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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
                       [X] ANNUAL REPORT UNDER SECTION 13
                 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000



                           Commission File No. 0-17973


                               I-LINK INCORPORATED
                (Name of registrant as specified in its charter)

                    FLORIDA                                52-2291344
          (State or other jurisdiction                  (I.R.S. Employer
      of incorporation or organization)              Identification Number)

    13751 S. WADSWORTH PARK DRIVE, SUITE 200, DRAPER, UT 84020 (801/576-5000)
          (Address and telephone number of principal executive offices)

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

Securities registered pursuant to Section 12(b) of the Exchange Act: None.

Securities registered pursuant to Section 12(g) of the Exchange Act: Common
Stock, $.007 par value.

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past twelve months (or for such
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 [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K contained in this form, and no disclosure will 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]

The aggregate market value of Common Stock held by non-affiliates based upon the
closing bid price on March 14, 2001, as reported by The Nasdaq Stock Market, was
approximately $17,566,000.

As of March 14, 2001, there were 95,111,785 shares of Common Stock, $.007 par
value, outstanding.
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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

OVERVIEW

     We are an integrated voice and data communications company focused on
simplifying the delivery of "Unified Communication." Unified Communication is
the integration of traditional telecommunications with new data IP (Internet
Protocol) communications systems with the effect of simplifying communications,
increasing communication capabilities and lowering overall communication costs.
Unified Communication platforms integrate telecommunication, mobile
communication, paging, voice-over-IP (VoIP) and Internet technologies. Through
our wholly owned subsidiaries, I-Link Communications, Inc. and I-Link Systems,
Inc., we provide enhanced telecommunications services on a wholesale and retail
basis. Through our wholly-owned subsidiaries, MiBridge, Inc., and ViaNet
Technologies Ltd., we undertake the research and development of new
telecommunications services, products and technologies, and the licensing of
certain of these products and technologies to other telecommunications
companies. We are a leader in the delivery of unified communications as a result
of five core technology offerings: I-Link's Intranet, Softswitch Plus(TM),
GateLink(TM), (TM)and Indavo(TM).

CORE TECHNOLOGIES

I-Link's Intranet

     Our real-time IP communications network ("RTIP Network") consists of a
nationwide, dedicated network of equipment and leased telecommunications lines
augmented by our developed IP software. The RTIP Network is an IP-based network
like the Internet; however, it is dedicated for use only by us and our customers
- an INTRANET. The RTIP Network provides the platform for the enhanced service
applications developed by us and other third-party applications developers who
partner with us. The RTIP Network is composed of an IP backbone that ties
together local loop dial-up and broadband connections via major hubs
strategically located in major metropolitan areas throughout the United States.
Through proxies, the RTIP Network is able to integrate SS7, Wireless, Public
Switch Telephone Networks (PSTN), the Internet, and next generation network
protocols such as SIP, MGCP, and H323 into one interoperable platform. The
architecture and technological approach used by the RTIP Network has resulted in
cost and capability breakthroughs unattainable through traditional circuit
switch telecommunications networks, while maintaining the high voice-quality and
reliability associated with traditional circuit switch networks. A more detailed
description of the RTIP Network is included below.

Softswitch Plus(TM)

     Softswitch Plus(TM) is the operating system that ties together all of our
core services that are available both to end users and third-party applications
developers. Much like a PC's operating system integrates hardware elements such
as disk drives, monitors, network interface cards, memory, and other computer
elements, Softswitch Plus(TM) integrates communication elements such as
connection services, voice recognition, interactive voice response (IVR)
services, text-to-speech services, unified messaging, conference call services,
operation support systems (OSS) and other application servers and communication
elements created by us and/or other third-party applications developers. These
software components are called "media servers" and the software layer that ties
these together is called a "softswitch." Our Softswitch Plus(TM) greatly
simplifies new application development as well as reduces infrastructure costs.

GateLink(TM)

     GateLink(TM) is a powerful set of developer tools that serves as the
mechanism for creating new applications, user services and solutions that can be
hosted within our RTIP Network. Companies determined to build real time
communication services are faced with many challenges, such as developing the
solution, building the network in which the solution will operate, defining the
OSS system to properly provision and bill for the new services. GateLink(TM)
greatly simplifies this process by confining it to

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developing the application. Once the application is developed it can be
certified by us and then deployed within the RTIP Network.

     GateLink(TM) is our mechanism to create new value and stimulate growth from
other communications services providers. GateLink(TM) allows third-party
developers to create applications that reside on our RTIP Network that deliver
monthly reoccurring charge (MRC) revenues as well as minute-traffic revenues to
us. With GateLink(TM), we are able to facilitate the creation of new
communications applications that open new business opportunities, market
segments, and distribution channels. Communications applications currently in
development with GateLink(TM) partners include:

-    ACD (automated call distribution) - an application in demand by the call
     center market;

-    Auto Attendant - an application which functions as an electronic assistant
     allowing small businesses, home offices, and remote enterprise sites to
     coordinate in-coming communication;

-    IP PBX which is an IP (internet protocol) PBX system developed with our
     Indavo(TM)and related software products;

-    IP Centrix - Centrix is an industry standard application suite that puts
     the intelligence of communication coordination within the network. IP
     Centrix simply implements these features using an IP network and IP
     protocols as well as VoIP capabilities; and

-    Web Conferencing which manages conferencing calls via a web interface.

V-Link(TM)

     V-Link(TM), one of the applications hosted within our RTIP Network, is a
powerful suite of basic and enhanced telecommunications services created by us
to meet the communication needs of the residential, SOHO (small office/home
office) and SME (small-to-medium enterprise) consumer. V-Link(TM) services
include:

     -    ENHANCED LOCAL OR LONG DISTANCE SERVICE. Long distance calls can be
          made at significantly lower costs.

     -    SINGLE NUMBER SERVICE. Set up to ring a subscriber's office phone,
          home office phone, cellular phone (or any phone number the subscriber
          specifies) and pager simultaneously so that he may be reached wherever
          he is, and without the caller having to try multiple numbers or know
          his party's current location.

     -    CALL SCREENING/CALL WHISPER. The subscriber can hear the name of the
          person calling before deciding to accept the call or send it to voice
          mail. If the subscriber receives a new call while already engaged in a
          call, the name of the new caller is "whispered" to the subscriber in a
          manner that is inaudible to the other call participant.

     -    CALLER HOLD. The subscriber can put a caller on hold, with music on
          hold.

     -    CONFERENCE CALLING. Provides the ability to conference in up to 9
          people at one time.

     -    PORTABLE FAX. The subscriber receives a fax to his Single Number
          Service, he is notified that there is a fax in his mailbox, and he can
          choose to route the fax to any fax machine, or to his e-mail through a
          fax-to-e-mail gateway.

     -    VOICE MAIL. Enables callers to leave recorded messages that can be
          retrieved, saved, forwarded, etc.

     Subscribers access their V-Link(TM) service through an assigned local
and/or toll-free (800) number (that also can become a single, convenient
telephone number through which others call and fax the subscriber). Once inside
the V-Link(TM) enhanced communications environment, all of the subscriber's
communications functions are handled over our RTIP Network, with its associated
benefits and capabilities - regardless of the call origination point. For
example, long distance calls are routed primarily through the RTIP Network, and
secondarily through the traditional public switched telephone network where
needed to

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ensure full geographic coverage. In addition to long distance calling
capability, entering the V-Link(TM) communications environment affords the user
a multitude of enhanced capabilities without the need for any special equipment.
Once the communications session is established by logging-in to V-Link(TM) from
any telephone, a subscriber has the ability to perform multiple operations
within the session (multiple long distance calls, call screening, voice mail,
fax, conference calling, etc.).

Indavo(TM) Line Capacity Expansion Device

     We have developed Indavo(TM). From a single standard telephone line the
Indavo(TM) device can simultaneously (1) create the capacity of multiple lines
carrying simultaneous calls while performing other communications functions
("multiplexing"), (2) provide the inter-office/home functionality of a PBX, and
(3) maintain a persistent Internet connection. In other words, through a single
standard telephone wire and line, the customer and his or her family members or
business associates can, from multiple phones, fax machines, and computers
within the customer's home or business premises, simultaneously carry on
multiple independent or conference telephone calls, receive or send faxes as if
on one or more dedicated fax lines, and maintain a persistent Internet
connection, without sacrificing quality or functionality. Indavo(TM) provides
the capacity of up to 24 lines using the existing telephone wires connected to
the customer's home or office. With the Indavo(TM) device connected to a single
standard telephone line within the customer's home or business office, the
customer obtains the following benefits:

     MULTIPLEXING. Multiple independent telephone calls and fax send/receive
calls can be simultaneously carried on from multiple phones and fax machines
within the customer's home or business office, with no degradation of quality.

     VIRTUAL PBX FUNCTIONALITY. The functionality of a PBX system, normally
obtainable through the acquisition of a costly equipment and software system, is
achieved over the existing telephones within the customer's home or office.
These include inter-home/office call conferencing, call forwarding, etc.

     PERSISTENT V-LINK(TM) CONNECTION. Through Indavo(TM), the customer is
always connected to the V-Link(TM) enhanced services environment and can fully
utilize all of the services provided by V-Link(TM) (and additional enhancements)
without the need to dial into the V-Link(TM) service.

     PERSISTENT INTERNET CONNECTION. Through Indavo(TM), the customer is able to
maintain a persistent connection to the Internet, usually obtainable only
through the purchase by the customer and on-site installation of specialized
equipment (a router).

     Indavo(TM) obviates the need for the customer to purchase multiple
telephone lines, a PBX system, and routing equipment, as well as provides both
substantial cost savings and increased functionality to the customer. We
anticipated that a larger capacity version of the Indavo(TM) device will be
marketed to traditional telecommunications carriers to provide a low-cost and
more functional alternative to the costly and functionally-limited switches now
required within their infrastructure.


I-LINK'S RTIP NETWORK

     Our communications services, as well as applications and services developed
by certified third-party developers, are carried over our RTIP Network. The RTIP
Network is a packet-based network established by us and composed of an IP
backbone that integrates local loop dial-up and broadband connections via
multiple routing facilities or "Hubs" strategically established in large
metropolitan areas nationwide. Each of these Hubs is comprised of off-the-shelf
hardware elements and our proprietary software. Figure 1 shows an architectural
view of a RTIP Hub.

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                                   [PICTURE]



                                   [PICTURE]

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     Our technology enables the user to employ its existing telephone, fax
machine, pager or modem to achieve high-quality communications with other
conventional communications equipment, while exploiting the capabilities of IP
technology. The RTIP Network is comprised of leased and dedicated lines carrying
telecommunications transmissions converted into a data format (TCP/IP). Network
access points ("gateways") comprised of sophisticated communications equipment
and proprietary software, which we call Communication Engines(TM), are used to
integrate our Intranet with the traditional telecommunications network. The
Communication Engine, including the software and firmware, represents our
patent-pending technology. Through the Communication Engines, the RTIP Network
receives traffic from the public switched telephone network as a TDM stream
(time division multiplexing) and converts it to IP data packets. The data is
converted from the PCM (pulse code modulation) format standard, which is the
traditional telephony standard, to our proprietary coding. Our proprietary
coding can distinguish among and handle voice, fax and modem communications
differently. Voice is compressed using a voice coder or codec, fax and modem
traffic are demodulated/modulated. The data can then be stored (such as
recording a message), altered (as in changing a fax call from 14400 BPS to 9600
BPS) or redistributed to multiple recipients (as in the case of conferencing).
Our gateways are flexible such that the RTIP Network can readily integrate with
other carriers' protocols and infrastructure. Accordingly, we are also capable
of leveraging the access infrastructure of other carriers, resellers, and
Internet service providers (ISPs) and wholesaling our enhanced services to these
providers and their customers while avoiding the need to build additional access
infrastructure.

     Unlike the traditional telecommunication network, the RTIP Network uses
TCP/IP as its communication protocol. This is the same protocol used by the
Internet for computer-to-computer communication. We utilize TCP/IP because of
the potential for interoperability between diverse technologies. This protocol
provides the potential for the RTIP Network to integrate fax, voice, e-mail,
websites, video conferencing, speech recognition servers, intelligent call
processing servers, Internet Information servers, and other technologies in an
efficient way. Not all of these technologies are currently implemented within
the RTIP Network. However, because communication is being carried over a TCP/IP
protocol these solutions can be integrated into our offerings at a fraction of
the cost of traditional telecommunication implementations. The advantage of
communication via the TCP/IP protocol is that it allows for efficient
integration of many enhanced information services as noted above. We do not need
to build all of the services that are presented to the user; it can easily
integrate additional services because the communication protocol offers
interoperability between all types of conventional communication equipment. The
other advantage to TCP/IP is that the cost of integration is substantially less
as a result of network design. New services, enhancements and updates can be
enabled at a central location and linked automatically to a subscriber's packet
of services, thus eliminating the costs and time restrictions of installing the
enhancement at each physical facility. The result of these benefits is lower
cost with greater capabilities.

Cost Advantages

     The cost advantages realized from the creation and deployment of enhanced
services over the RTIP Network are two-fold: (a) lower transmission costs, and
(b) lower capital infrastructure costs. Lower transmission costs result from the
inherent maximization of capacity in an IP-based "packet-switch" architecture
(like the Internet and I-Link's RTIP Network) as opposed to traditional
"circuit-switch" telecommunication architecture. A packet-switch network
converts the information being carried (such as a voice call) into a series of
data packets and is able to fill the entire capacity of the network with these
data packets simultaneously during transmission, while a traditional
circuit-switch network processes a single call at a time. Simply put, an
IP-based packet-switch network makes more efficient use of its fixed-cost
capacity than does a traditional circuit-switch network. The benefit to capital
infrastructure costs can be seen by recognizing that a traditional enhanced
service platform (a "platform" is the equipment and software required to provide
a particular service to customers) - such as a conference calling platform for
example - must be purchased and installed by the communications provider to work
alongside a traditional telecommunications switch (a "switch" is a large,
sophisticated piece of telecommunications equipment through which calls are
routed, and that has a given capacity of calls that can simultaneously be
handled). The traditional switch, which is unable to process anything but
low-level signals, must pass an incoming call for conferencing (in our example)
to a special conference call switch for processing. These types of

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special switches are highly expensive, costing providers hundreds of thousands
of dollars each. Because the transmission within the RTIP Network has been
converted to an IP signal, the given enhanced service (conference calling in our
example) occurs within a software-defined network handled through standard
personal computers, rather than a hardware - or equipment - defined network
requiring special and redundant, costly telecommunications switches for each
enhanced service offered. We are able to provide users these services at a
fraction of the cost of a traditional communication services provider, because
users are able to avoid the capital expense of acquiring, installing and
servicing an array of special switches. Lower costs in both the cost of
transmission and the capital infrastructure to provide the services, results in
lower costs to the customer.

Flexible Integration

     In addition to the conference calling service discussed above, consider a
provider that offers many combined services. In a traditional telecommunications
network, each service - voicemail, fax mail, conference calling, single number,
etc. - must be processed through one or more separate, non-integrated switches,
with the customer being assigned a separate number for each service: "call this
number to send me a fax, . . . call this number for my voice mail, . . . call
this number for my conference call," etc. Again, because our services are
provided in an IP environment and a software-defined network, all of these
services can be easily integrated through one switch and function utilizing one
customer number. Our IP environment also provides for the easy integration of
additional new services as they are developed and introduced.

     Because of the expanded capabilities and capacity of the RTIP Network, our
goal is to "resale" our core technologies as many times as possible to other
telecommunications service providers and application developers on a wholesale
basis as well as to the residential/SOHO/SME market.


DISTRIBUTION CHANNELS

Wholesale

     Wholesale distribution channels leverage our established network and
services to distribute to their customer base. Such wholesale channels use (or
lease from us) their own sales, billing, customer care and collection. The
wholesale channel consists of two types of partners: third-party application
developers and their customers, and telecommunications service providers.

     Third-Party Application Developers

     We provide application-hosting services to other third-party applications
developers and their respective customers on a wholesale basis. Third-party
developers who create new applications and solutions with GateLink(TM) are able
to host these services within our RTIP Network. These hosted services are then
made available to the third-party developers' channels of distribution and
customers. We also offer these third-party applications to our other sales
channels. Using our RTIP Network to host new applications greatly simplifies and
expedites getting new services to market.

     Telecommunications Service Providers

     We sell our enhanced services products on a wholesale basis to Big Planet,
Inc., (a subsidiary of Nu Skin Enterprises, Inc.), a telecommunications service
provider. Big Planet, in turn, sells these enhanced services to its retail
customers. Big Planet has non-exclusive worldwide rights to market and sell our
products and services through the network marketing (sometimes referred to as
"multi-level") sales channel to residential and small business users. We also
sell to other wholesale customers.

     We intend to sell our enhanced services on a wholesale basis to other
service providers, such as CLECs (Competitive Local Exchange Carriers), ILECs
(Independent Local Exchange Carriers), ISPs (Internet Service Providers), and
other alternate service providers. These telecommunications service

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providers can bundle V-link(TM) and other third-party developed services by
connecting to the RTIP Network through one of our major hubs located
strategically throughout the United States.

Retail

     We market our enhanced communications services directly to retail customers
primarily through two methods, "Enterprise" marketing and direct acquisition of
retail customer bases.

     Enterprise Marketing

     We are currently marketing our enhanced communications services to
businesses and associations ("Enterprises") for personal use by their
employee/member base. The Enterprise provides the communications hook-up between
its existing telecommunications system and our RTIP Network (typically through a
T-1 or other similar telecommunications line connection), thereby enabling its
employees or members to have direct, two-digit ("00") access to V-Link(TM)
services and other third-party communications applications available on our RTIP
Network via their existing telecommunications system and telephone numbers. It
also provides direct four-digit extension inter-office communications
capabilities between multiple locations worldwide. Enterprise marketing is
currently being beta-tested with initial Enterprise customers.

     Acquisitions of Existing Customer Bases

     We intend to accelerate the expansion of our customer base through the
strategic acquisition of other existing customer bases and/or the acquisition of
service providers controlling existing customer bases. However, there can be no
assurance that we will be successful in the acquisition of other customer bases
or acquisition of other service providers.

HISTORY

     We began our research and development activities in 1995. In 1997, we began
providing telecommunications products and services over the traditional public
switched telephone network and created the RTIP Network through the deployment
of our IP technology. Also in 1997, we launched a direct-sales marketing
company, I-Link Worldwide, LLC, to market products and services to the
residential and small business markets.

     In August 1997, we acquired MiBridge, Inc. ("MiBridge"), a New Jersey-based
communications technology company engaged in the design, development,
integration and marketing of a range of software telecommunication products that
support multimedia communications over the public switched telephone network
(PSTN), local area networks (LAN) and the Internet. Historically, MiBridge
concentrated our development efforts on compression systems such as voice and
fax over IP. MiBridge developed patent-pending technologies that combine
sophisticated compression capabilities with IP telephony technology. The
acquisition of MiBridge permitted us to accelerate the development and
deployment of this IP technology and add strength and depth to our research and
development team. It also provided us with the opportunity to generate income
and develop industry alliances through the strategic licensing of these
technologies to other industry leaders, such as Lucent Technologies, Nortel,
IDP, Brooktrout, Analogic and others. In late 1997, we formed ViaNet
Technologies, Ltd., headquartered in Tel Aviv, Israel, to undertake advanced
research and development of the Indavo(TM) line capacity expansion device.

     In February 2000, we transitioned our direct-sales marketing program to Big
Planet, whereupon Big Planet became one of our wholesale customers. While
maintaining our other existing traditional channels for retail sales of products
and services, the transition of the network marketing sales channel to Big
Planet has allowed us to focus our efforts on the expansion of the RTIP Network
and the development and deployment of new enhanced services and products.

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COMPETITION

     The market for business communications services is extremely competitive.
We believe that our ability to compete in this market successfully will depend
upon a number of factors, including the pricing policies of competitors and
suppliers; the capacity, reliability, availability and security of the RTIP
Network infrastructure; market presence and channel development; the timing of
introductions of new products and services into the marketplace; ease of access
to and navigation of the Internet or other such IP networks; our ability in the
future to support existing and emerging industry standards; our ability to
balance network demand with the fixed expenses associated with network capacity;
and industry and general economic trends.

     While we believe there is currently no competitor in the North American
market providing the same capabilities in the same manner afforded by the RTIP
Network, there are many companies that offer communications services, and
therefore compete with us at some level. These range from large
telecommunications companies and carriers such as AT&T, MCI Worldcom, Sprint,
Excel, Level3 and Qwest, to other VoIP carriers such as iBasis, ITXC, small,
regional resellers of telephone line access, to companies providing Internet
telephony. These companies, as well as others, including manufacturers of
hardware and software used in the business communications industry, have
announced plans to develop future products and services that are likely to
compete with our products on a more direct basis. These entities may be better
capitalized and may control significant market shares in their respective
industry segments. In addition, there may be other businesses that are
attempting to introduce products similar to ours for the transmission of
business information over the Internet. There is no assurance that we will be
able to successfully compete with these market participants.

GOVERNMENT REGULATION

     GENERAL. Traditionally, the Federal Communications Commission (the "FCC")
has sought to encourage the development of enhanced services as well as
Internet-based services by keeping such activities free of unnecessary
regulation and government influence. Specifically in the area of
telecommunications policy and the use of the Internet, the FCC has refused to
regulate most on-line information services under the rules that apply to
telephone companies. This approach is consistent with the passage of the
Telecommunications Act of 1996 ("1996 Act"), which expresses a Congressional
intent "to preserve the vibrant and competitive free market that presently
exists for the Internet and other interactive computer services, unfettered by
Federal or State regulation."

     FEDERAL. Since 1980, the FCC has refrained from regulating value-added
networks ("VANs"), software or computer equipment that offer customers the
ability to transport data over telecommunications facilities. By definition, VAN
operators purchase transmission facilities from "facilities-based" carriers and
resell them packaged with packet transmission and protocol conversion services.
Under current rules, such operators are excluded from regulation that applies to
"telecommunications carriers" under Title II of the Communications Act.

     In the wake of the 1996 Act, however, the FCC is revisiting many of its
past decisions. The FCC could impose common carrier regulation on some of the
transport and resale telecommunications facilities used to provide
telecommunications services as a part of an enhanced or information service
package. The FCC also may conclude that our protocol conversions, computer
processing and interaction with customer-supplied information are insufficient
to afford us the benefits of the "enhanced service" classification, and thereby
may seek to regulate some of our operations as common carrier/telecommunications
services. The FCC could conclude that such decisions are within its statutory
discretion, especially with respect to voice services. In December 1999, for
example, the FCC found that it had regulatory authority over ILEC advanced
services. In addition, the FCC is considering whether IP telephony services and
networks should be made available to persons with disabilities and whether
providers of these services and networks must comply with the FCC rules for
persons with disabilities.

     We are in the process of moving our customers off the facilities of
existing long distance carriers. We have also increased our reliance on a
proprietary Internet protocol network involving the provision of

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information services, which we believe, qualifies as an exemption from common
carrier regulation under current FCC rules. Historically, the FCC has not
regulated companies that provide the software and hardware for Internet
telephony or other Internet data functions as common carriers or
telecommunications service providers. Moreover, in May 1997 the FCC determined
that information and enhanced service providers are not required to contribute
to federal universal service funding mechanisms. This decision was later
reaffirmed in April of 1998 in an FCC report to Congress.

     Notwithstanding the current state of the rules, the FCC's potential
jurisdiction over the Internet is broad because the Internet relies on wire and
radio communications facilities and services over which the FCC has
long-standing authority. The FCC's framework for "enhanced services" confirms
that the FCC has authority to regulate computer-enriched services, but provides
that carrier-type regulation would not serve the public interest. Only recently
has this general deregulatory approach been questioned within the industry.

     An early example of deregulatory pressure is in the March 1996 initiative
of America's Carriers Telecommunications Association ("ACTA"), a trade
association primarily comprised of small and medium-size interexchange carriers.
ACTA filed a petition with the FCC requesting the FCC to regulate the Internet
and IP telephony. ACTA argued that providers of software that enables real-time
voice communications over the Internet should be treated as common carriers and
subject to the regulatory requirements of Title II of the Communications Act.
The FCC sought comment on the request and has not yet issued its decision.

     On April 10, 1998, the FCC submitted a report to Congress describing the
effect of its classification of information and telecommunications services on
contributions to universal service charge funds. In this report, the FCC
reiterated its conclusions that information services, and Internet access
services, in particular, are not subject to telecommunications service
regulation or universal service contribution requirements. The FCC did, however,
indicate its belief that certain gateway-based IP telephony services may be the
functional equivalent of a telecommunications service. The FCC deferred a
definitive resolution of this issue until it could examine a specific case of
phone-to-phone IP telephony. Senators from several states with large rural areas
expressed concern that migration of voice services to the Internet could erode
the contribution base for universal service subsidies. Continuing pressure from
those Senators to reclassify Internet telephony as a telecommunications service,
rather than an information service is likely. If reclassification occurs,
Internet telephony will be subjected to a regulatory assessment for universal
service contributions.

     On April 5, 1999, Quest (formerly US West) filed a "Petition for Expedited
Declaratory Ruling" with the FCC in which Quest seeks a declaration that
interexchange carriers ("IXCs") that provide phone-to-phone IP telephony are
telecommunications service providers whose services are subject to access
charges. The crux of the Petition claims that because there is no net protocol
conversion in messages sent and received by IXCs and as IXCs claim to provide
voice telephony, IP telephony does not qualify as an enhanced service under FCC
rules. Quest did not press the matter and, to date, the FCC has not issued a
public notice requesting comment on the petition. We cannot predict with
certainty what the Commission will rule or when. If Quest pursues the petition
and is successful, the FCC could rule that IP telephony service providers are
obligated to pay interstate access charges to local telephone companies for
originating and terminating interstate calls.

     Any FCC ruling that Internet-based service providers should be subject to
some level of Title II regulation could affect the manner in which we operate,
to the extent it uses the Internet to provide facsimile or voice capabilities.
Any FCC ruling would also result in additional costs to achieve compliance with
federal common carrier requirements. With the passage of the 1996 Act, the
precise dividing line or overlap between "telecommunications" and "information"
services as applied to Internet-based service providers is uncertain.
Consequently, our activities may be subject to evolving rules as the FCC
addresses novel questions presented by the increased use of the Internet to
offer services that appear functionally similar to traditionally-regulated
telecommunications services. At this time, it is impossible to determine what
effect, if any, such regulations may have on the our future operations.

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     STATE. While states have generally declined to regulate enhanced services,
their ability to regulate the provision of intrastate enhanced services remains
an uncertain possibility. For instance, Qwest petitioned Colorado and Nebraska
for a ruling that IP telephony providers must pay access charges for intrastate
calls. The proceeding was dismissed in Colorado and a decision was never reached
in Nebraska. In two recent interconnection decisions, Colorado and Nebraska
declined to classify IP telephony as switched access traffic subject to access
charges. But a recent Florida interconnection arbitration decision ruled
differently. If state regulators or legislators regulate the provision of
intrastate enhanced services it may negatively impact our ability to provide
enhanced services in any state that assesses access or universal service charges
against us.

DELIVERY OF SERVICES OVER EXISTING SWITCHED TELECOMMUNICATIONS NETWORKS

     A portion of our communications services are delivered over existing
switched telecommunications networks through our subsidiary, I-Link
Communications, Inc., a long distance telecommunications carrier that provides
long distance service to all 50 states of the United States. Access to the
switched telephone network is a necessary component of the RTIP Network to
ensure full geographic coverage of the RTIP Network in lesser-populated
geographic areas that are not serviced by one of the RTIP Network's Hubs. We
maintain traditional switch facilities in Dallas, Los Angeles, Phoenix, and Salt
Lake City.


ITEM 2. DESCRIPTION OF PROPERTY.

