-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VI2Yw/NBWoBHmJam/ZcvdIIidn095dVjr/R81XTlIoIblOxLnc6lhyAj4mz2KlUJ br43ocb1JwWG5ItitH1wDA== 0000950131-01-501508.txt : 20010516 0000950131-01-501508.hdr.sgml : 20010516 ACCESSION NUMBER: 0000950131-01-501508 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IFX CORP CENTRAL INDEX KEY: 0000792861 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 363399452 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15187 FILM NUMBER: 1638859 BUSINESS ADDRESS: STREET 1: 707 SKOKIE BLVD 5TH FLOOR CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 8474129411 MAIL ADDRESS: STREET 1: 707 SKOKIE BLVD 5TH FLOOR CITY: NORTHBROOK STATE: IL ZIP: 60062 FORMER COMPANY: FORMER CONFORMED NAME: CARL JACK 312 FUTURES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: 312 FUTURES INC DATE OF NAME CHANGE: 19860916 10-Q 1 d10q.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2001 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______ . Commission file number 0-15187 IFX CORPORATION (Exact name of Registrant as specified in its charter) Delaware 36-3399452 - -------------------------------------------------------------------------------- (State of incorporation) (I.R.S. Employer Identification No.) 707 Skokie Blvd., Suite 580 Northbrook, Illinois 60062 -------------------------- (Address of principal executive offices) (847) 412-9411 -------------- (Registrant's telephone number) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock: $.02 Par Value, 14,233,654 shares as of March 31, 2001. Page 1 IFX CORPORATION AND SUBSIDIARIES PART 1 FINANCIAL INFORMATION PAGE Item 1 Financial Statements Condensed consolidated balance sheets as of March 31, 2001 (unaudited) and June 30, 2000 3 Condensed consolidated statements of operations for the three and nine months ended March 31, 2001 (unaudited) and 2000 (unaudited) 4 Condensed consolidated statements of cash flows for the nine months ended March 31, 2001 (unaudited) and 2000 (unaudited) 5 Notes to condensed consolidated financial statements 6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3 Quantitative and Qualitative Disclosures about Market Risk 13 PART II OTHER INFORMATION Item 4 Submission of matters to a vote of shareholders 14 Item 6 Exhibits and reports on Form 8-K 14 (a) Exhibits (b) Reports on Form 8-K SIGNTAURES 15 Page 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements IFX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31, June 30, 2001 2000 -------------- ------------- (unaudited) ASSETS Current Assets Cash and cash equivalents $ 2,999,800 $ 13,835,500 Restricted cash 1,559,300 -- Receivables, net of allowance for doubtful accounts of $1,461,000 and $922,500 at March 31, 2001 and June 30, 2000, respectively 2,593,200 1,208,600 Receivable, related party 729,000 -- Net assets of discontinued operations 442,800 952,600 Income taxes receivable 1,571,300 1,632,600 Prepaid expenses 1,616,700 746,000 -------------- -------------- Total current assets 11,512,100 18,375,300 PROPERTY AND EQUIPMENT, NET 22,305,200 15,190,300 OTHER ASSETS Acquired customer base, net of accumulated amortization of $12,657,800 and $5,511,800, at March 31, 2001 and June 30, 2000, respectively 16,385,300 21,220,500 Investments 2,991,900 3,180,600 Foreign taxes recoverable 1,018,300 1,422,400 Other assets 496,800 843,100 -------------- -------------- Total other assets 20,892,300 26,666,600 -------------- -------------- TOTAL ASSETS $ 54,709,600 $ 60,232,200 ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 9,514,700 $ 6,683,300 Accrued expenses 4,051,900 3,243,500 Deferred revenues 598,300 361,900 Liabilities related to acquisitions 134,900 1,568,000 Notes payable - current portion 32,900 -- Capital lease obligations - current portion 5,055,200 1,935,300 -------------- -------------- Total current liabilities 19,387,900 13,792,000 LONG-TERM LIABILITIES Notes payable and other long term liabilities 1,437,400 1,477,600 Deferred gain on sale of investment 4,451,900 4,451,900 Capital lease obligations, less current portion 9,748,200 9,032,500 -------------- -------------- Total long-term liabilities 15,637,500 14,962,000 -------------- -------------- TOTAL LIABILITIES 35,025,400 28,754,000 -------------- -------------- STOCKHOLDERS' EQUITY: Preferred stock, $1.00 par value; 10,000,000 shares authorized, 2,030,869 and 1,210,398 issued and outstanding at March 31, 2001 and June 30, 2000, respectively. 25,000,000 14,900,000 Common stock, $.02 par value; 50,000,000 shares authorized, 14,233,654 and 13,295,183 shares issued and outstanding at March 31, 2001 and June 30, 2000, respectively 284,700 265,900 Additional paid-in capital 74,863,100 69,833,600 Accumulated deficit (72,142,500) (41,059,800) Accumulated other comprehensive loss (157,800) (329,000) Deferred compensation (8,163,300) (12,132,500) -------------- -------------- TOTAL STOCKHOLDERS' EQUITY 19,684,200 31,478,200 -------------- -------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 54,709,600 $ 60,232,200 ============== ==============
The accompanying notes are an integral part of the condensed consolidated financial statements. Page 3 IFX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
THREE MONTHS ENDED MARCH 31, NINE MONTHS ENDED MARCH 31, 2001 2000 2001 2000 -------- --------- -------- -------- REVENUES Dial-up 1,634,200 2,076,900 5,422,200 5,004,300 Dedicated line services 2,163,500 1,066,100 4,448,900 1,497,600 Sales to related party 3,597,300 -- 11,414,000 -- Web hosting and design services 354,600 125,200 986,700 293,100 Other 1,038,200 1,000 2,334,600 290,800 ----------- ------------ ------------ ------------- Total revenues 8,787,800 3,269,200 24,606,400 7,085,800 COSTS AND EXPENSES Cost of revenues 5,213,900 2,385,600 15,527,600 4,933,500 General and administrative 6,450,100 5,359,200 20,634,300 12,725,600 Sales and marketing 820,000 4,668,900 2,648,300 6,713,500 Depreciation and amortization 4,390,900 2,262,600 11,821,100 4,617,500 Non-cash stock compensation 1,184,800 2,289,500 4,974,700 3,930,000 ----------- ------------ ------------ ------------- Total operating expenses 18,059,700 16,965,800 55,606,000 32,920,100 ----------- ------------ ------------ ------------- Operating loss from continuing operations (9,271,900) (13,696,600) (30,999,600) (25,834,300) OTHER INCOME (EXPENSE) Interest income 80,000 83,800 539,700 233,900 Interest expense (857,900) (44,400) (1,175,500) (44,400) Loss from operations of equity investees - (6,400) (3,721,400) (41,900) Gain on sale of investment, related party - 1,900,000 - 1,900,000 Other (538,800) 700 (476,200) 68,900 ----------- ------------ ------------ ------------- Total other income (expense) (1,316,700) 1,933,700 (4,833,400) 2,116,500 ----------- ------------ ------------ ------------- Loss from continuing operations before income taxes (10,588,600) (11,762,900) (35,833,000) (23,717,800) Income tax benefit 794,000 301,600 2,036,500 1,728,600 ----------- ------------ ------------ ------------- Loss from continuing operations (9,794,600) (11,461,300) (33,796,500) (21,989,200) Income from discontinued operations, net of taxes 406,300 494,600 2,713,800 1,434,600 ----------- ------------ ------------ ------------- NET LOSS $(9,388,300) $(10,966,700) $(31,082,700) $ (20,554,600) =========== ============ ============ ============= BASIC AND DILUTED LOSS PER SHARE: Continuing operations $ (0.70) $ (1.01) $ (2.48) $ (2.41) Discontinued operations 0.03 0.04 0.20 0.16 ----------- ------------ ------------ ------------- Net loss $ (0.67) $ (0.97) $ (2.28) $ (2.25) =========== ============ ============ ============= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic and diluted 13,953,797 11,315,382 13,631,545 9,121,522 =========== =============== ============== =============
