UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE TO
(RULE 14D-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
iLINC COMMUNICATIONS, INC.
(Name of Subject Company and Filing Person (Issuer))
12% Convertible Subordinated Notes Due 2012
(Title of Class of Securities)
451724108
(CUSIP Number of Class of Securities)
James M. Powers, Jr.
Chairman of Board of Directors, President and Chief Executive Officer
iLinc Communications, Inc.
2999 N. 44th Street, Suite 650
Phoenix, AZ 85018
(602) 952-1200
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Filing Person)
COPY TO:
Richard S. Roth, Esq.
Jackson Walker L.L.P.
1401 McKinney St, Suite 1900
Houston, TX 77010
(713) 752-4209
CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE
$5,625,000 $672.44
* Calculated solely for purposes of determining the filing fee. THE TRANSACTION
VALUE ASSUMES THE EXCHANGE OF $5,625,000 IN PRINCIPAL AMOUNT OF THE 12%
CONVERTIBLE SUBORDINATED NOTES DUE 2012 THAT ARE SUBJECT TO THE EXCHANGE OFFER
AND THE AMENDMENT TO WARRANTS TO PURCHASE 5,625,000 SHARES OF COMMON STOCK OF
iLINC COMMUNICATIONS, INC., THE APPROXIMATE AGGREGATE VALUE OF WHICH AS OF MARCH
1, 2005 ($88,201) IS CALCULATED USING THE BLACK-SCHOLES OPTION PRICING MODEL.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
--------------------------------------------------------------------------------
Amount Previously Paid: Filing Party:
--------------------------------------------------------------------------------
Form or Registration No.: Date Filed:
--------------------------------------------------------------------------------
[ ] Check the box if the filing relates solely to preliminary communications
made before commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[ ] Third party tender offer subject to Rule 14d-1.
[X] Issuer tender offer subject to Rule 13e-4.
[ ] Going private transaction subject to Rule 13e-3.
[ ] Amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
ITEM 1. SUMMARY TERM SHEET.
The information set forth in the Offer to Exchange ("Summary"), dated March 1,
2005, and attached hereto as Exhibit (a)(1)(i) (the "Offer to Exchange"), is
incorporated herein by reference.
ITEM 2. SUBJECT COMPANY INFORMATION.
(a) The name of the issuer is iLinc Communications, Inc., a Delaware corporation
(the "Company"), and the address of the Company's principal executive offices is
2999 N. 44th Street, Suite 650, Phoenix, AZ 85018. The Company's telephone
number at its principal executive offices is (602) 952-1200.
(b) The information set forth in the Offer to Exchange ("Summary," "Pro Forma
Financial Information," "Description of Notes and Warrants," "Description of
Capital Stock") is incorporated herein by reference.
(c) The information set forth in the Offer to Exchange ("Market for Common Stock
and Notes") is incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) The filing person is the subject company. The information set forth under
Item 2(a) above is incorporated herein by reference. The information set forth
in the Offer to Exchange ("Management") is incorporated herein by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) The information set forth in the Offer to Exchange ("The Exchange Offer" and
"Material United States Federal Income Tax Consequences") is incorporated herein
by reference.
(b) The information set forth in the Offer to Exchange ("Interests of Directors
and Officers") is incorporated herein by reference.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AMENDMENTS.
(e) None.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(a) The information set forth in the Offer to Exchange ("Reason for the Exchange
Offer") is incorporated herein by reference.
(b) The information set forth in the Offer to Exchange ("Use of Proceeds") is
incorporated herein by reference.
(c) The information set forth in the Offer to Exchange ("Reason for the Exchange
Offer") is incorporated herein by reference.
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the Offer to Exchange ("The Exchange Offer" &
"Fees and Expenses") is incorporated herein by reference.
(b) None.
(d) Not applicable.
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Offer to Exchange ("Interests of Directors
and Officers") is incorporated herein by reference.
(b) None.
ITEM 9. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED.
(a) None.
ITEM 10. FINANCIAL STATEMENTS.
(a) The information set forth in the Offer to Exchange ("Selected Historical
Financial Data") is incorporated herein by reference.
(b) The information set forth in the Offer to Exchange ("Unaudited Pro Forma
Information") is incorporated herein by reference.
ITEM 11. ADDITIONAL INFORMATION.
(a)(1) None.
(a)(2) The information set forth in the Offer to Exchange ("Certain Legal
Matters; Regulatory Approvals") is incorporated herein by reference.
(a)(3) Not applicable.
(a)(4) Not applicable.
(a)(5) None.
(b) Not applicable.
ITEM 12. EXHIBITS.
(a)(1)(i) Offer to Exchange, dated March 1, 2005.
(a)(1)(ii) Form of Letter of Transmittal.
(a)(1)(iii) Press Release, dated March 2, 2005
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this statement is true, complete and correct.
iLinc Communications, Inc.
By: /s/ James M. Powers, Jr.
---------------------------
Name: James M. Powers, Jr.
Title: Chairman of the Board of Directors, President
and Chief Executive Officer
March 1, 2005
EXHIBIT (a)(1)(i)
iLINC COMMUNICATIONS, INC.
OFFER TO EXCHANGE
COMMON STOCK AND AMENDMENTS
TO $3.00 PER SHARE WARRANTS
FOR UP TO
$5,625,000 ORIGINAL PRINCIPAL AMOUNT OF
12% CONVERTIBLE SUBORDINATED NOTES DUE 2012
PLUS ACCRUED AND UNPAID INTEREST
We are offering to exchange 2,500 shares of our Common Stock ("Common
Stock") and to amend the exercise period and exercise price of outstanding $3.00
Warrants (as defined below) held by tendering holders for each $1,000 original
principal amount of currently outstanding 12% Convertible Subordinated Notes,
due 2012, of iLinc Communications, Inc., CUSIP No. 451724108 (the "Notes"). The
Notes were issued in 2002 as part of a private placement (see description below)
of Notes and warrants to acquire shares of Common Stock on or before March 29,
2005 with an exercise price of $3.00 per share (the "$3.00 Warrants"). Accrued
and unpaid interest due on the outstanding Notes from January 1, 2005 (the prior
payment date) to March 29, 2005 equals $162,739. No accrued and aggregate unpaid
interest from January 1, 2005 to March 29, 2005, the date tendered Notes are
accepted for payment in this Exchange Offer, will be paid.
Subject to the terms and conditions of the Exchange Offer, we will issue
shares of Common Stock in exchange for up to $5,625,000 aggregate principal
amount of Notes, representing 100% of the outstanding principal amount of Notes,
that are properly tendered and not withdrawn prior to the expiration of the
Exchange Offer. Under the existing terms of the Notes, each $1,000 original
principal amount of the Notes currently is convertible at the option of the
holder into 1,000 shares of Common Stock. The last reported sale price of the
Common Stock on February 28, 2005, the last trading day prior to the
establishment of the exchange ratio of Common Stock for Notes in this Exchange
Offer, was $0.39 per share. The 52-week range of the closing sales price of
Common Stock for the period ending the date of this document is $1.37 to $0.35
per share. Each Noteholder must elect to exchange his Note either in its
entirety or, if less than the full face value, in increments of at least
$25,000.
As a part of a private placement in 2002 of the Notes, the investors
purchased units consisting of Notes and $3.00 Warrants to purchase one share of
Common Stock for each $1.00 original principal amount of Notes purchased. The
$3.00 Warrants currently expire on March 29, 2005. Those Noteholders who
participate in this Exchange Offer will receive, in addition to the
aforementioned Common Stock, an extension of the exercise period of their $3.00
Warrants to March 29, 2006, the exercise price will be reduced to $1.20 per
share and the redemption price will be reduced to $2.40 per share (the "$3.00
Warrant Amendments"). Should a Noteholder decline to participate in this
Exchange Offer, the exercise period of their $3.00 Warrants will expire by their
terms on March 29, 2005. Should a Noteholder elect to exchange a portion of
their Notes, then the $3.00 Warrant Amendments will apply only to a
corresponding portion of their $3.00 Warrants (such number of shares underlying
the $3.00 Warrants equal to the same percentage of the total original principal
amount of Notes held by a Noteholder represented by the amount of original
principal amount of Notes exchanged by such Noteholder in this Exchange Offer).
THE EXCHANGE OFFER WILL EXPIRE ON FRIDAY, MARCH 29, 2005, AT 5:00 P.M.,
EASTERN STANDARD TIME, UNLESS EXTENDED AS PROVIDED HEREIN (THE "EXPIRATION
DATE").
We will accept Notes validly tendered for exchange and not withdrawn as of
the Expiration Date, upon the terms and conditions set forth herein, by tender
of the Note and the accompanying letter of transmittal attached as Exhibit "A"
hereto (the "Letter of Transmittal"). Our offer of exchange is not conditioned
upon the receipt of any minimum principal amount of Notes. We may therefore
accept any portion of the $5,625,000 aggregate principal amount of Notes, and
reserve the right to otherwise amend, extend or terminate the Exchange Offer in
our sole and absolute discretion. Our offer to exchange and the Letter of
Transmittal together constitute the "Exchange Offer." The principal amount of
the Notes exchanged together with any accrued but unpaid interest though the
Expiration Date will be exchanged for our Common Stock, without payment of that
accrued interest.
SEE "RISK FACTORS" AND "MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES" FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD CONSIDER IN
CONNECTION WITH THE EXCHANGE OFFER.
You may direct questions and requests for assistance or additional copies
of this Exchange Offer, the Letter of Transmittal and other related documents to
the Company at the address and telephone number set forth on the back cover
page.
The date of this Exchange Offer is March 1, 2005.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THIS TRANSACTION OR DETERMINED IF THIS
DOCUMENT IS ACCURATE OR COMPLETE.
For convenience, we use "Company," "we," "us," and "ours" to refer to iLinc
Communications, Inc. We are not and our Board of Directors is not making any
recommendation to you as to whether you should tender or refrain from tendering
your Notes. You must make the decision whether to tender your Notes and, if so,
the principal amount of Notes to tender.
IMPORTANT INFORMATION REGARDING THE OFFER
We are not aware of any jurisdiction where making the Exchange Offer is not
in compliance with applicable law. If we become aware that the Exchange Offer is
not in compliance with any jurisdiction's applicable state law, we will make a
good faith effort to comply with such state law. If with our good faith efforts,
we cannot comply with such state law, the Exchange Offer will not be made to
(nor will tenders be accepted from or on behalf of) the holders of Notes
residing in such jurisdiction. If any jurisdiction's securities or blue sky laws
require the Exchange Offer to be made by a licensed broker or dealer, the
Exchange Offer shall be deemed to be made on our behalf by one or more
registered brokers or dealers licensed under such jurisdiction's laws.
You should rely only on the information incorporated by reference or
provided in this Exchange Offer. We have not authorized anyone to provide you
with different information. You should not assume that the information in this
Exchange Offer or any supplement is accurate as of any date other than the date
on the cover of the document. By tendering your Note, you represent that you are
basing your decision solely on this Exchange Offer and your own examination of
our Company and the terms of the proposed exchange, including the merits and
risks involved. The contents of this Exchange Offer should not be construed as
legal, business or tax advice. You should consult your own attorney, business
advisor and tax advisor as to such matters.
CAUTION AS TO UNAUTHORIZED STATEMENTS
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF
AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING NOTES UNDER THE
EXCHANGE OFFER. WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATION IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THOSE
CONTAINED IN THIS EXCHANGE OFFER OR IN THE LETTER OF TRANSMITTAL. DO NOT RELY ON
ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION OR REPRESENTATIONS, IF GIVEN OR
MADE, AS HAVING BEEN AUTHORIZED BY US.
TABLE OF CONTENTS
SUMMARY........................................................................1
THE COMPANY AND ITS BUSINESS...................................................2
SELECTED HISTORICAL FINANCIAL DATA.............................................5
UNAUDITED PRO FORMA INFORMATION................................................6
RISK FACTORS..................................................................12
CAUTION AS TO FORWARD - LOOKING STATEMENTS....................................16
MANAGEMENT....................................................................16
REASONS FOR THE EXCHANGE OFFER................................................17
USE OF PROCEEDS...............................................................17
THE EXCHANGE OFFER............................................................17
DESCRIPTION OF NOTES AND WARRANTS.............................................21
DESCRIPTION OF CAPITAL STOCK..................................................22
MARKET FOR COMMON STOCK AND NOTES.............................................23
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES........................24
CERTAIN SECURITIES LAWS CONSIDERATIONS........................................27
INTERESTS OF DIRECTORS AND OFFICERS...........................................28
CERTAIN LEGAL MATTERS; REGULATORY APPROVALS...................................28
FEES AND EXPENSES.............................................................28
INDEPENDENT AUDITORS..........................................................28
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................28
WHERE YOU CAN FIND MORE INFORMATION...........................................28
MISCELLANEOUS.................................................................29
i
SUMMARY
This general summary is solely for your convenience. You should read the
entire Exchange Offer and the related Letter of Transmittal before you decide
whether to participate in the Exchange Offer. The following are some of the
questions you may have as a holder of the Notes and answers to those questions.
WHAT SECURITIES ARE SOUGHT IN THE EXCHANGE OFFER?
We are offering to acquire, in exchange for our shares of Common Stock and
the $3.00 Warrant Amendments, up to $5,625,000 aggregate principal amount of 12%
Convertible Subordinated Notes, due 2012, of the Company, which represents 100%
of the outstanding principal amount of Notes as of the date of this Exchange
Offer. The Notes are currently convertible at the option of the holder into
1,000 shares of Common Stock per $1,000 original principal amount. Accrued and
unpaid interest due from January 1, 2005 (the prior payment date) until March
29, 2005 for each $1,000 original principal amount of the Notes equals $28.93.
No accrued and unpaid interest from January 1,2005 until March 29, 2005, the
date tendered Notes are accepted for payment in this Exchange Offer, will be
paid.
WHAT SECURITIES ARE BEING OFFERED FOR MY NOTE?
We are offering to issue 2,500 shares of our Common Stock and the $3.00
Warrant Amendments as to 1,000 underlying shares of Common Stock in exchange for
each $1,000 of original principal amount of Notes properly tendered and not
withdrawn in the Exchange Offer. On February 28, 2005, the last reported sale
price prior to the establishment of the exchange ratio of Common Stock for Notes
in the Exchange Offer was $0.39 per share. The 52-week range of closing sales
prices for our Common Stock for the period ending on the date of this document
is $0.35 to $1.37 per share.
WHAT HAPPENS TO THE WARRANT THAT WAS ISSUED WITH MY NOTE?
As a part of the private placement in 2002 pursuant to which the Notes were
issued, the Company also issued warrants to each of the Note Holders to purchase
5,775,000 shares of the Company's common stock with an exercise price of $3.00
per share. The $3.00 Warrants will expire on their terms on March 29, 2005. In
exchange for the Notes, the Company will extend the exercise period of the $3.00
Warrants until March 29, 2006, will reduce the exercise price to $1.20 per share
and the redemption price will be reduced to $2.40 per share. Should a Note
Holder decline to tender his or her Notes, then the $3.00 Warrants purchased
with that Note will expire on their terms on March 29, 2005.
WHY IS THE COMPANY MAKING THE EXCHANGE OFFER?
We are making this offer to significantly strengthen our capitalization.
This exchange will result in the conversion of up to $5,625,000 million of debt
into equity. Our strengthened balance sheet will (i) sharply reduce the amount
of debt maturities that we are required to repay, (ii) eliminate up to
approximately $900,000 in annual cash and non-cash interest expense assuming all
of the outstanding Notes are exchanged and (iii) likely improve our access to
the capital markets. Our improved financial flexibility should better position
us to capitalize on the continued strength in our business. The Exchange Offer
will provide you with the opportunity to receive significantly more shares of
Common Stock than you are currently entitled to by converting the Notes.
WILL THE COMMON STOCK BE LISTED FOR TRADING?
Our Common Stock is listed for trading on the American Stock Exchange under
the symbol "ILC." The shares that would have been issued upon conversion of the
Notes at the original conversion price are currently listed. We will apply for
listing on the American Stock Exchange of the additional shares of Common Stock
that would be issued in the Exchange Offer and we expect our application to be
approved before the Expiration Date.
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES TO ME OF PARTICIPATING IN THE
EXCHANGE OFFER?
The Exchange Offer should constitute a nontaxable exchange for U.S. federal
income tax purposes. Accordingly, you should not recognize gain (or loss) upon
the receipt of Common Stock in exchange for the Notes or upon the receipt of
$1.20 Warrants. See "Federal Income Tax Consequences."
1
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER MY NOTE?
You will have until Friday, March 29, 2005, at 5:00 p.m., Eastern Standard
Time, unless we extend the Exchange Offer. See "The Exchange Offer." However, in
order to process your request before the Expiration Date, please make sure you
tender your Notes to us with sufficient time for processing.
HOW DO I TENDER MY NOTE?
To tender your Notes, you must transmit a properly completed and duly
executed Letter of Transmittal, or a facsimile thereof, to the Company prior to
the Expiration Date. See "The Exchange Offer"
UNTIL WHEN MAY I WITHDRAW PREVIOUSLY TENDERED NOTES?
You may withdraw tendered Notes at any time prior to the Expiration Date.
See "The Exchange Offer."
WHOM CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE EXCHANGE OFFER?
If you have questions regarding the mechanics of or the timing of events in
the Exchange Offer, please contact:
iLinc Communications, Inc.
2999 N. 44th Street, Suite 650
Phoenix, Arizona 85018
Telephone: (602) 952-1200
Attention: James M. Powers, Jr., Chairman, President & CEO
For a complete description of the Common Stock and Notes, see "Description
of Common Stock," "Description of Notes," "Material United States Federal Income
Tax Consequences," and "Certain Securities Law Considerations" and the Appendix.
