Edgar Filing: ILINC COMMUNICATIONS INC

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement

[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12

iLINC COMMUNICATIONS, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)

(1) Title of each class of securities to which transaction applies:

--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:

--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):

--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

--------------------------------------------------------------------------------
(5) Total fee paid:

--------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

--------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:

--------------------------------------------------------------------------------
(3) Filing Party:

--------------------------------------------------------------------------------
(4) Date Filed:

--------------------------------------------------------------------------------

-1-

2999 NORTH 44TH STREET, SUITE,650
PHOENIX, ARIZONA 85018

July 17, 2006

TO THE STOCKHOLDERS OF iLINC COMMUNICATIONS, INC.

You are cordially invited to attend the 2006 Annual Meeting of Stockholders (the
"Meeting") of iLinc Communications, Inc. (the "Company"), to be held on August
18, 2006, at 9:00 a.m., local time, at the Company's offices, 2999 North 44th
Street, Suite 650, Phoenix, Arizona 85018.

All shares represented by properly executed proxies will be voted in accordance
with the specifications on the enclosed proxy. If no specification is made,
proxies will be voted for approval of the proposals. Detailed information
concerning the proposals are set forth in the attached proxy statement which we
urge you to read carefully and promptly return your proxy.

Please read the enclosed 2006 Annual Report to Stockholders and Proxy Statement
and take the time to vote. Whether or not you plan to attend the Meeting, please
sign, date, and return the proxy card in the enclosed envelope as soon as
possible so that your vote will be recorded. If you received a proxy card with a
Web site address and voting codes, we urge you to vote on the Internet at the
Web site indicated in the materials, found at www.proxyvote.com.

If you attend the Meeting having already returned the proxy card, you may
withdraw your proxy and vote your shares in person. Your vote is important so
please take the time to vote.

Sincerely,

/s/ James M. Powers, Jr.
------------------------
Chairman of the Board
and Chief Executive Officer

-2-

iLINC COMMUNICATIONS, INC.
2999 NORTH 44TH STREET, SUITE 650
PHOENIX, ARIZONA 85018

_____________________

NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD AUGUST 18, 2006

_____________________

TO OUR STOCKHOLDERS:

The 2006 Annual Meeting of Stockholders (the "Meeting") of iLinc Communications,
Inc., a Delaware corporation (the "Company"), will be held on August 18, 2006,
at 9:00 a.m., local time, at the Company's offices, 2999 North 44th Street,
Suite 650, Phoenix, Arizona 85018, for the following purposes:

(1) To elect two Class B directors to serve for a term of three years or until
their successors are duly elected and qualified;

(2) To consider and vote for a proposal to approve and ratify the appointment of
Epstein Weber & Conover, PLC, as the Company's independent accountants for the
fiscal year ending March 31, 2007; and

(3) To consider such other matters as may properly come before the Meeting and
at any and all adjournments thereof.

Only stockholders of record at the close of business on June 30, 2006 are
entitled to notice of and to vote at the Meeting.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ James M. Powers, Jr.
------------------------
James M. Powers, Jr.
Chairman of the Board and Chief Executive
Officer

Phoenix, Arizona
July 17, 2006

A PROXY CARD IS ENCLOSED. YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU
OWN. TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE MEETING, PLEASE COMPLETE
AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE
PREPAID, ADDRESSED ENVELOPE. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. IF YOU RECEIVED A PROXY CARD WITH A WEB SITE ADDRESS AND VOTING
CODES, WE URGE YOU TO VOTE ON THE INTERNET AT THE WEB SITE INDICATED IN THE
MATERIALS, FOUND AT WWW.PROXYVOTE.COM. RETURNING YOUR PROXY WILL NOT AFFECT YOUR
RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.

-3-

iLINC COMMUNICATIONS, INC.
2999 NORTH 44TH STREET, SUITE 650
PHOENIX, ARIZONA 85018

PROXY STATEMENT

______________________

GENERAL INFORMATION

The enclosed proxy is solicited by and on behalf of the Board of Directors of
iLinc Communications, Inc., (the "Company"), for use at the Company's 2006
Annual Meeting of Stockholders (the "Meeting" or the "Annual Meeting") to be
held at 9:00 a.m., local time, on August 18, 2006, at 2999 North 44th Street,
Suite 650, Phoenix, Arizona 85018, and at any and all adjournments thereof. This
Proxy Statement and the accompanying form of proxy are first being mailed or
given to the stockholders of the Company on or about July 17, 2006.

The Company is mailing its 2006 Annual Report to Stockholders, including
consolidated financial statements, simultaneously with this Proxy Statement to
all stockholders of record as of the close of business on June 30, 2006. That
report does not constitute a part of this proxy solicitation material.

INFORMATION CONCERNING SOLICITATION AND VOTING

All voting rights are vested exclusively in the holders of the Company's common
stock, par value $0.001 per share. Each share of the Company's common stock is
entitled to one vote. Cumulative voting in the election of directors is not
permitted. Holders of a majority of shares entitled to vote at the Meeting, when
present in person or by proxy, constitute a quorum. On June 30, 2006, the record
date for stockholders entitled to vote at the Meeting, 32,909,703 shares of the
Company's common stock were issued and outstanding.

Proxies in the enclosed form will be effective if properly executed and returned
prior to the Meeting in the enclosed envelope either to ADP Investor
Communication Services, 51 Mercedes Way, Edgewood, NY 11717 or to the Company at
2999 N. 44th Street, Suite 650, Phoenix, Arizona 85018. The Company's common
stock represented by each effective proxy will be voted at the Meeting in
accordance with the instruction on the proxy. If no instructions are indicated
on a proxy, all common stock represented by such proxy will be voted (a) FOR
election of the two nominees named in the proxy as Class B directors; (b) FOR
approval and ratification of the appointment of Epstein Weber & Conover, PLC as
the Company's independent accountants for the fiscal year 2007; and (c) as to
any other matters of business which properly come before the Meeting, by the
named proxies at their discretion.

Any stockholder signing and mailing the enclosed proxy may revoke it at any time
before it is voted by giving written notice of the revocation to the Company, by
voting in person at the Meeting or by filing at the Meeting a later executed
proxy.

If a quorum is present, in the election of directors, the nominees having the
highest number of votes cast in favor of their election will be elected to the
Company's Board of Directors. With respect to the proposal to ratify the
appointment of Epstein Weber & Conover, PLC as the Company's independent
accountants for the fiscal year 2007, the affirmative vote of a majority of the
shares present or represented by proxy at the meeting is required. With respect
to any other matter which may properly come before the Meeting, unless a greater
number of votes is required by law or by the Company's restated certificate of
incorporation, a matter will be approved by the stockholders if the votes cast
in favor of the matter exceed the votes cast in opposition.

Abstentions, broker non-votes (i.e., shares held by brokers or nominees as to
which the broker or nominee indicates on a proxy that it does not have
discretionary authority to vote) and any other shares not voted will be treated
as shares that are present and entitled to vote for purposes of determining the
presence of a quorum. Abstentions and broker non-votes which may be specified on
the proposal to ratify the appointment of Epstein Weber & Conover, PLC as the
Company's independent accountants for the fiscal year 2007, will have the same
effect as a vote against that proposal. For purposes of determining the outcome
of the election of the directors, or of any other matter which properly may come
before the Meeting, abstentions and broker non-votes will not be considered as
votes cast for or against the matter. Thus, abstentions and broker non-votes
will have no impact in the election of the two Class B directors, or any other
matter which properly may come before the Meeting so long as a quorum is
present.

-4-

The Company will pay the cost of soliciting proxies in the accompanying form.
The Company has retained the services of ADP Investor Communication Services to
assist in distributing proxy materials to brokerage houses, banks, custodians
and other nominee holders. The estimated cost of such services is approximately
$8,000 plus out-of-pocket expenses. Although there are no formal agreements to
do so, proxies may be solicited by officers and other regular employees of the
Company by telephone, telegraph or by personal interview for which employees
will not receive additional compensation. Arrangements also may be made with
brokerage houses and other custodians, nominees and fiduciaries to forward
solicitation materials to beneficial owners of the shares held of record by such
persons, and the Company may reimburse such persons for reasonable out-of-pocket
expenses incurred by them in so doing.

PROPOSAL ONE: ELECTION OF DIRECTORS

GENERAL

The Company's restated certificate of incorporation provides for the
classification of the Company's Board of Directors into three classes. The term
of office of the Class B directors expires at this Annual Meeting of
Stockholders; the term of office of the Class C directors expires at the
Company's 2007 Annual Meeting of Stockholders and the term of office of the
Class A directors expires at the Company's 2008 Annual Meeting of Stockholders.
Two Class B nominees are nominated to be re-elected at this Annual Meeting to
serve for a three-year term to last until the 2009 Annual Meeting of
Stockholders or until their successors are duly elected and have been qualified.
The nominees for Class B directors will be elected by a plurality of the votes
cast, assuming a quorum is present at the Annual Meeting. Accordingly,
abstentions and broker non-votes will have no effect on the election of the
nominee director.

Proxies cannot be voted for a greater number of persons than the number of
nominees named therein. Unless authority to vote is withheld, the persons named
in the enclosed form of proxy will vote the shares represented by such proxy for
the election of the nominee for director named below. If, at the time of the
Meeting, the nominee shall have become unavailable for any reason for election
as a director, the persons entitled to vote the proxy will vote for such
substitute nominee, if any, as they determine in their discretion. Management is
currently unaware of any circumstances likely to render the nominee unavailable
for election or unable to serve.