The accompanying notes are an integral part of the condensed consolidated financial statements. Page 4 IFX CORPORATION AND SUBSIDIARIES CONDENDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
NINE MONTHS ENDED MARCH 31, -------------------------------------- 2001 2000 ---------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (31,082,700) $ (20,554,600) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation 4,675,100 1,453,400 Amortization 7,146,000 3,164,100 Deferred taxes - (1,728,600) Bad debt expense 858,300 644,700 Non-cash stock compensation 4,974,700 3,930,000 Equity in net (income) loss of equity investees 3,721,400 41,900 Effect of deconsolidation of Tutopia.com (2,391,700) - Change in net assets of discontinued operations 509,800 3,969,500 Changes in operating assets and liabilities: Foreign taxes recoverable 404,100 (799,700) Receivables (2,242,900) (856,900) Receivable, related party (729,000) - Income tax receivable 61,300 - Prepaid expenses (870,700) - Other assets 346,300 (1,196,300) Due from affiliates - (112,500) Deferred revenues 236,400 90,700 Accounts payable and accrued expenses 3,402,100 6,479,700 -------------- ------------- Cash provided (used) by operating activities (10,981,500) (5,474,600) CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions, primarily customer base (656,600) (1,927,500) (Increase) decrease in investments and advances to affiliates - 3,205,200 Increase (decrease) in notes receivable - (7,500) Purchase of property and equipment (6,131,500) (4,382,600) ------------ ------------- Cash provided (used) by investing activities (6,788,100) (3,112,400) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds (payments) of notes payable (7,300) 111,900 Payments of capital lease obligations (1,770,700) (43,900) Restricted cash (1,559,300) - Issuance of common stock - 16,634,400 Issuance of preferred shares 10,100,000 - ------------ ------------- Cash provided (used) by financing activities 6,762,700 16,702,400 Effect of exchange rate changes on cash and cash equivalents 171,200 482,600 ------------ ------------- Increase (decrease) in cash and cash equivalents (10,835,700) 8,598,000 Cash and cash equivalents, beginning of period 13,835,500 5,482,800 ------------- ------------- Cash and cash equivalents, end of period $ 2,999,800 $ 14,080,800 ============= ============= SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES DISCLOSURE: Value of stock issued in conjunction with acquisitions $ 2,977,800 $ 12,854,500 ============= ============= Acquisition of equipment through assumption of capital lease obligations $ 5,606,300 $ 6,679,100 ============= =============
The accompanying notes are an integral part of the condensed consolidated financial statements. Page 5 IFX CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2001 (Unaudited) 1. BASIS OF PRESENTATION AND CONSOLIDATION The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, these unaudited condensed consolidated financial statements reflect all material adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the consolidated financial position and consolidated results of operations for the interim periods presented. Operating results for the interim reporting periods presented are not necessarily indicative of the results that may be expected for the year ending June 30, 2001. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K/A for the year ended June 30, 2000. The condensed consolidated financial statements include the accounts of IFX Corporation, its wholly-owned subsidiaries, and investments in which the Company has a controlling financial interest (collectively referred to herein as "IFX" "IFX Networks" or the "Company"). On August 31, 2000, the Company's investment in its majority-owned subsidiary, Tutopia.com ("Tutopia"), was reduced from approximately 85% to approximately 47%. As a result of this reduction, the Company began accounting for Tutopia under the equity method. Accordingly, the Company restated prior periods to reflect this change in reporting entity and this restatement had no effect on the Company's loss or loss per share as previously reported. Certain reclassifications have been made to the prior period financial statements to conform to the March 31, 2001 presentation. All significant intercompany transactions have been eliminated in consolidation. IFX has created an extensive pan-regional Internet platform as a leading provider of Internet-based network products and services throughout Latin America. IFX's network operations are based in Miami, Florida with the IFX network currently spanning over 57 cities in 14 countries: Argentina, Bolivia, Brazil, Chile, Colombia, El Salvador, Honduras, Guatemala, Mexico, Nicaragua, Panama, Uruguay, Venezuela and the United States. Long-Lived Assets In the event that facts and circumstances indicate that the costs of assets may be impaired, an evaluation of the recoverability is performed. If an evaluation is required, the estimated future undiscounted cash flow associated with the asset is compared to the asset's carrying amount to determine if a write-down to market value is required. The Company evaluates the possible impairment of long- lived assets by reviewing cash flows generated on a country-by-country basis, which is consistent with the way the Company's segments are reported. The Company does not believe that any significant impairment has occurred at March 31, 2001. Computation of Earnings or Loss per Common Share Basic earnings per share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per common share is calculated based upon the sum of the weighted average number of shares outstanding and the weighted average number of potentially dilutive securities which consist of stock options and common shares issuable upon the conversion of Preferred Stock. Approximately 4.3 million