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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000912057-01-540260.txt : 20020411
<SEC-HEADER>0000912057-01-540260.hdr.sgml : 20020411
ACCESSION NUMBER:		0000912057-01-540260
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20010930
FILED AS OF DATE:		20011116

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			I LINK INC
		CENTRAL INDEX KEY:			0000849145
		STANDARD INDUSTRIAL CLASSIFICATION:	TELEGRAPH & OTHER MESSAGE COMMUNICATIONS [4822]
		IRS NUMBER:				592291344
		STATE OF INCORPORATION:			FL
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-17973
		FILM NUMBER:		1794505

	BUSINESS ADDRESS:	
		STREET 1:		13751 S WADSWORTH PK DR SUITE 200
		STREET 2:		STE 200
		CITY:			DRAPER
		STATE:			UT
		ZIP:			84020
		BUSINESS PHONE:		8015765000

	MAIL ADDRESS:	
		STREET 1:		13751 S WADSWORTH PK DR
		STREET 2:		STE 200
		CITY:			DRAPER
		STATE:			UT
		ZIP:			84020

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MEDCROSS INC
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>a2063563z10-q.txt
<DESCRIPTION>FORM 10-Q
<TEXT>
<Page>

================================================================================

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

                For the quarterly period ended September 30, 2001

                                       OR

/ / TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES sEXCHANGE ACT
OF 1934

                  For the transition period from ___________ to

                         Commission file number: 0-17973


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

                  FLORIDA                               59-2291344
     (State or other jurisdiction of      (I.R.S. Employer Identification No.)
      incorporation or organization)

          13751 S. WADSWORTH PARK DRIVE, SUITE 200, DRAPER, UTAH 84020
                    (Address of principal executive offices)

                                 (801) 576-5000
                         (Registrant's telephone number)

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

                                   -----------

As of November 6, 2001, the registrant had outstanding 116,549,667 shares of
$0.007 par value common stock.

The disclosures set forth Part II Item 1 in the registrant's Form 10-Q for the
period ended June 30, 2001 filed on August 20, 2001are incorporated in Part II
Item 1 herein.

================================================================================

<Page>

PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS

                      I-LINK INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                                                     September 30,          December 31,
                                                                                         2001                   2000
                                     ASSETS                                          (Unaudited)
                                                                                     --------------        --------------
<S>                                                                                   <C>                   <C>
Current assets:
 Cash and cash equivalents                                                            $  1,712,934          $  2,155,628
 Accounts receivable, less allowance for doubtful accounts of $1,667,000 and
   $100,665 as of September 30, 2001 and December 31, 2000, respectively                16,202,362             3,357,856
 Prepaid expenses                                                                        3,579,417                     -
 Other current assets                                                                    1,988,759               385,891
                                                                                     --------------        --------------
    Total current assets                                                                23,483,472             5,899,375
Furniture, fixtures, equipment and software, net                                        23,567,913            10,983,273

Intangible assets, net                                                                   2,294,040             3,939,226
Other assets                                                                             1,693,250               835,618
                                                                                     --------------        --------------
                                                                                      $ 51,038,675          $ 21,657,492
                                                                                     ==============        ==============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
 Accounts payable                                                                     $  7,292,663          $  5,370,490
 Accrued liabilities                                                                    12,869,492             3,327,900
 Unearned revenue                                                                        3,533,596            14,885,592
 Current portion of long-term debt                                                       1,646,988               785,971
 Notes payable to a related party                                                       22,090,259             7,768,000
 Accrued interest on notes payable to a related party                                      657,850             2,376,498
 Current portion of obligations under capital leases                                     4,895,897             1,445,690
                                                                                     --------------        --------------
    Total current liabilities                                                           52,986,745            35,960,141

Notes payable                                                                            1,577,235               796,662
Notes payable and accrued interest - related party                                      11,618,972                     -
Unearned revenue                                                                                 -             1,666,667
Obligations under capital leases                                                         7,458,964               338,263
                                                                                     --------------        --------------
                                                                                        73,641,916            38,761,733
                                                                                     --------------        --------------
Commitments and contingencies (Note 8)

Redeemable preferred stock - Class M                                                             -            11,734,820
                                                                                     --------------        --------------

Stockholders' deficit:
 Preferred stock, $10 par value, authorized 10,000,000 shares,
    issued and outstanding 769 and 24,435 at September 30, 2001 and
    December 31, 2000, respectively, liquidation preference of
    $761,310 at September 30, 2001                                                           7,690               244,350
 Common stock, $.007 par value, authorized 300,000,000 shares,
    issued and outstanding 116,549,547 and 28,136,506 at September 30, 2001
    and December 31, 2000, respectively                                                    815,849               196,957
 Additional paid-in capital                                                            128,851,786           106,622,114
 Accumulated deficit                                                                  (152,278,566)         (135,902,482)
                                                                                     --------------        --------------
    Total stockholders' deficit                                                        (22,603,241)          (28,839,061)
                                                                                     --------------        --------------
                                                                                      $ 51,038,675          $ 21,657,492
                                                                                     ==============        ==============
</Table>

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

                                        1
<Page>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<Table>
<Caption>
                                                               Three Months Ended                  Nine Months Ended
                                                                  September 30,                       September 30,
                                                       -------------------------------     -----------------------------------
                                                            2001             2000                2001                 2000
                                                       ---------------  --------------     -------------       ---------------
<S>                                                    <C>               <C>                <C>                 <C>
Revenues:
 Telecommunication services                            $ 25,274,900      $ 3,666,119        $ 49,104,324        $ 13,542,438
 Marketing services                                               -                -                   -             463,740
 Technology licensing and development                     1,419,998        1,432,301           4,276,895           7,678,707
 Other                                                      433,174          444,582           1,618,216           2,154,862
                                                       --------------   --------------     --------------      --------------
    Total revenues                                       27,128,072        5,543,002          54,999,435          23,839,747
                                                       --------------   --------------     --------------      --------------

Operating costs and expenses:
 Telecommunication network expense                       22,988,640        5,736,946          43,014,152          17,387,954
 Marketing services                                               -                -                   -             456,354
 Selling, general and administrative                      9,894,235        4,242,074          19,335,976          13,778,795
 Provision for (benefit from) doubtful accounts           1,276,740         (300,667)          2,654,496              79,236
 Depreciation and amortization                            3,204,871        1,565,065           7,186,662           4,614,770
 Research and development                                   434,651        1,085,236           2,025,023           2,759,594
 Impairment of goodwill                                   8,040,054                -           8,040,054                   -
                                                       --------------   --------------     --------------      --------------
    Total operating costs and expenses                   45,839,191       12,328,654          82,256,363          39,076,703
                                                       --------------   --------------     --------------      --------------

Operating loss                                          (18,711,119)      (6,785,652)        (27,256,928)        (15,236,956)
                                                       --------------   --------------     --------------      --------------

Other income (expense):
 Interest expense                                        (1,816,722)        (339,429)         (2,831,354)         (1,133,752)
 Interest and other income                                   25,212          249,940              76,872             400,737
 Settlement expense                                               -                -                   -            (639,565)
                                                       --------------   --------------     --------------      --------------
    Total other income (expense)                         (1,791,510)         (89,489)         (2,754,482)         (1,372,580)
                                                       --------------   --------------     --------------      --------------
       Net loss                                        $(20,502,629)     $(6,875,141)       $(30,011,410)       $(16,609,536)
                                                       ==============   ==============     ==============      ==============


CALCULATION OF NET LOSS PER COMMON SHARE:

Net Loss                                               $(20,502,629)     $(6,875,141)       $(30,011,410)       $(16,609,536)
Cumulative preferred stock dividends                         (5,595)        (402,529)            (27,610)         (1,221,231)
Dividends accrued and paid on Class M
 redeemable preferred stock                                       -                -            (269,027)                  -
Net effect on retained earnings of redemption
 and reissuance of Class M and N preferred
 stock, including beneficial conversion
 features                                                         -                -          15,512,473                   -
                                                       --------------   --------------     --------------      --------------
Net loss applicable to common stock                    $(20,508,224)     $(7,277,670)       $(14,795,574)       $(17,830,767)
                                                       ==============   ==============     ==============      ==============

Basic and diluted weighted average shares
 outstanding                                            113,672,070       27,850,335          93,333,115          26,639,187
                                                       ==============   ==============     ==============      ==============
Net loss per common share - basic and diluted          $      (0.18)     $     (0.26)       $      (0.16)       $      (0.67)
                                                       ==============   ==============     ==============      ==============
</Table>

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

                                        2
<Page>

                      I-LINK INCORPORATED AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
                                   (UNAUDITED)

<Table>
<Caption>
                                                             Preferred Stock         Common Stock
                                                           -------------------  ----------------------
                                                                                                         Additional     Accumulated
                                                            Shares    Amount       Shares      Amount  Paid-in Capital     Deficit
                                                           --------  ---------  -----------  -------- ---------------- -------------
<S>                                                          <C>     <C>        <C>         <C>       <C>             <C>
BALANCE AT DECEMBER 31, 2000                                 24,435  $ 244,350   28,136,506 $ 196,957 $ 106,622,114   $(135,902,482)
Conversion of convertible debt and accrued interest into
 Class M mezzanine preferred stock and common warrants            -          -            -         -     6,377,673               -
Common stock issued and accumulated deficit acquired as a
 result of WebToTel acquisition and conversion of notes
 payable                                                          -          -   17,454,333   122,182    11,822,812      (1,246,834)
Stock issued - employee stock purchase  plan                      -          -       34,518       241        15,338               -
Repurchase of Class M mezzanine preferred stock                   -          -            -         -             -               -
Repurchase of Class N preferred stock                       (14,404)  (144,040)           -         -   (14,164,060)              -
Net contribution from repurchase/settlement
 with stockholders of Class M and N preferred stock               -          -            -         -    (5,000,000)      30,292,319
Contingent beneficial conversion feature
 on Class N preferred stock                                       -          -            -         -     9,779,846      (9,779,846)
Issuance of common shares to related party
 to repurchase warrants outstanding                               -          -    5,000,000    35,000       (35,000)              -
Reissuance and conversion of Class M redeemable
 preferred stock into common stock                                -          -   50,442,857   353,100     3,696,900               -
Reissuance and conversion of Class N
 preferred stock into common stock                                -          -   11,523,159    80,662       869,338               -
Beneficial conversion feature on the reissuance
 of Class M and N preferred stock                                 -          -            -         -     5,000,000      (5,000,000)
Other conversions of Class N preferred stock
 into common stock                                              (13)      (130)       9,143        64            66               -
Warrants issued in connection with
 certain notes payable to related party                           -          -            -         -     2,079,456               -
Beneficial conversion feature on
 certain convertible note payable to related party                -          -            -         -     1,092,143               -
Conversion of Class C preferred stock
 into common stock                                           (9,249)   (92,490)   3,415,015    23,905        68,585               -
Dividend on Class C preferred stock paid in the
 form of common stock                                             -          -      534,016     3,738       626,575        (630,313)
Net loss                                                          -          -            -         -             -     (30,011,410)
                                                           --------  ---------  ----------- --------- --------------  --------------
BALANCE AT SEPTEMBER 30, 2001                                   769  $   7,690  116,549,547 $ 815,849 $  128,851,786  $(152,278,566)
                                                           ========  =========  =========== ========= ==============  ==============
</Table>

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

                                        3
<Page>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<Table>
<Caption>
                                                                                               For the Nine Months Ended
                                                                                                     September 30,
                                                                                            ---------------------------------
                                                                                               2001               2000
                                                                                            -------------       -------------
<S>                                                                                         <C>                 <C>
Cash flows from operating activities:
   Net loss                                                                                 $ (30,011,410)      $ (16,609,536)
    Adjustments to reconcile net loss to net cash used in (provided by)
     operating activities:
      Depreciation and amortization                                                             7,186,662           4,614,770
      Impairment of goodwill                                                                    8,040,054                   -
      Provision for doubtful accounts                                                           2,654,496              79,236
      Common stock issued as payment of accrued liabilities                                             -             740,587
      Amortization of discount on notes payable to a related party                                888,468                   -
      Amortization of deferred compensation on stock options issued for services                        -             503,257
      Increase  (decrease) from changes in operating  assets and  liabilities  (net of
        effects of acquisition of businesses):
          Accounts receivable                                                                  (3,376,429)            818,117
          Other assets                                                                         (4,733,639)           (294,856)
          Unearned revenue                                                                    (11,427,632)         17,916,667
          Accounts payable, accrued liabilities and accrued interest                            8,858,967            (271,573)
      Discontinued operations - noncash charges and working capital changes                             -              66,162
                                                                                            -------------       -------------
                  Net cash provided by (used in) operating activities                         (21,920,463)          7,562,831
                                                                                            -------------       -------------

