<PAGE>


                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark One)

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

                   For the fiscal year ended December 31, 1999
                  ---------------------------------------------


[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

               For the transition period from _______ to ________

                        Commission file number 333-84845

                              9278 COMMUNICATIONS, INC.
                 ----------------------------------------------
               (Name of small business registrant in its charter)

               Nevada                                           98-0207906
-------------------------------                              -------------------
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

1942 Williamsbridge Road, Bronx, New York                            10461
------------------------------------------                   -------------------
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code       (718) 792-5150
                                                  -----------------------------


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

       Title of each class           Name of each exchange on which registered

            None                                  Not Applicable
    -------------------                    ---------------------------

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

                                      None
                       -------------------------------------
                                (Title of class)

         Check whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days. [X] Yes [ ] No

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not 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-KSB
or any amendment to this Form 10-KSB. [X]

         The registrant's revenues for its most recent fiscal year were
$78,089,670.

         The aggregate market value of the voting and non-voting stock held by
non-affiliated stockholders of the registrant, as of March 21, 2000, was
$25,257,343.
                      APPLICABLE ONLY TO CORPORATE REGISTRANTS

         The number of shares outstanding of the registrant's common stock, as
of March 21, 2000, was 20,460,168.

         Transitional Small Business Disclosure Format (Check one):
Yes      ; No   X
  ------     ------

                        DOCUMENTS INCORPORATED BY REFERENCE

                                    None



<PAGE>


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

GENERAL

         9278 Communications, Inc. (the "Company" or "9278") is a value-added
integrator of telecommunications services and technologies, specializing in the
distribution of prepaid phone cards. The Company has a network of over 300
private distributors, retailing over 100 different prepaid card products,
including 13 private label cards, primarily in the New York, New Jersey and
Connecticut markets, through approximately 10,000 retail outlets.

         The Company plans to introduce several new telecommunications related
products into its growing distribution channels, including prepaid wireless
products and prepaid internet services, and to expand upon its existing business
relationships with the United States telecommunications companies and the large
national prepaid card providers. Further, with the coming launch of its
e-commerce services website, 9278 will provide sales, access and support for its
existing distributors and develop a mechanism for establishing new markets for
the Company's products.

CORPORATE BACKGROUND

         Aquasol Technologies, Inc.

         The Company was originally incorporated in Colorado on December 10,
1997, under the name Aquasol, Inc. ("Aquasol"). On January 9, 1998, the Company
changed its corporate domicile to Delaware and changed its name to Aquasol
Technologies, Inc.

         On January 15, 1998, the Company acquired Noralta Technologies Corp.,
an Alberta corporation, in a share-for-share exchange. The name of Noralta was
subsequently changed to Aquasol Technologies Inc. This company was engaged in
the business of designing, engineering, manufacturing and installing wastewater
treatment systems for government, industrial, commercial and agricultural
customers.

         On July 14, 1998, Aquasol Technologies, Inc., a Nevada corporation
originally incorporated as AFD Capital Group, Inc., merged with Aquasol
Technologies, Inc., a Delaware corporation, in a one-for-one stock exchange, and
the surviving entity continued under the laws of the state of Nevada.

         On February 3, 1999, the Company disposed of Aquasol Technologies Inc.,
an Alberta corporation, by returning the shares of common stock of that
corporation to the former holders thereof in exchange for the return of the
992,000 shares of Common Stock originally issued in the Noralta acquisition on
January 15, 1998. The Company has no further interest in the business of Aquasol
Technologies Inc.

         Acquisition of iLink B.C.

                  On February 14, 1999, the Company consolidated its share
capital by way of reverse stock split on the basis of one new share of its
Common Stock for each five old shares of its Common Stock and changed its name
to iLink Telecom, Inc. ("iLink").


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<PAGE>


         Pursuant to a share purchase agreement, dated February 26, 1999, with
ABDE Holdings Ltd., a British Columbia company, the Company acquired all of the
issued and outstanding common shares of 579782 B.C. Ltd. in exchange for the 145
shares of the Company's Series A Convertible Preferred Stock. On March 11, 1999,
579782 B.C. Ltd. changed its name to iLink Telecom (B.C.), Inc. The assets of
iLink B.C. consisted of an IVR Agreement with BCT.Telus as well as miscellaneous
telecommunications and computer equipment and office furniture.

         Merger with 9278 Distributor, Inc. and Name Change

         On December 10, 1999, 9278 Distributor, Inc., a New York corporation
involved in the distribution of prepaid phone cards, was merged with and into
9278 Distributor Acquisition Corp., a wholly-owned subsidiary of the Company,
which had been incorporated on December 7, 1999 specifically for that purpose
(the "Merger"). For accounting purposes, the Merger has been treated as a
reverse acquisition. The shareholders of 9278 Distributor, Inc. were issued an
aggregate of 14,900,000 shares of the Company's Common Stock, as well as a
dividend of $3.0 million, of which $1.0 million was paid in December 1999 and
the balance of $2.0 million was in the form of a two-year promissory note.
Subsequently, on December 22, 1999, the Company changed its name to 9278
Communications, Inc.

         Sale of iLink B.C.

         On February 28, 2000, the Company sold all of the assets of its
subsidiary iLink Telecom (B.C.), Inc. for gross consideration of $37,000.

INDUSTRY OVERVIEW

         Prepaid phone cards have been widely used throughout Europe and Asia
for more than fifteen years. Currently being issued in 140 countries, the
prepaid phone card market has grown to an estimated $20 billion dollar worldwide
industry.

         Prepaid phone cards were introduced into the North American marketplace
by small long distance consolidators and resellers, which purchase a high volume
of long distance minutes from major carriers at rates significantly lower than
those that could be obtained by individuals and small businesses and resell
those minutes to their established customer base. Originally introduced to meet
very specific telephony applications, and oriented towards the credit challenged
components of the marketplace, prepaid services have evolved into a widely
accepted solution by both businesses and consumers. More recently, major long
distance carriers such as AT&T, MCI/Worldcom and Sprint have committed
considerable resources to the prepaid phone card market.

         Prepaid phone cards are a reliable, convenient and cost-effective
alternative to coin-operated calling, collect calling, operator assisted calls
and standard credit calling cards. Unlike credit calling cards, which provide
virtually unlimited credit and impose surcharges on long distance services,
prepaid phone cards are paid for in advance and provide finite amounts of
calling time. Shaped like a credit card, the prepaid phone card easily fits into
a standard wallet. Generally, the front face denotes the denomination of the
card. The back of the cards contains a scratch-off surface covering the card
number and personal identification number (a "PIN").

         Most domestic prepaid cards utilize remote memory technology, which
permits users to place local, long distance and international calls from any
touch-tone phone by dialing a toll-free or local access number to connect to a
prepaid phone card switching platform. After being prompted to enter a PIN, the
caller is advised of the value remaining on the card and is prompted to enter
the telephone number to be


                                       3




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called. The call is then routed to its destination. The per-minute charges for
the call are automatically decremented from the prepaid account corresponding
to the PIN as the call progresses.

         Prepaid phone cards are distributed through a vast network of retail
outlets, including convenience stores, newsstands, grocery stores and discount
stores. While prepaid phone card products are also sold through vending machines
and, more recently, over Internet websites, the vast majority of phone card
sales are still made through retail outlets. In the New York metropolitan area,
where the majority of the Company's distribution occurs, the Company estimates
that prepaid phone cards are sold at tens of thousands of retail outlets.

         The retail outlets are serviced by independent distributors, which
often distribute newspapers or other items to the retail outlets. Typically, a
wholesale distributor, such as the Company, purchases large quantities of
prepaid phone cards from a long distance carrier or reseller, and sells the
cards in smaller quantities, together with cards from other carriers, to the
independent distributor for ultimate distribution to the retail outlet. The
discount from face value at which cards are bought and sold by the participants
in the distribution chain varies depending upon the carrier and the features of
the card, such as local versus toll free dial-up access, or the rates and
geographic regions for which the card can be used.

PRODUCTS AND SERVICES

         Prepaid Phone Cards

         9278 is primarily a wholesale distributor of prepaid phone cards,
distributing over 100 different types of prepaid phone cards issued from over 60
telecommunications carriers, including 13 private label cards. The long distance
rates available to users of such cards are between 10% and 50% less than the
rates for international calls placed by traditional methods. Generally, each
type of prepaid phone card is available in $5, $10 and $20 denominations. With
the exception of the private label phone cards, which 9278 prints and activates
itself, 9278 purchases pre-printed, pre-activated phone cards from each of the
applicable telecommunications carriers and distributes the cards through its
network of over 300 independent distributors, predominantly in the New York
metropolitan area.

         The Company distributes prepaid phone cards for most of the major
telecommunications carriers, including PT-1 Communications, MCI/Worldcom, Qwest
Communications and AT&T. The Company is a major distributor for PT-1
Communications, responsible for over 80% of PT-1's prepaid phone card sales in
the Bronx, New York area. Sales of phone cards supplied by Cominex, LLC
constituted approximately 55% of the Company's sales in 1999. In September 1999,
the Company stopped purchasing products from Cominex and has subsequently
increased its purchases from other carriers to offset these quantities. There
was no company whose products accounted for in excess of 10% of 9278's sales in
1998.

         Included in the Company's offering of over 100 prepaid phone cards, are
13 private label cards, serviced by 10 different long distance carriers,
including, "New York Call," which is serviced by PT-1, "9278 Number 1," which is
serviced by MCI/Worldcom and "Bollywood," which is serviced by Telstar. Each of
these 9278 private label cards is developed by the Company in conjunction with
the carrier. The design, rates and target market of the cards are generally
determined by 9278 based upon its perception of market demand. Private label
cards serve as lucrative promotional items and can also be used to help generate
brand name awareness. The private label cards are exclusive to 9278 and, unlike
the other types of prepaid phone cards which 9278 distributes, 9278 controls the
discounts for these products, leading to higher margins for the Company. Private
label cards constituted over 60% of the Company's sales in 1999.


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<PAGE>


         The Company's retail customers can use the prepaid phone cards it
distributes at any touch tone telephone by dialing an access number, followed by
a PIN assigned to each card and the telephone number the customer seeks to
reach. The carrier's switch completes the call, and its debit card platform
reduces the outstanding balance of the card during the call. The Company
believes that many of its customers use prepaid cards as their primary means of
making long distance calls due to (i) attractive rates, (ii) reliable service,
(iii) ease of monitoring and budgeting their long distance spending and (iv) the
appealing variety of calling cards offered to different market segments.

         One of the Company's focuses has been on distribution in certain ethnic
markets in the U.S. that generate high levels of international traffic to
specific countries. As a result, 9278 has become one of the premiere phone card
distribution channels in the New York City area, which has many such ethnic
markets. Recent immigrants and members of ethnic communities are heavy users of
international long distance, given their desire to keep in touch with family
members and friends back home. In addition, recent immigrants often do not have
established credit histories necessary to establish accounts with traditional
long distance carriers. One example of a 9278 product marketed to a specific
ethnic group is the Bollywood Phone Card, from which 9278 generated over
$15,000,000 in revenues in 1999. There are approximately 465,000 Indians,
Pakistanis, and Bengalis residing in the vicinity of New York City. The
Bollywood Phone Card is designed for and has become a household name for
peoples from the sub-continent of India, who, by using the card to place
long distance calls to that region, receive deep discounts on rates.