and 1.6 million of potentially dilutive securities have been excluded from the calculation of diluted loss per share from continuing operations for the three and nine month periods ended March 31, 2001 and 2000, respectively, since their effect would have been anti- dilutive. Liquidity Assessment Management expects to utilize existing cash and cash-equivalents together with operating cash flows, funds from the earn-out payments, and amounts to be paid by Tutopia to fund the Company's operations. Due primarily to slower than anticipated reductions in general and administrative expenses and slower dedicated-line revenue growth than anticipated, IFX raised additional equity capital during the quarter ended June 30, 2001, as described below. In the past, the Company has raised funds through the issuance of debt and equity securities and IFX may issue debt or make equity offerings in the future, depending on prevailing market conditions. Management is not certain whether the Company in the future will be able to continue raising funds through the issuance of securities or through other means on acceptable terms, or at all. The Company's inability to raise sufficient funds in the future could affect IFX's ability to meet its expansion plans, or satisfy capitalized lease obligations, and other obligations and IFX could have to postpone most of the Company's expansion goals and capital expenditures until financing is obtained. Cash needs will also be affected by whether Tutopia is able to fulfill its obligations to make cash payments under its network agreement with IFX. 2. DISCONTINUED OPERATIONS Income from discontinued operations primarily consists of amounts earned, net of related expenses, based on the financial performance of entities divested prior to July 1, 2000. Such amounts are expected to continue, depending upon the financial performance of the divested entities, through the Company's fiscal year ending June 30, 2002. In September 2000, the Company sold for $2.4 million a preference share which entitled the Company to future earn-out payments from one of the divested entities. Such amount was recognized in discontinued operations in the accompanying condensed consolidated statements of operations. The information set forth in the remaining Notes to Condensed Consolidated Financial Statements relates to continuing operations unless otherwise specified. Page 6 3. RECENT DEVELOPMENTS In January 2001 the Company entered into an agreement with Speedcom Finance to increase the Company's $1.2 million lease line to $2 million, providing the Company financing for the purchase of wireless networking equipment from Speedcom Wireless Corporation. The agreement required the Company to obtain an irrevocable letter of credit, which caused the Company to place approximately $0.6 million in restricted cash. As of March 31, 2001, IFX has leased approximately $2 million of equipment under this agreement. CrossKeys Agreement. In November 2000, the Company entered into an agreement with CrossKeys to purchase CrossKey's Dyband software for approximately $0.4 million. CrossKeys provides bandwidth management software and services. IBM Global Financing. In November 2000, the Company entered into an agreement with IBM Global Financing, providing the Company financing for approximately $2.1 million of IBM equipment and services. As a result of entering into the agreement, the Company obtained an irrevocable letter of credit that required the Company to place approximately $0.5 million in restricted cash. Nortel Networks Agreement. In October 2000, the Company entered into an agreement with Nortel Networks (CALA), Inc., providing the Company with the option to lease up to $5.0 million of Nortel networking equipment, software and consulting services. The equipment will be used to continue to expand the Company's network. As of March 31, 2001, approximately $1.0 million has been leased under the agreement. Inktomi Agreement. In September 2000, IFX entered into a $0.5 million agreement with Inktomi, a software caching management company. Under the terms of the agreement, IFX will purchase the Inktomi software caching solution to help improve the Company's bandwidth utilization and quality of service. Network Appliance. In September 2000, IFX entered into a $1.4 million lease agreement with Network Appliance, a storage and caching provider. Under the terms of the agreement, IFX has the option to lease up to $1.4 million of storage and caching equipment from Network Appliance. As of March 31, 2001 approximately $0.4 million has been leased under the agreement. UBS Capital Americas III, L.P. led a $20 million investment in Tutopia.com. On August 31, 2000, Tutopia.com, Inc., received $20 million of private equity financing from a group led by UBS Capital Americas. An entity controlled by Mr. Lee Casty, a former significant shareholder of the Company, participated in this group, and accounted for approximately $4.9 million of the group's investment. Following this financing, IFX owned approximately 47% of the outstanding stock of Tutopia. UBS Capital Americas and its affiliates which purchased Tutopia Series A Preferred Stock have the right to appoint a majority of Tutopia's directors, the entity controlled by Mr. Casty has the right to appoint one director of Tutopia, and IFX has the right to appoint one director of Tutopia. Prior to the UBS-led investment; Tutopia represented one of the Company's two major business lines. IFX has entered into an agreement with Tutopia to be the provider of Internet connectivity services to Tutopia for a period of three years. Either IFX or Tutopia can renew the interconnectivity agreement for a fourth year. After that agreement terminates, there can be no assurances that the Company will be the sole supplier of Internet connectivity services to Tutopia. UBS Capital Americas III, L.P., $25 million investment in IFX. On June 15, 2000, IFX received a $14.9 million round of private equity financing led by UBS Capital Americas III, L.P. ("UBS Capital Americas"). An additional $10.1 million was received on July 17, 2000, from a group lead by UBS Capital Americas. In exchange, IFX issued in total 2,030,869 Series A Preferred Shares. The proceeds were used in part to further the integration of IFX's information systems infrastructure, to increase marketing activities and to expand the Company's direct sales force to service the corporate market in Latin America. The Company also used these funds for working capital purposes. (See Note 10) 4. TUTOPIA.COM OPERATING RESULTS As discussed in Note 1, during September 2000, the Company's ownership interest in Tutopia was reduced from approximately 85% to approximately 47% and, as a result, the Company began accounting for its investment in Tutopia under the equity method. During the three-month period ended March 31, 2001 and the nine- month period ended March 31, 2001, IFX derived approximately 40.9% and 46.4%, respectively, of its revenue from Tutopia. As of March 31, 2001, IFX has accounts receivable from Tutopia in the amount of approximately $729,000. The unaudited operating results of Tutopia.com are as follows:
Three months ended March 31, Nine months ended March 31, ---------------------------- --------------------------- 2001 2000 2001 2000 Unaudited Unaudited Unaudited Unaudited ------------ ----------- ------------ ----------- Revenues $ 654,200 $ - $ 914,200 $ - Cost of revenues 3,997,400 - 13,347,500 - ------------ ----------- ------------ ----------- Gross loss 3,343,200 - 12,433,300 - Net loss $ 4,928,300 $ - $ 18,768,500 $ - ============ =========== ============ ===========
During the first quarter of fiscal 2001, the Company's investment in Tutopia was reduced to $0 under the equity method of accounting. Accordingly, the Company has not recognized its proportionate share of Tutopia's losses since the first quarter. Selected financial information from Tutopia's unaudited Balance Sheet:
March 31, 2001 Unaudited -------------- Current assets $ 4,023,100 Total assets 5,601,600 Current liabilities 1,709,200 Total liabilities 1,709,200 Stockholder's equity $ 3,892,400
5. SEGMENT REPORTING The Company is structured primarily around the geographic markets it serves and operates reportable segments in Argentina, Bolivia, Brazil, Chile, Mexico, and Venezuela. All of the segments provide Internet-related network services. The Company evaluates performance based on results of operations before income taxes excluding interest income and expense, income (loss) from investees accounted for under the equity method, and gains or losses from securities and other investments. During the three and nine month periods ended March 31, 2001, the Company derived approximately 40.9% and 46.4%, respectively, of its revenue from Tutopia. Selected unaudited financial information for the three months ended March 31, 2001 and 2000 by segment is presented below:
Three months ended March 31, 2001 Three months ended March 31, 2000 ------------------------------------------------- ------------------------------------------------ Total Revenues Loss from continuing Total Revenues Loss from continuing operations before operations before income taxes income taxes Unaudited Unaudited Unaudited Unaudited ------------------- ------------------------ ------------------- ----------------------- Argentina $ 1,042,100 $ (383,700) $ 86,400 $ (699,300) Bolivia 419,800 (194,700) 149,600 (286,300) Brasil 1,386,500 (1,893,800) 1,435,300 (1,647,100) Chile 963,400 (333,100) 409,400 (250,100) Mexico 1,326,500 (347,300) 537,700 (495,600) Venezuela 751,600 (208,400) 391,400 (50,200) All Other 2,897,900 (7,227,600) 259,400 (8,334,300) -------------- ------------ ------------- ------------- Total $ 8,787,800 $(10,588,600) $ 3,269,200 $ (11,762,900) ============== ============ ============= =============
Page 7 Selected unaudited financial information for the nine months ended March 31, 2001 and 2000 by segment is presented below:
Nine months ended March 31, 2001 Nine months ended March 31, 2000 -------------------------------------------------------- -------------------------------------------------------- Total Revenues Loss from continuing Total Assets Total Revenues Loss from continuing Total Assets operations before at 3/31/01 operations before at 3/31/00 income taxes income taxes Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited --------------- -------------------- --------------- ---------------- ------------------ ---------------- Argentina $ 2,335,300 $ (1,543,200) $ 2,611,200 $ 105,800 $ (1,404,800) $ 1,083,800 Bolivia 1,087,200 (596,000) 2,228,200 376,300 (545,300) 1,256,800 Brasil 4,002,200 (5,137,400) 17,591,900 2,443,300 (2,185,500) 13,843,600 Chile 2,785,700 (669,900) 4,988,300 1,215,100 (1,478,100) 5,322,700 Mexico 2,945,500 (2,225,900) 7,150,100 1,227,500 (832,300) 3,752,700 Venezuela 1,929,300 (1,195,000) 2,514,200 1,124,500 (518,200) 1,490,200 All Other 9,521,200 (24,465,600) 17,625,700 593,300 (16,753,600) 26,276,000 ------------- --------------- -------------- ------------- --------------- -------------- Total $ 24,606,400 $ (35,833,000) $ 54,709,600 $ 7,085,800 $ (23,717,800) $ 53,025,800 ============= =============== ============== ============= =============== ==============
6. ACCRUED LIABILITIES ON ACQUISITIONS A majority of IFX's acquisitions have been structured such that the Company pays an agreed upon percentage of the purchase price at closing ("first payment") with the remainder of the purchase price paid 60 to 360 days after closing ("second payment"). The amounts owed by IFX to the Internet Service Providers ("ISP's") it has acquired are classified as liabilities related to acquisitions. As of March 31, 2001 and June 30, 2000, IFX had accrued approximately $0.1 million and $1.6 million, respectively of such amounts. In general, the amounts are payable in cash or common stock of the Company at the fair market value on the date the obligation is settled. 7. STOCKHOLDERS' EQUITY During the three months ended March 31, 2001, the Company issued approximately 350,100 shares of common stock which a majority was issued as second payments related to acquisitions of ISPs. During the three months ended March 31, 2001, the Board of Directors approved the reservation of an additional 731,790 shares of common stock for stock options and warrants bringing the total number to approximately 4.6 million shares of the Company's common stock reserved for stock options and warrants under the Company's 1998 Stock Option and Incentive Plan. The Board of Directors also approved the adoption of the IFX Corporation 2001 Stock Option Plan and reserved approximately 1.3 million common shares for issuance under such plan. 8. INCOME TAX PROVISION Income tax benefits are recorded to the extent that the Company has realized tax provisions. Operating losses that could not be utilized to recover prior year tax liabilities have been fully provided for with a valuation allowance at June 30, 2000 and March 31, 2001. 