NOMINEES FOR ELECTION AT THE ANNUAL MEETING

The persons named below have been nominated to be elected at this Annual Meeting
to serve as Class B Directors for a three-year term to last until the 2009
Annual Meeting of Stockholders or until their successors are duly elected and
have been qualified.

DIRECTOR
NAME AGE POSITION CLASS - TERM SINCE
---- --- -------- ------------ -----

James H. Collins 59 Director Class B - Expires 2006 2000
Daniel T. Robinson, Jr. 45 Director Class B - Expires 2006 2000

CONTINUING DIRECTORS

The persons named below will continue to serve as directors of the Company until
the Annual Meeting of Stockholders in the year indicated below and until their
successors are elected and take office. Stockholders are not voting on the
election of the Class A and Class C directors. The following table shows the
names, ages and positions of each continuing director.

DIRECTOR
NAME AGE POSITION CLASS - TERM SINCE
---- --- -------- ------------ -----
Kent Petzold 59 Director Class C - Expires 2007 2003
Craig W. Stull 55 Director Class A - Expires 2008 2004
James M. Powers, Jr. 50 Chairman of the Board, President Class A - Expires 2008 1998
and Chief Executive Officer

The following table sets forth certain information concerning the Company's
directors and nominees to become a director (ages are as of March 31, 2006):

NAME AGE POSITION
---- --- --------
James M. Powers, Jr. 50 Chairman of the Board, President, Chief Executive Officer
James H. Collins 59 Current Director and Director Nominee
Daniel T. Robinson, Jr. 45 Current Director and Director Nominee
Kent Petzold 59 Current Director
Craig W. Stull 55 Current Director

-5-

DR. JAMES M. POWERS, JR. has served as Chairman, President and CEO of the
Company since December 1998. Dr. Powers led the Company through its initial
growth and acquisition phase and subsequent transformation to an integrated
communications company providing Web, audio, video, and Voice-over IP solutions.
Dr. Powers joined the Company through the merger with Liberty Dental Alliance,
Inc., a Nashville-based company where he was the founder, Chairman, and
President from 1997 to 1998. Dr. Powers was a founder and Chairman of Clearidge,
Inc., a privately held bottled water company in Nashville, Tennessee from 1993
to 1999, where he led Clearidge through 13 acquisitions over three years to
become one of the largest independent bottlers in the Southeast, before selling
the company to Suntory Water Group, Inc. Dr. Powers also was a founder and
Director of Barnhill's Buffet, Inc., a privately held chain of 48 restaurants in
the Southeast with over $100 million in annual revenues, which was sold in early
2005. He received his Bachelor of Science Degree from the University of Memphis,
a Doctor of Dental Surgery Degree from The University of Tennessee, and his MBA
from Vanderbilt University's Owen Graduate School of Management.

JAMES H. COLLINS has served as a corporate executive in financial/operational
management for over 20 years completing twelve corporate
turnarounds/restructurings and start-ups, served as an investment banker for 10
years in the public/private capital markets, and served five years with an
international accounting firm. Mr. Collins is CEO of Janus Health Network, Inc.,
an information technology and services company to physicians and medical groups
providing in-home care. He has been Managing Partner of Collins & Company, a
financial consulting firm since 2000. He was Managing Director of AFS
Industries, Inc., a modular building design and manufacturing company from 2002
to 2004. Previously, he was the Chairman and CEO of Vindrauga Corporation, a
private equity and financial services firm and from 1998 until 2000, Mr. Collins
served as President, COO, CFO, and Director of Scripps Clinic, La Jolla,
California. Industry experience includes technology, healthcare, consumer
electronics, financial services, food products, retailing, real estate,
construction, entertainment, and gaming. He serves as a Director of The John
Tracy Clinic, a non-profit organization serving hearing-impaired children
worldwide and Girl Scouts, San Diego-Imperial Council, Inc. Mr. Collins is a
Certified Public Accountant and a NASD General Securities Principal. He received
his B.S. and M.B.A. degrees from the University of Southern California.

DANIEL T. ROBINSON, JR. has been a member of the Bogatin Law Firm, PLC in
Memphis, Tennessee since September 2000. Mr. Robinson was previously with the
Glankler Brown law firm in Memphis, Tennessee. He is an investor and principal
advisor in a number of private ventures, and often acts as an officer and
director in closely-held businesses. When not in private practice, Mr. Robinson
engaged in several private equity ventures, including merchant banking, software
development, and the foodservice industry. Mr. Robinson holds a B.B.A. in
Finance, an M.B.A. and J.D. from the University of Memphis. He is a member of
the Memphis and Tennessee Bar Associations.

KENT PETZOLD is a private investor and since 2001 has been a principal of AZ
Ventures, LLC, a general partner of Arris Ventures, LLC, a venture capital firm
that focuses on information technology investments. From 1998 thru 2001, Mr.
Petzold was Chairman and CEO of Cyclone Commerce, Inc., providing supply chain
management software, where he led the company's turnaround and launch. Mr.
Petzold has held positions in several public software companies, including
president and CEO of Novadigm, Inc., (NASD:NVDM) which provided digital assets
management. He served as a Director of Novadigm until its acquisition by Hewlett
Packard in April 2004. He was SVP and General Manager of the $165 million
Systems Software Division of Pansophic Systems, Inc., a NYSE software company
that was acquired by Computer Associates, Inc. He also served as president and
CEO of privately held Viasoft, Inc. Mr. Petzold is a director of Xenos Group,
Inc. (TSE:XNS), JRiver, Inc., and Precept Ministries International. He is on the
Advisory Boards of Ethix Media, LLC, Arizona State University's College of
Engineering and Computer Science, and the state board of the Fellowship of
Christian Athletes. Mr. Petzold holds a B.A. in Management from the University
of Texas.

CRAIG W. STULL is the president and CEO of Pragmatic Marketing, Inc., an INC 500
company which he founded in 1993 to provide product marketing training and
consulting to firms by focusing on strategic, market-driven techniques. He
specializes in product roll-outs, turnarounds, positioning, naming, and prospect
need identification. Prior to 1993, Mr. Stull was Vice President of Product
Marketing, responsible for distributed systems products at LEGENT CORPORATION, a
$500 million, multi-platform software vendor. Mr. Stull has also held the
position of Vice President of Marketing at VIASOFT, a provider of COBOL code
analysis, testing, and re-engineering tools based in Phoenix, Arizona. Prior to
VIASOFT, Mr. Stull was Vice President of Marketing at UCCEL in Dallas, Texas. He
has eighteen years of software product marketing experience, six years of
exceptionally successful software sales experience and eight years technical
experience in operations and systems programming. This unique combination of
sales, marketing, and technical experience gives him sensitivity to all aspects
of software marketing. Mr. Stull holds a BSBA from Roger Williams University.

-6-

VOTE REQUIRED AND BOARD RECOMMENDATION

WHEN A QUORUM IS PRESENT, IN THE ELECTION OF DIRECTORS, THE NOMINEES HAVING THE
HIGHEST NUMBER OF VOTES CAST IN FAVOR OF THEIR ELECTION WILL BE ELECTED TO THE
COMPANY'S BOARD OF DIRECTORS. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
ELECTION OF THE NOMINATED DIRECTORS. PROXIES SOLICITED AND GATHERED BY THE BOARD
WILL BE VOTED IN FAVOR OF THE NOMINIEES UNLESS A STOCKHOLDER HAS INDICATED
OTHERWISE ON THE PROXY.

PROPOSAL TWO: APPROVAL AND RATIFICATION OF INDEPENDENT ACCOUNTANTS

The Company's Audit Committee and Board of Directors participated in and
approved the decision to engage Epstein Weber & Conover, PLC as independent
accountants of the Company. Epstein Weber & Conover, PLC audited our financial
statements for the fiscal years ending March 31, 2005 and March 31, 2006. The
Audit Committee and the Board of Directors unanimously recommends that
stockholders vote to approve and ratify the appointment of Epstein Weber &
Conover, PLC as the Company's independent accountants for the fiscal year 2007.
Representatives of Epstein Weber & Conover, PLC are expected to be present at
the Meeting, will have an opportunity to make a statement if they desire, and
will be available to respond to appropriate questions.

VOTE REQUIRED AND BOARD RECOMMENDATION

THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES PRESENT OR
REPRESENTED AT THE MEETING AND ENTITLED TO VOTE IS NEEDED TO RATIFY THE
APPOINTMENT OF EPSTEIN WEBER & CONOVER, PLC AS INDEPENDENT ACCOUNTANTS OF THE
COMPANY FOR THE FISCAL YEAR 2007. IF THE APPOINTMENT IS NOT APPROVED, THE MATTER
WILL BE REFERRED TO THE AUDIT COMMITTEE FOR FURTHER REVIEW. THE BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF EPSTEIN WEBER & CONOVER, PLC, AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE FISCAL YEAR 2007.

AUDIT AND NON-AUDIT FEES

Epstein, Weber & Conover, PLC audited the Company's consolidated financial
statements for the years ended March 31, 2005 and 2006.