         The Company has over 300 independent wholesalers and retailers
throughout the New York, New Jersey and Connecticut area and is continually
seeking to add distributors in other areas. These customers serve as a network,
purchasing cards from 9278 and further distributing them to approximately 10,000
retail outlets. Generally, each customer operates on a net 30 payment cycle. In
1999, one of 9278's customers, Sohel Distributor, Inc., accounted for over 10%
of 9278's revenues. None of 9278's customers accounted for over 10% of 9278's
revenues in 1998. In February 2000, the Company entered into a Letter of
Intent to acquire Sohel Distributor Inc., a company owned by the brother of the
Company's Chief Executive Officer and controlling stockholder.

         Switching Solutions

         During 1999, iLink conducted IVR services through its switching
facility located in Calgary, Alberta (the "Switching Facility"). The Switching
Facility was comprised of computer equipment, telecom equipment and IVR
programming. The software (VoiceCard) technology was licensed through
Telephony Experts. Pursuant to an IVR Agreement, iLink provided services to one
major customer at the Calgary site, namely BCT.Telus Communications Inc.,
Canada's third largest telephone company. Such services included account
processing, customer service and time billing for their brand name phone cards
distributed in Alberta and British Columbia. Revenues were generated through the
charge of a transaction fee to BCT.Telus based upon the number of minutes passed
through the Switching Facility each month by BCT.Telus phone card customers.
Through December 10, 1999, when iLink merged with 9278 Distributor, Inc.,
revenues from the Switching Facility, aggregating approximately $30,000,
represented 100% of iLink's total revenues.

         On February 28, 2000, in connection with the sale of assets of its
subsidiary, iLink Telecom (B.C.), Inc., the Company sold the Switching Facility
for gross consideration of $37,000.



                                       5




<PAGE>



         Wireless Services in Trinidad and Tobago

         The Company has submitted a proposal, which, if accepted, would allow
it to offer a digital mobile phone service and wireless infrastructure to the
people of Trinidad and Tobago. The Government of Trinidad and Tobago plans on
deregulating the telecommunications industry that is currently comprised of a
sole national wireless phone provider, the Telephone Service of Trinidad and
Tobago. The Trinidad Government will select providers for their new services
based on submissions which were provided prior to June 30, 1999. It is unclear
when the government of Trinidad and Tobago will be making a final decision. The
government has hired a European consultant to assist in the application review
process. If awarded this license, the Company intends to offer this service
through a joint venture with a third party, or to sell the license.

STRATEGY

         The Company's goal is to become a broad-based, value added
telecommunications services corporation, providing the customer with services
ranging from prepaid phone cards, to 1+ dialing, to custom branded prepaid phone
cards. The Company plans to extend its distribution and add a host of telecom
related products into its growing distribution channels, including:

       * Prepaid wireless phones;
       * Prepaid paging;
       * Prepaid local dialtone;
       * Prepaid internet services; and
       * Prepaid consumer products.

         The Company is implementing both a business-to-business (B2B) and
retail e-commerce strategy that will expand the geographic reach of the
Company's distribution, create operational efficiencies and ultimately increase
margins. Use of this service will enable the various participants in 9278's
distribution chain to access the Company through a dynamic, internet-based
supply chain management interface, permitting the user to interact with all
aspects of the Company's purchasing, manufacturing, inventory and payment
processing functions. The Company intends to launch this service in June 2000.

         The Company anticipates substantial growth in its client base and
market share of the prepaid card industry through internal expansion and by
strategic acquisition of other distributors. The competition's fragmented
approach has improved market accessibility without truly creating stable brand
awareness and distribution chain efficiency. The Company believes that this
presents the opportunity for 9278 to secure a significant share of the North
American market.

         9278 plans to introduce several new telecommunications related
products, including prepaid wireless services, Internet, and paging, and expand
upon existing business relationships with U.S. telecommunications companies and
the large national prepaid card providers. 9278 will offer assistance in
developing these companies' consumer product/value-added service offerings.
These products will be distributed through the Company's existing distribution
network. 9278 also plans to create private label prepaid card systems for select
customers. These prepaid private label cards are geared towards large
corporations and business travelers. 9278 is focusing on reaching clients with
existing sales and marketing forces.

         One such prepaid telecommunications product is the EZ2Phone, for which
the Company has exclusive distribution rights in the New York area. The EZ2Phone
is a fully functional telephone, which operates virtually the same as a standard
residential telephone. The telephone is sold with an established prepaid long



                                       6




<PAGE>


distance account, to allow the purchaser to make long distance calls at
reduced rates with a preset spending limit. With the prepaid funds credited,
the user places a call as they would for a traditionally placed long distance
or international call from a home phone. No dial access code or PIN is needed.
Upon entering the phone number, a computerized message tells the caller the
amount of time they can talk to the destination called, based upon the
prevailing rates and the credit balance of the phone, and the call is then
connected. The phone's account balance can be supplemented through the purchase
of "re-load" cards, also distributed by the Company.

         The Company is developing promotional/marketing applications of its
prepaid cards to provide the marketer of consumer products or services with an
interactive medium to further enhance product loyalty through placing
advertising and information directly on the prepaid service card. The card users
hear a short promotional message each time a long distance call is placed or the
service is used. If the card has been customized to a promotion, a prepaid card
can provide both a specific, coordinated visual and audio memory impressions. In
addition, companies may include a prepaid card with their products, that
provides customer service access and/or free calling services as an added
benefit to purchasing their products.

         To date, the ultimate consumer of mass market prepaid phone cards have
been travelers, niche market card collectors, new immigrants and credit
challenged consumers needing access to the North American and/or International
telecommunications systems servicing these customers. To remain competitive,
9278 will be conducting a targeted marketing program to distributors, retailers
and corporations. In addition, 9278 will seek out strategic partners who
currently provide distribution and marketing of prepaid cards to different
customers or regions as a means of increasing market penetration.

COMPETITION

         The telecommunications services industry generally, and the prepaid
phone card industry specifically, is intensely competitive, rapidly evolving and
subject to constant technological change. There are several large and numerous
small competitors in the industry, and the Company expects to face continuing
competition based on price and service offerings from existing competitors and
new market entrants. In addition, the increasing prevalence of the Internet and
emerging technologies seeking to establish Internet telephony pose potential
competitive threats to the market for long distance telephone services. The
principal competitive factors in the market include price, quality of service,
breadth of geographic presence, customer service, reliability, network capacity
and the availability of enhanced communications services. Our competitors
include:

       * Other distributors of prepaid products, such as Union Telecard
         Alliance;

       * Telecommunications companies that produce their own prepaid products,
         such as IDT and PT-1 Communications; and

       * Other telecommunications companies, such as AT&T, MCI/Worldcom and
         Total-Tel USA.

         Many of our competitors have substantially greater financial, technical
and marketing resources, larger customer bases, longer operating histories,
greater name recognition and more established relationships in the industry than
we have. As a result, certain of these competitors may be able to adopt more
aggressive pricing policies, which could hinder our growth.



                                       7




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GOVERNMENT REGULATION

         The provision of telecommunications services is regulated by the
federal and state governments of the United States. Federal laws and regulations
promulgated by the Federal Communications Commission ("FCC") apply to interstate
and international telecommunications, while state regulatory authorities have
jurisdiction over telecommunications services that originate and terminate
within the same state. Various other international authorities also may seek to
regulate telecommunications services originating in their respective countries.
However, as of the date of this report, we do not require any government
approvals to manufacture, distribute and/or market prepaid phone cards.

EMPLOYEES

         As of March 21, 2000, the Company had 15 full-time employees. Of these,
three were sales and marketing personnel, three were management and finance
personnel and nine were general and administrative personnel. None of the
Company's personnel is covered by a collective bargaining agreement. The Company
has never experienced an employment-related work stoppage and considers its
employee relations to be satisfactory.

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<PAGE>



ITEM 2.  DESCRIPTION OF PROPERTY.

         The Company's executive offices are located at 1942 Williamsbridge
Road, Bronx, New York, where it leases approximately 3,500 square feet, pursuant
to a sublease agreement that expires on November 30, 2008. The aggregate annual
base rental for such space is $63,000. The Company sublets these premises from
an officer and director of the Company, on terms substantially the same as those
under which the officer leases the space.

         The Company also leases approximately 1,100 square feet, located at
1938 Williamsbridge Road, Bronx, New York, as a warehouse location for the
off-site storage of their products, on a month-to-month basis. The monthly rent
for such space is $2,100.

         Through February 28, 2000, the Company leased approximately 200 square
feet located at #304, 320 23rd Avenue, Calgary Alberta T2S 0J2, at a monthly
rate of Cdn$625.00, pursuant to a sublease. This space housed the Company's
switching platform, which the Company sold on that date. In connection with such
sale, the lease was assigned.

ITEM 3. LEGAL PROCEEDINGS.

         On November 12,1999, the Company commenced an action against Cominex,
LLC in New York Supreme Court, Bronx County, alleging claims for breach of
contract and promissory estoppel arising out of Cominex's disabling of over $5.2
million of its prepaid telephone cards and asserting damages of approximately
$1.5 million as a direct result thereof. This action has been removed to Federal
Court and will be consolidated with the matter entitled "Cominex, LLC and Atlas
Communications, Inc. v. 9278 Distributors, Inc., Sajid Kapadia and Sohel
Kapadia," described below, in the event that action does not settle.

         In addition to the foregoing, on November 15, 1999 Cominex, LLC and
Atlas Communications Inc. commenced an action against 9278 Distributors, Inc.,
Sajid Kapadia and Sohel Kapadia in the Federal Court for the Southern District
of New York, alleging various claims against the defendants arising out of the
defendants' purported failure to make timely payments for certain Cominex
prepaid telephone cards and asserting damages of approximately $6.6 million as a
direct result thereof. The Company filed and Answer and Counterclaims alleging
various claims seeking approximately $2.4 million in damages. The parties
subsequently agreed to stay all discovery pending on-going settlement
negotiations and hope to resolve this matter without further proceedings. The
Company believes it has meritorious defenses aginst the claims asserted against
it and plans to vigorously defend against these claims in the event the parties
do not reach a settlement.

         The Company is subject to certain legal proceedings and claims which
have arisen in the ordinary course of its business. These actions when
ultimately concluded will not, in the opinion of management, have a material
adverse effect upon the financial position, results of operations or liquidity
of the Company.

                                       9




<PAGE>



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

         During the fourth quarter of the year ended December 31, 1999, the
following items were submitted for the approval of the Company's security
holders:

         * On December 20, 1999, the Company's security holders, by written
           consent, approved an Amendment to the Company's Articles of
           Incorporation, to change the Company's name from iLink Telecom, Inc.
           to 9278 Communications, Inc.