9. LITIGATION The Company is a defendant in, and may be threatened with, various legal proceedings arising from its regular business activities. Management, after consultation with legal counsel, is of the opinion that the ultimate liability, if any, resulting from any pending action or proceedings should not have a material effect on the financial position or results of operations of the Company. In addition, certain of the Company's discontinued operations are involved in litigation that may impact the Company in the event of an unfavorable outcome. The Company believes that any loss that may be incurred should not have a material effect on the Company's financial position or results of operations. Page 8 10. SUSEQUENT EVENTS UBS Capital Investment In IFX. As reported on the Company's Reports on Forms 8-K dated March 13, 2001 and May 10, 2001, the Company received approximately $15.4 million in funding from UBS Capital Americas III, L.P. and UBS Capital LLC (collectively, the "Purchasers"), to be used for working capital purposes. Pursuant to the Stock Purchase Agreement dated as of March 13, 2001, by and among the Company and the Purchasers, as amended by Amendment No. 1 to the Stock Purchase Agreement dated as of May 7, 2001, the Purchasers purchased 3,994,127 shares of IFX's Class I Series B Convertible Preferred Stock and 424,135 shares of IFX's Class II Series B Convertible Preferred Stock on May 7, 2001. All of the shares were purchased at $3.50 per share. The Class I Series B Convertible Preferred Stock has full voting rights and each preferred share is convertible into one share of the IFX's common stock. The Class II Series B Convertible Preferred Stock has the same rights as the Class I Series B Convertible Preferred Stock except that it may not vote for the Board of Directors. At the election of Purchasers, each share of the Class II Series B Convertible Preferred Stock is convertible after one year into one share of Class I Convertible Preferred Stock. Under the terms of the Series A Preferred Stock previously issued by IFX, this investment caused the conversion ratio of the approximately 2 million shares of Series A Preferred Stock held by the Purchasers to be adjusted so that each share of Series A Preferred Stock will be convertible into approximately 3.52 shares of the Registrant's common stock, rather than one share of the Registrant's common stock as originally provided. In accordance with EITF 98-5, the Series A conversion ratio adjustment results in a beneficial conversion feature, which will be recognized as a noncash dividend to preferred shareholders. IFX Board Of Directors. Following this transaction, the Board of Directors of IFX has been increased to eight directors from seven directors. The Purchasers are entitled to select three directors. Further, the Casty Grantor Subtrust ("Casty") is entitled to appoint one director and International Technology Investments, LC ("ITI") is entitled to appoint one director. ITI and Casty are entitled to jointly select an additional director. Also, ITI, Casty and the Purchasers are jointly entitled to select two additional directors who qualify as "independent directors" in accordance with NASDAQ rules. Effective with the purchase of the Series B Convertible Preferred Stock, Zalman Lekach resigned as a director of IFX and Charles Delaney and Patrick Delhougne were appointed as directors. Investment In Tutopia.com, Inc. On the closing of the sale of the IFX Corporation Series B Preferred Stock to the Purchaser, the Purchasers and IFX invested approximately $1.8 million and $3.2 million, respectively, in Series A Convertible Preferred Stock of Tutopia.com, Inc. ("Tutopia"), a former indirect subsidiary of the Company. After the investments, the Company's investment in Tutopia remained at less than 50% of Tutopia's outstanding shares. Page 9 ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations The Company's statement of position and results of operations include the accounts of IFX Corporation, its wholly owned subsidiaries, and investments in which the Company has a controlling financial interest (collectively referred to herein as "IFX," "IFX Networks" or the "Company"). On August 31, 2000, the Company's 85% ownership interest in Tutopia was reduced to approximately 47% and, as a result, the Company did not consolidate Tutopia at March 31, 2001 and now accounts for this investment under the equity method. The Company's June 30, 2000 balance sheet has been restated to exclude the balances of Tutopia as a result of this change in percentage ownership in Tutopia. The Company's income from discontinued operations primarily consists of amounts earned, based on the financial performance of entities divested prior to July 1, 2000, net of related expenses incurred. Such revenues are expected to continue, depending upon the financial performance of the divested entities, through the Company's fiscal year ending June 30, 2002. Except for the historical information contained herein, the following discussion and analysis contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those discussed here. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this section, and those discussed in the Company's Form 10-K/A for the year ended June 30, 2000. The information provided below should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K/A for the year ended June 30, 2000. RESULTS OF OPERATIONS Revenues The companies that IFX has acquired generally had both business and consumer customers at the time of acquisition. IFX plans to increase its customer base and revenues by marketing Internet access and value-added services to business users in the Company's markets. Management expects the number of business customers to grow more rapidly than the number of consumer customers and revenues from the sale of our business services should increase more rapidly than revenues from the sale of dial-up Internet access services. As a result, management believes the Company's current customer and revenue mix is not an indication of the Company's future customer and revenue mix. IFX Networks provides Internet access service to customers under contracts that typically range from one month for dial-up access services to one year or more for dedicated access services. The majority of dial-up subscribers pay their subscription fees in advance. IFX currently offers a premium dial-up Internet access service for a single fee although customers that were on various rate plans have been allowed to continue those plans. The Company intends to encourage these users to migrate to the Company's premium dial-up plan. If a significant number of users migrate to free Internet access services, revenues from dial-up subscribers will decrease. All of the Company's access revenues are recognized as they are earned. IFX Networks also derives revenues from providing wholesale Internet access to businesses that resell such access on a branded or private label basis. Fees for wholesale access are generally billed on a monthly basis after services are rendered. Wholesale access customers are billed on either a per port basis or a per hour basis. Revenues from our wholesale Internet access services are recognized in the period in which the services are provided. The Company's revenues from value-added Internet services come from web hosting, domain name registration and co-location services. Services such as web hosting and co-location