     We lease approximately 41,897 square feet of space for office and other
facilities in Draper, Utah pursuant to commercial leases with original terms of
five to seven years. These leases expire between 2001 and 2004 subject to our
right to extend for an additional five years. The current aggregate base rent is
approximately $39,000 per month. I-Link also leases several other co-location
facilities throughout the United States to house its Communication Engines. Such
spaces vary in size and length of term.

     We currently lease and occupy approximately 4,100 square feet of office
space in Phoenix, Arizona, pursuant to a commercial lease dated June 1, 2000.
The lease term is for five years commencing June 2000 beginning with a current
base rent of approximately $6,600 per month.

     On October 6, 2000, we purchased an office building located in Salt Lake
City, Utah consisting of approximately 14,250 square feet. We occupy the first
floor of the building and lease the second floor pursuant to a commercial lease,
dated June 1997. The lessee's lease term is for five years commencing June 1997
with a base rent of $7, 411. The building is subject to a promissory note in the
amount of $840,000 which is secured by a trust deed against the building and a
certificate of deposit in the amount of $200,000.

     MiBridge rents approximately 3,600 square feet of office space in
Eatontown, New Jersey under a five-year commercial lease effective December 1,
1997 at a cost of approximately $5,200 per month.

     Vianet Technologies leases approximately 1,400 square feet of office space
in Tel Aviv, Israel at a cost of approximately $2,200 per month. The lease
expires in February 2002.


ITEM 3. LEGAL PROCEEDINGS.

I-LINK INCORPORATED V. RED CUBE INTERNATIONAL AG, AND RED CUBE, INC., Case No.
2:01CV0049C, United States District Court, District of Utah, Central Division.

     We filed suit against Red Cube, International AG and Red Cube, Inc. ("Red
     Cube") on January 18, 2001, seeking damages against Red Cube for an alleged
     default on an agreement to provide approximately $60,000,000 in equity
     funding to I-Link, and instituting a scheme to drive us out of business and
     obtain control of our proprietary technology, telecommunications network,
     key

                                       11
<PAGE>

     employees and customers. While we obtained an initial temporary restraining
     order against Red Cube preventing Red Cube from interfering with our
     employees, vendors and customers, Red Cube subsequently filed a motion to
     dismiss the action and compel arbitration based upon a mandatory
     arbitration provision in the May 2000 Cooperation and Framework Agreement
     by and between I-Link and Red Cube. The court found that our claims were
     "related to" the Cooperation and Framework Agreement and granted Red Cube's
     motion to dismiss the action for lack of subject matter jurisdiction.

IN THE ARBITRATION MATTER OF RED CUBE INTERNATIONAL AG, V. I-LINK INCORPORATED,
before the American Arbitration Association, New York, New York, AAA # 50 T 117
0002B 01.

     On or about January 24, 2001 Red Cube International, AG delivered to us a
     written demand for arbitration under the May 2000 Cooperation and Framework
     Agreement between the parties. Red Cube's demand constituted written notice
     of an alleged breach of the Cooperation and Framework Agreement stemming
     from I-Link's (i) threatening a shut-down of our IP telecommunications
     network, (ii) the resignation of Dror Nahumi as our employee, which Red
     Cube claims will cause us to breach our undertaking to provide the
     consulting services of John Edwards, Dror Nahumi and Alex Radulovic in the
     event we are unable to perform under the Agreement and Red Cube is required
     to assume primary operation and maintenance of it's own IP
     telecommunications network based upon our technology, and (iii) our alleged
     failure to update the escrowed copy of its source code to the current
     version of the source code employed to maintain the IP telecommunications
     network. We denied these allegations, filed a counterclaim against Red Cube
     International, AG and filed a third-party claim against Red Cube, Inc,
     seeking (compensatory and/or punitive) damages for Red Cube's default under
     a subsequent agreement to provide approximately $60,000,000 in equity
     funding to us, engaging in a scheme to drive us out of business and obtain
     control of our proprietary technology, telecommunications network, key
     employees and customers. The arbitration proceeding is in its initial
     stage, and no hearings have occurred.

STEVEN J. LITTLE, DBA, FREEDOM ENTERPRISES V. I-LINK WORLDWIDE, L.L.C.,
MEDCROSS, INC., I-LINK INCORPORATED, JOHN DOES I-X, Civil No. 990908018, in The
Judicial District Court of the Third Judicial Court in and For Salt Lake County,
State of Utah and STEVEN J. LITTLE, DBA, FREEDOM ENTERPRISES V. I-LINK
WORLDWIDE, L.L.C., MEDCROSS, INC., I-LINK INCORPORATED, before the American
Arbitration Association, Case No. 81 181 00118 00 VSS.

     Steven J. Little is a former independent representative of I-Link
     Worldwide, L.L.C. whose contractual relationship consisted of I-Link's
     standard independent representative agreement and two written agreements
     between himself, I-Link and I-Link Worldwide, LLC. Mr. Little filed the
     above action alleging that I-Link Incorporated and I-Link Worldwide, LLC
     wrongfully terminated his written agreements. Mr. Little's claims for
     damages range from $7,000,000 to $10,000,000 constituting the alleged
     aggregate value of the residual terms of these agreements. I-Link
     Incorporated and I-Link Worldwide, LLC maintain that Mr. Little's written
     agreements were properly terminated pursuant to the written terms and
     conditions of those agreements and therefore Mr. Little has suffered no
     damages. Binding arbitration is tentatively scheduled to start April 23,
     2001.

On March 10, 2000, the Company and JNC Opportunity Fund, Ltd. ("JNC") entered
into a settlement and release agreement relating to certain litigation
concerning shares of Series F Preferred stock held by JNC. The shares of Series
F Preferred stock held by JNC were convertible into 1,104,972 shares of common
stock under the original agreement with JNC. On March 10, 2000, the Company
issued 531,968 shares of common stock to JNC pursuant to the settlement
agreement in cancellation of the Series F shares held by JNC. The balance of the
shares required to be issued pursuant to the settlement agreement required
approval at a special meeting of the shareholders held on May 23, 2000, at which
time approval of the shareholders was received. Due to the delay in issuance of
the shares required to be issued pursuant to the settlement agreement until
shareholder approval was received and the related common shares were registered,
the Company issued 20,458 "Additional Shares" of common stock in accordance with
the agreement.

                                       12
<PAGE>

     We are involved in litigation relating to claims arising out of our
operations in the normal course of business, none of which is expected,
individually or in the aggregate, to have a material adverse affect on us.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     Our annual meeting of shareholders was held on October 2, 2000 at which
five proposals were considered and passed by the stockholders as follows:

     1.   Messrs. Henry Y. L. Toh and Hal B. Heaton were re-elected as Class 2
          Directors of I-Link. Mr. John W. Edwards, Mr. Thomas A. Keenan and Mr.
          David R. Bradford continued as Directors.

     2.   PricewaterhouseCoopers LLP was appointed as our independent public
          accountants. The vote was 39,258,011 for, 166,888 against and 107,939
          abstained.

     3.   The 1997 Recruitment Stock Option Plan was amended to increase the
          amount of shares of common stock eligible for issuance under that Plan
          from 4,400,000 to 7,400,000. The vote was 17,519,669 for, 1,821,885
          against and 1,652,094 abstained.

     4.   The grant of non-qualified options to purchase I-Link's common stock
          to certain executive officers was approved. The vote was 17,288,274
          for, 2,052,425 against and 1,652,949 abstained.

     5.   The establishment of the 2000 Employee Stock Purchase Plan was
          approved. The vote was 18,149,256 for, 1,203,608 against and 1,640,784
          abstained.


                                     PART II

ITEM 5. MARKET FOR I-LINK INCORPORATED'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.

PRICE RANGE OF COMMON STOCK

     Our common stock is traded on The Nasdaq Small-Cap Market ("Nasdaq") tier
of The Nasdaq Stock Market, Inc. under the symbol "ILNK." Although the Common
Stock is currently listed on Nasdaq, there can be no assurance given that we
will be able to continue to satisfy the listing requirements for maintaining
such securities on Nasdaq or that such listing will otherwise continue. We have
no current plans to apply for listing of any preferred shares, warrants or any
of our other securities on Nasdaq.

     On February 14, 2001, we were notified by the Nasdaq Listing
Qualifications Department (the "Nasdaq Staff") that our securities would be
de-listed from The Nasdaq SmallCap Market due to our inability to maintain
our market capitalization above the minimum $35,000,000 required for
continued listing on The Nasdaq SmallCap Market in accordance with the
National Association of Securities Dealers, Inc. rules. Pursuant to the NASD
Rules, we have requested an oral hearing before the Nasdaq Listing
Qualifications Panel (the "Panel") to appeal the Nasdaq Staff's decision to
de-list our securities. The hearing is scheduled for late April 2001.
Pursuant to the same NASD Rule 4820(a), a request for a hearing has stayed
the scheduled de-listing of our securities pending issuance of the Panel's
decision. Should our securities cease to be listed on the Nasdaq SmallCap
Market, I-Link's securities may be listed on the Over-the-Counter Bulletin
Board market.

                                       13
<PAGE>

     The following table sets forth the high and low bid prices for our common
stock for the period as quoted on Nasdaq based on interdealer bid quotations,
without retail markup, markdown, commissions or adjustments and may not
represent actual transactions:

<TABLE>
<CAPTION>
          Quarter Ended                 High Bid       Low Bid
          ------------------            --------       -------
<S>                                     <C>            <C>
          March 31, 1999                  $ 4.13        $ 2.19
          June 30, 1999                     5.50          2.44
          September 30, 1999                4.88          2.50
          December 31, 1999                 4.38          2.25

          March 31, 2000                  $20.00        $ 2.75
          June 30, 2000                    11.88          2.00
          September 30, 2000                5.91          2.00
          December 31, 2000                 3.53          0.75
</TABLE>

     On March 14, 2001, the closing price for a share of our common stock was
$.625.

HOLDERS

     As of March 14, 2001, we had approximately 650 stockholders of common stock
of record and approximately 17,000 beneficial owners


DIVIDEND POLICY

     We must be current on dividends accrued on our Series C and Series M
preferred stock before paying any dividends to common stock holders. Preferred
stock dividends in the amount of $196,333 and $351,868 were paid in 2000 and
1999, respectively, in common stock (non-cash) on the converted shares of Series
F redeemable preferred stock. As of December 31, 2000, dividends in arrears
(undeclared) on Series C and Series M preferred stock were $602,702 and
$4,543,187 respectively. On February 22, 2000, our Board of Directors set a
record date for payment of accrued dividends on Class (Series) C preferred stock
of $563,781 to stockholders of record on February 22, 2000, to be paid in shares
(approximately 125,400) of our common stock (the "Dividend Shares") within ten
business days of the date the Dividend Shares become subject to an effective
registration statement (anticipated in second or third quarter of 2001) under
the Securities Act of 1933, as amended. To date, we have not paid and do not
anticipate that we will pay dividends on our common stock in the foreseeable
future.


ITEM 6. SELECTED FINANCIAL DATA.

     The following selected consolidated financial information was derived from
the audited consolidated financial statements and notes thereto. The information
set forth below is not necessarily indicative of the results of future
operations and should be read in conjunction with "Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements and Notes thereto included elsewhere in
this Form 10-K.

                                       14
<PAGE>

<TABLE>
<CAPTION>
                                                      2000              1999              1998            1997            1996
                                                  -------------     -------------     -------------   -------------   -------------
<S>                                               <C>               <C>               <C>             <C>             <C>
STATEMENT OF OPERATIONS DATA:

Revenues:
    Telecommunications services                   $  18,300,548     $  26,440,017     $  19,634,681   $  11,081,007   $          --
    Marketing services                                  463,740         3,672,988         4,548,421       2,637,331              --
    Technology licensing and
       development                                    8,972,828         2,506,701         1,466,315         346,875              --
    Other                                             2,667,039                --                --              --         170,532
                                                  -------------     -------------     -------------   -------------   -------------
           Net sales                                 30,404,155        32,619,706        25,649,417      14,065,213         170,532
                                                  -------------     -------------     -------------   -------------   -------------
Operating expenses:
    Telecommunications
       network expenses                              24,958,320        20,373,209        19,099,194      14,634,999       1,120,779
    Marketing services costs                            456,354         5,400,149         5,850,873       4,294,014              --
    Selling, general,
       administrative and other                      29,086,550        26,098,700        20,345,293      20,997,262      18,536,090
                                                  -------------     -------------     -------------   -------------   -------------
           Total operating expenses                  54,501,224        51,872,058        45,295,360      39,926,275      19,656,869
                                                  -------------     -------------     -------------   -------------   -------------
Operating loss                                      (24,097,069)      (19,252,352)      (19,645,943)    (25,861,062)    (19,486,337)

Other income (expense)                               (1,655,109)       (4,906,936)       (8,134,130)     (2,806,630)     (2,677,640)
                                                  -------------     -------------     -------------   -------------   -------------
Loss from continuing operations                     (25,752,178)      (24,159,288)      (27,780,073)    (28,667,692)    (22,163,977)

Loss from discontinued
       operations                                            --          (500,000)         (178,006)     (1,191,009)       (900,263)
                                                  -------------     -------------     -------------   -------------   -------------
Net loss                                          $ (25,752,178)    $ (24,659,288)    $ (27,958,079)  $ (29,858,701)  $ (23,064,240)
                                                  =============     =============     =============   =============   =============

Loss from continuing operations
    applicable to common stock                    $ (27,398,996)    $ (33,086,262)    $ (37,621,215)  $(118,360,731)  $ (43,387,606)
                                                  =============     =============     =============   =============   =============
Net loss per common share - basic and diluted:

Loss from continuing operations                   $       (1.03)    $       (1.55)    $       (2.13)  $      (10.07)  $       (6.40)
Loss from discontinued operations                            --             (0.02)            (0.01)          (0.10)          (0.13)
                                                  -------------     -------------     -------------   -------------   -------------
       Net loss per common share                  $       (1.03)    $       (1.57)    $       (2.14)  $      (10.17)  $       (6.53)
                                                  =============     =============     =============   =============   =============
BALANCE SHEET DATA:

Working capital                                   $ (30,060,766)    $  (1,318,640)    $  (4,073,914)  $  (2,955,180)  $   1,305,814
Property and equipment, net                          10,983,273         7,019,361         7,262,781       3,551,917       1,575,769
Net assets (liabilities) of
     discontinued operations                                 --           (82,629)          417,371         595,377       1,668,223
Total assets                                         21,657,492        21,658,199        23,855,363      24,252,876       9,864,696
Long-term obligations                                 2,801,592         9,658,525         8,785,933       1,921,500         236,705
Stockholders' equity (deficit)                      (28,839,061)      (11,049,897)      (16,953,363)        814,376       6,298,617
</TABLE>

     In January 1997, we acquired I-Link Communications, an FCC-licensed long
distance carrier. With the acquisition, we began our telecommunications services
operations. Effective December 31, 1997, we made the decision to discontinue the
operations of our Medical Imaging Division. Our Board of Directors approved the
plan of disposal on March 23, 1998. The net operating activities and net assets
from the Medical Imaging Division are presented separately as discontinued
operations in the above table. Through our wholly-owned subsidiaries MiBridge,
Inc., and ViaNet Technologies Ltd., we pursue research and development of new
telecommunications products and technologies, and the licensing of certain of
these products and technologies to other telecommunications companies. MiBridge
was acquired during the third quarter of 1997 and ViaNet Technologies Ltd. was
formed in the first quarter of 1998.

     During 1997, I-Link formed a wholly owned subsidiary, I-Link Worldwide,
L.L.C., through which we launched a network marketing channel to market its
telecommunications services and products. On February 15, 2000, we signed a
strategic marketing and channel agreement with Big Planet, a wholly owned
subsidiary of Nu Skin Enterprises, Inc. Under the terms of the agreement, our
independent network

                                       15
<PAGE>

marketing sales force (the IRs) transitioned to Big Planet, and Big Planet was
granted the worldwide rights to market and sell our products and services
through the network marketing (sometimes referred to as "Multi-Level") sales
channel to residential and small business users. Our other sales channels into
the residential, small business, and other markets are unaffected by the
agreement with Big Planet. The impact on the results of operations included a
termination of marketing service revenues and marketing service costs effective
February 15, 2000. Additionally, telecommunication service revenues decreased as
we sold our services to the same subscribers through Big Planet at wholesale
prices. The reduction in telecommunications service revenues was partially
offset by a reduction in commissions paid to IRs related to telecommunication
services revenues.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

FORWARD-LOOKING INFORMATION

     THIS REPORT CONTAINS CERTAIN "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27-A OF THE SECURITIES ACT OF `1933, AS AMENDED, SECTION 21-E
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND INFORMATION RELATING TO
I-LINK THAT ARE BASED ON MANAGEMENT'S EXERCISE OF BUSINESS JUDGEMENT AS WELL AS
ASSUMPTIONS MADE BY AND INFORMATION CURRENTLY AVAILABLE TO MANAGEMENT. WHEN USED
IN THIS DOCUMENT, THE WORDS "ANTICIPATE," "BELIEVE," "ESTIMATE," "EXPECT," AND
"INTEND" AND WORDS OF SIMILAR IMPORT, ARE INTENDED TO IDENTIFY ANY
FORWARD-LOOKING STATEMENTS. YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS REFLECT OUR CURRENT VIEW OF FUTURE
EVENTS AND ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES AS NOTED BELOW. SHOULD
ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD UNDERLYING
ASSUMPTIONS PROVE INCORRECT, OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS.

     Although we believe that our expectations are based on reasonable
assumptions, we can give no assurance that our expectations will materialize.
Many factors could cause actual results to differ materially from our forward
looking statements. Several of these factors include, without limitation: our
ability to finance and manage expected rapid growth; the impact of competitive
services and pricing; our ongoing relationship with our long distance carriers
and vendors; dependence upon key personnel; subscriber attrition; the adoption
of new, or changes in, accounting principles; legal proceedings; federal and
state governmental regulation of the long distance telecommunications and
internet industries; our ability to maintain, operate and upgrade our
information systems network; our success in deploying our Communication Engine
network in internet telephony; the existence of demand for and acceptance of our
products and services (including but not limited to V-Link(TM) and Indavo(TM));
the migrating of subscribers from a retail billing basis to a wholesale billing
basis; the continued increasing revenues from GateLink(TM) and other wholesale
clients as well as other risks referenced from time to time in our filings with
the SEC.

     We undertake no obligation and do not intend to update, revise or otherwise
publicly release any revisions to these forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
any unanticipated events.

RESULTS OF OPERATIONS

     When reviewing the operating results for 2000 compared to 1999 and 1998, it
is important to note the significant changes in our operations that occurred in
2000. Prior to February 15, 2000, our telecommunication and marketing service
revenues were primarily dependent upon the sales efforts of independent
representatives (IRs) functioning within a network marketing channel of
distribution which targeted residential users and small businesses in the United
States. These revenue sources depended directly upon the efforts of IRs. IRs
personally solicited potential residential and business customers via one-to-one
sales presentations. At the conclusion of the sales presentations, customers
would sign order forms for our telecommunication products and services
(telecommunication service revenues). IRs received commissions based upon sales
of our products and services to customers who became our subscribers.
Additionally revenues from the network marketing channel prior to February 15,
2000 were recorded at retail whereas after that date the same sales to the
end-users were recorded on a wholesale rate.

                                       16
<PAGE>

     On February 15, 2000, the nature of our telecommunication services revenues
and marketing service revenues relating to the network marketing channel were
significantly changed. On that date we signed a strategic marketing and channel
agreement with Big Planet, a wholly-owned subsidiary of Nu Skin Enterprises,
Inc. Under terms of the agreement, I-Link's IR's transitioned to Big Planet, and
Big Planet was granted rights to market and sell our products and services
through the network marketing (sometimes referred to as "Multi-Level") sales
channel to residential and small business users. Our other sales channels into
the residential, small business, and other markets were unaffected by the
agreement with Big Planet. This agreement had two significant impacts on our
gross revenues.

     -    telecommunication service revenues decreased as we sold our services
          to the same subscribers through Big Planet at wholesale prices. Even
          though our billed minutes increased in 2000 as compared to 1999,
          revenues decreased due to the transition to wholesale. The reduction
          in telecommunications service revenues was partially offset by a
          cessation of commissions paid to IRs related to telecommunication
          services revenues, and

     -    marketing service revenues and marketing service costs ceased
          effective February 15, 2000.

     As a result of this agreement with Big Planet, we ended our involvement in
the network marketing channel and Big Planet became our single largest customer.


     YEAR ENDED DECEMBER 31, 2000 COMPARED TO THE YEAR ENDED DECEMBER 31, 1999

REVENUES

     Net operating revenue in 2000 and 1999 included three primary sources of
revenue which were: (1) telecommunications service; (2) marketing services which
began in June 1997 (and terminated in February 2000 - see "Results of
Operations" above) and includes revenues from the network marketing channel,
including revenues from independent representatives for promotional and
presentation materials and national conference registration fees; and (3)
technology licensing and development revenues related to communications software
that supports multimedia communications over PBX, LAN's and the Internet. In
2000, we also had revenues from other sources including customer services such
as billing, accounts receivable processing, customer care and special consulting
services which were primarily associated with the transition of the network
marketing channel to Big Planet in the first quarter of 2000.

     Telecommunication service revenues decreased $8,139,469 to $18,300,548 in
2000 as compared to $26,440,017 in 1999. The decrease is a direct result of the
agreement with Big Planet effective February 15, 2000. Before February 15, 2000,
our telecommunication services revenues were primarily dependent upon the sales
efforts of IRs functioning within a network marketing channel of distribution.
These revenue sources were recorded at retail. Under terms of the agreement, our
independent network marketing sales force transitioned to Big Planet. This
resulted in a substantial decrease in telecommunication services revenues for
the year 2000 as revenues from subscribers migrating from retail sales to the
sale of services to the same subscribers through Big Planet at wholesale prices.
While a significant portion of the revenues converted to wholesale, we retained
a portion of Big Planet's subscriber base on a retail-billing basis, for which
the Big Planet is paid a commission. Should Big Planet convert this portion of
its business to a wholesale relationship, our reported revenues would decline
and commissions paid on this retail business would decline correspondingly.
Revenues billed to customers of Big Planet have decreased due to the decline in
rate per minute billed of approximately 32% due to the transition from retail to
wholesale, combined with a decrease in subscriber base and lower than expected
new subscriber acquisitions. Big Planet accounted for 46% of our
telecommunication services revenue in the fourth quarter of 2000. Due to
perceived risks relative to our financial condition (prior to the Counsel
Corporation transaction in March 2001), Big Planet signed an agreement to
transition its business to another service provider in the third or fourth
quarter of 2001, contingent upon the new service provider meeting certain
milestones of product and service development. Hence, we cannot predict what
future telecommunication services revenue from Big Planet may be. Part of the
decrease in telecommunications services revenues billed through Big Planet, our
largest wholesale customer, was offset by $3,230,000 in revenues generated from
Gatelink(TM) partners

                                       17
<PAGE>

primarily in the last half of 2000. We expect revenues from Gatelink(TM) and
other wholesale clients to continue to increase in 2001 and beyond. The
percentage of telecommunication services revenue from our second largest
customer during the fourth quarter was 32%. Telecommunication services revenue
from this customer in the first quarter of 2001 is expected to decrease compared
to the fourth quarter of 2000 by approximately 50% as the customer transferred
some of their traffic to other carriers due to concerns relative to our
financial condition in early 2001 (prior to the Counsel Corporation
transaction). We cannot predict what future telecommunication services revenue
from this customer may be.

     Marketing services revenue, which included revenue from independent
representatives for promotional and presentation materials, WebCentre, and
ongoing administrative support decreased $3,209,248 to $463,740 in 2000 as
compared to $3,672,988 in 1999. The decrease was the result of the transition of
this network-marketing channel to Big Planet in February 2000. With this
transition, marketing service revenues ceased.

     Technology licensing and development revenue increased $6,466,127 to
$8,972,828 in 2000 as compared to $2,506,701 in 1999. Revenue from this source
will vary from quarter to quarter based on timing of technology licensing and
development projects and royalties from products previously licensed. During
2000, our increase in these revenues stemmed primarily from the following
sources:

     -    we entered into two licensing agreements that resulted in revenues of
          nearly $4,000,000, and

     -    on May 9, 2000, we entered into an agreement with Red Cube under which
          Red Cube paid us an aggregate sum of $10,000,000 comprised of a
          $7,500,000 licensing fee and $2,500,000 for consulting services. The
          total of $10,000,000 is being recorded as income ratably over a
          two-year period. Accordingly, $3,333,333 was recorded as technology
          licensing revenue in 2000 while the balance of $6,666,667 was recorded
          as unearned revenue as of December 31, 2000.

     Other revenues in 2000 of $2,667,039 includes $2,203,693 relating to
customer care, billing and accounts receivable services performed for wholesale
customers. Revenues from these services in 2001 are expected to approximate the
2000 revenues. During 2000, other revenues also included royalties of $400,000
from the sale of Indavo(TM) units through a distributor to a company that will
not use the Indavo(TM) units over our network.


OPERATING COSTS AND EXPENSES

     Telecommunications network expenses increased $4,585,111 to $24,958,320 in
2000 as compared to $20,373,209 in 1999. The increase is related to the costs of
continuing development and deployment of our communication network and expenses
related to the telecommunication service revenue. While variable costs per
minute have remained comparable to 1999 variable costs, fixed costs have
increased as we continue to build our RTIP network. While network costs
associated with telecommunications services revenues increased, the transition
from retail to wholesale-based revenues resulted in decreased per minute
revenue. However, we continue to incur the same network costs. We do not expect
fix costs associated with our network to increase as we are devoting our efforts
to increasing minute traffic and enhanced services over the existing network
before we undertake additional expansion.

     Marketing services costs decreased $4,943,795 to $456,354 in 2000 as
compared to $5,400,149 in 1999. These costs directly relate to our marketing
services revenue that began late in the second quarter of 1997 and include
commissions and the costs of providing promotional and presentation materials
and ongoing administrative support of the network marketing channel. As we
transferred this network marketing channel to Big Planet in February 2000,
marketing service costs ceased.

     Selling, general and administrative expenses increased $5,924,775 to
$18,353,731 in 2000 as compared to $12,428,956 in 1999. In 2000, we added
significant infrastructure in the form of employees and facilities in
anticipation of fulfilling obligations to various business partners including
Red Cube. The increase in 2000 expenses is partly a result of the cost of this
added infrastructure. In 2000, we also entered into various transactions that
contributed to this increase in the form of increased outside services. In

                                       18
<PAGE>

January 2001, we had a strategic work force reduction in order to reduce
overhead and streamline operations.

     The provision for doubtful accounts decreased $3,589,908 to $113,168 in
2000 as compared to $3,703,076 in 1999. The decrease is directly related to two
items:

     (1)  the transitioning of the network marketing channel subscribers to Big
          Planet in February 2000. With the transition, Big Planet assumed the
          risk of collections from individual subscribers, thus resulting in a
          reduced provision for the remainder of 2000 as compared to the same
          period of 1999.

     (2)  during the third quarter of 2000 we settled a lawsuit wherein we sued
          a former wholesale customer for non-payment of its bills. Prior to
          2000, we had written off the receivable from this customer. Upon
          settling the lawsuit, we received $300,000 for past billings, which
          amount reduced our provision for doubtful accounts in 2000.

     Depreciation and amortization increased $916,679 to $6,399,318 in 2000 as
compared to $5,482,639 in 1999. The increase is primarily associated with
increased expenditures related to continued expansion of our RTIP Network.

     In 1999 we recorded a write-down of capitalized software costs of
$1,847,288 which did not recur in 2000.

     Research and development costs increased $1,583,592 to $4,220,333 in 2000
as compared to $2,636,741 in 1999. The increase is associated with our
commitment to continuing telecommunication network research and development
efforts and development of new products and technologies. We anticipate research
and development expenditures in 2001 will be less than 2000 as we plan to use
our resources to sell our developed and in-process technologies and enhance
current products. If none of these new products and technologies are
successfully developed, the sales and profitability of I-Link may be adversely
affected in future periods.