                                       10




<PAGE>



                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

MARKET INFORMATION

         The Company's Common Stock is quoted on the over-the-counter bulletin
board ("OTCBB") of the Nasdaq Stock Market under the symbol "NTSE", since
January 4, 2000. Prior to January 4, 2000, the Company's Common Stock was traded
under the symbol "ILTE", beginning February 16, 1999. Prior to this, the
Company's Common Stock was traded under the symbol "AQUS". The following table
sets forth the range of the high and low quotations for the common stock for the
periods indicated. Such market quotations reflect inter-dealer prices, without
mark-up, mark-down or commission and may not necessarily represent actual
transactions.
<TABLE>
<CAPTION>

                                                        HIGH       LOW
                                                        ----       ---
         <S>                                           <C>        <C>
         1999
         ----
         First quarter(1)..........................   $ 5.63       $0.95
         Second quarter ...........................     6.00        3.87
         Third quarter(2)..........................     1.75        1.75
         Fourth quarter ...........................     6.50        0.63

         1998
         ----
         First quarter ............................   $ 1.25       $1.25
         Second  quarter...........................     2.50        1.13
         Third quarter ............................    10.63        5.00
         Fourth quarter ...........................     5.63        0.95
</TABLE>

----------
(1) Effective February 14, 1999, the Company consolidated its share capital by
    way of reverse stock split on the basis of one new share of Common Stock for
    each five old shares of Common Stock. The prices listed have been adjusted
    to reflect the effect of the one-for-five reverse stock split.
(2) Amounts derived from the Company's listing in the NASD "pink sheets."

         At March 21, 2000, there were 352 holders of record of the Company's
common stock and the closing bid quotation of the common stock on the OTCBB was
$3.625 per share.

DIVIDEND POLICY

         Immediately prior to the closing of the Merger, the Company declared
a $3.0 million dividend, of which $1.0 million was paid in cash and the
balance of $2.0 million in the form of a two-year promissory note. In addition,
$375,000 was reflected as a dividend based upon a beneficial conversion feature
of preferred stock issued by the Company. The Company does not intend to pay
future dividends and intends to reinvest any earnings in its business to
finance future growth. Accordingly, the Board of Directors does not anticipate
declaring any cash dividends in the foreseeable future.

                                       11




<PAGE>



RECENT SALES OF UNREGISTERED SECURITIES

       * On March 21, 2000, the Company issued an aggregate of 404,000 shares of
         its Common Stock to 7 different investors at a price of $2.00 per share
         for gross proceeds to the Company of $808,000. Two of the investors,
         Sajid Kapadia and Haris Syed, are officers and directors of the
         Company. This transaction was exempt from registration pursuant to
         Section 4(2) of the Securities Act of 1933 (the "Act").

       * On March 15, 2000, the Company issued an aggregate of 300,000 shares of
         its Common Stock to 6 different investors at a price of $2.00 per share
         for gross proceeds to the Company of $600,000. This transaction was
         exempt from registration pursuant to Rule 506 of Regulation D of the
         Act.

       * On March 15, 2000, pursuant to its non-qualified stock option plan, the
         Company granted non-qualified options to purchase 25,000 shares of
         Common Stock of the Company, at an exercise price of $4.00 per share,
         to Raymond Akwule, a newly appointed director of the Company. The
         options vest 50% on September 15, 2000 and 50% on March 15, 2001 and
         are exercisable for a period of ten years from the date of the grant.
         This transaction was exempt from registration pursuant to Rule 701 of
         the Act.

       * On January 18, 2000, January 19, 2000 and February 7, 2000, holders of
         the Company's Series B Convertible Preferred Stock converted 100, 100
         and 25 of such shares into 42,496, 42,839 and 11,204 shares of Common
         Stock of the Company, respectively. These transactions were exempt from
         registration pursuant to Section 4(2) of the Act.

       * On December 10, 1999, iLink issued an aggregate of 14,900,00
         shares to the shareholders of 9278 Distributor, Inc., a New York
         Corporation, in connection with the Merger. This transaction was exempt
         from registration pursuant to Section 4(2) of the Act.

       * On December 10, 1999, iLink issued 500,000 shares of its common stock
         at a purchase price of $2.00 per share to one investor. In addition,
         iLink sold an aggregate of 1,500 shares of its Series B Convertible
         Preferred Stock at a purchase price of $1,000 per share. The Series B
         Convertible Preferred Stock is convertible into shares of common stock
         of the Company based on a per share conversion price equal to 75% of
         the prevailing market price of the Common Stock for the ten trading
         days prior to conversion. These transactions were exempt from
         registration pursuant to Rule 506 of Regulation D of the Act.

       * On June 8, 1999, pursuant to its non-qualified stock option plan, iLink
         granted non-qualified options to purchase an aggregate of 23,000 shares
         of Common Stock of iLink, at an exercise price of $5.25 per share, to
         three employees of iLink. The options vested upon grant and are
         exercisable for a period of one year from the date of the grant. None
         of the grantees are currently employed by the Company. This transaction
         was exempt from registration pursuant to Rule 701 of the Act.

       * On May 25, 1999, iLink issued 250,000 shares of its Common Stock to
         Marketsource Direct Holdings Ltd., a company controlled by Peter
         Schriber, who was a director of iLink, as compensation for services
         rendered to iLink. The deemed value for which this Common Stock was
         issued was $250 ($0.001 per share). This transaction was exempt from
         registration pursuant to Section 4(2) of the Act. These shares were
         subject to a Vesting Agreement. All of these shares were surrendered
         by the holder to the Company on December 10, 1999.

                                       12






<PAGE>



       * On May 20, 1999, iLink issued 22,259 shares of its Common Stock to
         Century Capital Management Ltd. as consideration for the acquisition of
         certain leasehold improvements, furniture and telephone equipment
         valued at $44,518. The value for which this Common Stock was issued was
         $44,518 ($2.00 per share). This transaction was exempt from
         registration pursuant to Section 4(2) of the Act.

       * On April 6, 1999, iLink issued 353,500 shares of its Common Stock to 22
         different investors at a price of $1.00 per share for gross cash
         proceeds to iLink of $353,500. This transaction was exempt from
         registration pursuant to Rule 504 of Regulation D of the Act.

       * On April 2, 1999, iLink issued 1,300,000 shares of its Common Stock to
         4 different investors at a price of $0.05 per share for gross cash
         proceeds to iLink of $65,000. This transaction was exempt from
         registration pursuant to Rule 504 of Regulation D of the Act.

       * On March 31, 1999, iLink issued 145 shares of Series A Convertible
         Preferred Stock to ABDE Holdings Ltd. in consideration for the
         acquisition of all of the shares of iLink B.C. The deemed value for
         which this preferred stock was issued was $145,000 ($1,000 per share).
         This transaction was exempt from registration pursuant to Section 4(2)
         of the Act.

       * On March 25, 1999, iLink issued 1,590,000 shares of its Common Stock to
         certain of its directors and employees as compensation for services
         rendered to iLink and to induce them to remain in iLink's employ and to
         perform their duties and responsibilities to the best of their
         abilities. The deemed value of which this Common Stock was issued was
         $1,590 ($0.001 per share). This transaction was exempt from
         registration pursuant to Section 4(2) of the Act. These shares were
         subject to a Vesting Agreement. Subsequently, 1,500,000 of these
         shares were surrendered by a holder to the Company.

       * On March 25, 1999, iLink issued 300,000 shares of its Common Stock to
         Century Capital Management Ltd. pursuant to the terms of an engagement
         letter dated March 25, 1999, between iLink and Century Capital
         Management Ltd., pursuant to which Century Capital Management Ltd.
         provides the Company with financial consulting services. The deemed
         value of this Common Stock was issued was $300 ($0.001 per share). This
         transaction was exempt from registration pursuant to Section 4(2)
         of the Act. This engagement letter terminates on March 31, 2000.

       * On March 16, 1999, iLink issued 250,000 shares of its Common Stock to 2
         different investors at a price of $0.05 per share for gross cash
         proceeds to iLink of $12,500. This transaction was exempt from
         registration pursuant to Rule 504 of Regulation D of the Act.

       * On June 26, 1998, Aquasol merged with Aquasol Technologies, Inc.
         (formerly AFD Capital Group, Inc.), a Nevada corporation, on the basis
         of one share of Aquasol's Common Stock for each share of common stock
         of Aquasol Technologies Inc. then outstanding. As a result of this
         merger, Aquasol issued 2,080,000 (416,000*) shares of its Common Stock
         to the stockholders of Aquasol Technologies, Inc., the Nevada
         corporation. The estimated value for which this Common Stock was issued
         was $15,650 (ranging from $0.0017 to $0.05 per share). The merger was
         exempt from registration pursuant to Rule 504 of Regulation D of the
         Act. Subsequent to the merger, 1,020,000 shares of Aquasol's Common
         Stock issued to the stockholders of Aquasol Technologies, Inc. were
         surrendered to Aquasol's treasury for cancellation. Prior to the date
         of the merger Aquasol Technologies, Inc. had issued the following
         securities:

                                       13





<PAGE>



         (i)    On March 31, 1998, Aquasol Technologies, Inc. issued 80,000
                (16,000*) shares of common stock to one investor at a price of
                $0.05 ($0.25*) per share for gross proceeds of $4,000. This
                transaction was exempt from registration pursuant to Rule 504 of
                Regulation D of the Act.

         (ii)   On April 1, 1997, Aquasol Technologies, Inc. issued 1,000,000
                (200,000*) shares of common stock to five investors at a price
                of $0.01 ($0.05*) per share for gross proceeds of $10,000. This
                transaction was exempt from registration pursuant to Rule 504 of
                Regulation D of the Act.

         (iii)  On March 27, 1997, Aquasol Technologies, Inc. issued 1,000,000
                (200,000*) shares of common stock to two investors at a price of
                $0.01 ($0.05*) per share for gross proceeds of $10,000. This
                transaction was exempt from registration pursuant to
                Section 4(2) of the Act.

       * On January 15, 1998, Aquasol issued 992,000 (198,400*) shares of its
         Common Stock to the seven stockholders of Aquasol Technologies Inc. (an
         Alberta corporation) formerly named Noralta Technologies Inc. in
         exchange for all of the shares of Aquasol Technologies Inc. (the
         Alberta corporation). This transaction was exempt from registration
         pursuant to Rule 504 of Regulation D of the Act. On January 15, 1999,
         this transaction was unwound and Aquasol returned all of the shares of
         Aquasol Technologies Inc. (the Alberta corporation) to the seven former
         stockholders of that corporation and Aquasol canceled the 992,000
         shares of its Common Stock, which were issued to them.

       * On January 12, 1998, Aquasol issued 4,000,000 (800,000*) shares of its
         Common Stock to one investor at a price of $0.0001 ($0.0005*) per share
         for gross proceeds to Aquasol of $400. This transaction was exempt from
         registration pursuant to Rule 504 of Regulation D of the Act.

       * On January 9, 1998, Aquasol merged with Aquasol Technologies Inc. (a
         Delaware corporation) on the basis of one share of Aquasol's Common
         Stock for each share of common stock of Aquasol Technologies Inc. then
         outstanding. As a result of this merger Aquasol issued 100 (20*) shares
         of its common stock to the sole stockholder of Aquasol Technologies,
         Inc., the Delaware corporation. The estimated value for which this
         Common Stock was issued was $10.00 ($0.10 per share). The merger was
         exempt from registration by Rule 504 of Regulation D. The 100 shares of
         common stock outstanding in Aquasol Technologies, Inc., the Delaware
         corporation, immediately prior to the merger had been issued on
         December 18, 1997, at a price of $0.10 per share. This transaction was
         exempt from registration pursuant to Rule 504 of Regulation D of
         the Act.