See "Risk Factors" for a discussion of risks relating to the exchange offer
and the ownership of our common stock.
WHAT ARE THE DIFFERENCES IN MY RIGHTS AS A RESULT OF THE EXCHANGE OFFER?
By participating in the Exchange Offer, you will forego your rights to
future and accrued and unpaid interest on your Notes as well as your rights as a
creditor of the Company. However, if you participate in the Exchange Offer you
will become a holder of Common Stock and be entitled to full voting rights with
respect to the shares issued and receive the $3.00 Warrant Amendments. See "Risk
Factors," "Description of Common Stock" and "Description of Notes."
THE COMPANY AND ITS BUSINESS
OVERVIEW
Headquartered in Phoenix, Arizona, iLinc Communications, Inc. is a provider
of Web conferencing, audio conferencing and collaboration software and services.
Our four-product iLinc Suite (which includes LearnLinc, MeetingLinc,
ConferenceLinc, and SupportLinc), is an award winning virtual classroom, Web
conferencing and collaboration suite of software. With our Web collaboration,
conferencing and virtual classroom products, we provide simple, reliable and
cost-effective tools for remote presentations, meetings and online events. Our
software is based on a proprietary architecture and code that finds its origins
as far back as 1994, in what we believe to be the beginnings of the Web
collaboration industry. Versions of the iLinc Suite have been translated into
six languages, and it is currently available in version 7.6. Our customers may
choose from several different pricing options for the iLinc Suite, and may
receive our products on a stand-alone basis or integrated with one or a number
of our other award-winning products, depending upon their needs. Uses for our
four-product suite of Web collaboration software include online business
meetings, sales presentations, employee training sessions, product
demonstrations and technical support assistance. We sell our software solutions
to large and medium-sized corporations inside and outside of the Fortune 1000,
targeting certain vertical markets. We market our products using a direct sales
force and a distribution channel consisting of authorized agents and value-added
resellers. We allow customers to choose between purchasing a perpetual license
or subscribing to a term license to our products, providing for flexibility in
pricing and payment methods.
PRODUCTS AND SERVICES
WEB CONFERENCING AND WEB COLLABORATION
The iLinc Suite(TM) is a four product suite of software that addresses the
four most common business collaboration needs.
2
LearnLinc(TM) is an Internet-based software platform that provides for
training and education of remote students. With LearnLinc, instructors and
students can collaborate and learn remotely providing a learning environment
that replicates traditional instructor-led classes. Instructors can create
courses and classes, add varied agenda items, enroll students, deliver live
instruction, and deliver content that includes audio, video, and interactive
multimedia. In combination with TestLinc(TM), LearnLinc permits users to
administer comprehensive tests, organize multiple simultaneous breakout sessions
and record, edit, play back and archive entire sessions for future use.
MeetingLinc(TM) is an online collaboration software that facilitates the
sharing of documents, PowerPoint(TM) presentations, graphics and applications
between meeting participants without leaving their desks. MeetingLinc allows
business professionals, government employees, and educators to communicate more
effectively and economically through interactive online meetings using
voice-over-IP technology to avoid the expense of travel and long distance
charges. MeetingLinc allows remote participants to: give presentations,
demonstrate their products and services, annotate on virtual whiteboards, edit
documents simultaneously, and take meeting participants on a Web tour. Like all
of the Web collaboration products in the suite, MeetingLinc includes integrated
voice and video conferencing services.
ConferenceLinc(TM) is a presentation software that delivers the message in
a one-to-many format providing professional management of Web conferencing
events. ConferenceLinc manages events such as earnings announcements, press
briefings, new product announcements, corporate internal mass communications and
external marketing events. ConferenceLinc is built on the MeetingLinc software
platform and code to combine the best interactive features with an easy to use
interface providing meaningful and measurable results to presenters and
participants alike. Its design includes features that take the hassle out of
planning, and supporting a hosted Web seminar. ConferenceLinc includes automatic
email invitations, "one-click join" capabilities, online confirmations, update
notifications, and customized attendee registration. With ConferenceLinc,
presenters may not only present content, but may also gain audience feedback
using real-time polling, live chat, question and answer sessions, and post-event
assessments. The entire presentation is easily recordable for viewing offline
and review after the show with the recorder capturing the content and the audio,
video, and participant feedback.
SupportLinc(TM) is an online technical support and customer sales support
software that gives customer service organizations the ability to provide remote
hands-on support for products, systems, or software applications. SupportLinc
manages the support call volume and enhances the effectiveness of traditional
telephone-based customer support systems. SupportLinc's custom interface is
designed to be simple to use so as to improve the interaction and level of
support for both customers and their technical support agents.
AUDIO CONFERENCING
Through its acquisition of Glyphics in June 2004, the Company now also
delivers comprehensive audio conferencing solutions that help businesses provide
virtual meetings, corporate events, distance learning programs, and daily
conference calls. Our audio conferencing offering includes a wide array of
services and products that include the following:
o Audio On-Demand (no reservations needed): With pre-established calling
accounts for each user, customers can create or participate in
conference calls with no advance notice, 24/7;
o Reserved Automated: The solution for recurring calls, each participant
has a permanent number and passcode;
o Operator Assisted: This service includes an iLinc conference operator
to host, monitor, and coordinate the call; and,
o Online Seminars: Support for online Web presentations with high-touch
professionally managed events.
Customers may purchase our audio conferencing products and services without
an annual contract commitment on a monthly recurring usage basis, and often
subscribe for a fixed per minute rate.
SALES & MARKETING
Our marketing plan incorporates public relations, tradeshows, Web events,
Web marketing initiatives and direct marketing (mail and email) efforts
specifically at the target verticals - messaged in campaigns that speak to the
needs of these industries. The goals of this strategy are to increase our market
share in the selected markets, target marketing dollars more efficiently, sell
away from the competition, align sales, marketing, and product development and
creating customer value to prevent future displacement threats.
Our direct sales team is organized by geographic territory and is broken
down into distinct groups; one focuses upon organizations with fewer than 1,000
employees and one on organizations with 1,000 or more employees. We have a
dedicated audio event services sales team that focuses on large high-touch
professionally-managed events. All of these direct sales groups focus their
outbound activity within our specific identified vertical markets that include
financial services, high technology, and professional service organizations. We
believe that the target vertical markets meet four specific criteria: there is
an established customer base in that target market; our product feature set is
specifically appropriate for the needs of that target market; analysts have
identified a need within that target market for increasing use of Web
conferencing; and we have the potential to capture a significant portion of that
target market.
3
In addition to our direct sales team efforts, iLinc has formed
relationships with several organizations that market and sell our products and
services through their sales distribution channels. The relationships can be
categorized into authorized agents and value added resellers that actively sell
the products on a co-branded or private branded basis. As of March 1, 2005, we
had over 120 individuals and organizations selling our products, on a
non-exclusive basis. Twenty eight of our partners providing indirect sales in 12
countries outside North America, including the United Kingdom, Spain, Italy,
Israel, Germany, Australia, Costa Rica, Columbia and Japan. Our domestic and
international VAR network provides sales of iLinc in markets such the education
and government markets, as well as international markets, where we do not have a
direct sales presence.
CUSTOMERS
Our corporate customer list includes those inside and outside of the
Fortune 1000 with notable customers in financial services such as Aetna,
Guardian Life Insurance, JP Morgan Chase, Travelers Insurance, and Wells Fargo;
high tech with customers such as California Software, Qualcomm, Sabre, and
Xerox, and professional services organizations such as EDS, Greenburg Traurig
and McKinsey Consulting. We also have a significant number of higher educational
organizations including The State University of New York, Kent State University,
Tulane and 23 other major universities that use our products. Our reach includes
customers both within the United States, Canada, Mexico, and outside North
America in 13 other countries.
RESEARCH & DEVELOPMENT
We invested a substantial portion of its working capital and resources in
the continued development of its e-Learning software and technologies. We employ
full-time engineers, programmers and developers, that are located in Troy, New
York and Phoenix, Arizona, who are constantly focused on developing new features
and enhancements to our existing software offering and expanding that offering
with new products and services. The primary focus of our research and
development efforts are on improving the functionality and performance of the
iLinc Suite as well as developing new features that meet changing market
demands. In the 2003 fiscal year, we invested over $3.2 million in direct and
indirect research and development activities, and invested over $2.7 million for
the 2004 fiscal year. We expect to continue to make significant investments in
research and development for the next several years.
4
SELECTED HISTORICAL FINANCIAL DATA
The selected summary financial data as of March 31, 2004, March 31, 2003,
and March 31, 2002 for each of the three years in the period ended March 31,
2004, March 31, 2003, and March 31, 2002 set forth below are derived from our
audited consolidated financial statements. That selected summary financial
information should be read in conjunction with our financial statements and
related notes thereto presented in our annual report on Form 10-K for the year
ended March 31, 2004. The selected summary financial data as of December 31,
2004 and for the nine months ending December 31, 2004 was derived from our
unaudited consolidated financial statements. The historical summary financial
information is not necessarily indicative of the results of future operations
and should be read in conjunction with our historical consolidated financial
statements and the related notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included in the
annual report on Form 10-K for the year ended March 31, 2004 and our most recent
quarterly report on Form 10-Q for the nine months ending December 31, 2004.
STATEMENT OF OPERATIONS DATA: NINE MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, MARCH 31, MARCH 31, MARCH 31,
2004 2004 2003 2002
------------ ------------ ------------ ------------
Revenues
Licenses ............................................ $ 2,343 $ 2,241 $ 447 $ 92
Service and maintenance ............................. 4,930 3,665 3,629 2,590
------------ ------------ ------------ ------------
Total revenue ..................................... 7,273 5,906 4,076 2,682
Operating expenses .................................... 10,240 7,293 6,748 3,446
------------ ------------ ------------ ------------
Loss from operations .................................. (2,967) (1,387) (2,672) (764)
------------ ------------ ------------ ------------
Loss from continuing operations before income taxes ... (4,417) (2,293) (3,889) (1,062)
Income tax expense .................................... -- -- -- --
------------ ------------ ------------ ------------
Loss from continuing operations ....................... (4,417) (2,293) (3,889) (1,062)
Income (loss) from discontinued operations ............ 15 275 133 6,867
------------ ------------ ------------ ------------
Net income (loss) ..................................... (4,402) (2,018) (3,756) 5,805
Preferred stock dividends ............................. (81) (75) -- --
Imputed preferred stock dividends ..................... -- (247) -- --
------------ ------------ ------------ ------------
Income (loss) available to common shareholders ........ $ (4,483) $ (2,340) $ (3,756) $ 5,805
============ ============ ============ ============
Earnings (loss) per common share - basic and
diluted
From continuing operations .......................... $ (0.20) $ (0.16) $ (0.25) $ (0.09)
From discontinued operations ........................ -- 0.02 0.01 0.50
------------ ------------ ------------ ------------
Net earnings (loss) per common share ................ $ (0.20) $ (0.14) $ (0.24) $ 0.49
============ ============ ============ ============
BALANCE SHEET DATA:
Cash and cash equivalents ............................. $ 418 $ 292 $ 409 $ 1,498
Working capital (deficit) ............................. (3,564) (3,113) (2,984) (1,538)
Assets of discontinued operations ..................... 93 301 620 7,350
Total assets .......................................... 17,412 12,460 12,423 15,587
Long-term debt, less current maturities ............... 8,824 6,404 7,901 7,361
Long-term debt discount ............................... (2,240) (1,960) (2,038) (2,264)
Liabilities of discontinued operations ................ -- -- -- --
Total shareholders' equity (deficit) .................. 4,605 3,366 2,320 4,666
5
iLINC COMMUNICATIONS, INC.
UNAUDITED PRO FORMA INFORMATION
The unaudited pro forma consolidated balance sheet as December 31, 2004,
has been prepared as of December 31, 2004 to reflect the effect of the exchange
of (i) the entire outstanding principal balance of $5,625,000, and alternatively
ii) one-half of the outstanding principal of $2,812,500. The unaudited pro forma
consolidated statement of operations presents the results of operations the
Company for the twelve months ending March 31, 2004 and the nine months ended
December 31, 2004 to reflect the effect of the exchange of (i) the entire
outstanding principal balance of $5,625,000, and alternatively ii) one-half of
the outstanding principal of $2,812,500, as if the exchange offer had been
consummated at the beginning of that period.
In the period that the Notes are exchanged and the Exchange Offer is
consummated, and assuming a closing price of Common Stock on March 29, 2005 of
$0.40 per share, the Company will incur conversion expense of $3,375,000,
additional warrant amortization expense of $88,201, a write off of the previous
beneficial conversion feature associated with the Notes of $789,063, and a write
off of the previous unamortized debt discount of $789,133, if all of the
$5,625,000 in principal balance participate in the exchange. Additionally, in
the period that the Notes are exchanged and the Exchange Offer is consummated,
and assuming a closing price of $0.40 per share, the Company will record an
increase equity of $4,054,511 if all of the $5,625,000 in principal balance
participate in the exchange. Such loss will be recorded in accordance with
Statement of Financial Accounting Standard No. 84, Induced Conversions of
Convertible Debt. The Statement requires the recognition of an expense equal to
the fair value of additional shares of common stock issued in excess of the
number of shares that would have been issued under the original terms of the
notes. We expect to record the loss in the quarter in which the Exchange Offer
is consummated.
The unaudited pro forma consolidated information was prepared based on the
historical consolidated financial statements. The unaudited pro forma
consolidated financial statements and the notes thereto should be read in
conjunction with the historical consolidated financial statements and related
notes. The pro forma adjustments are based upon available information and
certain assumptions that we believe are reasonable under the circumstances. The
unaudited pro forma consolidated financial information is not necessarily
indicative of what our results would have been if the Exchange Offer actually
had occurred as of the dates indicated or of what our future operating results
will be.
6
iLinc Communications, Inc.
Unaudited Condensed Pro Forma Balance Sheet at December 31, 2004
Assuming $5.625 million of debt converts
December 31, 2004
(unaudited) Pro Forma December 31, 2004
as reported Adjustments Pro Forma
------------ ------------ ------------
ASSETS
Total assets $ 17,412 $ -- $ 17,412
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities $ 6,117 $ -- $ 6,117
Long term debt and Capital lease liabilites,
less current maturities, net 6,690 (4,028) 1) 2,662
------------ ------------ ------------
Total liabilities 12,807 (4,028) 8,779
------------ ------------ ------------
Shareholders' Equity:
Preferred stock
Common stock 26 14 2) 40
Additional paid-in capital 42,161 5,611 3) 51,881
3,966 4)
143 5)
Accumulated deficit (36,174) (5,706) 6) (41,880)
Less: treasury shares (1,408) (1,408)
------------ ------------ ------------
Total shareholders' equity 4,605 4,028 8,633
------------ ------------ ------------
Total liabilities and shareholders' equity $ 17,412 $ -- $ 17,412
============ ============ ============
1) Amount represents conversion of $5.625 million of debt, net of discount and
beneficial conversion feature of warrant.
2) Amount represents conversion of $5.625 million of debt to common stock at a
ratio of 2.5 shares per $1 of debt.
3) Amount represents conversion of $5.625 million of debt, net of par value of
shares issued.
4) Amount represents the loss realized on conversion of $5.625 million of 12%
Convertible Notes into Common Stock on a pro forma basis, assuming the
conversion took place on December 31, 2004 (original conversion price of $1.00)
in accordance with SFAS No. 84. The actual loss will be based on the market
price on the date of the actual conversion.
5) Amount represents the fair value of the warrants to be issued in connection
with the conversion (by virtue of amendment of existing warrants). The warrants
will be amended to change the exercise price to $1.20 per underlying share for
each dollar of debt converted. One warrant, redeemable at $1.20, will be issued
for each dollar of debt converted (by virtue of amendment of existing warrants).
The fair value of the warrants on a pro forma basis was estimated using a
Black-Scholes pricing model with the following assumptions: contractual and
expected life of one year, volatility of 77%, dividend yield of 0%, and a
risk-free rate of 2.77%.
6) Amount represents the adjustment to accumulated deficit for the conversion
expense, warrant expense, write-off of discount on converted debt, and write-off
of beneficial conversion feature of warrants attached to converted debt.
7
iLinc Communications, Inc.
Unaudited Condensed Pro Forma Profit And Loss
For The Year Ended March 31, 2004
and The Nine Months Ended December 31, 2004
Assumes $5.625 Million Of Debt Converts
Nine Months Nine Months
Ended Ended
Year Ended Year Ended December 31, December 31,
March 31, 2004 Pro Forma March 31, 2004 2004 Pro Forma 2004
as reported Adjustments Pro Forma as reported Adjustments Pro Forma
----------- ----------- ----------- ----------- ----------- -----------
Total revenue $ 5,906 $ -- $ 5,906 $ 7,273 $ -- $ 7,273
Total Operating expenses 7,293 212 1) 7,505 10,240 10,240
----------- ----------- ----------- ----------- ----------- -----------
Loss from operations (1,387) (212) (1,599) (2,967) -- (2,967)
Interest expense (1,233) (1,811) 2) (2,147) (1,514) 673 4) (841)
897 4)
Other income (expense) 327 (2,953) 3) (2,626) 64 64
----------- ----------- ----------- ----------- ----------- -----------
Loss from continuing operations $ (2,293) $ (4,079) $ (6,372) $ (4,417) $ 673 $ (3,744)
=========== =========== =========== =========== =========== ===========
Income (loss) available to common
shareholders $ (2,340) $ (4,079) $ (6,419) $ (4,483) $ (4,079) $ (6,419)
=========== =========== =========== =========== =========== ===========
Earnings (loss) per common share,
basic and diluted $ (0.14) $ (0.21) $ (0.20) $ (0.17)
=========== =========== =========== ===========
Number of shares used in calculation of
earnings (loss) per basic and diluted: 16,743 14,063 5) 30,806 22,858 14,063 5) 36,921
=========== =========== =========== =========== =========== ===========
1) Amount represents the fair value of the warrants to be issued in connection
with the conversion (by virtue of amendment of existing warrants). The warrants
will be amended to change the exercise price to $1.20 per underlying share for
each dollar of debt converted. One warrant, redeemable at $1.20, will be issued
for each dollar of debt converted (by virtue of amendment of existing warrants).