Aggregate fees for professional services rendered to the Company by Epstein,
Weber & Conover, PLC for the year ended March 31, 2006 were $111,280. Total
aggregate fees for professional services for the years ended March 31, 2006 and
2005, respectively were as follows:

SERVICES PROVIDED 2006 2005
-----------------------------
Audit Fees $109,600 $149,392

Audit Related Fees -- 13,474
All Other Fees 1,680 --
-----------------------------
Total $111,280 $162,866
=============================

Audit Fees

The aggregate fees billed for the years ended March 31, 2006 and 2005, were for
the audits of the Company's consolidated financial statements and reviews of the
Company's interim consolidated financial statements included in the Company's
annual and quarterly reports, and for services provided with respect to the
Company's other regulatory filings. The fees reflected above for 2006 do not
include fees paid to BDO Seidman, LLP of $30,350 for the fiscal year ended March
31, 2006.

Audit Related Fees
The aggregate fees billed for the year ended March 31, 2005 were primarily for
services provided for review and consultation on acquisition, capital raising,
and tender offer transactions.

AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

The Audit Committee has implemented pre-approval policies and procedures related
to the provision of audit and non-audit services. Under these procedures, the
Audit Committee pre-approves both the type of services to be provided by its
auditor and the estimated fees related to these services. During the approval
process, the Audit Committee considers the impact of the types of services and
the related fees on the independence of the auditor. The services and fees must
be deemed compatible with the maintenance of the auditor's independence,
including compliance with SEC rules and regulations. One hundred percent of all
services provided by the Company's independent accountants in the fiscal year
ended March 31, 2006 and the fiscal year ended March 31, 2005 were pre-approved
by the Audit Committee in accordance with this policy.

-7-

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

The following table shows, as of May 31, 2006, the "beneficial ownership" of the
Company's common stock of (i) each person who served as a director at March 31,
2006, the end of the Company's fiscal year, and nominee to become a director,
(ii) each executive officer at March 31, 2006, the end of the Company's fiscal
year, (iii) all executive officers and directors of the Company as a group and
(iv) each person who owns more than 5% of the outstanding common stock. Except
as otherwise indicated, the address of each person in the table is c/o iLinc
Communications, Inc., 2999 N. 44th Street, Suite 650, Phoenix, Arizona 85018.

PERCENT (1) NUMBER NOTE
----------- ------ ----

James M. Powers, Jr. 5.4% 1,548,474 (2)
James L. Dunn, Jr. * 262,035 (3)
Nathan Cocozza * 189,485 (4)
James H. Collins * 125,000 (5)
Daniel T. Robinson, Jr. * 141,307 (6)
Kent Petzold 1.2% 343,460 (7)
Gary Moulton 4.0% 1,098,152 (8)
Craig W. Stull * 29,950 (9)
Barry Blank 5.3% 1,517,900 (10)
Renaissance Capital Growth and Income Fund III, Inc. 1.9% 523,266 (11, 12, 13)
Renaissance U.S. Growth and Income Trust PLC 4.3% 1,225,001 (11, 12, 13, 14)
BFS US Special Opportunities Trust PLC 5.8% 1,674,999 (11, 12, 13, 15)
John Rhodes 4.8% 1,327,345 (16)
Anthony Silverman 7.0% 1,937,225 (17)
(ALL EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP - 8) 12.7% 3,737,863

_______________

* LESS THAN 1%.
(1) CALCULATIONS ARE MADE IN ACCORDANCE WITH RULE 13D-3 UNDER THE
SECURITIES EXCHANGE ACT, AS AMENDED. IN DETERMINING THE PERCENT OF
OUTSTANDING COMMON STOCK OWNED BY A PERSON, (A) THE NUMERATOR IS THE
NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED BY THE PERSON,
INCLUDING SHARES THE BENEFICIAL OWNERSHIP OF WHICH MAY BE ACQUIRED
WITHIN 60 DAYS UPON THE EXERCISE OF OPTIONS OR WARRANTS OR CONVERSION
OF CONVERTIBLE SECURITIES, AND (B) THE DENOMINATOR IS THE TOTAL OF (I)
THE 27,504,298 SHARES IN THE AGGREGATE OF COMMON STOCK OUTSTANDING ON
MAY 31,2006 AND (II) ANY SHARES OF COMMON STOCK WHICH THE PERSON HAS
THE RIGHT TO ACQUIRE WITHIN 60 DAYS UPON THE EXERCISE OF OPTIONS OR
WARRANTS OR CONVERSION OF CONVERTIBLE SECURITIES. NEITHER THE NUMERATOR
NOR THE DENOMINATOR INCLUDES SHARES WHICH MAY BE ISSUED UPON THE
EXERCISE OF ANY OTHER OPTIONS OR WARRANTS OR THE CONVERSION OF ANY
OTHER CONVERTIBLE SECURITIES.
(2) INCLUDES 514,703 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK
OPTIONS THAT VEST ON OR BEFORE JULY 30, 2006. INCLUDES A RESTRICTED
STOCK AWARD, AS AMENDED, FOR 450,000 SHARES ACQUIRED AS A PART OF A
STOCK GRANT UNDER THE STOCK COMPENSATION PLAN. THE AWARD HAS A TERM OF
TEN YEARS AND PROVIDES FOR FULL VESTING 10 YEARS FROM THE DATE OF GRANT
OR UPON ATTAINING THE FOLLOWING SHARES PRICE PERFORMANCE CRITERIA:
150,000 SHARES VEST IF THE COMPANY'S STOCK PRICE EXCEEDS $1.00 PER
SHARE, 150,000 IF THE COMPANY'S STOCK PRICE EXCEEDS $2.00 PER SHARE,
AND THE REMAINING 150,000 IF THE COMPANY'S STOCK PRICE EXCEEDS $3.00
PER SHARE.
(3) INCLUDES 209,010 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK
OPTIONS THAT VEST ON OR BEFORE JULY 30, 2006.
(4) INCLUDES 169,485 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK
OPTIONS THAT VEST ON OR BEFORE JULY 30, 2006.
(5) INCLUDES 90,000 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK
OPTIONS THAT VEST ON OR BEFORE JULY 30, 2006 AND A TOTAL OF 25,000
SHARES THAT MAY BE ISSUED ON CONVERSION OF A CONVERTIBLE NOTE HELD FOR
THE BENEFIT OF HIS DAUGHTER.
(6) INCLUDES 90,000 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK
OPTIONS THAT SHALL VEST ON OR BEFORE JULY 30, 2006.
(7) INCLUDES 55,000 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK
OPTIONS THAT SHALL VEST ON OR BEFORE JULY 30, 2006 AND 50,000 SHARES
THAT MAY BE ISSUED ON EXERCISE OF WARRANTS AND 200,000 SHARES THAT MAY
BE ISSUED UPON CONVERSION OF PREFERRED STOCK.
(8) INCLUDES 6,350 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK
OPTIONS THAT SHALL VEST ON OR BEFORE JULY 30, 2006.
(9) INCLUDES 29,950 SHARES THAT MAY BE ACQUIRED UPON THE EXERCISE OF STOCK
OPTIONS THAT SHALL VEST ON OR BEFORE JULY 30, 2006.

-8-

(10) MR. BLANK'S ADDRESS IS C/O MURPHY AND DURIEU, 1661 EAST CAMELBACK ROAD,
SUITE 201, PHOENIX, ARIZONA 86016. INCLUDES 1,098,000 SHARES THAT MAY
BE ISSUED UPON CONVERSION OF CONVERTIBLE NOTES. ALSO INCLUDES 214,500
SHARES THAT MAY BE ISSUED ON EXERCISE OF WARRANTS. DOES NOT INCLUDE AN
AGGREGATE 100,000 SHARES THAT MAY BE ISSUED ON CONVERSION OF
CONVERTIBLE NOTES HELD BY HIS MOTHER AND DAUGHTER, WITH RESPECT TO
WHICH MR. BLANK DISCLAIMS BENEFICIAL OWNERSHIP. ALSO INCLUDES 24,500
SHARES THAT MAY BE ISSUED ON EXERCISE OF WARRANTS AND 98,000 SHARES
THAT MAY BE ISSUED UPON CONVERSION OF PREFERRED STOCK RECEIVED AS
COMMISSION IN HIS CAPACITY AS AN AFFILIATE OF THE PLACEMENT AGENT FOR
THE SEPTEMBER 2003 PREFERRED STOCK PRIVATE PLACEMENT.
(11) THE ADDRESS OF EACH OF THESE ENTITIES IS 8080 NORTH CENTRAL EXPRESSWAY,
SUITE 210-LB 59, DALLAS, TX 75206-1857.
(12) INCLUDES 500,000 SHARES THAT MAY BE ISSUED UPON CONVERSION OF
CONVERTIBLE NOTES PURCHASED IN OUR MARCH 2002 CONVERTIBLE NOTE PRIVATE
PLACEMENT.
(13) NUMBERS ARE BASED ON INFORMATION OBTAINED FROM THE COMPLIANCE OFFICER
OF THE BENEFICIAL OWNERS.
(14) INCLUDES 225,000 SHARES THAT MAY BE ISSUED ON EXERCISE OF WARRANTS AND
400,000 SHARES THAT MAY BE ISSUED UPON CONVERSION OF PREFERRED STOCK.
(15) INCLUDES 275,000 SHARES THAT MAY BE ISSUED ON EXERCISE OF WARRANTS AND
600,000 SHARES THAT MAY BE ISSUED UPON CONVERSION OF PREFERRED STOCK.
(16) INCLUDES 150,000 SHARES THAT MAY BE ISSUED ON EXERCISE OF WARRANTS.
(17) MR. SILVERMAN'S ADDRESS IS 7625 E. VIA DEL REPOSO, SCOTTSDALE, AZ
85258.

