iLinc Communications, Inc (ILC)

[thepennyking]

DILUTION TO EXISTING SHAREHOLDERS IS LIKELY TO OCCUR UPON ISSUANCE OF SHARES WE

HAVE RESERVED FOR FUTURE ISSUANCE


On December 31, 2003, 19,073,059 shares of our common stock were issued, of which 1,432,412 were held in treasury, and 22,459,769 additional shares of our common stock were reserved for issuance. The issuance of these additional shares will reduce the percentage ownership of existing stockholders in the Company.

The following shares were reserved for issuance as of December 31, 2003:


o Issued and outstanding stock options to purchase common shares
totaling approximately 1,982,105;
o Issued and outstanding warrants to purchase common shares totaling
approximately 7,647,664; includes a warrant for 250,000 shares
that if exercised precluded the delivery of the shares until
February 5, 2004.
o Issued and outstanding warrant to purchase $577,500 of convertible
redeemable subordinated notes with detachable warrants for 577,500
common shares, all of which are exercisable for or convertible
into an aggregate 1,155,000 common shares;
o Issued and outstanding warrant to purchase 15,000 shares of
convertible preferred stock with detachable warrants for 75,500
common shares, all of which are exercisable for or convertible
into a potential aggregate 575,000 common shares;
o A restricted stock grant to receive shares totaling approximately
450,000; and
o Shares issuable upon the conversion of convertible redeemable
subordinated notes and preferred stock totaling a potential
aggregate of 10,650,000 common shares.

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.