       * On December 26, 1997, Aquasol effectuated a plan of share exchange with
         the holders of shares of Series I common stock issued by STB Corp. on
         the basis of one share of Aquasol's Common Stock for each one share of
         Series I common stock outstanding in STB Corp. Pursuant to this
         transaction Aquasol issued 175,456 (35,091*) shares of its Common Stock
         to 293 different holders of Series I common stock of STB Corp. The
         estimated value for which this Common Stock was issued was $175
         ($0.0001 per share). This transaction was exempt from registration
         pursuant to Rule 504 of Regulation D.



                                       14




<PAGE>





       * On December 11, 1997, Aquasol sold 1,500,000 (300,000*) shares of its
         Common Stock to one investor for gross proceeds to Aquasol of $5,000.
         This transaction was exempt from registration pursuant to Section 4(2)
         of the Securities Act.

----------
* The parenthetical amounts reflect the adjustment for the 1-for-5 reverse stock
  split which was effective as of February 14, 1999.



                                       15




<PAGE>



 ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

         The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto set forth in Item 7 of this
Annual Report. In addition to historical information, this discussion and
analysis contains forward-looking statements that involve risks, uncertainties
and assumptions, which could cause actual results to differ materially from
Management's expectations. Factors that could cause differences include, but are
not limited to, expected market demand for the Company's products, fluctuations
in pricing for products distributed by the Company and products offered by
competitors, as well as general conditions of the telecommunications
marketplace.

OVERVIEW

         To date, the Company's principal source of revenue has been the
marketing and distribution of prepaid phone cards. The Company markets and
distributes branded prepaid phone cards produced by a variety of
telecommunications long distance carriers and resellers, as well as private
label proprietary prepaid phone cards produced exclusively for the Company by
various long distance carriers and/or resellers.

         Prepaid phone cards are distributed through a vast network of retail
outlets, including convenience stores, newsstands, grocery stores and discounts
stores. The retail outlets are serviced by independent distributors, which often
distribute newspapers or other items to the retail outlets. The Company
purchases large volumes of branded prepaid phone cards from the long distance
carrier or reseller and sells the cards in smaller quantities, together with
cards from other carriers and/or private label cards distributed by the Company,
to the independent distributor, for ultimate distribution to retailer outlet.

         Branded cards are purchased by the Company at a discount from the face
value of the card, and resold to the distributor at a slightly lower discount.
The difference between the two discount rates, typically from 1% to 3%,
represents the gross margin retained by the Company. Purchases of branded cards
by the Company are made on varying terms, from C.O.D. to a net 30 basis,
although the majority of the Company's purchases are made on credit terms of 10
days or less. Sales by the Company of its product are generally made on a net 30
basis.

         Private label cards are generally designed and produced by the Company,
utilizing card numbers and PINs provided by the telecommunications' carrier or
reseller providing the long distance service for the card. The Company incurs
the upfront expense of printing the phone cards. However, the Company does not
pay the long distance carrier until it activates the cards, which occurs upon
the sale by the Company to the distributor. Accordingly, through the use of
private label cards, the Company's cost of inventory is significantly reduced,
as purchases are effectively made on an as-needed basis. In addition, private
label cards generally provide the Company with the ability to achieve a greater
gross margin percentage, typically ranging from 3% to 6%.

         The Company is seeking to develop and acquire rights to additional
prepaid telecommunications services and other prepaid products or services to
diversify its product offerings and increase its overall gross margin.


                                       16




<PAGE>


RESULTS OF OPERATIONS

     Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

         Net sales increased $56 million to $78 million for the year ended
December 31, 1999, up 255% from net sales of $22 million for the year-ended
December 31, 1998. The increase in net sales was due to the addition of
distributors during the 1999 calendar year, as well as an increase in the number
of brands of prepaid phone cards distributed by the Company. During 1999, the
Company began actively marketing and distributing private label phone cards.

         Gross profit increased to $2,617,000 in 1999, as compared to $682,000
in 1998, as a result of increased volume. As a percentage of sales, gross profit
for 1999 increased 3.35%, as compared to 3.07% for the year ended December 31,
1998. This increase in gross profit was attributable to the addition of higher
margin private label cards, slightly offset by the decrease in margins
attributable to branded products and increasing competition from additional
cards entering the marketplace.

         Operating expenses for the year ended December 31, 1999 increased
$2,003,000 to $2,605,000, an increase of 332% over operating expenses of
$602,000 for the year ended December 31, 1998. Included in operating expenses
for 1999 was a loss of $554,000, attributable to the cancellation of private
label phone cards resulting from the closing of a long distance reseller
providing telecommunications services for such private label card of the
Company, rendering some of the Company's private label cards worthless. In
addition, general and administrative expenses increased to $1,202,000 for 1999,
as compared to $87,000 for 1998. This increase was primarily due to the increase
in salaries, constituting $184,000 in 1999, as compared to $27,000 in 1998, the
addition of $125,000 of advertising costs in 1999, as a result of the Company's
introduction of its private label cards, and an increase in professional fees to
$442,000 in 1999 as compared to $4,000 in 1998. The increase in professional
fees was due to legal, accounting and consulting fees incurred primarily in
connection with the Merger.

         The Company generated net income of $7,000 for 1999 as compared to
$72,000 for the year ended December 31, 1998. The decrease in net income was
primarily due to the loss of $554,000 described above and the significant
non-recurring professional fees incurred by the Company in connection with its
merger activity. For purposes of earnings per share, net income (loss)
attributable to common stock reflects a net loss of $368,000. This gives
effect to a recognition of a beneficial conversion feature of $375,000
attributable to the outstanding series B convertible preferred stock issued
by the Company in December 1999.

     Year Ended December 31, 1998 compared to Year Ended December 31, 1997.

         The Company began substantial operations in 1998. Accordingly, the
results of operations for the year ended December 31, 1997 are not comparative
to those for the year ended December 31, 1998.


                                       17




<PAGE>


CAPITAL RESOURCES

         At December 31, 1999, the Company had total current assets of
approximately $5,179,000. This included $26,000 in cash, $1,302,000 of inventory
and $3,821,000 of accounts receivable. The Company's cash balances vary
significantly from day-to-day due the large volume of purchases and sales made
by the Company from the various prepaid phone cards companies and the numerous
distributors to whom the Company sells cards. Due to the shorter credit terms
made available to the Company from the telecommunications companies from whom it
buys branded cards, as compared to the credit terms made available by the
Company to its customers, the Company, from time-to-time, requires infusions of
cash in order to maintain its preferential buying/purchasing terms with its
carriers. Such cash flow needs are also affected by the timing of large
purchases by the Company, which are made by the Company from time-to-time to
take advantage of favorable pricing opportunities. To date, the Company has
satisfied such cash requirements by loans from its principals and/or private
sales of the Company's equity securities. The Company is seeking to secure
financing to provide the Company with liquidity to meet its future needs. There
can be no assurance that the Company will be able to obtain such financing on
commercially reasonable terms, or otherwise, or that it will be able to
otherwise satisfy it short-term cash flow needs from other sources in the
future.



                                       18




<PAGE>





ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


                     9278 COMMUNICATIONS INC. AND SUBSIDIARY
                        (FORMERLY 9278 DISTRIBUTOR INC.)
                        CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998

                                TABLE OF CONTENTS

Independent Auditors' Report ......................................  F-2
Consolidated Financial Statements
   Balance Sheet at December 31, 1999 .............................  F-3
   Statement of Income
     Years Ended December 31, 1999 and 1998 .......................  F-4
   Statement of Changes in Shareholders' Equity
     Years Ended December 31, 1999 and 1998 .......................  F-5
   Statement of Cash Flows
     Years Ended December 31, 1999 and 1998 .......................  F-6
   Notes to Consolidated Financial Statements .....................  F-7 - F-14


                                      F-1






<PAGE>

                                                              1700 BROADWAY
FRIEDMAN                                                      NEW YORK, NY 10019
ALPREN &                                                      212-582-1600
GREEN LLP                                                     FAX 212-265-4761
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS                  www.nyccpas.com



                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

TO THE BOARD OF DIRECTORS OF 9278 COMMUNICATIONS INC.

           We have audited the accompanying consolidated balance sheet of 9278
COMMUNICATIONS INC. AND SUBSIDIARY (formerly 9278 Distributor Inc.) as of
December 31, 1999, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for each of the years in the two-year period
ended December 31, 1999. 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 in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

           In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of 9278
COMMUNICATIONS INC. AND SUBSIDIARY as of December 31, 1999, and the results of
their operations and their cash flows for each of the years in the two-year
period ended December 31, 1999 in conformity with generally accepted accounting
principles.

                                                    Friedman Alpren & Green LLP

New York, New York
January 24, 2000, except for
   Note 9, as to which the
   date is March 2, 2000

                                      F-2




<PAGE>


                     9278 COMMUNICATIONS INC. AND SUBSIDIARY
                        (FORMERLY 9278 DISTRIBUTOR INC.)
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1999

                                     ASSETS
                                     ------
<TABLE>

<S>                                                               <C>
Current assets
   Cash .......................................................   $    26,192
   Accounts receivable, less allowance for doubtful accounts
     of $125,000 ..............................................     3,820,503
   Inventories ................................................     1,302,171
   Prepaid expenses and other current assets ..................        30,749
                                                                  -----------
           Total current assets ...............................     5,179,615
Property and equipment - at cost, less accumulated
   depreciation and amortization ..............................       349,869
Goodwill, less accumulated amortization of $11,205 ............       593,857
Other assets ..................................................        15,339
                                                                  -----------
                                                                  $ 6,138,680
                                                                  ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------
Current liabilities
   Accounts payable and accrued expenses ......................   $ 2,805,579
   Current maturities of note and advances payable, shareholder     1,633,521
   Current maturities of debt obligations .....................        69,102
   Income taxes payable .......................................         2,000
                                                                  -----------
                                                                    4,510,202
           Total current liabilities
Note payable, shareholder, less current maturities ............     1,000,000
Debt obligations, less current maturities .....................       108,002
                                                                  -----------
                                                                    5,618,204
                                                                  -----------
Commitments and contingencies .................................            --
Shareholders' equity
   Convertible preferred stock
     Class B, $.001 par value; 5,000,000 shares authorized,
       1,500 shares issued and outstanding ....................     1,500,000
   Common stock, $.001 par value; 25,000,000 shares
     authorized, 19,659,629 shares issued and outstanding .....        19,659
   Additional paid-in capital .................................     2,361,382
   Accumulated deficit ........................................    (3,360,565)
                                                                  -----------
                                                                      520,476
                                                                  -----------
                                                                  $ 6,138,680
                                                                  ===========
</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      F-3