There has been no change in control of the Company since the beginning of its
last fiscal year, and there are no arrangements known to the Company, including
any pledge of securities of the Company, the operation of which may at a
subsequent date result in a change in control of the Company.

BOARD ORGANIZATION AND MEETINGS

During the fiscal year 2006, the Board of Directors of the Company (the "Board")
held four (4) regular meetings, one (1) special called meeting and acted by
unanimous written consent on one (1) occasion.

The Board has an Audit Committee, a Compensation Committee and a Nominating and
Corporate Governance Committee each of which was initially constituted on March
30, 1998. During the fiscal year 2006, each director attended one hundred
percent of the aggregate of the total number of Board meetings, two directors
attended one hundred percent of meetings of committees of the Board on which
they served, one director attended eighty-eight percent of the meetings of
committees of the Board on which he served, and one director attended ninety-two
percent of the meetings of committees of the Board on which he served. The
members of the Audit and Compensation Committees are not employees of the
Company.

AUDIT COMMITTEE

The Audit Committee is responsible for the appointment, compensation, retention
and oversight of the work of any registered public accounting firms engaged by
the Company for the purpose of preparing or issuing an audit report or
performing other audit review or attest services for the Company and acts on
behalf of the Board in reviewing with the independent public accountants, the
chief financial officer and other corporate officers, various matters relating
to the adequacy of the Company's accounting policies and procedures and
financial controls and the scope of the annual audits by the independent public
accountants. The Audit Committee consists of Mr. Collins (Chairman), Mr. Petzold
and Mr. Stull. During the fiscal year 2006, the Audit Committee held six (6)
meetings and acted by unanimous written consent on one (1) occasion. The Audit
Committee operates under a written charter adopted by the Board of Directors
attached hereto as Appendix A. A copy of the Audit Committee Charter may be
obtained from the Company by visiting the Company's Web site located at
www.ilinc.com, or upon written request to the Secretary of the Company at the
principal executive offices of the Company located at 2999 N. 44th Street, Suite
650, Phoenix, AZ 85018. The members of the Audit Committee are independent
within the meaning of Section 121(A) of the American Stock Exchange's listing
standards and federal securities laws. The Board has determined that Mr. James
Collins is an independent financial expert as described in Item 401(h) of
Regulation S-K.

COMPENSATION COMMITTEE

The Compensation Committee is authorized to establish the general compensation
policy for the officers and directors of the Company and annually reviews and
establishes or makes recommendations to the entire Board regarding officers'
salaries and bonuses and the general participation of all employees in employee
benefit plans, including the Company's Stock Compensation Plan (the "Stock
Plan"). The Compensation Committee prepares reports required by federal
securities laws and approves the directors' compensation. The Compensation
Committee consists of Mr. Petzold (Chairman), and Mr. Stull. During the fiscal
year 2006, the Compensation Committee held three (3) meetings. The members of
the Compensation Committee are independent within the meaning of Section 121(A)
of the American Stock Exchange's listing standards and federal securities laws.
A copy of the Compensation Committee Charter may be obtained from the Company by
visiting the Company's Web site located at www.ilinc.com, or upon written
request to the Secretary of the Company at the principal executive offices of
the Company located at 2999 N. 44th Street, Suite 650, Phoenix, AZ 85018.

-9-

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE

The Nominating and Corporate Governance Committee (the "Nominating Committee")
is authorized to develop policies on the size and composition of the Board and
criteria relating to candidate selection, propose to the Board a slate of
director nominees for election at annual meetings of stockholders, propose
candidates to fill vacancies on the Board and recommend board members to serve
on the various committees of the Board. The members of the Nominating Committee
are Mr. Robinson (Chairman), Mr. Collins and Mr. Petzold. During the fiscal year
2006, the Nominating Committee held three (3) meetings. The members of the
Nominating Committee are independent within the meaning of Section 121(A) of the
American Stock Exchange's listing standards. A copy of the Charter of the
Nominating Committee may be obtained from the Company by visiting the Company's
Web site located at www.ilinc.com, or upon written request to the Secretary of
the Company at the principal executive offices of the Company located at 2999 N.
44th Street, Suite 650, Phoenix, AZ 85018.

The Nominating Committee will consider nominees proposed by stockholders in
accordance with guidelines for such consideration set forth in the Company's
bylaws. Article II, Section 12 of the Company's Bylaws provides that persons
nominated by stockholders shall be eligible for election as directors only if
nominated in accordance with the following procedures. Such nominations shall be
made pursuant to timely notice in writing to the Secretary of the Company. To be
timely, a stockholder's notice shall be delivered to or mailed and received at
the principal executive offices of the Company (2999 N. 44th Street, Suite 650,
Phoenix, AZ 85018) not less than ninety (90) days nor more than one hundred
eighty (180) days prior to the meeting. Such stockholder's notice to the
Secretary must set forth (a) as to the stockholder proposing to nominate a
person for election or re-election as director, (i) the name and address of the
nominator, (ii) the class and number of shares of capital stock of the Company
which are beneficially owned by the nominator, (iii) the name and address of any
person with whom the nominator is acting in concert and their beneficial
ownership of the Company's capital stock, and (b) as to the nominee, (i) the
information relating to the nominee that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Regulation 14A
under the Exchange Act and (ii) a notarized affidavit executed by each such
nominee to the effect that, if elected as a member of the Board, he will serve
and that he is eligible for election as a member of the Board. The Company may
require any proposed nominee to furnish such other information as may reasonably
be required by the Company to determine the eligibility of such proposed nominee
to serve as a director of the Company.

The Nominating Committee has not developed specific, minimum qualifications that
must be met by a committee recommended director. Neither has the Nominating
Committee specified a particular set of qualities or skills one or more
directors must possess other than the need for the Board to include at least one
director who is a financial expert. The Nominating Committee does not currently
utilize the services of any third party search firm to assist in the
identification or evaluation of Board member candidates. The Nominating
Committee may engage a third party to provide such services in the future, as it
deems necessary or appropriate at the time in question. The Nominating Committee
determines the required selection criteria and qualifications of director
nominees based upon the needs of the Company at the time nominees are
considered. A candidate must possess the ability to apply good business judgment
and must be in a position to properly exercise his or her duties of loyalty and
care. Candidates should also exhibit proven leadership capabilities, high
integrity and experience with a high level of responsibility within their chosen
fields, and have the ability to quickly understand complex principles of, but
not limited to, business and finance. Candidates with potential conflicts of
interest or who do not meet independence criteria will be identified and
disqualified. The Nominating Committee will consider these criteria for nominees
identified by the Committee, by stockholders, or through some other source. When
current Board members are considered for nomination for reelection, the
Nominating Committee also takes into consideration their prior Board
contributions, performance and meeting attendance records.

The Nominating Committee conducts a process of making a preliminary assessment
of each proposed nominee based upon the resume and biographical information, an
indication of the individual's willingness to serve and other background
information. This information is evaluated against the criteria set forth above
as well as the specific needs of the Company at that time. Based upon a
preliminary assessment of the candidate(s), those who appear best suited to meet
the needs of the Company may be invited to participate in a series of
interviews, which are used for further evaluation. The Nominating Committee uses
the same process for evaluating all nominees, regardless of the original source
of the information.

No candidates for director nominations were submitted to the Nominating
Committee by any stockholder in connection with the 2006 Annual Meeting.

-10-

DIRECTOR COMPENSATION

Directors who are employees of the Company do not receive additional
compensation for serving as directors. Each director who is not an employee of
the Company receives a fee of $3,000 for attendance at each regular Board
meeting and $1,000 for each committee meeting (unless held on the same day as a
Board meeting). The Chairman of the Audit Committee receives $2,000 per quarter,
but no other chairman of a committee receives compensation as chairman. All
directors of the Company are reimbursed for out-of-pocket expenses incurred in
attending meetings of the Board or committees thereof, and for other expenses
incurred in their capacity as directors of the Company. Under the Company's
Stock Plan each non-employee director is eligible to receive non-qualified
options to purchase shares of the Company common stock. Each newly elected
non-employee director automatically is granted nonqualified options to purchase
25,000 shares of the Company's common stock on the date that the person first
becomes a director of the Company. The vesting for the initial grant of 25,000
is 10,000 vested immediately on the Date of Grant with 5,000 shares of the
remaining shares vesting on the date of subsequent annual meeting of
stockholders each year from year to year until fully vested. Thereafter, each
non-employee director each year automatically is granted nonqualified options to
purchase 15,000 shares of the Company's common stock on the date of the
Company's annual meeting of stockholders. Each option has an exercise price per
share equal to the fair market value of the Company's common stock on the date
of grant. All the options granted to the non-employee directors have a term of
ten years and options granted after the initial grant are fully exercisable on
the date of grant.