The fair value of the warrants, on a pro forma basis was estimated using a
Black-Scholes pricing model with the following assumptions: contractual and
expected life of one year, volatility of 106%, dividend yield of 0%, and a
risk-free rate of 1.19%.
2) Amount represents the write-off of the unamortized discount on the converted
debt and the write-off of the unamortized beneficial conversion feature on the
warrants attached to the converted debt.
3) Amount represents the loss realized on conversion of $5.625 million of 12%
Convertible Notes into Common Stock on a pro forma basis, assuming the
conversion took place on April 1, 2003 (original conversion price of $1.00) in
accordance with SFAS No. 84. The actual loss will be based on the market price
on the date of the actual conversion.
4) Amount represents the elimination of cash and noncash interest on $5.625
million of converted debt.
5) Common stock exchanged for the retirement of $5.625 million of 12%
Convertible Notes.
8
iLinc Communications, Inc.
Unaudited Condensed Pro Forma Balance Sheet at December 31, 2004
Assuming $2.8125 million of debt converts
December 31, 2004
(unaudited) Pro Forma December 31, 2004
as reported Adjustments Pro Forma
------------ ------------ ------------
ASSETS
Total assets $ 17,412 $ -- $ 17,412
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities $ 6,117 $ -- $ 6,117
Long term debt and Capital lease liabilites,
less current maturities, net 6,690 (2,015) 1) 4,675
------------ ------------ ------------
Total liabilities 12,807 (2,015) 10,792
------------ ------------ ------------
Shareholders' Equity:
Preferred stock
Common stock 26 7 2) 33
Additional paid-in capital 42,161 2,805 3) 47,020
1,983 4)
71 5)
Accumulated deficit (36,174) (2,851) 6) (39,025)
Less: treasury shares (1,408) (1,408)
------------ ------------ ------------
Total shareholders' equity 4,605 2,015 6,620
------------ ------------ ------------
Total liabilities and shareholders' equity $ 17,412 $ -- $ 17,412
============ ============ ============
1) Amount represents conversion of $2.8125 million of debt, net of discount and
beneficial conversion feature of warrant.
2) Amount represents conversion of $2.8125 million of debt to common stock at a
ratio of 2.5 shares per $1 of debt.
3) Amount represents conversion of $2.8125 million of debt, net of par value of
shares issued.
4) Amount represents the loss realized on conversion of $2.8125 million of 12%
Convertible Notes into Common Stock on a pro forma basis, assuming the
conversion took place on December 31, 2004 (original conversion price of $1.00),
in accordance with SFAS No. 84. The actual loss will be based on the market
price on the date of the actual conversion.
5) Amount represents the fair value of the warrants to be issued in connection
with the conversion (by virtue of amendment of existing warrants). The warrants
will be amended to change the exercise price to $1.20 per underlying share for
each dollar of debt converted. One warrant, redeemable at $1.20, will be issued
for each dollar of debt converted (by virtue of amendment of existing warrants).
The fair value of the warrants, on a pro forma basis was estimated using a
Black-Scholes pricing model with the following assumptions: contractual and
expected life of one year, volatility of 77%, dividend yield of 0%, and a
risk-free rate of 2.77%.
6) Amount represents the adjustment to accumulated deficit for the conversion
expense, warrant expense, write-off of discount on converted debt, and write-off
of beneficial conversion feature of warrants attached to converted debt.
9
iLinc Communications, Inc.
Unaudited Condensed Pro Forma Profit and Loss
For The Year Ended March 31, 2004
and the nine months ended December 31, 2004
Assumes $2.8125 million of debt converts
Nine Months Nine Months
Ended Ended
Year Ended Year Ended December 31, December 31,
March 31, 2004 Pro Forma March 31, 2004 2004 Pro Forma 2004
as reported Adjustments Pro Forma as reported Adjustments Pro Forma
----------- ----------- ----------- ----------- ----------- -----------
Total revenue $ 5,906 $ -- $ 5,906 $ 7,273 $ -- $ 7,273
Total Operating expenses 7,293 106 1) 7,399 10,240 10,240
----------- ----------- ----------- ----------- ----------- -----------
Loss from operations (1,387) (106) (1,493) (2,967) -- (2,967)
Interest expense (1,233) (906) 2) (1,690) (1,514) 337 4) (1,177)
449 4)
Other income (expense) 327 (1,477) 3) (1,150) 64 64
----------- ----------- ----------- ----------- ----------- -----------
Loss from continuing operations $ (2,293) $ (2,040) $ (4,333) $ (4,417) $ 337 $ (4,080)
=========== =========== =========== =========== =========== ===========
Income (loss) available to common
shareholders $ (2,340) $ (4,079) $ (6,419) $ (4,483) $ (4,079) $ (6,419)
=========== =========== =========== =========== =========== ===========
Earnings (loss) per common share,
basic and diluted $ (0.14) $ (0.27) $ (0.20) $ (0.21)
=========== =========== =========== ===========
Number of shares used in calculation of
earnings (loss) per basic and diluted: 16,743 7,031 5) 23,774 22,858 7,031 5) 29,889
=========== =========== =========== =========== =========== ===========
1) Amount represents the fair value of the warrants to be issued in connection
with the conversion (by virtue of amendment of existing warrants). The warrants
will be amended to change the exercise price to $1.20 per underlying share for
each dollar of debt converted. One warrant, redeemable at $1.20, will be issued
for each dollar of debt converted (by virtue of amendment of existing warrants).
The fair value of the warrants, on a pro forma basis was estimated using a
Black-Scholes pricing model with the following assumptions: contractual and
expected life of one year, volatility of 106%, dividend yield of 0%, and a
risk-free rate of 1.19%.
2) Amount represents the write-off of the unamortized discount on the converted
debt and the write-off of the unamortized beneficial conversion feature on the
warrants attached to the converted debt.
3) Amount represents the loss realized on conversion of $2.8125 million of 12%
Convertible Notes into Common Stock on a pro forma basis, assuming the
conversion took place on April 1, 2003 (original conversion price of $1.00), in
accordance with SFAS No. 84. The actual loss will be based on the market price
on the date of the actual conversion.
4) Amount represents the elimination of cash and noncash interest on $2.8125
million of converted debt.
5) Common stock exchanged for the retirement of $2.8125 million of 12%
Convertible Notes.
10
Debt Conversion Summary
Assuming $5.625 million Assuming $2.8125 million
participate in the Exchange Offer participate in the Exchange Offer
--------------------------------- ---------------------------------
Conversion will result in the following one-time charges to operations at conversion date:
Conversion expense $ 3,375,000 $ 1,687,500
Warrant expense 88,201 44,100
Write-off of unamortized
debt discount 789,133 394,567
Write-off of unamortized
beneficial conversion feature 789,063 394,532
--------------------------------- ---------------------------------
Total: $ 5,041,397 $ 2,520,699
================================= =================================
Conversion will result in the following net increase to equity:
Additional common stock $ 14,063 $ 7,031
Additional paid-in capital 9,081,845 4,540,923
Less charges to retained earnings (5,041,397) (2,520,699)
--------------------------------- ---------------------------------
Total: $ 4,054,511 $ 2,027,255
================================= =================================
Conversion will result in the following cash and noncash annual interest savings:
Cash $ 665,748 $ 332,874
Noncash 222,468 111,234
--------------------------------- ---------------------------------
Total: $ 888,216 $ 444,108
================================= =================================
Conversion will result in the issuance of the following number of shares:
Common stock Total: 14,062,500 7,031,250
================================= =================================
Note:
These amounts were calculated as if the conversion occurred on 3/29/05 using an
assumed closing price of Common Stock on March 29, 2005 of $0.40 per share.
Actual amounts for the warrant and conversion expenses will depend on the fair
market price of the stock using the closing price on the date of consummation of
the Exchange Offer.
11
RISK FACTORS
You should carefully consider the risks described below. The risks and
uncertainties described below are not the only ones we face. If any of the
following risks actually occur, our business, financial condition or results of
operations could be materially and adversely affected. In that case, the trading
price of our common stock could be adversely affected.
RISKS SPECIFIC TO THIS EXCHANGE OFFER
THERE ARE GREATER FINANCIAL RISKS ASSOCIATED WITH THE OWNERSHIP OF COMMON STOCK
THAN WITH OWNERSHIP OF DEBT INSTRUMENTS.
In the event of our dissolution or the liquidation of our assets, under
Delaware law, our obligations to creditors under its debt instruments, such as
the Notes, receive priority in the distribution of our assets. If any assets are
remaining after distribution to such creditors, then only those remaining assets
may be distributed pro rata to the holders of our Common Stock.
THERE ARE RISKS ASSOCIATED WITH THE CONCENTRATED OWNERSHIP OF OUR COMMON STOCK.
Any sales of substantial amounts of our Common Stock in the public market,
or the perception that such sales might occur, could lower the price of our
Common Stock. We have entered into a registration rights agreement with various
holders of our common stock, including the 1,634,550 shares that were issued as
a part of a recent senior debt offering. Those registration rights could cause
us to file a registration statement, which would allow the holders to freely
sell our shares on the open market at an undetermined point in the future.
THERE ARE RISKS ASSOCIATED WITH NOT CONVERTING THE NOTES INTO COMMON STOCK. WE
MAY BE UNABLE TO MEET OUR PAYMENT OBLIGATIONS ON THE NOTES AT MATURITY.
If $5,625,00 in aggregate principal amount of the outstanding Notes are not
tendered in the Exchange Offer, then the Company may not be able to pay the
amounts due on the outstanding Notes as they mature.
OUR CONTINUED OPERATIONS ARE SUBJECT TO A NUMBER OF RISKS WHICH MAY AFFECT THE
PRICE OF OUR COMMON STOCK IN THE FUTURE.
WE HAVE A LIMITED OPERATING HISTORY, WHICH MAKES IT DIFFICULT TO EVALUATE OUR
BUSINESS.
We have a limited operating history in the Web conferencing and audio
conferencing business. While the organizations that we have acquired have been
engaged in their respective business for over five years, we only recently
acquired those assets and have undertaken to integrate their assets into our
operations at varying levels. Since the acquisition of these businesses, we have
made significant changes to our product mix and service mix, our growth
strategies, our sales and marketing plans, and other operational matters. As a
result, it may be difficult to evaluate an investment in our company. Given our
recent investment in technology, we cannot be certain that our business model
and future operating performance will yield the results that we intend. In
addition, the competitive and rapidly changing nature of the Web conferencing
and audio conferencing markets makes it difficult for us to predict future
results. Our business strategy may be unsuccessful and we may be unable to
address the risks we face.
WE FACE RISKS INHERENT IN INTERNET-RELATED BUSINESSES AND MAY BE UNSUCCESSFUL IN
ADDRESSING THESE RISKS.
We face risks frequently encountered by companies in new and rapidly
evolving markets such as Web conferencing and audio conferencing. We may fail to
adequately address these risks and, as a consequence, our business may suffer.
To address these risks among others, we must successfully introduce and attract
new customers to our products and services; successfully implement our sales and
marketing strategy to generate sufficient sales and revenues to achieve or
sustain operations; foster existing relationships with our existing customers to
provide for continued or recurring business and cash flow; and, successfully
address and establish new products and technologies as new markets develop. We
may not be able to sufficiently access, address and overcome risks inherent in
our business strategy.
12
OUR QUARTERLY OPERATING RESULTS ARE UNCERTAIN AND MAY FLUCTUATE SIGNIFICANTLY.
Our operating results have varied significantly from quarter to quarter and
are likely to continue to fluctuate as a result of a variety of factors, many of
which we cannot control. Factors that may adversely affect our quarterly
operating results include: the size and timing of product orders; the mix of
revenue from custom services and software products; the market acceptance of our
products and services; our ability to develop and market new products in a
timely manner and the market acceptance of these new products; the timing of
revenues and expenses relating to our product sales; and, the timing of revenue
recognition. Expense levels are based, in part, on expectations as to future
revenue and to a large extent are fixed in the short term. To the extent we are
unable to predict future revenue accurately, we may be unable to adjust spending
in a timely manner to compensate for any unexpected revenue shortfall.
WE HAVE SIGNIFICANT OPERATING LOSSES, HAVE LIMITED FINANCIAL RESOURCES, AND MAY
NOT BECOME PROFITABLE.
We have incurred substantial operating losses and have limited financial
resources at our disposal. We have long-term obligations that we will not be
able to satisfy without additional debt and/or equity capital and/or ultimately
generating profits and cash flows from our Web conferencing and audio
conferencing operations. If we are unable to achieve profitability in the near
future, we will face increasing demands for capital and liquidity. We may not be
successful in raising additional debt or equity capital and may not become
profitable in the short term or not at all. As a result, we may not have
sufficient financial resources to satisfy our obligations as they come due in
the short term including quarterly payments of the interest on the Notes.
OUR AUDITORS HAVE EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A
GOING CONCERN.
Our consolidated financial statements have been prepared on a basis which
assumes that we will continue as a going concern and which contemplates the
realization of our assets and the satisfaction of our liabilities and
commitments in the normal course of business. We have a significant working
capital deficiency, and have historically suffered substantial recurring losses
and negative cash flows from operations. These factors, among others, and the
limited operating history as a Web conferencing and audio conferencing company
have caused our auditors to conclude in their report regarding our most recent
audited financial statements that there is substantial doubt as to our ability
to continue as a going concern. Our plans with regard to these factors include
continued development, marketing and licensing of our Web Conferencing and audio
conferencing products and services through both internal growth and acquisition.
Although we continue to pursue these plans, there is no assurance that we will
be successful in obtaining sufficient revenues from our products and services to
provide adequate cash flows to sustain operations. Our continuation is dependent
on our ability to raise additional equity or debt capital, to increase our Web
conferencing and audio conferencing revenues, to generate positive cash flows
from operations and to achieve profitability. The consolidated financial
statements do not include any adjustments related to the recoverability of
assets and classification of liabilities that might result from the outcome of
this uncertainty.
LISTING QUALIFICATIONS MAY NOT BE MET.
The American Stock Exchange's continued listing standards require that the
Company maintain stockholder's equity of at least $4.0 million if the Company
has losses from continuing operations and/or net losses in three of its four
most recent fiscal years. While the Company has sustained losses in three of its
four most recent fiscal years it has as of the date of this report stockholder's
equity in excess of the $4.0 million requirement. If in the future, the Company
fails to maintain a sufficient level of stockholder's equity in compliance with
those and other listing standards of the American Stock Exchange then the
Company would be required to submit a plan to the American Stock Exchange
describing how it intended to regain compliance with the requirements.
DILUTION TO EXISTING STOCKHOLDERS IS LIKELY TO OCCUR UPON ISSUANCE OF SHARES WE
HAVE RESERVED FOR FUTURE ISSUANCE.
On December 31, 2004, 25,578,350 shares of our common stock were issued, of
which 1,432,412 were held in treasury, and 21,066,512 additional shares of our
common stock were reserved for issuance. The issuance of additional shares of
common stock in the Exchange Offer will reduce the percentage ownership of
existing stockholders in the Company. The existence of these reserved shares
coupled with other factors, such as the relatively small public float, could
adversely affect prevailing market prices for our common stock and our ability
to raise capital through an offering of equity securities.
THE LOSS OF THE SERVICES OF OUR SENIOR EXECUTIVES AND KEY PERSONNEL WOULD LIKELY
CAUSE OUR BUSINESS TO SUFFER.
Our success depends to a significant degree on the performance of our
senior management team. The loss of any of these individuals could harm our
business. We do not maintain key person life insurance for any officers or key
employees other than on the life of James M. Powers, Jr., our Chairman,
President and CEO, with that policy providing a death benefit to the Company of
$1.0 million. Our success also depends on the ability to attract, integrate,
motivate and retain additional highly skilled technical, sales and marketing,
and professional services personnel. To the extent we are unable to attract and
retain a sufficient number of additional skilled personnel, our business will
suffer.
13
OUR INTELLECTUAL PROPERTY MAY BECOME SUBJECT TO LEGAL CHALLENGES, UNAUTHORIZED
USE OR INFRINGEMENT, ANY OF WHICH COULD DIMINISH THE VALUE OF OUR PRODUCTS AND
SERVICES.
Our success depends in large part on our proprietary technology. If we fail
to successfully enforce our intellectual property rights, the value of these
rights, and consequently the value of our products and services to our
customers, could diminish substantially. It may be possible for third parties to
copy or otherwise obtain and use our intellectual property or trade secrets
without our authorization, and it may also be possible for third parties to
independently develop substantially equivalent intellectual property. Currently,
we do not have patent protection in place related to our products and services.
Litigation may be necessary in the future to enforce our intellectual property
rights, to protect trade secrets or to determine the validity and scope of the
proprietary rights of others. While we have not received any notice of any claim
of infringement of any of our intellectual property, from time to time we may
receive notice of claims of infringement of other parties' proprietary rights.