<PAGE>


                     9278 COMMUNICATIONS INC. AND SUBSIDIARY
                        (FORMERLY 9278 DISTRIBUTOR INC.)
                        CONSOLIDATED STATEMENT OF INCOME
                     YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                           1999           1998
                                                           ----           ----
<S>                                                    <C>           <C>
Net sales ..........................................   $78,089,670   $22,169,108
Cost of sales ......................................    75,472,736    21,486,747
                                                        ----------    ----------
           Gross profit ............................     2,616,934       682,361
                                                        ----------    ----------
Operating expenses
   Selling .........................................       240,255            --
   General and administrative ......................     1,201,585        87,382
   Depreciation and amortization ...................        66,296        22,139
   Loss attributable to major supplier .............       553,547            --
   Provision for doubtful accounts .................       519,962       489,087
   Interest expense ................................        23,454         3,469
                                                        ----------    ----------
                                                         2,605,099       602,077
                                                        ----------    ----------
           Income before income taxes ..............        11,835        80,284

Income taxes .......................................         5,000         8,551
                                                        ----------    ----------
           Net income ..............................   $     6,835   $    71,733
                                                       ===========   ===========
Pro forma income data (unaudited) - 1998
   Income before income taxes as reported ..........                 $    80,284
   Pro forma income taxes ..........................                      40,000
                                                                     -----------
   Pro forma net income ............................                 $    40,284
                                                                      ==========
Basic and diluted earnings (loss) per share ........   $      (.02)  $       -0-
                                                       ===========   ===========
Shares used in the calculation of earnings per share    19,659,629    14,900,000
                                                       ===========   ===========

</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      F-4




<PAGE>





                     9278 COMMUNICATIONS INC. AND SUBSIDIARY
                        (FORMERLY 9278 DISTRIBUTOR INC.)

            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

                     YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                  ADDITIONAL                                     RETAINED
                                                COMMON STOCK        PAID-IN        PREFERRED     TREASURY        EARNINGS
                                           SHARES         AMOUNT    CAPITAL          STOCK         STOCK         (DEFICIT)
                                           ------         ------    -------          -----         -----         ---------
<S>                                   <C>            <C>           <C>            <C>          <C>           <C>
Balance, January 1, 1998 ..........           200    $     1,000   $   199,000    $        --   $        --  $         867
Net income for the year ended
  December 31, 1998 ...............            --            --             --             --            --         71,733
                                      -----------   -----------    -----------    -----------   -----------  -------------
Balance, December 31, 1998 ........           200          1,000       199,000             --            --         72,600

Contribution of common shares by
   founding shareholder ...........         22.75             --       350,721             --        350,721            --

Reissuance of treasury shares .....       (22.75)             --            --             --       (350,721)           --

Effective stock split of 74,500
 shares  to 1 at merger ...........    14,899,800         13,900       (13,900)            --            --             --

Effective acquisition of iLink
 excluding contemporaneous
  private placements ..............     4,259,629          4,259       451,061             --            --             --

Issuance of common stock through
  private placement ...............       500,000            500       999,500             --            --             --

Issuance of preferred stock through
  private placement ...............            --             --            --      1,500,000            --             --

Dividends paid and declared .......            --             --            --             --            --     (3,065,000)

Imputed preferred stock dividend
 attributable to the beneficial
  conversion feature ..............            --             --         375,000           --            --       (375,000)

Net income for the year ended
  December 31, 1999 ...............            --            --             --             --            --          6,835
                                      -----------   -----------    -----------    -----------   -----------  -------------
Balance, December 31, 1999 ........    19,659,629    $    19,659   $ 2,361,382    $ 1,500,000   $       -0-  $ ( 3,360,565)
                                      ===========    ===========   ===========    ===========   ===========  =============


</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      F-5




<PAGE>

                     9278 COMMUNICATIONS INC. AND SUBSIDIARY
                        (FORMERLY 9278 DISTRIBUTOR INC.)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>

                                                               1999           1998
                                                               ----           ----
<S>                                                      <C>           <C>
Cash flows from operating activities
  Net income .........................................   $     6,835    $    71,733
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities
       Depreciation and amortization .................        66,296         22,139
       Provision for doubtful accounts ...............       519,962        489,087
       Changes in assets and liabilities
         Accounts receivable .........................    (1,689,999)    (3,084,553)
         Inventories .................................      (917,787)      (334,384)
         Prepaid expenses and other current assets ...       (30,749)            --
         Other assets ................................        (5,339)       (10,000)
         Accounts payable and accrued expenses .......      (132,023)     3,079,234
         Income taxes payable ........................        (6,551)         8,551
                                                         -----------    -----------
           Net cash provided by (used in) operating
             activities ..............................    (2,189,355)       241,807
                                                         -----------    -----------
Cash flows from investing activities
  Cash received in merger ............................         5,410             --
  Acquisition of property and equipment ..............      (122,104)       (14,000)
  Merger transaction costs ...........................       (55,681)            --
                                                         -----------    -----------
           Net cash used in investing activities .....      (172,375)       (14,000)
                                                         -----------    -----------
Cash flows from financing activities
  Advances payable, shareholder ......................       633,521        (29,300)
  Principal payments on debt obligations .............       (45,567)       (39,539)
  Issuance of common stock ...........................     1,000,000        199,000
  Issuance of preferred stock ........................     1,500,000             --
  Dividends paid .....................................    (1,065,000)            --
                                                         -----------    -----------
          Net cash provided by financing activities ..     2,022,954        130,161
                                                         -----------    -----------
Net increase (decrease) in cash ......................      (338,776)       357,968

Cash, beginning of year ..............................       364,968          7,000
                                                         -----------    -----------
Cash, end of year ....................................   $    26,192    $   364,968
                                                         ===========    ===========
Supplemental cash flow disclosures
  Interest paid ......................................   $    16,787    $     3,469
  Income taxes paid ..................................        11,551             --

Noncash investing and financing activities
  Note issued for accrued dividends ..................     2,000,000             --
  Issuance of common stock for net noncash assets
    received in merger ...............................       455,320             --
  Additional paid-in capital arising from contribution
    of treasury shares ...............................       350,721             --
  Transportation and other equipment acquired under
    debt obligations .................................       121,240        140,970

</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      F-6




<PAGE>

                     9278 COMMUNICATIONS INC. AND SUBSIDIARY
                        (FORMERLY 9278 DISTRIBUTOR INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization

         9278 Communications Inc. is the successor consolidated entity formed by
     the merger, on December 10, 1999, of 9278 Distributor Inc. (the "Company")
     and its subsidiary, iLink Telecom, Inc. ("iLink"). iLink was originally
     incorporated in Colorado on December 10, 1997 and was reincorporated in
     Nevada on July 14, 1998. The Company was incorporated in New York on April
     17, 1997.

          Concurrent with the merger, iLink, a publicly held company and the
     legally surviving parent company, changed its name to 9278 Communications
     Inc. For accounting purposes, the merger has been treated as a reverse
     acquisition, with the Company as the acquiror, and is accounted for as a
     purchase.

          The Company sells telephone cards to small retail establishments and
     distributors, primarily in the New York, New Jersey and Connecticut areas.

     Acquisition

          The Company consummated the reverse acquisition of iLink on December
     10, 1999. The Company's shareholders were issued 14,900,000 iLink shares in
     exchange for the 200 shares of the Company. For accounting purposes, the
     shares retained by the original shareholders of iLink, subject to certain
     adjustments, are treated as being issued by the Company to effect the
     merger, hence the term "reverse acquisition". These shares were valued at
     $155,000 based upon an independent valuation of iLink. In addition to the
     value of these shares, the Company's acquisition cost includes the eight
     shares (post split equivalent of 596,000 shares) issued to a creditor of
     iLink valued at $123,330, legal fees of $42,455, and investment banker fees
     of $13,226, for total acquisition costs of $334,011.

          Concurrent with the closing of the merger, iLink completed two private
     placements pursuant to which it sold 500,000 new common shares for
     $1,000,000 and 1,500 convertible preferred shares for $1,500,000.

          Immediately prior to the closing of the merger, the Company declared a
     $3,000,000 dividend ($15,000 per share), of which $1,000,000 was paid in
     cash and the balance of $2,000,000 in the form of a two-year promissory
     note. The payment of $1,000,000 was funded by the private placements
     consummated as of that date.

                                  (Continued)
                                      F-7







<PAGE>

                     9278 COMMUNICATIONS INC. AND SUBSIDIARY
                        (FORMERLY 9278 DISTRIBUTOR INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          Also prior to the merger, iLink issued 300,000 shares in satisfaction
     of $300,000 in debt; issued 190,000 shares for services upon the
     achievement of certain vesting provisions and also issued 200,000 common
     shares for advisory and related services in connection with the private
     placement and merger.

          The following unaudited pro forma information presents the results of
     operations of the Company as if the acquisition had taken place on January
     1, 1998:
<TABLE>
<CAPTION>
                                               Year Ended December 31,
                                              -------------------------
                                               1999               1998
                                              ------             ------
               <S>                         <C>              <C>
               Net sales ...............   $ 78,121,200    $ 22,169,108
               Net earnings (loss) .....     (1,497,438)         48,019
               Earnings (loss) per share           (.08)            -0-
</TABLE>


          These unaudited pro forma results of operations have been prepared for
     comparative purposes only and do not purport to be indicative of the
     results of operations which actually would have resulted had the
     acquisition occurred on the date indicated, or which may result in the
     future.

     Use of Estimates

          Management uses estimates and assumptions in preparing financial
     statements. Those estimates and assumptions affect the reported amounts of
     assets and liabilities, the disclosure of contingent assets and
     liabilities, and the reported revenues and expenses. Actual results could
     differ from those estimates.

     Basis of Presentation

          The accompanying consolidated balance sheet as of December 31, 1999
     includes the accounts of the Company and iLink. The related accompanying
     consolidated statements of income, changes in shareholders' equity and cash
     flows include the results of operations and cash flows of the Company for
     the entire year and of iLink for the period beginning December 11, 1999.
     All significant intercompany transactions and balances have been
     eliminated.

                                  (Continued)
                                      F-8




<PAGE>


                     9278 COMMUNICATIONS INC. AND SUBSIDIARY
                        (FORMERLY 9278 DISTRIBUTOR INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Inventories

          Inventories, which consist of telephone cards, are stated at the lower
     of cost (first-in, first-out) or market.

     Property and Equipment

          Property and equipment are stated at cost. Depreciation, including
    depreciation on assets held under capital leases, is computed on accelerated
    methods over the estimated useful lives of five to seven years. Leasehold
    improvements are amortized primarily over 39 years.

     Goodwill

          Goodwill represents cost in excess of fair value of net assets
     acquired in the merger transaction, and is being amortized over 3 years.
     The Company periodically re-evaluates its recoverability. In management's
     opinion, there has been no impairment of goodwill at December 31, 1999.

     Revenue Recognition

          Revenue is recognized at the time of sale.

     Income Taxes

          Prior to the merger with iLink, the Company had elected S Corporation
     status for Federal and New York State income tax purposes. Under these
     elections, the Company's taxable income or loss was reportable by the
     shareholders on their individual income tax returns, and the Company made
     no provision for Federal income tax. Provisions were recorded for New York
     State S Corporation tax and New York City General Corporation tax.

          Concurrent with the merger with iLink on December 10, 1999, the S
     Corporation elections terminated and the Company became subject to all
     Federal, state and city corporation income taxes.

                                  (Continued)
                                     F-9




<PAGE>


                     9278 COMMUNICATIONS INC. AND SUBSIDIARY
                        (FORMERLY 9278 DISTRIBUTOR INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Concentrations of Credit Risk

          At December 31, 1999, the Company maintained cash balances in two
     banks. Balances are insured for up to $100,000 by the Federal Deposit
     Insurance Corporation.