CODE OF ETHICS

Our Board has adopted a code of ethics for the Company. While no code of conduct
can replace the thoughtful behavior of an ethical director, officer or employee,
we feel the code of ethics will, among other things, focus our board and
management on areas of ethical risk, provide guidance in recognizing and dealing
with ethical issues, provide mechanisms to report unethical conduct and
generally help foster a culture of honesty and accountability. Any amendment or
waiver of the code of ethics may only be made by the Board or an authorized
committee of the Board. A copy of the Code of Ethics may be obtained from the
Company by visiting the Company's Web site located at www.ilinc.com, or upon
written request to the Secretary of the Company at the principal executive
offices of the Company located at 2999 N. 44th Street, Suite 650, Phoenix, AZ
85018.

STOCKHOLDER COMMUNICATIONS

The management of the Company and the Board welcome communications from the
Company's stockholders. Stockholders who wish to communicate with the Board, or
one or more specified directors, may send an appropriately addressed letter to
the Chairman of the Board of the Company, at 2999 North 44th Street, Suite 650,
Phoenix, Arizona 85018. The mailing envelope should contain a clear notation
indicating that the enclosed letter is a "Stockholder-Board Communication." All
such letters should identify the author as a security holder, and, if the author
desires for the communication to be forwarded to the entire Board or one or more
specified directors, the author should so request, in which case the Chairman
will arrange for it to be so forwarded unless the communication is irrelevant or
improper.

-11-

EXECUTIVE COMPENSATION

The following table sets forth each component of compensation paid or awarded
to, or earned by, the person who served as Chief Executive Officer of the
Company during the fiscal year ended March 31, 2006, and the five other most
highly compensated executive officers serving as of March 31, 2006 whose
aggregate cash compensation exceeded $100,000 during the fiscal year 2006 (the
"Named Executive Officers").

RESTRICTED SECURITIES ALL OTHER
NAME AND PRINCIPAL FISCAL OTHER STOCK UNDERLYING COMPENSATION (1)
POSITION YEAR SALARY BONUS (2) COMPENSATION AWARDS OPTIONS
--------------------------------------------------------------------------------------------------------------------------------

James M. Powers, Jr.
Chairman of the Board 2006 $217,967 $27,563 -- -- 30,000 $9,000
President and Chief 2005 $226,486 $45,000 -- -- 24,600 $9,000
Executive Officer 2004 $226,602 -- -- -- 30,000 $9,000

James L. Dunn, Jr. 2006 $145,653 $9,375 -- -- 70,000 --
Sr. Vice President, CFO and 2005 $151,377 -- -- -- 20,000 --
General Counsel 2004 $151,164 $21,875 -- -- 20,000 --

2006 $173,835 $38,429 -- -- 20,000 --
Nathan Cocozza 2005 $176,163 $12,500 -- -- 16,400 --
Sr. Vice President of Sales 2004 $37,804 -- -- -- 200,000 --

Gary L. Moulton
Sr. Vice President of Audio 2006 $137,529 $32,000 -- -- 20,000 --
Services 2005 $118,483 $100,000 -- -- -- --
________________________

(1) All Other Compensation is comprised of the reimbursement of automobile
expenses.
(2) Bonuses paid based on performance for prior fiscal year.

-12-

OPTION GRANTS

The following table provides information on stock option grants to the Named
Executive Officers in the fiscal year ended March 31, 2006 under the Stock Plan.

OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

NUMBER OF
SECURITIES
UNDERLYING
OPTIONS % OF TOTAL
GRANTED OPTIONS GRANTED GRANT
DURING TO EMPLOYEES IN EXERCISE PRICE EXPIRATION PRESENT
FISCAL YEAR FISCAL YEAR (PER SHARE) DATE VALUE
---------------- ----------------------- ---------------- -------------- ---------------
James M. Powers, Jr. 7,500(1) 1.0% $0.25 9/25/15 $1,381(3)
22,500(2) 3.0% $0.25 9/25/15 $4,144(3)

James L. Dunn, Jr. 17,500(1) 2.3% $0.25 9/25/15 $3,223(3)
52,500(2) 7.0% $0.25 9/25/15 $9,670(3)

Nathan Cocozza 5,000(1) 0.7% $0.25 9/25/15 $921(3)
15,000(2) 2.0% $0.25 9/25/15 $2,763(3)

Gary L. Moulton 5,000(1) 0.7% $0.25 9/25/15 $921(3)
15,000(2) 2.0% $0.25 9/25/15 $2,763(3)

(1) Vested 100% on March 25, 2006.
(2) Vest monthly over three (3) years in 1/36 increments beginning April 1,
2006.
(3) Calculated using the following weighted-average assumptions: dividend yield
of 0%, expected volatility of 108%, risk-free interest rate of 4.30% and
expected life of ten (10) years.

The following table sets forth certain information with respect to unexercised
options to purchase the Company's common stock held by the Named Executive
Officers at March 31, 2006. (None of the Named Executive Officers exercised
options in the fiscal year 2006.)

YEAR-END 2006 OPTION VALUES

NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN THE MONEY
OPTIONS HELD AT OPTIONS HELD AT
MARCH 31, 2006 MARCH 31, 2006
EXERCISABLE UNEXERCISABLE EXERCISABLE (1) UNEXERCISABLE (1)
--------------- ----------------- ----------------- --------------------
James M. Powers, Jr. 507,764 41,836 1,200 3,600
James L. Dunn, Jr. 201,009 65,391 2,800 8,400
Gary L. Moulton 5,000 15,000 800 2,400
Nathan Cocozza 148,659 87,741 800 2,400

_________________________

(1) Value of unexercised in-the-money options is calculated based upon the
difference, if any, between the option exercise price and the closing price of
the common stock at year-end, multiplied by the number of shares underlying the
options. The closing price per share of the Company's common stock as reported
on the AMEX on March 31, 2006 was $0.41. The exercise prices for the options
previously granted to the Named Executive Officers range from $0.25 to $6.125
per share.

-13-

EMPLOYMENT AGREEMENTS

The Company is a party to employment agreements with Mr. Powers, Mr. Dunn, and
Mr. Moulton. All are or were officers of the Company, and Mr. Powers is also
Chairman of the Board of Directors. Mr. Cocozza was a party to an employment
agreement with the Company, but that employment agreement expired on January 6,
2006. Each of these agreements provides for an annual base salary in an amount
not less than the initial specified amount and entitles the employee to
participate in all of the Company's compensation plans. Each agreement
establishes a base annual salary and provides the eligibility for an annual
award of bonuses based on the management incentive compensation plan (as adopted
and amended by the Compensation Committee of the Board of Directors from year to
year), and is subject to the right of the Company to terminate their respective
employment at any time without cause. Mr. Powers' and Mr. Dunn's employment
agreements provide for continuous employment for a one-year term that renews
automatically unless otherwise terminated. Mr. Dunn's employment agreement
permits Mr. Dunn to work outside the corporate offices, and Mr. Dunn relocated
to Houston in June of 2005. Mr. Moulton's agreement provides for continuous
employment for a two-year term. Under each of the employment agreements, if the
Company terminates the employee's employment without cause (as therein defined),
Mr. Powers, Mr. Dunn, and Mr. Moulton will be entitled to a payment equal to 12
months' salary. Additionally, Mr. Powers' and Mr. Dunn's employment agreements
provide for a severance payment equal to one (1) year's compensation in the
event of termination of employment following a "change in control" of the
Company (as defined therein) except that should Mr. Dunn obtain employment with
the successor organization in a comparable position, then the Company shall not
be responsible for the severance payment. Each of the foregoing agreements also
contains a covenant limiting competition with iLinc for one year following
termination of employment except for Mr. Moulton's which limits competition with
iLinc for nine months following termination.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No executive officer of the Company currently serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Board of directors or as an executive
officer of the Company. See "Director and Executive Compensation" and "Certain
Transactions" for a description of any transactions between the Company and
members of the Board of Directors.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

OVERVIEW

The Compensation Committee is responsible for establishing a general
compensation policy for officers and employees of the Company, preparing any
reports that may be required relating to officer compensation and approving any
increases in director's fees. The Compensation Committee consists of Mr.
Petzold, Chairman, and Mr. Stull. In the fiscal year 2006, the Compensation
Committee approved, or in some cases recommended to the Board for the Board's
approval, remuneration arrangements and compensation plans involving the
Company's directors, executive officers and certain other employees whose
compensation exceeds specified levels. The Compensation Committee recommends to
the Board the level of stock options that should be granted to employees,
including executive officers under the Company's Stock Plan.

The Company's executive compensation program has been designed by the
Compensation Committee to assist the Company in attracting, motivating and
retaining the executive talent necessary for the Company to maximize its return
to stockholders. To this end, this program provides competitive compensation
levels and incentive pay levels that vary based on corporate and individual
performance.

The Company's compensation program for executives consists of three key
elements: a base salary, a performance-based annual bonus, and periodic grants
of stock options.

The Compensation Committee believes that this three-part approach best serves
the interests of the Company and its stockholders. It enables the Company to
meet the requirements of the highly competitive environment in which the Company
operates while ensuring that executive officers are compensated in a way that
advances both the short-term and long-term interests of its stockholders. Under
this approach, compensation for these officers involves a high proportion of pay
that is dependent on maximizing returns to stockholders. The annual bonus
payable for the fiscal year 2006 had not yet been determined or accrued as of
March 31, 2006, but will depend on the Company's operational performance in the
fiscal year 2006 and other individual factors including certain revenue targets.