OTHER INCOME (EXPENSE)

     Interest expense decreased $3,583,465 to $1,502,676 in 2000 as compared to
$5,086,141 in 1999. Interest expense in 1999 was significantly greater than in
2000 due to the accretion of debt discount (non-cash expense of $3,125,000 in
1999) related to certain warrants granted in connection with $8,000,000 in loans
from Winter Harbor. In 1999, there was also $627,000 of interest expense on
other debt instruments that were converted to equity in 1999.

     Interest and other income increased $307,927 to $487,132 in 2000 as
compared to $179,205 in 1999. The increase was primarily due to interest earned
in 2000 on higher average cash balances on hand during 2000 as compared to 1999.

     A settlement expense of $639,565 was recorded in 2000. This expense is the
result of an obligation to issue 129,519 shares of common stock in exchange for
trading restrictions imposed on JNC Opportunity Fund Ltd. ("JNC") in relation to
the common stock to be issued to JNC pursuant to a settlement and release
agreement entered into in February 2000. The settlement and release agreement
settled litigation between JNC and us over unconverted Series F preferred stock
held by JNC. The amount of this expense was based upon the market price of our
common stock on May 24, 2000 when the common stock was issued. There was no
comparable expense in 1999.


     YEAR ENDED DECEMBER 31, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31, 1998

REVENUES

     Net operating revenue in 1999 and 1998 included three primary sources of
revenue which were:

                                       19
<PAGE>

(1) telecommunications service; (2) marketing services (terminated in February
2000 - see "Results of Operations" above) which included revenues from the
network marketing channel, including revenues from independent representatives
for promotional and presentation materials and national conference registration
fees; and (3) technology licensing and development revenues related to
communications software that supports multimedia communications over PBX, LANs
and the Internet.

     Telecommunication service revenues increased $6,805,336 to $26,440,017 in
1999 as compared to $19,634,681 in 1998. The increase was primarily due to an
increase of $9,192,135 from growth in telecommunication sales by the network
marketing channel. This increase was partially offset by a decrease of
$2,386,799 in revenues from other channels of distribution as we focused our
resources on those channels of distribution of products that had higher profit
margins. The increase in revenues was primarily due a 38% increase in usage,
which was offset by an 11% decrease in revenue per minute.

     Marketing service revenues decreased $875,433 to $3,672,988 in 1999 as
compared to $4,548,421 in 1998. The decrease was primarily due to a reduction of
new IR sign ups resulting in a decrease of $1,937,634 in revenues from
promotional and presentational materials and national conventions. This decrease
was offset by increased revenues from product sales of $1,062,201 primarily from
WebCentre sales, which began in 1999.

     Technology licensing and development revenues increased $1,040,386 to
$2,506,701 as compared to $1,466,315 in 1998. The increase was primarily due to
increasing acceptance of our core technologies in the market place.

OPERATING COSTS AND EXPENSES

     Telecommunications network expenses increased $1,274,015 to $20,373,209 in
1999 as compared to $19,099,194 in 1998. The increase is related to the costs of
continuing development and deployment of our communication network and expenses
related to the telecommunication service revenue. Moreover, the deployment of
our Communication Engines in 1999 and better pricing from underlying carriers
allowed telecommunications revenues to grow at a significantly higher rate than
the related telecommunication network expenses.

     Marketing services costs decreased $450,724 to $5,400,149 in 1999 as
compared to $5,850,873 in 1998. These costs directly relate to our marketing
services revenue that began late in the second quarter of 1997 and include
commissions, the costs of providing promotional and presentation materials and
ongoing administrative support of the network marketing channel.

     Selling, general and administrative expenses increased $1,865,574 to
$12,428,956 in 1999 as compared to $10,563,382 in 1998. The increase was
primarily due to (1) increased payroll related to an increased number of
employees and (2) increased rent and travel costs related to the increased
number of employees.

     The provision for doubtful accounts increased $542,455 to $3,703,076 in
1999 as compared to $3,160,621 in 1998. The increase is related directly to the
growth in telecommunication service revenues, and increased bad debts from
receivables in the channels which we decided to terminate in order to refocus
our resources on those channels of distribution of our products that had higher
profit margins.

     Depreciation and amortization increased $1,290,465 to $5,482,639 in 1999 as
compared to $4,192,174 in 1998. The increase was primarily associated with
increasing expenditures related to continued and increasing expansion of our
RTIP Network.

     In the first quarter of 1999, we recorded a write-down of capitalized
software costs of $1,847,288. In early 1998 we contracted with an outside
consulting company to develop a billing and operations information system. We
continually evaluated the functionality and progress of the in-process system
development, and together with our Board of Directors concluded that the new
system would not significantly enhance our existing billing and information
systems or meet our ultimate needs. Accordingly, we could not justify paying

                                       20
<PAGE>

additional contracted expenses of approximately $1,000,000 and effective March
31, 1999, we recorded a write-down on the in-process system development of
$1,847,288.

     Research and development increased $207,625 to $2,636,741 in 1999 as
compared to $2,429,116 in 1998. The increase was associated with our increased
commitment to continuing telecommunication network research and development
efforts, primarily at our Israeli subsidiary, ViaNet Technologies.

OTHER INCOME (EXPENSE)

     Interest expense decreased $3,318,277 to $5,086,141 in 1999 as compared to
$8,404,418 in 1998. The decrease is primarily due to a decrease of $4,013,095
from the accretion of debt discounts (non-cash) related to certain warrants
granted in connection with $7,768,000 in loans during 1998 as compared to
warrants granted in connection with $8,000,000 in loans in 1999. An increase in
interest expense in 1999 of approximately $694,818 on loans outstanding and an
increase in capital leases offset this decrease.

     Interest and other income decreased $91,083 to $179,205 in 1999 as compared
to $270,288 in 1998. The decrease was primarily due to interest earned in 1998
on deposits with our primary provider of long-distance telecommunications
capacity, which did not recur in 1999 as the deposits were refunded.


LIQUIDITY AND CAPITAL RESOURCES

     Cash and cash equivalents as of December 31, 2000 were $2,155,628,
short-term certificates of deposit were $53,500 and the working capital deficit
was $30,060,766 (which includes deferred revenue of $14,885,592). Cash provided
by operating activities during 2000 was $1,869,355 as compared to cash used of
$10,381,925 in 1999 and $16,825,719 in 1998. The increase in cash from
operations in 2000 as compared to 1999 was primarily due to $20,000,000 received
from Red Cube for licensing and prepayment for future services, of which
$16,552,259 remains as deferred revenues at December 31, 2000. The decrease in
cash used by operating activities in 1999 compared to 1998 was primarily due to
a decrease in our net loss and timing of accounts receivable collections and
accounts payable payments.

     Net cash used by investing activities in 2000 was $6,881,466 as compared to
$1,585,299 in 1999 and $1,602,974 in 1998. The net increase in cash used by
investing activities in 2000 as compared to 1999 was due to an increase in
purchases of furniture, fixtures equipment and software of $4,863,055 and a
decrease of $412,649 in cash flows from maturing restricted certificates of
deposit and $20,463 from discontinued operations. The decrease in cash used by
investing activities in 1999 as compared to 1998 was primarily attributable to
(1) a decrease in purchases of furniture, fixtures and equipment of $1,210,241
which was offset by a decrease in cash received in connection with maturing of
restricted certificates of deposits of $932,566 and (2) a decrease in investing
activities of discontinued operations of $260,000.

     Financing activities in 2000 provided net cash of $4,171,735 as compared to
$13,594,301 in 1999 and $18,069,765 in 1998. Cash provided in 2000 included
$4,341,659 from exercise of options and warrants and employee purchases under
the employee stock purchase plan. During 2000, we repaid $145,720 in long-term
debt and capital lease obligations and used $24,204 in our discontinued
operations. Cash provided in 1999 included $8,200,000 from long-term debt,
$7,116,408 net proceeds from the sale of preferred stock and $5,000 from the
exercise of stock options and warrants. During 1999, we repaid $1,727,107 of
long-term debt and capital lease obligations. Cash provided in 1998 included
$9,430,582 from issuance of preferred stock (net of offering costs), $11,009,712
in proceeds from loans to us, and $684,943 from exercise of stock options and
warrants. Long term-debt and capital lease payments of $2,885,007 offset these
sources of cash.

     We incurred a net loss from continuing operations of $25,752,178 for the
year ended December 31, 2000, and as of December 31, 2000 had an accumulated
deficit of $135,902,482. We anticipate that revenues generated from our
continuing operations will not be sufficient during 2001 to fund ongoing
operations, the continued expansion of our private telecommunications network
facilities, product development and

                                       21
<PAGE>

manufacturing, and anticipated growth in subscriber base. As described below,
several events have occurred in 2001 that affect our ability to obtain the
additional necessary funds and reduce liabilities requiring funds for our
continuing operations in 2001.


CURRENT POSITION/FUTURE REQUIREMENTS

     During 2001, we plan to use available cash to fund the development and
marketing of I-Link products and services. We anticipate that revenues from all
sources of continuing operations will grow in 2001 and will increasingly
contribute to meeting our cash requirements. Our business plan of continued
market penetration and deployment of I-Link products and services will require
financial resources at increasingly higher levels than those experienced in
2000. In order to provide for and/or reduce capital expenditure and working
capital needs, we entered into the following agreements in 2001:

     -    On March 1, 2001, Winter Harbor elected to convert a note payable from
          I-Link for $7,768,000 plus accrued interest of $2,537,072 ($2,376,498
          as of December 31, 2000) into 4,122 shares of Series M convertible
          preferred stock of I-Link pursuant to the original loan agreement.
          Upon conversion, current liabilities as of December 31, 2000 in the
          amount of $10,144,498 were satisfied without requiring cash.

     -    On March 1, 2001, we entered into a Senior Convertible Loan and
          Security Agreement with Counsel Communications, LLC, ("Counsel LLC").
          Pursuant to the Loan Agreement, Counsel LLC agreed to make periodic
          loans to us in the aggregate principal amount not to exceed
          $10,000,000, of which $3,000,000 was available to us immediately upon
          the execution of the Loan Agreement. The $10,000,000 is structured as
          a 3-year note convertible with interest at a rate of 9% per annum,
          compounded quarterly.

     -    In January 2001, we undertook a strategic work force reduction to
          reduce overhead and streamline operations.

     In March 2001, Counsel LLC purchased Winter Harbor's security holdings in
I-Link and became our single largest shareholder. In addition to the above
transactions, Counsel Corporation and its subsidiary Counsel LLC have committed
to fund, through long-term inter-company advances or equity contribution, all
capital investment, working capital or other operational cash requirements of
I-Link through April 15, 2002.

     While we believe that the aforementioned sources of funds will be
sufficient to fund operations into 2002, we anticipate that additional funds
will be necessary from public or private financing markets to successfully
integrate and finance the planned expansion of our business communications
services, product development and manufacturing, and to discharge our financial
obligations. The availability of these capital sources will depend on prevailing
market conditions, interest rates, and our financial position and results of
operations. There can be no assurance that such financing will be available,
that we will receive any additional proceeds from the exercise of outstanding
options and warrants or that we will not be required to arrange for additional
debt, equity or other financing.

OTHER ITEMS

     We have reviewed all recently issued, but not yet adopted, accounting
standards in order to determine their effects, if any, on the results of our
operations or financial position. Based on that review, we believe that none of
these pronouncements will have a significant effect on current financial
condition or results of operations.


ITEM 8. FINANCIAL STATEMENTS.

     See Consolidated Financial Statements beginning on page F-1.

                                       22
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     None

                                    PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

     As of March 14, 2001, the Board of Directors had five members including one
vacancy due to the resignation of Mr. Keenan in February 2001. Our Articles of
Incorporation provide that the Board of Directors is divided into three classes
and that each director shall serve a term of three years. Mr. Keenan's term of
office as the sole Class I Director, would have expired at the annual meeting of
shareholders in 2002 if Mr. Keenan had not resigned. The term of office of Mr.
Toh and Mr. Heaton, both Class II Directors, will expire at the 2003 annual
meeting of shareholders, and the term of office of Mr. Edwards and Mr. Bradford,
the Class III Directors, will expire at the annual meeting of shareholders in
2001. In March 2001, Counsel LLC acquired all I-Link securities and their
associated rights previously held by Winter Harbor. The result of this transfer
of beneficial ownership interests is that Counsel LLC has the right to designate
two member of the Board of Directors pursuant to our financing arrangements
previously with Winter Harbor. In addition, Counsel obtained a right to appoint
three additional members (bringing the number of Board members to nine) to our
Board of Directors under a convertible loan agreement effective March 1, 2001.
As of December 31, 2000, no Winter Harbor designees were members of the Board
and as of March 14, 2001 Counsel had not designated any members to the Board.

     Biographical information with respect to the present executive officers,
directors, and key employees are set forth below. There are no family
relationships between any present executive officers and directors except that
John W. Edwards and Robert W. Edwards, Vice President of Network Operations, are
brothers.

<TABLE>
<CAPTION>
Name                          Age (1)   Title
----                          -------   -----
<S>                           <C>       <C>
John W. Edwards ..........      46      Chairman of the Board, President, Chief Executive Officer

Dror Nahumi (2) ..........      38      President

David E. Hardy ...........      48      Senior Vice President, Secretary and General Counsel

John M. Ames .............      41      Senior Vice President, Chief Operating Officer and Chief Financial Officer

Alex Radulovic ...........      31      Vice President of Technology

Henry Y.L. Toh ...........      43      Director

Thomas A. Keenan (3) .....      36      Director

David R. Bradford ........      50      Director

Hal B. Heaton ............      50      Director
</TABLE>

(1)  As of December 31, 2000

(2)  Dror Nahumi submitted his resignation as President effective January 8,
     2001.

(3)  Thomas A. Keenan submitted his resignation as a Director effective February
     21, 2001.

                                       23
<PAGE>

     JOHN W. EDWARDS, Chairman of the Board, President and Chief Executive
Officer. Mr. Edwards was selected to fill a vacancy on the Board of Directors as
a Class III director in June 1996. He was elected Chairman of the Board in
August 1998. Mr. Edwards serves as our Chief Executive Officer and, from
September 30, 1996 through December 1999, served as our President and Chief
Executive Officer. Mr. Edwards began to serve as President in January 2001. Mr.
Edwards served as President and a director of Coresoft, Inc., a software company
developing object-oriented computer solutions for small businesses from
September 1995 to April 1996. During the period August 1988 through July 1995,
Mr. Edwards served in a number of executive positions with Novell, Inc., a
software company providing networking software, including Executive Vice
President of Strategic Marketing, Executive Vice President of the Appware and
Desktop Systems Groups and Vice President of Marketing of the NetWare Systems
Group. Mr. Edwards was involved in the development of the NetWare 386 product
line. Until May 1996, he was a visiting faculty member at the Marriott School of
Management at Brigham Young University. Mr. Edwards received a B.S. degree in
Computer Science from Brigham Young University. Mr. Edwards was re-elected to
the Board of Directors as a Class III Director at the 1997 Annual Meeting.

     DROR NAHUMI, President. Mr. Nahumi resigned as President in January 2001
after serving thirteen months as President. Mr. Nahumi was President of MiBridge
Inc., a communications software company, when we acquired MiBridge in June 1997.
Mr. Nahumi served as Senior VP of Engineering from June 1997 until his
appointment as President. Prior to founding MiBridge, Mr. Nahumi was working for
AT&T Bell Labs, where he represented AT&T in voice, data and cellular standards
competitions. The speech-coding algorithm Mr. Nahumi designed for the cellular
standard was chosen for deployment in the CDMA cellular network in North
America. Mr. Nahumi was also a senior telecommunications engineer for ECI
Telecom and other telecom R&D centers in Israel.

     DAVID E. HARDY, Senior Vice President, Secretary and General Counsel. Mr.
Hardy has served as General Counsel since October 1996, and was appointed
Secretary in December 1996. In November 1999, Mr. Hardy became an employee of
I-Link and in January 2000 was named Senior Vice President. He is a founding
partner of the law firm of Hardy & Allen, in Salt Lake City. From February 1993
to April 1995, Mr. Hardy served as Senior Vice President and General Counsel of
Megahertz Corporation, a publicly held manufacturer of data communication
products. Mr. Hardy holds a Bachelor of Arts degree from the University of Utah
and a Juris Doctor degree from the University of Utah School of Law.

     JOHN M. AMES, CPA, Senior Vice President, Chief Operating Officer and Chief
Financial Officer. Mr. Ames joined us as Vice President of Operations in
September of 1998 and in August 1999, was promoted to Senior Vice President,
Chief Operating Officer and acting Chief Financial Officer. Between April 1997
and August 1998, Mr. Ames organized, developed and sold Time Key L.C., a company
specializing in Time and Labor Management software and consulting. From June
1996 until April 1997, he was the Vice President and Chief Financial Officer of
Neurex (now Elan Pharmaceutical), a Menlo Park, California based public biotech
company. From August 1993 until June 1996, Mr. Ames managed various information
services, finance and cost accounting, strategic partnering, international tax,
risk management and human resource functions as the Director of Corporate
Services at TheraTech (now Watson Pharmaceutical), a public California bay area
based pharmaceutical company. From April 1992 through August 1993, he was
responsible for overseeing U.S. sites information services activities as the
Corporate Director of Information Services with Otsuka Pharmaceutical, a large
privately owned Japanese conglomerate. Prior to joining Otsuka, Mr. Ames spent
over eight years with KPMG Peat Marwick as an auditor and consultant in the High
Technology practice. He is a graduate from Brigham Young University with both a
Bachelors and Masters (MAcc) degree in Accounting with emphasis in accounting
information systems and management consulting.

     ALEX RADULOVIC, Vice President of Technology. Mr. Radulovic has
considerable Internet and telecommunications development experience. Previously,
he was a consultant to IBM for a wide range of AIX Communications projects and
was also a development engineer for Novell's NetWare 386-network operating
system. Mr. Radulovic is a co-developer of our patent-pending technology.

     HENRY Y.L. TOH, Director. The board of directors elected Mr. Toh as a Class
II Director and as Vice Chairman of the Board of Directors in March 1992. Mr.
Toh was elected President of our Company

                                       24
<PAGE>

in May 1993, Acting Chief Financial Officer in September 1995 and Chairman of
the Board in May 1996, and served as such through September 1996. He was
appointed Assistant Secretary in May 1997. He is a graduate of Rice University.

     THOMAS A. KEENAN, Director. Mr. Keenan was appointed to serve as a Class I
Director on September 1, 1998. Mr. Keenan was elected as a Director Designee of
Winter Harbor pursuant to the Stockholder Agreement dated September 30, 1997
between Winter Harbor and I-Link. Mr. Keenan is the principal of Wolfeboro
Holdings, an investment fund based in Wellesley, Massachusetts. Mr. Keenan
received a Juris Doctor degree from the University of Michigan Law School. From
September 1994 to August 1996 he was employed by McKinsey & Company, an
international management-consulting firm. Mr. Keenan resigned as a Director of
I-Link effective February 21, 2001.

     DAVID R. BRADFORD, Director. The board of directors elected Mr. Bradford as
a Class III Director in January 1999. Currently Mr. Bradford is actively
involved in the venture capital business in the inter-mountain west. Mr.
Bradford has served as Senior Vice-President and General Counsel for Novell,
Inc. from 1985 to 2000. Mr. Bradford is past chairman of the board of the
Business Software Alliance, the leading business software trade association
representing Microsoft, Novell, Adobe and Autodesk, among others. Mr. Bradford
also serves on the board of directors of Pervasive Software, Altius Heath, Found
Inc., OneWorldOnLine.com, NextStep Broadband and Utah Valley State College. Mr.
Bradford received his Juris Doctorate from Brigham Young University and a
Master's degree in Business Administration from Pepperdine University.

     HAL B. HEATON, Director. Dr. Heaton was appointed to serve as a Class II
Director on June 14, 2000 to fill a board vacancy. From 1982 to present, Dr.
Heaton has been a professor of Finance at Brigham Young University. Dr.
Heaton holds a Bachelor's degree in Computer Science/Mathematics and a
Master's in Business Administration from Brigham Young University, a Master's
degree in Economics and a Ph.D. in Finance from Stanford University.

     Each officer is chosen by the board of directors and holds his or her
office until his or her successor shall have been duly chosen and qualified or
until his or her death or until he or she shall resign or be removed as provided
by the By-laws.

     Mr. Bradford, Mr. Keenan and Mr. Heaton were non-employee independent
directors as of December 31, 2000.

     There are no material proceedings to which any director, officer or
affiliate of our Company, any owner of record or beneficial owner of more than
five percent of any class of voting securities, or any associate of any such
director, officer, affiliate or security holder is a party adverse to us or any
of our subsidiaries or has a material interest adverse to us or any of our
subsidiaries.

COMMITTEES OF THE BOARD OF DIRECTORS

     The Committees of the Board of Directors are as follow:

     AUDIT COMMITTEE. The audit committee (the "Audit Committee") is responsible
for making recommendations to the Board of Directors concerning the selection
and engagement of independent certified public accountants and for reviewing the
scope of the annual audit, audit fees, and results of the audit. The Audit
Committee also reviews and discusses with management and the Board of Directors
such matters as accounting policies, internal accounting controls, and
procedures for preparation of financial statements. Its membership is currently
comprised of Messrs. Heaton (chairman), Bradford and Keenan. The Audit Committee
held three meetings during the last fiscal year.

     COMPENSATION COMMITTEE. The compensation committee (the "Compensation
Committee") approves the compensation for executive employees. Its membership is
currently comprised of Messrs. Bradford (chairman), Heaton and Keenan. The
Compensation Committee held five meetings during the last fiscal year.

                                       25
<PAGE>

     FINANCE COMMITTEE. The finance committee (the "Finance Committee") is
responsible for reviewing and evaluating financing, strategic business
development and acquisition opportunities. Its membership is currently comprised
of Messrs. Keenan (chairman), Heaton and Edwards. The Finance Committee held
twelve meetings during the last fiscal year.

     SPECIAL COMMITTEE. A special committee was formed in January 2001 to advise
the board of directors on matters relating to raising funds and capitalization
issues. Mr. Bradford was Chairman of the special committee and Messrs. Toh and
Heaton were members. The special committee was disbanded in March 2001 after
completion of the Winter Harbor and Counsel Communications transactions (See
"Current Position/Future Requirements"). See "Certain Relationships and Related
Transactions."

     We do not have a nominating committee or any committee serving a similar
function.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires our officers and directors, and persons who own more
than ten percent of a registered class of our equity securities, to file reports
of ownership and changes in ownership of equity securities of I-Link with the
Securities and Exchange Commission ("SEC"). Officers, directors, and greater
than ten percent shareholders are required by the SEC regulation to furnish us
with copies of all Section 16(a) forms that they file.

     Based solely upon a review of Forms 3 and Forms 4 furnished to us pursuant
to Rule 16a-3 under the Exchange Act during our most recent fiscal year and
Forms 5 with respect to our most recent fiscal year, we believe that all such
forms required to be filed pursuant to Section 16(a) of the Exchange Act were
timely filed, as necessary, by the officers, directors, and security holders
required to file the same during the fiscal year ended December 31, 2000,

ITEM 11. EXECUTIVE COMPENSATION

     The following table sets forth the aggregate cash compensation paid for
services rendered during the last three years by each person serving as our
Chief Executive Officer during the last year and our five most highly
compensated executive officers serving as such at the end of the year ended
December 31, 2000, whose compensation was in excess of $100,000.

<TABLE>
<CAPTION>
                                                                                Long-Term Compensation
                                                                         -----------------------------------
                                       Annual Compensation                      Awards             Payouts
                         ----------------------------------------------  ----------------------   ----------
                                                                                     Securities
                                                            Other        Restricted  Underlying
Name and                                                   Annual          Stock      Options/      LTIP         All Other
Principal Position       Year      Salary($)  Bonus($)  Compensation($)   Awards($)   SARs(#)     Payouts($)  Compensation($)
------------------       ----      --------   --------  ---------------  ----------  ----------   ----------  ---------------
<S>                      <C>       <C>        <C>       <C>              <C>         <C>          <C>         <C>
John W. Edwards          2000      225,000(1)    --         --                 --        25,000        --          $2,725
CEO                      1999      201,115(1)    --         --                 --       230,000        --              --
                         1998      133,333(1)    --         --                 --        30,000        --              --

Dror Nahumi              2000      200,000(2)    --         --                 --     1,750,000        --          $1,700
President                1999      142,972(2)    --         --                 --       250,000        --              --
                         1998       98,887(2)    --         --                 --            --        --              --

David E. Hardy           2000      200,000(5)    --         --                 --       100,000        --              --
Secretary and            1999      146,332(5)    --         --                 --            --        --              --
General Counse(l)        1998      132,000(5)    --         --                 --            --        --              --

John M. Ames             2000      165,000(4)    --         --                 --       300,000        --          $9,236
COO and CFO              1999      128,462(4)    --         --                 --            --        --              --
                         1998       37,369(4)    --         --                 --       350,000        --              --
</TABLE>

                                       26
<PAGE>

<TABLE>
<CAPTION>
                                                                                Long-Term Compensation
                                                                         -----------------------------------
                                       Annual Compensation                      Awards             Payouts
                         ----------------------------------------------  ----------------------   ----------
                                                                                     Securities
                                                            Other        Restricted  Underlying
Name and                                                   Annual          Stock      Options/      LTIP         All Other
Principal Position       Year      Salary($)  Bonus($)  Compensation($)   Awards($)   SARs(#)     Payouts($)  Compensation($)
------------------       ----      --------   --------  ---------------  ----------  ----------   ----------  ---------------
<S>                      <C>       <C>        <C>       <C>              <C>         <C>          <C>         <C>
Alex Radulovic           2000      200,000(5)    --         --                 --       400,000        --            $615
VP of Technology         1999      164,734(5)    --         --                 --            --        --              --
                         1998      105,218(5)    --         --                 --       500,000        --              --
</TABLE>

(1)  Mr. Edwards began his employment in April 1996 and was appointed President
     and CEO as of September 30, 1996 and resigned as President in December
     1999. He resumed his office as President upon Mr. Nahumi's resignation in
     January 2001. Mr. Edwards' annual salary was $96,000 in 1997 until August,
     when it was increased to an annual salary of $150,000. In November 1997 Mr.
     Edwards voluntarily reduced his annual salary to $35,000, for the balance
     of 1997 and until our financial restraints were reduced. See "Employment
     Agreements." Mr. Edwards was paid at an annual rate of $125,000 commencing
     January 1, 1998 even though Mr. Edward's salary was increased to $200,000
     effective May 1997, however the salary increase accrued but was not paid
     from May 1997 to April 1999 when we began to pay his salary at the rate of
     $225,000. The deferred salary in the amount of $141,875 was paid during
     2000. In 2000 we contributed $1,700 as a match to Mr. Edwards' 401K
     contribution and paid $1,025 on a life insurance policy.

(2)  Mr. Nahumi began his employment with us in June 1997 when we acquired
     MiBridge of which Mr. Nahumi was President. Mr. Nahumi was appointed our
     president in December 1999. Mr. Nahumi's annual salary during 1998 was
     $100,000; 1999 was $110,000 which salary was then increased to $200,000 per
     year when Mr. Nahumi was appointed President in January 2000. In 2000 we
     contributed $1,700 as a match to Mr. Nahumi's 401K contribution. Mr. Nahumi
     resigned as president in January 2001 resulting in forfeiture of 1,270,835
     options.

(3)  Mr. Hardy became our employee on November 1, 1999. From October 1996 to
     present, Mr. Hardy served as Secretary and General Counsel. Mr. Hardy's
     annual consulting fee during the first four months of 1997 was $125,000.
     Mr. Hardy's consulting fee was increased to $175,000 per year effective May
     1997, however the salary increase was deferred until September 1999, when
     we began to pay his salary at the rate of $175,000. The deferred salary was
     paid in the amount of $23,685 in 1999 and $80,757 in 2000. In January 2000,
     Mr. Hardy's salary was increased to $200,000 per year.