     Earnings Per Share

          Basic earnings per common share for 1999 is calculated by dividing net
     income (loss) available to common stockholders by the average number of
     common shares outstanding during the year. Diluted earnings per common
     share is calculated by adjusting outstanding shares, assuming conversion of
     any potentially dilutive securities, such as stock options or warrants. The
     Company has no material potentially dilutive securities outstanding.

          The numerator in calculating basic and diluted earnings (loss) per
     share is reported net income less the beneficial conversion feature of
     preferred stock. In 1999, reported net income of $6,835 was reduced by the
     beneficial conversion feature of $375,000 to arrive at net loss
     attributable to common shareholders totaling $368,165. In 1998, there was
     no beneficial conversion feature and all of reported net income of $71,733
     was available for common shareholders.

          Basic earnings per common share for 1998, which gives retroactive
     effect to the stock split, has been computed on a pro forma basis by
     dividing net income by 14,900,000 shares, which represents the number of
     shares of iLink issued to the shareholders of the Company.

2 - PROPERTY AND EQUIPMENT

          Property and equipment consist of the following:
<TABLE>
               <S>                                              <C>
               Transportation and other equipment
                 under capital leases .......................   $185,970
               Furniture and equipment ......................     39,410
               Automobiles ..................................    154,566
               Computer equipment ...........................     48,799
               Leasehold improvements .......................     15,000
                                                                --------
                                                                 443,745
                 Less - Accumulated depreciation and
                   amortization..............................     93,876
                                                                --------
                                                                $349,869
                                                                ========
</TABLE>

          Accumulated depreciation on equipment held under capital leases was
$63,653 at December 31, 1999.

                                  (Continued)
                                      F-10




<PAGE>


                     9278 COMMUNICATIONS INC. AND SUBSIDIARY
                        (FORMERLY 9278 DISTRIBUTOR INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


3 - NOTE AND ADVANCES PAYABLE, SHAREHOLDER

          On December 10, 1999, the Company declared $3,000,000 in dividends, of
     which $1,000,000 was paid at that time. On December 13, 1999, the Company
     executed a promissory note for the benefit of the shareholders in the
     amount of $2,000,000, payable to the Company's chief executive officer, who
     is also a shareholder. A principal payment of $1,000,000 is due on June 13,
     2000, and the second payment is payable on December 13, 2001. However, the
     final payment is accelerated if the Company's gross revenues exceed $10
     million in each of any six consecutive calendar months or exceed $60
     million in any six-month period. Management does not anticipate this
     occurring prior to January 10, 2001. Interest is payable at the time of
     each principal payment at a rate of 10%. Interest expense accrued at
     December 31, 1999 was $6,667.

          In addition, the Company's chief executive officer made advances which
     are noninterest-bearing and due on demand.

4 - DEBT OBLIGATIONS

          In 1999, the Company entered into two automobile loans for $76,240.
     The loans require total monthly payments of $2,277, including interest at
     10%.

          In addition, the Company leases transportation and other equipment
     under capital leases. Future loan principal and minimum lease payments at
     December 31, 1999 are as follows:
<TABLE>
<CAPTION>

           Year Ending                                     Capital   Automobile
           December 31,                                    Leases      Loans
           ------------                                    ------    ----------
           <S>                                            <C>         <C>

               2000...................................   $ 58,563     $ 21,423
               2001...................................     38,963       12,346
               2002...................................     11,522       12,842
               2003...................................     11,522       12,521
               2004...................................      6,721        9,507
                                                         --------     --------
               Total minimum loan and lease payments..    127,291       68,639
               Less - Amount representing interest ...     18,826           --
                                                         --------     --------
               Present value of minimum loan and lease
                 payments ............................    108,465       68,639
               Less - Current maturities .............     47,679       21,423
                                                         --------     --------
               Long-term debt obligations ............   $ 60,786     $ 47,216
                                                         ========     ========
</TABLE>


          Interest expense on the automobile loans and capital lease obligations
     for the years ended December 31, 1999 and 1998 was $16,787 and $3,469,
     respectively.

                                   (Continued)
                                      F-11




<PAGE>


                     9278 COMMUNICATIONS INC. AND SUBSIDIARY
                        (FORMERLY 9278 DISTRIBUTOR INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5 - CAPITAL STOCK TRANSACTIONS

          On November 17, 1999, the Company's sole shareholder sold 22.75 of his
     common shares in the Company to three new shareholders. Of these, 14.75
     shares were issued to affiliates of two providers of advisory services.
     Such services were in large part related to the Company's general merger
     and business development activities, but had no specific connection to the
     merger with iLink. The remaining eight shares were issued to a creditor of
     iLink as consideration for services directly related to the merger. (This
     creditor subsequently converted $300,000 of loans payable to 300,000 shares
     of iLink.) The issuance of all of these shares furthered the Company's
     interest to varying degrees; accordingly, their issuance has been
     attributed directly to the Company, as if they had first been contributed
     to the Company by the sole shareholder. These shares were recorded as
     treasury stock at their fair value and reissued to the three new
     shareholders. The Company recognized $227,391 of advisory fee expense for
     the 14.75 shares. The remaining eight shares with a fair value of $123,330
     have been added to the Company's acquisition cost for the merger.

6 - RELATED PARTY TRANSACTIONS

          Sales to a customer who is related to an officer were approximately
     $9,500,000 and $2,208,000 for the years ended December 31, 1999 and 1998,
     respectively. The amount receivable from this related party at December 31,
     1999 and 1998 was approximately $215,000 and $880,000, respectively, all of
     which had been subsequently collected as of January 24, 2000. On March 2,
     2000, the Company entered into a letter of intent to acquire this
     customer's business (see Note 9).

7 - LITIGATION WITH MAJOR SUPPLIER

          For the year ended December 31, 1999, purchases from one telephone
     card supplier were approximately 55% of total purchases. In November 1999,
     the Company commenced an action against this supplier to recover damages
     resulting from cancellation of telephone cards purchased by the Company.
     The supplier subsequently countersued. In the Company's opinion, with which
     its legal counsel concurs, no material liability will result from the
     countersuit. The Company incurred a loss of $553,547, which was reflected
     in the fourth quarter of 1999. The Company is doubtful as to the prospects
     for recovery against such loss. The Company subsequently mitigated, in
     substantial part, its reliance on this supplier by increasing its purchases
     from other vendors.

                                  (Continued)
                                      F-12




<PAGE>



                     9278 COMMUNICATIONS INC. AND SUBSIDIARY
                        (FORMERLY 9278 DISTRIBUTOR INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8 - COMMITMENTS AND CONTINGENCIES

     Lease Commitments

          The Company was assigned a noncancelable operating lease for warehouse
     and office space by its chief executive officer. The assignment was
     structured as a sublease. Approximate future minimum rentals at December
     31, 1999 are as follows:
<TABLE>
<CAPTION>
               Year Ending
               December 31,
               ------------
                 <S>                                  <C>
                   2000..............................   $  63,000
                   2001..............................      66,000
                   2002..............................      70,000
                   2003..............................      73,000
                   2004..............................      77,000
                   Thereafter........................     340,000
                                                         --------
                                                         $689,000
                                                         ========
</TABLE>

          Rent expense for the years ended December 31, 1999 and 1998 was
     $68,910 and $16,708, respectively.

     Employment Agreement

          On December 10, 1999, the Company entered into a three-year employment
     agreement with its chief executive officer. Base salary for each of the
     three years will be $200,000, $225,000 and $250,000, respectively. At the
     end of the three-year period, the employment agreement will automatically
     be extended for an additional year without any action by the Company or the
     chief executive officer, unless there is a submitted written notice four
     months prior to expiration of the agreement by either party. In addition to
     the base salary, the Company will compensate the chief executive officer
     with cash bonuses and stock option grants based on the Company's economic
     performance.

     Contracts

          The Company has various commitments with certain vendors requiring
     minimum periodic purchases. Such contracts are common in the Company's
     industry.

                                   (Continued)
                                      F-13




<PAGE>

                     9278 COMMUNICATIONS INC. AND SUBSIDIARY
                        (FORMERLY 9278 DISTRIBUTOR INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



8 - COMMITMENTS AND CONTINGENCIES (Continued)

     Stock Options

          Prior to the acquisition, iLink had established a non-qualified stock
     option plan pursuant to which options to acquire a maximum of 500,000
     common shares would be granted. On June 9, 1999, the Company granted
     options to individuals, who were employees at that time, to acquire 23,000
     common shares at an exercise price of $5.25. These options are exercisable
     on June 9, 2000 and expire after that date if not exercised.

9 - SUBSEQUENT EVENTS

          Between January 18, 2000 and February 7, 2000, certain holders of
     preferred stock converted 225 preferred shares into 96,539 common shares.

          On February 28, 2000, the Company sold the assets acquired in the
     acquisition of iLink and will recognize a loss on the sale of approximately
     $400,000, primarily attributable to the write-off of the related goodwill.

          On March 2, 2000, the Company entered into a letter of intent to
     acquire a company which is owned by a family member of an officer of the
     Company.

                                      F-14





<PAGE>



ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         On December 28, 1999, the Company dismissed Ernst & Young LLP ("E&Y")
as its independent certified public accountant. The reports of E&Y on the
Company's financial statements for the fiscal years ended December 31, 1998 and
1997 did not contain an adverse opinion, or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principle.
The Company's Board of Directors approved the decision to change accountants.
During the Company's two most recent fiscal years and subsequent interim
periods, there were no disagreements with E&Y on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedures, which disagreements, if not resolved to the satisfaction of E&Y
would have caused it to make reference to such disagreement in its reports.

         The Company engaged Friedman Alpern & Green LLP ("Friedman") to act as
its independent certified public accountant, effective December 28, 1999. During
the two most recent fiscal years and subsequent interim periods, the Company has
not consulted Friedman regarding the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's financial statements, or any
matter that was the subject of a disagreement or a reportable event.

                                       19




<PAGE>


                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The following persons are our executive officers and directors:

<TABLE>
<CAPTION>

NAME                        AGE                OFFICES HELD
----                        ---                ------------
<S>                         <C>          <C>
Sajid Kapadia               25           Chairman, Chief Executive Officer and Director

Amar Bahadoorsingh          29           President, Secretary and Director

Haris Syed                  25           Vice President and Director

Raymond Akwule              44           Director
</TABLE>

SAJID KAPADIA. Mr. Kapadia has been the Chairman, Chief Executive Officer and a
Director of the Company since December 1999. In October 1996, Mr. Kapadia
founded 9278 Distributor Inc., which was merged with and into 9278 Distributor
Acquisition Corp., a wholly owned subsidiary of iLink, and served as its
President from inception. Prior to this, Mr. Kapadia was involved in several
short-term telemarketing positions. Mr. Kapadia has a degree in mechanical
engineering from Gandhi Engineering College in Gujrat, India.

