As filed with the Securities and Exchange Commission on April _____, 2000
Registration No. ____________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
____________________________
FUSION NETWORKS HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 51-0393382
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8115 N.W. 29th Street
Miami, Florida 33122
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(Address of principal executive offices, including zip code)
IDM Environmental Corp. 1993 Stock Option Plan
IDM Environmental Corp. 1995 Stock Option Plan
IDM Environmental Corp. 1998 Comprehensive Stock Option and Award Plan
IDM Environmental Corp. Executive Stock Option Granted Under
Employment Agreements
Fusion Networks, Inc. 1999 Stock Option Plan
----------------------------------------------
(Full title of the plans)
Copy to:
Joel Freedman Michael Sanders
Fusion Networks Holdings, Inc. Vanderkam & Sanders
P.O. Box 388 440 Louisiana
396 Whitehead Avenue Suite 475
South River, New Jersey 08882 Houston, Texas 77010
(732) 390-9550 (713) 547-8900
----------------------------------
(Name, address and telephone
number of agent for service)
Approximate date of proposed sales pursuant to the plan: From time to time
after the effective date of this Registration Statement.
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
============================================================================================
Title of securities Amount to be Proposed Proposed
to be registered registered (5) maximum offering maximum Amount of
price per aggregate registration
share offering price fee
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.00001
par value (1) 3,452,177 (2) $22,903,391.00 (2) $ 6,046.50
- --------------------------------------------------------------------------------------------
Common Stock, $.00001
par value (3) 4,035,546 $ 4.38 (4) $17,675,691.48 (4) $ 4,666.38
- --------------------------------------------------------------------------------------------
Total $40,579,082.48 $ 10,712.88
============================================================================================
</TABLE>
(1) This subtotal represents the sum of shares issuable upon exercise of
presently outstanding options that have been granted by IDM Environmental
Corp. ("IDM") and by Fusion Networks, Inc. ("Fusion") under the IDM 1993
Stock Option Plan, the IDM 1995 Stock Option Plan, the IDM 1998
Comprehensive Stock Option and Award Plan, various stock option grants of
IDM under Employment Agreements and the Fusion Networks 1999 Stock Option
Plan. All of the foregoing options were assumed by Fusion Networks
Holdings, Inc. (the "Registrant") in connection with the closing of the
merger of IDM Merger Subsidiary, Inc., a wholly owned subsidiary of the
Registrant, with and into IDM and the merger of IDM/FNI Acquisition
Corporation, a wholly-owned subsidiary of the Registrant, with and into
Fusion under which IDM and Fusion will become wholly-owned subsidiaries of
the Registrant.
(2) Calculated in accordance with Rule 457(h) based on the aggregate exercise
price for all presently outstanding options described in note 1 above.
(3) This subtotal represents the sum of shares issuable upon exercise of
options that have not yet been granted under the IDM 1993 Stock Option
Plan, the IDM 1995 Stock Option Plan, the IDM 1998 Comprehensive Stock
Option and Award Plan, and the Fusion Networks 1999 Stock Option Plan, as
of the date of this Registration Statement.
(4) Estimated in accordance with Rule 457(h) under the Securities Act of 1933
solely for the purpose of calculating the total registration fee.
Computation based upon the average of the high and low prices of the common
stock of IDM as reported on the Nasdaq SmallCap Market on April 12, 2000
because the price at which the options to be granted in the future may be
exercised is not currently determinable.
(5) An undetermined number of additional shares may be issued if the
antidilution provisions of the options described in note 1 above become
operative.
INTRODUCTORY STATEMENT
Fusion Networks Holdings, Inc., a Delaware corporation (the "Registrant"),
is filing this Form S-8 Registration Statement relating to shares of common
stock $.00001 par value per share, of the Registrant (the "Common Stock")
deliverable to holders of options to purchase shares of common stock of IDM
Environmental Corp. ("IDM") and holders of options to purchase shares of common
stock of Fusion Networks, Inc. ("Fusion"), which options were converted into
options to purchase shares of Common Stock upon the effective time of the merger
of IDM Merger Subsidiary, Inc., a wholly owned subsidiary of the Registrant,
with and into IDM on April 13, 2000 and the merger of IDM/FNI Acquisition
Corporation, a wholly-owned subsidiary of the Registrant, with and into Fusion
on March 28, 2000. The shares of Common Stock are deliverable upon the exercise
of stock options granted, or to be granted, under the IDM 1993 Stock Option
Plan, the IDM 1995 Stock Option Plan, the IDM 1998 Comprehensive Stock Option
and Award Plan, various stock option grants of IDM under Employment Agreements
and the Fusion Networks 1999 Stock Option Plan (collectively, the "Plans").