Such claims could result in costly litigation and could divert management and
technical resources. These types of claims could also delay product shipment or
require us to develop non-infringing technology or enter into royalty or
licensing agreements, which agreements, if required, may not be available on
reasonable terms, or at all.
COMPETITION IN THE WEB CONFERENCING AND AUDIO CONFERENCING SERVICES MARKET IS
INTENSE AND WE MAY BE UNABLE TO COMPETE SUCCESSFULLY, PARTICULARLY AS A RESULT
OF RECENT ANNOUNCEMENTS FROM LARGE SOFTWARE COMPANIES.
The markets for Web conferencing and audio conferencing products and
services are relatively new, rapidly evolving and intensely competitive.
Competition in our market will continue to intensify and may force us to reduce
our prices, or cause us to experience reduced sales and margins, loss of market
share and reduced acceptance of our services. Many of our competitors have
larger and more established customer bases, longer operating histories, greater
name recognition, broader service offerings, more employees and significantly
greater financial, technical, marketing, public relations and distribution
resources than we do. We expect that we will face new competition as others
enter our market to develop Web conferencing and audio conferencing services.
These current and future competitors may also offer or develop products or
services that perform better than ours. In addition, acquisitions or strategic
partnerships involving our current and potential competitors could harm us in a
number of ways.
FUTURE REGULATIONS COULD BE ENACTED THAT EITHER DIRECTLY RESTRICT OUR BUSINESS
OR INDIRECTLY IMPACT OUR BUSINESS BY LIMITING THE GROWTH OF INTERNET-BASED
BUSINESS AND SERVICES.
As commercial use of the Internet increases, federal, state and foreign
agencies could enact laws or adopt regulations covering issues such as user
privacy, content and taxation of products and services. If enacted, such laws or
regulations could limit the market for our products and services. Although they
might not apply to our business directly, we expect that laws or rules
regulating personal and consumer information could indirectly affect our
business. It is possible that such legislation or regulation could expose us to
liability which could limit the growth of our Web conferencing and audio
conferencing products and services. Such legislation or regulation could dampen
the growth in overall Web conferencing usage and decrease the Internet's
acceptance as a medium of communications and commerce.
WE DEPEND LARGELY ON ONE-TIME SALES TO GROW REVENUES WHICH MAKE OUR REVENUES
DIFFICULT TO PREDICT.
While audio conferencing provides a more recurring revenue base, a high
percentage of our revenue is attributable to one-time purchases by our customers
rather than long term recurring conferencing ASP type contracts. As a result,
our inability to continue to obtain new agreements and sales may result in lower
than expected revenue, and therefore, harm our ability to achieve or sustain
operations or profitability on a consistent basis, which could also cause our
stock price to decline. Further, because we face competition from larger
better-capitalized companies, we could face increased downward pricing pressure
that could cause a decrease in our gross margins. Additionally, our sales cycle
varies depending on the size and type of customer considering a purchase.
Potential customers frequently need to obtain approvals from multiple decision
makers within their company and may evaluate competing products and services
before deciding to use our services. Our sales cycle, which can range from
several weeks to several months or more, combined with the license purchase
model makes it difficult to predict future quarterly revenues.
OUR OPERATING RESULTS MAY SUFFER IF WE FAIL TO DEVELOP AND FOSTER OUR VALUE
ADDED RESELLER OR DISTRIBUTION RELATIONSHIPS.
We have an existing channel and distribution network that provides growing
revenues and contributes to our high margin software sales. These distribution
partners are not obligated to distribute our services at any particular minimum
level. As a result, we cannot accurately predict the amount of revenue we will
derive from our distribution partners in the future. The inability of our
distribution partners to sell our products to their customers and increase their
distribution of our products could result in significant reductions in our
revenue, and therefore, harm our ability to achieve or sustain profitability on
a consistent basis.
14
SALES IN FOREIGN JURISDICTIONS BY US AND OUR INTERNATIONAL DISTRIBUTOR NETWORK
MAY CAUSE COSTS THAT ARE NOT ANTICIPATED.
We continue to expand internationally through our value added reseller
network and OEM partners. We have limited experience in international operations
and may not be able to compete effectively in international markets. We face
certain risks inherent in conducting business internationally, such as:
o our inability to establish and maintain effective distribution
channels and partners;
o the varying technology standards from country to country;
o our inability to effectively protect our intellectual property rights
or the code to our software;
o our inexperience with inconsistent regulations and unexpected changes
in regulatory requirements in foreign jurisdictions;
o language and cultural differences;
o fluctuations in currency exchange rates;
o our inability to effectively collect accounts receivable; or
o our inability to manage sales and other taxes imposed by foreign
jurisdictions.
THE GROWTH OF OUR BUSINESS SUBSTANTIALLY DEPENDS ON OUR ABILITY TO SUCCESSFULLY
DEVELOP AND INTRODUCE NEW SERVICES AND FEATURES IN A TIMELY MANNER.
We acquired our Web conferencing software and business in November 2002 and
we acquired our audio conferencing business in June 2004. With our focus on
those products and services, our growth depends on our ability to continue to
develop new features, products and services around that software and product
line. We may not successfully identify, develop and market new products and
features in a timely and cost-effective manner. If we fail to develop and
maintain market acceptance of our existing and new products to offset our
continuing development costs, then our net losses will increase and we may not
be able to achieve or sustain profitability on a consistent basis.
IF WE FAIL TO OFFER COMPETITIVE PRICING, WE MAY NOT BE ABLE TO ATTRACT AND
RETAIN CUSTOMERS.
Because the Web conferencing market is relatively new and still evolving,
the prices for these services are subject to rapid and frequent changes. In many
cases, businesses provide their services at significantly reduced rates, for
free or on a trial basis in order to win customers. Due to competitive factors
and the rapidly changing marketplace, we may be required to significantly reduce
our pricing structure, which would negatively affect our revenue, margins and
our ability to achieve or sustain profitability on a consistent basis. We have
an existing channel and distribution network that provides growing revenues and
contributes to our high margin software sales. These distribution partners are
not obligated to distribute our services at any particular minimum level. As a
result, we cannot accurately predict the amount of revenue we will derive from
our distribution partners in the future. Our inability of our distribution
partners to sell our products to their customers and increase their distribution
of our products could result in significant reductions in our revenue, and
therefore, harm our ability to achieve or sustain profitability on a consistent
basis.
IF WE ARE UNABLE TO COMPLETE OUR ASSESSMENT AS TO THE ADEQUACY OF OUR INTERNAL
CONTROLS OVER FINANCIAL REPORTING AS REQUIRED BY SECTION 404 OF THE
SARBANES-OXLEY ACT OF 2002, INVESTORS COULD LOSE CONFIDENCE IN THE RELIABILITY
OF OUR FINANCIAL STATEMENTS, WHICH COULD RESULT IN A DECREASE IN THE VALUE OF
OUR COMMON STOCK.
As directed by Section 404 of the Sarbanes-Oxley of 2002, the Securities
and Exchange Commission adopted rules requiring public companies to include in
their annual reports on Form 10-K a report of management on the company's
internal control over financial reporting, including management's assessment of
the effectiveness of the company's internal control over financial reporting as
of the company's fiscal year end. In addition, the accounting firm auditing a
public company's financial statements must also attest to and report on
management's assessment of the effectiveness of the company's internal control
over financial reporting as well as the operating effectiveness of the company's
internal controls. There is a risk that we may not comply with all of its
requirements. If we do not timely complete our assessment or if our internal
controls are not designed or operating effectively as required by Section 404,
our accounting firm may either disclaim an opinion as it related to management's
assessment of the effectiveness of its internal controls or may issue a
qualified opinion on the effectiveness of the company's internal controls. If
our accounting firm disclaims its opinion or qualifies its opinion as to the
effectiveness of our internal controls, then investors may lose confidence in
the reliability of our financial statements, which could cause the market price
of our common stock to decline.
15
WE MAY ACQUIRE OTHER BUSINESSES THAT COULD NEGATIVELY AFFECT OUR OPERATIONS AND
FINANCIAL RESULTS AND DILUTE EXISTING STOCKHOLDERS.
We may pursue additional business relationships through acquisition which
may not be successful. We may have to devote substantial time and resources in
order to complete acquisitions we therefore may not realize the benefits of
those acquisitions. Further, these potential acquisitions entail risks,
uncertainties and potential disruptions to our business. For example, we may not
be able to successfully integrate a company's operations, technologies, products
and services, information systems and personnel into our business. These risks
could harm our operating results and could cause our stock price to decline.
OUR CURRENT STOCK COMPENSATION EXPENSE NEGATIVELY IMPACTS OUR EARNINGS, AND WHEN
WE ARE REQUIRED TO REPORT THE FAIR VALUE OF EMPLOYEE STOCK OPTIONS AS AN EXPENSE
IN CONJUNCTION WITH THE NEW ACCOUNTING STANDARDS, OUR EARNINGS WILL BE ADVERSELY
AFFECTED, WHICH MAY CAUSE OUR STOCK PRICE TO DECLINE.
Under our current accounting practice, stock compensation expense is
recorded on the date of the grant only if the current market price of the
underlying stock exceeds the exercise price. Beginning with the fiscal quarter
ended September 30, 2005, we will be required to report all employee stock
options as an expense based on a change in the accounting standards our earnings
will be negatively impacted, which may cause our stock price to decline and
increase our anticipated net losses.
CAUTION AS TO FORWARD - LOOKING STATEMENTS
Statements contained in this Exchange Offer that involve words like
"anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates"
and similar expressions are intended to identify forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995, the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended. These are statements that relate to future periods and include, but are
not limited to, statements as to our ability to: sell our products and services;
improve the quality of our software; derive overall benefits of our products and
services; introduce new products and versions of our existing products; sustain
and increase revenue from existing products; integrate current and emerging
technologies into our product offerings; control our expenses including those
related to sales and marketing, research and development, and general and
administrative expenses; control changes in our customer base; support our
customers and provide sufficient technological infrastructure; obtain sales or
increase revenues; impact the results of legal proceedings; control and
implement changes in our employee headcount; obtain sufficient cash flow; manage
liquidity and capital resources; realize positive cash flow from operations; or
realize net earnings.
Such forward-looking statements involve certain risks and uncertainties
that could cause actual results to differ materially from anticipated results.
These risks and uncertainties include, but are not limited to, our dependence on
our products or services, market demand for our products and services, our
ability to attract and retain customers and channel partners, our ability to
expand our technological infrastructure to meet the demand from our customers,
our ability to recruit and retain qualified employees, the ability of channel
partners to successfully resell our products, the status of the overall economy,
the strength of competitive offerings, the pricing pressures created by market
forces, and the risks discussed herein. All forward-looking statements included
in this Exchange Offer are based on information available to us as of the date
hereof. We expressly disclaim any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements contained herein, to
reflect any change in our expectations or in events, conditions or circumstances
on which any such statement is based. Readers are urged to carefully review and
consider the various disclosures made in this report and in our other reports
filed with the SEC that attempt to advise interested parties of certain risks
and factors that may affect our business.
A copy of the annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and all amendments to those reports are available
free of charge on our Web site found at www.ilinc.com, as soon as reasonably
practical after such material is electronically filed with the Securities and
Exchange Commission.
MANAGEMENT
The following is information about the Company's current directors and
executive officers:
NAME AGE POSITION
---- --- --------
James M. Powers, Jr. 49 Chairman of the Board, President and Chief
Executive Officer
James H. Collins 58 Director
Daniel T. Robinson, Jr. 44 Director
Kent Petzold 58 Director
Craig W. Stull 54 Director
James L. Dunn, Jr. 43 Sr. Vice President and General Counsel
John S. Hodgson 53 Sr. Vice President and Chief Financial Officer
Nathan Cocozza 32 Sr. Vice President of Sales
16
For purposes of this Exchange Offer, the business address for each of these
individuals is 2999 N. 44th Street, Suite 650, Phoenix, Arizona 85018.
REASONS FOR THE EXCHANGE OFFER
We are making this offer to significantly strengthen our capitalization.
This exchange will result in the conversion of up to $5,625,000 million of debt
into equity. Assuming holders of a substantial principal amount of the Notes
accept the Exchange Offer our strengthened balance sheet will (i) sharply reduce
the amount of debt maturities that we are required to repay, (ii) eliminate up
to approximately $900,000 in annual cash and non-cash interest expense and (iii)
likely improve our access to the capital markets. Our improved financial
flexibility should better position us to capitalize on the continued strength in
our business. The Exchange Offer will provide you with the opportunity to
receive significantly more shares of Common Stock than you are currently
entitled to under the Notes. Absent the Exchange Offer, each $1,000 portion of
original principal amount of the Notes is convertible into 1,000 shares of
Common Stock. However, we are offering to exchange 2,500 shares of Common Stock
for each $1,000 of original principal amount of the Notes and the $3.00 Warrant
Amendments.
USE OF PROCEEDS
There will not be any cash proceeds from the exchange of Common Stock for
Notes. Notes surrendered in exchange for shares of Common Stock will be retired
and cancelled and cannot be reissued.
THE EXCHANGE OFFER
ORIGINAL PRIVATE PLACEMENT OF NOTES
In March of 2002, the Company completed a private placement offering (the
"Private Placement") raising $5,775,000. For an investment of $50,000, the
Company issued a unit consisting of a convertible subordinated promissory note
with an original principal amount of $50,000 and a warrant to purchase 50,000
shares of Common Stock (a "Unit"). The convertible subordinated promissory notes
bear interest at 12% per annum payable quarterly, with the principal due March
29, 2012. The original terms of the notes permitted the holders to convert the
principal amount of the Notes into shares of Common Stock at the fixed price of
$1.00 per share. The Company may force conversion of the Notes into shares of
the Company's common stock at the conversion price if the closing price of
Common Stock equals or exceeds $3.00 per share for 20 consecutive trading days.
The Notes are unsecured and are subordinated to any present or future senior
indebtedness. The Company sold a total of 115.5 Units and accordingly the
Company issued warrants to purchase 5,775,000 shares of Common Stock. The
Company may force exercise of the warrants at the exercise price, if the closing
price of Common Stock equals or exceeds $5.50 per share for 20 consecutive
trading days. The $3.00 Warrants currently expire on March 29, 2005. During the
fiscal year ended March 31, 2004, holders of $150,000 original principal amount
of Notes converted those Notes into 150,000 shares of Common Stock and no
Warrants have been exercised.
GENERAL TERMS
Subject to the terms and conditions of the Exchange Offer, we will issue
shares of Common Stock and the $3.00 Warrant Amendments in exchange for up to
$5,625,000 aggregate principal amount of Notes, representing 100% of the
outstanding principal amount of Notes, that are properly tendered and not
withdrawn prior to the expiration of the Exchange Offer. Under the existing
terms of the Notes, each $1,000 original principal amount of the Notes currently
is convertible at the option of the holder into 1,000 shares of Common Stock.
The last reported sale price of the Company's Common Stock on February 28, 2005,
the last trading day prior to the establishment of the exchange ratio of Common
Stock for Notes in this Exchange Offer, was $0.39 per share. The 52-week range
of the closing sales price of Common Stock for the period ending the date of
this document is $1.37 to $0.35 per share. Each Noteholder must elect to
exchange its Note either in its entirety or, if less than the full face value,
in increments of $25,000.
As a part of a private placement in 2002 of the Notes, the investor's
purchased units consisting of Notes and $3.00 Warrants to purchase one share of
Common Stock for each $1.00 original principal amount of Notes purchased. The
$3.00 Warrants currently expire on March 29, 2005. The Noteholders who
participate in this Exchange Offer will receive, in addition to the
17
aforementioned shares of Common Stock, an extension of the exercise period of
their $3.00 Warrants to March 29, 2006, the exercise price will be reduced to
$1.20 per share and the redemption price will be reduced to $2.40 per share (the
"$3.00 Warrant Amendments"). Should a Noteholder decline to participate in this
Exchange Offer, the exercise period of their $3.00 Warrants will expire on their
terms on March 29, 2005. Should a Noteholder elect to exchange a portion of his
or her Notes, then the $3.00 Warrant Amendments will apply only for a
corresponding portion of their $3.00 Warrants (such number of shares underlying
the $3.00 Warrants equal to the same percentage of the total original principal
amount of Notes held by a Noteholder represented by the amount of original
principal amount of Notes exchanged by such Noteholder in this Exchange Offer).
PARTIAL EXCHANGE PERMITTED
A Noteholder may tender any portion of the Notes by instruction contained
in the Letter of Transmittal. If the amount of the Notes to be converted is less
than the full principal amount of the Notes held by any Noteholder, then the
Company will exchange that portion of the Note and will issue a replacement note
or modify the existing note for the balance of the principal portion not
exchanged in this Exchange Offer. Other than the principal amount of the Note,
the terms and conditions of the re-issued note will remain the same, including
the interest rate and the maturity date. All non-exchanged Notes and all
re-issued Notes will be maintained on the books of the Company.