services are sold on a monthly subscription basis and are paid for in advance. The Company's domain name registration service is billed through a one-time fee. These revenues are recognized in the period in which the services are provided. Internet access charges and fees for value-added services vary among the countries in which we do business, depending on competition, economic and regulatory environments and other market factors. As a result of competitive pressure, IFX has reduced prices in some markets, especially for access services. Management expects that these pressures will continue in the Company's markets as the demand for and supply of Internet services continue to grow. The period-to-period comparisons of our results of operations set forth below include the results of operations from acquisitions that were made during the applicable period. Results of operations from acquisitions completed during a period have been included from the time of the closing of each acquisition. Revenues from continuing operations increased to $8.8 million for the three months ended March 31, 2001, from $3.3 million for the three months ended March 31, 2000. Revenues from continuing operations increased to $24.6 million for the nine months ended March 31, 2001, from $7.1 million for the nine months ended March 31, 2000. The increase in revenues was primarily related to the Company's acquisitions completed during fiscal 2000 and expansion of its user base resulting from the growth in value added services such as dedicated access and from wholesale access sold to Tutopia. During the three months ended March 31, 2001 and during the nine months ended March 31, 2001, the Company recognized approximately $3.6 million and $11.4 million, respectively, in revenue from Tutopia for network access fees, which represented approximately 40.9% and 46.4%, respectively, of the Company's total revenues. Page 10
Three Months Ended March 31, ------------------------------------------ 2001 2000 % Increase Unaudited Unaudited (Decrease) ------------ ------------ ------------- Dial-up $1,634,200 $2,076,900 (21.3)% Dedicated line services 2,163,500 1,066,100 102.9% Sales to related party 3,597,300 - n/a Web hosting and design services 354,600 125,200 183.2% Other 1,038,200 1,000 103,720.0% ------------ ------------ ------------- Total $8,787,800 $3,269,200 168.8%
Nine Months Ended March 31, -------------------------------------- 2001 2000 Unaudited Unaudited % Increase -------------------------------------- Dial-up $ 5,422,200 $5,004,300 8.4% Dedicated line services 4,448,900 1,497,600 197.1% Sales to related party 11,414,000 - n/a Web hosting and design services 986,700 293,100 236.6% Other 2,334,600 290,800 702.8% ------------- ---------- --------- Total $24,606,400 $7,085,800 247.3%
Costs of Revenues The Company's costs of revenues from providing Internet services are incurred to carry customer traffic to and over the Internet. IFX Networks leases lines that connect the Company's POPs to IFX's national hubs. Payments are made to other network providers for transit that allow the Company to transmit customers' data to or from the Internet over the providers' networks. IFX has other recurring telecommunications costs that include the cost of local telephone lines customers use to reach the Company's POPs and access IFX Network's services, and satellite bandwidth costs to connect the national hubs to the Internet backbone. Management expects operating costs from providing Internet services to increase as capacity to meet customer demand increases. Management expects that costs of revenues will decline as a percentage of revenue through the expansion of Company owned network facilities. Management also expects costs to decline as wireless technology usage expands and the telecommunication markets in Latin America deregulate. Costs of revenues increased to $5.2 million for the three months ended March 31, 2001 from $2.4 million for the three months ended March 31, 2000. Costs of revenues increased to $15.5 million for the nine months ended March 31, 2001 from $4.9 million for the nine months ended March 31, 2000. The increase was primarily related to the Company's network expansion to accommodate the growth in the user base, especially for Tutopia and for dedicated access. During the three months ended March 31, 2001, costs of revenues decreased as a percentage of total revenues to 59.3% from 73.0% for the same period in the prior fiscal year. During the nine months ended March 31, 2001, costs of revenues as a percentage of total revenues decreased to 63.1% from 69.6% for the same period in the prior fiscal year due to the scalability of the company's business. General and Administrative Expenses General and administrative expenses include the costs of employee compensation, rent, utilities, insurance, telecommunications, travel and professional fees. Compensation costs include salaries and related benefits, commissions and bonuses. Management expects general and administrative expenses to increase as IFX Networks continues to grow to meet the demands of its customers. General and administrative expenses increased to $6.5 million for the three months ended March 31, 2001 from $5.4 million for the three months ended March 31, 2000. General and administrative expenses increased to $20.6 million for the nine months ended March 31, 2001 from $12.7 million for the nine months ended March 31, 2000. The increase in general and administrative expenses is primarily attributable to the increase in payroll resulting from the increased support of the Company's expansion in Latin America. As a percentage of total revenues, general and administrative expenses reduced during the three months ended March 31, 2001 to 73.4% from 163.9% for the three months ended March 31, 2000. For the nine months ended March 31, 2001, general and administrative expenses as a percentage of total revenues was 83.9% as compared to 179.6% for the same period from the prior fiscal year. Sales and Marketing Sales and marketing expenses consist primarily of advertising costs, distribution costs and related production costs. Sales and marketing expenses decreased to $0.8 million for the three months ended March 31, 2001 from $4.7 million for the three months ended March 31, 2000. For the nine months ended March 31, 2001 and the nine months ended March 31, 2000, sales and marketing expenses were $2.6 million and $6.7 million, respectively. The decrease in sales and marketing results from the deconsolidation of Tutopia in that in the three months ended March 31, 2000, sales and marketing was primarily attributable to the launch of Tutopia.com. Depreciation and amortization A large component of depreciation and amortization expense is the amortization of acquired customer base. The value of