<PAGE>
On April 13, 2000, IDM Merger Subsidiary, Inc., a wholly-owned subsidiary
of the Registrant, was merged with and into IDM (the "Holding Company
Reorganization") and IDM/FNI Acquisition Corp., a wholly-owned subsidiary of the
Registrant, was merged with and into Fusion (the "Merger"). As a result of the
Holding Company Reorganization and Merger, IDM and Fusion have each become
wholly-owned subsidiaries of the Registrant and each outstanding share of common
stock of IDM (the "IDM Common Stock") and of Fusion (the "Fusion Common Stock")
has been converted into one share of Common Stock. Prior to the Holding Company
Reorganization and Merger, outstanding options granted pursuant to the Plans
were exercisable for shares of IDM Common Stock or Fusion Common Stock, as
appropriate. Pursuant to the Holding Company Reorganization and Merger, the
Registrant assumed the outstanding stock options granted under the Plans
(whether vested or unvested) and, following the Holding Company Reorganization
and Merger, each such stock option constitutes an option (a "Substitute Option")
to acquire shares of Common Stock. Substitute Options generally have the same
terms and conditions as were applicable to the predecessor options prior to the
Holding Company Reorganization and Merger.
================================================================================
<PAGE>
Part I
INFORMATION REQUIRED IN SECTION 10(a) PROSPECTUS
Item 1. Plan Information
Information required by Item 1 is included in documents sent or given to
participants in the Plan pursuant to Rule 428(b)(1) of the Securities Act.
Item 2. Registration Information and Employee Plan Annual Information
Information required by Item 2 is included in documents sent or given to
participants in the Plan pursuant to Rule 428(b)(1) of the Securities Act.
I-1
<PAGE>
PROSPECTUS
FUSION NETWORKS HOLDINGS, INC.
----------------------------
1,627,500 Shares
Common Stock
---------------------------
Fusion Networks Holdings, Inc. (the "Company") has prepared this prospectus
for use by the selling stockholders listed on page 16 of this prospectus to
allow them to sell such shares without restriction. The selling stockholders
have indicated that sales may be made by the methods described in the section
entitled "Plan of Distribution" in this prospectus. We will file a supplemental
prospectus if required to do so by applicable securities laws to describe
specific sales of shares or to identify any selling stockholders not listed in
this prospectus.
Our common stock (the "Common Stock") trades on the Nasdaq National Market
under the symbol "FUSN." We may be deemed to be the successor to IDM
Environmental Corp., which was acquired by merger with a subsidiary of the
Company on April 13, 2000. Prior to the acquisition of IDM, IDM's common stock
traded on the Nasdaq SmallCap Market under the symbol "IDMC". On April 12, 2000,
the last reported sale price of the common stock of IDM was $4.38 per share.
We will not receive any portion of the proceeds resulting from the sale of
the shares offered by the selling stockholders under this prospectus. In
addition, we will pay for certain of the expenses relating to the registration
of the shares. See "Plan of Distribution" and "Selling Stockholders."
Any sales by the Selling Shareholders will be made subject to certain
volume limitations. During any three month period during which this Prospectus
is effective, each Selling Shareholder and affiliates may sell a maximum of the
greater of one percent of the outstanding Common Stock of the Company or the
average weekly trading volume of the Common Stock during the four calendar weeks
preceding the date of the sale.
Our principal executive offices are located at 8115 N.W. 29th Street,
Miami, Florida 33122, and our telephone number is (305) 477-6701.
--------------------------------
You should carefully consider the "Risk Factors" on pages 4 - 15
of this Prospectus before deciding to buy our securities.