(4)  Mr. Ames began his employment in September 1998; his annual salary during
     1998 was $120,000. In September 1999, Mr. Ames salary was increased to
     $165,000 per year. In 2000, other compensation includes $1,700 contributed
     as a match to Mr. Ames' 401K contribution and $7,536 paid for vacation time
     not taken.

(5)  Mr. Radulovic began his employment in February 1996; his annual salary
     during 1997 was $90,000. Mr. Radulovic's salary was increased to $150,000
     effective November 1998 and to $200,000 in October 1999. In 2000 we paid
     $615 on a life insurance policy for Mr. Radulovic.


OPTION/SAR GRANTS IN LAST FISCAL YEAR (2000)

     The following table sets forth certain information with respect to the
options granted during the year ended December 31, 2000, for the persons named
in the Summary Compensation Table (the "Named Executive Officers"):

                                       27
<PAGE>

<TABLE>
<CAPTION>
                       Number of Securities           Percent of Total          Exercise or
                            Underlying            Options/SARs Granted to       Base Price     Grant Date     Expiration
Name                  Options/SARs Granted (#)    Employees in Fiscal Year       ($/Share)      Value(1)         Date
----                  ------------------------    ------------------------      -----------    ----------     ----------
<S>                   <C>                         <C>                           <C>            <C>            <C>
John W. Edwards                25,000                       *                   $   2.78       $   36,900       1/1/10

Dror Nahumi(2)              1,750,000                      30.9%                $   2.75       $2,670,959       1/3/10

David E. Hardy                100,000                       1.8%                $   2.75       $  147,478       1/3/10

John M. Ames                  300,000                       5.3%                $   2.75       $  442,435       1/3/10

Alex Radulovic                400,000                       7.1%                $   2.75       $  589,913       1/3/10
</TABLE>

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

*    Indicates less than 1%

(1)  Determined using the Black Scholes option-pricing model.

(2)  Mr. Nahumi's employment with I-Link terminated in January 2001.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES

     The following table sets forth certain information with respect to options
exercised during 2000 by the Named Executive Officers and with respect to
unexercised options held by such persons at the end of 2000.

<TABLE>
<CAPTION>
                        Shares                                      Number of Securities           Value of Unexercised in the
                     Acquired on            Value                 Underlying Unexercised              Money Options/SARs at
Name                 Exercise (#)        Realized ($)            Options/SARs at FY-End (#)               FY-End ($)(1)
----                 ------------        ------------        ---------------------------------     ---------------------------
                                                             Exercisable         Unexercisable     Exercisable   Unexercisable
                                                             -----------         -------------     -----------   -------------
<S>                  <C>                 <C>                 <C>                 <C>               <C>           <C>
John W. Edwards        12,000            $  43,897            1,709,670              333,330            --            --

Dror Nahumi(2)             --                   --              625,000            1,375,000            --            --

David E. Hardy             --                   --              841,667               58,333            --            --

John M. Ames               --                   --              441,667              208,333            --            --

Alex Radulovic             --                   --              711,670              688,330            --            --
</TABLE>

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

(1)  The calculations of the value of unexercised options are based on the
     difference between the closing bid price on Nasdaq of the common stock on
     December 31, 2000, and the exercise price of each option, multiplied by the
     number of shares covered by the option. Value ascribed to unexercised
     options at December 31, 2000 was minimal as the exercise price exceeded the
     closing bid price at December 31, 2000.

(2)  Mr. Nahumi's employment with I-Link terminated in January 2001.


DIRECTOR COMPENSATION

     On the first business day in January each year, each Director then serving
will receive an option to purchase 20,000 shares of common stock and for each
committee on which the Director serves an option to purchase 5,000 shares of
common stock. The exercise price of such options shall be equal to the fair
market value of the common stock on the date of grant. The Directors are also
eligible to receive options under our stock option plans at the discretion of
the board of directors.

                                       28
<PAGE>

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGES-IN-CONTROL
ARRANGEMENTS

     On September 9, 1999, we entered into a three-year employment agreement
with John W. Edwards, Chief Executive Officer and Director. Pursuant to the
terms of the employment agreement, Mr. Edwards is employed as the Chief
Executive Officer and a Director, and is required to devote substantially all of
his working time to the business and our affairs. Mr. Edwards is entitled under
his employment agreement to receive compensation at the rate of $225,000 per
year and is entitled to a profitability bonus at the discretion of the Board of
Directors and to participate in fringe benefits as are generally provided to
executive officers. In addition, Mr. Edwards was granted an option to purchase
200,000 shares of common stock at an exercise price of $3.56 per share based on
the market price at the date of grant. Of such options, 33,340 vested
immediately and 16,666 vest and become exercisable on the first calendar day of
each quarter beginning October 1, 1999. In the event of termination by I-Link or
in the event of a violation of a material provision of the agreement by I-Link
which is unremedied for thirty (30) days and after written notice, Mr.
Edwards is entitled to receive, as liquidated damages or severance pay, an
amount equal to the Monthly Compensation (as defined in the agreement) for
the remaining term of the agreement or two years whichever is shorter and all
options shall thereupon be fully vested and immediately exercisable. The
agreement contains non-competition and confidentiality provisions.

     On January 3, 2000, we entered into a three-year agreement with Dror
Nahumi, President. Mr. Nahumi was required to devote substantially all of his
working time to our business and affairs. Mr. Nahumi was entitled under his
employment agreement to receive compensation at the rate of $200,000 per year
and was entitled to a profitability bonus at the discretion of the I-Link
Directors and to participate in fringe benefits as are generally provided to
executive officers. In addition, Mr. Nahumi was granted an option to purchase
1,000,000 shares of common stock at an exercise price of $2.75 per share based
on the market price at the date of grant. Of such options, 83,333 vested
immediately and 83,333 vest and become exercisable on the first calendar day of
each quarter beginning October 1, 1999. Mr. Nahumi was also granted an option to
purchase 750,000 shares of common stock as performance-vested options. Vesting
of 125,000 of the performance options are to occur when the daily closing stock
price attains or exceeds each of the following levels for more than 20
consecutive trading days: $10, $12, $14, $16, $18, $20. In the event of a
"change in control" (as defined in the agreement), accelerated vesting of the
options will not take place except in the event of a change of control pursuant
to which our stock is exchanged for the stock of another entity and the options
are not rolled-over or otherwise exchanged for similar options of such entity
(with like terms and conditions). The agreement contains non-competition and
confidentiality provisions. Mr. Nahumi resigned as president in January 2001
resulting in forfeiture of 1,270,835 options.

     On January 3, 2000, we entered into three-year employment agreements with
John M. Ames as Senior Vice President, Chief Operating Officer and Acting Chief
Financial Officer, David E. Hardy as Senior Vice President and General Counsel,
and Alex Radulovic as Vice President Technology. Pursuant to the terms of the
employment agreements, each of the three individuals is required to devote
substantially all of his working time to our business and affairs. Mr. Ames,
Hardy and Radulovic are each entitled under their respective employment
agreements to receive compensation at the rate of $165,000, $200,000 and
$200,000 per year, respectively, and are entitled to a profitability bonus at
the discretion of the Board of Directors and to participate in fringe benefits
as are generally provided to executive officers. In addition, Mr. Ames, Hardy
and Radulovic were each granted options to purchase 300,000, 100,000 and
400,000, respectively, shares of common stock at an exercise price of $2.75 per
share based on the market price at the date of grant. Of such options, 25,000,
8,333 and 33,333, respectively, vested immediately and the same amounts vest and
become exercisable on the first calendar day of each quarter beginning October
1, 1999. In the event of termination by I-Link or in the event of a violation of
a material provision of the agreement by I-Link which is unremedied for thirty
(30) days and after written notice, each of these individuals is entitled to
receive, as liquidated damages or severance pay, an amount equal to the
Monthly Compensation (as defined in the corresponding agreement) for twelve
months and all options shall thereupon be fully vested and immediately
exercisable. The agreements contain non-competition and confidentiality
provisions.

                                       29
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     John Edwards is Chairman of the Board and an executive officer of I-Link.
Mr. Edwards resigned his seat on the Compensation Committee effective April 29,
2000. Messrs. Heaton, Bradford and Kennan are non-employee directors of I-Link.

DIRECTOR STOCK OPTION PLAN

     Our Director Stock Option Plan (the "DSOP") authorizes the grant of stock
options to our directors. Options granted under the DSOP are non-qualified stock
options exercisable at a price equal to the fair market value per share of
common stock on the date of any such grant. Options granted under the DSOP are
exercisable not less than six (6) months or more than ten (10) years after the
date of grant.

     As of December 31, 2000, options for the purchase of 8,169 shares of common
stock at prices ranging from $.875 to $3.875 per share were outstanding. As of
December 31, 2000, options to purchase an aggregate of 15,228 shares of common
stock were exercised. In connection with adoption of the 1995 Director Plans (as
hereinafter defined) the Board of Directors authorized the termination of future
grants of options under the DSOP; however, outstanding options granted under the
DSOP will continue to be governed by the terms of the DSOP until the options are
exercised or expire.

1995 DIRECTOR STOCK OPTION PLAN

     In October 1995, our stockholders approved adoption of our 1995 Director
Stock Option and Appreciation Rights Plan, which plan provides for the issuance
of incentive options, non-qualified options and stock appreciation rights (the
"1995 Director Plan").

     The 1995 Director Plan provides for automatic and discretionary grants of
stock options which qualify as incentive stock options (the "Incentive Options")
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
as well as options which do not so qualify (the "Non-Qualified Options") to be
issued to directors. In addition, stock appreciation rights (the "SARs") may be
granted in conjunction with the grant of Incentive Options and Non-Qualified
Options. No SARs have been granted to date.

     The 1995 Director Plan provides for the grant of Incentive Options,
Non-Qualified Options and SARs to purchase up to 250,000 shares of common stock
(subject to adjustment in the event of stock dividends, stock splits and other
similar events). To the extent that an Incentive Option or Non-Qualified Option
is not exercised within the period of exercisability specified in the 1995
Director Plan, it will expire as to the then-unexercised portion. If any
Incentive Option, Non-Qualified Option or SAR terminates prior to exercise and
during the duration of the 1995 Director Plan, the shares of common stock as to
which such option or right was not exercised will become available under the
1995 Director Plan for the grant of additional options or rights to any eligible
employees. The shares of common stock subject to the 1995 Director Plan may be
made available from either authorized but unissued shares, treasury shares, or
both.

     The 1995 Director Plan also provides for the grant of Non-Qualified Options
on a non-discretionary basis pursuant to the following formula: each member of
the Board of Directors then serving shall receive a Non-Qualified Option to
purchase 10,000 shares of common stock at an exercise price equal to the fair
market value per share of the common stock on that date. Pursuant to such
formula, directors received options to purchase 10,000 shares of common stock as
of October 17, 1995, options to purchase 10,000 shares of common stock on
January 2, 1996, and will receive options to purchase 10,000 shares of common
stock on the first business day of each January. The number of shares granted to
each Board member was increased to 20,000 in 1998. In addition, the Board member
will receive 5,000 options for each committee membership. Each option is
immediately exercisable for a period of ten years from the date of grant. We
have 190,000 shares of common stock reserved for issuance under the 1995
Director Plan. As of December 31, 2000, options exercisable to purchase 170,000
shares of common stock at prices ranging from $1.00 to $1.25 per share are
outstanding under the 1995 Director Plan. As of December 31, 2000, options to
purchase 60,000 shares have been exercised under the 1995 Director Plan.

                                       30
<PAGE>

1995 EMPLOYEE STOCK OPTION PLAN

     In October 1995, the stockholders approved adoption of our 1995 Employee
Stock Option and Appreciation Rights Plan (the "1995 Employee Plan"), which plan
provides for the issuance of Incentive Options, Non-Qualified Options and SARs.

     Directors are not eligible to participate in the 1995 Employee Plan. The
1995 Employee Plan provides for the grant of stock options which qualify as
Incentive Stock Options under Section 422 of the Code, to be issued to officers
who are employees and other employees, as well as Non-Qualified Options to be
issued to officers, employees and consultants. In addition, SARs may be granted
in conjunction with the grant of Incentive Options and Non-Qualified Options. No
SARs have been granted to date.

     The 1995 Employee Plan provides for the grant of Incentive Options,
Non-Qualified Options and SARs of up to 400,000 shares of common stock (subject
to adjustment in the event of stock dividends, stock splits and other similar
events). To the extent that an Incentive Option or Non-Qualified Option is not
exercised within the period of exercisability specified therein, it will expire
as to the then-unexercised portion. If any Incentive Option, Non-Qualified
Option or SAR terminates prior to exercise thereof and during the duration of
the 1995 Employee Plan, the shares of common stock as to which such option or
right was not exercised will become available under the 1995 Employee Plan for
the grant of additional options or rights to any eligible employee. The shares
of common stock subject to the 1995 Employee Plan may be made available from
either authorized but unissued shares, treasury shares, or both. We have 400,000
shares of common stock reserved for issuance under the 1995 Employee Plan. As of
December 31, 2000, options to purchase 302,000 shares of common stock have been
granted under the plan and 182,750 were outstanding with an exercise price of
$3.90 per share. As of December 31, 2000, 119,250 options have been exercised
under the 1995 Employee Plan.

1997 RECRUITMENT STOCK OPTION PLAN

     In October 1997, our stockholders approved adoption of the 1997 Recruitment
Stock Option and Appreciation Rights Plan, which plan provides for the issuance
of incentive options, non-qualified options and SAR's (1997 Plan).

     The 1997 Plan provides for automatic and discretionary grants of stock
options, which qualify as incentive stock options (the "Incentive Options")
under Section 422 of the Code, as well as options which do not so qualify (the
"Non-Qualified Options"). In addition, stock appreciation rights (the "SARs")
may be granted in conjunction with the grant of Incentive Options and
Non-Qualified Options. No SARs have been granted to date.

     The 1997 Plan, as amended in 2000, provides for the grant of Incentive
Options, Non-Qualified Options and SARs to purchase up to 7,400,000 shares of
common stock (subject to adjustment in the event of stock dividends, stock
splits and other similar events). The price at which shares of common stock
covered by the option can be purchased is determined by our Board of Directors;
however, in all instances the exercise price is never less than the fair market
value of our common stock on the date the option is granted. To the extent that
an Incentive Option or Non-Qualified Option is not exercised within the period
of exercisability specified therein, it will expire as to the then unexercised
portion. If any Incentive Option, Non-Qualified Option or SAR terminates prior
to exercise thereof and during the duration of the 1997 Plan, the shares of
common stock as to which such option or right was not exercised will become
available under the 1997 Plan for the grant of additional options or rights. The
shares of common stock subject to the 1997 Plan may be made available from
either authorized but unissued shares, treasury shares, or both. As of December
31, 2000, options to purchase 5,350,673 shares of common stock have been granted
under the plan and 4,939,253 were outstanding with exercise prices of $1.19 to
$13.88 per share. As of December 31, 2000, 411,420 options have been exercised
under the 1997 Plan.

                                       31
<PAGE>

2000 EMPLOYEE STOCK PURCHASE PLAN

     In October 2000, the stockholders of I-Link approved adoption of I-Link's
2000 Employee Stock Purchase Plan which plan provides for purchase and issuance
of common stock. (the "Stock Purchase Plan").

     The purpose of the Stock Purchase Plan is to induce all eligible employees
of I-Link (or any of its subsidiaries) who have been employees for at least
three months to encourage stock ownership of I-Link by acquiring or increasing
their proprietary interest in I-Link. The Stock Purchase Plan is designed to
encourage employees to remain in the employ of I-Link. It is the intention of
I-Link to have the Stock Purchase Plan qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code").

     The Stock Purchase Plan provides for the purchase of common stock in the
aggregate, up to 2,500,000 shares of common stock (which number is subject to
adjustment in the event of stock dividends, stock splits and other similar
events). As of December 31, 2000, 23,494 shares of common stock had been
purchased under the Stock Purchase Plan.

CHANGES IN CONTROL

     On March 1, 2001, Counsel LLC entered into a separate Securities Purchase
Agreement with Winter Harbor. Pursuant to the terms of the Securities Purchase
Agreement, Counsel LLC purchased from Winter Harbor all of the debt and equity
securities of I-Link held by Winter Harbor, including all shares of Series M and
Series N preferred stock held by Winter Harbor. Additionally, Counsel obtained
the right to immediately name two Counsel designees to I-Link's board of
directors, and seek to obtain I-Link shareholder approval to appoint an
additional three Counsel director nominees, resulting in a nine member board,
five members of which will be directors nominated or designated by Counsel LLC.
As a result of the above mentioned transactions pursuant to the terms of the
Securities Purchase Agreement, a change in control may be deemed to have
occurred.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table shows, as of March 14, 2001, all directors, executive
officers, and, to the best of our knowledge, all other parties we know to be
beneficial owners of more than 5% of the common stock, or beneficial owners of a
sufficient number of shares of Series C preferred stock, Series M convertible
preferred stock or Series N preferred stock to be converted into at least 5% of
the common stock. As of March 14, 2001, there were issued and outstanding the
following: 95,111,785 shares of common stock, 9,249 shares of Series C preferred
stock and 769 shares of Series N preferred stock.

<TABLE>
<CAPTION>
                                                                  Number of Shares         % of Common Stock
Name and Address of Beneficial Owner (1)     Title of Class      Beneficially Owned       Beneficially Owned(2)
----------------------------------------     --------------      ------------------       ---------------------
<S>                                          <C>                 <C>                      <C>
John M. Ames                                  Common Stock            526,000(3)                   *

David R. Bradford                             Common Stock            115,000(4)                   *

John W. Edwards                               Common Stock          2,018,000(4)                 2.1%

David E. Hardy                                Common Stock          1,069,219(4)                 1.1%

Hal B. Heaton                                 Common Stock             53,958(4)                   *

Alex Radulovic                                Common Stock            897,103(5)                   *

Henry Y.L. Toh                                Common Stock            283,501(6)                   *

Counsel Communications L.L.C.                 Common Stock         79,823,200(7)                70.66%
280 Park Avenue
West Building, 28th Floor
New York, NY 10017
</TABLE>

                                       32
<PAGE>

<TABLE>
<CAPTION>
                                                                  Number of Shares         % of Common Stock
Name and Address of Beneficial Owner (1)     Title of Class      Beneficially Owned       Beneficially Owned(2)
----------------------------------------     --------------      ------------------       ---------------------
<S>                                          <C>                 <C>                      <C>
Winter Harbor, L.L.C.                         Common Stock          5,000,000(8)                 5.26%
c/o First Media, L.P.
11400 Skipwith Lane
Potomac, MD 20854

All Executive Officers and Directors
as a Group (7 people)                         Common Stock          4,962,781(9)                 4.96%
</TABLE>

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

*    Indicates less than one percent.

(1)  Unless otherwise noted, all listed shares of common stock are owned of
     record by each person or entity named as beneficial owner and that
     person or entity has sole voting and dispositive power with respect to the
     shares of common stock owned by each of them. All addresses are c/o I-Link
     Incorporated unless otherwise indicated.

(2)  As to each person or entity named as beneficial owners, that person's or
     entity's percentage of ownership is determined based on the assumption that
     any options or convertible securities held by such person or entity which
     are exercisable or convertible within 60 days have been exercised or
     converted, as the case may be.

(3)  Represents 1,000 shares of common stock and 525,000 shares of common stock
     issuable pursuant to options.

(4)  Represents shares of common stock issuable pursuant to options and
     warrants.

(5)  Represents 858,333 shares of common stock subject to options and 38,770
     shares of common stock owned.

(6)  Represents shares of common stock issuable pursuant to options. Does not
     include shares held of record by Four M International, Ltd., of which Mr.
     Toh is a director. Mr. Toh disclaims any beneficial ownership of such
     shares.

(7)  Includes 61,966,057 shares of common stock issued upon conversion of Series
     M and N redeemable preferred stock in March 2001 which were obtained from
     Winter Harbor L.L.C. in March 2001, (based on information to be included in
     an amended Schedule 13-D amending their Schedule 13-D filed with the SEC on
     March 13, 2001.) Also includes a maximum of 17,857,143 shares of common
     stock issuable upon conversion of up to $10,000,000 principal amount of a
     Senior Convertible Loan and Security Agreement which named stockholder will
     be entitled to receive should it convert its convertible note to common
     stock, subject to conversion price adjustments provisions set forth in the
     Senior Convertible Loan and Security Agreement dated March 1, 2001.

(8)  Represents 5,000,000 shares of common stock issued to Winter Harbor in
     March 2001 in exchange for 33,540,000 warrants to purchase I-Link common
     stock which Winter Harbor held prior to the exchange, based on information
     included in an amended Schedule 13-D filed with the SEC on March 21, 2001.
     Winter Harbor is owned by First Media, L.P., a private media and
     communications company that is a private investment principally of Richard
     E. Marriott and his family. I-Link's general counsel, David E. Hardy, is a
     brother of Ralph W. Hardy, Jr. who is general counsel and a minority equity
     holder in Winter Harbor. David E. Hardy has no ownership in or association
     with Winter Harbor.

(9)  Represents 39,770 shares of common stock issued and 4,923,011 shares of
     common stock that may be obtained pursuant to options and warrants
     exercisable within 60 days of the date hereof.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

TRANSACTIONS WITH MANAGEMENT AND OTHERS

     See Item 11 hereof for descriptions of the terms of employment and
consulting agreements between us and certain officers, directors and other
related parties.

                                       33
<PAGE>

TRANSACTIONS WITH WINTER HARBOR, LLC.

     Winter Harbor, L.L.C. ("Winter Harbor") is owned by First Media, L.P., a
private media and communications company that is a private investment
principally of Richard E. Marriott and his family. Our general counsel, David E.
Hardy, is a brother of Ralph W. Hardy, Jr. who is general counsel and a minority
equity holder in Winter Harbor. David E. Hardy has no ownership or association
with Winter Harbor. As a result of this relationship, as well as personal
relationships of David E. Hardy with the principals of Winter Harbor,
discussions were initiated which led to Winter Harbor's investments in us, which
are summarized below.

     On June 5, 1997, we entered into a term loan agreement and promissory note
with Winter Harbor pursuant to which Winter Harbor agreed to loan to us the
principal sum of $2,000,000 for capital expenditures and working capital
purposes. As further consideration for Winter Harbor's commitment to make this
loan, we granted to Winter Harbor a warrant ("Loan Warrant") to purchase up to
500,000 shares of common stock at an exercise price of $4.97 per share, subject
to adjustment, pursuant to the terms of a Warrant Agreement between the parties.
The Loan Warrant expires on March 11, 2002, and contains demand and piggyback
registration rights and customary anti-dilution terms. The maturity date of the
Note was October 15, 1998; however, the Loan Agreement anticipated an equity
investment in us by Winter Harbor (the "Investment"). Upon closing of the
Investment, all principal and accrued interest then due under the Note was
credited toward payment of Winter Harbor's purchase price for the Investment and
the Note was cancelled. The loan from Winter Harbor had an interest rate of
prime plus 2%. In addition to the stated interest rate, we recognized the debt
discount attributable to the warrants as interest expense over the life of the
loan (maturity date was October 15, 1998). We expended significant time and
effort pursuing various financing alternatives and determined that Winter Harbor
proposal was the best alternative available to us.

     On August 18, 1997, Winter Harbor and we amended their Loan Agreement.
Pursuant to the amended Loan Agreement, we borrowed an additional $3,000,000
(bringing the total principal amount due under the Note to $5,000,000), and
issued additional warrants to purchase an additional 300,000 shares at an
exercise price of $6.38 per warrant to Winter Harbor.

     Winter Harbor and I-Link subsequently executed a Sales Purchase Agreement,
dated as of September 30, 1997, pursuant to which Winter Harbor invested
$12,100,000 in a new series of convertible preferred stock (the "Series M
convertible preferred stock"). Winter Harbor purchased approximately 2,545
shares of 700,000 (convertible into 2,545,000 shares of common stock) for
aggregate cash consideration of approximately $7,000,000 (equivalent to $2.75
per share of common stock). The agreement with Winter Harbor provided for
purchase of approximately 1,855 additional shares of Series M convertible
preferred stock (convertible into 1,855,000 shares of common stock). Such
additional shares of Series M convertible preferred stock were paid for by
exchanging the $5,000,000 outstanding principal balance plus approximately
$100,000 accrued interest due under the Note. As additional consideration for
its equity financing commitments, Winter Harbor was issued additional warrants
to acquire (a) 2,500,000 shares of common stock at an exercise price of $2.75
per share (the "Series A Warrants"), (b) 2,500,000 shares of common stock at an
exercise price of $4.00 per share (the "Series B Warrants") and (c) 5,000,000
shares of common stock at an exercise price of $4.69 per share (the "Series C
Warrants"). The respective exercise prices for the Series A Warrants, the Series
B Warrants and the Series C Warrants (collectively, the "Investment Warrants"),
were subject to adjustment. The Series A Warrants were exercisable at any time
for thirty months from the date of issuance, and the Series B Warrants and
Series C Warrants were exercisable at any time for sixty months from the date of
issuance. All of the Investment Warrants (i) have demand registration rights and
anti-dilution rights and (ii) contain cashless exercise provisions.

     The Series M convertible preferred stock was entitled to receive cumulative
dividends in the amount of 10% per annum before any other series of preferred or
common stock received any dividends. Thereafter, the Series M convertible
preferred stock participated with the common stock in the issuance of any
dividends on a per share basis. Moreover, the Series M convertible preferred
stock will had the right to veto the payment of dividends on any other class of
stock, except for cumulative dividends which accrued pursuant to the terms of
the Series C preferred stock outstanding prior to the Winter Harbor investment.

                                       34
<PAGE>

The Series M convertible preferred stock was convertible at any time prior to
the fifth anniversary of its issuance, at the sole option of Winter Harbor, into
shares of common stock on a one thousand-for-one basis; provided, however, that
the Series M convertible preferred stock would be automatically converted to
common stock on the fifth anniversary of its issuance at no cost to Winter
Harbor. The conversion price would be, in the case of discretionary conversion,
$2.75 (subsequently reset to $2.033) per share of common stock, or, in the case
of automatic conversion, the lesser of $2.033 per share or 50% of the average
closing bid price of the common stock for the ten trading days immediately
preceding the fifth anniversary of issuance. The basis for discretionary
conversion, or the conversion price for automatic conversion, would be adjusted
upon the occurrence of certain events, including without limitation, issuance of
stock dividends, recapitalization of I-Link, or the issuance of stock at less
than the fair market value thereof.

     During 1998, we obtained an aggregate of $7,768,000 in new interim debt
financing from Winter Harbor, L.L.C. As consideration for Winter Harbor's loan
commitment, we agreed to issue 6,740,000 warrants to purchase common stock of at
exercise prices ranging from $5.50 to $7.22 based upon 110% of the closing price
of the common stock on the day loan funds were advanced. The warrants had
exercise periods of 7.5 years from issuance. We also agreed to extend the
exercise period on all warrants previously issued to Winter Harbor (10,800,000)
to 7.5 years. Pursuant to the terms of the loan agreement with Winter Harbor,
the initial borrowings of $5,768,000 were payable upon demand by Winter Harbor
no earlier than May 15, 1998, and were collateralized by essentially all of the
assets of our subsidiaries. As the loan was not repaid by May 15, 1998, the
total loan, including additional borrowings of $2,000,000 obtained in the second
quarter, continued on a demand basis with interest accruing at prime plus four
percent. On April 15, 1999, Winter Harbor agreed that it would not demand
payment under the notes prior to April 15, 2000 and in April 2000 agreed to
extend the due date of the principal and accrued interest to April 15, 2001.
Additionally, Winter Harbor had the right at any time prior to repayment to
elect to exchange the unpaid balance of the loan into additional shares of our
Series M convertible preferred stock and to receive an additional 5,000,000
warrants to purchase common stock of at an exercise price of $2.033 per share.