If a Noteholder elects to exchange only a portion of the principal amount
of his or her Note then the amount exchanged must be in increments of at least
$25,000. Should a Noteholder elect to exchange only a portion of their Note,
then (i) its Note will be modified to reduce the principal amount of the Note by
the amount exchanged, and the remaining balance shall remain outstanding on the
same terms; and, (ii) a portion of their $3.00 Warrants will be amended to
extend the exercise period of its $3.00 Warrants until March 29, 2006, the
exercise price will be reduced to $1.20 per share and the redemption price will
be reduced to $2.40 per share (such number of shares underlying the $3.00
Warrants equal to the same percentage of the total original principal amount of
Notes held by a Noteholder represented by the amount of original principal
amount of Notes exchanged by such Noteholder in this Exchange Offer). By way of
example but not limitation, if an investor who had invested $100,000 in the
Private Placement (receiving a $100,000 Note and Warrant for 100,000 shares),
elects to exchange only $75,000 of that Note's original principal amount, then
(i) the principal amount of that Note will be reduced to $25,000 and (ii) $3.00
Warrants to acquire 75,000 shares of Common Stock will be amended to extend the
exercise period to March 29, 2006 and to reduce the exercise price to $1.20 per
share.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., Eastern Standard Time, on
Friday, March 29, 2005, unless and until we extend the period of time during
which the Exchange Offer will remain open, in which event the term "Expiration
Date" shall refer to the latest time and date at which the Exchange Offer, as so
extended by the Company, shall expire.
We expressly reserve the absolute right, in our sole discretion, to delay
accepting any Notes, to extend the Exchange Offer or, if in our reasonable
judgment, any of the conditions described below are not satisfied, to terminate
the Exchange Offer or waive any condition set forth in the Exchange Offer, by
giving oral or written notice of this delay, extension, termination or waiver to
Noteholder. We expressly reserve the absolute right, in our sole discretion, to
amend the terms of the Exchange Offer in any manner provided that any such
amendment will be followed as promptly as practicable by a public announcement
thereof; and to terminate the Exchange Offer and not accept for exchange Notes
tendered pursuant thereto.
Any waiver, amendment or modification will apply to all Notes tendered,
regardless of when or in what order such Note was tendered. Any extension or
termination of the Exchange Offer or any amendment or modification of the terms
set forth in the Exchange Offer, will be followed as promptly as practicable by
public announcement thereof, such announcement in the case of an extension to be
issued no later than 9:00 a.m., Eastern Standard Time, on the next business day
after the previously scheduled Expiration Date, unless otherwise required by
applicable law or regulation. If the Exchange Offer is amended in a manner
determined by us to constitute a material change, we will promptly disclose such
amendment by means of an Exchange Offer supplement that will be distributed to
all Noteholders. In addition, we will extend the Exchange Offer for a period of
five to ten business days, depending upon the significance of the amendment and
the manner of disclosure to the registered holders, if the Exchange Offer would
otherwise expire during such five to ten business day period. Without limiting
the manner in which we may choose to make a public announcement of any delay,
extension, termination or amendment of the Exchange Offer, we have no obligation
to publish, advertise or otherwise communicate any such public announcement,
other than by issuing a timely press release.
CONDITIONS
Notwithstanding any other provision of this Exchange Offer or the Letter of
Transmittal, we will not be required to accept for exchange Notes tendered
pursuant to the Exchange Offer and may terminate, extend or amend the Exchange
Offer if:
18
a. any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange
Offer which, in our reasonable judgment, will materially impair our
ability to proceed with the Exchange Offer or materially impair the
contemplated benefits of the Exchange Offer to us;
b. any change or any development involving a prospective change in our
business, stock price or our financial affairs has occurred which, in
our reasonable judgment, makes it impossible to proceed with the
Exchange Offer without violating contractual agreements or impair the
contemplated benefits of the Exchange Offer to us;
c. any law, statute, rule or regulation is proposed, adopted or enacted,
which, in our reasonable judgment, might materially impair our ability
to proceed with the Exchange Offer or materially impair the
contemplated benefits of the Exchange Offer to us; or
d. any governmental approval has not been obtained, which approval we, in
our reasonable discretion, shall deem necessary for the consummation
of the Exchange Offer as contemplated hereby.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us in whole or in part at any time and from time to time in our sole
discretion. Our failure at any time to exercise any of the foregoing rights
shall not be deemed a waiver of the respective right and each of these rights
shall be deemed an ongoing right which may be asserted at any time and from time
to time. However, all conditions to the Exchange Offer, other than those subject
to applicable law, shall be satisfied or waived on or before the Expiration
Date.
If we determine in our reasonable discretion that any of the conditions are
not satisfied, up until the Expiration Date, we may:
a. refuse to accept Notes and return all tendered Notes to the tendering
holders; extend the Exchange Offer and retain all Notes tendered prior
to the Expiration of the Exchange Offer, subject, however, to the
rights of holders to withdraw their tendered shares (see "Withdrawal
of Tenders"); or
b. waive the unsatisfied conditions with respect to the Exchange Offer
and accept all properly tendered Notes which have not been withdrawn.
If such waiver constitutes a material change to the Exchange Offer, we will
promptly disclose this waiver by means of an Exchange Offer supplement that will
be distributed to the record holders of Notes. We also will extend the Exchange
Offer for a period of five to ten business days, depending upon the significance
of the waiver and the manner of disclosure to the record holders, if the
Exchange Offer would otherwise expire during such five to ten business day
period.
PROCEDURES FOR TENDERING NOTES
A holder who wishes to tender Notes for exchange pursuant to the Exchange
Offer must transmit a properly completed and duly executed Letter of
Transmittal, or a facsimile thereof, and any other required documents, to the
Company prior to 5:00 p.m., Eastern Standard Time, on the Expiration Date. To be
tendered effectively, the Letter of Transmittal and other required documents
must be received by the Company prior to 5:00 p.m., Eastern Standard Time, on
the Expiration Date.
THE METHOD OF DELIVERY OF CONFIRMATIONS, LETTERS OF TRANSMITTAL, AND ALL
OTHER REQUIRED DOCUMENTS IS AT YOUR ELECTION. IN ALL CASES, YOU SHOULD ALLOW
SUFFICIENT TIME TO ASSURE TIMELY DELIVERY. PLEASE SEND NOTES, LETTERS OF
TRANSMITTAL TO THE COMPANY, AT THE ADDRESSES SET FORTH ON THE BACK COVER PAGE OF
THIS OFFER
We will determine all questions as to the validity, form, eligibility,
including time of receipt, acceptance and withdrawal of tendered Notes in our
sole discretion, which determination shall be final and binding. We reserve the
absolute right to reject any and all Notes not properly tendered or any Notes,
our acceptance of which would, in the opinion of our counsel, be unlawful. We
also reserve the right to waive any defects, irregularities or conditions of
tender as to particular Notes. Our interpretation of the terms and conditions of
the Exchange Offer, including the instructions in the Letter of Transmittal,
shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with the tender of Notes must be cured within the
time as we shall determine. Neither we nor any other person shall incur any
liability for failure to give notice of any defect or irregularity with respect
to any tender of Notes. Tenders of Notes will not be deemed to have been made
until such defects or irregularities have been cured or waived. Any Notes
received by the Company that are not properly tendered and as to which the
defects or irregularities have not been cured or waived will not be deemed to
have been properly tendered. Any Notes received by the Company that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned to the tendering noteholder, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
19
ACCEPTANCE OF NOTES FOR EXCHANGE
For purposes of the Exchange Offer, we shall be deemed to have accepted
properly tendered Notes for exchange when, as and if we have given oral or
written notice thereof to the Note Holder. In all cases, the issuance of shares
of Common Stock for Notes that are accepted for exchange pursuant to the
Exchange Offer will be made only after timely receipt by the Note Holder of a
timely confirmation of the Notes receipt, a properly completed and duly executed
Letter of Transmittal and all other required documents. If any tendered Notes
are not accepted for any reason set forth in the terms and conditions of the
Exchange Offer these unaccepted or non-exchanged Notes will be returned without
expense to the tendering Holder of these Notes.
DELIVERY OF SHARES OF COMMON STOCK
For each $1,000 principal amount of outstanding Notes accepted for exchange
in the Exchange Offer, the tendering holder will receive 2,500 shares of the
Company's Common Stock and the $3.00 Warrant Amendments. The shares representing
the Common Stock will be issued, and the $3.00 Warrant Amendment Agreement will
be signed by the Company, immediately following the closing of the Exchange
Offer and the shares will be listed with the American Stock Exchange.
WITHDRAWAL OF NOTES TENDERED
EXCEPT AS OTHERWISE PROVIDED HEREIN, TENDERS OF NOTES MAY BE WITHDRAWN AT
ANY TIME PRIOR TO 5:00 P.M., EASTERN STANDARD TIME, ON THE EXPIRATION DATE.
To withdraw a tender of Notes in the Exchange Offer, a written or facsimile
transmission notice of withdrawal must be received by the Company at its address
set forth herein prior to 5:00 p.m., Eastern Standard Time, on the Expiration
Date. Any notice of withdrawal must:
a. specify the name of the person having deposited the Note to be
withdrawn (the "Depositor");
b. identify the principal amount of Notes to be withdrawn; and,
c. be signed by the noteholder in the same manner as the original
signature on the Letter of Transmittal by which Notes were tendered.
In all events, holders have the right to withdraw their Notes after the
expiration of 40 business days from the commencement of the Exchange Offer if
not accepted for exchange. Any notice of withdrawal must specify the name and
principal amount and note reference number. We will determine in our sole
discretion all questions as to the validity, form and eligibility (including
time of receipt) of those notices, which determination shall be final and
binding on all parties. Any Notes so withdrawn will be deemed not to have been
validly tendered for purposes of the Exchange Offer and no Common Stock will be
issued with respect thereto, unless the Notes so withdrawn are validly
re-tendered. Properly withdrawn Notes may be re-tendered by following one of the
procedures described above. Any Notes which have been tendered but which are not
accepted due to withdrawal, rejection of tender or termination of the Exchange
Offer will be returned promptly to the holder of the Notes, without cost to the
noteholder by crediting the Notes to an account maintained with such book-entry
transfer facility for the Notes.
EXTENSION OF THE EXCHANGE OFFER; TERMINATION; AMENDMENT
We expressly reserve the right, in our sole discretion, at any time and
from time to time, to extend the period of time during which the Exchange Offer
is open and thereby delay acceptance for exchange of, and exchange for, any
shares by giving oral or written notice of such extension to the Noteholders and
making a public announcement thereof. We also expressly reserve the right, in
our sole discretion, to terminate the Exchange Offer and not accept for exchange
any shares not theretofore accepted for exchange or exchanged for or, subject to
applicable law, to postpone exchange for shares upon conditions specified in a
written notice of such termination or postponement to the Depositary and making
a public announcement thereof. Our reservation of the right to delay exchange
for shares which we have accepted for payment is limited by Rule 13e-4(f)(5)
promulgated under the Exchange Act, which requires that we must pay the
consideration offered or return the shares tendered promptly after termination
or withdrawal of an exchange offer. Subject to compliance with applicable law,
we further reserve the right, in our sole discretion, to amend the Exchange
Offer in any respect (including, without limitation, by decreasing or increasing
the consideration offered in the Exchange Offer to holders of shares or by
decreasing or increasing the number of shares being sought in the Exchange
Offer). Amendments to the Exchange Offer may be made at any time and from time
to time effected by public announcement thereof, such announcement, in the case
of an extension, to be issued no later than 9:00 a.m., Eastern Standard Time, on
the next business day after the last previously scheduled or announced
Expiration Date. Any public announcement made pursuant to the Exchange Offer
will be disseminated promptly to Noteholders in a manner reasonably designed to
inform the Noteholders of such change.
20
If we materially change the terms of the Exchange Offer or the information
concerning the Exchange Offer, we will extend the Exchange Offer to the extent
required by Rules 13e-4(d)(2) and 13e-4(e)(3) promulgated under the Exchange
Act. These rules provide that the minimum period during which an offer must
remain open following material changes in the terms of the Exchange Offer or
information concerning the Exchange Offer (other than a change in price or a
change in percentage of securities sought) will depend on the facts and
circumstances, including the relative materiality of such terms or information.
If (a) we increase or decrease the exchange rates for Notes or increase or
decrease the amount of Notes being sought in the Exchange Offer and, if an
increase in the amount of Notes being sought, exceeds 2% of the outstanding
Notes, and (b) the Exchange Offer is scheduled to expire at any time earlier
than the expiration of a period ending on the tenth business day from, and
including, the date that such notice of an increase, decrease or amendment is
first published, sent or given in the manner specified in this section, the
Exchange Offer will be extended until the expiration of such period of ten
business days.
ACCOUNTING TREATMENT
The exchange of Notes for shares of Common Stock will be treated as an
induced conversion for accounting purposes under accounting principles generally
accepted in the United States. In the period that the Notes are exchanged and
the Exchange Offer is consummated, and assuming a closing market price for the
Company's common stock of $0.40 per share on March 29, 2005, the Company will
incur additional conversion of $3,375,000, additional warrant amortization
expense of $88,201, a write off of the previous beneficial conversion feature
associated with the Notes of $789,063, and a write off of the previous
unamortized debt discount of $789,133, if all of the $5,625,000 in principal
balance participate in the exchange. Additionally, in the period that the Notes
are exchanged and the Exchange Offer is consummated, and assuming a closing
price of $0.40 per share, the Company will record an increase equity of
$4,054,511 if all of the $5,625,000 in principal balance participate in the
exchange. See "Unaudited Pro Forma Information."
REGULATORY APPROVALS
We do not believe that the receipt of any material federal or state
regulatory approvals will be necessary in connection with the Exchange Offer.
DESCRIPTION OF NOTES AND WARRANTS
In March 2002, the Company completed a private placement offering raising
$5,775,000 by issuing 115.5 Units, with each Unit consisting of a Note with a
principal amount of $50,000 and $3.00 Warrants to purchase 50,000 shares of
Common Stock. The convertible subordinated promissory notes bear interest at 12%
per annum payable quarterly, with the principal due March 29, 2012. The original
terms of the notes permitted the holders to convert the principal amount of the
Notes into shares of Common Stock at the fixed price of $1.00 per share. The
Company may force conversion of the Notes into shares of the Company's common
stock at the conversion price if the closing price of Common Stock equals or
exceeds $3.00 per share for 20 consecutive trading days. The Notes are unsecured
and are subordinated to any present or future senior indebtedness.
In addition to the Notes, the Company issued warrants (the "$3.00
Warrants") to purchase 5,775,000 shares of Common Stock with the exercise price
equal to $3.00 per share. The Company may force exercise of the $3.00 Warrants
at the exercise price, if at any time the closing price of the Company's common
stock equals or exceeds $5.50 per share for 20 consecutive trading days. The
warrants expire on March 29, 2005.
The fair value of the $3.00 Warrants was estimated using the Black-Scholes
pricing model with the following assumptions: contractual and expected life of
three years, volatility of 75%, dividend yield of 0%, and a risk-free rate of
3.87%. The fair value was then used to calculate a discount of $1,132,000, which
is being amortized as interest expense over the ten-year term of the Notes.
Since the carrying value of the Notes was less than the conversion value, a
beneficial conversion feature of $1,132,000 was calculated and recorded as an
additional discount to the Notes and is being amortized as interest expense over
the ten year term of the Notes. Upon conversion of the Notes, any remaining
discount associated with the beneficial conversion feature will be expensed in
full at the time of conversion.
During fiscal year 2004, holders of Notes with an original principal amount
of $150,000 converted their Notes into 150,000 shares of Common Stock leaving
Notes outstanding with an aggregate principal amount of $5,625,000. The resale
of the Common Stock underlying these Notes and the $3.00 Warrants was registered
under the Securities Act of 1933 and the underlying shares of Common Stock may
be sold if converted into Common Stock pursuant to a resale prospectus dated May
24, 2004. However, the registration statement to which the resale prospectus
relates will not be available if the Exchange Offer is consummated unless and
until it is amended to reflect the changes resulting from the Exchange Offer.
21
DESCRIPTION OF CAPITAL STOCK
The Company has authorized 110,000,000 shares of capital stock, consisting
of 100,000,000 shares of Common Stock and 10,000,000 shares of preferred stock.
The Company currently has 25,630,350 shares validly issued and outstanding,
consisting of 25,578,350 shares of Common Stock, par value $0.001 per share, and
150,000 shares of Series A Preferred Stock, par value $.001 per share (the
"Series A Preferred Stock"). The remaining shares of preferred stock may be
issued in such series and with such voting powers, designations, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as may be fixed from time to time by the
Board of Directors for each series. The following summary description of certain
provisions of the Company's Amended and Restated Certificate of Incorporation
(the "Certificate of Incorporation") and the By-laws does not purport to be
complete and is qualified in its entirety by reference to said provisions.
COMMON STOCK
Holders of the Common Stock are entitled to one vote per share and shall
vote together as a single class on all matters submitted to a vote at a meeting
of stockholders. Each stockholder may exercise such vote either in person or by
proxy. The Company's common stockholders will not be entitled to receive
dividends or distributions unless and until all dividends have been paid on the
Series A Preferred Stock. If a dividend is declared, subject to the preceding
sentence, it will be distributed pro rata to its common stockholders on a per
share basis. In the event of a liquidation, dissolution or winding up of the
Company, its common stockholders will be entitled to receive our assets and
funds available for distribution to common stockholders in proportion to the
number of shares they hold. Our common stockholders may not receive any assets
or funds until our creditors have been paid in full and the preferential or
participating rights of its preferred stockholders have been satisfied. If we
participate in a corporate merger, consolidation, purchase or acquisition of
property or stock, or other reorganization, any payments or shares of stock
allocated to our common stockholders will be distributed pro rata to holders of
the Common Stock on a per share basis. If we redeem, repurchase or otherwise
acquire for payment any shares of Common Stock, we will treat each share of
common stock identically.
Holders of the Common Stock do not have any preemptive, subscription,
redemption or sinking fund rights with respect to shares of their Common Stock.
The Company may issue additional shares of its Common Stock, if authorized by
its Board of Directors, without the common stockholders' approval, unless
required by Delaware law or a stock exchange on which its securities are traded.