--------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved of the securities to be issued under this prospectus or
determined if this prospectus is accurate or adequate. Any representation to the
contrary is a criminal offense.
The date of this prospectus is April ___, 2000.
<PAGE>
TABLE OF CONTENTS
Page
------
Where You Can Find More Information.............................. 3
Our Business..................................................... 4
Risk Factors..................................................... 4
Use of Proceeds.................................................. 16
Selling Stockholders............................................. 16
Plan of Distribution............................................. 16
Legal Matters.................................................... 17
Experts.......................................................... 17
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We have not authorized any dealer, salesperson or any other person to give
any information or to represent anything not contained in this Prospectus. You
must not rely on any unauthorized information. This Prospectus does not offer to
sell or buy any shares in any jurisdiction where it is unlawful. The information
in this Prospectus is current as of the date hereof.
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-8 with the SEC to register
the securities offered hereby. This prospectus does not contain all of the
information contained in the registration statement, including its exhibits and
schedules. You should refer to the registration statement for further
information about us and the securities the selling stockholder is offering.
Statements made in this prospectus about certain contracts or other documents
are not necessarily complete. When we make such statements, we refer you to the
copies of those contracts or other documents that are filed as exhibits to the
registration statement, because those statements are qualified in all respects
by reference to those exhibits. The registration statement, including exhibits
and schedules, is on file at the offices of the SEC and may be inspected without
charge.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings, including the registration statement,
are available to the public over the Internet at the SEC's website at
http://www.sec.gov. You also may read and copy any document we file at the SEC's
public reference rooms in Washington, D.C.; New York, New York; and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information about
the public reference rooms.
SEC rules allow us to include some of the information required to be in the
registration statement by incorporating that information by reference to other
documents we file with them. That means we can disclose important information to
you by referring you to those documents. The information incorporated by
reference is an important part of this prospectus, and information that we file
later with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act of
1934 until all of the securities covered by this prospectus are sold:
(a) The Company's Form 424(b) Prospectus (Commission File No. 333-92949)
filed February 29, 2000;
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
since the end of the fiscal year covered by the document referred to
in (a) above; and
(c) The description of securities included in Form S-4 declared effective
by the Commission on February 15, 2000 (Commission File No.
333-92949).
You may request a copy of these filings, which we will provide to you
at no cost, by writing or telephoning us at the following address:
Fusion Networks Holdings, Inc.
8115 N.W. 29th Street
Miami, Florida 33122
Attn: Corporate Secretary
(305) 477-6701
3
<PAGE>
OUR BUSINESS
We operate through our subsidiary companies, Fusion Networks, Inc.
("Fusion") and IDM Environmental Corp. ("IDM"). We acquired Fusion and IDM
pursuant to a holding company reorganization of IDM and merger of a subsidiary
with Fusion in April 2000.
Fusion is an Internet portal company founded to provide improved Internet
content and services to Latin American markets and to the Spanish and Portugese
speaking population around the world. Fusion Networks launched its Internet
site, LatinFusion.com, in Bogota, Colombia in October 1999 followed by the
launch of its site in Miami in January 2000, and plans similar launches in
targeted cities and regions in the Americas and Europe.
IDM is a global, diversified services and project development company
offering a broad range of design, engineering, construction, project development
and management, and environmental services and technologies to government and
private industry clients. Through its domestic and international affiliates and
subsidiaries, IDM offers services and technologies, and operate, in three
principal areas: Energy and Waste Project Development and Management,
Environmental Remediation and Plant Relocation.
RISK FACTORS
You should carefully consider the following risk factors and other
information set forth in this prospectus before deciding to buy our securities.
Risks Related to Fusion Networks
Company Risks
We have only been in business for a short period of time, so your basis for
evaluating our company is limited
We have only an extremely limited operating history for you to evaluate our
business. We were incorporated in July 1999 and launched the LatinFusion.com web
site on a pilot basis in October 1999. Other than development of our business
plan and steps taken to implement that business plan, we have conducted limited
operations since inception and, as of December 31, 1999 had generated no
operating revenues.
