC business (see Note 10). This agreement covers potential customer
claims arising from activity prior to the sale. No such claims are currently
outstanding.

     A similar limited indemnification agreement was issued to MINC related to
the Sale of Assets. No claims are currently pending. See Note 17.

NOTE 13 - FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK AND
          CONCENTRATION OF CREDIT RISK

     Prior to the Sale of Assets, the Company, through Index, was in the
business of clearing and executing futures contracts and options on futures
contracts for the accounts of its customers. As such, Index guaranteed to the
respective clearinghouses its customers' performance under these contracts. To
reduce its risk, Index required its customers to meet, at a minimum, the margin
requirement established by each of the exchanges at which the contract was
traded. This margin was a good faith deposit from the customer which reduced the
risk to Index of failure on behalf of the customer to fulfill any obligation
under the contract. To minimize its exposure to risk of loss due to market
variation, Index adjusted these margin requirements, as needed, due to daily
fluctuations in the values of the underlying positions. If necessary, certain
positions may have been liquidated to satisfy resulting changes in margin
requirements. Management believes that the margin deposits held at June 30,
1996, were adequate to minimize the risk of material loss which could be created
by the positions held at that time.

     To facilitate small orders from customers, the Company entered into
proprietary positions at the MidAmerica Commodity Exchange and offsets these
positions at the Chicago Board of Trade and the Chicago Mercantile Exchange,
thereby assuming no market risk. At June 30, 1996, Index held proprietary long
financial futures positions with an aggregate notional value of $165,130,900 and
proprietary short financial futures positions with an aggregate notional value
of $165,130,900.

     The exchange upon which financial futures and options on futures contracts
are traded acts as the counterparty and, accordingly, bears the risk of
performance. At June 30, 1996 Index's open financial contracts were transacted
at the Chicago Mercantile Exchange, Chicago Board of Trade, and MidAmerican
Commodity Exchange. At June 30, 1996, Index held no foreign currency forward
contracts.

                                     -38-
<PAGE>
 
                       IFX CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                        

     As a result of the Sale of Assets, after July 1, 1996, the Company did not
maintain open financial contracts at the exchange, nor did it hold any foreign
currency forward contracts.

     IFX Ltd. conducts business for its customers in foreign currencies on the
spot market in which trades generally settle on the next business day. IFX Ltd.
offsets its customer positions to manage its currency risk. It also requires
certain customers to post margin deposits. Management believes that with the
trades settling the next business day and the margin policy employs, its credit
risk is reduced substantially. At June 30, 1997 and 1996, respectively, IFX Ltd.
held long foreign currency positions with an aggregate notional value of
$2,993,671,900 and $2,101,661,100, respectively and short foreign currency
positions with an aggregate notional value of $2,993,109,600 and $2,101,662,400
respectively.

     At June 30, 1997 and 1996, the IFX Ltd. foreign currency business was
transacted with several international financial institutions.


NOTE 14 - LITIGATION

     The Company is a defendant in, and may be threatened with, various legal
proceedings arising from its regular business activities. Management, after
consultation with legal counsel, is of the opinion that the ultimate liability,
if any, resulting from any pending or threatened action or proceedings will not
have a material effect on the financial position or results of operations of the
Company.

     On May 16, 1996, Index filed suit in the Circuit Court of Cook County--Law
Division against Doug Niemann, a former customer, for breach of contract,
seeking to recover debit balance of $88,200 (Index Futures Group, Inc. v. Doug
Niemann, case no. 96L-5506). On January 14, 1997, Niemann filed a counterclaim
for $688,200. The Company believes that the counterclaim is without merit and
will defend vigourously.

     In April, 1994, Index without admitting or denying the allegations, paid
$100,000 to the CFTC, settling an administrative action filed on September 29,
1992. In a related action, the equity receiver of an alleged commodity pool
operator brought an action to recover losses of approximately $600,000, alleging
various theories such as constructive trust, negligence, breach of fiduciary
duty and conversion. On May 29, 1996, the district judge dismissed the complaint
in its entirety. Supplemental Plaintiff filed a timely Notice of Appeal with the
U.S. Court of Appeals for the Seventh Circuit on May 16, 1997. The Seventh
Circuit has yet to rule on whether this case may be appealed.

     A former officer of Index whose employment was terminated as a result of
the Sale of Assets rejected Index's severance payment offer. The officer has
made a demand for $500,000. The Company settled this case in July, 1997 for
$75,000.