Cash flows from investing activities:
   Purchases of furniture, fixtures, equipment and software                                    (1,527,514)         (4,687,910)
   Acquisition of WorldxChange assets                                                         (13,000,000)                  -
   Cash received from purchase of WebToTel                                                        233,787                   -
   Investing activities of discontinued operations                                                      -              29,537
                                                                                            -------------       -------------
                  Net cash used in investing activities                                       (14,293,727)         (4,658,373)
                                                                                            -------------       -------------

Cash flows from financing activities:
   Proceeds from issuance of notes payable to related party                                    36,189,534           2,600,000
   Proceeds from advance under strategic marketing agreement                                            -           1,751,183
   Payment of related party debt                                                                        -          (2,600,000)
   Payment of advance under strategic marketing agreement                                               -          (1,751,183)
   Payment of long-term debt                                                                      (29,040)                  -
   Payment of capital lease obligations                                                          (404,578)           (104,979)
   Proceeds from exercise of common stock warrants and options
       and issuances under stock purchase plan                                                     15,580           4,274,879
   Financing activities of discontinued operations                                                      -             (24,204)
                                                                                            -------------       -------------
                  Net cash provided by financing activities                                    35,771,496           4,145,696
                                                                                            -------------       -------------

Increase (decrease) in cash and cash equivalents                                                 (442,694)          7,050,154

Cash and cash equivalents at beginning of period                                                2,155,628           2,996,004
                                                                                            -------------       -------------
Cash and cash equivalents at end of period                                                  $   1,712,934       $  10,046,158
                                                                                            =============       =============

Cash and cash equivalents at end of period:
   Continuing operations                                                                    $   1,712,934       $   9,929,375
   Discontinued operations                                                                              -             116,783
                                                                                            -------------       -------------
      Total cash and cash equivalents at end of period                                      $   1,712,934       $  10,046,158
                                                                                            =============       =============
</Table>

                                        4
<Page>

                      I-LINK INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<Table>
<Caption>
                                                                                               For the Nine Months Ended
                                                                                                     September 30,
                                                                                            ---------------------------------
                                                                                               2001               2000
                                                                                            -------------       -------------
<S>                                                                                         <C>                 <C>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

   Reclassification of Class F redeemable preferred stock from mezzanine                                -       $   2,338,784
   Discount on note payable to related party due to warrants issued with the note           $   2,079,456                   -
   Stock options issued for services                                                                    -              54,902
   Equipment acquired under capital lease obligations                                           9,523,590                   -
   Conversion of notes payable to a related party and associated accrued interest
     to Class M redeemable preferred stock                                                     10,305,072                   -
   Reclassification of Class M redeemable preferred stock from mezzanine                       22,039,892                   -
   Conversion of notes payable to a related party and associated accrued
     interest to common stock                                                                  10,326,938                   -

</Table>

                                        5
<Page>

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

The consolidated financial statements include the accounts of I-Link
Incorporated and its subsidiaries ("I-Link" or the "Company"). The Company's
principal operations are two-fold. First, for the past five years the Company
has developed and marketed enhanced communications products and services
utilizing its own private intranet and both owned and leased network switching
and transmission facilities. The communications solutions are delivered through
the Company's proprietary technologies. Enhanced communications products and
services are marketed through master agent and wholesale distributor
arrangements with I-Link Communications Inc., a wholly owned subsidiary of the
Company that is an FCC licensed long-distance carrier. The Company develops and
licenses communications applications products and software that support
multimedia communications (voice, fax and audio) over the public switched
network, local area networks and the Internet. The second principal operation
began on June 4, 2001, when I-Link Incorporated, through its wholly-owned
subsidiary WorldxChange Corp. ("WorldxChange"), purchased certain assets and
assumed certain liabilities of WorldxChange Communications, Inc. from a
bankruptcy proceeding. WorldxChange is a facilities-based telecommunications
carrier that provides international and domestic long-distance service to retail
customers. Telecommunication services provided by WorldxChange consist primarily
of a dial-around product that allows a customer to make a call from any phone by
dialing a 10-10-XXX prefix. The phone call is then billed directly to the
customer. Billings to these customers are primarily done through the customers'
local exchange carrier ("LEC"). Marketing of the dial around product is
primarily done through independent marketing agents that receive a commission.
WorldxChange's retail base is comprised of residential and commercial customers
located throughout the United States.

On March 1, 2001, I-Link became a majority owned subsidiary of Counsel
Communications LLC, which is a wholly-owned subsidiary of Counsel Corporation
(US), (collectively, "Counsel"). On April 17, 2001, I-Link, WebToTel, Inc.
("WebToTel"), a subsidiary of Counsel, and its subsidiary Nexbell Communications
Inc. ("Nexbell") in a stock-for-stock transaction.

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

The interim financial data are unaudited; however, in the opinion of the
management of the Company, the interim data includes all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of (a)
the results of operations for the three-month and nine-month periods ended
September 30, 2001 and 2000, (b) the financial position at September 30, 2001,
and (c) cash flows for the nine-month periods ended September 30, 2001 and 2000.
The December 31, 2001 balance sheet was derived from audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles. The financial statements should be read in conjunction
with the Company's annual report on Form 10-K for the year ended December 31,
2000 and quarterly reports on Form 10-Q for the three and six-months ended March
31 and June 30, 2001.

The results of operations for the three and nine-month periods ended September
30, 2001 are not necessarily indicative of those to be expected for the entire
year.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NET LOSS PER SHARE

Basic earnings per share is computed based on the weighted average number of
common shares outstanding during the period. The weighted average number of
shares outstanding includes 17,454,333 shares issued by I-Link in April 2001 to
acquire WebToTel as if the acquisition and related stock issuance had occurred
on March 1, 2001. Options, warrants, convertible preferred stock and convertible
debt are included in the calculation of diluted earnings per share, except when
their effect would be anti-dilutive. As the Company had a net loss applicable to
common stock for the three and nine-month periods ending September 30, 2001 and
2000, basic and diluted loss per share are the same.

The net loss per common share basic and diluted for the nine-months ending
September 30, 2001 includes a net increase to retained earnings of $30,292,319
attributable to the redemption on March 1, 2001 of the Class M redeemable
preferred stock and all Class N preferred stock owned by Winter Harbor,
including redemption of the beneficial conversion feature related to such

                                        6
<Page>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

preferred stock. In addition, there was a charge to retained earnings of
$9,779,846 representing a contingent beneficial conversion feature on the Class
N preferred stock resulting from the reset of the conversion price. The net loss
per common share basic and diluted also reflects a $5,000,000 charge to retained
earnings for the beneficial conversion feature related to the reissuance on
March 1, 2001 of the Class M and Class N preferred stock to Counsel
Communications, LLC.

AMORTIZATION OF INTANGIBLES

WebToTel acquired Nexbell on February 22, 2001 and accounted for that
acquisition using the purchase method of accounting. As part of that
acquisition, WebToTel recorded $9,136,427 of goodwill. This goodwill was being
amortized over a five-year period.

The Company continuously reviews the products it offers and their
contribution to our Company and our overall strategy. As of September 30,
2001, our analysis determined that it was not economically justified to
continue to maintain a portion of the Company's network related to leased
lines for local access origination and Nexbell's METS product. Subsequent to
September 30 2001, the company approved a plan to discontinue offering the
METS product. With this determination, the Company performed an impairment
analysis of the goodwill recorded in connection with the acquisition of
WebToTel and its subsidiary Nexbell ("WebToTel"). The analysis was performed
in response to projected losses on the METS product acquired in the WebToTel
acquisition. As a result of this review, an $8,040,054 impairment charge,
representing the remaining balance of the goodwill, was recorded as of
September 30, 2001. The Company anticipates incurring additional operating
losses in the fourth quarter of 2001 of approximately $1.3 million related to
the wind down the METS product and a portion of the Company's network related
to leased lines used for local access origination.

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations."
SFAS 141 requires the purchase method of accounting for business combinations
initiated after June 30, 2001 and eliminates the pooling-of-interests method.
The Company believes that the adoption of SFAS 141 will not have a significant
impact on its financial statements.

In July 2001, the FASB issued Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets", which is effective for fiscal years
beginning after December 15, 2001. SFAS 142 requires, among other things, the
discontinuance of goodwill amortization. In addition, the standard includes
provisions upon adoption for the reclassification of certain existing recognized
intangibles as goodwill, reassessment of the useful lives of existing recognized
intangibles, reclassification of certain intangibles out of previously reported
goodwill and the testing for impairment of existing goodwill and other
intangibles. The Company is currently assessing, but has not yet determined the
impact of SFAS 142 on its financial position and results of operations.

In August 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations", effective for years beginning after June 15, 2002. SFAS 143
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. It applies to legal obligations associated with the retirement of
long-lived assets that result from the acquisition, construction, development
and (or) the normal operation of a long-lived asset, except for certain
obligations of lessees. The Company is currently evaluating the effects of this
Statement.

In August 2001, the FASB issued the Statement of Financial Accounting Standards
No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS 144
addresses financial accounting and reporting for the disposal of long-lived
assets. FAS 144 is effective for fiscal years beginning after December 15, 2001.
The Company is currently evaluating the potential impact, if any, the adoption
of SFAS 144 will have on its financial position and results of operation.

                                        7
<Page>

NOTE 3 - SHORT TERM BORROWINGS

On June 6, 2001, I-Link and Counsel entered into a Loan and Security Agreement
("Loan Agreement"). Any monies advanced to I-Link between June 6, 2001 and April
15, 2002, (in the amount not to exceed $10,000,000) will be governed by the Loan
Agreement. In connection with the Loan Agreement, I-Link will execute a note
payable to Counsel, due June 6, 2002. The loan is secured by all of the assets
of I-Link. Outstanding balances (including any accrued and unpaid interest)
under the loan bear interest at 10% per annum which interest is payable
quarterly in arrears following the last business day of each quarter. However,
Counsel may (and has) at its sole election allow interest to accrue and become
payable at the end of the term. As of September 30, 2001, advances under this
loan agreement totaled $9,159,536.

To fund the acquisition of the assets purchased and liabilities assumed by
WorldxChange, Counsel provided a loan to WorldxChange in the aggregate amount of
$15,000,000. The loan is collateralized against all assets of WorldxChange. The
loan is also guaranteed by I-Link and collateralized by the assets of I-Link.
Outstanding balances (including any accrued and unpaid interest) under the loan
bear interest of 10% per annum and are payable quarterly in arrears and in cash
on the last business day of each quarter. The payment of cash interest by
WorldxChange may be waived by Counsel. The loan will mature on June 4, 2002 but
may be extended upon mutual agreement of both Counsel and I-Link. The loan may
be prepaid at any time prior to the maturity, without penalty.

In connection with the $15,000,000 loan, I-Link issued to Counsel a warrant to
purchase 15,000,000 shares of common stock of I-Link at an exercise price of
$0.60 per share. The warrants are exercisable in three tranches as follows;
5,000,000 on the date of the agreement, 5,000,000 on September 4, 2001 and
December 4, 2001, respectively, in the event the loan is still outstanding on
those dates. The warrants expire on June 4, 2003. The Company has recorded
$2,079,455 as a discount against the $15,000,000 loan from Counsel representing
the relative fair value attributed to the 10,000,000 shares exercisable as of
September 30, 2001. The value of the warrants is calculated using the Black
Scholes Model and is being amortized over the term of the loan. In the event the
third tranche of warrants become exercisable, the Company will record additional
interest expense related to the fair value of the warrants when exercisable.

NOTE 4 - LONG-TERM DEBT

The Company borrowed $12,000,000 under a loan agreement with Counsel
Communications during 2001. Interest on the note (9% per annum) is automatically
added to principal at the end of each calendar quarter. The note is convertible
into I-Link's common stock at a conversion rate of $.56 per share. At any time
the Company made a draw on the loan agreement and the market price of the
Company's common stock was higher than the conversion rate, a debt discount was
recorded equal to this beneficial conversion feature. As of September 30, 2001,
debt discount of $1,092,143 has been recorded on the borrowings of $12,000,000.
This discount is being accreted to interest expense over the term (three years)
of the loan agreement.

Included in the liabilities assumed with the WorldxChange acquisition,
WorldxChange and I-Link Incorporated agreed to a non-interest-bearing obligation
of $1,350,000 payable in installments of $37,500 per month for 36 months to a
carrier. The Company has recorded this debt at its fair market value with an
imputed interest rate of 10%, resulting in a liability in the amount of
$1,162,171. The obligation is subject to reduced payments based upon future
usage with the carrier.

NOTE 5 - FURNITURE, FIXTURES, EQUIPMENT AND SOFTWARE

In connection with the purchase of certain assets from WorldxChange
Communications Inc, the Company recorded $5,247,709 in equipment and cables,
including Indefeasible Rights of Use ("IRU") in telecommunication cable systems.

On June 27, 2001, WorldxChange entered into a capital lease agreement to lease
certain telecommunications equipment with a value of $9,524,000. Lease payments
for the first six months of the lease term will be $159,000 per month. The
remaining forty-two payments are $245,000 per month.