     During 1998, we recorded $7,274,000 as a discount against the new
$7,768,000 debt representing the relative fair value attributed to the new
warrants, the revised exercise period on prior warrants and the equity
instruments associated with the assumed conversion of the debt into equity. The
debt discount was amortized over the original terms of the respective
borrowings.

     The exercise prices of the above warrants issued or issuable to Winter
Harbor varied at the time of their respective issuance, however, all were
subject to adjustment downward to equal the market price of common stock in the
event the common stock market price was below the original exercise price at the
time of exercise, subject to an exercise price lower limit of the lesser of the
original exercise price or $2.75 per share. The exercise price of all Winter
Harbor warrants was reset to $1.48 as of December 31, 2000 and continued to be
subject to downward adjustment per the Loan Agreement.

     On January 15, 1999, we formalized an agreement with Winter Harbor for
additional financing. The financing arrangement consists of an $8,000,000 bridge
loan facility and a $3,000,000 standby letter of credit to secure additional
capital leases of equipment and telephone lines relative to the expansion of our
telecommunications network. The bridge loan and accrued interest were exchanged
for Series N preferred stock in July 1999.

     As additional consideration for making the Bridge Loan, we granted warrants
to purchase common stock to Winter Harbor. Initially, Winter Harbor received one
warrant for every $10 borrowed from Winter Harbor including the standby letter
of credit. The warrants had a 7.5 year exercise period with an exercise price of
the lower of (a) $2.78 (reset to $1.48 as of December 31, 2000), (b) the average
trading price for any 20 day period subsequent to the issuance of the warrants,
(c) the price at which new shares of common stock or common stock equivalents
were issued, or (d) the exercise price of any new options, warrants, preferred
stock or other convertible security. The exercise price was subject to a $1.25
floor. On April 14, 1999, the shareholders voted to approve a plan of financing
which included issuing 10 warrants for each $10 borrowed under the Bridge Loan
and standby letter of credit. As we did not repay the loan before April 26,
1999, we granted Winter Harbor warrants to purchase 11,000,000 shares of common
stock as provided in the agreement.

                                       35
<PAGE>

     During 1999 and 1998, we recorded $2,956,283 and $1,032,634, respectively,
as a discount against the $8,000,000 Bridge Loan representing the relative fair
value attributed to the Bridge Loan warrants and line of credit. The debt
discount was amortized over the term of the Bridge Loan, or leases as
applicable. During 1999 and 1998, $3,360,771 and $128,059, respectively, of debt
discount was amortized.

     On April 15, 1999, we entered into a financing agreement with Winter
Harbor. Winter Harbor loaned us approximately $4,000,000 under a note due
September 30, 1999. In July 1999 this loan and accrued interest were exchanged
for Series N preferred stock as discussed below.

     On July 23, 1999 we completed our offering of 20,000 shares of Series N
preferred stock. The offering was fully subscribed through cash subscriptions
and we exercised our right to exchange notes payable to Winter Harbor of
$8,000,000 million and $4,000,000 plus accrued interest. In total we exchanged
$12,718,914 in debt and accrued interest. Winter Harbor purchased 14,404 (in
cash and exchange of debt and interest) of the 20,000 shares of Series N stock.
The Series N conversion price was initially set at $2.78, but was adjustable to
the lowest of: (1) 110% of the average trading price for any 20 day period
following the date that Series N preferred stock is first issued; (2) the price
at which any new common stock or common stock equivalent is issued; (3) the
price at which common stock is issued upon the exercise or conversion of any new
options, warrants, preferred stock or other convertible security; (4) the
conversion price of any Series F preferred stock converted after the date that
Series N preferred stock was first issued; and (5) a conversion price floor of
$1.25. Series N conversion price was reset to $1.25 in January 2001.

     On April 13, 2000, Winter Harbor, LLC, agreed to provide us with a line of
credit to meet our minimum financing needs of up to an aggregate amount of
$15,000,000. This commitment was to expire on the earlier of April 12, 2001 or
the date we received net cash proceeds of not less than $15,000,000 pursuant to
one or more additional financings or technology sales as well as licensing or
consulting agreements outside the normal and historical course of business.
Borrowings under this note were repaid in 2000 and the line of credit
terminated.

     On March 1, 2001, Winter Harbor elected to convert a note payable from
I-Link for $7,768,000 with accrued interest of $2,537,072 ($2,376,498 as of
December 31, 2000) into 4,122 shares of our Series M convertible preferred stock
as allowed under the original loan agreement. Upon conversion of the debt, we
issued a warrant to purchase 5,000,000 shares of common stock to Winter Harbor
as required under the loan agreement.

     On March 1, 2001, we entered into a Warrant Exchange Agreement with Winter
Harbor. Pursuant to the terms and provisions of this Agreement, Winter Harbor
agreed to assign, transfer, convey and deliver to us warrants to acquire
33,540,000 (including 5,000,000 warrants issued upon conversion of the
convertible debt discussed above) shares of our common stock beneficially owned
by Winter Harbor in exchange for our issuance to Winter Harbor of 5,000,000
shares of our common stock.

TRANSACTIONS WITH COUNSEL CORPORATION;

     On March 1, 2001, we entered into a Senior Convertible Loan and Security
Agreement, (the "Loan Agreement") with Counsel Corporation and Communications,
LLC, ("Counsel LLC") and a wholly-owned subsidiary of Counsel Corporation,
(collectively, "Counsel"). Pursuant to the terms and provisions of the Loan
Agreement, Counsel LLC agreed to make periodic loans to us in the aggregate
principal amount not to exceed $10,000,000, of which $3,000,000 was available
immediately upon the execution of the Loan Agreement.

     The $10,000,000 capital investment is structured as a 3-year note
convertible with interest at a rate of 9% per annum, compounded quarterly.
Counsel LLC can convert the loan into shares of our common stock at a conversion
price of $0.56 per common share. At any time after September 1, 2002, the

                                       36
<PAGE>

outstanding debt including accrued interest shall automatically convert into
common stock using the then conversion rate, on the first date that is the
twentieth consecutive trading day that the common stock has closed at a price
per share that is equal to or greater than $1.00 per share. The conversion price
is subject to adjustment in accordance with the terms and provisions of the Loan
Agreement. The Loan Agreement provides for traditional anti-dilution protection
and is subject to certain events of default. Proceeds to I-Link will be
$10,000,000 less debt issuance costs of approximately $700,000.

     By executing the above Loan Agreement, we granted Counsel LLC a first
priority security interest in all of our assets owned at the time of the
execution of the Loan Agreement or subsequently acquired, including but not
limited to our accounts receivable, general intangibles, inventory, equipment,
books and records, and negotiable instruments held by I-Link (collectively, the
"Collateral"). The Loan Agreement also included demand registration rights for
common stock issuable upon conversion of the Loan Agreement.

     In addition to the foregoing agreements, Counsel LLC and we executed a
Securities Support Agreement, dated March 1, 2001 (the "Support Agreement") for
the purpose of providing certain representations and commitments by us to
Counsel LLC as an inducement to Counsel to enter into a separate agreement with
Winter Harbor and First Media, L.P, (the "Securities Purchase Agreement"). We
were not a party to the Securities Purchase Agreement. In accordance with the
terms and provisions of the Securities Purchase Agreement, Counsel agreed to
purchase from Winter Harbor all of our debt and equity securities owned by
Winter Harbor, including shares of our Series M and Series N preferred stock,
beneficially owned by Winter Harbor for an aggregate consideration of
$5,000,000.

     Our commitments to Counsel LLC set forth in the Support Agreement included
our agreement to appoint two designees of Counsel, reasonably acceptable to us,
to our board of directors. We also agreed that immediately following the initial
funding (which was received in March 2001) of the Loan Note, we would solicit
the proxies of our shareholders to elect three additional nominees designated by
Counsel, thus, increasing the size of our Board of Directors to nine members.

     Under the Support Agreement, we also agreed to engage appropriate advisors
and proceed to take all steps necessary to merge Nexbell Communications Inc. (a
subsidiary of Counsel LLC) into I-Link. The merger has not yet taken place nor
have the terms been determined under which the merger may take place. Nexbell is
a designated Cisco Powered Network member in the VoIP category and operates a
private, managed packet telephony network delivering packet voice services to
over 400 metropolitan areas in the United States.

     On March 7, 2001, as part of the agreements discussed above, Counsel
converted all of the Series M and N convertible preferred stock it obtained from
Winter Harbor into 61,966,057 shares of our common stock. The Series N shares
were converted at equivalent of $1.25 per common share and Series M at $.56 per
common share.

                                       37
<PAGE>

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

     (a)  The following financial statements and those financial statement
          schedules required by Item 8 hereof are filed as part of this report:

          1.   Financial Statements:

               Report of Independent Accountants

               Consolidated Balance Sheets as of December 31, 2000 and 1999

               Consolidated Statements of Operations for the years ended
                 December 31, 2000, 1999 and 1998

               Consolidated Statement of Changes in Stockholders' Equity
                 for the years ended December 31, 2000, 1999 and 1998

               Consolidated Statements of Cash Flows for the years ended
                 December 31, 2000, 1999 and 1998

               Notes to Consolidated Financial Statements

          2.   Financial Statement Schedule:

               Report of Independent Accountants

               Schedule II - Valuation and Qualifying Accounts

               All other schedules are omitted because of the absence of
               conditions under which they are required or because the required
               information is presented in the Financial Statements or Notes
               thereto.

     (b)  We did not file any reports on Form 8-K during the fourth quarter of
          2000.

     (c)  The following exhibits are filed as part of this Registration
          Statement:

                                       38
<PAGE>

<TABLE>
<CAPTION>
NUMBER    TITLE OF EXHIBIT
------    ----------------
<S>       <C>
 3.1(12)  Amended and Restated Articles of Incorporation, as further amended.

 3.2(13)  Articles of Amendment to I-Link's Amended and Restated Articles of
          Incorporation, establishing the terms of Series F Preferred Stock.

 4.1(4)   Form of Hardy Group Warrant to purchase 175,000 shares of Common
          Stock.

 4.2(3)   Securities Purchase Agreement by and between I-Link and Winter Harbor,
          dated as of September 30, 1997.

 4.3(7)   Amended and Restated Registration Rights Agreement dated as of January
          15, 1999 by and between I-Link and Winter Harbor, amending
          Registration Rights Agreement dated October 10, 1997.

 4.4(3)   Form of Shareholders Agreement by and among I-Link and Winter Harbor
          and certain holders of I-Link's securities, which constitutes Exhibit
          D to the Purchase Agreement.

 4.5(3)   Form of Warrant Agreement by and between Medcross, Inc. and Winter
          Harbor, which constitutes Exhibit F to the Purchase Agreement.

 4.6(2)   Warrant Agreement dated as of June 6, 1997, by and between I-Link and
          Winter Harbor; and related Warrant Certificate.

 4.7(8)   Stock Option Agreement by and between I-Link and John Edwards.

 4.8(11)  Senior Convertible Loan and Security Agreement dated March 1, 2001, by
          and between Counsel Communications, LLC and I-Link Incorporated.

 4.9(11)  Loan Note, dated as of March 1, 2001, by and between Counsel
          Communications LLC and I-Link Incorporated.

 4.10(11) Security Agreement, dated as of March 1, 2001, by and between I-Link
          Communications, MiBridge Inc and Counsel Communications, LLC.

10.1(1)   1997 Recruitment Stock Option Plan.

10.2(5)   Agreement dated April 14, 1998, by and between I-Link and Winter Harbor.

10.3(5)   Pledge Agreement dated April 14, 1998, by and between I-Link and Winter Harbor.

10.4(5)   Security Agreement dated April 14, 1998, by and among certain of
          I-Link's subsidiaries and Winter Harbor.

10.5(5)   Form of Promissory Notes issued to Winter Harbor.

10.6(6)   Amended Form of Convertible Preferred Stock Purchase Agreement dated
          June 30, 1998 by and between I-Link and JNC Opportunity Fund Ltd.
          ("JNC").

10.7(5)   Registration Rights Agreement dated June 30, 1998 by and between I-Link and JNC.

10.8(5)   Warrant to purchase 250,000 shares of Common Stock of I-Link, dated
          June 30, 1998, issued to JNC.

10.9(5)   Exchange Agreement dated July 28, 1998 by and between I-Link and JNC.

10.10(5)  Warrant to purchase 100,000 shares of Common Stock of I-Link, dated
          July 28, 1998, issued to JNC.

10.11(7)  Loan Agreement dated as of January 15, 1999 by and between I-Link and
          Winter Harbor.

10.12(7)  First Amendment to Loan Agreement dated March 4, 1999 by and between
          I-Link and Winter Harbor.

10.13(7)  Promissory Note dated November 10, 1998, in principal amount of
          $8,000,000 executed by I-Link in favor of Winter Harbor.

10.14(7)  Series K Warrant Agreement dated as of January 15, 1999 by and between
          I-Link and Winter Harbor and form of Series K Warrant.

10.15(7)  Subsidiary Guaranty dated as of January 15, 1999 executed by five of
          I-Link's wholly owned subsidiaries in favor of Winter Harbor.

10.16(7)  Agreement dated as of January 15, 1999 by and between I-Link and Winter Harbor.

10.17(7)  First Amendment to Security Agreement dated as of January 15, 1999, by
          and among I-Link, five of its wholly-owned subsidiaries and Winter
          Harbor, amending Security Agreement dated April 14, 1997.

10.18(7)  First Amendment to Pledge Agreement dated as of January 15, 1999, by
          and among I-Link and Winter Harbor, amending Pledge Agreement dated
          April 14, 1997.

10.19(7)  Series D, E, F, G, H, I and J Warrant Agreement dated as of January
          15, 1999 by and between I-Link and Winter Harbor, and related forms of
          warrant certificates.
</TABLE>

                                       39
<PAGE>

<TABLE>
<S>       <C>
10.20(8)  Employment agreement with John Edwards dated September 9, 1999.

10.21(9)  Employment agreement with Dror Nahumi dated January 3, 2000.

10.22(9)  Employment agreement with David E. Hardy dated January 3, 2000.

10.23(9)  Employment agreement with John M Ames dated January 3, 2000.

10.24(9)  Employment agreement with Alex Radulovic dated January 3, 2000

10.25(9)  Form of Wholesale Service Provider and Distribution Agreement between
          I-Link and Big Planet, Inc. dated February 1, 2000

10.26(10) Form of Cooperation and Framework Agreement between I-Link
          Incorporated and CyberOffice International AG dated May 8, 2000

10.27(10) Form of Revenue Sharing Agreement between I-Link Incorporated and Red
          Cube International AG (formerly known as CyberOffice International
          AG.) dated June 30, 2000.

10.28(10) Form of Letter dated June 30, 2000, clarifying a Cooperation and
          Framework Agreement issue.

21(6)     Subsidiaries of the Registrant.

99.1(11)  Warrant Exchange Agreement, dated as of March 1, 2001, by and between
          Winter Harbor, LLC and I-Link Incorporated.

99.2(11)  Securities Support Agreement, dated as of March 1, 2001, by and
          between Counsel Communications, LLC and I-Link Incorporated.
</TABLE>

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

(1)  Incorporated by reference to our Annual Report on Form 10-KSB for the year
     ended December 31, 1996, file number 0-17973.

(2)  Incorporated by reference to our Current Report on Form 8-K, dated June 5,
     1997, file number 0-17973.10

(3)  Incorporated by reference to our Current Report on Form 8-K, dated
     September 30, 1997, file number 0-17973.

(4)  Incorporated by reference to our Pre-Effective Amendment No. 3 to
     Registration Statement on Form SB-2, file number 333-17861.

(5)  Incorporated by reference to our Quarterly Report on Form 10-Q for the
     period ended June 30, 1998, file number 0-17973.

(6)  Incorporated by reference to our Registration Statement on Form S-1 filed
     September 3, 1998, file number 333-62833.

(7)  Incorporated by reference to our Current Report on Form 8-K filed on March
     23, 1999, file number 0-17973.

(8)  Incorporated by reference to our Quarterly Report on Form 10-Q for the
     period ended September 30, 1999, file number 0-17973.

(9)  Incorporated by reference to our Quarterly Report on Form 10-Q for the
     period ended March 31, 2000, file number 0-17973.

(10) Incorporated by reference to our Quarterly Report on Form 10-Q for the
     period ended June 30, 2000, file number 0-17973.

(11) Incorporated by reference to our Current Report on Form 8-K filed on March
     16, 2001, file number 0-17973.

(12) Incorporated by reference to our Annual report on Form 10-K for the year
     ended December 31, 1998, file number 0-17973.

(13) Incorporated by reference to our Quarterly report on Form 10-Q for the
     period ended June 30, 1998, file number 0-17973.

                                       40
<PAGE>

SIGNATURES

     In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on our behalf by
the undersigned, hereunto duly authorized.


                                     I-LINK INCORPORATED
                                     (Registrant)


Dated: March 27, 2001                By: /s/ John W. Edwards
                                         ------------------------------
                                         John W. Edwards, Chairman of the Board,
                                         President and Chief Executive Officer


     In accordance with Section 13 of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

Signature                                Title                       Date
---------                                -----                       ----

/s/ John W. Edwards           Chairman of the Board, President   March 27, 2001
---------------------         and Chief Executive Officer
John W. Edwards


/s/ John M. Ames              Chief Financial Officer and        March  27, 2001
---------------------         Chief Operating Officer
John M. Ames


/s/ David E. Hardy            Secretary                          March 27, 2001
---------------------
David E. Hardy


/s/ Henry Y.L. Toh            Director                           March 27, 2001
---------------------
Henry Y.L. Toh


/s/ David R. Bradford         Director                           March 27, 2001
---------------------
David R. Bradford


/s/ Hal B. Heaton             Director                           March 27, 2001
---------------------
Hal B. Heaton



                                       41
<PAGE>

FINANCIAL STATEMENTS & SUPPLEMENTAL SCHEDULES

TABLE OF CONTENTS

<TABLE>
<CAPTION>
TITLE OF DOCUMENT                                                               PAGE
<S>                                                                             <C>
Report of Independent Accountants                                               F-1

Consolidated Balance Sheets as of December 31, 2000 and 1999                    F-2

Consolidated Statements of Operations for the years ended
  December 31, 2000, 1999 and 1998                                              F-3

Consolidated Statement of Changes in Stockholders' Equity (Deficit)
  for the years ended December 31, 2000, 1999 and 1998                          F-4

Consolidated Statements of Cash Flows for the years ended
  December 31, 2000, 1999 and 1998                                              F-7

Notes to Consolidated Financial Statements                                      F-9

Report of Independent Accountants on Financial Statement Schedule               S-1

Schedule of Valuation and Qualifying Accounts                                   S-2

</TABLE>

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders of
I-Link Incorporated and Subsidiaries:


In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, changes in stockholders' equity
(deficit), and cash flows present fairly, in all materials respects, the
financial position of I-Link Incorporated and its subsidiaries (the "Company")
as of December 31, 2000 and 1999, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.


PricewaterhouseCoopers LLP
Salt Lake City, Utah
March 19, 2001



                                      F-1
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2000 AND 1999


<TABLE>
<CAPTION>
                                                                                             2000               1999
                                                                                       -------------       -------------
<S>                                                                                    <C>                 <C>
                                     ASSETS
Current assets:
    Cash and cash equivalents                                                          $   2,155,628       $   2,950,730
    Accounts receivable, less allowance for doubtful accounts of $100,665 and
         $1,789,000 as of December 31, 2000 and 1999, respectively                         3,357,856           4,344,406
    Certificates of deposit - restricted                                                      53,500              53,500
    Other current assets                                                                     332,391             308,691
                                                                                       -------------       -------------
         Total current assets                                                              5,899,375           7,657,327
Furniture, fixtures, equipment and software,  net                                         10,983,273           7,019,361
Other assets:
    Intangible assets, net                                                                 3,939,226           6,551,453
    Certificates of deposit - restricted                                                     222,636              76,136
    Other assets                                                                             612,982             353,922
                                                                                       -------------       -------------
                                                                                       $  21,657,492       $  21,658,199
                                                                                       =============       =============
                      LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
    Accounts payable                                                                   $   5,370,490       $   4,131,675
    Accrued liabilities                                                                    3,327,900           2,629,046
    Unearned revenue                                                                      14,885,592                  --
    Current portion of long-term debt                                                        785,971             751,660
    Notes payable to a related party                                                       7,768,000                  --
    Accrued interest on notes payable to a related party                                   2,376,498                  --
    Current portion of obligations under capital leases                                    1,445,690           1,380,957
    Net liabilities of discontinued operations                                                    --              82,629
                                                                                       -------------       -------------
         Total current liabilities                                                        35,960,141           8,975,967
Notes payable                                                                                796,662                  --
Notes payable to a related party                                                                  --           7,768,000
Accrued interest on long-term notes payable                                                       --           1,345,801
Obligations under capital leases                                                             338,263             544,724
Unearned revenue                                                                           1,666,667                  --
                                                                                       -------------       -------------
         Total liabilities                                                                38,761,733          18,634,492
                                                                                       -------------       -------------
Commitments and contingencies (notes 9, 12 and 16)
Redeemable preferred stock - Series M                                                     11,734,820          11,734,820
Redeemable preferred stock - Series F                                                             --           2,338,784
                                                                                       -------------       -------------
                                                                                          11,734,820          14,073,604
                                                                                       -------------       -------------
Stockholders' deficit:
    Preferred stock, $10 par value, authorized 10,000,000 shares, issued and
         outstanding 24,435 and 49,992 as of December 31, 2000 and 1999,
         respectively; liquidation preference of $16,099,292 at December 31, 2000            244,350             499,920
    Common stock, $.007 par value, authorized 150,000,000 shares,
         issued and outstanding 28,136,506 and 24,150,829 at December 31, 2000
         and 1999, respectively                                                              196,957             169,056
    Additional paid-in capital                                                           106,622,114          98,734,475
    Deferred compensation                                                                         --            (499,377)
    Accumulated deficit                                                                 (135,902,482)       (109,953,971)
                                                                                       -------------       -------------
        Total stockholders' deficit                                                      (28,839,061)        (11,049,897)
                                                                                       -------------       -------------
                                                                                       $  21,657,492       $  21,658,199
                                                                                       =============       =============
</TABLE>

              The accompanying notes are an integral part of these
                        consolidated financial statements

                                      F-2
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                         2000               1999               1998
                                                                     ------------       ------------       ------------
<S>                                                                  <C>                <C>                <C>
Revenues:
    Telecommunication services                                       $ 18,300,548       $ 26,440,017       $ 19,634,681
    Marketing services                                                    463,740          3,672,988          4,548,421
    Technology licensing and development                                8,972,828          2,506,701          1,466,315
    Other                                                               2,667,039                 --                 --
                                                                     ------------       ------------       ------------
        Total revenues                                                 30,404,155         32,619,706         25,649,417
                                                                     ------------       ------------       ------------
Operating costs and expenses:
    Telecommunication network expense                                  24,958,320         20,373,209         19,099,194
    Marketing services                                                    456,354          5,400,149          5,850,873
    Selling, general and administrative                                18,353,731         12,428,956         10,563,382
    Provision for doubtful accounts                                       113,168          3,703,076          3,160,621
    Depreciation and amortization                                       6,399,318          5,482,639          4,192,174
    Write-down of capitalized software costs                                   --          1,847,288                 --
    Research and development                                            4,220,333          2,636,741          2,429,116
                                                                     ------------       ------------       ------------
        Total operating costs and expenses                             54,501,224         51,872,058         45,295,360
                                                                     ------------       ------------       ------------
Operating loss                                                        (24,097,069)       (19,252,352)       (19,645,943)
                                                                     ------------       ------------       ------------
Other income (expense):
    Interest expense                                                   (1,502,676)        (5,086,141)        (8,404,418)
    Interest and other income                                             487,132            179,205            270,288
    Settlement expense                                                   (639,565)                --                 --
                                                                     ------------       ------------       ------------
        Total other expense                                            (1,655,109)        (4,906,936)        (8,134,130)
                                                                     ------------       ------------       ------------
Loss from continuing operations                                       (25,752,178)       (24,159,288)       (27,780,073)
                                                                     ------------       ------------       ------------
Discontinued operations:
        Loss during phase-out period of discontinued
               operations (less applicable income tax provision
               of $0 in 1999 and 1998)                                         --           (500,000)          (178,006)
                                                                     ------------       ------------       ------------
Loss from discontinued operations                                              --           (500,000)          (178,006)
                                                                     ------------       ------------       ------------
               Net loss                                              $(25,752,178)      $(24,659,288)      $(27,958,079)
                                                                     ============       ============       ============
Calculation of net loss per common share:

Loss from continuing operations                                      $(25,752,178)      $(24,159,288)      $(27,780,073)
Cumulative preferred stock dividends not paid in current year          (1,646,818)        (1,948,557)        (2,066,383)
Deemed (non-cash) preferred stock dividend on Series F
        and N convertible preferred stock                                      --         (6,978,417)        (7,774,759)
                                                                     ------------       ------------       ------------
        Loss from continuing operations applicable to
                common stock                                         $(27,398,996)      $(33,086,262)      $(37,621,215)
                                                                     ============       ============       ============
Basic and diluted weighted average shares outstanding                  26,669,058         21,413,772         17,627,083
                                                                     ============       ============       ============
Net loss per common share - basic and diluted:
        Loss from continuing operations                              $      (1.03)      $      (1.55)      $      (2.13)
        Loss from discontinued operations                                      --              (0.02)             (0.01)
                                                                     ------------       ------------       ------------
                Net loss per common share                            $      (1.03)      $      (1.57)      $      (2.14)
                                                                     ============       ============       ============
</TABLE>

              The accompanying notes are an integral part of these
                        consolidated financial statements

                                      F-3
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
        CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                        Preferred Stock           Common Stock
                                     ---------------------   ---------------------
                                                                                      Additional
                                                                                        Paid-in       Deferred        Accumulated
                                      Shares      Amount      Shares       Amount      Capital      Compensation       Deficit
                                     --------  -----------   ----------   --------  -------------   ------------    --------------
<S>                                 <C>        <C>           <C>          <C>       <C>             <C>             <C>
BALANCE AT DECEMBER 31, 1997          115,526  $ 1,155,260   16,036,085   $112,251  $  58,820,877   $(2,289,765)    $ (56,984,247)
Issuance of Series F
  redeemable preferred stock,
  net of issuance costs
  of $569,418                           1,000       10,000           --         --      9,420,582            --                --
Reclassification of Series F
  redeemable preferred stock
  to mezzanine                         (1,000)     (10,000)          --         --     (9,420,582)           --                --
Reclassification of Series F
  redeemable preferred stock
  from mezzanine due to
  conversion to common stock                2           20           --         --         18,842            --                --
Conversion of preferred stock
  into common stock                   (71,477)    (714,770)   2,326,731     16,288        698,482            --                --
Common Stock dividend paid
  to holders of Series F
  redeemable preferred stock               --           --          240          2            487            --              (489)
Stock options issued for services          --           --           --         --        378,322      (356,322)               --
Amortization of deferred
  compensation on stock options
  issued for services                      --           --           --         --             --     1,157,901                --
Forfeiture of stock options
  issued for services                      --           --           --         --       (273,595)      273,595                --
Warrants issued in connection
  with certain notes payable               --           --           --         --      1,032,634            --                --
Warrants issued in connection
  with certain convertible
  notes payable                            --           --           --         --      7,274,000            --                --
Exercise of stock options
  and warrants                             --           --      399,540      2,797        682,146            --                --
Net loss                                   --           --           --         --             --            --       (27,958,079)
                                    ---------  -----------   ----------   --------  -------------   -----------     -------------
BALANCE AT DECEMBER 31, 1998           44,051  $   440,510   18,762,596   $131,338  $  68,632,195   $(1,214,591)    $ (84,942,815)
                                    =========  ===========   ==========   ========  =============   ===========     =============
</TABLE>