                                     -39-
<PAGE>
 
                       IFX CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                        

NOTE 15 - CAPITAL REQUIREMENTS

     Until December, 1996, Index was subject to the minimum capital requirements
adopted and administered by the Commodity Futures Trading Commission ("CFTC")
and by certain exchanges of which it was a member. Index has since withdrawn its
registration as a futures commission merchant and, as such, is no longer subject
to minimum capital requirements.

     IFX Ltd. became a registrant of the Securities and Futures Authority
("SFA") in London during November, 1996. As such, IFX Ltd. is subject to the
financial resources requirements adopted and administered by the SFA. As of June
30, 1997, IFX Ltd.'s financial resources, as defined by the SFA, were
$8,976,000, which was $6,040,000 in excess of its requirements.

NOTE 16 - CASH FLOWS

     For purposes of reporting cash flows, cash does not include segregated or
secured cash, as defined in the Commodity Exchange Act. Interest paid during the
years ended June 30, 1997, 1996 and 1995 amounted to $3,013,600, $4,043,800 and
$3,194,300, respectively. The Company made income tax payments in the amount of
$200,000, $1,100,000 and $444,600 during the years ended June 30, 1997, 1996 and
1995, respectively.

NOTE 17 - SALE OF ASSETS

     On May 31, 1996, an agreement was reached to sell, transfer and assign to
MINC substantially all of the brokerage accounts maintained by Index, together
with all positions, securities and other assets held in or for such accounts and
other agreed-upon assets used in the conduct of the brokerage activities. MINC
is a unit of E.D.& F. Man Group, plc, a London-based international trading and
finance conglomerate. This sale was completed as of July 1, 1996. During 1997,
Index ceased being a clearing member at all exchanges, and ceased being a
registered futures commission merchant.

     The purchase price payable by MINC in connection with this transaction is
based on a percentage of the net income (as defined in the sales agreement) of
the transferred activities during the sixty-six month period following the sale.
As the purchase price is contingent upon the future earnings of the customer
accounts sold, none of which is guaranteed, no gain on the sale was reflected in
the financial statements for the year ended June 30, 1996. Rather, income will
be recognized as earned over the five and one-half years after the date of the
sale. A condition of the sales agreement required the principal shareholder to
sign a non-competition agreement. As compensation for providing such an
agreement, a portion of the purchase price may be allocated to the principal
shareholder and recorded by the Company concurrently with its recognition of
income as described above. Management has been advised by the principal
shareholder that he should not be allocated a portion of the purchase price.

                                     -40-
<PAGE>
 
                       IFX CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                        

     A net pre-tax, restructuring charge of $1,556,500, related to the sale, was
reflected in the income statement for fiscal year 1996. These amounts consisted
of the following:
<TABLE>
<CAPTION>
 
<S>                                                     <C>           
Write-off of remaining goodwill                         $   (488,400) 
Accrue employee benefits related to                                   
  terminated and transferred employees                      (643,700) 
Revalue of furniture, fixtures and equipment                (373,100) 
Accrue lease obligation                                     (154,600) 
Accrue legal expenses related to the sale                   (110,000) 
Write-off printing stock                                     (97,100) 
Reduce bonus accrual, related to terminated                           
  and transferred employees                                  195,000  
Write-off deferred rent for assumed lease                     65,200  
Reduce business promotion accruals                            50,200  
                                                           ---------   
</TABLE>
Total restructuring charge in fiscal 1996               $ (1,556,500)
                                                          ==========

     In addition, in conjunction with the sale, the Company issued a limited
indemnification agreement to MINC. The agreement covers potential customer
claims arising from activity prior to the sale.

     During the year ended June 30, 1997, the Company earned $2,157,900 from the
Sale of Assets. Such earnings are included in other revenue in the Statements of
Operations.

     Given the Sale of Assets, the Company no longer has a need to own exchange
memberships or clearing corporation stock. All memberships and stock owned as of
June 30, 1996 were sold during 1997 at a net gain of $737,700.