                                        8
<Page>

NOTE 6 - INCOME TAXES

The Company recognized no income tax benefit from the losses generated in 2001
and 2000 because of the uncertainty of the realization of the related deferred
tax asset.

NOTE 7 - STOCK-BASED COMPENSATION PLANS

During the nine months ended September 30, 2001, approximately 3,500,000 options
to purchase the Company's common stock previously issued to employees expired or
were forfeited. During the same period, there were approximately 1,800,000
options to purchase common stock issued to employees. There were no exercises of
options during the nine-month period ended September 30, 2001.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

I-Link's subsidiaries have various agreements with national carriers to lease
local access spans and to purchase carrier services. The agreements include
minimum usage commitments with termination penalties up to 100% of the remaining
commitment. Minimum usage commitments are as follows:

<Table>
        <S>                                       <C>
        2001 (fourth quarter of 2001)             $  1,600,000
        2002                                         5,400,000
        2003                                         3,600,000
        2002                                         3,100,000
        2003                                         1,300,000
</Table>

As of September 30, 2001, I-Link's subsidiary Nexbell had defaulted on two
equipment leases. As of September 30, Nexbell was in default on $690,000 in
arrearages. Nexbell is currently in discussions with the leasing companies and
has recorded its best estimate of the liability under these leases as of
September 30, 2001. However, the potential range of the liability could be
approximately $1.6 million greater than the recorded liability.

As of September 30, 2001, I-Link was in default on an equipment lease. This
lease was secured by a letter of credit issued by an affiliate of Winter
Harbor LLC, a former majority shareholder of I-Link. On October 11, 2001, the
leasing company drew against the letter of credit in the amount of
$1,998,681. As of September 30, 2001, I-Link continues to carry the liability
related to this lease in its financial statements. On October 26, 2001,
I-Link received a demand for payment from Winter Harbor LLC for the amount of
the draw on the letter of credit and interest since October 11, 2001. The
Company is evaluating Winter Harbor's demand in light of the various
agreements entered into between the Company, Counsel Communications LLC and
Winter Harbor. While the Company believes that it will not be required to pay
cash to Winter Harbor of the amount claimed, there can be no assurance as to
the ultimate outcome of this matter.

WorldxChange has entered into operating lease agreements to lease space at
various switch sites and at its headquarters. These lease agreements include
commitments as follows:

<Table>
        <S>                                       <C>
        2001                                      $  1,000,000 (fourth quarter of 2001)
        2002                                         3,000,000
        2003                                         1,200,000
        2004                                           500,000
        2005                                           500,000
        Thereafter through 2010                     11,000,000
                                                  ------------
             Total                                $ 17,200,000
</Table>

                                        9
<Page>

NOTE 9 - PREFERRED STOCK

On September 6, 2001, all outstanding shares of the Company's Class C preferred
stock automatically converted into shares of common stock according to the terms
of the designation of the Class C preferred stock. Accordingly, 9,249 shares of
Class C preferred stock were converted into 3,415,015 shares of common stock. In
addition to the conversion of the preferred stock, the Company was obligated to
pay dividends declared but unpaid and other dividends not paid on the preferred
stock through the conversion date. Accordingly, dividends in the amount of
$630,313 were paid through the issuance of 534,016 shares of common stock.

NOTE 10 - LEGAL PROCEEDINGS

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

On January 24, 2001, Red Cube, after the federal court action described above
had been commenced against it by I-Link, delivered a written demand for
arbitration and commenced an arbitration proceeding in New York alleging that
I-Link breached the Cooperation and Framework Agreement by (i) threatening a
shut-down of I-Link's IP telecommunications network, (ii) the resignation of
Dror Nahumi as an employee of I-Link (which Red Cube claims will cause I-Link to
breach its undertaking to provide certain consulting services in the event
I-Link is unable to perform under the Agreement and Red Cube is required to
assume primary operation and maintenance of its own IP telecommunications
network based upon I-Link's technology), and (iii) I-Link's alleged failure to
update the escrowed copy of its source code to the current version of the source
code employed to maintain the IP telecommunications network. When the federal
court action was dismissed in favor of the arbitration proceeding, I-Link filed
a response in the arbitration proceeding denying all of Red Cube's claims.
I-Link also filed a counterclaim against Red Cube virtually identical to the
claims it initially brought against Red Cube in the federal court action seeking
compensatory and/or punitive damages for Red Cube's default under a subsequent
agreement to provide approximately $60,000,000 in equity funding to I-Link, and
engaging in a scheme to drive I-Link out of business and obtain control of
I-Link's proprietary technology, telecommunications network, key employees and
customers. In May 2001, Red Cube amended its claim to include additional
allegations that I-Link undertook certain unspecified "significant transactions"
in violation of its agreements with I-Link's then majority shareholder, Winter
Harbor, LLC (with which Red Cube was also at the time engaged in arbitration)
which resulted in damage to Red Cube. I-Link has denied these additional
allegations. The arbitration proceeding is in the discovery stage. In its
Quarterly Report dated September 30, 2001, Ventis, a Swiss private equity
investment firm and an investor in Red Cube, stated that Red Cube and Winter
Harbor LLC had settled their arbitration subject to a confidentiality agreement.

In June 2001, I-Link gave notice to Red Cube that it intended to cease providing
international carrier services to Red Cube (representing the vast majority of
all services performed for Red Cube) as a result of Red Cube's failure to
provide I-Link adequate assurance of ongoing payment for such services. Red Cube
sought emergency relief in the arbitration attempting to prohibit I-Link from
terminating these services. A hearing was held before the arbitration panel in
July 2001 and Red Cube's request for relief was denied. I-Link ceased providing
international carrier services to Red Cube immediately thereafter.

On September 28, 2001, The Nasdaq Stock Market Inc. issued an order delisting
I-Link's common stock from The Nasdaq SmallCap Market, effective October 1,
2001. I-Link's common stock is now traded on the OTC-Electronic Bulletin Board.

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

                                       10
<Page>

NOTE 11 - SEGMENT OF BUSINESS REPORTING

The Company's four reportable segments are as follows:

- -    Telecommunications services - includes long-distance toll services,
     origination and termination services (I-Link and Nexbell) and enhanced
     calling features such as the One-Number service (formerly know as V-Link).
     The telecommunications services products are marketed primarily to
     residential and small business customers.

- -    Dial-around telecommunication services - includes operations of
     WorldxChange that offers a dial around telecommunications product through
     independent marketing agents. This business was entered into effective June
     4, 2001 with the Company's purchase of certain assets and liabilities of
     WorldxChange Communications, Inc.

- -    Marketing services - includes training and promotional materials to
     independent sales representatives (IRs) in the network marketing sales
     channel. Additionally, revenues are generated from registration fees paid
     by IRs to attend regional and national sales conferences. This segment
     ceased operations in February 2000.

- -    Technology licensing and development - provides research and development to
     enhance the Company's product and technology offerings. Products developed
     by this segment include One Number, Indavo, and other proprietary
     technology. The Company licenses certain developed technology to third
     party users such as Red Cube.

There are no intersegment revenues. The Company's business is conducted
principally in the U.S.; foreign operations are not material. The table below
presents information about revenues from external customers and net loss for the
three-month and six-month periods ended September 30, 2001 and 2000. There has
been no material change in segment assets from the amounts reported in the
Company's annual report on Form 10-K for the year ended December 31, 2000 except
that segment assets for dial-around telecommunication services has increased by
approximately $34,000,000 due to the acquisition of WorldxChange.

<Table>
<Caption>
                                                              FOR THE THREE-MONTH                        FOR THE NINE-MONTH
                                                                 PERIOD ENDED                               PERIOD ENDED
                                                     ------------------------------------      -------------------------------------
                                                     SEPT. 30, 2001       SEPT. 30, 2000        SEPT. 30, 2001        SEPT. 30, 2000
                                                     --------------      ---------------       ----------------      ---------------

<S>                                                  <C>                   <C>                   <C>                  <C>
REVENUES FROM EXTERNAL CUSTOMERS:
     Telecommunications services                     $   4,221,000         $ 4,111,000           $  23,303,000        $  15,297,000
     Dial-around telecommunication services             21,487,000                   -              27,419,000                    -
     Marketing services                                          -                   -                       -              464,000
     Technology licensing and development                1,420,000           1,432,000               4,277,000            8,079,000
                                                     --------------      ---------------       ----------------      ---------------
     Total revenues from external customers
       for reportable segments                       $  27,128,000         $ 5,543,000           $  54,999,000        $  23,840,000
                                                     ==============      ===============       ================      ===============
SEGMENT INCOME (LOSS):
     Telecommunications services                     $ (13,274,000)        $(2,761,000)          $ (15,416,000)       $  (6,548,000)
     Dial-around telecommunication services             (3,001,000)                  -              (4,243,000)                   -
     Marketing services                                          -             (50,000)                      -             (204,000)
     Technology licensing and development                  573,000             (96,000)                951,000            3,875,000
                                                     --------------      ---------------       ----------------      ---------------

     Total segment income (loss) for reportable
       Segments                                        (15,702,000)         (2,907,000)            (18,708,000)          (2,877,000)
</Table>

                                       11
<Page>

<Table>
<Caption>
                                                              FOR THE THREE-MONTH                        FOR THE NINE-MONTH
                                                                 PERIOD ENDED                               PERIOD ENDED
                                                     --------------------------------------    -------------------------------------
                                                     SEPT. 30, 2001       SEPT. 30, 2000        SEPT. 30, 2001        SEPT. 30, 2000
                                                     --------------       --------------        --------------        --------------
<S>                                                  <C>                   <C>                   <C>                   <C>
     Unallocated non-cash amounts in
      consolidated net loss:
         Settlement expense                                      -                   -                       -             (640,000)
         Amortization of discount on notes
            payable                                       (784,000)                  -                (888,000)                   -
         Amortization of deferred
            compensation on stock options
            issued for services                                  -            (122,000)                      -             (503,000)
         Amortization of intangible assets                (549,000)           (626,000)             (1,645,000)          (2,064,000)
     Other corporate expenses                           (3,468,000)         (3,220,000)             (8,770,000)         (10,526,000)
                                                     --------------       --------------        --------------        --------------
                                                     $ (20,503,000)        $(6,875,000)          $ (30,011,000)        $(16,610,000)
                                                     ==============       ==============        ==============        ==============
</Table>

                                       12
<Page>

ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the information
contained in the financial statements of the Company and the notes thereto
appearing elsewhere herein and in conjunction with the Management's Discussion
and Analysis set forth in our Form 10-K for the year ended December 31, 2000 and
Form 10-Q for the quarters ended March 31 and June 30, 2001.

FORWARD LOOKING INFORMATION

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

Although we believe that our expectations are based on reasonable assumptions,
we can give no assurance that our expectations will materialize. Many factors
could cause actual results to differ materially from our forward-looking
statements. Several of these factors include, without limitation:

- -  our ability to finance and manage expected rapid growth;
- -  the impact of competitive services and pricing;
- -  our ongoing relationship with our long distance carriers and vendors;
- -  our ability to meet our usage commitments with carriers;
- -  our dependence upon key personnel;
- -  subscriber attrition;
- -  the adoption of new, or changes in, accounting principles; |X| legal
   proceedings;
- -  federal and state governmental regulation of the long distance
   telecommunications and internet industries;
- -  our ability to maintain, operate and upgrade our information systems network;
- -  our success in deploying our Communication Engine network in internet
   telephony;
- -  the existence of demand for and acceptance of our products and services
   (including but not limited to dial-around service and One-Number service
   (formerly V-Link(TM)));
- -  our ability to efficiently integrate our recent acquisitions;
- -  the migrating of subscribers from a retail billing basis to a wholesale
   billing basis;
- -  the ultimate financial liability related to certain leases in default as of
   September 30, 2001;
- -  other risks referenced from time to time in our filings with the SEC.

WE UNDERTAKE NO OBLIGATION AND DO NOT INTEND TO UPDATE, REVISE OR OTHERWISE
PUBLICLY RELEASE ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT
EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF
ANY UNANTICIPATED EVENTS.


Our principal operations are two-fold:

        First, for the past five years we have been an integrated voice and data
        communications company focused on simplifying the delivery of "Unified
        Communication." Unified Communication is the integration of traditional
        telecommunications with new data IP (Internet Protocol) communications
        systems with the effect of simplifying communications, increasing
        communication capabilities and lowering overall communication costs.
        Unified Communication platforms integrate telecommunication, mobile
        communication, paging, voice-over-IP (VoIP) and

                                       13
<Page>

        Internet technologies. We have developed and marketed enhanced
        communications products and services utilizing our own private intranet
        and both owned and leased network switching and transmission facilities.
        The communications solutions are delivered through our proprietary
        technologies. Our enhanced communications products and services are
        marketed through master agent and wholesale distributor arrangements
        with I-Link Communications, our wholly owned subsidiary, that is an FCC
        licensed long-distance carrier. We also undertake research and
        development of new telecommunications services, products and
        technologies, and the licensing of certain of these products and
        technologies to other telecommunications companies.