              The accompanying notes are an integral part of these
                        consolidated financial statements

                                      F-4
<PAGE>


                      I-LINK INCORPORATED AND SUBSIDIARIES
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT), CONTINUED
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                        Preferred Stock           Common Stock
                                     ---------------------   ---------------------
                                                                                      Additional
                                                                                        Paid-in       Deferred        Accumulated
                                      Shares      Amount      Shares       Amount      Capital      Compensation       Deficit
                                     --------  -----------   ----------   --------  -------------   ------------    --------------
<S>                                 <C>        <C>           <C>          <C>       <C>             <C>             <C>
BALANCE AT DECEMBER 31, 1998           44,051  $   440,510   18,762,596   $131,338  $  68,632,195   $(1,214,591)    $ (84,942,815)
Conversion of Series C, F
  and N preferred stock into
  common stock                        (14,809)    (148,090)   5,180,396     36,263        111,827            --                --
Reclassification of Series F
  redeemable preferred stock
  from mezzanine due to
  conversion to common stock              750        7,500           --         --      7,065,435            --                --
Common stock dividend paid
  to holders of Series F
  redeemable preferred stock               --           --      165,220      1,157        350,712            --          (351,868)
Issuance of Series N convertible
  preferred stock, net of
  issuance costs of $486,679           20,000      200,000           --         --     19,313,321            --                --
Exercise of stock options
  and warrants                             --           --       42,617        298          4,702            --                --
Warrants issued in connection
  with certain notes payable               --           --           --         --      2,220,563            --                --
Warrants issued in connection
  with a standby letter of credit          --           --           --         --        735,720            --                --
Stock options issued for services          --           --           --         --        300,000      (300,000)               --
Amortization of deferred
  compensation on stock options
  issued for services                      --           --           --         --             --     1,015,214                --
Net loss                                   --           --           --         --             --            --       (24,659,288)
                                    ---------  -----------   ----------   --------  -------------   -----------     -------------
BALANCE AT DECEMBER 31, 1999           49,992  $   499,920   24,150,829   $169,056  $  98,734,475   $  (499,377)    $(109,953,971)
                                    =========  ===========   ==========   ========  =============   ===========     =============
</TABLE>

              The accompanying notes are an integral part of these
                        consolidated financial statements

                                      F-5
<PAGE>


                      I-LINK INCORPORATED AND SUBSIDIARIES
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT), CONTINUED
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                        Preferred Stock           Common Stock
                                     ---------------------   ---------------------
                                                                                      Additional
                                                                                        Paid-in       Deferred        Accumulated
                                      Shares      Amount      Shares       Amount      Capital      Compensation       Deficit
                                     --------  -----------   ----------   --------  -------------   ------------    --------------
<S>                                 <C>        <C>           <C>          <C>       <C>             <C>             <C>
BALANCE AT DECEMBER 31, 1999           49,992  $   499,920   24,150,829   $169,056  $  98,734,475   $  (499,377)    $(109,953,971)
Conversion of preferred stock
  into common stock                   (25,805)    (258,050)   2,158,413     15,109        242,941            --                --
Reclassification of Series F
  redeemable preferred stock
  from mezzanine due to
  conversion to common stock              248        2,480           --         --      2,336,305            --                --
Common stock dividend paid
  to holders of Series F
  redeemable preferred stock               --           --       87,477        612        195,721            --          (196,333)
Exercise of stock options,
  warrants and issuances under
  stock purchase plan                      --           --    1,589,810     11,129      4,330,530
Stock options issued for services          --           --           --         --         42,605       (42,605)               --
Common stock issued as payment of
  accrued liabilities                      --           --      149,977      1,051        739,537            --                --
Amortization of deferred
  compensation on stock options
  issued for services                      --           --           --         --             --       541,982                --
Net loss                                   --           --           --         --             --            --       (25,752,178)
                                    ---------  -----------   ----------   --------  -------------   -----------     -------------
BALANCE AT DECEMBER 31, 2000           24,435  $   244,350   28,136,506   $196,957  $ 106,622,114   $        --     $(135,902,482)
                                    =========  ===========   ==========   ========  =============   ===========     =============

</TABLE>

              The accompanying notes are an integral part of these
                        consolidated financial statements

                                      F-6
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                             2000               1999                1998
                                                                          ------------       ------------       ------------
<S>                                                                       <C>                <C>                <C>
Cash flows from operating activities:
    Net loss                                                              $(25,752,178)      $(24,659,288)      $(27,958,079)
    Adjustments to reconcile net loss to net cash used in
       operating activities:
         Depreciation and amortization                                       6,399,318          5,482,639          4,192,174
         Provision for doubtful accounts                                       113,168          3,703,076          3,160,621
         Amortization of discount and debt issuance costs on notes
            payable and capital leases                                              --          3,360,771          7,402,059
         Amortization of deferred compensation on stock options
            issued for services                                                541,982          1,015,214          1,157,901
         Common stock issued as payment of settlement and
            interest expense                                                   740,588                 --                 --
         Write-down of capitalized software costs                                   --          1,847,288                 --
         Loss on disposal of assets                                                 --              7,494                 --
    Increase (decrease) from changes in operating assets and
       liabilities, net of effects of acquisitions:
         Accounts receivable                                                   873,382         (3,645,466)        (4,329,430)
         Other assets                                                         (429,260)          (163,089)           527,466
         Accounts payable, accrued liabilities and interest                  2,963,346          2,232,086           (990,776)
         Unearned revenue                                                   16,552,259                 --                 --
         Discontinued operations - noncash charges and working
            capital changes                                                   (133,250)           437,350             12,345
                                                                          ------------       ------------       ------------
                 Net cash provided by (used in) operating activities         1,869,355        (10,381,925)       (16,825,719)
                                                                          ------------       ------------       ------------
Cash flows from investing activities:
    Purchases of furniture, fixtures, equipment and software                (6,911,003)        (2,047,948)        (3,258,189)
    Proceeds from maturity of certificates of deposit  - restricted                 --            412,649          1,345,215
    Investing activities of discontinued operations                             29,537             50,000            310,000
                                                                          ------------       ------------       ------------
                 Net cash used in investing activities                      (6,881,466)        (1,585,299)        (1,602,974)
                                                                          ------------       ------------       ------------
</TABLE>

                                 (Continued)

              The accompanying notes are an integral part of these
                        consolidated financial statements

                                      F-7
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                             2000               1999              1998
                                                                          -----------       ------------       ------------
<S>                                                                       <C>               <C>                <C>
Cash flows from financing activities:
    Proceeds from issuance of notes payable to a related party            $ 2,600,000       $  8,200,000       $ 11,009,712
    Payment of notes payable to related party                              (2,600,000)          (798,772)        (2,700,904)
    Proceeds from advance under strategic marketing agreement               1,751,183                 --                 --
    Payment of advance under strategic marketing agreement                 (1,751,183)                --                 --
    Payment of capital lease obligations                                     (141,728)          (928,335)          (184,103)
    Proceeds from issuance of preferred stock, net of offering costs               --          7,116,408          9,430,582
    Payment of long-term debt                                                  (3,992)                --                 --
    Proceeds from exercise of stock options and warrants and
        issuances under stock purchase plan                                 4,341,659              5,000            684,943
    Financing activities of discontinued operations                           (24,204)                --           (170,465)
                                                                          -----------       ------------       ------------
         Net cash provided by financing activities                          4,171,735         13,594,301         18,069,765
                                                                          -----------       ------------       ------------
Increase (decrease) in cash and cash equivalents                             (840,376)         1,627,077           (358,928)

Cash and cash equivalents at beginning of year                              2,996,004          1,368,927          1,727,855
                                                                          -----------       ------------       ------------
Cash and cash equivalents at end of year:
    Continuing operations                                                   2,155,628          2,950,730          1,311,003
    Discontinued operations                                                        --             45,274             57,924
                                                                          -----------       ------------       ------------
         Total cash and cash equivalents at end of year                   $ 2,155,628       $  2,996,004       $  1,368,927
                                                                          ===========       ============       ============
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
    ACTIVITIES:
    Reclassification of Series F redeemable preferred stock
        from mezzanine                                                    $ 2,338,785       $  7,072,935       $         --
    Warrants issued in connection with a standby letter of credit                  --            735,720                 --
    Building mortgage incurred                                                840,000
    Stock options issued for services                                          42,605            300,000            378,322
    Accrued interest and debt exchanged for Series N preferred stock               --         12,718,914                 --
    Accrued debt issuance costs                                                    --            322,000                 --
    Equipment acquired under capital lease obligations                             --          2,177,126          1,124,606

SUPPLEMENTAL CASH FLOW INFORMATION:
    Interest paid - continuing operations                                 $   244,854       $    312,937       $    109,866
    Interest paid - discontinued operations                                    43,087             10,011            158,392

</TABLE>

              The accompanying notes are an integral part of these
                        consolidated financial statements

                                      F-8
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


NOTE 1 - DESCRIPTION OF BUSINESS, PRINCIPLES OF CONSOLIDATION AND LIQUIDITY

The consolidated financial statements include the accounts of I-Link
Incorporated and its subsidiaries ("I-Link" or the "Company"). The Company's
principal operation is the development, sale and delivery of enhanced
communications products and services utilizing its own private intranet and both
owned and leased network switching and transmission facilities. The Company
provides unique communications solutions through its use of proprietary
technologies. Telecommunications services are marketed primarily through master
agent and wholesale distributor arrangements with I-Link Communications, a
wholly-owned subsidiary of the Company that is an FCC licensed long-distance
carrier.

Through its wholly owned subsidiaries, MiBridge, Inc. (MiBridge) and ViaNet
Technologies, Ltd. (ViaNet), the Company develops and licenses communications
applications products and software that support multimedia communications
(voice, fax and audio) over the public switched network, local area networks and
the Internet.

During 1997, the Company formed a wholly owned subsidiary, I-Link Worldwide,
L.L.C., through which it launched a network marketing channel to market its
telecommunications services and products. On February 15, 2000, the Company
signed a strategic marketing and channel agreement with Big Planet Inc. ("Big
Planet"), a wholly-owned subsidiary of Nu Skin Enterprises, Inc. Under terms of
the agreement, I-Link's independent network marketing sales force (the " IRs")
transitioned to Big Planet, and Big Planet was granted the worldwide rights to
market and sell I-Link's products and services through the network marketing
(sometimes referred to as "Multi-Level") sales channel to residential and small
business users. Other I-Link sales channels into the residential, small
business, and other markets are unaffected by the agreement with Big Planet.

All significant intercompany accounts and transactions have been eliminated in
consolidation.

The Company incurred a net loss from continuing operations of $25,752,178 for
the year ended December 31, 2000, and as of December 31, 2000 had an accumulated
deficit of $135,902,482 and negative working capital of $30,060,766 (including
$14,885,592 in unearned revenue). The Company anticipates that revenues
generated from its continuing operations will not be sufficient during 2001 to
fund ongoing operations, the continued expansion of its private
telecommunications network facilities, product development and manufacturing,
and anticipated growth in subscriber base. The Company entered into additional
financing arrangements and issued a convertible loan in March 2001 as described
below (and more fully described in Note 16 - Subsequent Events) in order to
obtain additional funds and reduce liabilities to help fund for its continuing
operations in 2001.

-    On March 1, 2001, Winter Harbor elected to convert a note payable from the
     Company for $7,768,000 plus accrued interest of $2,537,072 ($2,376,498 as
     of December 31, 2000) into 4,122 shares of Series M convertible preferred
     stock of I-Link as provided under the original loan agreement. Upon
     conversion of the note, current liabilities as of December 31, 2000 in the
     amount of $10,144,498 were satisfied without cash.

-    On March 1, 2001 I-Link entered into a Senior Convertible Loan and Security
     Agreement ("Loan Agreement") with Counsel Communications, LLC, ("Counsel
     LLC"). Pursuant to the terms and provisions of the Loan Agreement, Counsel
     LLC agreed to make periodic loans to I-Link in the aggregate principal
     amount not to exceed $10,000,000. Of that amount, $3,000,000 was available
     to I-Link immediately upon the execution of the Loan Agreement. The
     $10,000,000 capital investment is structured as a 3-year note convertible
     into the Company's common stock with interest at a rate of 9% per annum,
     compounded quarterly.

As a result of Counsel LLC's purchase of Winter Harbor's security holdings in
I-Link (See Note 16 - Subsequent Events) Counsel LLC became the single largest
shareholder of the Company. In addition to the above transactions, Counsel
Corporation and its subsidiary Counsel LLC committed to fund, through long-term
inter-company advances or equity contribution, all capital investment, working
capital or other operational cash requirement of the Company through April 15,
2002.

                                      F-9
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. The Company maintains its cash and
cash equivalents primarily with financial institutions in Utah, California,
Arizona, New Jersey and Florida. These accounts may from time to time exceed
federally insured limits. The Company has not experienced any losses on such
accounts.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company evaluates the collectibility of its receivables at least quarterly,
based upon various factors including the financial condition and payment history
of major customers, an overall review of collections experience on other
accounts and economic factors or events expected to affect the Company's future
collections experience.

FURNITURE, FIXTURES, EQUIPMENT AND SOFTWARE

Furniture, fixtures, equipment and software are stated at cost. Depreciation is
calculated using the straight-line method over the following estimated useful
lives:

<TABLE>
<S>                                                         <C>
     Telecommunications network equipment                   2-6  years
     Furniture, fixtures and office equipment               3-6  years
     Software                                               1-3  years
</TABLE>

Betterments and renewals that extend the life of the assets are capitalized.
Other repairs and maintenance charges are expensed as incurred. The cost and
related accumulated depreciation applicable to assets retired are removed from
the accounts and the gain or loss on disposition is recognized in operations.
The Company regularly evaluates whether events or circumstances have occurred
that indicate the carrying value of its furniture, fixtures, equipment and
software may not be recoverable. When factors indicate the asset may not be
recoverable, the Company compares the related undiscounted future net cash flows
to the carrying value of the asset to determine if an impairment exists. If the
expected future net cash flows are less than the carrying value, impairment is
recognized based on the fair value of the asset. During 1999, the Company wrote
off $1,847,288 in unrecoverable capitalized software costs (see Note 6). There
were no such write-offs in 2000 or 1998.

INTANGIBLE ASSETS

The Company regularly evaluates whether events or circumstances have occurred
that indicate the carrying value of its intangible assets may not be
recoverable. When factors indicate the asset may not be recoverable, the Company
compares the related undiscounted future net cash flows to the carrying value of
the asset to determine if impairment exists. If the expected future net cash
flows are less than carrying value, impairment is recognized based on the fair
value of the asset. Amortization of intangible assets is calculated using the
straight-line method over the following periods:

<TABLE>
<S>                                                                   <C>
     Excess acquisition cost over fair value of net assets acquired   5-10 years
     Other intangible assets                                          3-15 years
</TABLE>

REVENUE RECOGNITION

Long-distance and enhanced service revenue is recognized as service is provided
to subscribers.

Marketing services revenues from the network marketing channel primarily
included revenues recognized from IRs for promotional and presentation materials
and national conference registration fees. Revenue from the sale of promotional
and presentation materials (included in Marketing services revenue) was
recognized at the time the materials were shipped. The portion of the sign-up
fee, including a normal profit margin, relating to on-going administrative
support was deferred and recognized over twelve months (the initial term of the
IR agreement). Marketing services revenues are presented net of estimated
refunds on returns of network marketing materials.

                                      F-10
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

During the second quarter of 2000, the Company entered into an agreement with
Red Cube International AG ("Red Cube"). The agreement with Red Cube consisted of
a $7,500,000 licensing fee and $2,500,000 for consulting services. This
$10,000,000 aggregate amount is nonrefundable and is being recorded as revenue
ratably over a two-year period. Accordingly, $3,333,333 was recorded as
technology licensing revenue in 2000. The balance of $6,666,667 has been
recorded as unearned revenue as of December 31, 2000. In July 2000, the Company
received an additional nonrefundable payment of $10,000,000. This payment is a
service prepayment that will be credited against services performed for and/or
provided to Red Cube. To the extent the service prepayment credit has not been
fully utilized by Red Cube by June 30, 2001, any unused service prepayment shall
be deemed fully earned and utilized as of that date contingent upon the
Company's network meeting certain capacity requirements during the service
period. During 2000, services rendered in the amount of $114,408 have been
offset against the prepayment resulting in a prepaid balance of unearned revenue
of $9,885,592 as of December 31, 2000. The balance ($9,885,592) of the service
prepayment has been recorded as unearned revenue as of December 31, 2000 and
will be recognized as revenue when the related services are performed or the
other criteria are met.

Revenue from the sale of software licenses is recognized when the product is
shipped, a noncancellable agreement is in force, the license fee is fixed or
determinable, acceptance has occurred and collectibility is reasonably assured.
Maintenance and support revenues are recognized ratably over the term of the
related agreements, which in most cases is one year. Revenues on long-term
development projects are recognized under the percentage of completion method of
accounting and are based upon costs incurred on the project, compared to
estimated total costs related to the contract.

COMPUTER SOFTWARE COSTS

The Company capitalizes qualified costs associated with developing computer
software for internal use. Purchased computer software for internal use is
capitalized and amortized over the expected useful life, usually three years.

CONCENTRATIONS OF CREDIT RISK

The Company's retail telecommunications subscribers are primarily residential
subscribers and are not concentrated in any specific geographic region of the
United States. The Company's wholesale customers are primarily based in Utah and
California.

INCOME TAXES

The Company records deferred taxes in accordance with Statement of Financial
Accounting Standards (SFAS) 109, "Accounting for Income Taxes." The statement
requires recognition of deferred tax assets and liabilities for temporary
differences between the tax bases of assets and liabilities and the amounts at
which they are carried in the financial statements, based upon the enacted tax
rates in effect for the year in which the differences are expected to reverse. A
valuation allowance is established when necessary to reduce deferred tax assets
to the amount expected to be realized.

SEGMENT REPORTING

The Company reports it segment information based upon the management approach
which designates the internal organization that is used by management for making
operating decisions and assessing performance as the source of the Company's
reportable segments.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities; 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.

                                      F-11
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 3 - NET LOSS PER SHARE

Basic earnings per share is computed based on the weighted average number of
common shares outstanding during the period. Options, warrants, convertible
preferred stock and convertible debt are included in the calculation of diluted
earnings per share, except when their effect would be anti-dilutive. As the
Company had a net loss from continuing operations for 2000, 1999 and 1998, basic
and diluted loss per share are the same.

During 2000, 1999 and 1998, holders of the Series F redeemable preferred stock
converted 248, 750 and 2 of those preferred shares, respectively. Accordingly,
they were paid stock dividends of 87,477, 165,220 and 240 shares, respectively,
of common stock on the converted shares.

As the conversion prices of the Series E, F, M and N preferred stock at issuance
were less than the market price of the Company's common stock, the Company
recognized deemed preferred stock dividends at issuance in 1999 and 1998, which
increased the loss attributable to common shareholders in the calculation of
basic and diluted net loss per common share. The deemed dividends are implied
only and do not represent future obligations to pay a dividend.

The deemed preferred stock dividends on the Series N preferred stock were
calculated as the difference between the conversion price per common share per
the Series N agreement and the market price of the common stock on the date the
proceeds from the offering were received and/or the debt was exchanged.

The deemed preferred stock dividends on Series E and Series F convertible
cumulative redeemable preferred stock equal the sum of the difference between
the conversion price per common share per the agreements and the market price of
the common stock as of the date the agreements were finalized and the difference
between the fair value of the Series F redeemable preferred stock issued and the
carrying value of the Series E stock at the date of redemption.

The deemed preferred stock dividend on Series M convertible cumulative
redeemable preferred stock is calculated as the difference between the
conversion price per common share per the agreement and the market price of the
common stock as of the date the agreement was finalized, plus the fair value of
the warrants issuable in connection with the preferred stock investment.

Potential common shares that were not included in the computation of diluted EPS
because they would have been anti-dilutive are as follows as of December 31:

<TABLE>
<CAPTION>
                                                                   2000           1999             1998
                                                                ----------      ----------      ----------
<S>                                                             <C>             <C>             <C>
Assumed conversion of Series C preferred stock                     374,959         808,248       1,057,224
Assumed conversion of Series F redeemable preferred stock               --       1,105,169       4,909,001
Assumed conversion of Series M convertible preferred stock       8,175,676       5,951,795       5,951,795
Assumed conversion of Series N preferred stock                  10,260,810       7,270,463              --
Assumed conversion of convertible debt                           7,539,830       4,931,226       3,820,954
Assumed exercise of warrants issued on conversion
       of convertible debt                                       5,000,000       5,000,000       5,000,000
Assumed exercise of options and warrants to purchase
       shares of common stock                                   45,354,992      41,945,091      30,265,670
                                                                ----------      ----------      ----------
                                                                76,706,267      67,011,992      51,004,644
                                                                ==========      ==========      ==========
</TABLE>

As of December 31, 2000, Winter Harbor, the sole holder of Series M convertible
preferred stock, held warrants, exercisable at any time, for the purchase of up
to 28,540,000 shares of common stock. In March 2001, Winter Harbor exchanged its
$7.768 million (and accrued interest) in promissory notes into additional shares
of Series M convertible preferred stock and by doing so received additional
warrants to purchase 5,000,000 shares of common stock. The exercise prices of
all of such warrants varied at the time of their respective issuance; however,
all are subject to adjustment downward to equal the price at which new shares of
common stock are issued or to equal the market price of common stock in the
event the common stock

                                      F-12
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 3 - NET LOSS PER SHARE, CONTINUED

market price is below the original exercise price at the time of exercise. The
exercise price of all Winter Harbor warrants was $1.48 at December 31, 2000 and
$1.25 in January 2001.

Subsequent to year end (see Note 16 - Subsequent Events) the following occurred:

     -    the convertible debt and associated accrued interest were converted
          into Series M convertible preferred stock;

     -    5,000,000 warrants were issued upon conversion of the convertible
          debt;

     -    all Series M and N redeemable preferred shares were converted into
          common stock;

     -    33,540,000 warrants (including the 5,000,000 discussed above) were
          retired in exchange for 5,000,000 shares of common stock.

NOTE 4 - DISCONTINUED OPERATIONS

On March 23, 1998, the Company's Board of Directors approved a plan to dispose
of the Company's medical services businesses in order to focus its efforts on
the sale of telecommunication services and technology licensing. The Company has
sold essentially all of the fixed assets, with the proceeds being used to
satisfy outstanding obligations of the medical services subsidiaries. During
1998, the Company received $310,000 from the sale of assets from the medical
services subsidiaries. In January 1999, the Company sold additional assets for
$15,000 and a note receivable of $35,000. In March 2000, the Company sold the
remaining assets and settled the outstanding liabilities of the China operations
and received net proceeds of $150,000. As of December 31, 2000 and 1999, there
are no revenue generating activities.

The results of the medical services operations have been classified as
discontinued operations for all periods presented in the Consolidated Statements
of Operations. The assets and liabilities of the discontinued operations have
been classified in the 1999 Consolidated Balance Sheet as "Net Liabilities -
discontinued operations". Discontinued operations have also been segregated for
all periods presented in the Consolidated Statements of Cash Flows.

Net assets (liabilities) of the Company's discontinued operations (excluding
intercompany balances, which have been eliminated against the net equity of the
discontinued operations) are as follows:

<TABLE>
<CAPTION>
                                                       2000         1999
                                                       ----     ------------
<S>                                                    <C>      <C>
Assets:
   Current assets:
       Cash and cash equivalents                         --      $    45,274
       Accounts receivable                               --          391,590
       Inventory                                         --          555,291
       Other                                             --           33,233
                                                       ----      -----------
          Total current assets                           --        1,025,388

   Furniture, fixtures and equipment, net                --           37,850
   Other non-current assets                              --              854
                                                       ----      -----------
          Total assets                                   --        1,064,092
                                                       ----      -----------
Liabilities:
   Current liabilities:
       Accounts payable and accrued liabilities          --          905,060
       Notes payable, current portion                    --          141,661
                                                       ----      -----------
          Total current liabilities                      --        1,046,721
   Note payable                                          --          100,000
   Other liabilities                                                     --
                                                       ----      -----------
          Total liabilities                              --        1,146,721
                                                       ----      -----------
Net assets (liabilities ) - discontinued operations      --      $   (82,629)
                                                       ====      ===========
</TABLE>

Revenues of the discontinued operations were $0, $337,268 and $1,445,376 for
2000, 1999 and 1998, respectively.

                                      F-13
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 5 - CERTIFICATES OF DEPOSIT - RESTRICTED

As of December 31, 2000, the Company has $276,136 in restricted certificates of
deposit (CDs). The CDs collateralize certain facilities lease agreements and a
mortgage payable to a bank. All of the CDs are held in escrow and bear interest,
which is paid to the Company. During 2000, restricted CDs totaling $53,500 were
released to the Company in accordance with the lease agreements. Of the
remaining CDs held in escrow, $53,500 will be released to the Company during
2001 and is classified as a current asset in the consolidated balance sheet.

NOTE 6 - FURNITURE, FIXTURES, EQUIPMENT AND SOFTWARE

Continuing operations

Furniture, fixtures, equipment and software relating to continuing operations
consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                        2000               1999
                                                    ------------       ------------
<S>                                                 <C>                <C>
Telecommunications network equipment                $ 13,209,784       $  7,749,939
Furniture, fixtures and office equipment               3,896,733          3,459,911
Building                                               1,200,000                 --
Software and information systems                       1,259,343            745,104
                                                    ------------       ------------
                                                      19,565,860         11,954,954
Less accumulated depreciation and amortization        (8,582,587)        (4,935,593)
                                                    ------------       ------------
                                                    $ 10,983,273       $  7,019,361
                                                    ============       ============
</TABLE>

Included in telecommunications network equipment are $3,899,474 and $3,907,312
in assets acquired under capital leases at December 31, 2000 and 1999,
respectively. Accumulated amortization on these leased assets was $2,931,420 and
$1,671,657 at December 31, 2000 and 1999, respectively.

During 1998, the Company contracted with an outside consulting firm to develop a
billing and operations information system and capitalized as a component of
furniture, fixture, equipment and software $2,284,574 in costs (including
amounts in accounts payable at December 31, 1998 of $437,286) associated with
this in-process system development. The Company continually evaluated the
functionality and progress of the in-process system development. In May 1999,
the Company's management and its Board of Directors concluded that the new
system would not significantly enhance the Company's existing billing and
information systems, would not meet its ultimate needs and had no alternative
future use and accordingly did not justify paying additional billed and
contracted expenses of approximately $1,000,000. Negotiations to discontinue
work under the contract were concluded in May 1999, with the consulting company
forgoing any future payments on the project while retaining amounts paid to date
of $1,847,288. Accordingly, the Company recorded, effective March 31, 1999, a
write-down of capitalized software costs on the in-process system development of
$1,847,288.