The outstanding shares of Common Stock are, and the shares of Common Stock to be
issued on conversion of the Series A Preferred Stock or exchange of the $3.00
Warrants will be, duly authorized, validly issued, fully paid and
non-assessable.
DESCRIPTION OF THE SERIES A PREFERRED STOCK
The following summarizes the material terms and provisions of the Series A
Preferred Stock, par value $0.001 per share, and is qualified in its entirety by
reference to the terms and provisions of our certificate of incorporation, as
amended by the Certificate of Designations relating to the Series A Preferred
Stock. The Series A Preferred Stock constitutes an authorized series of our
Series A Preferred Stock. Currently there are 150,000 shares of Series A
Preferred Stock, with the designations, dividend rights, liquidation rights,
conversion rights and other provisions described generally below. The holders of
the Series A Preferred Stock have no preemptive rights with respect to any
shares of our capital stock or any other securities convertible into or carrying
rights or options to purchase any of our capital stock. The Series A Preferred
Stock is not subject to any obligation on our part to repurchase or retire the
Series A Preferred Stock. The Company's transfer agent, Continental Stock
Transfer and Trust Company, acts as transfer agent and conversion agent for the
Series A Preferred Stock.
The Series A Preferred Stock, with respect to dividend rights and rights on
liquidation, ranks senior to the Common Stock and to all other equity securities
issued by us. For this purpose, the term "equity securities" does not include
debt securities convertible into or exchangeable for equity securities or other
debt instruments outstanding. The holders of Series A Preferred Stock are
entitled to receive cash dividends, out of funds that are legally available
therefor, on each share of Series A Preferred Stock at an annual rate equal to
8% of the original purchase price per share of Series A Preferred Stock (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to such shares). Dividends are payable in cash. For any
share of Series A Preferred Stock, such dividends are payable quarterly in cash
on the first day of each calendar quarter beginning in the calendar quarter
following the issue date. All dividends on Series A Preferred Stock are
cumulative, whether or not declared. Dividends cease to accumulate in respect of
shares of Series A Preferred Stock on the date they are converted into shares of
Common Stock.
22
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of the Series A Preferred Stock are
entitled to receive in cash out of assets of the Company available for
distribution to stockholders, before any distribution of assets is made to
holders of Common Stock or any other class of stock ranking junior to the Series
A Preferred Stock upon liquidation, liquidating distributions in the amount of
the liquidation preference(i.e., the original purchase price plus accrued and
unpaid dividends). After payment of the full amount of the liquidating
distributions to which they are entitled, our remaining assets available for
distribution shall be distributed pro rata among the holders of the Common Stock
and Series A Preferred Stock based on the number of shares of Common Stock into
which the shares of Series A Preferred Stock would then convert. If, upon any
voluntary or involuntary liquidation, our assets are insufficient to pay the
amount of the liquidating distributions on all outstanding Series A Preferred
Stock, then the holders of the Series A Preferred Stock shall share ratably in
any distribution of assets in proportion to the full liquidating distributions
to which they would otherwise be respectively entitled.
Any shares of Series A Preferred Stock may, at the holder's option, be
converted at any time after 90 days after issuance thereof, an initial
conversion price of $0.50 per share, subject to adjustment as described below.
The initial conversion price of $0.50 per share was arbitrarily determined by
the Company in its sole discretion and is not necessarily reflective of the
Company's asset value, net worth, earnings, cash flow or any other established
criteria of value. The Company may require conversion of the Series A Preferred
Stock at the then-existing conversion price (if such holder has not already
converted the Series A Preferred Stock held by it to Common Stock) if at any
time that the 10- trading day average closing price of the Common Stock exceeds
$1.50 per share.
The Company required to at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, for the purpose of effecting the
conversion, such number of its shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding shares of the Series A
Preferred Stock. Upon conversion, a holder of Series A Preferred Stock is
entitled to receive a payment in satisfaction of all accrued but unpaid
dividends.
Holders of Series A Preferred Stock do not have the right to vote on
matters brought before the stockholders of the Company. The Common Stock
issuable upon conversion of the Series A Preferred Stock generally may not be
transferred and must be held indefinitely unless the disposition thereof is
subsequently registered under the Securities Act or an exemption from such
registration is available.
MARKET FOR COMMON STOCK AND NOTES
Beginning on March 31, 1998, the Common Stock has traded on the American
Stock Exchange. The Company's Common Stock has been traded on the American Stock
Exchange system under the symbol "ILC" since February 6, 2004. The following
table sets forth the range of the reported high and low sales prices of the
Company's Common Stock for the years ended March 31, 2004 and 2003, and the
fiscal year ending March 31, 2005 (with forth quarter information through
February 28, 2005):
FYE 2005 HIGH LOW
-------------- ------- -------
First Quarter.................................... $0.92 $0.82
Second Quarter................................... $0.50 $0.42
Third Quarter.................................... $0.50 $0.45
Fourth Quarter through February 28, 2005......... $0.50 $0.39
FYE 2004 HIGH LOW
-------------- ------- -------
First Quarter.................................... $0.41 $0.25
Second Quarter................................... $0.81 $0.32
Third Quarter.................................... $1.09 $0.61
Fourth Quarter................................... $1.23 $0.80
FYE 2003 HIGH LOW
-------------- ------- -------
First Quarter ................................... $1.40 $0.76
Second Quarter................................... $0.90 $0.33
Third Quarter.................................... $0.57 $0.25
Fourth Quarter................................... $0.57 $0.25
There were approximately 344 holders of record, as shown on the records of
the transfer agent and registrar of Common Stock. The number of record holders
does not bear any relationship to the number of beneficial owners of the Common
Stock. The Company has not paid any cash dividends on its Common Stock in the
past and does not plan to pay any cash dividends on its Common Stock in the
foreseeable future. The Company's Board of Directors intends, for the
foreseeable future, to retain earnings to finance the continued operation and
expansion of the Company's business.
23
On February 28, 2005, the last full trading day prior to the public
announcement of the Exchange Offer, the last reported sale price was $0.39 per
share for our Common Stock. We urge you to obtain current market quotations
prior to making any decision with respect to the Exchange Offer. There is no
established trading market for the Notes. Any trading in the Notes takes place
in privately-negotiated transactions among holders.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The discussion set forth below is a summary of the material U.S. federal
income tax considerations relevant to holders ("Holders") who exchange their
Notes for Common Stock. This discussion is based on the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), final, temporary and
proposed Treasury regulations thereunder ("Treasury Regulations"), and
administrative and judicial interpretations thereof, all as in effect on the
date hereof and all of which are subject to change (possibly on a retroactive
basis).
The Company will not obtain any ruling from the Internal Revenue Service
with respect to the matters discussed below. In addition, the Company will not
obtain any tax opinion from counsel with respect to the U.S. federal income tax
consequences of the Exchange. The following discussion does not constitute and
is not intended to constitute either a tax opinion or tax advice to any person.
This summary is intended for general information only and does not purport to
address all of the material U.S. federal income tax consequences that may be
applicable to a holder of Notes. Tax consequences which are different from or in
addition to those described herein may apply to Holders of Notes who are subject
to special treatment under the U.S. federal income tax laws, such as foreign
persons, tax-exempt organizations, financial institutions, insurance companies,
broker-dealers, Holders who hold their Notes as part of a hedge, straddle, wash
sale, synthetic security or conversion transaction and persons who acquired
their Warrants in compensatory transactions. This discussion does not address
foreign or state or local tax considerations.
The discussion below only addresses the U.S. federal income tax
consequences of the exchange of Notes for Common Stock to U.S. holders who hold
their Notes and Warrants as capital assets within the meaning of Section 1221 of
the Code. As used herein, the term "U.S. holder" means a beneficial owner of a
note who or that is for U.S. federal income tax purposes (i) a citizen or
individual resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, (iii) an estate the income of which is
subject to U.S. federal income taxation regardless of its source, or (iv) a
trust if (A) a United States court is able to exercise primary supervision over
the administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust or (B) it validly
elects to be treated as a United States person for U.S. federal income tax
purposes. As used herein, the term "foreign holder" means a beneficial owner of
a Note that is not a United States person and is not a partnership for U.S.
federal income tax purposes. If a partnership (or any other entity treated as a
partnership for U.S. federal income tax purposes) holds Notes or Warrants, the
tax treatment of the partnership and a partner in such partnership generally
will depend on the status of the partner and the activities of the partnership.
Such partner should consult its own tax advisor as to the application of the
U.S. tax laws to its particular situation.
THE SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES BELOW IS FOR GENERAL
INFORMATION ONLY AND DOES NOT CONSTITUTE TAX ADVICE. THIS DISCUSSION IS NOT A
SUBSTITUTE FOR AN INDIVIDUAL ANALYSIS OF THE U.S. FEDERAL INCOME TAX
CONSEQUENCES OF THE EXCHANGE TO A HOLDER. EACH HOLDER SHOULD CONSULT A TAX
ADVISER REGARDING THE PARTICULAR FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF THE EXCHANGE IN LIGHT OF SUCH HOLDER'S OWN PERSONAL TAX
SITUATION.
EXCHANGE AS A REORGANIZATION
The federal income tax consequences of the exchange of Notes for Common
Stock and $3.00 Warrants for $1.20 Warrants pursuant to the Exchange generally
will depend on whether the Exchange is treated as a "recapitalization" within
the meaning of Section 368(a)(1)(E) of the Code. The Exchange generally should
constitute a recapitalization provided that the Notes constitute "securities"
for U.S. federal income tax purposes ("Tax Securities").
The term "securities" is not defined in the Code or the applicable Treasury
regulations and has not been clearly defined by judicial decisions or
administrative rulings. In general, the determination of whether a debt
instrument constitutes a Tax Security is based upon an evaluation of all of the
facts and circumstances, including the nature of the debt instrument, the degree
of participation and continuing interest of holders of the debt instruments in
the affairs of the business and the extent of proprietary interest compared with
the similarity of the note to a cash payment. In making this determination,
courts have typically focused on the original term of the debt instrument (i.e.,
the length of time between the issuance of the debt instrument and its
maturity). In general, (i) debt instruments with an original term of 5 years or
less are rarely treated as Tax Securities; (ii) debt instruments with an
original term of 10 years or more are likely to be treated as Tax Securities;
and (iii) the classification as Tax Securities of debt instruments with an
original term of more than 5 but less than 10 years is uncertain. Debt
24
instruments (such as the Notes) that are convertible into stock of the issuer
may be more likely to be treated as securities than nonconvertible debt
instruments with otherwise similar terms because of the holders' potential
equity participation in the issuer. The Notes have an original term in excess of
ten years. While not free from doubt, the Company believes that, based upon an
evaluation of the factors relevant to the classification of Notes as Tax
Securities, the Notes should be treated as Tax Securities.
If the Notes are properly treated as Tax Securities, then the Company
believes that the Exchange should constitute a recapitalization under Section
368(a)(1)(E) of the Code. In such a case, subject to the exceptions for amounts
attributable to interest and market discount discussed below, (i) no gain or
loss should be recognized by a U.S. Holder upon receipt of Common Stock in
exchange for a Note; (ii) the holding period of the Common Stock should include
the holding period of the Notes exchanged therefore; and (iii) the adjusted tax
basis of the Common Stock should be the same as the adjusted tax basis of the
Notes exchanged therefore (less any basis attributable to accrued but unpaid
interest).
Pursuant to the Exchange, a U.S. Holder's Warrants will be modified to (i)
extend the exercise period of the Warrants to March 29, 2006, (ii) reduce the
exercise price from $3.00 per share to $1.20 per share and (iii) the redemption
price will be reduced to $2.40 per share (such modified Warrants to be referred
to as the "$1.20 Warrants"). While not free from doubt, the Corporation believes
that such modification should be treated as a deemed exchange by a U.S. Holder
(who exchanges a Note for Common Stock) of existing Warrants (the "$3.00
Warrants") for New Warrants for federal income tax purposes.
Under Treasury Regulations, rights issued by a party to a reorganization to
acquire its stock are treated for purposes of Sections 354 and 356 of the Code
as securities with no principal amount (the "Warrant Regulations"). Provided
that the Exchange qualifies as a recapitalization under Section 368(a)(1)(E) of
the Code, the Company should be treated as a "party to a reorganization" under
Section 368(b) of the Code. In such a case, the $1.20 Warrants and the $3.00
Warrants should be treated as rights to acquire stock under the Warrant
Regulations. In a reorganization, holders of securities generally recognize no
gain or loss on the exchange of such securities for stock or other securities.
However, a security holder will recognize gain on an exchange of securities to
the extent that the "principal amount" of the securities received exceeds the
"principal amount" of the securities surrendered. In such a case, the amount of
gain recognized by the security holder will be equal to the fair market value of
the excess principal amount. Since warrants have no principal amount under the
Regulations, no excess principal amount should exist in connection with the
exchange of the $1.20 Warrants for the $3.00 Warrants by a U.S. Holder pursuant
to the Exchange. Thus, provided that the Exchange qualifies as a
recapitalization under Section 368(a)(1)(E) of the Code and that the
modification of the Warrants is properly treated as a deemed exchange of the
$3.00 Warrants for the $1.20 Warrants for federal income tax purposes (i) no
gain or loss should be recognized by a U.S. Holder upon the receipt of a $1.20
Warrant in exchange for an $3.00 Warrant; (ii) the holding period of a $1.20
Warrant should include the holding period of an $3.00 Warrant exchanged
therefore; and (iii) the adjusted tax basis of a $1.20 Warrant should be the
same as the adjusted tax basis of an $3.00 Warrant exchanged therefore.
Alternatively, because the Old Warrants expire by their terms on March 29, 2005,
the Exchange may be treated as the exchange by a U.S. Holder of a Note (a Tax
Security) for Common Stock and a $1.20 Warrant. In such event, provided that the
Exchange qualifies as a recapitalization under Section 368(a)(1)(E) of the Code,
the issuance of the $1.20 Warrant generally should be nontaxable under the
Warrant Regulations. In such a case, a U.S. Holder's tax basis in the
surrendered Note generally should be allocated between the Common Stock and the
New Warrant on the basis of their respective fair market values and the U.S.
Holder's holding period in the Common Stock and the New Warrants should include
the period of time that such holder held the surrendered Note.
ACCRUED AND UNPAID INTEREST ON THE NOTES
Under the terms of the Exchange, the Company will issue a specified number
of shares of Common Stock to each U.S. Holder who tenders a Note. As stated
above, however, no accrued and unpaid interest will be paid on the Notes.
Notwithstanding the above, Treasury Regulations provide that a payment on a debt
obligation will be allocated first to accrued and unpaid interest and then to
principal. Under such Treasury Regulations, Common Stock would first be
allocated to the U.S. Holder's accrued and unpaid interest on the surrendered
Note with any remaining Common Stock then allocated to the holder's unpaid
principal amount on the Note. To the extent that Common Stock (and/or Warrants)
is allocable to accrued and unpaid interest on the Notes, and such U.S. Holder
has not already included such interest in income, such Common Stock (and/or
Warrants) will be taxable to the U.S. Holder as ordinary interest income,
regardless of whether the Notes are capital assets in the U.S. Holder's hands.
Finally, as discussed above under "Exchange as a Reorganization," even if the
fair market value of the Common Stock allocated to a Note is less than the
principal amount of the Note, no loss will be recognized by a U.S. Holder if the
Exchange qualifies as a nontaxable reorganization under Section 368(a)(1)(E) of
the Code.
25
MARKET DISCOUNT
Any gain recognized by a U.S. Holder in connection with the Exchange
generally will be treated as ordinary income to the extent of such holder's
accrued market discount. Any remaining accrued market discount on the Notes (to
the extent not previously included by a U.S. Holder as ordinary income)
generally will be taxed as ordinary income upon the U.S. Holder's sale or other
disposition of the Common Stock received in exchange for such Notes. In general,
market discount is the excess, as of the date of a U.S. Holder's acquisition of
a Note, of the Note's stated redemption price at maturity over the U.S. Holder's
tax basis in the Note, subject to a de minimis rule. Market discount, if any,
accrues ratably from the date the holder purchases a note until its final
maturity.
POSSIBLE TREATMENT OF EXCHANGE AS A DEEMED DISTRIBUTION
Section 305(a) of the Code provides the general rule that gross income does
not include the amount of any distribution of the "stock" of a corporation made
by such corporation to its "shareholders" with respect to its stock. For
purposes of Section 305, the term "stock" includes rights to acquire stock and
the term "shareholder" generally includes a holder of rights or of convertible
securities. Section 305(b) of the Code provides several exceptions to this
general nonrecognition rule pursuant to which taxable distributions will result.
Section 305(c) of the Code provides that a change in redemption price, a
difference between redemption price and issue price, a redemption which is
treated as a distribution to which section 301 applies, or any transaction
(including a RECAPITALIZATION) having a similar effect on the interest of any
shareholder may be treated as a distribution with respect to any shareholder
whose proportionate interest in the earnings and profits or assets of the
corporation is increased by such change, difference, redemption, or similar
transaction. Thus, under certain circumstances, it is possible for a
recapitalization to be treated as resulting in a taxable distribution under
Section 305(c) for federal income tax purposes.
In general, a recapitalization should not be treated as a taxable
distribution under Section 305 of the Code if the recapitalization (i) has a
bona fide business purpose, (ii) is an isolated transaction and (iii) is not
part of a plan to increase periodically the proportionate interest of any
shareholder in the assets or earnings and profits of a corporation. Based on the
foregoing, the Company believes that the Exchange should not be treated as a
taxable distribution under Section 305 of the Code.