        Second, beginning June 4, 2001, we purchased, through our wholly-owned
        subsidiary WorldxChange Corp. ("WorldxChange"), certain assets and
        assumed certain liabilities of WorldxChange Communications, Inc. from a
        bankruptcy proceeding. WorldxChange is a facilities-based
        telecommunications carrier that provides international and domestic
        long-distance service to retail customers. Telecommunication services
        provided by WorldxChange consist primarily of a dial-around product that
        allows a customer to make a call from any phone by dialing a 10-10-XXX
        prefix. The phone call is then billed directly to the customer. Billings
        to these customers are primarily done through the customers' local
        exchange carrier ("LEC"). Marketing of the dial around product is
        primarily done through independent marketing agents that receive a
        commission. WorldxChange's retail base is comprised of residential and
        commercial customers.

On March 1, 2001, we became a majority owned subsidiary of Counsel
Communications LLC which was a wholly-owned subsidiary of Counsel Corporation
(US), (collectively, "Counsel"). On April 17, 2001, we acquired WebToTel, Inc.
("WebToTel"), a subsidiary of Counsel, and its subsidiaries including Nexbell
Communications Inc. ("Nexbell") in a stock-for-stock transaction. Nexbell
continued to offer a Multi-Exchange Transport Service ("METS") product
originally offered by NexBell that provided customers with VoIP-based local
access origination and termination services. However, Nexbell determined it is
not economically justified to continue selling its product and accordingly
stopped taking new orders for the product and initiated steps toward an orderly
discontinuance for existing customers (expected December 1, 2001).

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents as of September 30, 2001 were $1,712,934 and the
working capital deficit was $29,503,273 (including $22,748,109 payable to our
parent company). Cash used by operating activities during the nine-month period
ended September 30, 2001 was $21,920,463 as compared to cash provided by
operations of $7,562,831 during the same period ended September 30, 2000. The
primary reason for the change from 2000 was cash provided by operating
activities in 2000 included $20,000,000 received as of September 30, 2000 from a
customer, Red Cube, International AG and Red Cube, Inc. ("Red Cube"), which did
not recur in 2001.

Net cash used by investing activities in the nine-month period ended September
30, 2001 was $14,293,727 as compared to net cash used of $4,658,373 in the same
period ended September 30, 2000. Cash used by investing activities in 2001 was
attributed to $13,000,000 used to purchase the net assets of WorldxChange and
$1,527,514 used to purchase equipment. These uses of cash were offset by cash of
$233,787 received as part of the WebToTel acquisition. Cash used by investing
activities in 2000 was primarily attributable to the purchase of network
equipment of $4,687,910, which was offset by $29,537 received from the sale of
assets from discontinued operations.

Financing activities provided net cash of $35,771,496 in the first nine-months
of 2001, as compared to cash provided of $4,145,696 in the same period of 2000.
Cash provided in the first nine-months of 2001 included loans from Counsel of
$36,189,534 and $15,580 from issuances of common stock which were offset by
repayment of notes payable and capital lease obligations of $433,618. Cash
provided in 2000 included proceeds of $2,600,000 from a note payable to a
related party, $4,274,879 in net proceeds from exercises of common stock
warrants and options and a $1,751,183 advance received under the strategic
marketing and channel agreement with a customer. The $2,600,000 note and
$1,751,183 advance were both repaid during the second quarter of 2000.
Repayments of capital lease obligations of $104,979 and repayments of $24,204 on
certain notes in discontinued operations offset these proceeds.

                                     14
<Page>

We incurred a net loss from continuing operations of $30,011,410 (including an
$8 million non-cash impairment of goodwill) for the first nine-months of 2001,
and as of September 30, 2001 had an accumulated deficit of $ 152,278,566. While
we anticipate that revenues during the fourth quarter of 2001 will be greater
than recorded in the third quarter of 2001, we anticipate that revenue generated
from continuing operations will not be sufficient during the remainder of 2001
and into 2002 to fund our operations or continued expansion of our private
telecommunications network facilities and anticipated growth in subscriber base.
As of September 30, 2001, we were in default on a lease with a potential current
liability of approximately $2 million and Nexbell was in default on certain
leases with a potential current liability of approximately $3 million. While we
are working on settlement of these potential liabilities on a favorable basis to
us, the ultimate liability could have a negative effect on our liquidity and
financial resources. We continue to be dependent upon funding from Counsel to
fund our operational cash needs (see discussion below).

CURRENT POSITION/FUTURE REQUIREMENTS

While revenues from operations have increased significantly, operational
expenses have also increased, thus continuing our need for sources of
operational funds other than from operations. Our operational cash needs
continue to be funded through our agreement with Counsel wherein Counsel
committed to fund, through long-term inter-company advances or equity
contribution, all capital investment, working capital or other operational cash
requirements through April 15, 2002. On June 6, 2001, we entered into a Loan and
Security Agreement with Counsel, pursuant to which Counsel agreed to advance up
to $10 million. We no longer have any availability under that facility, and we
have entered into discussions with Counsel with respect to the terms under which
Counsel will advance additional funds. There can be no assurance that Counsel
will continue to provide funding after April 15, 2002. We anticipate that
additional funds will be necessary after such time to fund our operations and
finance the planned expansion of our business communications services, product
development and manufacturing, and to discharge our financial obligations. The
availability of such funds will depend on prevailing market conditions, interest
rates, our financial position and results of our operations. There can be no
assurance that such funds will be available or if available that they will be on
terms and conditions favorable to I-Link.

RESULTS OF OPERATIONS

In order to more fully understand the comparison of the three and nine months
ended September 30, 2001 as compared to the same three and nine months in 2000,
you must understand two significant business transactions that are reflected in
our 2001 financial results, for which there are not comparable transactions in
2000. Specifically:

     1. We acquired WebToTel Incorporated and its subsidiaries (including
        Nexbell) in a stock for stock transaction on April 17, 2001. However, as
        WebToTel and I-Link were under common control of Counsel as of March 1,
        2001 (the date Counsel obtained its ownership in I-Link), we have
        accounted for the acquisition on an accounting method consistent with
        the pooling-of-interests method of accounting as of March 1, 2001.
        Accordingly, we have included the financial results of WebToTel and its
        subsidiaries subsequent to March 1, 2001.

     2. On June 4, 2001 WorldxChange completed the purchase of certain assets
        and liabilities of WorldxChange Communication, Inc. WorldxChange
        continues to offer the dial-around telecommunications product, which
        WorldxChange Communications, Inc. had previously offered. We did not
        offer a comparable product prior to June 4, 2001.

THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2001 COMPARED TO THREE-MONTH PERIOD ENDED
SEPTEMBER 30, 2000

REVENUES

Telecommunications service revenue increased $21,608,781 to $25,274,900 in the
three months ended September 30, 2001 as compared to $3,666,119 in the three
months ended September 30, 2000. The increase is primarily the result of the
acquisition of two companies. Revenue in the third quarter increased $21,487,000
related to the dial-around business of WorldxChange and $1,191,000 related to
the METS product offered by Nexbell. Excluding the above revenues, recurring

                                       15
<Page>

revenues decreased $1,069,000 which was due to a decrease in revenues billed
to wholesale customers in the third quarter 2001 as compared to the third
quarter of 2000. We anticipate that reported revenues for the fourth quarter
will be higher than the third quarter primarily because WorldxChange will
begin its first major advertising campaign that the Company anticipates will
result in higher revenues than those for the third quarter. The Company has
determined to discontinue maintaining a potion of the Company's network
related to leased lines used for local access origination and to cease
offering its METS product, effectively ceasing revenues from METS as of
approximately December 1, 2001. We anticipate revenues from other recurring
sources will remain constant in the fourth quarter.

Technology licensing and development revenue decreased $12,303 to $1,419,998 in
the third quarter of 2001 as compared to $1,432,301 in the same quarter of 2000.
During the three months ended September 30, 2001, licensing revenues were
primarily from a $10,000,000 licensing agreement in May 2000 between Red Cube
and I-Link that is being recorded over a two-year period. Accordingly,
$1,250,000 was recorded in the third quarters of 2001 and 2000. As of September
30, 2001, the unearned balance of $2,917,000 has been recorded as unearned
revenue. Revenue from this source will vary from quarter to quarter based on
timing of future technology licensing and development projects.

Other revenues in the third quarter of 2001 decreased $11,408 to $433,174 as
compared to $444,582 in the same period of 2000. These revenues relate primarily
to customer care, billing and accounts receivable services performed primarily
for our single largest customer. Revenues from these services are expected to
remain constant in the fourth quarter of 2001. However, revenues from these
types of services vary from period to period based upon services requested.

OPERATING COSTS AND EXPENSES

Telecommunication network expense increased $17,251,694 in the third quarter of
2001 to $22,988,640 as compared to $5,736,946 for the same quarter of 2000. The
primary increase was related to inclusion of network expense ($15,727,405)
related to the dial-around business that we began to offer June 4, 2001 when we
acquired the operations of and certain assets and liabilities of WorldxChange
Communications, Inc. These expenses include the costs related to the continuing
development and deployment of our communication network and expenses related to
the generation of telecommunication service revenue. The remaining increase in
telecommunication network expense was primarily due to the inclusion of the
expense associated with the METS product in 2001. We anticipate that
telecommunication network expense for the fourth quarter will be significantly
different from the third quarter due to two events. First, in the fourth quarter
WorldxChange will begin its first major advertising campaign which the Company
anticipates will result in significantly higher revenues and related
telecommunication network expense than those for the third quarter. Second, the
Company has determined to discontinue offering its METS product effectively
ceasing revenues as of December 1, 2001. Certain related telecommunication
network expenses from METS will begin to decrease during December 2001 and
continue to decline into the first quarter of 2002.

Selling, general and administrative expense increased $5,652,161 to $9,894,235
in the third quarter of 2001 as compared to $4,242,074 in the third quarter of
2000. The primary components of the net increase consisted of an approximate
$5,862,000 related to the WorldxChange dial-around business that began June 4,
2001. Additional increases related to Nexbell were offset by a reduction in
other corporate expenses relating to the workforce reductions implemented in the
first six months of 2001. We anticipate that selling, general and administrative
expenses will increase dramatically as a result of the advertising campaign by
WorldxChange in the fourth quarter of 2001.

The provision for doubtful accounts increased $1,577,407 to $1,276,740 in the
third quarter of 2001 as compared to a negative expense of ($300,667) in the
same quarter of 2000. The overall increase was due to (1) provision for doubtful
accounts associated with two sources of revenues, WorldxChange ($1,171,000) and
Nexbell ($93,000), both of which came into existence in 2001; and (2) during the
third quarter of 2000 we settled a lawsuit wherein we sued a former wholesale
customer for non-payment of its bills. Prior to the third quarter of 2000 we had
written off the receivable from this customer. Upon settling the lawsuit we
received $300,000 for past billings, which amount reduced our bad debt expense
in the third quarter of 2000. We anticipate that the relationship between
telecommunication service revenues and the bad debt provision for the fourth
quarter will be comparable to the third quarter.

                                       16
<Page>

Depreciation and amortization increased $1,639,806 to $3,204,871 in the third
quarter of 2001 as compared to $1,565,065 in the third quarter of 2000. The
increase is primarily due to depreciation and amortization relating to assets
and goodwill acquired in the WebToTel and WorldxChange acquisitions.
Depreciation of WorldxChange assets resulted in approximately $1,149,000 of
the increase. The remainder of the increase in depreciation and amortization
was due to $457,000 amortization of goodwill recorded in the WebToTel
acquisition. While we anticipate depreciation will be comparable in the
fourth quarter, there will be no amortization of goodwill on the WebToTel
acquisition in future periods as a result of the impairment of goodwill
recorded in the third quarter (see discussion on impairment of goodwill
expense below).

Research and development decreased $650,585 to $434,651 in the third quarter of
2001 as compared to $1,085,236 in the same period of 2000. The decrease was
primarily a result of our decision to consolidate our research operations at our
headquarters in Draper, Utah and an overall decrease in research and development
activities during 2001. We anticipate that research and development expense will
continue at a comparable amount during the fourth quarter of 2001.

During the third quarter of 2001, we performed a review of the products we
offer and their contribution to our Company and our overall strategy. As of
September 30, 2001, our analysis determined that it was not economically
justified to continue to maintain a portion of the Company's network related
to leased lines used for local access origination and Nexbell's METS product.
Accordingly, we performed an impairment analysis of the goodwill recorded in
connection with the acquisition of WebToTel and subsidiaries ("WebToTel").
The analysis was performed in response to projected losses on the METS
product acquired in the WebToTel acquisition. Additionally, subsequent to
September 30, 2001, we approved a plan to discontinue offering the METS
product. As a result of this review, an $8,040,054 impairment charge was
recorded during the quarter. We do not anticipate any impairment expense in
the fourth quarter of 2001.