NOTE 18 - SUBSEQUENT EVENT

     On August 1, 1997, the Company consummated documentation of a transaction,
effective as of April 1, 1997, whereby The Park Trust, an affiliate of IFX
Ltd.'s two principal salesmen, Graham Wellesley and Lorenzo Naldini, subscribed
for slightly less than 50% of the stock of IFX Ltd. The subscription price of
$2,448,464 was funded with $100,000 in cash and a subscription payable from The
Park Trust for the remaining $2,348,464 of the purchase price. The subscription
payable will be funded out of dividends from IFX Ltd. which would otherwise be
paid to The Park Trust, as provided in a stockholders agreement among the
Company, IFX Ltd. and The Park Trust (the "Agreement"). Following the
restructuring of IFX Ltd., the Company owns slightly greater than 50% of IFX
Ltd., and is deemed to have a controlling interest.

     The subscription by The Park Trust was effected through a restructuring of
IFX Ltd.'s capital. The 2,448,465 ordinary $1.00 par shares, already issued and
held by the Company, were redesignated as "A" ordinary $1.00 par shares. In
addition the authorized share capital of IFX Ltd. was increased by the creation
of 322,829 new "B" ordinary $1.00 par shares and the 2,125,635 unissued ordinary
$1.00 par shares were converted into a like number of "B" ordinary $1.00 par
shares. The 2,448,464 "B" ordinary $1.00 par shares were then subscribed for by
The Park Trust as described above.

                                      -41-
<PAGE>
 
                       IFX CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
                                        

     Following the subscription by The Park Trust, the Company and The Park
Trust are entitled to profit distributions according to their respective
ownership percentages, based upon stipulations set forth in the Agreement.

     Prior to the subscription, under their original employment contracts, the
three principal salesmen of IFX Ltd., namely Messrs. Wellesley and Naldini, and
a third individual whose employment with IFX Ltd. was terminated, who together
were primarily responsible for establishing the business of IFX Ltd., were
entitled to 50% of the pre-tax profits of IFX Ltd. One-half of such amount was
payable quarterly, with the remaining one-half payable at the end of the fiscal
year, adjusted for subsequent losses, if any. These salesmen were also entitled
to share in up to 50% of any premium, as defined, which might be generated if a
change in ownership of IFX Ltd. occurred, depending upon when such a change
happened. Since these contracts were entered into, business at the IFX Ltd. has
grown substantially, requiring that the Company provide additional capital for
regulatory purposes to IFX Ltd.

     In March, 1997, the Company and IFX Ltd. renegotiated the employment
contracts of Messrs. Wellesley and Naldini. As a result of this renegotiation,
their existing employment contracts were terminated, new ones were executed, and
the Company agreed, in principal, to issue shares of IFX Ltd. to The Park Trust
at book value. Under the new arrangement, the remaining two principal salesmen
receive a modest salary rather than a profit share.

     In settlement of their original employment contracts, Messrs. Wellesley and
Naldini have agreed to accept the one-half of profit share which was payable to
them quarterly for the first nine months of the fiscal year ending June 30, 1997
($641,000) less any draws that had been previously taken) and to waive any
rights to the one-half profit share ($641,000) which would have otherwise been
due to them on June 30, 1997. As IFX Ltd. had been accruing the fiscal year-end
one-half profit share which would have been due to Messrs. Wellesley and Naldini
on June 30, 1997, it was able to reduce its compensation and related benefits
expenses by $641,000 for the quarter ended March 31, 1997 as a result of this
settlement. The third salesman who was terminated received full payment in
February 1997 for his deferred profit share under the terms of his employment
contract.

                                     -42-
<PAGE>
 
                                                                     SCHEDULE II
<TABLE>
<CAPTION>

                        IFX CORPORATION AND SUBSIDIARIES
                       Valuation and Qualifying Accounts

 
                                                     Additions
                                                ---------------------                                     
                                               Charged to
                                               (Benefits   Charged
                                    Balance at  Against)  to Other                       Balance
                                    Beginning  Costs and   Accounts      Deductions      at End of
Description                         of Period  Expenses    (Describe)    (Describe)      Period
-----------                         ---------  ---------   ---------     ----------      ---------
<S>                                 <C>        <C>         <C>           <C>             <C> 
Allowance for douftful accounts
 
For the year ended June 30, 1997     $409,300  $(119,300)  $149,600(b)   $  (9,600)(a)    $430,000
 
For the year ended June 30, 1996     $191,900  $ 140,600   $144,800(b)   $ (68,000)(a)    $409,300
 
For the year ended June 30, 1995     $506,600  $(586,000)  $323,900(b)   $ (52,600)(a)    $191,900
 
</TABLE>


_______________________________

(a)   Uncollected receivables written off.

(b)   Collection of receivables previously written off.

                                      -43-