FAILURE TO QUALIFY AS A REORGANIZATION
If the Notes do not constitute Tax Securities, then the Exchange will be a
taxable transaction. In such a case, a U.S. Holder generally will recognize gain
or loss equal to the difference between the fair market value of the Common
Stock received and the U.S. Holder's adjusted tax basis in the Notes
surrendered. Furthermore, in such event, the deemed exchange of the $3.00
Warrants for the $1.20 Warrants or the issuance of the $1.20 Warrants (as the
case may be) generally will also be taxable to a U.S. Holder. The remainder of
this tax discussion assumes that the Exchange will be treated as a nontaxable
reorganization for U.S. federal income tax purposes.
NET OPERATING LOSSES
The Company currently has significant net operating losses ("NOLs") for
federal income tax purposes. The Company 's ability to use its NOLs and certain
other tax attributes to reduce future U.S. federal income tax, if any, will be
limited if the Company is treated as having undergone an "ownership change"
(i.e., a more than fifty percentage point change in the ownership of the Company
's stock) in connection with the Exchange or certain previous transactions
involving transfers of the Company's stock. Under Section 382 of the Code, a
corporation that undergoes an ownership change is subject to limitations on the
amount of its NOLs that may be used to offset the corporation's federal income
tax following the ownership change.
Under Section 382 of the Internal Revenue Code, following an "ownership
change," the amount of a loss corporation's income that can be offset by
pre-ownership change NOLs cannot exceed an annual amount equal to the sum of (i)
the value of the loss corporation's equity immediately before the ownership
change (excluding proscribed contributions to capital) multiplied by a
prescribed rate of return, and (ii) recognized built-in gains, if any (as
hereinafter described). Moreover, no NOLs will survive if the loss corporation
does not continue its historic business or use a significant portion of its
assets in such a business during the two-year period beginning on the date of
the ownership change. If the loss corporation has more than one line of
business, continuity of business enterprise requires only that it continue a
significant line of business. The Company has not determined (i) whether the
Exchange will trigger an ownership change under Section 382 of the Code or (ii)
in the event of an ownership change, the limitations (if any) that would be
imposed on the use of its NOLs.
CANCELLATION OF INDEBTEDNESS INCOME
If the fair market value of the Common Stock issued by the Company in the
Exchange (excluding amounts paid with respect to accrued interest) is less than
the principal amount of Notes exchanged therefor, the Company will recognize
cancellation of indebtedness income. Based upon the terms of the Exchange set
forth herein, it is possible that the fair market value of the Common Stock
26
issued in exchange for a Note would be less than the principal amount of the
Note even if all of the Common Stock issued to a U.S. Holder were allocated to
such holder's Note. In addition, as discussed above under "Accrued and Unpaid
Interest on the Notes," Treasury Regulations provide that Common Stock issued to
a U.S. Holder in the Exchange will be allocated first to accrued and unpaid
interest on the Notes and then to principal. As a result, it is likely that the
fair market value of the Common Stock allocated to the Notes will be less than
the principal amount of the surrendered Notes, with the result that the Company
will recognize cancellation of indebtedness income in an amount equal to the
difference between the principal amount of the Notes surrendered and the fair
market value of the Common Stock allocated thereto (unless an exception to such
cancellation of indebtedness income applies).
OWNERSHIP OF COMMON STOCK
If a U.S. Holder exchanges Notes for Common Stock, there will be additional
tax consequences from holding such shares beyond the tax consequences of the
Exchange itself. Generally, any distributions made with respect to shares of the
Common Stock will be treated as ordinary income to the extent of the Company's
current or accumulated earnings and profits. Amounts in excess of such earnings
and profits generally are treated as a tax-free return of capital to the extent
of a U.S. Holder's tax basis in the Common Stock, with any amounts received in
excess of such tax basis treated as proceeds from the sale of stock.
In general, a U.S. Holder will recognize gain or loss on a sale or other
disposition of the Common Stock (other than certain redemptions taxed as
distributions under Section 302 of the Code) to the extent of the difference
between the U.S. Holder's amount realized on the disposition and the U.S.
Holder's tax basis in such stock. Such gain or loss generally should, subject to
the market discount rules discussed above, be treated as capital gain or loss,
assuming that the U.S. Holder holds the Common Stock as a capital asset.
HOLDERS WHO DO NOT PARTICIPATE IN THE EXCHANGE OFFER
U.S. Holders of Notes who elect not to participate in the Exchange Offer
and do not exchange their Notes for Common Stock should not recognize gain or
loss as a consequence of the Exchange Offer.
U.S. BACKUP WITHHOLDING AND INFORMATION REPORTING REQUIREMENTS
Information reporting generally will apply to payments of dividends on the
Common Stock and proceeds from the sale or redemption of Common Stock or
warrants made to a U.S. Holder, other than an exempt recipient, including a
corporation, a payee that is not a United States person that provides an
appropriate certification and certain other persons. If information reporting
applies to any such payment, a payor will be required to withhold backup
withholding tax from the payment if the holder fails to furnish its correct
taxpayer identification number or otherwise fails to comply with, or establish
an exemption from, such backup withholding tax requirements. U.S. Holders should
consult with their tax advisors as to their ability to qualify for an exemption
from backup withholding and the procedure for obtaining such an exemption. In
general, any amount withheld from a payment under the backup withholding rules
is allowable as a refundable credit against a holder's U.S. federal income tax
liability, provided that the required information is timely furnished to the
IRS.
THE ABOVE DESCRIPTION IS INTENDED FOR GENERAL INFORMATION PURPOSES AND IS NOT
INTENDED TO CONSTITUTE TAX ADVICE OR A COMPLETE ANALYSIS OF ALL OF THE MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES TO A HOLDER RELATING TO THE EXCHANGE OF THE
NOTES AND $3.00 WARRANTS AND THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE
COMMON STOCK AND $1.20 WARRANTS. A HOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX
ADVISOR CONCERNING THE TAX CONSEQUENCES, INCLUDING THE APPLICABILITY OF ANY
STATE, LOCAL OR FOREIGN TAX LAWS, TO SUCH HOLDER OF THE EXCHANGE AND OF OWNING
THE COMMON STOCK AND $1.20 WARRANTS.
CERTAIN SECURITIES LAWS CONSIDERATIONS
All of the Notes were issued by the Company in March of 2002 pursuant to a
Private Placement offering that was not registered pursuant to the Securities
Act or any state securities laws. Separately, on May 24, 2004, a registration
statement covering resales of Common Stock issueable upon conversion of the
Notes and exercise of the $3.00 Warrants became effective. Only the shares
issueable upon conversion of the Notes or exercise of th $3.00 Warrants pursuant
to the original terms are therefore currently registered. However, that
registration statement will not be available if the Exchange Offer is
consummated until and unless it is amended to reflect the changes resulting from
this Exchange Offer, if at all. We are under no obligation to amend that
registration statement. Therefore, all of the shares of Common Stock that we may
issue must be sold in reliance upon an exemption from registration. Under
Securities Act Rule 144, recipients of Common Stock in the Exchange Offer can
tack the holding period of the Notes previously held by them, meaning that such
shares will be eligible for sale under Rule 144. However, shares of Common Stock
issued on exercise of the $1.20 Warrants will not be eligible for sale under
Rule 144 until one year after the date of exercise of the $1.20 Warrants.
27
INTERESTS OF DIRECTORS AND OFFICERS
The Company is aware that two of its outside directors and one of its
officers invested in the Private Placement and therefore are Note holders who
will be eligible for participation, and are likely to participate in the
Exchange Offer. Mr. Daniel T. Robinson, Jr., a director since 2000, purchased
Notes with a principal amount of $25,000 in the name of his family trust,
Peldawn, LLC, and if fully exchanged will receive 62,500 shares of the Common
Stock. Mr. James H. Collins, a director since 2000, purchased Notes with a
principal amount of $25,000 in the name of his daughter, and if fully exchanged
will receive 62,500 shares of Common Stock. Dr. James M. Powers, Jr., a director
since 1998 and the Company's Chairman, President and Chief Executive Officer,
purchased Notes with a principal amount of $25,000 and if fully exchanged will
receive 62,500 shares of Common Stock. Ms. Laura Powers, the wife of James M.
Powers, Jr., purchased Notes with a principal amount of $25,000 for her
individual retirement account and if fully exchanged will receive 62,500 shares
of Common Stock. Neither the Company, nor any subsidiary of the Company nor, to
the best of the Company's knowledge, any of the Company's directors or executive
officers, nor any affiliates of any of the foregoing, had any transactions in
the Notes during the 120 business days prior to the Effective Date.
CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
The Company is not aware of any license or regulatory permit that appears
to be material to the Company's business that might be adversely affected by the
Company's acquisition of Notes as contemplated herein or of any approval or
other action by any government or governmental, administrative, or regulatory
authority or agency, domestic or foreign, that would be required for the
acquisition or ownership of Notes by the Company as contemplated herein. Should
any such approval or other action be required, the Company presently
contemplates that such approval or other action will be sought. The Company is
unable to predict whether it may determine that it is required to delay the
acceptance for exchange of or exchange of Note tendered pursuant to the Exchange
Offer pending the outcome of any such matter. There can be no assurance that any
such approval or other action, if needed, would be obtained or would be obtained
without substantial conditions, or that the failure to obtain any such approval
or other action might not result in adverse consequences to the Company's
business. The Company's obligations under the Exchange Offer to accept for
exchange and exchange Notes are subject to certain conditions. See "The Exchange
Offer -- Conditions".
FEES AND EXPENSES
The Company is acting as its own exchange agent without compensation to any
person or entity. The Company has not retained any dealer, manager or other
agent to solicit tenders with respect to the Exchange Offer. The Company will
not pay fees or commissions to any broker, dealer, or other person for
soliciting tenders of Notes pursuant to the Exchange Offer. No broker, dealer,
commercial bank, or trust company has been authorized to act as the agent of the
Company for purposes of the Exchange Offer.
INDEPENDENT AUDITORS
The summary financial information presented herein has not been prepared or
audited by the Company's independent auditors.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We are incorporating by reference into this Exchange Offer the following
documents:
o The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2004.
o The Company's Quarterly Report on Form 10-Q for the Three Month and
Nine Month Periods ended December 31, 2004.
o The Company's Proxy Statement for 2004 Annual Meeting of Stockholders
filed with the SEC on July 20, 2004.
The information incorporated herein by reference is considered to be part
of this Exchange Offer and later information that we file with the Securities
and Exchange Commission will automatically update and supersede this
information. You may obtain a copy of these filings online at no cost by
visiting www.ilinc.com or by writing us at: iLinc Communications, Inc., 2999 N.
44th Street, Suite 650, Phoenix, Arizona 85018, Attention: General Counsel.
28
WHERE YOU CAN FIND MORE INFORMATION
The Company has filed with the SEC registration statements and other public
filings with respect to its Common Stock and its operations, but not with
respect to the issuance or resale of the Notes, the Warrants or the underlying
Common Stock issuable upon conversion of the Notes or exercise of the Warrants.
This Exchange Offer does not contain all the information contained in those
public filings. For further information with respect to the Company, reference
is made to the Company's public filings including the exhibits and schedules
thereto.
All of the Exhibits and other public filings may be inspected without
charge at the Public Reference Section of the SEC and at their regional offices.
Copies can also be obtained from the SEC at prescribed rates. The SEC maintains
a Web site (www.sec.gov) that contains reports, proxy and information statements
and other information regarding the Company and other registrants that file
electronically with the SEC. In addition, the Company will provide copies
(including exhibits) free of charge upon the written request.
MISCELLANEOUS
The Company is not aware of any jurisdiction where the making of the
Exchange Offer is not in compliance with applicable law. If the Company becomes
aware of any jurisdiction where the making of the Exchange Offer is not in
compliance with any valid applicable law, the Company will make a good faith
effort to comply with such law. If, after such good faith effort, the Company
cannot comply with such law, the Exchange Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Notes residing in such
jurisdiction. In any jurisdiction the securities or blue sky laws of which
require the Exchange Offer to be made by a licensed broker or dealer, the
Exchange Offer shall be deemed to be made on the Company's behalf by one or more
registered brokers or dealers license under the laws of such jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations under the
Exchange Act, the Company has filed with the Securities and Exchange Commission
an Issuer Tender Offer Statement on Schedule TO which contains additional
information with respect to the Exchange Offer. Such Schedule TO, including the
exhibits and any amendments thereto, may be examined, and copies may be
obtained, at the same places and in the same manner as is set forth under the
caption "Where You Can Find More Information."
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY IN CONNECTION WITH THE OFFER OTHER THAN
THOSE CONTAINED IN THIS OFFER TO EXCHANGE OR IN THE LETTER OF TRANSMITTAL. IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY.
29
EXHIBIT (a)(1)(ii)
Exhibit "A"
30
LETTER OF TRANSMITTAL
iLINC COMMUNICATIONS, INC.
EXCHANGE OFFER
SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE
AND MODIFICATION OF $3.00 WARRANTS
FOR UP TO
$5,625,000 ORIGINAL PRINCIPAL AMOUNT OF
12% CONVERTIBLE REDEEMABLE SUBORDINATED NOTES
--------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M. (EST),
MARCH 29, 2005, UNLESS THE OFFER IS EXTENDED.
--------------------------------------------------------------------
ADDRESS FOR TRANSMITTAL:
iLinc Communications, Inc.
2999 N. 44th Street, Suite 650
Phoenix, AZ 85018
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE COMPANY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
TRANSMITTAL LETTER AND SUBSCRIPTION AGREEMENT PAGE 1 OF 8
By execution hereof, the undersigned acknowledges receipt of the Exchange
Offer, dated March 1, 2005 (the "Exchange Offer"), of iLinc Communications,
Inc., a Delaware corporation (the "Company"), and this Letter of Transmittal and
the instructions hereto (the "Letter of Transmittal"), which together constitute
the Company's offer (the "Offer") to exchange 2,500 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), for each $1,000
original principal amount of 12% Convertible Redeemable Subordinated Notes,
issued by the Company (the "Notes"), validly tendered. Subject to the terms and
conditions of the Offer, the Company will issue shares of Common Stock in
exchange for up to $5,625,000 aggregate principal amount of the Notes. The
Company reserves the right to extend or terminate the Offer, in its sole and
absolute discretion, for any or no reason, and to otherwise amend the Offer in
any respect. The term "Expiration Date" shall mean 5:00 p.m. (Eastern Standard
Time), on March 29, 2005, unless the Offer is extended as provided in the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Offer is extended. Capitalized terms used but not
defined herein shall have the same meaning given them in the Exchange Offer.
The term "Holder" with respect to the Offer means any person in whose name
Notes are registered on the books of the Company. The undersigned has completed,
executed and delivered this Letter of Transmittal to indicate the action the
undersigned desires to take with respect to the Offer. Holders who wish to
tender their Notes must complete this Letter of Transmittal in its entirety.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
DESCRIPTION OF NOTES TENDERED
--------------------------------------------------------------------------------
Print Name and Address Principal Amount of Principal Amount of Notes
of Holder Notes Currently Held Tendered* (if amount is less
than the whole)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
* Notes may be tendered in whole or in part in denominations of $25,000 and
integral multiples thereof
TRANSMITTAL LETTER AND SUBSCRIPTION AGREEMENT PAGE 2 OF 8
TRANSMITTAL LETTER AND SUBSCRIPTION AGREEMENT
DATE: _____________________________
iLinc Communications, Inc.
2999 N. 44th Street, Suite 650
Phoenix, Arizona 85018
Re: Transmittal of Convertible Note in Exchange for Common Stock and
Amendment to the $3.00 Warrant
Gentlemen:
The undersigned ("we" or "our") is the holder of a 12% Convertible
Unsecured Subordinated Note due 2012 (the "Note") in the original principal sum
of [$________________________], that was issued by iLinc Communications, Inc.
(formerly called "EDT Learning, Inc.") (the "Company"). We are in receipt of the
Company's Exchange Offer concerning the Company's Exchange Offer of 2,500 shares
of the Company's Common Stock ("Common Stock") and to amend the exercise period
and exercise price of the outstanding $3.00 Warrants (as defined below) for each
$1,000 of original principal amount, using a conversion price of $0.40 per
share. We acknowledge that under the existing terms of the Notes, each $1,000 of
original principal amount of the Note currently is convertible into only 1,000
shares of Common Stock, using the conversion price of $1.00.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, TRANSFER AND EXCHANGE THE NOTES TENDERED
HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE, THE COMPANY WILL
ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE AND CLEAR OF ALL
LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE NOTES TENDERED
HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL,
UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE COMPANY
TO BE NECESSARY OR DESIRABLE TO COMPLETE THE TRANSFER AND EXCHANGE OF THE NOTES
TENDERED HEREBY. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE
EXCHANGE OFFER.
The undersigned understands that tender of Notes pursuant to any one of the
procedures described in "The Exchange Offer -- Procedures for Tendering Notes"
in the Exchange Offer and in this Letter of Transmittal, and the Company's
acceptance for exchange of such tendered Notes, will constitute a binding
agreement between the undersigned and the Company upon the terms and subject to
the conditions of the Offer. The undersigned recognizes that, under certain
circumstances set forth in the Exchange Offer, the Company may not be required
to accept for exchange any of the Notes tendered hereby.
We understand, subject to the terms and conditions of the Exchange Offer
and the consummation of that Exchange Offer, that the Company will extinguish
our Notes and issue to us shares of Common Stock at the exchange rate indicated
above in full payment of all (or that portion indicated below), of the principal
balance of our Note together with any and all accrued but unpaid interest due
therefrom. We understand that we may withdraw our offer of exchange any time
prior to the expiration of the Exchange Offer. We understand that the Exchange
Offer will expire on Friday, March 29, 2005, at 5:00 p.m., Eastern Standard
Time, unless extended or earlier terminated as provided in the Exchange Offer.