OTHER INCOME (EXPENSE)

Interest expense increased $1,477,293 to $1,816,722 in the third quarter of 2001
as compared to $339,429 in the same quarter of 2000. The increase was due
primarily to increased interest on related-party debt and non-cash interest
expense. Interest in the third quarter of 2001 on related party debt was
$525,000 higher compared to the same period of 2000 due to higher average
balances outstanding during the three months ended September 30, 2001. We also
recorded non-cash interest expense of $785,000 in the third quarter of 2001
related to the amortization of a beneficial conversion feature on convertible
debt with Counsel and non-cash interest related to the value of warrants issued
to Counsel in connection with a loan. Interest expense in the fourth quarter is
anticipated to increase as the Company continues to accrue interest on
borrowings from Counsel and continues to record non-cash interest related to the
amortization of beneficial conversion feature on convertible debt and
amortization of the value of warrants issued to Counsel in connection with a
loan. There were no similar non-cash interest expenses recorded in the third
quarter of 2000.

Interest and other income decreased $224,728 to $25,212 in the third quarter of
2001 as compared to $249,940 in the same quarter of 2000. The decrease was
primarily due to a decrease in the average balance of cash on hand in the third
quarter of 2001 as compared to the same quarter of 2000.

NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2001 COMPARED TO THE NINE-MONTH PERIOD
ENDED SEPTEMBER 30, 2000

REVENUES

Telecommunications service revenue increased $35,561,886 to $49,104,324 in
the first nine months of 2001 as compared to $13,542,438 in the first nine
months of 2000. The increase is primarily the result of the recognition of
previously reported unearned revenue related to a prepayment from Red Cube
and two acquisitions during 2001. According to the terms of the agreement,
Red Cube was to use services related to the prepayment prior to June 30,
2001. Unused services as of June 30, 2001 were approximately $9,543,000. As
the Company has no further obligation under the prepayment arrangement, the
$9,543,000 was recognized as revenue as of June 30, 2001. We do not expect
any significant revenues from Red Cube in the future. Revenues also increased
due to the acquisition of two companies. Revenue in the first nine months of
2001 increased $27,420,000 (representing revenues from June to September of
2001) related to the dial-around business of WorldxChange and $2,352,000
(representing revenues from March to September of 2001) related to Nexbell's
METS product. These increases in telecommunications services revenues were
offset by decreases in revenue which were a direct result of a shift in focus
from retail to wholesale sales in addition to decreases in revenues billed to
wholesale customers in 2001 as compared to revenues billed to wholesale
customers in 2000.

                                       17
<Page>

Marketing services revenue, which included revenue from independent
representatives for promotional and presentation materials, WebCentre, and
ongoing administrative support decreased $463,740 to $0 in the first nine-months
of 2001 as compared to $463,740 in the same period of 2000. The decrease was a
result of transition of this network-marketing channel to Big Planet in February
2000, which caused marketing service revenues to cease.

Technology licensing and development revenue decreased $3,401,812 to $4,276,895
in the first nine months of 2001 as compared to $7,678,707 in the first nine
months of 2000. During the first nine months of 2001, the revenues were
primarily from a $10,000,000 licensing agreement in May 2000, between Red Cube
and I-Link that is being recorded over a two-year period. Accordingly,
$3,750,000 was recorded in the first nine months of 2001 as compared to
$2,083,333 in the first nine months of 2000. As of September 30, 2001, the
unearned balance of $2,917,000 has been recorded as unearned revenue. During the
first nine months of 2000, revenues of $4,000,000 were recorded related to two
licensing agreements that did not recur in 2001. The additional overall decrease
in technology licensing revenue was due to several other licensing agreements in
2000 which did not recur in 2001. Technology licensing revenue will vary from
quarter to quarter based on timing of technology licensing and development
projects.

Other revenues in the first nine months of 2001 decreased $536,646 to $1,618,216
as compared to $2,154,862 in the first nine months of 2000. During the first
nine months of 2000, other revenues also included royalties of $400,000 from the
sale of Indavo units to a company which will not use the Indavo units over the
I-Link Network. There were no comparable sales of Indavo in 2001. Decreases in
other revenues relating to customer care, billing and accounts receivable
services performed for our single largest customer accounted for the balance of
the decrease in other revenues. Revenues from these types of services vary from
period to period based upon services requested.

OPERATING COSTS AND EXPENSES

Telecommunication network expense increased $25,626,198 in the nine months ended
September 30, 2001 to $43,014,152 as compared to $17,387,954 for the same period
in 2000. These expenses include the costs related to the continuing development
and deployment of our communication network and expenses related to the
generation of telecommunication service revenue. The primary increase was
related to inclusion of network expense ($21,043,000) related to the dial-around
business that we began to offer June 4, 2001 when we acquired certain assets and
liabilities of WorldxChange Communications, Inc. The remaining increase in
telecommunication network expense was due to the inclusion of the expense
associated with the METS product in 2001 in addition to increased expenses in
2001 related to the network buildout which began in late 2000.

Marketing service costs decreased $456,354 to $0 in the first nine months of
2001 as compared to $456,354 for the same period in 2000. The decrease in
expense is directly related to the transition of the network-marketing channel
to Big Planet Inc. in February 2000, which resulted in the cessation of
marketing service revenues and accordingly the related expenses.

Selling, general and administrative expense increased $5,557,181 to $19,335,976
in the first nine months of 2001 as compared to $13,778,795 in the first nine
months in 2000. The primary components of the net increase were due to
additional selling, general and administrative cost of approximately $7,000,000
related to WorldxChange dial-around business that began June 4, 2001. Further
increases relating to WebToTel were offset by a reduction in other corporate
expenses relating to the workforce reductions in the first six months of 2001
including reduction in facilities, materials etc. and other cost cutting
measures instituted by management.

The provision for doubtful accounts increased $2,575,260 to $2,654,496 in the
nine months of 2001 as compared to $79,236 in the same period in 2000. The
increase was directly due to necessary provisions for doubtful accounts
associated with two sources of revenues. During the second and third quarters of
2001 we recorded an allowance for accounts receivable from a major customer in
the amount of $975,000 due to the termination of their agreement and pending
arbitration. Additional reserves of $1,453,000 were recorded related to the
WorldxChange dial-around business, which began June 4, 2001. Further increases
relate to the WebToTel (primarily the Nexbell METS product) acquisition included
in our financial statements after March 1, 2001.

                                       18
<Page>

Depreciation and amortization increased $2,571,892 to $7,186,662 in the first
nine months of 2001 as compared to $4,614,770 in the first nine months of 2000.
The increase is primarily due to depreciation of $1,477,000 relating to
WorldxChange assets and 1,066,000 from amortization of goodwill acquired in the
WebToTel acquisition.

Research and development decreased $734,571 to $2,025,023 in the first nine
months of 2001 as compared to $2,759,594 in the same period in 2000. The
decrease was primarily a result of our decision to consolidate our research
operations at our headquarters in Draper, Utah and a decrease in research and
development activities during 2001.

During the third quarter of 2001, we performed a review of the products we
offer and their contribution to our Company and our overall strategy. As of
September 30, 2001, our analysis determined that it was not economically
justified to continue to maintain a portion of the Company's network related
to leased lines used for local access origination and Nexbell's METS product.
Accordingly, we performed  an impairment analysis of the goodwill recorded in
connection with the acquisition of WebToTel and subsidiaries ("WebToTel").
The analysis was performed in response to projected losses on the METS
product acquired in the WebToTel acquisition. Additionally, subsequent to
September 30, 2001, we approved a plan to discontinue offering the METS
product. As a result of this review, an $8,040,054 impairment charge was
recorded during the quarter. We do not anticipate any impairment expense in
the fourth quarter of 2001.

OTHER INCOME (EXPENSE)

Interest expense increased $1,697,602 to $2,831,354 in the first nine months of
2001 as compared to $1,133,752 in the same period of 2000. We recorded non-cash
interest expense of $888,000 in the first nine months of 2001 related to the
amortization of a beneficial conversion feature on convertible debt with Counsel
and amortization of the discount related to the value of warrants issued to
Counsel n connection with a loan. Interest on other debt increased $522,000 as a
result of increased average balances of debt outstanding.

Interest and other income decreased $323,865 to $76,872 in the first nine months
of 2001 as compared to $400,737 in the same period of 2000. The decrease was
primarily due to a decrease in the average balance of cash on hand in the first
nine months of 2001.

A settlement expense of $639,565 was recorded in the first nine months of 2000.
This expense is the result of an obligation to issue 129,519 shares of common
stock in exchange for certain trading restrictions imposed on JNC Opportunity
Fund Ltd. ("JNC") in relation to the common stock to be issued to JNC pursuant
to a settlement and release agreement entered into in February 2000. There was
no comparable expense in the first nine months of 2001.

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations."
SFAS 141 requires the purchase method of accounting for business combinations
initiated after June 30, 2001 and eliminates the pooling-of-interests method.
The Company believes that the adoption of SFAS 141 will not have a significant
impact on its financial statements.

In July 2001, the FASB issued Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets", which is effective for fiscal years
beginning after December 15, 2001. SFAS 142 requires, among other things, the
discontinuance of goodwill amortization. In addition, the standard includes
provisions upon adoption for the reclassification of certain existing recognized
intangibles as goodwill, reassessment of the useful lives of existing recognized
intangibles, reclassification of certain intangibles out of previously reported
goodwill and the testing for impairment of existing goodwill and other
intangibles. The Company is currently assessing, but has not yet determined the
impact of SFAS 142 on its financial position and results of operations.

In August 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations", effective for years beginning after June 15, 2002. SFAS 143
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. It applies to legal obligations associated with the retirement of
long-lived assets that result from the acquisition, construction, development
and (or) the normal operation of a long-lived asset, except for certain
obligations of lessees. The Company is currently evaluating the effects of this
Statement.

                                       19
<Page>

In August 2001, the FASB issued the Statement of Financial Accounting Standards
No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS 144
addresses financial accounting and reporting for the disposal of long-lived
assets. FAS 144 is effective for fiscal years beginning after December 15, 2001.
The Company is currently evaluating the potential impact, if any, the adoption
of SFAS 144 will have on its financial position and results of operation.

ITEM 3- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk is limited to interest income sensitivity, which is
affected by changes in the general level of U.S. interest rates. Our cash
equivalents are invested with high quality issuers and limit the amount of
credit exposure to any one issuer. Due to the short-term nature of the cash
equivalents, we believe that we are not subject to any material interest rate
risk. We did not have any foreign currency hedges or other derivative financial
instruments as of September 30, 2001.

We do not enter into financial instruments for trading or speculative purposes
and do not currently utilize derivative financial instruments. Our operations
are conducted primarily in the United States and as such are not subject to
material foreign currency exchange rate risk.

                                       20
<Page>

PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

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

On January 24, 2001, Red Cube, after the federal court action described above
had been commenced against it by I-Link, delivered a written demand for
arbitration and commenced an arbitration proceeding in New York alleging that
I-Link breached the Cooperation and Framework Agreement by (i) threatening a
shut-down of I-Link's IP telecommunications network, (ii) the resignation of
Dror Nahumi as an employee of I-Link (which Red Cube claims will cause I-Link to
breach its undertaking to provide certain consulting services in the event
I-Link is unable to perform under the Agreement and Red Cube is required to
assume primary operation and maintenance of its own IP telecommunications
network based upon I-Link's technology), and (iii) I-Link's alleged failure to
update the escrowed copy of its source code to the current version of the source
code employed to maintain the IP telecommunications network. When the federal
court action was dismissed in favor of the arbitration proceeding, I-Link filed
a response in the arbitration proceeding denying all of Red Cube's claims.
I-Link also filed a counterclaim against Red Cube virtually identical to the
claims it initially brought against Red Cube in the federal court action seeking
compensatory and/or punitive damages for Red Cube's default under a subsequent
agreement to provide approximately $60,000,000 in equity funding to I-Link, and
engaging in a scheme to drive I-Link out of business and obtain control of
I-Link's proprietary technology, telecommunications network, key employees and
customers. In May 2001 Red Cube amended its claim to include additional
allegations that I-Link undertook certain unspecified "significant transactions"
in violation of its agreements with I-Link's then majority shareholder, Winter
Harbor, LLC (with which Red Cube was also at the time engaged in arbitration)
which resulted in damage to Red Cube. I-Link has denied these additional
allegations. The arbitration proceeding is in the discovery stage. In its
Quarterly Report dated September 30, 2001, Ventis, a Swiss private equity
investment firm and an investor in Red Cube, stated that Red Cube and Winter
Harbor had settled their arbitration subject to a confidentiality agreement.

In June 2001, I-Link gave notice to Red Cube that it intended to cease providing
international carrier services to Red Cube (representing the vast majority of
all services performed for Red Cube) as a result of Red Cube's failure to
provide I-Link adequate assurance of ongoing payment for such services. Red Cube
sought emergency relief in the arbitration attempting to prohibit I-Link from
terminating these services. A hearing was held before the arbitration panel in
July 2001 and Red Cube's request for relief was denied. I-Link ceased providing
international carrier services to Red Cube immediately thereafter.