AMAR BAHADOORSINGH. Mr. Bahadoorsingh has been the President, Secretary and a
director of the Company since December 1999. Prior to the Merger, he was Chief
Executive Officer, President, Secretary and a director of iLink, beginning
February 1999. Prior to this, Mr. Bahadoorsingh was the Corporate Finance
Director for Insync Securities Ltd., from August 1997 through December 1998.
Before this, Mr. Bahadoorsingh was President of ABDE Holdings Ltd. from April
1992 through July 1997. Mr. Bahadoorsingh holds a Masters of Business
Administration degree from Queen's University, in Ontario, Canada, with a focus
on management and marketing strategy.

HARIS SYED. Mr. Syed has been Vice President and a Director of the Company,
since December 1999. Prior to this, from November 1996 through December 1999, he
was the Vice President of TCI Telecom of NY, a telecom switching and Voice Over
Internet Protocol integrator. Prior to this, he was a student, enrolled in the
Business Administration and Marketing program at Columbus University in Los
Angeles.

RAYMOND AKWULE, PH.D. Dr. Akwule has been a Director of the Company since March
15, 2000. Dr. Akwule is a tenured professor at George Mason University, with
more than 18 years of teaching, research and project implementation experience
in the fields of telecommunications policy, information technology
implementation and mass communication. He is the author of Global
Telecommunications: The Technology, Administration and Policies
(Butterworth-Heinemann, 1992), used as a text in several major universities in
the United States and abroad. Dr. Akwule holds a Doctor of Philosophy degree
from Howard University and a Masters of Arts degree and Bachelor of Arts degree
from the University of Iowa.

         All directors hold office until the next annual meeting of stockholders
and the election and qualification of their successors. Executive officers are
elected annually by the Board of Directors to hold office until the first
meeting of the Board following the next annual meeting of stockholders and until
their successors are chosen and qualified.



                                       20




<PAGE>





ITEM 10. EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION

         Set forth below is the aggregate compensation for services rendered in
all capacities to the Company during its fiscal years ended December 31, 1999
and 1998 by its Chief Executive Officer. No executive officer of the Company had
compensation in excess of $100,000 during the fiscal year ended December 31,
1999.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                                                                                 LONG-TERM
NAME AND                                       ANNUAL COMPENSATION          COMPENSATION AWARDS
ANNUAL                                  ----------------------------      ----------------------
PRINCIPAL                                                                 SECURITIES UNDERLYING
POSITION                     YEAR       SALARY      BONUS      OTHER          OPTIONS/SARS
---------                    ----       ------      -----      -----      ----------------------
<S>                          <C>        <C>          <C>        <C>          <C>
Sajid Kapadia,
Chairman and                 1999       $ 80,815     $   --     $   --                --
Chief Executive Officer      1998       $ 24,000     $   --     $   --                --

</TABLE>

       Set forth below is information with respect to options to purchase the
Company's Common Stock granted in the year ended December 31, 1999 and prior
years under the Company's Stock Option Plan.

                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
                                                                 NUMBER OF SECURITIES
                              NUMBER OF                          UNDERLYING UNEXERCISED       VALUE OF UNEXERCISED
                              SHARES                             OPTIONS AT                   IN-THE-MONEY OPTIONS
                              ACQUIRED                           DECEMBER 31, 1999            AT DECEMBER 31, 1999
                              UPON            VALUE              -----------------            --------------------
NAME                  YEAR    EXERCISE        REALIZED        EXERCISABLE   UNEXERCISABLE    EXERCISABLE   UNEXERCISABLE
----                  ----    --------        --------        -----------   -------------    -----------   -------------
<S>                   <C>     <C>            <C>             <C>           <C>               <C>           <C>

Sajid Kapadia         1999      --            $  --               --             --             $  --         $  --
                      1998      --            $  --               --             --             $  --         $  --
</TABLE>


                                       21




<PAGE>



EMPLOYMENT AGREEMENTS

         Consulting Agreement with Devmar Holdings Ltd.

         On February 27, 1999, iLink entered into a five-year consulting
agreement dated February 27, 1999, with Devmar Holdings Ltd., a company
controlled by Mr. Amar Bahadoorsingh, an officer and director of the Company.
Pursuant to this consulting agreement the Company agreed to pay Devmar Holdings
Ltd. $5,000 per month for management consulting service provided by Mr.
Bahadoorsingh. This consulting agreement was terminated as of December 31, 1999.

         Contract with Sajid Kapadia

         On December 10, 1999, the Company entered into an Employment Agreement
with Sajid Kapadia. Under the terms of this agreement, Mr. Kapadia will serve as
Chairman of the Board and Chief Executive Officer of the Company for an initial
term of 3 years, which term will be automatically extended for additional one
year periods unless either party submits a notice of non-extension to the other
not less than four months prior to the expiration of the term.

         Pursuant to the agreement, Mr. Kapadia shall receive a base salary of
$200,000, $225,000 and $250,000 during his first, second and third years of
employment, respectively. In addition, during each year of employment Mr.
Kapadia shall receive cash bonuses and stock option grants in amounts to be
determined by the Company's Board of Directors. The Company shall also lease an
automobile for Mr. Kapadia's exclusive use. Mr. Kapadia is entitled to
participate in all plans adopted for the general benefit of the Company's
employees and executive employees.

         The agreement with Mr. Kapadia automatically terminates upon his death.
In addition, the Company can terminate the agreement based on Mr. Kapadia's
continued disability, for due cause or without due cause. Mr. Kapadia can
terminate his employment for good reason. If the agreement is terminated for
death disability or due cause, the Company will pay Mr. Kapadia any unpaid base
salary and bonus through the date of termination. If the Company terminates Mr.
Kapadia's employment for any other reason, or if he terminates it for good
reason, the Company will pay him his base salary for the remaining term of the
agreement, but in no event less than 24, nor more than 35 months.

         Mr. Kapadia's agreement contains standard provisions regarding
confidentiality and non-competition during the term of his employment.

STOCK OPTION PLAN

         The Company has adopted a Non-Qualified Stock Option Plan. The Option
Plan authorizes the issuance of options to purchase up to 500,000 shares of the
Company's Common Stock. The Option Plan became effective on June 1, 1999. The
Company's employees, directors, officers, consultants and advisors are eligible
to be granted options pursuant to the Option Plan. The exercise price of the
options is determined by the Board of Directors.

         Options granted pursuant to the Option Plan terminate on the date
established by the Board of Directors when the options are granted.

         The Option Plan is administered by the Company's Board of Directors.
The Board of Directors has the authority to interpret the provisions of the
Option Plan and supervise the administration of the Option Plan. In addition,
the Board of Directors is empowered to select those persons to whom options

                                       22




<PAGE>
are to be granted, to determine the number of shares subject to each grant of
an option and to determine when, and upon what conditions or options granted
under the Option Plan will vest or otherwise be subject to forfeiture and
cancellation.

          In the discretion of the Board of Directors, any option granted
pursuant to the Option Plan may include installment exercise terms so that the
option becomes fully exercisable in a series of cumulating portions. The Board
of Directors may also accelerate the date upon which any option (or any part of
any options) is first exercisable. In the discretion of the Board of Directors
payment for shares of Common Stock underlying options may be paid through the
delivery of shares of our Common Stock having an aggregate fair market value
equal to the option price, provided that such shares have been owned by the
option holder for at least one year prior to the exercise. A combination of cash
and shares of Common Stock may also be permitted at the discretion of the Board
of Directors. Options are generally non-transferable except upon death of the
option holder.

         The Company's Board of Directors may at any time, and from time to
time, amend, terminate, or suspend the Option Plan in any manner it deems
appropriate, provided that the amendment, termination or suspension cannot
adversely affect rights or obligations with respect to shares or options
previously granted.

         The Option Plan is not qualified under Section 401(a) of the Internal
Revenue Code, and is not subject to any provisions of the Employee Retirement
Income Security Act of 1974. No directors or officers have been granted any
incentive stock options.

         On June 9, 1999, iLink granted non-qualified options to purchase an
aggregate of 23,000 shares of Common Stock of the Company, at an exercise price
of $5.25 per share, to three of its employees. The options vested upon grant and
are exercisable for a period of one year from the date of the grant. None of the
grantees are currently employed by the Company.

         On March 15, 2000, the Company granted non-qualified options to
purchase 25,000 shares of Common Stock of the Company, at an exercise price of
$4.00 per share, to Raymond Akwule, a newly appointed director of the Company.
The options vest 50% on September 15, 2000 and 50% on March 15, 2001 and are
exercisable for a period of ten years from the date of the grant.


                                       23




<PAGE>


DIRECTORS' COMPENSATION

         The Company reimburses its directors for expenses incurred in
connection with attending Board meetings but it does not pay director's fees or
other cash compensation for services rendered as a director.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

         Section 78.7502 of the Nevada Revised Statutes provides that a
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any litigation by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the action if he
acted in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Any indemnification made under section 78.7502 must be determined
to be proper, on a case-by-case basis, by either the Company's stockholders, a
quorum of its Board of Directors (excluding any directors named in the action)
or by the written opinion of its legal counsel. The Company's Articles of
Incorporation and its Bylaws provide for indemnification of its directors,
officers, employees or agents against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement if they acted in good faith and
reasonably believed their conduct or action to be in the Company's best
interest.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

          Each member of the Board of Directors participates in the
determination of the level of compensation of the Company's executive officers.
Three of such directors, Sajid Kapadia, Amar Bahadoorsingh and Haris Syed, are
officers of the Company.

                                       24




<PAGE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table sets forth information as of March 25, 2000 based on
information obtained from the persons named below, with respect to the
beneficial ownership of shares of the Company's Common Stock by (i) each
director of the Company, (ii) certain executive officers of the Company, (iii)
each person known by the Company to be the owner of more than 5% of its
outstanding shares of Common Stock and (iv) all executive officers and directors
as a group:

<TABLE>
<CAPTION>

NAME AND ADDRESS OF                    NUMBER OF             APPROXIMATE
BENEFICIAL HOLDER                       SHARES           PERCENTAGE OF CLASS
-----------------                       ------           -------------------
<S>                                           <C>        <C>
Sajid Kapadia ......................   13,455,125               65.8%

Haris Syed .........................       37,500                 *

Amar Bahadoorsingh .................            0                 *

Raymond Akwule(1) ..................            0                 *

All executive officers .............   13,492,625               65.9%
and directors as a group
(4 persons)
</TABLE>

----------
* Less than 1%

(1) Does not include 25,000 options to purchase shares of common stock of the
    Company, which have not vested.

                                       25




<PAGE>



ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         In March 2000, the Company sold an aggregate of 404,000 shares of its
Common Stock to seven different investors at a price of $2.00 per share. Sajid
Kapadia, the Chairman, Chief Executive Officer and a director of the Company and
Haris Syed, the Vice President and a director of the Company, purchased 250,000
and 37,500 shares, respectively. Sohel Kapadia, Mr. Kapadia's brother, also
purchased 32,500 shares in this offering.

         In December 1999, iLink agreed to purchase 9278 Distributor Inc., a
company controlled by Sajid Kapadia. Mr. Kapadia was not an officer or director
of iLink. In connection with the Merger, the shareholders of 9278 Distributor
were issued an aggregate of 14,900,000 shares of common stock of the Company, as
well as a dividend of $3.0 million, of which $1.0 million was paid in December
1999 and the balance of $2.0 million was in the form of a two-year promissory
note. Of such shares, 13,205,125 were issued to Mr. Kapadia. In addition to such
shares, Mr. Kapadia was granted proxies to vote an aggregate of 2,150,000
additional shares of common stock of the Company. As a result of such
shareholdings and proxies, Mr. Kapadia currently has the right to vote
approximately 78% of the outstanding common stock of the Company.