-14-

BASE SALARY

Base pay is designed to be competitive with salary levels for comparable
executive positions at other companies and the Compensation Committee reviews
such comparable salary information as one factor to be considered in determining
the base pay for the Company's executive officers. Other factors the
Compensation Committee considers in determining base pay for each of the
executive officers are that officer's responsibilities, experience, leadership,
potential future contribution and demonstrated individual performance. The
Company has employment agreements with its Chief Executive Officer and certain
of the other Named Executive Officers. These agreements provide for a minimum
annual base salary the Company may increase, but cannot decrease. Any increase
in these base salaries of the Company's executive officers will be based on
recommendations by the Company's Chief Executive Officer, taking into account
such factors as competitive industry salaries, a subjective assessment of the
nature of the position and the contribution and experience of the executive
officer. Performance for base salary purposes will be assessed on a qualitative,
rather than a quantitative, basis. No specific performance formula or weighting
of factors will be used in determining base salary levels.

ANNUAL BONUS

For the fiscal year 2006, the Compensation Committee determined to compensate
the executive officers both with cash bonuses and in the form of long-term,
equity-based compensation through the award of stock options. Cash bonus
payments related to fiscal 2006 performance had not yet been determined or
accrued as of March 31, 2006. The Compensation Committee expects to base future
annual bonuses on the Company's financial performance and the individual
performance of the employees, and intends to use qualitative and quantitative
factors for this purpose that will include the level of revenues, operating
profit and other financial measures appropriate to each position.

STOCK PLAN

The objectives of the Stock Plan are to (i) attract and retain superior
personnel for positions of substantial responsibility and (ii) provide
employees, non-employee directors and advisors with an additional incentive to
contribute to the success of the Company.

Stock options align the interests of employees and stockholders by providing
value to option holders through stock price appreciation only. The Compensation
Committee expects that it will make future stock option or other long-term
equity-based incentive awards periodically at its discretion based on
recommendations of the Chief Executive Officer. Stock option grant sizes, in
general, will be evaluated by regularly assessing competitive market practices,
the overall performance of the Company, the size of previous grants and the
number of options held. In addition, the Compensation Committee may consider
factors including that executive's current ownership stake in the Company, the
degree to which increasing that ownership stake would provide the executive with
additional incentives for future performance, the likelihood that the grant of
those options would encourage the executive to remain with the Company and the
value of the executive's service to the Company. This posture with regard to
stock options is intended to focus management's efforts on maximizing
stockholder returns. The number of options granted to a particular participant
will also be based on the Company's historical financial success, its future
business plans and the individual's position and level of responsibility within
the Company, but these factors will be assessed subjectively and not weighted.

During fiscal year 2006, the Company issued 630,500 incentive and 125,000 non
statutory stock options to employees under the Stock Plan providing for the
purchase of shares of the Company's common stock, par value per share of $0.001
as follows: options to purchase 479,500 shares were issued at an exercise price
of $0.25 per share; options to purchase 16,000 shares were issued at an exercise
price of $0.26 per share; options to purchase 250,000 shares were issued at an
exercise price of $0.38 per share; and options to purchase 10,000 shares were
issued at an exercise price of $0.43 per share. All the options granted vest as
follows: twenty-five percent (25.000%) of the options shall be vested six (6)
months from Date of Grant; and thereafter beginning on the first day of the
following month one thirty-sixth (1/36) of the remaining portion shall vest on
the first day of each month, from month to month, until fully vested.

FISCAL YEAR 2006 CHIEF EXECUTIVE OFFICER PAY

As described above, the Compensation Committee considers several factors in
developing an executive compensation package. For the Chief Executive Officer,
these factors will include competitive market pay practices, performance level,
experience, contributions toward achievement of strategic goals and the overall
financial and operations success of the Company.

The Company entered into an initial employment agreement with Mr. Powers, the
Company's Chief Executive Officer, in November 1998. The Company entered into a
subsequent employment agreement with Mr. Powers in November 2000 upon expiration
of the initial agreement. That agreement has a continuous two-year term at an
initial base compensation rate of $225,000 per annum. The Compensation Committee

-15-

increased the base pay of Mr. Powers to $240,000 per annum effective May 24,
2006. Pursuant to his employment agreement, Mr. Powers is eligible to receive an
annual cash bonus in an amount up to 35% of his base salary upon achievement of
certain performance targets. The Compensation Committee monitors trends in this
area, as well as changes in law, regulation and accounting practices, that may
affect either its compensation practices or its philosophy. Accordingly, the
Committee reserves the right to alter its approach in response to changing
conditions.

THIS REPORT WILL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL
STATEMENT INCORPORATING THIS PROXY STATEMENT BY REFERENCE INTO ANY FILING UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE
EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT") AND WILL NOT BE DEEMED
FILED UNDER EITHER OF SUCH STATUTES EXCEPT TO THE EXTENT THAT THE COMPANY
SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE.

The Compensation Committee:

Kent Petzold, Chairman
Craig W. Stull

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In December 2001, in connection with the grant of restricted shares of common
stock to Mr. Powers, the Company loaned to Mr. Powers $179,000 related to
federal income tax liability incurred by Mr. Powers in connection with the
restricted shares grant. The entire principal balance of the loan remains
outstanding and is due and payable on April 12, 2012. No interim payments on
principal are required. The loan and the obligations arising thereunder are
secured by a first lien security interest in and to the 450,000 shares of the
Company's common stock granted to Mr. Powers in his Restricted Stock Award
Agreement dated December 3, 2001. The Company recognized a $179,000 charge to
income at the date of the grant.

-16-

PERFORMANCE GRAPH

The following line graph compares the percentage change from March 31, 2001
through March 31, 2006 for (i) the Company's common stock, (ii) a peer group
(the "Peer Group") of companies selected by the Company that are e-Learning and
Web conferencing companies located in the United States, (iii) and the AMEX
Composite Index. The companies in the Peer Group historically included
Click2Learn, Digital Think, Docent, Learn2, Mentergy, Saba Software, Skillsoft,
and Smart Force, but Click2Learn and Docent merged to become SumTotal Systems,
Inc., Digital Think was purchased by Convergys Corporation and Mentergy and
Learn2 had ceased to trade, therefore the 2006 data point includes: Convergys
Corporation, SumTotal Systems, Inc., Saba Software, Skillsoft, WebEx and West
Corporation.

[PERFORMANCE GRAPH HERE]

Comparison of Total Returns*

March 30, March 30, March 31, March 31, March 31, March 31,
Description 2001 2002 2003 2004 2005 2006
------------------------------------------------------------------------------------------------

iLinc Communications $100 $222 $80 $218 $82 $91
AMEX Composite Index $100 $107 $94 $143 $166 $221
Peer Group $100 $96 $36 $138 $121 $165

*Total return based on $100 initial investment. The graph is presented in
accordance with SEC requirements. Stockholders are cautioned against drawing any
conclusions from the data contained therein, as past results are not necessarily
indicative of future financial performance. The total return on investment for
the period shown for the Company, the AMEX Composite Index and the Peer Group is
based on the stock price or composite index at March 31, 2001. The performance
graph appearing above will not be deemed incorporated by reference by any
general statement incorporating this Proxy Statement by reference into any
filing under the Securities Act, or under the Exchange Act and will not be
deemed filed under either of those Acts except to the extent that the Company
specifically incorporates this information by reference.

-17-

REPORT OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS

The Audit Committee hereby reports as follows:

The Audit Committee assists the board of directors in its oversight
responsibilities and, in particular, is responsible for (1) monitoring the
integrity of the Company's financial statements, financial reporting processes
and systems of internal controls regarding finance, accounting and legal
compliance, (2) selecting and appointing the Company's independent auditors and
monitoring their independence and performance, pre-approving all audit and
non-audit services to be provided, consistent with all applicable laws, to the
Company by the Company's independent auditors, and establishing the fees and
other compensation to be paid to the independent auditors, and (3) establishing
procedures for the receipt, retention, response to and treatment of complaints,
including confidential, anonymous submission by the Company's employees,
regarding accounting, internal controls or audit related matters.

Management is responsible for the Company's financial reporting process,
including its system of internal controls, and for the preparation of the
consolidated financial statements in accordance with generally accepted
accounting principles. The Company's independent auditors are responsible for
auditing those financial statements. The Audit Committee's responsibility is to
monitor and review these processes. It is not the Audit Committee's duty or
responsibility to conduct auditing or accounting reviews or procedures. The
members of the Audit Committee are not employees of the Company. The members of
the Audit Committee are not and do not represent themselves to be, or to serve
as, accountants or auditors by profession. Therefore, the Audit Committee has
relied, without independent verification, on management's representation that
the financial statements have been prepared with integrity and objectivity and
in conformity with accounting principles generally accepted in the United States
of America and on the representations of the independent auditors included in
their report on the Company's financial statements.

1. The Audit Committee has reviewed and discussed the audited financial
statements with the Company's management.

2. The Audit Committee has discussed with the Company's independent
accountants the matters required to be discussed by SAS 61
(Communication with Audit Committees).

3. The Audit Committee has received the written disclosures and the letter
from Company's independent accountants required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit
Committees) and has discussed with the Company's independent
accountants their independence.