The information in Part II, Item 1 of I-link's quarterly report on Form 10-Q for
the period ending June 30, 2001 relating to the Company's proceedings before The
Nasdaq Stock Market, Nasdaq Listing Qualifications Department ("Nasdaq") is
incorporated herein by reference. On September 28, 2001, Nasdaq issued an order
delisting I-Link's common stock from The Nasdaq SmallCap Market, effective
October 1, 2001. I-Link's common stock is now traded on the OTC-Electronic
Bulletin Board.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

As of September 30, 2001 I-Link's subsidiary Nexbell had defaulted on two
equipment leases. As of September 30, Nexbell was in default on $690,000 in
arrearages and approximately $3,000,000 in total.

As of September 30, 2001, I-Link was in default on an equipment lease. This
lease was secured by a letter of credit issued by an affiliate of Winter Harbor
LLC, a former majority shareholder of I-Link. On October 11, 2001, the leasing
company drew against the letter of credit in the amount of $1,998,681. As of
September 30, 2001, I-link continues to carry the liability related to this
lease in its financial statements. On October 26, 2001, I-Link received a demand
for

                                       21
<Page>

payment from Winter Harbor LLC for the amounts of the draw on the letter of
credit and interest since October 11, 2001.

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

Our annual meeting of shareholders was held on September 20, 2001 where the
stockholders considered five proposals as follows:

1. Messrs. Norman Chirite and Albert Reichmann were elected as Class III
   Directors of I-Link. Mr. Allan C. Silber was elected as a Class II Director.
   Mr. Chririte, Mr. Reichmann and Mr. Silber each received the following vote
   totals: 68,481,245 votes for and 629,672 votes withheld. Messrs. Henry Y. L.
   Toh, Hal B. Heaton, Gary J. Wasserson and Samuel L. Shimer continued as
   Directors.

2. A proposal to approve a discretionary reverse split of I-Link's common stock
   was defeated. For the vote on this proposal, the common stock voted in two
   groups. One group (the "Affiliates") consisted of those who were officers,
   directors or greater than 5% holders of the common stock. The other group
   ("Non-Affiliates") consisted of all other holders of common stock. The
   affirmative vote of a majority of the outstanding shares of BOTH GROUPS was
   required to approve the proposal. The voting was as follows: Affiliates: of
   79,400,546 shares outstanding in the group, 61,966,057 voted for, none voted
   against, and none abstained. Non-Affiliates: of 33,825,290 shares outstanding
   in the group, 6,285,007 voted for, 821,033 voted against, and 38,160
   abstained. The Non-Affiliates group did not pass the proposal, therefore it
   was defeated.

3. A proposal to approve an increase in the Company's authorized shares of
   common stock from 150 million to 300 million was approved. The vote was
   67,949,361 for, 1,126,946 against and 34,610 abstained.

4. The 2001 Stock Option and Appreciation Rights Plan was approved. The vote was
   67,925,946 for, 1,151,260 against and 33,711 abstained.

5. Issuances by I-Link of shares of its common stock in connection with the
   March 1, 2001 Senior Convertible Loan and Security Agreement between Counsel
   Communications LLC and I-Link and with the April 17, 2001 Agreement and Plan
   of Merger between WebToTel, Inc. and I-Link were ratified. The vote was
   68,339,581 for, 737,931 against and 32,905 abstained.

ITEM 6(a) - EXHIBITS

EXHIBIT NO.       EXHIBIT

4.11              2001 Stock Option and Appreciation Rights Plan, filed herewith

ITEM 6(b) - REPORTS ON FORM 8-K

A Current Report on Form 8-K/A#1 was filed on August 20, 2001 as an amendment to
a Form 8-K filed on June 19, 2001, in order to include financial statements and
pro forma financial information relative to I-Link's purchase of WorldxChange.

A Current Report on Form 8-K/A#2 was filed on July 27, 2001 as an amendment to a
Form 8-K/A#1 filed on June 29, 2001, to amend certain information in the
unaudited pro forma combined condensed statement of operation for the year ended
December 31, 2000 as originally reported in the 8-K/A#1.

                                       22
<Page>

SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.


                                               I-LINK INCORPORATED
                                              ----------------------
                                                   (Registrant)


Date:  November 13, 2001                      By:  /s/ GARY S. WASSERSON
                                                 -------------------------------

                                                   Gary S. Wasserson
                                                   Chief Executive Officer


                                              By:  /s/ JAMES A. GIAUQUE III
                                                 -------------------------------
                                                   James A. Giauque III
                                                   Chief Accounting Officer

                                       23

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.11
<SEQUENCE>3
<FILENAME>a2063563zex-4_11.txt
<DESCRIPTION>EXHIBIT 4.11
<TEXT>
<Page>

                               I-LINK INCORPORATED

                                2001 STOCK OPTION
                          AND APPRECIATION RIGHTS PLAN



                                    ARTICLE I

                            ESTABLISHMENT AND PURPOSE



         Section 1.1 I-Link Incorporated, a Florida corporation (the "Company"),
hereby establishes an equity incentive plan to be named the 2001 Stock Option
and Appreciation Rights Plan (the "2001 Plan" or "Plan").

         Section 1.2 The purpose of the 2001 Plan is to induce persons who are
officers, directors, employees and consultants of the Company or any of its
subsidiaries who are in a position to contribute materially to the Company's
prosperity to remain with the Company, to offer such persons incentives and
rewards in recognition of their contributions to the Company's progress, and to
encourage such persons to continue to promote the best interests of the Company.
The 2001 Plan provides for options which qualify as incentive stock options
("Incentive Options") under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), to be issued to such persons who are employees or
officers, as well as options which do not so qualify ("Non-Qualified Options")
to be issued to officers, directors, employees and consultants.

         Section 1.3 This Plan shall be governed by, and construed in accordance
with, the laws of the State of Florida.

         Section 1.4 All stock options and SARs, granted by the Company on or
after the date that this 2001 Plan has been approved or adopted by the Company's
stockholders, shall be governed by the terms and conditions of this 2001 Plan
unless the terms of such option or SAR specifically indicate that it is not to
be governed by this 2001 Plan.

                                   ARTICLE II

                                 ADMINISTRATION



         Section 2.1 All determinations under the 2001 Plan concerning the
selection of persons eligible to receive awards under the 2001 Plan and with
respect to the timing, pricing and amount of a grant or award under this 2001
Plan shall be made by the administrator (the "Administrator") of the 2001 Plan.
The Administrator shall be either (a) the Company's Board of Directors (the
"Board"), or (b) in the discretion of the Board, a committee (the "Committee")
that is composed solely of two or more members of the Board. In the event the
Committee is the Administrator, the Committee shall select one of its members as
its Chairman and shall hold its meetings at such times and places as it may
determine. In such case, a majority of the Committee shall constitute a quorum,
and the acts of a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by a majority of the Committee,
shall be deemed the acts of the Committee. With respect to persons subject to
Section 16 of the Securities Exchange Act of 1934 ("Exchange Act"), transactions
under this 2001 Plan are intended to comply with all applicable conditions of
Rule 16b-3 ("Rule 16b-3") or its successor under the Exchange Act, as such may
be amended from time to time. To the extent any provision of the 2001 Plan or
action by the Administrator fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Administrator.


                                      C-1
<Page>

         Section 2.2 The provisions of this 2001 Plan relating to Incentive
Options are intended to comply in every respect with Section 422 of the Code and
the regulations promulgated thereunder ("Section 422"). In the event any future
statute or regulation shall modify Section 422, this 2001 Plan shall be deemed
to incorporate by reference such modification. Any stock option agreement
relating to any Incentive Option granted pursuant to this 2001 Plan outstanding
and unexercised at the time that any modifying statute or regulation becomes
effective shall also be deemed to incorporate by reference such modification,
and no notice of such modification need be given to the optionee. Any stock
option agreement relating to an Incentive Option shall provide that the optionee
hold his stock received upon exercise of such Incentive Option for a minimum of
two years from the date of grant of the Incentive Option and one year from the
date of the exercise of such Incentive Option absent the written approval,
consent or waiver of the Committee.

         Section 2.3 All determinations made by the Administrator with respect
to award grants to: (i) the chief executive officer of the Company or an
individual acting in that capacity; (ii) one of the four highest compensated
officers (other than the chief executive officer) of the Company; or (iii) an
individual reasonably deemed likely, in the judgment of the Board of Directors
or the Committee, to become an employee described in clause (i) or (ii) of this
paragraph within the exercise period of any contemplated option, shall be made
only by those directors who qualify as an "outside director" within the meaning
of Treasury Regulation Sect. 1.162-27(e)(3), as that Regulation may be amended
from time to time (the "Regulation"), under the Code, and all other directors
must abstain from making any such award determinations. This limitation is
subject to adjustment at the Board's discretion pursuant to Article IX herein.
This limitation shall be calculated by including the number of shares of Common
Stock underlying the exercise of any Option granted pursuant to this Plan (if
any).

         Section 2.4 If any provision of this 2001 Plan is determined to
disqualify the shares purchasable pursuant to the Incentive Options granted
under this 2001 Plan from the special tax treatment provided by Section 422,
such provision shall be deemed to incorporate by reference the modification
required to qualify the shares for said tax treatment.

         Section 2.5 The Company shall grant Incentive Options and Non-Qualified
Options (collectively, "Options") and SARs under the 2001 Plan in accordance
with determinations made by the Board or the Committee pursuant to the
provisions of the 2001 Plan. All Options shall be evidenced by a Stock Option
Agreement and all SARs shall be evidenced by a Stock Appreciation Rights
Agreement (which may or may not be incorporated into a Stock Option Agreement at
the sole discretion of the Administrator). All Options granted pursuant to the
2001 Plan shall be clearly identified as Incentive Options or Non-Qualified
Options. The Board or the Committee may from time to time adopt (and thereafter
amend or rescind) such rules and regulations for carrying out the 2001 Plan and
take such action in the administration of the 2001 Plan, not inconsistent with
the provisions hereof, as it shall deem proper. The Board or, subject to the
supervision of the Board, the Committee, shall have plenary discretion, subject
to the express provisions of this 2001 Plan, to determine which officers,
directors, employees and consultants shall be granted Options, the number of
shares subject to each Option, the time or times when an Option may be exercised
(whether in whole or in installments), the terms and provisions of the
respective Option agreements (which need not be identical), including such terms
and provisions which may be amended from time to time as shall be required, in
the judgment of the Board or the Committee, to conform to any change in any law
or regulation applicable hereto, and whether SARs hereto shall be granted
pursuant to Article VIII; and to make all other determinations deemed necessary
or advisable for the administration of the 2001 Plan. The interpretation and
construction of any provisions of the 2001 Plan by the Board or the Committee
(unless otherwise determined by the Board) shall be final, conclusive and
binding upon all persons.

         Section 2.6 No member of the Board or the Committee shall be liable for
any action or determination made in good faith with respect to the 2001 Plan or
any Option or SAR granted under it. A member of the Board or the Committee shall
be indemnified by the Company, pursuant to the


                                      C-2
<Page>

Company's By-Laws, for any expenses, judgments or other costs incurred as a
result of a lawsuit filed against such member claiming any rights or remedies
due to such member's participation in the administration of the 2001 Plan.

                                   ARTICLE III

           TOTAL NUMBER OF SHARES AVAILABLE TO BE OPTIONED OR GRANTED

         Section 3.1 There shall be reserved for issuance or transfer upon
exercise of Options, to be granted from time to time under this 2001 Plan, an
aggregate of 14,000,000 shares of Common Stock, $.001 par value per share, of
the Company (subject to adjustment as provided in Article X hereof). The shares
issued by the Company under the 2001 Plan may be either Treasury shares or
authorized but unissued shares, as the Board from time to time may determine.

         Section 3.2 In the event that any outstanding Options under the 2001
Plan for any reason should expire or are terminated without having been
exercised in full; or shares of Common Stock subject to Options are surrendered
in whole or in part pursuant to SARs granted under Article VIII hereof (except
to the extent that shares of Common Stock are paid to the holder of the Option
upon such surrender) should be returned to Treasury, the unpurchased shares
subject to such Option and any such surrendered shares or shares returned to
Treasury may again be available for transfer under the 2001 Plan.

         Section 3.3 No Options or SARs shall be granted pursuant to this 2001
Plan to any optionee after the tenth anniversary of the earlier of the date that
this 2001 Plan is adopted by the Board or the date that this 2001 Plan is
approved by the Company's stockholders.