acquired customer bases, which are amortized over three years using the straight-line method, was created as a result of the allocation of the price paid to acquire a company that was in excess of the value of its tangible assets. IFX also recognizes depreciation expense that is primarily related to telecommunications equipment, computers and network infrastructure. These assets are depreciated over their useful lives that typically range from three to ten years. Depreciation expense will increase as the Company expands its network infrastructure and thereby acquiring additional equipment as the Company expands and improves its operations. Depreciation and amortization expenses increased to $4.4 million for the three months ended March 31, 2001 from $2.3 million for the three months ended March 31, 2000. Depreciation and amortization expense increased to $11.8 million for the nine months ended March 31, 2001 from $4.6 million for the nine months ended March 31, 2000. The increase in depreciation for the three months ended March 31, 2001 is attributable to the increase in fixed assets, capitalized software and capital leases of approximately $17.4 million from the same period of fiscal 2000. The increase in amortization expense is due to approximately $29.1 million of acquired customer base due to acquisitions the Company completed in Latin America during fiscal year 2000. Page 11 Non-Cash Stock-Based Compensation Expense For the three months ended March 31, 2001, IFX recorded non-cash stock compensation expense of approximately $1.2 million compared to $2.3 million for the three months ended March 31, 2000. For the nine months ended March 31, 2001, the Company recorded non-cash compensation expense of approximately $5.0 million compared to $3.9 million for the nine months ended March 31, 2000. The increase is attributable predominantly to the current-year amortization related to the issuance of additional employee option grants during the prior year. Also, as of March 31, 2001, the Company had recorded as a reduction of Stockholders Equity approximately $8.2 million of deferred compensation, which will be amortized in future years over the vesting period of the individual options (generally 3 years). Other Income (Expense) Interest income decreased to $80,000 for the three months ended March 31, 2001 from $83,800 for the three months ended March 31, 2000. Interest income increased to $539,700 for the nine months ended March 31, 2001 from $233,900 for the nine months ended March 31, 2000. Interest income increased as the result of increased cash and cash equivalents attributable to the equity funding received by the Company in June and July 2000. Interest expense increased to $857,900 from $44,400 for the three months ended March 31, 2001 as compared to the three months ended March 31, 2000. Interest expense increased to $1,175,500 from $44,400 for the nine months ended March 31, 2001 as compared to the nine months ended March 31, 2000. The increase is a result of the increase in borrowings under capital lease agreements. No loss from operations of equity investees was realized for the three months ended March 31, 2001 as compared to $6,400 for the three months ended March 31, 2000. Loss from operations of equity investees increased to $3,721,400 from a loss of $41,900 for the nine months ended March 31, 2001 and 2000, respectively. The increase is related to the treatment of Tutopia as an equity investee rather than as a consolidated subsidiary as further discussed in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2000. The decrease of other to an expense of $476,200 during the nine months ended March 31, 2001 as compared to income of $68,900 during the nine months ended March 31, 2000 is primarily attributable to a private equity fee related to UBS capital funding during fiscal 2001. Income tax provision Income tax benefits are recorded to the extent that the Company recorded a tax provision from its discontinued operations. Operating losses that could not be utilized to recover prior year tax liabilities have been fully provided for with a valuation allowance at June 30, 2000 and March 31, 2001. Income from discontinued operations, net For the three months ended March 31, 2001, the Company earned approximately $0.4 million from its discontinued operations, compared to $0.5 million earned for the three months ended March 31, 2000. For the nine months ended March 31, 2001, the Company earned approximately $2.7 million from its discontinued operations, compared to $1.4 million earned for the nine months ended March 31, 2000. This increase is due to the $2.4 million sale of the preference share. Net loss and loss per share IFX's loss from continuing operations for the three months ended March 31, 2001 was approximately $9.8 million, or $0.70 per share, compared to a net loss of $11.5 million, or $1.01 per share, for the three months ended March 31, 2000. The loss of $9.8 million includes non-cash charges of $5.6 million related to depreciation, amortization, stock compensation, and loss from operations of equity investees. Including discontinued operations, the Company lost $9.4 million, or $0.67 per share, compared to a net loss of $11.0 million, or $0.97 per share, for the three months ended March 31, 2000. IFX's loss from continuing operations for the nine months ended March 31, 2001 was approximately $33.8 million, or $2.48 per share, compared to a net loss of $22.0 million, or $2.41 per share, for the nine months ended March 31, 2000. The loss of $33.8 million includes non-cash charges of $20.5 million related to depreciation, amortization, stock compensation, and loss from operations of equity investees. Including discontinued operations, the Company lost $31.1 million, or $2.28 per share, compared to a net loss of $20.6 million, or $2.25 per share, for nine months ended March 31, 2000. Page 12 FINANCIAL CONDITION Liquidity and Capital Resources For the nine months ended March 31, 2001, cash used by ongoing and discontinued operations was approximately $11.0 million compared to cash used by ongoing and discontinued operations of $5.5 million for the nine months ended March 31, 2000. The majority of cash provided in the nine months ended March 31, 2001 is primarily attributed to Internet operations and the earn-out payments related to discontinued operations. The cash used in operations is mainly related to the connectivity expenses of our network, operating leases, payroll and advertising. In addition, the Company invests cash not needed for operations at any of its subsidiaries in short-term investments such as U.S. Government obligations and overnight time deposits. As of March 31, 2001, the Company held approximately $3.0 million in cash and equivalents. For the nine months ended March 31, 2001, cash used in investing