4. Based on the review and discussion referred to in paragraphs (1)
through (3) above, the Audit Committee recommended to the Board, and
the Board has approved, that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 2006, for filing with the SEC.

The Audit Committee:

James H. Collins, Chairman
Kent Petzold
Craig W. Stull

-18-

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires directors, executive officers and
beneficial owners of more than 10% of the outstanding shares of the Company to
file with the SEC reports regarding changes in their beneficial ownership of
shares in the Company. Those who own 10% or more of the Company have been
identified in the Security Ownership of Certain Beneficial Owners and Management
as well as on file with the SEC.

Based solely on a review of the copies of such reports furnished to the Company
and written representations that no other reports were required, the Company
believes that all its directors, officers, or beneficial owners of more than 10%
of any class of equity securities during the fiscal year 2006 complied on a
timely basis with all applicable filing requirements under Section 16(a) of the
Exchange Act.

STOCKHOLDER PROPOSALS

Under the rules of the SEC, stockholder proposals for inclusion in the Company's
proxy materials relating to the next annual meeting of stockholders must be
received by the Company on or before March 15, 2007.

In addition, a stockholder may bring business before the 2007 annual meeting or
may submit nominations for election as a director at that meeting if the
stockholder complies with the requirements specified in the Company's bylaws.
The requirements for nominations for director and stockholder proposals include:
(i) providing written notice to the Company's principal executive offices at
least 90 and not more than 180 days prior to the annual meeting or the
corresponding date for the 2007 Annual Meeting; and (ii) supplying the
additional information listed in Article II, Section 11 of the Company's bylaws
(in the case of stockholder proposals) and Article II, Section 12 of the
Company's Bylaws in the case of director nominations).

2006 ANNUAL REPORT ON FORM 10-K

THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 2006 WAS
FILED ELECTRONICALLY WITH THE SEC AND IS AVAILABLE ON THE COMPANY'S WEB SITE.
STOCKHOLDERS WHO WISH TO OBTAIN, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL
REPORT (WITHOUT EXHIBITS) ON FORM 10-K MAY EITHER VISIT THE COMPANY'S WEBSTIE AT
WWW.ILINC.COM OR MAY ADDRESS A WRITTEN REQUEST TO iLINC COMMUNICATIONS, INC.,
2999 N. 44TH STREET, SUITE 650, PHOENIX, ARIZONA, 85018. THE COMPANY WILL
PROVIDE COPIES OF THE EXHIBITS TO THE FORM 10-K UPON PAYMENT OF A REASONABLE
FEE.

OTHER BUSINESS

As of the date of this Proxy Statement, management was not aware of any business
not described above would be presented for consideration at the Meeting. If any
other business properly comes before the Meeting, it is intended that the shares
represented by proxies will be voted in respect thereto in accordance with the
judgment of the persons voting them.

The above Notice and Proxy Statement are sent by order of the Board.

/s/ James L. Dunn, Jr.
----------------------
James L. Dunn, Jr.
Sr. Vice President and Chief Financial Officer
Phoenix, Arizona

-19-

iLINC COMMUNICATIONS, INC.
2999 NORTH 44TH STREET, SUITE 650
PHOENIX, ARIZONA 85018

________________________

PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 18, 2006

________________________

The undersigned hereby appoints James M. Powers, Jr. and James L. Dunn, Jr., or
either of them, proxies for the undersigned, each with full power of
substitution, to vote all shares of common stock of iLinc Communications, Inc.
which the undersigned is entitled to vote, at the Annual Meeting of Stockholders
(the "Meeting") to be held on August 18, 2006, at 9:00 a.m., local time, at the
Company's offices, 2999 N. 44th Street, Suite 650, Phoenix, Arizona 85018 and at
any and all adjournments thereof for the following purposes:

(1) Election of Class B Directors:

[ ] FOR the nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for the nominees listed below

Nominee: James H. Collins
Nominee: Daniel T. Robinson, Jr.

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THE NOMINEE'S NAME ON THE LINE IMMEDIATELY BELOW.)

-----------------------------------------------------------------------------

(2) Approval and Ratification of the Appointment of Epstein Weber &
Conover, PLC, as the Company's Independent Accountants for Fiscal 2007.

[ ] FOR
[ ] AGAINST
[ ] ABSTAIN

(3) In their discretion, the proxies are authorized to vote upon such other
business as properly may come before the Meeting.

[ ] FOR
[ ] AGAINST
[ ] ABSTAIN

-20-

PLEASE DATE AND SIGN ON REVERSE SIDE.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING "FOR" ELECTION OF THE
NOMINEES FOR DIRECTOR AS SELECTED BY THE BOARD OF DIRECTORS AND "FOR" APPROVAL
AND RATIFICATION OF THE APPOINTMENT OF EPSTEIN WEBER & CONOVER, PLC, AS THE
COMPANY'S INDEPENDENT ACCOUNTANTS.

The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished therewith. The undersigned hereby
revokes any proxies given prior to the date reflected below.

_______________________
Date

____________________________________________________________
Signature(s) of stockholders(s)

Please complete, date and sign exactly as your name appears
herein. If shares are held jointly, each holder should sign.
When signing as attorney, executor, administrator, trustee,
guardian or corporate official, please add your title.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. PLEASE SIGN AND
RETURN THIS PROXY IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE TO ADP INVESTOR
COMMUNICATION SERVICES, 51 MERCEDES WAY, EDGEWOOD, NY 11717 AS AGENT FOR THE
COMPANY OR TO THE COMPANY AT 2999 N. 44TH STREET, SUITE 650, PHOENIX, ARIZONA
85018. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU
ATTEND THE MEETING.

-21-

Appendix A

Audit Committee Charter

-1-

AUDIT COMMITTEE CHARTER

The Board of Directors (the "Board") of iLinc Communications, Inc., a
Delaware corporation (the "Company"), approves and adopts the following Audit
Committee Charter to specify the composition, roles and responsibilities of the
following Audit Committee used in this Charter, (i) "Company" includes the
Company and its subsidiaries unless the context otherwise requires, (ii)
"Nasdaq/AMEX" means the Nasdaq National Market and the American Stock Exchange,
(iii) "SEC" means the Securities and Exchange Commission and (iv) "Exchange Act"
means the Securities Exchange Act of 1934, as amended.

PURPOSE

The Audit Committee shall provide assistance to the members of the
Board in fulfilling their responsibility to the stockholders relating to
corporate accounting, reporting to the SEC, and the quality and integrity of
financial reports of the Company filed with the SEC. In so doing, it is the
responsibility of the Audit Committee to oversee the accounting and financial
reporting processes of the Company and the audits of the financial statements of
the Company and to maintain free and open communication between the directors,
the independent auditors, and the financial management of the Company.

COMPOSITION

The Audit Committee shall consist of not less than three members,
comprised solely of independent directors, each of whom shall not have:

o been employed by the company or its affiliates in the current or past
three years;

o accepted any compensation from the Company or its affiliates in excess
of $60,000 during the previous fiscal year, except for board service,
retirement plan benefits, payments arising solely from investments in
the Company's securities or non-discretionary compensation;

o an immediate family member who is, or has been in the past three
years, employed by the Company or its affiliates as an executive
officer;

o been a partner, controlling stockholder or an executive officer of any
for-profit business to which the Company made, or from which it
received, payments, other than those which arise solely from
investments in the Company's securities, that exceed five percent of
the Company's or such other organization's consolidated gross revenues
for that year, or $200,000, whichever is more, in any of the past
three years; or

o been employed nor have any immediate family member who has been
employed as an executive of another entity where any of the Company's
executives serve on such entity's compensation committee. [Nasdaq/AMEX
4200(a)(14)]

In addition, each member of the Audit Committee shall be able to read
and understand fundamental financial statements, including the Company's balance
sheet, income statement and cash flow statement, or will become able to do so
within a reasonable period of time after his or her appointment to the Audit
Committee. Moreover, at least one member of the Audit Committee shall have past
employment experience in finance or accounting, requisite professional
certification in accounting, or any comparable experience or background which
results in financial sophistication, including being or having been a chief

-2-

executive officer, chief financial officer or other senior officer with
financial oversight responsibilities. [Nasdaq/AMEX 4310(c)(26)(B)(i)] The
qualifications required of Audit Committee members shall be interpreted in
conformity with Rules 4200(a)(14) and 4310(c)(26)(B) of the Nasdaq/AMEX
Marketplace Rules.

The Chairman of the Audit Committee shall be designated by the Board;
provided that if a Chairman is not designated by the Board or present at a
meeting, the Audit Committee may designate a Chairman by majority vote of the
Audit Committee members then in office.

ROLES AND RESPONSIBILITIES

RELATIONSHIP WITH THE OUTSIDE AUDITORS

The Company's outside auditors are ultimately responsible to the Audit
Committee, as representatives of the Company's stockholders. [Nasdaq/AMEX
4310(c)(26)(A)(iii)]

The Audit Committee has the ultimate authority and responsibility to
select, evaluate and, where appropriate, replace the outside auditors (or to
nominate the outside auditors to be proposed for stockholder approval in any
proxy statement). [Nasdaq/AMEX 4310(c)(26)(A)(ii) and (iii)]

The Audit Committee has the further authority and responsibility to
review the fees charged by the outside auditors, the scope of their engagement
and proposed audit approach and to recommend such review or auditing steps as
the Audit Committee may consider desirable. The Audit Committee shall establish
policies and procedures for the engagement of the independent auditors to
provide permissible non-audit services, subject to the de minimus exceptions for
non-audit services described in Section 10A(i)(1)(B) of the Exchange Act, which
shall include pre-approval of permissible non-audit services to be provided by
the independent auditors. The Audit Committee shall approve in advance all
non-audit services to be provided by the independent auditors.