                                   ARTICLE IV

                                   ELIGIBILITY



         Section 4.1 Non-Qualified Options and SARs may be granted pursuant to
this 2001 Plan only to officers, directors, employees and consultants of the
Company or any of its subsidiaries, as selected by the Board or the Committee,
and Incentive Options may be granted pursuant to this 2001 Plan only to
officers, directors who are also employees, and employees of the Company or any
of its subsidiaries, as selected by the Committee. Persons granted Options
and/or SARs pursuant to this 2001 Plan are hereinafter referred to as
"Optionees." For purposes of determining who is an employee with respect to
eligibility for Incentive Options, Section 422 shall govern. The Board or the
Committee may determine in its sole discretion that any person who would
otherwise be eligible to be granted Options and SARs, shall, nonetheless, be
ineligible to receive any award under this 2001 Plan.

         Section 4.2 The Board or the Committee will, in its discretion,
determine the persons to be granted Options or SARs, the time or times at which
Options or SARs shall be granted; with respect to Options, the number of shares
subject to each Option; the terms of a vesting or forfeiture schedule, if any,
the type of Option issued, the period during which any such options may be
exercised; the manner in which Options may be exercised and all other terms and
conditions of the Options; provided, however, no Option or SAR will be made
which has terms or conditions inconsistent with this 2001 Plan. Relevant factors
in making such determinations may include the value of the services rendered by
the respective Optionee, his present and potential contributions to the Company,
and such other factors which are deemed relevant in accomplishing the purpose of
the 2001 Plan.


                                      C-3
<Page>

                                    ARTICLE V

                         TERMS AND CONDITIONS OF OPTIONS

         Section 5.1 Each Option granted under the 2001 Plan shall be evidenced
by a STOCK OPTION AGREEMENT in a form not inconsistent with the 2001 Plan,
provided that the following terms and conditions shall apply:

                  (a) The price at which each share of Common Stock covered by
         an Option may be purchased ("OPTION EXERCISE PRICE") shall be set forth
         in the Stock Option Agreement and shall be determined by the Board or
         the Committee, provided that the OPTION EXERCISE PRICE for any
         Incentive Option shall not be less than the "FAIR MARKET VALUE" OF THE
         COMMON STOCK AT THE TIME OF GRANT AS DEFINED IN SECTION 6.1(B).
         Notwithstanding the foregoing, if an Incentive Option to purchase
         shares is granted pursuant to this 2001 Plan to an Optionee who, on the
         date of the grant, directly or indirectly owns more than 10% of the
         voting power of all classes of stock of the Company or its parent or
         subsidiary, not including the stock obtainable under the Option, the
         minimum Option Exercise Price of such Option shall be not less than
         110% of the "FAIR MARKET VALUE" of the stock on the date of grant.

                  (b) The "FAIR MARKET VALUE" shall be determined by the Board
         or the Committee, which determination shall be binding upon the Company
         and its officers, directors, employees and consultants. The
         determination of the Fair Market Value shall be based upon the
         following methodology: (i) if the Common Stock is not listed and traded
         upon a recognized securities exchange and there is no report of stock
         prices with respect to the Common Stock published by a recognized stock
         quotation service, on the basis of the recent purchases and sales of
         the Common Stock in arms-length transactions; or (ii) if the Common
         Stock is not then listed and traded upon a recognized securities
         exchange or quoted on The Nasdaq Stock Market, Inc. ("Nasdaq"), and
         there are reports of stock prices by a recognized quotation service, on
         the basis of quotations for such stock, based upon the average of the
         closing bid prices of the Common Stock for the five most recent trading
         days preceding the date of grant ("Five-Day Average"); or (ii) if the
         Common Stock shall then be listed and traded upon a recognized
         securities exchange or quoted on Nasdaq, upon the basis of the Five-Day
         Average preceding the date of grant on such recognized securities
         exchange; or, if the Common Stock was not traded on such date, upon the
         basis of the Five-Day Average nearest preceding that date. In the
         absence of any of the above-referenced evidence of Fair Market Value,
         the Board or the Committee shall consider such other factors relating
         to the Fair Market Value of the Common Stock, as it shall deem
         appropriate.

                  (c) For the purpose of determining whether an Optionee owns
         more than 10% of the voting power of all classes of stock of the
         Company, an Optionee is considered to own those shares which are owned
         directly or indirectly through brothers and sisters (including
         half-blooded siblings), spouse, ancestors and lineal descendants; and
         proportionately as a stockholder of a corporation, a partner of a
         partnership, and/or a beneficiary of a trust or an estate that owns
         shares of the Company.

                  (d) Notwithstanding any other provision of this 2001 Plan, in
         accordance with the provisions of Section 422(d) of the Code, to the
         extent that the aggregate Fair Market Value (determined at in
         accordance with Section 5.1(b)) of the stock of the Company with
         respect to which Incentive Options (without reference to this
         provision) are exercisable for the first time by any individual in any
         calendar year under any and all stock option plans of the Company, its
         subsidiary corporations and its parent (if any) exceeds $100,000, such
         Options shall be treated as Non-Qualified Options.

                  (e) An Optionee may, in the Board or the Committee's
         discretion, be granted more than one Incentive Option or Non-Qualified
         Option during the duration of this 2001 Plan, and may be


                                      C-4
<Page>

          issued a combination of Non-Qualified Options and Incentive Options;
          provided that non-employees are not eligible to receive Incentive
          Options.

                  (f) The duration of any Option and any right or SAR related to
         the Option shall be within the sole discretion of the Board or the
         Committee; provided, however, that any Incentive Option granted to a
         10% or less stockholder or any Non-Qualified Option shall, by its
         terms, be exercised within ten years after the date the Option is
         granted and any Incentive Option granted to a greater than 10%
         stockholder shall, by its terms, be exercised within five years after
         the date the Option is granted.

                  (g) Any Option and any right or SAR related thereto shall not
         be transferable by the Optionee other than by will, or by the laws of
         descent and distribution. An Option may be exercised during the
         Optionee's lifetime only by the Optionee.

                  (h) At least six months shall elapse from the date on which an
         Option is granted to a director, officer or beneficial owner of more
         than 10% of the outstanding Common Stock under this 2001 Plan by the
         Board (or the Committee) to the date on which any share of Common Stock
         underlying such Option is sold or any SAR associated with such Option
         is exercised, unless the Board or the Committee otherwise consents in
         writing.

                  (i) In the event that stockholder approval of the 2001 Plan is
         not obtained within one year of the adoption of the 2001 Plan by the
         Board or within such other time period required under Section 422 and
         the regulations thereunder, all Options issued and issuable hereunder
         shall automatically be deemed to be Non-Qualified Options.

                  (j) The Committee may impose such other conditions with
         respect to the exercise of options, including without limitation, any
         conditions relating to the application of federal or state securities
         laws, as it may deem necessary or advisable.

                                   ARTICLE VI

                        EMPLOYMENT OR SERVICE OF OPTIONEE

         Section 6.1 If the employment or service of an Optionee is terminated
for cause, any vested or unvested Options, or rights to Options (collectively
referred to herein as "Option Rights"), SARs, if any, of such Optionee under any
then outstanding Non-Qualified or Incentive Option shall terminate immediately.
Unless the Board or the Committee determines to define "cause" differently and
such definition is set forth in the Stock Option Agreement, "cause" shall mean
incompetence in the performance of duties, disloyalty, dishonesty, theft,
embezzlement, unauthorized disclosure of customer lists, product lines,
processes or trade secrets of the Company, individually or as an employee,
partner, associate, officer or director of any organization. The determination
of the existence and the proof of "cause" shall be made by the Board or the
Committee and, subject to the review of any determination made by the Committee
by the Board, such determination shall be binding on the Optionee and the
Company.

         Section 6.2 If the employment or service of the Optionee is terminated
by either the Optionee or the Company for any reason other than for cause,
death, or for disability, as defined in Section 22(e)(3) of the Code, the Option
Rights, and SARs, if any, of such Optionee under any then outstanding
Non-Qualified Option shall, subject to the provisions of Section 5.1(h) hereof,
be exercisable by such Optionee at any time prior to the expiration of the
Option or within three months after the date of such termination, whichever
period of time is shorter, but only to the extent of the vested right to
exercise the Option at the date of such termination. With respect to Incentive
Options, such Options shall, subject to the provisions of Section 5.1(h) hereof,
be exercisable by such Optionee at any time prior to the expiration of the
Option, or within three months after the date of such


                                      C-5
<Page>

termination, whichever period of time is shorter, but only to the extent of the
vested right to exercise the Option at the date of such termination.

         Section 6.3 In the case of an Optionee who becomes disabled, as defined
by Section 22(e)(3) of the Code, the Option rights of such Optionee under any
then outstanding Incentive Option shall, subject to the provisions of Section
5.1(h) hereof, be exercisable by such Optionee at any time prior to the
expiration of the Option or, in the case of an Incentive Option, within three
months after the date of termination of employment or service due to disability,
whichever period of time is shorter, but only to the extent of the vested right
to exercise the Option, and SARs if any, at the date of such termination. With
respect to any then outstanding Non-Incentive Options, the Option rights of such
Optionee shall, subject to the provisions of Section 6.1(h) hereof, be
exercisable by such Optionee at any time prior to the expiration of the Option,
or within three months after the date of termination of employment or service
due to disability, whichever period of time is shorter, but only to the extent
of the vested right to exercise the Option, and SARs, if any, at the date of
such termination.

         Section 6.4 In the event of the death of an Optionee, the Option rights
of such Optionee under any then outstanding Incentive Option shall be
exercisable by the person or persons to whom these rights pass by will or by the
laws of descent and distribution, at any time prior to the expiration of the
Option or within three years after the date of death, whichever period is
shorter; but only to the extent of the vested right to exercise the Option and
SARs, if any, at such time. With respect to any then Non-Incentive Options, the
Option rights exercisable by the person or persons to whom these rights pass by
will or by the laws of descent and distribution shall, subject to the provisions
of Section 5.1(h) hereof, be exercisable by person or persons, at any time prior
to the expiration of the Option, or within three months after the date of death,
but only to the extent of the vested right to exercise the Option, and SARs, if
any, at such time. If a person or estate acquires the right to exercise a
Non-Qualified or Incentive Option by bequest or inheritance, the Committee may
require reasonable evidence as to the ownership of such Option, and may require
such consents and releases of taxing authorities, as the Committee may deem
advisable.

         Section 6.5 In addition to the requirements set forth in the 2001 Plan,
the Committee or the Board may set such other targets, restrictions or other
terms relating to the employment or service of the Optionee, including but not
limited to a requirement that an employee must be continuously employed by the
Company for such period of time as the Board or Committee, in its discretion,
deems advisable before the right to exercise any portion of an Option granted to
such employee will accrue, which targets, restrictions, or terms must be
fulfilled or complied with, as the case may be, prior to the exercise of any
portion of an Option and/or SARs, if any, granted to any Optionee.

         Section 6.6 Options and/or SARs, if any, granted under the 2001 Plan
shall not be affected by any change of duties or position, so long as the
Optionee continues in the service of the Company.

         Section 6.7 Nothing contained in the 2001 Plan, or in any Option and/or
SARs, if any, granted pursuant to the 2001 Plan, shall confer upon any Optionee
any right with respect to continuance of employment or service by the Company
nor interfere in any way with the right of the Company to terminate the
Optionee's employment or service or change the Optionee's compensation at any
time.

                                   ARTICLE VII

                               EXERCISE OF OPTIONS

         Section 7.1 Except as provided in this Article VIII, an Option shall be
exercised by tender to the Company of the total Option Exercise Price of the
shares with respect to which the Option is exercised and written notice of the
exercise. The right to purchase shares shall be cumulative so that, once the
right to purchase any shares has vested, such shares or any part thereof may be
purchased at any time thereafter until the expiration or termination of the
Option. A partial exercise of an Option shall not


                                      C-6
<Page>

affect the right of the Optionee to exercise the Option from time to time, in
accordance with the 2001 Plan, as to the remaining number of shares subject to
the Option. The Option Exercise Price of the shares shall be in United States
dollars, payable in cash or by certified bank check. Notwithstanding the
foregoing, in lieu of cash, an Optionee may, with the approval of the Board or
the Committee, exercise his Option by tendering to the Company shares of the
Common Stock of the Company owned by him and having an aggregate Fair Market
Value at least equal to the total Option Exercise Price or part or all of one or
more Options to purchase Common Stock of the Company for which the aggregate
Fair Market Value of the Common Stock underlying exercise of the Option shall be
at least equal to the Option Exercise Price. The Fair Market Value of any shares
of Common Stock so surrendered shall be determined by the Board or the Committee
by application of the methodology set forth in Section 5.1(b) hereof; except
that the term "date of surrender" shall be substituted for the term "date of
grant" in applying such Section 5.1(b).

         Section 7.2 Except as provided in Article VI, an Option may not be
exercised unless the holder thereof is an officer, director, employee or
consultant of the Company at the time of exercise.

         Section 7.3 No Optionee, or Optionee's executor, administrator,
legatee, distributee or other permitted transferee, shall be deemed to be a
holder of any shares subject to an Option for any purpose whatsoever unless and
until a stock certificate or certificates for such are issued to such person(s)
under the terms of the 2001 Plan. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in Article IX hereof.