activities was approximately $6.8 million compared to cash used in investing activities of $3.1 million for the same period in 2000. Cash used in investing activities was related primarily to the purchase of property and equipment of approximately $6.1 million. For the nine months ended March 31, 2001, cash provided by financing activities was approximately $6.8 million compared to cash provided by financing activities of $16.7 million for the nine months ended March 31, 2000. Management expects to utilize existing cash and cash-equivalents together with operating cash flows, funds from the earn-out payments, and amounts to be paid by Tutopia to fund the Company's operations. In the past, the Company has raised funds through the issuance of debt and equity securities and IFX may need to raise additional funds for expansion and/or working capital purposes. IFX may issue debt or make equity offerings in the future, depending on prevailing market conditions. Management is not certain whether the Company will be able to raise sufficient funds on acceptable terms, or at all. The Company's inability to raise sufficient funds in the future could affect IFX's ability to meet its expansion plans, or satisfy capitalized lease obligations and other obligations and IFX could have to postpone most of the Company's expansion goals and capital expenditures until financing is obtained. Cash needs will also be affected by whether Tutopia is able to fulfill its obligations to make cash payments under its network agreement with IFX. Forward-Looking Statements The statements contained herein that are not historical facts are "forward- looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. The Company wishes to caution you that these forward-looking statements addressing the timing, costs and scope of the Company's acquisition of, or investments in, existing or future ISPs, the revenue and profitability levels of the ISPs in which the Company invests, the anticipated reduction in costs of sales and operating costs resulting from the integration and optimization of those ISPs or otherwise, and other matters contained herein regarding matters that are not historical facts, are only predictions. The Company can give no assurance that the future results indicated, whether expressed or implied, will be achieved. These projections and other forward-looking statements are based upon a variety of assumptions relating to the Company's business, which, although the Company considered reasonable, may not be realized. Because of the number and uncertainties of the assumptions underlying the Company's projections and forward-looking statements, some of the assumptions may not materialize and unanticipated events and circumstances may occur subsequent to the date of this report. These forward- looking statements are based on current expectations, and the Company assumes no obligation to update this information. The inclusion of projections and other forward-looking statements should not be regarded as a representation by the Company or any person that these estimates and projections will be realized, actual results may vary materially. Item 3. - Quantitative and Qualitative Disclosures about Market Risk Exchange Rate and Inflation Risk The Company's continuing operations are focused primarily in Latin America, subjecting the Company to certain political, economic and commercial risks and uncertainty not typically found in the U.S. The Company's exposure to market risk is directly related to its role as a Latin American network company and its primary market risk exposure relates to foreign exchange rate risk. Foreign exchange rate risk arises from the possibility that changes in foreign currency exchange rates will adversely impact the value of the Company's revenues, assets, liabilities and/or equity. When the Company operates in a foreign country, the value of the local currency will probably fluctuate. This fluctuation can cause the Company to gain or lose on the translation to US Dollars. Interest Rate Risk The Company's short-term investments are classified as cash and cash equivalents with original maturities of three month or less. Therefore, changes in the market's interest rates should not significantly affect the value of the investments as recorded by IFX. Page 13 PART II - OTHER INFORMATION ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS On January 9, 2001, the Company held its 2000 annual meeting of stockholders, at which there were 9,510,771 shares of Common Stock, or approximately 67% of the shares of Common Stock entitled to vote, and 1,227,825 shares of Series A Preferred Stock, or approximately 60% of the shares of Series A Preferred Stock entitled to vote, present or represented by proxy. At the annual meeting, the following matters were approved by more than the requisite number of stockholders. All persons nominated to become directors of the Company were elected. The number of votes cast for and withheld for each director were as follows: Votes Cast For Withheld -------------- -------- Joel M. Eidelstein 9,519,668 967 Michael Shalom 9,519,668 967 Zalman Lekach 9,519,668 967 George A. Myers 9,519,668 967 Burton J. Meyer 9,519,668 967 Mark O. Lama 9,519,668 967 Charles W. Moore 9,519,668 967 A proposal to approve an amendment to the IFX Corporation 1998 Stock Option and Incentive Plan (the "Plan") to increase the number of shares of common stock available for issuance under the Plan was approved, with 11,395,623 shares voted for and 31,855 shares voted against the proposal, and 22,482 shares abstaining. A proposal to ratify the appointment of Ernst & Young LLP as independent auditors for the Company's fiscal year ending June 30, 2001 was approved, with 11,449,193 shares voted for and 255 shares voted against the proposal, and 512 shares abstaining. On March 13, 2001, the holders of 10,991,151 shares, or 68.7% of the Company's stock entitled to cast votes for such matters consented, in writing, to the following proposals made by the Company's Board of Directors: The issuance of 4,418,262 shares of Series B Convertible Preferred Stock. Amendment of the Certificate of Designation for the Series A Convertible Preferred Stock. Amendment of the 1998 Stock Option Plan. Adoption of the 2001 Stock Option Plan. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (b) Reports on Form 8-K The Company filed reports on Forms 8-K on March 16, 2001, and May 10, 2001. Page 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. IFX CORPORATION - ----------------------------------- (Registrant) Dated: May 15, 2001 By: /s/ MICHAEL SHALOM ------------------------- Michael Shalom Chief Executive Officer Dated: May 15, 2001 By: /s/ JOSE LEIMAN ----------------------- Jose Leiman Chief Financial Officer Page 15 -----END PRIVACY-ENHANCED MESSAGE-----