DISCONTINUED OPERATIONS

Furniture, fixtures and equipment relating to discontinued operations consisted
of the following at December 31:

<TABLE>
<CAPTION>
                                                  2000          1999
                                                  -----      ---------
<S>                                               <C>        <C>
Medical services equipment                           --      $  66,082
Furniture, fixtures and office equipment             --         46,755
                                                  -----      ---------
                                                     --        112,837
Less accumulated depreciation                        --        (74,987)
                                                  -----      ---------
                                                     --      $  37,850
                                                  =====      =========
</TABLE>

                                      F-14
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 7 - INTANGIBLE ASSETS

Intangible assets consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                        2000               1999
                                                                    ------------       ------------
<S>                                                                 <C>                <C>
Acquired technology                                                 $  1,450,000       $  1,450,000
Excess acquisition cost over fair value of net assets acquired        11,072,138         11,072,138
Other intangible assets                                                1,228,200          1,228,200
                                                                    ------------       ------------
                                                                      13,750,338         13,750,338
Less accumulated amortization                                         (9,811,112)        (7,198,885)
                                                                    ------------       ------------
                                                                    $  3,939,226       $  6,551,453
                                                                    ============       ============
</TABLE>

NOTE 8 - LONG-TERM DEBT

CONTINUING OPERATIONS

Long-term debt relating to continuing operations, the carrying value of which
approximates market, consists of the following at December 31:

<TABLE>
<CAPTION>
                                                                             2000             1999
                                                                         -----------       -----------
<S>                                                                      <C>               <C>
Note payable to a service provider, interest at 7.0%, due on demand      $   746,625       $   746,625

Note payable to Winter Harbor, payable April 15, 2001, interest
  at prime plus four percent (13.50% at December 31, 2000)
  (converted to common stock in March 2001)                                7,768,000         7,768,000

Building mortgage payable to a bank, interest at 9.84%,
  payable in monthly installments of $10,028                                 836,008                --

Other                                                                             --             5,035
                                                                         -----------       -----------
                                                                           9,350,633         8,519,660
Less current portion                                                      (8,553,971)         (751,660)
                                                                         -----------       -----------
Long-term debt, less current portion                                     $   796,662       $ 7,768,000
                                                                         ===========       ===========

</TABLE>

Maturities of long-term obligations on the building mortgage during each of the
years 2002 through 2005 are $43,894, $48,414, $53,399 and $59,379 respectively.

During 1998, the Company obtained an aggregate of $7,768,000 in interim debt
financing from Winter Harbor, L.L.C. As consideration for Winter Harbor's
commitment to make the loan, the Company agreed to issue 6,740,000 warrants to
purchase common stock of the Company at exercise prices ranging from $5.50 to
$7.22 (subsequently reset to $1.25 in January 2001) based upon 110% of the
closing price of the common stock on the day loan funds were advanced. The
warrants have exercise periods of 7.5 years from the date of issuance. The
Company also agreed to extend the exercise period on all warrants previously
issued to Winter Harbor (10,800,000) to 7.5 years. Pursuant to the terms of the
loan agreement with Winter Harbor, the initial borrowings of $5,768,000 were
payable upon demand by Winter Harbor no earlier than May 15, 1998, and were
collateralized by essentially all of the assets of the Company's subsidiaries.
As the loan was not repaid by May 15, 1998, the total loan, including additional
borrowings of $2,000,000 obtained in the second quarter, continued on a demand
basis with interest accruing at prime plus 4%. On April 15, 1999, Winter Harbor
agreed that it would not demand payment under the notes prior to April 15, 2000
and in April 2000 agreed to extend the due date of the principal and accrued
interest to April 15, 2001. On March 1, 2001, Winter Harbor converted the note
($7,768,000) and accrued interest ($2,537,072 at February 28, 2001) into 4,122
shares of Series M convertible preferred stock (See Note 16 - Subsequent
Events).

                                      F-15
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 8 - LONG-TERM DEBT, CONTINUED

During 1998, the Company recorded $7,274,000 as a discount against the
$7,768,000 Winter Harbor debt representing the relative fair market value
attributed to the warrants, the change of the exercise period on prior warrants
and the equity instruments associated with the assumed conversion of the debt
into equity. The debt discount was amortized over the original terms of the
respective borrowings.

Accrued and unpaid interest of $2,376,498 on the $7,768,000 Winter Harbor debt
is included in short-term liabilities as of December 31, 2000 while the note and
accrued and unpaid interest of $1,345,801 were included in long-term liabilities
on the consolidated balance sheet at December 31, 1999.

On January 15, 1999, I-Link finalized an agreement negotiated in November 1998
with Winter Harbor for additional financing. The financing arrangement consisted
of an $8,000,000 bridge loan facility (Bridge Loan) and a $3,000,000 standby
letter of credit to secure additional capital leases of equipment and telephone
lines relative to the expansion of the Company's telecommunications network. As
of December 31, 1998, the amount borrowed under the Bridge Loan was $3,841,712.
During 1999, the Company made additional borrowings under the Bridge Loan
totaling $4,158,288. Amounts outstanding under the Bridge Loan were originally
due on October 31, 1999. In July 1999, the Company exercised its right to
exchange the $8,000,000 in outstanding notes payable along with accrued interest
for Series N preferred stock.

As additional consideration for making the $8,000,000 Bridge Loan and $3,000,000
standby letter of credit, the Company granted warrants to purchase common stock
to Winter Harbor. Initially, Winter Harbor received one warrant for every $10
borrowed from Winter Harbor. On April 14, 1999, the shareholders voted to
approve a plan of financing which included issuing 10 warrants for each $10
borrowed under the Bridge Loan and standby letter of credit if the Company did
not repay the bridge loan on April 26, 1999. As the loan was not repaid by April
26, 1999, the number of warrants increased in total to 10 warrants for every $10
borrowed. As of December 31, 2000, the exercise price was $1.48 on these
warrants. The exercise price was reset to its floor of $1.25 in January 2001.

The Company recorded $3,253,196 as a discount against borrowings over a two-year
period (1999 and 1998) on the $8,000,000 Bridge Loan representing the relative
fair market value attributed to the Bridge Loan warrants. The debt discount was
amortized over the term of the Bridge Loan. As the $8,000,000 loan was exchanged
for Series N preferred stock in 1999, the debt discount has been fully
amortized. In addition, the Company recorded $735,720 as debt issuance costs
related to obligations under certain capital leases guaranteed by the Winter
Harbor letter of credit representing the fair value of the warrants associated
with the letter of credit warrants. The debt issuance costs are being amortized
over the term of the lease agreements.

On April 15, 1999, the Company entered into a financing agreement with Winter
Harbor. Winter Harbor agreed to loan to the Company up to $4,000,000 under a
note originally due September 30, 1999. In July 1999, the Company exercised its
right to exchange the loan for Series N preferred Stock.

In March 2001 Winter Harbor surrendered all of the warrants held by Winter
Harbor totaling 33,540,000 for 5,000,000 shares of common stock (See Note 16 -
Subsequent Events).


NOTE 9 - COMMITMENTS UNDER LONG-TERM LEASES

The Company leases a variety of equipment, fiber optics and facilities used in
its operations. The majority of these lease agreements are with three creditors.
During 1998, Winter Harbor obtained on behalf of the Company a letter of credit
totaling $3,000,000 to guarantee payment on a new lease agreement providing for
equipment purchases of up to $3,000,000. As of December 31, 2000 and 1999, the
Company had acquired $3,000,000 in assets under this lease.

In March 2000, the Company entered into a new lease facility providing for
equipment purchases of up to $5,000,000. The lease agreement requires monthly
payments over the three-year term. As of December 31, 2000, the Company
purchased $1,003,000 of equipment under the lease facility.

                                      F-16
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


NOTE 9 - COMMITMENTS UNDER LONG-TERM LEASES, CONTINUED

Agreements classified as operating leases have terms ranging from one to six
years. The Company's rental expense for operating leases was approximately
$6,946,000, $3,270,000 and $2,900,000 for 2000, 1999 and 1998, respectively.
Future minimum rental payments required under non-cancelable capital and
operating leases with initial or remaining terms in excess of one year consist
of the following at December 31, 2000:

<TABLE>
<CAPTION>
                                                   Capital          Operating
                                                   Leases             Leases
                                                 -----------       -----------
<S>                                              <C>               <C>
Year ending December 31:
               2001                              $ 1,607,000       $ 3,192,000
               2002                                  197,000         2,059,000
               2003                                  197,000           696,000
               2004                                   16,000           366,000
               2005                                       --           116,000
               Thereafter                                 --                --
                                                 -----------       -----------
Total minimum payments                             2,017,000       $ 6,429,000
                                                                   ===========
Less amount representing interest                   (233,000)
                                                 -----------
Present value of net minimum lease payments        1,784,000
Less current portion                              (1,446,000)
                                                 -----------
Long-term obligations under capital leases       $   338,000
                                                 ===========

</TABLE>

The Company has an agreement with a national carrier to lease local access
spans. The agreement includes minimum usage commitments of $2,160,000 per year
for the two years beginning July 2000. If the Company were to terminate the
agreement early, it would be required to pay 25% of any remaining minimum usage
requirements.


NOTE 10 - INCOME TAXES

The Company recognized no income tax benefit from its losses in 2000, 1999 and
1998.

The reported benefit from income taxes varies from the amount that would be
provided by applying the statutory U.S. Federal income tax rate to the loss from
continuing operations before taxes for the following reasons:

<TABLE>
<CAPTION>
                                                          2000                1999               1998
                                                       ------------       ------------       ------------
<S>                                                    <C>                <C>                <C>
Expected federal statutory tax benefit                 $ (8,755,741)      $ (8,384,158)      $ (9,505,747)

Increase (reduction) in taxes resulting from:
    State income taxes                                     (774,427)          (553,452)          (734,464)
    Foreign loss not subject to domestic tax              1,584,313            353,083                 --
    Non-deductible interest on certain notes                     --          2,473,160          2,516,700
    Exercise of stock options issued for services        (1,277,402)           (60,428)          (583,743)
    Change in valuation allowance                        10,090,027          5,719,844          8,301,669
    Other                                                  (866,770)           451,951              5,585
                                                       ------------       ------------       ------------
                                                       $         --       $         --       $         --
                                                       ============       ============       ============
</TABLE>

At December 31, 2000, the Company had net operating loss carryforwards for both
federal and state income tax purposes of approximately $73,000,000. The net
operating loss carryforwards will expire between 2006 and 2020 if not used to
reduce future taxable income. In 2001 the Company underwent a change of control
and accordingly the net operating loss carryforwards may be subject to certain
annual limitations in the future under Section 338 of the Internal Revenue Code.

                                      F-17
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


NOTE 10 - INCOME TAXES, CONTINUED

The components of the deferred tax asset and liability as of December 31, 2000
and 1999 are as follows:

<TABLE>
<CAPTION>
                                                                         2000               1999
                                                                     ------------       ------------
<S>                                                                  <C>                <C>
Deferred tax assets:
        Tax net operating loss carryforwards                         $ 27,319,350       $ 21,851,952
        Acquired in-process research and development
          and intangible assets                                         2,943,381          2,381,880
        Amortization of deferred compensation on stock options                 --          1,730,901
        Reserve for loss on disposal of discontinued operations                --             54,370
        Reserve for accounts receivable and inventory valuation           164,703            623,897
        Accrued officers wages                                                 --            134,910
        Accrued vacation                                                  126,820             48,490
        Unearned revenue                                                6,183,318                 --
        Other                                                             136,993             37,187
        Valuation allowance                                           (36,798,144)       (26,708,116)
                                                                     ------------       ------------
          Total deferred tax asset                                         76,421            155,471
                                                                     ------------       ------------
Deferred tax liability:
        Excess tax depreciation and amortization                          (76,421)          (155,471)
                                                                     ------------       ------------
          Total deferred tax liability                                    (76,421)          (155,471)
                                                                     ------------       ------------
Net deferred tax asset                                               $         --       $         --
                                                                     ============       ============
</TABLE>

The valuation allowance at December 31, 2000 and 1999 has been provided to
reduce the total deferred tax assets to the amount which is considered more
likely than not to be realized, primarily because the Company has not generated
taxable income from its business communications services. The change in the
valuation allowance is due primarily to the increase in net operating loss
carryforwards. It is at least reasonably possible that a change in the valuation
allowance may occur in the near term.


NOTE 11 - LEGAL PROCEEDINGS

On January 18, 2001, I-Link Incorporated ("I-Link") filed action against Red
Cube, International AG and Red Cube, Inc. ("Red Cube") in federal court in Utah
seeking damages against Red Cube, for an alleged default on an agreement to
provide approximately $60,000,000 in equity funding to I-Link, and instituting a
scheme to drive I-Link out of business and obtain control of I-Link's
proprietary technology, telecommunications network, key employees and customers.
I-Link obtained a temporary restraining order against Red Cube preventing Red
Cube from interfering with I-Link's employees, vendors and customers. Red Cube
subsequently filed a motion to dismiss the action and compel arbitration based
upon a mandatory arbitration provision in the May 2000 Cooperation and Framework
Agreement by and between Red Cube and I-Link. The court found that I-Link's
claims were "related to" the Cooperation and Framework Agreement and granted Red
Cube's motion to dismiss for lack of subject matter jurisdiction. The dismissal
resulted in this issue being submitted for AAA arbitration pursuant to the
Cooperation and Framework Agreement.

On January 24, 2001, Red Cube delivered a written demand for arbitration and
commenced an arbitration proceeding in New York alleging that I-Link breached
the Cooperation and Framework Agreement by (i) threatening a shut-down of
I-Link's IP telecommunications network, (ii) the resignation of Dror Nahumi as
an employee of I-Link (which Red Cube claims will cause I-Link to breach its
undertaking to provide the consulting services of John Edwards, Dror Nahumi and
Alex Radulovic in the event I-Link is unable to perform under the Agreement and
Red Cube is required to assume primary operation and maintenance of it's own IP
telecommunications network based upon I-Link's technology), and (iii) I-Link's
alleged failure to update the escrowed copy of its source code to the current
version of the source code employed to maintain the IP telecommunications
network. I-Link denied these allegations. I-Link filed a counterclaim against
Red Cube and filed a third-party claim against Red Cube, seeking (compensatory
and/or punitive) damages for Red Cube's default under a

                                      F-18
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 11 - LEGAL PROCEEDINGS, CONTINUED

subsequent agreement to provide approximately $60,000,000 in equity funding to
I-Link, and engaging in a scheme to drive I-Link out of business and obtain
control of I-Link's proprietary technology, telecommunications network, key
employees and customers. The arbitration proceeding is in its initial stage, and
no hearings have occurred.

An action has been brought against I-Link Worldwide LLC by a former independent
representative of I-Link Worldwide, L.L.C. whose contractual relationship
consisted of I-Link's standard independent representative agreement and two
written agreements between himself, I-Link and I-Link Worldwide, LLC. The action
alleges that I-Link Incorporated and I-Link Worldwide LLC wrongfully terminated
his agreements. The alleged damages range from $7,000,000 to $10,000,000
constituting the aggregate value of the residual terms of these agreements.
I-Link Incorporated and I-Link Worldwide, LLC maintain that the agreements were
properly terminated pursuant to their respective terms and conditions and that
no losses were suffered or damages incurred by the former independent
representative. Binding arbitration is tentatively scheduled to start April 23,
2001.

On March 10, 2000, the Company and JNC Opportunity Fund, Ltd. ("JNC") entered
into a settlement and release agreement relating to certain litigation
concerning shares of Series F Preferred stock held by JNC. The shares of Series
F Preferred stock held by JNC were convertible into 1,104,972 shares of common
stock under the original agreement with JNC. On March 10, 2000, the Company
issued 531,968 shares of common stock to JNC pursuant to the settlement
agreement in cancellation of the Series F shares held by JNC. The balance of the
shares required to be issued pursuant to the settlement agreement required
approval at a special meeting of the shareholders held on May 23, 2000, at which
time approval of the shareholders was received. Due to the delay in issuance of
the shares required to be issued pursuant to the settlement agreement until
shareholder approval was received and the related common shares were registered,
the Company issued 20,458 "Additional Shares" of common stock in accordance with
the agreement.

The issuance of 87,477 shares representing dividends associated with the Series
F stock has been recorded in the Company's financial statements as dividends
paid, and 129,519 shares have been recorded as settlement expense. The Company
has recorded interest expense of $111,021 representing the market value of the
common stock issued as Additional Shares, Late Shares and Additional Late Shares
(20,458) on May 24, 2000. The amount of settlement and interest expense was
determined by reference to the market value of the Company's common stock on the
date of issuance (May 24, 2000) multiplied by the common shares issued.
Accordingly, the total settlement and interest expense was $639,565 and
$111,021, respectively.

The Company is involved in litigation relating to other claims arising out of
its operations in the normal course of business. The litigation and arbitration
referred to above is not expected, individually or in the aggregate, to have a
material adverse affect on the Company.


NOTE 12 - STOCKHOLDERS' EQUITY

PREFERRED STOCK

The Company's Articles of Incorporation provide for up to 240,000 shares of
preferred stock as Series C Convertible Cumulative preferred stock (the "Series
C preferred stock"). The Series C preferred stock has a par value of $10 per
share and holders are entitled to receive cumulative preferential dividends
equal to 8% per annum of the liquidation preference per share of $60.00. Unless
previously redeemed, the Series C preferred stock was initially convertible into
24 of the Company's common stock ("Conversion Shares") at the option of the
holder (subject to certain anti-dilution adjustments). The Series C stock
exchange price did allow for downward resets based upon certain conditions
subject to a floor of $1.25. Subsequent to year-end the exchange price has been
reset to the floor of $1.25 or 48 shares of the Company's common stock. The
Series C preferred stock is redeemable at any time after September 6, 2000, at
the option of the Company at a redemption price equal to $90 plus accrued and
unpaid dividends, provided the Conversion Shares are covered by an effective
registration statement or the Conversion Shares are otherwise exempt from
registration. During the years ending December 31, 2000, 1999 and 1998, 24,428,
10,374 and 70,908 shares, respectively, of Series C preferred stock were
converted into common shares. At December 31, 2000, there were 9,249 Series C
preferred shares outstanding.

                                      F-19
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 12 - STOCKHOLDERS' EQUITY, CONTINUED

On October 10, 1997, the Company closed an agreement with Winter Harbor pursuant
to which Winter Harbor invested $12,100,000 in a new series of the Company's
convertible preferred stock (the "Series M convertible preferred stock"). Winter
Harbor purchased approximately 2,545 shares of Series M convertible preferred
stock, originally convertible into approximately 2,545,000 shares of common
stock, for an aggregate cash consideration of approximately $7,000,000
(equivalent to $2.75 per share of common stock). The agreement with Winter
Harbor also provided for the purchase of approximately 1,855 additional shares
of Series M convertible preferred stock, originally convertible into
approximately 1,855,000 shares of common stock. Such additional shares of Series
M convertible preferred stock were paid for by Winter Harbor exchanging
$5,000,000 in outstanding notes payable and accrued interest of approximately
$100,000. As additional consideration for its equity investment in Series M
convertible preferred stock, Winter Harbor was issued additional warrants by the
Company to acquire 10,000,000 shares of common stock. The exercise price on each
of the warrants has subsequently been reset to $1.48 as of December 31, 2000 and
$1.25 in January 2001 (see Note 3). All of the warrants have demand registration
and anti-dilution rights and contain cashless exercise provisions.

The Series M convertible preferred stock is entitled to receive cumulative
dividends in the amount of 10% per annum before any other Series of preferred
(other than Series F) or common stock receives any dividends. Thereafter, the
Series M convertible preferred stock participates with the common stock in the
issuance of any dividends on a per share basis. The Series M convertible
preferred stock will have the right to veto the payment of dividends on any
other class of stock.

The basis for conversion shall be adjusted upon the occurrence of certain
events, including without limitation, issuance of stock dividends,
recapitalization of the Company or the issuance of stock by the Company at less
than the fair market value thereof. At December 31, 2000, the conversion price
of the Series M convertible preferred stock was $1.48 (and $1.25 in January
2001) as a result of shares of Series N preferred stock being converted at that
price. The Series M convertible preferred stock will vote with the common stock
on an as-converted basis on all matters which are submitted to a vote of the
stockholders, except as may otherwise be provided by law or by the Company's
Articles of Incorporation or By-Laws; provided, however, that the Series M
convertible preferred stockholders will have the right to appoint two members of
the Company's board of directors. Furthermore, the Series M convertible
preferred stockholders shall have the right to be redeemed at fair market value
in the event of a change of control of the Company, shall have preemptive rights
to purchase securities sold by the Company, and shall have the right to preclude
the Company from engaging in a variety of business matters without the
concurrence of Winter Harbor, including without limitation: mergers,
acquisitions and disposition of corporate assets and businesses, hiring or
discharging key employees and auditors, transactions with affiliates,
commitments in excess of $500,000, the adoption or settlement of employee
benefit plans and filing for protection from creditors. As of December 31, 2000,
all 4,400 shares of the Company's Series M convertible preferred stock remain
issued and outstanding.

Because the above redemption provisions are not entirely within the control of
the Company, the Series M convertible preferred stock is presented as a separate
line item above stockholders' deficit. All of the Series M convertible preferred
stock was converted into common shares of the Company in March 2001 (See Note 16
- Subsequent Events).

On July 9, 1998 the Company obtained a $10,000,000 equity investment, net of
$530,000 in closing costs, from JNC Opportunity Fund Ltd. ("JNC"). Under the
original terms of the equity investment, JNC purchased 1,000 shares of the
Company's newly created 5% Series E convertible preferred stock, which were
convertible into the Company's common stock. In addition, JNC obtained a warrant
to purchase 250,000 shares of the Company's common stock at an exercise price of
$5.873 (equal to 120% of the market price of the Company's publicly traded
common shares as of the date of closing).

On July 28, 1998, the terms of the JNC equity investment were amended to provide
a floor to the conversion price, and to effect the amendment the Company created
a 5% Series F convertible preferred stock for which the Series E preferred
shares originally issued to JNC were exchanged one for one. Pursuant to the
amendment, the Series F preferred shares were originally convertible into common
shares at a conversion price of the lesser of $4.00 per common share or 87% of
the moving average market price of the Company's common shares at the time of
conversion, subject to a $1.25 floor. JNC also received an additional warrant to
purchase 100,000 shares of the Company's common stock at an exercise price of
$4.00 per common share. See "Note 11 - Legal Proceeding" for additional
information relating to the Series F preferred stock and settlement with JNC.

                                      F-20
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 12 - STOCKHOLDERS' EQUITY, CONTINUED

In certain instances, including a change in control of the Company in excess of
33% ownership and if the Company's common stock is not listed on NASDAQ or a
subsequent market or is suspended for more than three non-consecutive trading
days, the holders of the Series F preferred stock may require that the Company
redeem their Series F preferred stock. Because these redemption provisions were
not entirely within the control of the Company, Series F preferred stock was
presented as a separate line item above stockholders' deficit as of December 31,
1999.

In addition, the Company issued warrants to purchase 75,000 shares of the
Company's common stock at a price of $4.89 per share to two individuals as a
brokerage fee in connection with the JNC equity investment.

During 2000, 1999 and 1998, JNC converted 248, 750 and 2 shares of Series F
redeemable preferred stock into 1,104,972, 3,518,051 and 10,004 shares of common
stock, respectively. In addition, during 2000, 1999 and 1998, JNC was paid a
stock dividend of 87,477, 165,220 and 240 shares of common stock, respectively,
on the converted shares. As of December 31, 2000, all of the Series F redeemable
preferred stock had been converted.

On July 23, 1999, the Company completed its offering of 20,000 shares of Series
N preferred stock. The offering was fully subscribed through cash subscriptions
and the Company exercised its rights to exchange notes payable to Winter Harbor
of $8,000,000 and $4,000,000, plus accrued interest. In total the Company
received $7,281,086 in cash (before expenses of $486,679) and exchanged
$12,718,914 in debt and accrued interest. The Series N conversion price was
initially set at $2.78. The conversion rate was adjusted to $1.48 as of December
31, 2000 and $1.25 in January 2001 based on 110% of the average trading price
for any 20 day period following the date that Series N preferred stock is first
issued subject to a floor of $1.25. The Series N preferred stock votes with the
common stock on an as converted basis and is senior to all other preferred stock
of the Company, except that the Series N preferred stock will in all rights be
equal in seniority to the already outstanding Series F preferred stock.
Dividends will be paid on an as converted basis equal to common stock dividends.

During 2000 and 1999, holders of the Series N preferred stock converted 1,129
and 3,685 of those shares into 467,169 and 1,413,369 shares of common stock,
respectively, at conversion prices ranging between $2.78 and $1.64

As the conversion price of the Series N preferred stock at issuance was less
than the market price, the Company recognized a $6,978,417 deemed preferred
stock dividend in the third quarter of 1999. All shares of Series N preferred
stock held by Winter Harbor were converted into common stock of the Company in
March 2001 (see Note 16 - Subsequent Events).

At December 31, 2000, of the 10,000,000 shares of preferred stock authorized,
9,486,500 remain undesignated and unissued. Dividends in arrears at December 31,
2000 were $602,702 and $4,543,187 for Series C and M preferred stock,
respectively.

COMMON STOCK

On April 14, 1999, the shareholders approved an amendment to the Articles of
Incorporation increasing the authorized common stock from 75,000,000 shares to
150,000,000 shares.


NOTE 13 - STOCK-BASED COMPENSATION PLANS

At December 31, 2000, the Company has several stock-based compensation plans,
which are described below. The Company applies APB Opinion No. 25 and related
interpretations in accounting for its plans. Accordingly, no compensation cost
has been recognized for its fixed option plans

Had compensation cost for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates for awards under the plans
and based on the incremental fair value associated with the repricing of options
consistent with the method outlined by SFAS 123, "Accounting for Stock-Based
Compensation", the Company's net loss and loss per share would have been
increased to the pro forma amounts indicated as follows:

                                      F-21
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


NOTE 13 - STOCK-BASED COMPENSATION PLANS, CONTINUED

<TABLE>
<CAPTION>
                                                       2000                 1999                1998
                                                  --------------       --------------       --------------
<S>                                               <C>                  <C>                  <C>
Net loss as reported                              $  (25,752,178)      $  (24,659,288)      $  (27,958,079)
                                                  ==============       ==============       ==============
Net loss pro-forma                                $  (33,262,209)      $  (33,442,845)      $  (38,224,529)
                                                  ==============       ==============       ==============
Basic and diluted loss per share as reported      $        (1.03)      $        (1.57)      $        (2.14)
                                                  ==============       ==============       ==============
Basic and diluted loss per share pro-forma        $        (1.25)      $        (1.98)      $        (2.73)
                                                  ==============       ==============       ==============
</TABLE>

The fair value of each option grant is estimated on the date of the grant using
the Black-Scholes option pricing model with the following weighted average
assumptions: expected volatility of 102%, 97% and 103% in 2000, 1999, and 1998,
respectively, risk free rates ranging from 4.67% to 6.83%, 4.35% to 6.08% and
4.26% to 5.67% in 2000, 1999, and 1998, respectively, expected lives of 3 years
for each year, and dividend yield of zero for each year.

<TABLE>
<CAPTION>
                                                             2000                       1999                      1998
                                                   ------------------------   ------------------------   ------------------------
                                                                   Weighted                   Weighted                   Weighted
                                                    Options        Average     Options        Average     Options        Average
                                                      and          Exercise      and          Exercise      and          Exercise
                                                    Warrants         Price     Warrants        Price      Warrants        Price
                                                   ----------      --------   ----------      --------   ----------      --------
<S>                                                <C>             <C>        <C>              <C>       <C>             <C>
Outstanding at beginning of year                   41,945,091       $ 2.67    30,265,670       $ 4.54    20,998,872       $ 4.68
Granted                                             5,508,339         4.13    12,138,246         2.18     9,978,671         5.48
Exercised                                          (1,612,231)        3.10       (74,280)        2.03      (399,540)        1.71
Expired                                              (180,144)        3.56      (301,462)        3.59      (145,834)        5.42
Forfeited                                            (306,063)        3.40       (83,083)        4.13      (166,499)        6.67
                                                   ----------       ------    ----------       ------    ----------       ------
Outstanding at end of year                         45,354,992       $ 2.57    41,945,091       $ 2.67    30,265,670       $ 4.54
                                                   ==========       ======    ==========       ======    ==========       ======
Options and warrants exercisable
         at year end                               38,662,539                 37,074,871                 24,479,374
                                                   ==========                 ==========                 ==========
Weighted-average fair value of options
        and warrants granted during the year                        $ 2.25                     $ 2.61                     $ 4.69
                                                                    ======                     ======                     ======
</TABLE>

The following table summarizes information about fixed stock options and
warrants outstanding at December 31, 2000.