We understand that the Company's right to accept the Notes and issue Common
Stock is not subject to the receipt of any minimum amount of principal, or
number of Notes or Note Holders in the Company's sole and absolute discretion.
We acknowledge that we received a warrant (the "Warrant") in association
with the issuance of our Note and as part of our investment in the Company in
2002, and that our Warrant will expire on March 29, 2005 (the $3.00 Warrant). In
addition to the Common Stock exchanged for our Note, we understand that the
Company will extend the term of our existing $3.00 Warrant until March 29, 2006,
will reduce the exercise price of our $3.00 Warrant from $3.00 per share to
$1.20 per share and the redemption price will be reduced to $2.40 per share.
TRANSMITTAL LETTER AND SUBSCRIPTION AGREEMENT PAGE 3 OF 8
We understand that should we elect to exchange only a portion of our Note
in increments of $25,000, then (i) our Note will be modified to reduce the
principal balance of the Note by the amount exchanged, and the remaining balance
shall remain outstanding on the same terms; and, (ii) our $3.00 Warrant will be
modified to extend the expiration date of our $3.00 Warrant until March 29,
2006, and the exercise price will be reduced to $1.20 per share, but the number
of shares that may be purchased will be reduced so that the remaining Warrant
permits purchase of as many common shares as the amount exchanged of our Note
bears to the original principal balance of our Note on a share for share basis
using $1.00 per share. By way of example but not limitation, we understand that
if an investor who had invested $100,000 in the Private Placement (receiving a
$100,000 Note and $3.00 Warrant for 100,000 shares), elects to exchange only
$75,000 of that original principal balance then (i) their note will be reduced
leaving a principal balance of $25,000, and (ii) their $3.00 Warrant will be
modified to extend the term, but also modified so that is represents the right
to purchase only 75,000 shares at the reduced price of $1.20 per share.
Therefore, please accept this transmittal letter as evidence of our tender
of our Note in accordance with the terms and conditions of the Exchange Offer.
We have indicated below the face value of the note that we wish to tender to the
Company for exchange into Common Stock (Check One).
___ The undersigned wishes to tender the Note in its entirety.
OR
___ The undersigned wishes to tender $_______________________
($25,000 increments) of the face value of the Note.
We understand that the closing of the Exchange Offer will take place
following Expiration of the Exchange Offer and upon acceptance by the Company of
the Notes tendered, if any, which shall take place at the Company's corporate
offices in Phoenix, Arizona the day after the Expiration Date.
We acknowledge that a prospectus is presently available providing for the
resale of the underlying shares of Common Stock, but would be available only if
the Notes had been converted on its original terms. However, because additional
shares are being issued upon conversion, that prospectus will not be available
to cover the resale of the Common Stock issued as a result of the Exchange
Offer. Therefore, the undersigned acknowledges that the Common Stock that may be
receive upon exchange of the Note will not be registered under the Securities
Act of 1933 (the "1933 Act") or qualified under applicable state securities
laws. We acknowledge that resale of the Common Stock may be immediately
available under Rule 144(k) because the required holding period proscribed by
Rule 144 permits inclusion of the period of time that the Note was held, which
is more than 2 years.
We acknowledge that the issuance of Common Stock is being made pursuant to
an exemption from registration as may be provided by Section 4(2) of the 1933
Act and/or Regulation D promulgated thereunder, together with all applicable
state securities law qualification exemptions. The undersigned represents that
the Common Stock is being obtained for our own account, for investment purposes
only and not with a view to resale or other distribution, except by selling,
transferring or disposing of the Common Stock upon full compliance with all
applicable provisions of the 1933 Act, the Securities Exchange Act of 1934 (the
"Exchange Act"), the Rules and Regulations promulgated by the United States
Securities and Exchange Commission (the "Commission") thereunder, and any
applicable state securities laws. The undersigned further understands and agrees
that (i) these securities may be sold only if they are subsequently registered
under the 1933 Act and qualified under any applicable state securities laws or,
in the opinion of the Company's counsel, an exemption from such registration and
qualification is available; (ii) any routine sales of these securities made in
reliance upon Rule 144 promulgated by the Commission under the 1933 Act can be
effected only in the amounts set forth in and pursuant to the other terms and
conditions, including applicable holding periods, of Rule 144; and (iii) the
Company is under no obligation to assist the undersigned in complying with any
exemption from registration under the 1933 Act, except as otherwise described in
the Exchange Offer.
TRANSMITTAL LETTER AND SUBSCRIPTION AGREEMENT PAGE 4 OF 8
The undersigned represents and warrants that he has received the Company's
Exchange Offer, together with all the exhibits attached thereto. In addition,
the we are aware that the Company files annual reports on Form 10-K, quarterly
reports on Form 10-Q, special reports on Form 8-K, proxy statements, and other
information with the Commission that we can access without charge by visiting
the Commission's website, which is found at www.sec.gov or at the Company's web
site found at www.ilinc.com. We acknowledges that we have been granted a
reasonable period of time during which we have had the opportunity to obtain
such additional information as we deemed necessary to permit us to make an
informed decision with respect to the exchange of the Note and the receipt of
the Common Stock. We represent and warrant that we: (i) have reviewed such
information as we deem necessary to make an informed investment decision; (ii)
have had the opportunity to ask questions of and receive answers from management
of the Company; and (iii) are fully aware of the current business prospects,
financial condition, and operating history as set forth in the Company's public
filings and the Exchange Offer. Except as may be provided in the Exchange Offer,
we warrant that no representation, statement or inducement was made to us to
exchange our Note for the Common Stock, and our investment decision is not
relying upon any representations.
In connection with the subscription being made hereby, we warrant and
represent that:
a. If the undersigned is not an individual, it has not been organized for
the purpose of participating in the Exchange Offer;
b. We have not received any general solicitation or advertising regarding
the Exchange Offer or been furnished with any oral representation or
oral information in connection with the Exchange Offer which is not
set forth in any of the Information Documents;
c. We possesses the ability to bear the economic risk associated with the
Exchange Offer;
d. We have had substantial experience in previous private and public
purchases of speculative securities and we are not relying on the
Company, or its attorneys with respect to economic or other
considerations involved in this investment;
We are providing the following financial information to the Company to
permit a determination of our status as an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D promulgated under the 1933 Act. We have
INITIALED the paragraphs below that describe the suitability requirement under
which we intend to qualify. Upon request of the Company, we will provide
information to document the representations provided below. (ONLY ONE PARAGRAPH
NEED BE INITIALED).
_____ 1. The undersigned is NOT an Accredited Investor or Qualified
Non-Accredited Investor.
OR
_____ 2. Individual Net Worth Suitability. The undersigned represents
and warrants that his or her individual net worth or joint net
worth with his or her spouse, at the time of the prospective
purchase, exceeds $1,000,000. THIS SUITABILITY REQUIREMENT MAY BE
SELECTED ONLY BY A NATURAL INDIVIDUAL(S), AND NOT BY A
CORPORATION, PARTNERSHIP, TRUST, ESTATE, UNINCORPORATED
ASSOCIATION OR OTHER ENTITY.
OR
_____ 3. Individual Net Income Suitability. The undersigned represents
and warrants that his or her individual net income was in excess
of $200,000 in each of the calendar years 2003 and 2004, or his
or her joint income with his or her spouse was in excess of
$300,000 in each of those years and he or she reasonably expects
his or her net income to reach such level in the year calendar
2005. THIS SUITABILITY REQUIREMENT MAY BE SELECTED ONLY BY A
NATURAL INDIVIDUAL(S), AND NOT BY A CORPORATION, PARTNERSHIP,
TRUST, ESTATE, UNINCORPORATED ASSOCIATION OR OTHER ENTITY.
OR
TRANSMITTAL LETTER AND SUBSCRIPTION AGREEMENT PAGE 5 OF 8
_____ 4. Certain Qualified Organizations.
The Investor represents and warrants that it is (check
one):
____ A corporation, partnership, Massachusetts or similar
business trust, or organization described in Section
501(c)(3) of the Internal Revenue Code (tax exempt
organization), not formed for the specific purpose
of acquiring the securities offered, having total
assets in excess of $5,000,000.
____ Any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of
acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in
Section 230.506(b)(2)(ii) of the 1933 Act.
____ A bank, savings and loan association or other
similar institution as defined in Sections 3(a)(2)
and 3(a)(5)(A) of the 1933 Act, respectively,
whether acting in its individual or fiduciary
capacity.
____ An insurance company as defined in Section 2(13) of
the 1933 Act.
____ An investment company registered under the
Investment Company Act of 1940.
____ A business development company as defined Section
2(a)(48) of the Investment Company Act of 1940 or
private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of
1940.
____ A Small Business Investment Company licensed by the
U.S. Small Business Administration under Sections
301(c) or (d) of the Small Business Investment Act
of 1958.
____ A broker or dealer registered pursuant to Section 15
of the Exchange Act, as amended.
____ Any plan established and maintained by a state, its
political subdivisions, or any agency or
instrumentality of a state or its political
subdivisions for the benefit of its employees, if
such plan has total assets in excess of $5,000,000.
____ Any employee benefit plan within the meaning of the
Employment Retirement Income Security Act of 1974,
as amended ("ERISA"), if the investment decision is
made by a plan fiduciary, as defined in Section
3(21) of ERISA, which is either a bank, savings and
loan association, insurance company, or registered
investment advisor, or if the employee benefit plan
has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made
solely by persons that are accredited investors.
NOTE: If you claim suitability under this paragraph 4, the
Company may require that you provide appropriate
information supporting your claim to status as a Qualified
Organization.
OR
_____ 5. Entity Suitability.
The undersigned represents and warrants that it is a
corporation, a partnership, an unincorporated association
or other similar entity, and that each owner of an equity
interest in the entity satisfies the suitability
requirements of either paragraphs (2), (3) or (4) above.
TRANSMITTAL LETTER AND SUBSCRIPTION AGREEMENT PAGE 6 OF 8
NOTE: If you claim suitability under this paragraph (5),
you must submit a list of each of the owners with an equity
interest in the entity, setting forth the address,
telephone number and social security or tax identification
number and list for EACH such owner the information
required under paragraphs (2), (3) or (4) above. These
separate pages must be validly signed by or on behalf of
each such owner or beneficiary.
OR
_____ 6. Officer, Director, Manager, Member Suitability.
The undersigned represents and warrants that it, he or she
is an officer, director, manager, member or general partner
of the Company, or an officer, director, manager, member or
general partner of a general partner of the Company.
We represent and warrant that the information set forth herein as well as
all other information which we are furnishing to the Company with respect to our
financial condition and business and investment experience is accurate and
complete as of the date hereof and we covenant that, in the event a material
change should occur in such information, we will immediately provide the Company
with such revised or corrected information.
The undersigned acknowledges and agrees that they have full power and
authority to enter into this agreement. None of the provisions hereof shall be
modified, discharged or terminated except by an instrument in writing signed by
the party against whom any waiver, change discharge or termination is sought.
This agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the internal laws of the State of
Delaware. This agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which shall constitute the same instrument.
Except as otherwise provided herein, this agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors, legal representatives and assigns. If the
undersigned is more than one person, the obligations of each undersigned shall
be joint and several and the agreements, representations, warranties and
acknowledgments herein contained shall be deemed to be made and binding upon
such undersigned and his heirs, executors, administrators, successors, legal
representatives and assigns.
TRANSMITTAL LETTER AND SUBSCRIPTION AGREEMENT PAGE 7 OF 8
Name of Entity (if applicable):_________________________________________________
Signature:_____________________________________
Signature:_____________________________________
Name:__________________________________________
Name:__________________________________________
Title (if applicable):__________________________________________________________
Street Address:_________________________________________________________________
City: __________________________ State: ________________ Zip: ______________
Telephone: (_________)__________________________________________________________
Social Security or Federal Tax ID Number: ______________________________________
Date of Organization (if applicable): __________________________________________
***DO NOT WRITE BELOW DOTTED LINE***
................................................................................
ACCEPTED ON BEHALF OF THE COMPANY:
BY:_________________________________
Name: James M. Powers, Jr.
Title: President
Date: __________________________
TRANSMITTAL LETTER AND SUBSCRIPTION AGREEMENT PAGE 8 OF 8
EXHIBIT (a)(1)(iii)
iLinc Communications
CONTACT: JAMES M. POWERS, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
(602) 952-1200
ILINC iNNOUNCES EXCHANGE OFFER FOR 12%
SUBORDINATED CONVERTIBLE NOTES DUE 2012
PHOENIX, Arizona (March 2, 2005) iLinc Communications, Inc. (AMEX:ILC),
developers of one of the most feature-rich and secure Web conferencing and
integrated audio conferencing solutions, announced today an offer to exchange up
to $5,625,000 principal amount of its 12% subordinated convertible notes due
2012 for common stock and modified warrants.
iLinc is offering to exchange the notes for common stock at a price of $0.40 per
share, and extend the exercise period and reduce the exercise price of
outstanding warrants to purchase iLinc common stock held by tendering note
holders. The notes and accompanying warrants were issued in 2002 as part of a
private placement. The warrants currently have an exercise price of $3.00 per
share and expire March 29, 2005. Those note holders who participate in this
exchange offer will receive, in addition to the common stock, an extension of
the exercise period of their warrants to March 29, 2006 and the exercise price
of the warrant will be reduced to $1.20 per share.
The issuance of the shares of iLinc common stock in connection with the exchange
offer will not be registered under the Securities Act of 1933 and such shares
may not be offered or sold in the United States absent registration or an
exemption from registration.
The exchange offer will expire at 5:00 p.m. EST, on March 29, 2005, unless
extended by iLinc, and iLinc will act as its own exchange agent. iLinc may
accept any portion of the $5,625,000 aggregate principal amount of notes, and
reserved the right to otherwise amend, extend, or terminate the exchange offer.
This press release is neither an offer to purchase nor a solicitation of an
offer to sell securities of iLinc. The exchange offer will be made only through
and upon the terms and conditions described in the Tender Offer Statement dated
March 1, 2005, a part of Schedule TO on file with the Securities and Exchange
Commission. The Tender Offer Statement, and related documents contain important
information that should be read carefully before any decision is made with
respect to the exchange offer. The Tender Offer Statement and the related letter
of transmittal are being sent to all holders of the notes, and the Tender Offer
Statement is available at no charge at the SEC's Web Site found at www.sec.gov
or from iLinc by visiting www.ilinc.com.
ABOUT iLINC COMMUNICATIONS, INC.
iLinc Communications, Inc. is a leading developer of integrated Web and audio
(phone) conferencing products and services for highly secure and cost-effective
collaborative meetings, presentations, and training sessions. The Company
enables customers to purchase and own iLinc Web conferencing software, which can
be installed inside of a customer's network or hosted by iLinc. Our products and
services include the iLinc suite of Web Conferencing software (MeetingLinc,
LearnLinc, ConferenceLinc, and SupportLinc); Phone (Audio) Conferencing
Services; On-Demand Conferencing; and EventPlus, a service for professionally
managed online and audio conferencing events. iLinc's products and services are
used by organizations worldwide in sales, HR and training, marketing, and
customer support. More information about the Phoenix-based company may be found
on the Web at www.iLinc.com.
THIS PRESS RELEASE CONTAINS INFORMATION THAT CONSTITUTES FORWARD-LOOKING
STATEMENTS MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. ANY SUCH FORWARD-LOOKING STATEMENTS INVOLVE RISK
AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM ANY
FUTURE RESULTS DESCRIBED WITHIN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT
COULD CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THE RATE OF ACCEPTANCE OF THE
COMPANY'S PRODUCTS AND SERVICES BY CUSTOMERS, CHANGES IN THE WEB CONFERENCING
AND AUDIO CONFERENCING MARKET IN GENERAL, THE ACCEPTANCE OF NEW PRODUCTS, THE
COMPANY'S NEED FOR WORKING CAPITAL, THE RESULT OF PENDING LITIGATION, THE
COMPETITION THE COMPANY FACES FROM LARGER AND MORE WELL-CAPITALIZED COMPETITORS,
AND OTHER MATTERS MORE FULLY DISCLOSED IN THE COMPANY'S ANNUAL REPORT ON FORM
10-K, QUARTERLY REPORTS ON FORM 10-Q, AND OTHER REPORTS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THE FORWARD-LOOKING INFORMATION PROVIDED
HEREIN REPRESENTS THE COMPANY'S ESTIMATES AND EXPECTATIONS AS OF THE DATE OF THE
PRESS RELEASE, AND SUBSEQUENT EVENTS AND DEVELOPMENTS MAY CAUSE THE COMPANY'S
ESTIMATES AND EXPECTATIONS TO CHANGE. THE COMPANY SPECIFICALLY DISCLAIMS ANY
OBLIGATION TO UPDATE THE FORWARD-LOOKING INFORMATION IN THE FUTURE. THEREFORE,
THIS FORWARD-LOOKING INFORMATION SHOULD NOT BE RELIED UPON AS REPRESENTING THE
COMPANY'S ESTIMATES AND EXPECTATIONS OF ITS FUTURE FINANCIAL PERFORMANCE AS OF
ANY DATE SUBSEQUENT TO THE DATE OF THIS PRESS RELEASE.
iLinc, iLinc Communications, MeetingLinc, LearnLinc, ConferenceLinc,
SupportLinc, and its logo are trademarks or registered trademarks of iLinc
Communications, Inc. All other company names and products may be trademarks of
their respective companies.
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