         Section 7.4 If (i) the listing, registration or qualification of the
Options issued hereunder, or of any securities that may be purchased upon
exercise of such Options (the "Subject Securities") upon any securities exchange
or quotation system, or under federal or state law is necessary as a condition
of or in connection with the issuance or exercise of the Options, or (ii) the
consent or approval of any governmental regulatory body is necessary as a
condition of, or in connection with, the issuance or exercise of the Options,
the Company shall not be obligated to deliver the certificates representing the
Subject Securities or to accept or to recognize an Option exercise unless and
until such listing, registration, qualification, consent or approval shall have
been effected or obtained. The Company will take reasonable action to so list,
register, or qualify the Options and the Subject Securities, or effect or obtain
such consent or approval, so as to allow for their issuance.

         Section 7.5 An Optionee may be required to represent to the Company as
a condition of his exercise of Options issued under this 2001 Plan: (i) that the
Subject Securities acquired upon Option exercise are being acquired by him for
investment and not with a view to distribution or resale, unless counsel for the
Company is then of the view that such a representation is not necessary and is
not required under the Securities Act of 1933, as amended, (the "Securities
Act") or any other applicable statute, law, regulation or rule; and (ii) that
the Optionee shall make no exercise or disposition of an Option or of the
Subject Securities in contravention of the Securities Act, the Exchange Act or
the rules and regulations thereunder. Optionees may also be required to provide
(as a condition precedent to exercise of an Option) such documentation as may be
reasonably requested by the Company to assure compliance with applicable law and
the terms and conditions of the 2001 Plan and the subject Option.

                                  ARTICLE VIII

                            STOCK APPRECIATION RIGHTS

         Section 8.1 The Board or the Committee may, in its discretion, grant in
connection with any Option, at any time prior to the exercise thereof, SARs to
surrender all or part of the Option to the extent that such Option is
exercisable and receive in exchange an amount payable in cash, shares of the


                                      C-7
<Page>

Company's Common Stock or a combination thereof, as determined by the Board or
the Committee, equal to the difference between the then Fair Market Value of the
shares (valued at the then Fair Market Value, in accordance with the methodology
set forth in Section 5.1(b), except that the term "date of surrender" shall be
substituted for the term "date of grant,") issuable upon the exercise of the
Option or portions thereof surrendered and the Option Exercise Price payable
upon the exercise of the Option or portions thereof surrendered (the "Spread").
Such SARs may be granted only under the following conditions: (a) the SARs will
expire no later than the expiration of the underlying Option; (b) the SARs may
be for no more than one hundred percent ("100%)"of the Spread; (c) the SARs are
transferable only when the underlying Option is transferable, and under the same
conditions; (d) the SARs may be exercised only when the underlying Option is
eligible to be exercised; (e) the SARs may be exercised only when the Spread is
positive, i.e., when the Fair Market Value of the Common Stock subject to the
Option exceeds the Option Exercise Price; and (f) any SARs granted to an
Optionee shall be subject to all terms, conditions and provisions governing the
Options, as expressed in the 2001 Plan and in the Option agreement issued to
such Optionee pursuant to the 2001 Plan.

         Section 8.2 Each grant of an SAR under the Plan shall be evidenced by a
Stock Appreciation Rights Agreement between the Optionee and the Company, which
may either be a separate agreement between the Company and the Optionee, or may
be incorporated into an Option Agreement between the Optionee and the Company.
Such SAR shall be subject to all applicable terms of the Plan and may be subject
to any other terms that are not inconsistent with the Plan. The provisions of
the various SAR Agreements entered into under the Plan need not be identical.
SARs may be granted in consideration of a reduction in the Optionee's other
compensation. Each SAR Agreement shall specify the number of shares of Common
Stock to which the SAR pertains and shall provide for the adjustment of such
number in accordance with Article IX.

         Section 8.3 Each SAR Agreement shall specify the date when all or any
installment of the SAR is to become exercisable. The SAR Agreement shall also
specify the term of the SAR. An SAR Agreement may provide for accelerated
exercisability in the event of the Optionee's death, disability or retirement or
other events and may provide for expiration prior to the end of its term in the
event of the termination of the Optionee's service. SARs may be awarded in
combination with Options, and the SAR Agreement may provide that the SARs will
not be exercisable unless the related Options are forfeited. An SAR may be
included in an Incentive Option only at the time of grant but may be included in
an Non-Qualified Option at the time of grant or thereafter. An SAR granted under
the Plan may provide that it will be exercisable only in the event of certain
conditions that are determined in the sole discretion of the Board or the
Committee.

         Section 8.4 Within the limitations of the Plan, the Committee may
modify, extend or assume outstanding SARs or may accept the cancellation of
outstanding SARs in return for the grant of new SARs for the same or a different
number of shares and at the same or a different exercise price

                                   ARTICLE IX

                    CHANGE IN NUMBER OF OUTSTANDING SHARES OF
                    STOCK, ADJUSTMENTS, REORGANIZATIONS, ETC.

         Section 9.1 In the event that the outstanding shares of Common Stock of
the Company are hereafter increased or decreased, or changed into or exchanged
for a different number of shares or kind of shares or other securities of the
Company, or of another corporation, by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock split, combination of
shares, or a dividend payable in capital stock, appropriate adjustment may be
made by the Board or the Committee in the number and kind of shares for the
purchase of which Options may be granted under the 2001 Plan, including the
maximum number that may be granted to any one person. In addition, the
Administrator may make appropriate adjustments in the number and kind of shares
as to


                                      C-8
<Page>

which outstanding Options, and, to the extent granted, SARs in connection
therewith, or portions thereof then unexercised, shall be exercisable, to the
end that the Optionee's proportionate interest shall be maintained as before the
occurrence to the unexercised portion of the Option, and to the extent granted,
SARs in connection therewith, and with a corresponding adjustment in the Option
Exercise Price per share. Any such adjustment made by the Administrator shall be
conclusive.

         Section 9.2 The grant of an Option and/or any SARs granted in
connection therewith, pursuant to the 2001 Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.

         Section 9.3 Upon the dissolution or liquidation of the Company, or upon
a reorganization, merger or consolidation of the Company as a result of which
the outstanding securities of the class then subject Options and/or any SARs
granted in connection therewith, are changed into or exchanged for cash or
property or securities not of the Company's issue, or upon a sale of
substantially all the property of the Company to an association, person, party,
corporation, partnership, or control group as that term is construed for
purposes of the Exchange Act, the 2001 Plan shall terminate, and all Options,
and any SARs granted in connection therewith, theretofore granted hereunder
shall terminate unless provision be made in writing in connection with such
transaction for the continuance of the 2001 Plan and/or for the assumption of
Options and/or any SARs granted in connection therewith, theretofore granted, or
the substitution for such Options of options covering the stock of a successor
employer corporation, or a parent or a subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices, in which event the
2001 Plan and Options, and/or any SARs granted in connection therewith,
theretofore granted shall continue in the manner and under the terms so
provided. If the 2001 Plan and unexercised Options, and /or any SARs granted in
connection therewith, shall terminate pursuant to the foregoing sentence, all
persons owning any unexercised portions of Options then outstanding shall have
the right, at such time prior to the consummation of the transaction causing
such termination as the Company shall designate, to exercise the unexercised
portions of their Options, including the portions thereof which would, but for
this Section 10.3 not yet be exercisable; except that the exercise of any SARs
after such termination shall be allowed solely at the discretion of the Board.

                                    ARTICLE X

                                WITHHOLDING TAXES



         Section 10.1 General. To the extent required by applicable federal,
state, local or foreign law, an Optionee or his successor shall make
arrangements satisfactory to the Company for the satisfaction of any withholding
tax obligations that arise in connection with the Plan. The Company shall not be
required to issue any Common Stock or make any cash payment under the Plan until
such obligations are satisfied.

         Section 10.2 Share Withholding. The Committee may permit an Optionee to
satisfy all or part of his withholding or income tax obligations by having the
Company withhold all or a portion of any shares of Common Stock that otherwise
would be issued to him or by surrendering all or a portion of any shares of
Common Stock that he or she previously acquired. Such shares of Common Stock
shall be valued at their Fair Market Value in accordance with the methodology
set forth in Section 5.1 (b) hereof, except that the term "date of surrender"
shall be substituted for the term "date of grant" in applying such methodology.


                                      C-9
<Page>

                                   ARTICLE XI

                       DURATION, AMENDMENT AND TERMINATION



         Section 11.1 The Board may at any time terminate the 2001 Plan or make
such amendments thereto as it shall deem advisable and in the best interests of
the Company, without action on the part of the stockholders of the Company
unless such approval is required pursuant to applicable law; provided, however,
that no such termination or amendment shall, without the consent of the
individual to whom any Option shall theretofore have been granted, affect or
impair the rights of such individual under such Option. Pursuant to Section
422(b)(2) of the Code, no Incentive Option may be granted pursuant to this 2001
Plan more than ten years from the date the 2001 Plan is adopted or the date the
2001 Plan is approved by the stockholders of the Company, whichever is earlier.

                                   ARTICLE XII

                                  RESTRICTIONS

         Section 12.1 Any shares issued pursuant to the 2001 Plan shall be
subject to such restrictions on transfer and limitations as shall, in the
opinion of the Board or the Committee, be necessary or advisable to assure
compliance with the laws, rules and regulations of the United States government
or any state or jurisdiction thereof or any other applicable law. In addition,
the Board or the Committee may in any Stock Option Agreement and/or SAR impose
such other restrictions upon the exercise of an Option or upon the sale or other
disposition of the shares of Common Stock deliverable upon exercise thereof as
the Board or the Committee may, in its sole discretion, determine, including but
not limited to provisions which allow the Company to reacquire such shares at
their original purchase price if the Optionee's employment terminates within a
stated period after the acquisition of such shares. By accepting an award
pursuant to the 2001 Plan each Optionee shall thereby agree to any such
restrictions.

         Section 12.2 Any certificate issued to evidence shares issued pursuant
to an Option shall bear such legends and statements as the Board or counsel to
the Company shall deem advisable to assure compliance with the laws, rules and
regulations of the United States government or any state or jurisdiction
thereof. No shares will be delivered under the 2001 Plan until the Company has
obtained such consents or approvals from such regulatory bodies of the United
States government or any state or jurisdiction thereof as the Board or counsel
to the Company deems necessary or advisable.

                                  ARTICLE XIII

                              FINANCIAL ASSISTANCE

         Section 13.1 The Company is vested with authority under this 2001 Plan,
at the discretion of the Board, to assist any employee to whom an Option is
granted hereunder (including any director or officer of the Company or any of
its subsidiaries who is also an employee) in the payment of the purchase price
payable on exercise of that Option, by lending the amount of such purchase price
to such employee on such terms and at such rates of interest and upon such
security (or unsecured) as shall have been authorized by or under authority of
the Board. Any such assistance shall comply with the requirements of Regulation
G promulgated by the Board of the Federal Reserve System, as amended from time
to time, and any other applicable law, rule or regulation.


                                      C-10
<Page>

                                   ARTICLE XIV

                              APPLICATION OF FUNDS

         Section 14.1 The proceeds received by the Company from the sale of
stock pursuant to the exercise of Options under the 2001 Plan are to be added to
the general funds of the Company and used for its corporate purposes as
determined by the Board.

                                   ARTICLE XV

                              EFFECTIVENESS OF PLAN

         Section 15.1 This 2001 Plan shall become effective upon adoption by the
Board, and Options may be issued hereunder from and after that date subject to
the provisions of Section 3.3. This 2001 Plan must be approved by the Company's
stockholders in accordance with the applicable provisions (relating to the
issuance of stock or Options) of the Company's governing documents and state law
or, if no such approval is prescribed therein, by the affirmative vote of the
holders of a majority of the votes cast at a duly held stockholders meeting at
which a quorum representing a majority of all the Company's outstanding voting
stock is present and voting (in person or by proxy) or, without regard to any
required time period for approval, by any other method permitted by Section 422
and the regulations thereunder. If such stockholder approval is not obtained
within one year of the adoption of the 2001 Plan by the Board or within such
other time period required under Section 422 and the regulations thereunder,
this 2001 Plan shall remain in force, provided however, that all Options issued
and issuable hereunder shall automatically be deemed to be Non-Qualified
Options.

                                      *****


                                      C-11
<Page>

         IN WITNESS WHEREOF, pursuant to the adoption of this 2001 Plan by the
Board of Directors of the Company, this 2001 Plan is hereby executed effective
as of this 4th day of June, 2001.

                                          I-LINK INCORPORATED

                                          -------------------------------------
                                          Gary J. Wasserson
                                          PRESIDENT AND CHIEF EXECUTIVE OFFICER

ATTEST:

- -------------------------------------
David E. Hardy, Esq.
SECRETARY


                                      C-12

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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