<TABLE>
<CAPTION>
                            Options           Weighted           Weighted                      Weighted
                         and Warrants          Average           Average          Number       Average
                         Outstanding          Remaining          Exercise       Exercisable    Exercise
Exercise price           at 12/31/00         Life (years)         Price         at 12/31/00     Price
---------------          ------------        --------------      --------       -----------    --------
<S>                      <C>                 <C>                 <C>            <C>            <C>
$0.875 to $2.50           29,788,741            5.08              $1.66          29,419,746      $1.65
$2.56 to $3.88             5,095,837            8.69               2.88           2,709,461       2.91
$3.90 to $4.94             6,223,638            6.18               3.92           5,647,706       3.90
$5.06 to $13.88            4,246,773            7.03               6.66             885,626       6.57
                          ----------           -----              -----         -----------      -----
                          45,354,989            5.82              $2.57          38,662,539      $2.18
                          ==========           =====              =====         ===========      =====
</TABLE>

1997 RECRUITMENT STOCK OPTION PLAN

In October 2000, the shareholders of the Company approved an amendment of the
1997 Recruitment Stock Option Plan which provides for the issuance of incentive
stock options, non-qualified stock options and stock appreciation rights (SARs)
up to an aggregate of 7,400,000 shares of common stock (subject to adjustment in
the event of stock dividends, stock splits, and other similar events). The price
at which shares of common stock covered by the option can be purchased is
determined by the Company's Board of Directors; however, in all instances the
exercise price is never less than the fair market value of the Company's common
stock on the date the option is granted.

                                      F-22
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 13 - STOCK-BASED COMPENSATION PLANS, CONTINUED

As of December 31, 2000, there were incentive stock options to purchase
2,951,045 shares of the Company's common stock and non-qualified stock options
to purchase 1,038,208 shares of the Company's common stock outstanding. The
outstanding options vest over three years at exercise prices of $1.19 to $13.88
per share. Options issued under the plan must be exercised within ten years of
grant and can only be exercised while the option holder is an employee of the
Company. The Company has not awarded any SARs under the plan. During 2000, 1999
and 1998, options to purchase 439,542, 126,042 and 228,500 shares of common
stock, respectively, were forfeited or expired. During 2000 options to purchase
411,420 shares of common stock were exercised.

DIRECTOR STOCK OPTION PLAN

The Company's Director Stock Option Plan authorizes the grant of stock options
to directors of the Company. Options granted under the Plan are non-qualified
stock options exercisable at a price equal to the fair market value per share of
common stock on the date of any such grant. Options granted under the Plan are
exercisable not less than six months or more than ten years after the date of
grant.

As of December 31, 2000, options for the purchase of 7,669 shares of common
stock at prices ranging from $0.875 to $3.875 per share were outstanding, all of
which are exercisable. In connection with the adoption of the 1995 Director
Plan, the Board of Directors authorized the termination of future grants of
options under the plan; however, outstanding options granted under the plan will
continue to be governed by the terms thereof until exercise or expiration of
such options. In 2000, options to purchase 500 shares of common stock were
exercised.

1995 DIRECTOR STOCK OPTION AND APPRECIATION RIGHTS PLAN

The 1995 Director Stock Option and Appreciation Rights Plan (the "1995 Director
Plan") provides for the issuance of incentive options, non-qualified options and
stock appreciation rights to directors of the Company. The 1995 Director Plan
provides for the grant of incentive options, non-qualified options, and SARs to
purchase up to 250,000 shares of common stock (subject to adjustment in the
event of stock dividends, stock splits, and other similar events).

The 1995 Director Plan also provides for the grant of non-qualified options on a
discretionary basis to each member of the Board of Directors then serving to
purchase 10,000 shares of common stock at an exercise price equal to the fair
market value per share of the common stock on that date. Each option is
immediately exercisable for a period of ten years from the date of grant. The
Company has 190,000 shares of common stock reserved for issuance under the 1995
Director Plan. As of December 31, 2000, options to purchase 170,000 shares of
common stock at prices ranging from $1.00 to $1.25 per share are outstanding and
exercisable. No options were granted or exercised under this plan in 1998, 1999
or 2000.

1995 EMPLOYEE STOCK OPTION AND APPRECIATION RIGHTS PLAN

The 1995 Employee Stock Option and Appreciation Rights Plan (the "1995 Employee
Plan") provides for the issuance of incentive options, non-qualified options,
and SARs.

Directors of the Company are not eligible to participate in the 1995 Employee
Plan. The 1995 Employee Plan provides for the grant of stock options which
qualify as incentive stock options under Section 422 of the Internal Revenue
Code, to be issued to officers who are employees and other employees, as well as
non-qualified options to be issued to officers, employees and consultants. In
addition, SARs may be granted in conjunction with the grant of incentive options
and non-qualified options.

The 1995 Employee Plan provides for the grant of incentive options,
non-qualified options and SARs of up to 400,000 shares of common stock (subject
to adjustment in the event of stock dividends, stock splits, and other similar
events). To the extent that an incentive option or non-qualified option is not
exercised within the period of exercisability specified therein, it will expire
as to the then unexercisable portion. If any incentive option, non-qualified
option or SAR terminates prior to exercise thereof and during the duration of
the 1995 Employee Plan, the shares of common stock as to which such option or
right was not exercised will become available under the 1995 Employee Plan for
the grant of additional options or rights to any eligible employee. The shares
of common stock subject to the 1995 Employee Plan may be made available from
either authorized but unissued shares,

                                      F-23
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 13 - STOCK-BASED COMPENSATION PLANS, CONTINUED

treasury shares or both. The Company has 400,000 shares of common stock reserved
for issuance under the 1995 Employee Plan. As of December 31, 2000, options to
purchase 182,750 shares of common stock with an exercise price of $3.90 are
outstanding under the 1995 Employee Plan. During 2000, 1999 and 1998, options to
purchase 3,333, 45,834 and 23,833 shares, respectively, of common stock were
forfeited or expired. Options to purchase 94,250 shares of common stock were
exercised in 2000.

OTHER WARRANTS AND OPTIONS

Pursuant to the terms of a Financial Consulting Agreement dated as of November
3, 1994 between the Company and JW Charles Financial Services, Inc., the Company
issued a common stock purchase warrant (the "JWC Warrant") covering 250,000
(331,126 as adjusted) shares of common stock to JW Charles Financial Services as
partial consideration for its rendering financial consulting services to the
Company. The warrant is exercisable at a price of $1.51 per share and expires on
November 3, 2001. During 1998, warrants to purchase 165,563 shares of common
stock were exercised.

In April 1996, the Company approved the issuance of 1,000,000 options to John
Edwards as part of his employment agreement. The options vest over a three-year
period and expire in 2006 and have an option price of $3.90.

On July 1, 1996, the Company approved the issuance of options to purchase
1,500,000 and 500,000 shares of common stock to Clay Wilkes and Alex Radulovic
respectively as part of their employment agreements. Each option has an exercise
price of $7.00 per share, vesting in 25% increments in the event that the
average closing bid price of a share of the Company's common stock for five
consecutive trading days exceeds $10, $15, $20 and $25, respectively. Each
option becomes exercisable (to the extent vested) on June 30, 1997, vests in its
entirety on June 30, 2001 and lapses on June 30, 2002. As of December 31, 2000,
500,000 of the options had vested.

In September 1996, the Company closed a private placement offering of Series C
preferred stock. As a result of this transaction, the Company issued warrants to
purchase 750,000 shares of common stock at an exercise price of $2.50 (reset to
$1.48 as of December 31, 2000) per share as compensation to the Placement Agent.
These warrants expire on August 20, 2001. During 2000, 1999 and 1998, warrants
to purchase 417,061, 73,050 and 46,477 shares of common stock were exercised,
respectively. As of December 31, 2000 there were 177,259 Placement Agent
warrants outstanding.

John Edwards agreed to amend his employment contract on August 21, 1996, which
reduced his salary. In consideration of the salary reduction, the Company
granted him options, which vested immediately, to purchase 250,000 shares of
common stock. The options have a term of 10 years and an exercise price of
$3.90.

In October 1996 the Company agreed to issue options to purchase 250,000 shares
of common stock each to William Flury and Karl Ryser Jr. pursuant to their
employment agreements. The options vested quarterly over a three-year period and
expire in 2006 and have an exercise price of $3.90. In 2000, 250,000 options
were exercised.

During 1997, the Company issued options to purchase 1,210,000 shares of common
stock (210,000 of which were issued under the 1997 recruitment stock option
plan) to consultants at exercise prices ranging from $4.875 to $8.438 (repriced
to $3.90 on December 13, 1998), which was based on the closing price of the
stock at the grant date. The fair value of the options issued was recorded as
deferred compensation of $4,757,134 to be amortized over the expected period the
services were to be provided. As a result of the repricing, the Company recorded
additional deferred compensation expense totaling $262,200 (of which $21,103,
$44,364 and $196,733 was expensed in 2000, 1999 and 1998, respectively),
representing the incremental fair value of the repriced options over the
original options. During 2000, 1999 and 1998, $279,150, $852,714 and $1,157,901,
respectively, of the deferred compensation was amortized to expense. During
2000, 1999 and 1998, options to purchase 91,000, 16,669 and 60,000,
respectively, shares of common stock expired. During 2000, 169,000 options were
exercised. The remaining options must be exercised within ten years of the grant
date.

During 1997, the Company issued non-qualified options to purchase 2,295,000
shares of common stock to certain executive employees. The options must be
exercised within ten years of the grant date and have an exercise price of
$3.90. During 2000 and 1999, options to purchase 0 and 66,670 shares of common
stock, respectively, were forfeited. During 2000, options to purchase 78,000
shares of common stock were exercised.

                                      F-24
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 13 - STOCK-BASED COMPENSATION PLANS, CONTINUED

During 1998, the Company issued non-qualified options to purchase 935,000 shares
of common stock to certain executive employees at exercise prices ranging from
$2.563 to $3.125, which price was based on the closing price of the stock at the
grant date. The options must be exercised within ten years of the grant date.
During 2000 and 1999, options to purchase 43,332 and 58,333 shares of common
stock, respectively, were forfeited. During 2000, options to purchase 4,000
shares of common stock were exercised.

During 1999, the Company issued non-qualified options to purchase 655,000 shares
of common stock to certain executive employees at exercise prices ranging from
$2.50 to $3.563, which price was based on the closing price of the stock at the
grant date. The options must be exercised within ten years of the grant date.
During 2000, options to purchase 230,000 shares of common stock were exercised.

During 1999, the Company issued non-qualified options to purchase 200,000 shares
of common stock to a consultant at an exercise price of $3.00, which was based
on the closing price of the stock at the grant date. The fair value of the
options issued was recorded as deferred compensation of $300,000 to be amortized
over the expected period the services were to be provided. During 2000 and 1999
deferred compensation of $137,500 and $162,500, respectively, was amortized to
expense.

During 2000, the Company issued non-qualified options to purchase 2,585,000
shares of common stock to certain executive employees at exercise prices ranging
from $2.75 to $6.375, which price was based on the closing price of the stock at
the grant date. The options must be exercised within ten years of the grant
date.

Subsequent to December 31, 2000 and prior to March 15, 2001 approximately
1,900,000 employee options to purchase common stock were forfeited due to
termination of employment.

During 2000 the Company obtained approval from its shareholders to establish the
2000 Employee Stock Purchase Plan. This plan allows all eligible employees of
the Company to have payroll withholding of 1 to 15 percent of their wages. The
amounts withheld during a calendar quarter are then used to purchase common
stock at a 15 percent discount off the lower of the closing sale price of the
Company's stock on the first or last day of each quarter. This plan was approved
by the Board of Directors, subject to shareholder approval, and was effective
beginning the third quarter of this year. The Company issued 23,494 shares to
employees based upon payroll withholdings during 2000.


NOTE 14 - SEGMENT OF BUSINESS REPORTING

The Company's three reportable segments are as follows:

-    Telecommunications services - includes long-distance toll services and
     enhanced calling features such as V-Link(TM). The telecommunications
     services products are marketed primarily to residential and small business
     customers.

-    Marketing services - includes training and promotional materials to IRs in
     the network marketing sales channel and WebCentre set-up and monthly
     recurring fees. Additionally, revenues are generated from registration fees
     paid by IRs to attend regional and national sales conferences. This revenue
     source was terminated in February 2000.

-    Technology licensing and development - provides research and development to
     enhance the Company's product and technology offerings. Products developed
     by this segment include V-Link(TM), Indavo(TM), and other proprietary
     technology. The Company licenses certain developed technology to third
     party users, such as Lucent, Brooktrout and others.

With the Company's shift in focus from retail to wholesale sales in February
2000, revenues from Big Planet amounted to 61% of telecommunication services
revenue from February 2000 through the end of the year. The percentage of
telecommunication services revenue from Big Planet during the fourth quarter
amounted to 46% of fourth quarter revenue due to the addition of a new large
wholesale customer. As a result of financial uncertainty with I-Link in January
and February of 2001 resulting from Red Cube not funding the Company, and prior
to the Counsel Corporation transaction in March 2001, Big Planet was uncertain
as to the ability of I-Link to continue operations. Therefore, Big Planet signed
an

                                      F-25
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 14 - SEGMENT OF BUSINESS REPORTING, CONTINUED

agreement to transition their unified messaging (V-Link(TM)) business to another
company. They anticipate the possibility of moving the customers in the third or
fourth quarter of 2001 if the new unified messaging vendor achieves certain
milestone of product features, billing capabilities and service development.
Additionally, Big Planet is evaluating new I-Link products for release in the
first half of 2001. The Company cannot predict what future telecommunication
services revenue from this customer may be. The percentage of telecommunication
services revenue from another large customer during the fourth quarter was 32%.
Telecommunication services revenue from this customer in the first quarter of
2001 is expected to decrease compared to the fourth quarter of 2000 by
approximately 50% as the customer transferred some of their traffic to other
carriers due to our financial condition in the early 2001 prior to the Counsel
Corporation agreement. The Company cannot predict what future telecommunication
services revenue from this customer may be.

There are no intersegment revenues. The Company's business is conducted
principally in the U.S.; foreign operations are not material. The table below
presents information about net loss and segment assets used by the Company as of
and for the year ended December 31:

<TABLE>
<CAPTION>
                                           For the Year Ending December 31, 2000
                                           ------------------------------------------------------------------------
                                                                                     Technology           Total
                                           Telecommunication      Marketing        Licensing and        Reportable
                                                Services          Services           Development          Segments
                                           -----------------     ------------      --------------      ------------
<S>                                        <C>                   <C>               <C>                 <C>
Revenues from external customers              $ 20,567,000       $    464,000       $  9,373,000       $ 30,404,000
Interest revenue                                        --                 --                 --                 --
Interest expense                                    16,000                 --                 --             16,000
Depreciation and amortization expense            2,409,000             15,000             98,000          2,522,000
Segment income (loss)                          (10,599,000)          (204,000)         3,218,000         (7,585,000)

Other significant non-cash items:
        Amortization of deferred
           compensation on stock options                --                 --                 --                 --
        Provision for doubtful accounts            113,000                 --                 --            113,000

Expenditures for segment assets                  5,528,000                 --              8,000          5,536,000

Segment assets                                  14,832,000                 --            201,000         15,033,000
</TABLE>

<TABLE>
<CAPTION>
                                           For the Year Ending December 31, 1999
                                           ------------------------------------------------------------------------
                                                                                     Technology           Total
                                           Telecommunication      Marketing        Licensing and        Reportable
                                                Services          Services           Development          Segments
                                           -----------------     ------------      --------------      ------------
<S>                                        <C>                   <C>               <C>                 <C>
Revenues from external customers              $ 26,440,000       $  3,673,000          2,507,000       $ 32,620,000
Interest revenue                                        --                 --                 --                 --
Interest expense                                    51,000                 --                 --             51,000
Depreciation and amortization expense            2,128,000            115,000            115,000          2,358,000
Segment loss                                    (1,818,000)        (2,456,000)        (1,472,000)        (5,746,000)
Other significant non-cash items:
        Amortization of deferred
           compensation on stock options           163,000            557,000                 --            720,000
        Provision for doubtful accounts          3,703,000                 --                 --          3,703,000

Expenditures for segment assets                  3,191,000            282,000            282,000          3,755,000
Segment assets                                   8,423,000            620,000          1,464,000         10,507,000
</TABLE>

                                      F-26
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 14 - SEGMENT OF BUSINESS REPORTING, CONTINUED

<TABLE>
<CAPTION>
                                           For the Year Ending December 31, 1998
                                           ------------------------------------------------------------------------
                                                                                     Technology           Total
                                           Telecommunication      Marketing        Licensing and        Reportable
                                                Services          Services           Development          Segments
                                           -----------------     ------------      --------------      ------------
<S>                                        <C>                   <C>               <C>                 <C>
Revenues from external customers              $ 19,635,000       $  4,548,000       $  1,466,000       $ 25,649,000
Interest expense                                    63,000                 --                 --             63,000
                                                   127,000                 --                 --            127,000
Depreciation and amortization expense              827,000             30,000             35,000            892,000
Segment loss                                    (5,258,000)        (1,332,000)        (1,823,000)        (8,413,000)

Other significant non-cash items:
        Amortization of deferred
           compensation on stock options                --            706,000                 --            706,000
        Provision for doubtful accounts          3,161,000                 --                 --          3,161,000
Expenditures for segment assets                  1,012,000             46,000             56,000          1,114,000
Segment assets                                   7,006,000            115,000            883,000          8,004,000


</TABLE>

The following table reconciles reportable segment information to the
consolidated financial statements of the Company:

<TABLE>
<CAPTION>
                                                                              2000               1999                1998
                                                                           ------------       ------------       ------------
<S>                                                                        <C>                <C>                <C>
Total interest revenue for reportable segments                             $         --       $         --       $     63,000
Unallocated interest revenue from corporate accounts                            487,000            179,000            207,000
                                                                           ------------       ------------       ------------
                                                                           $    487,000       $    179,000       $    270,000
                                                                           ============       ============       ============
Total interest expense for reportable segments                             $     16,000       $     51,000       $    127,000
Unallocated amortization of discount on notes payable                                --          3,361,000          7,405,000
Unallocated interest expense associated with issuance of
    convertible debt                                                                 --                 --                 --
Unallocated interest expense from related party debt                          1,054,000          1,571,000            851,000
Other unallocated interest expense from corporate debt                          433,000            103,000             21,000
                                                                           ------------       ------------       ------------
                                                                           $  1,503,000       $  5,086,000       $  8,404,000
                                                                           ============       ============       ============
Total depreciation and amortization for reportable segments                $  2,523,000       $  2,358,000       $    892,000
Unallocated amortization expense from intangible assets                       2,612,000          2,894,000          2,894,000
Other unallocated depreciation from corporate assets                          1,264,000            231,000            407,000
                                                                           ------------       ------------       ------------
                                                                           $  6,399,000       $  5,483,000       $  4,193,000
                                                                           ============       ============       ============
Total segment loss                                                         $ (7,585,000)      $ (5,746,000)      $ (8,413,000)
Unallocated non-cash amount in consolidated net loss:
        Amortization of discount on notes payable                                    --         (3,361,000)        (7,405,000)
        Loss on write-off and disposal of certain assets                             --         (1,847,000)                --
        Litigation settlement expense                                          (640,000)                --                 --
        Amortization of deferred compensation on stock options issued
               for services                                                    (542,000)          (296,000)          (452,000)
        Amortization of intangible assets                                    (2,612,000)        (2,894,000)        (2,894,000)
        Acquired in-process research and development                                 --                 --                 --
Other corporate expenses                                                    (14,373,000)       (10,016,000)        (8,616,000)
                                                                           ------------       ------------       ------------
                                                                           $(25,752,000)      $(24,160,000)      $(27,780,000)
                                                                           ============       ============       ============
</TABLE>

                                      F-27
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 14 - SEGMENT OF BUSINESS REPORTING, CONTINUED

<TABLE>
<CAPTION>
                                                                            2000             1999             1998
                                                                         -----------      -----------      -----------
<S>                                                                      <C>              <C>              <C>
Total amortization of deferred compensation for reportable segments      $        --      $   720,000      $   706,000
Unallocated amortization of deferred compensation                            542,000          296,000          452,000
                                                                         -----------      -----------      -----------
                                                                         $   542,000      $ 1,016,000      $ 1,158,000
                                                                         ===========      ===========      ===========
Expenditures for segment long-lived assets                               $ 5,536,000      $ 3,755,000      $ 1,114,000
Unallocated expenditures for development of information systems                   --               --        1,723,000
Other unallocated expenditures for corporate assets                           93,000          703,000          422,000
                                                                         -----------      -----------      -----------
                                                                         $ 5,629,000      $ 4,458,000      $ 3,259,000
                                                                         ===========      ===========      ===========
Segment assets                                                           $15,033,000      $10,507,000      $ 8,004,000
Intangible assets not allocated to segments                                3,939,000        6,551,000        9,420,000
Furniture, fixtures and equipment not allocated to segments                  954,000        1,240,000        1,496,000
Software and information systems not allocated to segments                   443,000          228,000        2,476,000
Net assets of discontinued operations                                             --               --          417,000
Other assets not allocated to segments                                       809,000        3,132,000        2,042,000
                                                                         -----------      -----------      -----------
                                                                         $21,178,000      $21,658,000      $23,855,000
                                                                         ===========      ===========      ===========
</TABLE>

NOTE 15 - COMMITMENTS

EMPLOYMENT AND CONSULTING AGREEMENTS

The Company has entered into employment and consulting agreements with eight
employees, primarily executive officers and management personnel. These
agreements generally continue over the entire term unless terminated by the
employee or consultant of the Company, and provide for salary continuation for a
specified number of months. Certain of the agreements provide additional rights,
including the vesting of unvested stock options in the event a change of control
of the Company occurs or termination of the contract without cause. The
agreements contain non-competition and confidentiality provisions. As of
December 31, 2000, if the contracts were to be terminated by the Company, the
Company's liability for salary continuation would be approximately $1,165,000.


NOTE 16 - SUBSEQUENT EVENTS

TRANSACTIONS WITH WINTER HARBOR:

On March 1, 2001, Winter Harbor elected to convert a note payable from I-Link
for $7,768,000 plus accrued interest of $2,537,072 ($2,376,498 as of December
31, 2000) into 4,122 shares of Series M convertible preferred stock of I-Link as
allowed under the original loan agreement. Upon conversion of the debt, the
company issued 5,000,000 warrants to Winter Harbor as required under the loan
agreement.

On March 1, 2001 the Company entered into a Warrant Exchange Agreement with
Winter Harbor. Pursuant to the terms and provisions of this Agreement, Winter
Harbor agreed to assign, transfer, convey and deliver to I-Link warrants to
acquire 33,540,000 (including 5,000,000 warrants issued upon conversion of the
convertible debt discussed above) shares of common stock of I-Link beneficially
owned by Winter Harbor in exchange for the issuance by I-Link to Winter Harbor
of 5,000,000 shares of I-Link's common stock.

TRANSACTIONS WITH COUNSEL:

On March 1, 2001 I-Link entered into a Senior Convertible Loan and Security
Agreement, (the "Loan Agreement") with Counsel Communications, LLC, ("Counsel
LLC") and a wholly-owned subsidiary of Counsel Corporation, (collectively,
"Counsel"). Pursuant to the terms and provisions of the Loan Agreement, Counsel
LLC agreed to make periodic loans to I-

                                      F-28
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 16 - SUBSEQUENT EVENTS, CONTINUED

Link in the aggregate principal amount not to exceed $10,000,000. Of that
amount, $3,000,000 was available to I-Link immediately upon the execution of the
Loan Agreement. The $10,000,000 capital investment is structured as a 3-year
note convertible with interest at 9% per annum, compounded quarterly. Counsel
LLC can convert the loan into shares of common stock of I-Link at a conversion
price of $0.56 per common share. At any time after September 1, 2002, the
outstanding debt including accrued interest shall automatically convert into
common stock using the then current conversion rate, on the first date that is
the twentieth consecutive trading day that the common stock has closed at a
price per share that is equal to or greater than $1.00 per share. The conversion
price is subject to adjustment in accordance with the terms and provisions of
the Loan Agreement. The Loan Agreement provides for traditional anti-dilution
protection and is subject to certain events of default. Proceeds to the Company
will be $10,000,000 less debt issuance costs of approximately $700,000.

By executing the above Loan Agreement, I-Link granted Counsel LLC a first
priority security interest in all of I-Link's assets owned at the time of the
execution of the Loan Agreement or subsequently acquired, including but not
limited to I-Link's accounts receivable, general intangibles, inventory,
equipment, books and records, and negotiable instruments held by the Company
(collectively, the "Collateral"). The Loan Agreement also included demand
registration rights for common stock issuable upon conversion of the Loan
Agreement.

In addition to the foregoing agreements, I-Link and Counsel LLC executed a
Securities Support Agreement, dated March 1, 2001 (the "Support Agreement") for
the purpose of providing certain representations and commitments by I-Link to
Counsel LLC as an inducement to Counsel to enter into a separate agreement with
Winter Harbor and First Media, L.P, a limited partnership and the parent company
of Winter Harbor (collectively, the "Winter Harbor Parties") (the "Securities
Purchase Agreement"). I-Link was not a party to the Securities Purchase
Agreement. In accordance with the terms and provisions of the Securities
Purchase Agreement, Counsel agreed to purchase from the Winter Harbor Parties
all of the debt and equity securities in I-Link, including shares of Series M
and Series N preferred stock of I-Link, beneficially owned by the Winter Harbor
Parties for an aggregate consideration of $5,000,000.

I-Link's commitments to Counsel LLC set forth in the Support Agreement included
I-Link's agreement to appoint two designees of Counsel, reasonably acceptable to
the Company, to the Board of Directors of I-Link. The Company also agreed that
immediately following the initial funding (which was received in March 2001) of
the Loan Note, I-Link would solicit the proxies of I-Link's shareholders to
elect three additional nominees designated by Counsel, thus, increasing the size
of the Company's Board of Directors to nine members.

Under the Support Agreement, I-Link also agreed to engage appropriate advisors
and proceed to take all steps necessary to merge Nexbell Communications Inc. (a
subsidiary of Counsel LLC) into I-Link. The merger has not yet taken place nor
have the terms been determined under which the merger may take place. Nexbell is
a designated Cisco Powered Network member in the VoIP category and operates a
private, managed packet telephony network delivering packet voice services to
over 400 metropolitan areas in the United States.

On March 7, 2001, as part of the agreements discussed above, Counsel converted
all of the Series M and N convertible preferred stock it obtained from Winter
Harbor into 61,966,057 shares of I-Link's common stock. The Series N shares were
converted at equivalent of $1.25 per common share and Series M at $.56 per
common share, in accordance with their respective conversion features.

                                      F-29
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE


To the Board of Directors and Stockholders of
I-Link Incorporated and Subsidiaries:


In our opinion, the accompanying financial statement schedule is fairly stated
in all material respects in relation to the basic financial statements, taken as
a whole, of I-Link Incorporated and subsidiaries for the years ended December
31, 2000, 1999 and 1998, which are covered by our report dated March 19, 2001.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. This information is presented for purposes of
additional analysis and is not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements.



PricewaterhouseCoopers LLP
Salt Lake City, Utah
March 19, 2001


                                      S-1
<PAGE>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                  SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                      Balance at     Charged to                    Balance at
                                      Beginning      Costs and                       End of
         Description                  of Period       Expenses    Deductions (a)    Period
--------------------------------      ----------     ----------   --------------   ---------
<S>                                   <C>            <C>          <C>              <C>
Allowance for doubtful accounts:
        December 31, 1998             1,385,000      3,160,621      2,604,621      1,941,000
        December 31, 1999             1,941,000      3,703,077      3,855,077      1,789,000
        December 31, 2000             1,789,000        113,168      1,801,503        100,665

</TABLE>

-----------------
(a)  For the allowance for doubtful accounts represents amounts written off as
uncollectible and recoveries of previously reserved amounts.

                                      S-2