The Audit Committee shall review and confirm the independence of the
outside auditors by requiring that the outside auditors submit to the Audit
Committee on a periodic basis a formal written statement delineating all
relationships between the outside auditors and its related entities and the
Company and its related entities, engaging in a dialogue with the outside
auditors with respect to any disclosed relationships or services that may impact
their objectivity and independence and taking, or recommending, that the Board
take appropriate action to oversee the independence of the of the outside
auditors. [Nasdaq/AMEX 4310 (c)(26)(A)(ii)] In addition to disclosing all
relationships between the outside auditors and its affiliates and the Company
and its affiliates, the outside auditors' formal written statement shall also
contain a confirmation that, in the outside auditors' professional judgment, it
is independent of the Company within the meaning of the federal securities laws.
[Nasdaq/AMEX 4310(c)(26)(A)(ii) and Independence Standards Board Standard No. 1]

Management is responsible for preparing the Company's financial
statements. The Company's outside auditors are responsible for auditing the
financial statements. The activities of the Audit committee are in no way
designed to supersede or alter these traditional responsibilities.

INTERNAL CONTROLS

The Audit Committee shall evaluate whether management is setting the
appropriate tone at the top by communicating the importance of internal
controls.

-3-

In consultation with management, the outside auditors and the internal
auditors, the Audit Committee shall consider the Company's significant financial
risk exposures and the steps management has taken to monitor, control and report
such exposures.

The Audit Committee shall focus on the extent to which internal
auditors and outside auditors review computer systems and applications, the
security of such systems and applications, and the contingency plan for
processing financial information in the event of a systems breakdown.

The Audit Committee shall consider the extent to which internal control
recommendations made by outside auditors have been implemented by management.

The Audit Committee shall request that the internal auditors and
outside auditors keep the Audit Committee informed about fraud, illegal acts and
deficiencies in internal controls that come to their attention and such other
matters as either the internal auditors or the outside auditors conclude should
be brought to the attention of the Audit Committee.

FINANCIAL REPORTING

GENERAL

The Audit Committee shall review with management, the outside auditors
and the internal auditors significant accounting and reporting issues applicable
to the Company, including recent professional and regulatory pronouncements, and
their impact on the financial statements.

ANNUAL FINANCIAL STATEMENTS

The Audit Committee shall meet with management and the outside auditors
to review the annual financial statements and the results of the annual audit
prior to the release to the public of the results of operations for each fiscal
year. [SEC SK ss. 306(a)(1)]

The Audit Committee shall review the annual financial statements prior
to release to the public or filing with the SEC. [SEC SK ss. 306(a)(1)]

The Audit Committee shall obtain explanations from management or from
the outside auditors on whether:

o Actual financial results for the year varied significantly
from budgeted or projected results.

o Changes in financial ratios and relationships in the annual
financial statements are consistent with changes in the
Company's operations and financing practices.

o Generally accepted accounting principles have been
consistently applied in the annual financial statements.

o There are any actual or proposed changes in accounting or
financial reporting practices.

o There are any significant or unusual events or transactions.

o The Company's financial and operating controls are functioning
effectively.

o The Company has complied with the terms of loan agreements.

-4-

o The annual financial statements contain adequate and
appropriate disclosures.

The Audit Committee shall discuss with management and the outside
auditors any significant changes to the Company's accounting principles, the
degree of aggressiveness or conservatism of the accounting principles and
underlying estimates used in the preparation of the Company's financial
statements, and any items required to be communicated by the outside auditors in
accordance with Statement of Auditing Standards ("SAS") No. 61. [SEC SK ss.
306(a)(2) and note 29 to SEC Release 34-42266]

Based on the review and discussions with management and outside
auditors contemplated by this Charter, the Audit Committee shall recommend to
the Board whether the audited annual financial statements be included in the
Company's Form 10-K Annual Report. [SEC SK ss. 306(b)(4)]

The Audit Committee shall review the Management's Discussion and
Analysis and other sections of the Company's Form 10-K Annual Report before its
release and consider whether the information is adequate and consistent with
members' knowledge about the Company and its operations.

INTERIM FINANCIAL STATEMENTS

The Audit Committee shall meet with management and the outside auditors
to review the interim financial statements and the results of the auditors'
review thereof prior to the release to the public of the results for each
quarter.

The Audit Committee shall review the quarterly financial statements
prior to release to the public or filing with the SEC.

Obtain explanations from management or from the outside auditors on
whether:

o Actual financial results for the quarter or interim period
varied significantly from budgeted or projected results.

o Changes in financial ratios and relationships in the interim
financial statements are consistent with changes in the
Company's operations and financing practices.

o Generally accepted accounting principles have been
consistently applied in the quarterly financial statements.

o There are any actual or proposed changes in accounting or
financial reporting practices.

o There are any significant or unusual events or transactions.

o The Company's financial and operating controls are functioning
effectively.

o The company has complied with the terms of loan agreements.

o The interim financial statements contain adequate and
appropriate disclosures.

-5-

COMPLIANCE WITH LAWS AND REGULATIONS

The Audit Committee shall review the effectiveness of the system for
monitoring compliance with laws and regulations and the results of management's
investigation of and follow-up (including disciplinary action) on any fraudulent
acts or accounting irregularities.

The Audit Committee shall periodically obtain updates from management
regarding compliance.

The Audit Committee shall be satisfied that regulatory compliance
matters have been considered in the preparation of the financial statements.

The Audit Committee shall review the findings of any examinations of
the Company by regulatory agencies which have authority over the Company.

The Audit Committee shall establish procedures for the receipt,
retention and treatment of complaints regarding accounting, internal accounting
controls or auditing matters, including procedures for the confidential
anonymous submission by employees of concerns regarding questionable accounting
or auditing matters.

COMPLIANCE WITH CODES OF CONDUCT

The Audit Committee shall evaluate whether management is setting the
appropriate tone at the top by communicating the importance of the Company's
codes of conduct and the guidelines for acceptable business practices.

The Audit Committee shall review the program for monitoring compliance
with the codes of conduct.

OTHER RESPONSIBILITIES

The Audit Committee may meet with the outside auditors, the senior
internal audit executive, management and any employee seeking to meet with the
Audit Committee about any matter within its purview in separate executive
sessions to discuss any matters that the Committee or these persons believe
should be discussed privately.

The Audit Committee shall request that significant findings and
recommendations made by the internal and outside auditors be received and
discussed on a timely basis.

The Audit Committee shall review, with the Company's counsel, any legal
matters that could have a significant impact on the Company's financial
statements.

The Audit Committee shall review the policies and procedures in effect
for considering officers' expenses and perquisites.

The Audit Committee shall perform other oversight functions as
requested by the Board.

CHARTER SCOPE

The Audit Committee shall review and reassess the adequacy of this
Charter at least annually. [Nasdaq/AMEX 4310(c)(26)(A)]

-6-

The Audit Committee shall submit this Charter to the Board for
approval, and have the Charter published at least every three years in
accordance with the rules of the SEC from time to time in effect. [SEC Schedule
14A Item 7(e)(iv)(A)]

REPORTING RESPONSIBILITIES

The Audit Committee shall regularly update the Board about Audit
Committee activities and make appropriate recommendation.

The Audit Committee shall annually prepare a report to stockholders as
required by SEC rules for inclusion in the Company's proxy statement. [SEC SK
ss. 306; SEC Schedule 14A Item 7(e)(3)]

MEETINGS

The Audit Committee shall meet at least quarterly and may meet more
frequently as circumstances dictate.

Meetings of the Audit Committee may be in person or by conference call
in accordance with the Bylaws of the Company.

Meetings of the Audit Committee shall be held at such time and place,
and upon such notice, as the Chairman of the Audit Committee may from time to
time determine.

The Chairman of the Audit Committee shall develop the agenda for each
meeting and in doing so may consult with management, the internal auditors and
the outside auditors.

Except as specifically provided in this Charter, the provisions of the
Bylaws of the Company with respect to committees of the Board shall apply to the
Audit Committee.

AUTHORITY

The Audit Committee shall have the authority to conduct any
investigation appropriate to fulfilling its responsibilities and shall have
direct access to the outside auditors and the internal auditors as well as
anyone in the Company.

The Audit Committee shall have the ability to retain, at the Company's
expense, such special legal, accounting or other consultants or experts it deems
necessary in the performance of its duties.

The Audit Committee may from time to time delegate to its Chairman or
any of its members the responsibility for any particular matters.

FUNDING

The Company shall provide for appropriate funding, as determined by the
Audit Committee, for payment of compensation to the independent auditor for the
purpose of rendering or issuing an audit report, to any advisor employed by the
Audit Committee and for ordinary administrative expenses of the Audit Committee
that are necessary and appropriate in carrying out its duties.

-7-