         In December 1999, the Company entered into a sublease agreement with
Sajid Kapadia, pursuant to which it subleases the entire premises at 1942
Williamsbridge Road, Bronx, New York as its corporate offices, at an annual rent
of $63,000. The rental terms of the sublease agreement are substantially the
same as the terms under which Mr. Kapadia leases the space.

         In February 1999, iLink agreed to purchase all of the shares of iLink
B.C. from ABDE Holdings Ltd., a company controlled by Amar Bahadoorsingh, the
President and a director of the Company, in exchange for 145 shares of our
Series A Convertible Preferred Stock. At the time of this agreement Mr.
Bahadoorsingh was not a director or officer of iLink. Subsequent to the
agreement, Mr. Bahadoorsingh and Peter Schriber were appointed as directors of
iLink and the prior director resigned. Upon consummation of the Merger, Mr.
Schriber resigned as a director of the Company. Each share of Series A
Convertible Preferred Stock entitled ABDE to convert into $1,000 worth of the
Company's Common Stock at a 25% discount to the average market price of the
Company's Common Stock for the five trading days immediately preceding the
conversion. On September 30, 1999, our Board of Directors (with Mr.
Bahadoorsingh abstaining) and ABDE agreed to exchange the 145 shares of Series A
Preferred Stock for 96,666 shares of the Company's Common Stock. The acquisition
of iLink B.C. was valued at $145,000, which was based upon arm's length
negotiations between the Company and ABDE, however, no independent appraisal was
obtained. ABDE acquired these assets from Revere Communications, Inc. on January
13, 1999 for $123,165.

         iLink entered into a five-year consulting agreement, dated February 27,
1999, with Devmar Holdings, Ltd., which is controlled by Mr. Bahadoorsingh. The
agreement provided for monthly payments of $5,000 per month for the consulting
services of Mr. Bahadoorsingh. On March 25, 1999, iLink issued 1,500,000 of its
restricted common stock to Mr. Bahadoorsingh as compensation for services
rendered and to induce Mr. Bahadoorsingh to remain in iLink's employ, which was
deemed essential for the Company's future business developments. These
transactions were approved by iLink's Board of Directors with Mr. Bahadoorsingh
abstaining. Subsequently, the consulting agreement with Devmar Holdings was
terminated.

         In March 1999, iLink issued 25,000 shares of the Company's restricted
common stock to Peter Schriber, a former officer and director of iLink, and in
May 1999, iLink issued 250,000 shares of its

                                       26




<PAGE>


restricted common stock to Marketsource Direct Holdings, Ltd., a company
controlled by Mr. Schriber, as compensation for services rendered to iLink. The
number of shares issued was based upon Mr. Schriber's past services to iLink and
to induce his continued employment with iLink, which was deemed to be vital to
the Company's future business development. This transaction was approved by the
Company's Board of Directors with Mr. Schriber abstaining.

         The 1,500,000 shares issued to Mr. Bahadoorsingh and the 275,000 shares
issued to Mr. Schriber referred to above were subject to a Vesting Agreement,
dated May 25, 1999. The Vesting Agreement provided for vesting of the shares,
if:

         (a)  the Holder remained an officer, director or employee of iLink; and

         (b)  (i) certain operating milestones were achieved, or (ii) if iLink
              was granted a PCS License in Trinidad and Tobago, or (iii) if
              iLink became subject to a takeover bid. Pursuant to the Vesting
              Agreement, shares not vested by May 25, 2000 would be forfeited
              and returned to iLink for cancellation.

         On December 10, 1999, 1,750,000 of such shares were surrendered to the
Company by the holders for cancellation and the remaining 25,000 shares, held by
Mr. Schriber, vested.

         In March 1999, iLink issued 300,000 shares of the its Common Stock to
Century Capital Management Ltd., a company controlled by Andrew Hromyk, a former
director of Aquasol, as compensation for services rendered. The agreement with
Century Capital also provides for an initial payment of $12,500 and monthly
consulting fees of $5,000 for the term of agreement, which is for 12 months.
This agreement terminates on March 31, 2000.

         In May 1999, Century Capital assigned its interest in a lease covering
certain office space to iLink. The lease was assigned to iLink on the same terms
and conditions that existed for Century Capital except that iLink agreed to
indemnify Century Capital for any liabilities which may arise under the lease
after the assignment and Century Capital was issued 22,259 shares of iLink's
Common Stock as consideration for certain leasehold improvements, furniture and
telephone equipment. In December 1999, Century Capital agreed to the
cancellation of the assignment.

         In March 1999, iLink entered into indemnification agreements with Mr.
Bahadoorsingh and Mr. Schriber, two of iLink's directors. In these agreements
the iLink agreed to indemnify the directors from and against any and all costs,
charges and expenses, however arising, or incurred by either of them in relation
to iLink's affairs by reason of them being directors. As required by Nevada
corporate law, the indemnification must be determined to be proper, on a
case-by-case basis, by either a company's stockholders, a quorum of its Board of
Directors, excluding any directors named in the action, or by the written
opinion of a company's legal counsel.


                                       27




<PAGE>


                                     PART IV

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

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

    (1)  Financial Statements. See Index to Consolidated Financial Statements in
         Item 8 hereof.

    (2)  Financial Statement Schedules.

         None

    (3)  Exhibits.

    EXHIBIT
    NUMBER                    DESCRIPTION OF EXHIBIT
    ------                    ----------------------
    2.1    Agreement and Plan of Merger, dated December 17, 1999, among iLink
           Telecom, Inc., 9278 Distributors Acquisition Corp. and 9278
           Distributor, Inc.***

    3.1    Certificate of Incorporation of the Company, as amended.** a.
           Amendment to Certificate of Incorporation, dated December 22, 1999.*

    3.2    Bylaws of the Company.**

    4.1    Specimen Common Stock Certificate of the Company.**

    4.2    Non-Qualified Stock Option Plan of the Company.*

    10.1   Employment Agreement, dated December 10, 1999, between the Company
           and Sajid Kapadia.*

    10.2   Consulting Agreement , dated February 27, 1999, between iLink and
           Devmar Holdings Ltd.**

    16.1   Letter from Ernst & Young LLP, dated January 10, 2000, addressed to
           the Securities and Exchange Commission in compliance with Item 304 of
           Regulation S-K.****

    21.1   Subsidiaries of the Company.*

    27.1   Financial Data Schedule.*


----------
*    Filed herewith
**   Incorporated by reference from the Company's registration statement on Form
     SB-2 (Registration No. 333-84845)
***  Incorporated by reference from the Company's report on Form 8-K, dated
     December 22, 1999
**** Incorporated by reference from the Company's report on Form 8-K, dated
     December 28, 1999


                                       28




<PAGE>



(b) Reports on Form 8-K. The Company filed the following Current Reports on Form
8-K during the fiscal year ended December 31, 1999:

         (1) On December 23, 1999, the Company filed a Current Report on Form
8-K to report a change in control of the Company as a result of the Company
consummating a merger among the Company, 9278 Acquisition Corp., a wholly-owned
subsidiary of the Company ("Acquisition Corp."), and 9278 Distributor Inc., a
New York corporation ("Distributor"), pursuant to which Distributor was merged
with and into Acquisition Corp., thereby becoming a wholly-owned subsidiary of
the Company. As a result of such Merger, the shareholders of Acquisition Corp.
were issued an aggregate of 14,900,000 shares of common stock of the Company, as
well as $1,000,000 and a promissory note in the amount of $2,000,000. Of such
shares, 13,205,125 were issued to Sajid Kapadia, President and Chief Executive
Officer of Distributor. In addition to such shares, Mr. Kapadia was granted
proxies to vote an aggregate of 2,150,000 additional shares of common stock of
the Company. As a result of such shareholdings and proxies, Mr. Kapadia
currently has the right to vote approximately 78% of the outstanding common
stock of the Company. In connection with the Merger, certain members of
management agreed to forgive 1,750,000 shares of common stock of the Company,
which were subject to issuance under existing agreements with the Company. As a
result of such transactions, the aggregate number of issued and outstanding
shares of the Company increased to 19,659,629 shares.

         (2) On December 29, 1999, the Company filed a Current Report on Form
8-K to report that it had (i) dismissed Ernst & Young LLP as its independent
certified public accountant and engaged Friedman Alpern & Green LLP to act as
its independent certified public accountant, effective December 28, 1999, (ii)
filed a Certificate of Amendment to its Articles of Incorporation, to change its
name from iLink Telecom, Inc. to 9278 Communications, Inc., and (iii) changed
its fiscal year from February 28 to December 31.

                                       29




<PAGE>


                                   SIGNATURES

       Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report on Form 10-KSB
to be signed on its behalf by the undersigned, thereunto duly authorized.

                                               9278 COMMUNICATIONS, INC.

       Date: March  30, 2000              By:/s/ Sajid Kapadia
                                             ---------------------------------
                                             Sajid Kapadia
                                             Chairman, Chief Operating Officer
                                                    and Director

       Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report on Form 10-KSB has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<S>                              <C>                            <C>

/s/ Sajid Kapadia                Chairman,                       March 30, 2000
---------------------------      Chief Executive Officer,
Sajid Kapadia                    Principal Executive Officer
                                 and Director


/s/ Amar Bahadoorsingh           President, Principal            March 30, 2000
---------------------------      Accounting and Financial
Amar Bahadoorsingh               Officer and Director


/s/ Haris Syed                   Vice President                  March 30, 2000
---------------------------      and Director
Haris Syed
</TABLE>

                                       30




<PAGE>


                                  EXHIBIT INDEX
                                  -------------

    EXHIBIT
    NUMBER                    DESCRIPTION OF EXHIBIT
    ------                    ----------------------

    2.1     Agreement and Plan of Merger, dated December 17, 1999, among iLink
            Telecom, Inc., 9278 Distributors Acquisition Corp. and 9278
            Distributor, Inc.***

    3.2     Certificate of Incorporation of the Company, as amended.** a.
            Amendment to Certificate of Incorporation, dated December 22, 1999.*

    3.3     Bylaws of the Company.**

    4.2     Specimen Common Stock Certificate of the Company.**

    4.2     Non-Qualified Stock Option Plan of the Company.*

    10.2    Employment Agreement, dated December 10, 1999, between the Company
            and Sajid Kapadia.*

    10.2    Consulting Agreement , dated February 27, 1999, between iLink and
            Devmar Holdings Ltd.**

    16.1    Letter from Ernst & Young LLP, dated January 10, 2000, addressed to
            the Securities and Exchange Commission in compliance with Item 304
            of Regulation S-K.****

    21.1    Subsidiaries of the Company.*

    27.1    Financial Data Schedule.*

----------
*    Filed herewith

**   Incorporated by reference from the Company's registration statement on Form
     SB-2 (Registration No. 333-84845)
***  Incorporated by reference from the Company's report on Form 8-K, dated
     December 22, 1999
**** Incorporated by reference from the Company's report on Form 8-K, dated
     December 28, 1999