You must consider the risks, expenses and uncertainties that an early stage
Internet company like ours faces. These risks include our ability to:
- fund the proposed expansion of the LatinFusion.com network in new
markets;
- increase awareness of the LatinFusion.com brand and continue to build
user loyalty;
- expand the content and services on our network;
- attract a larger audience to our network;
- attract a large number of advertisers from a variety of industries;
- maintain our current, and develop new, strategic relationships;
- respond effectively to competitive pressures; and
- continue to develop and upgrade our technology.
We cannot assure you that we will be successful or that we will be able
effectively to compete and achieve market acceptance or otherwise address the
risk factors disclosed in this proxy statement/prospectus.
4
<PAGE>
We have not generated any operating revenues, have not operated profitably and
expect to operate at a loss for the foreseeable future
As of September, 1999, we had generated no operating revenues since
inception and had an accumulated deficit of approximately $409,238. We expect to
continue to incur significant losses for the foreseeable future. Although our
revenues are expected to grow rapidly, for the foreseeable future, our expenses
are expected to grow even faster and we expect to increase our spending
significantly. Accordingly, we will need to generate significant revenues to
achieve profitability. We may not be able to do so.
We may not be able to generate substantial advertising revenues as called for in
our business plan
Our business plan is dependent on the anticipated expansion of online
advertising in Latin America and the growth of our revenues is dependent on
establishing and growing revenues generated by advertising. If the market for
online advertising in Latin America does not develop to the extent anticipated
or develops at a slower pace than anticipated or if we are unable to secure and
maintain online advertising relationships, our revenues may be insufficient to
operate profitably.
Online advertising is an unproven business and our ability to generate and
maintain significant advertising revenues will depend, among other things, on:
- advertisers' acceptance of the Internet as an effective and
sustainable advertising medium;
- the development of a large base of users of our portal network
possessing demographic characteristics attractive to advertisers;
- our ability to contract with a diverse group of advertising
affiliates; and
- the effectiveness of our advertising delivery, tracking and reporting
system.
We have developed an "infomercial" advertising model. We have not, however,
as yet, entered into any substantial advertising arrangements pursuant to which
advertisements will appear on our network. We anticipate that most advertising
affiliates will contract for our services under agreements cancelable upon a
specified notice period. Our advertising affiliates will measure satisfaction by
acceptable revenue levels, the number of times users view an advertisement,
general reputation of our network and loyalty to our network among users and
timely and accurate reporting. There can be no assurance that:
- - we will be able to attract a sufficient number of advertisers to allow us
to operate profitably;
- - our advertising affiliates will remain associated with us; or
- - our advertising affiliates will maintain consistent or increasing traffic
levels over time.
The loss of our advertising affiliates or a reduction in traffic on such
Web sites or on our portal may cause advertisers to withdraw from our network,
which, in turn, could reduce our future advertising revenues.
Some of our advertising revenues may be non-cash revenues which do not provide
funds to pay operating expenses or expansion costs
We may enter into reciprocal advertising arrangements under which we
exchange advertising on our network for advertising space on traditional
advertising mediums, such as radio, television, newspapers and magazines.
Reciprocal advertising arrangements do not generate any cash revenues and,
therefore, do not provide funds to pay operating expenses or expansion costs.
Such reciprocal advertising arrangements may represent a substantial portion of
our revenues, particularly in the early months and years of operation of our
network.
5
<PAGE>
We will rely on content provided by third parties to attract users and
advertisers
Pursuant to our business plan, we expect to rely on a number of third
parties to create and supply content in order to make our network more
attractive to users and advertisers. The loss of content, or receipt of content
which is not attractive to users or is readily available at other sites, could
result in reduced traffic volume to our network and reduced revenues. To remain
competitive, we must continue to enhance and improve our content. We have
entered into a limited number of arrangements with content providers and must
enter into additional arrangements to provide for the quality and volume of
content necessary to make our network an attractive site. We anticipate that
most of these arrangements will not be exclusive and will be short term in
nature or cancelable on short notice. There can be no assurance that we will be
successful in establishing and maintaining relationships with content providers.
We will rely on various strategic relationships with electronic commerce
merchants, technology providers and others
Our business is expected to depend on establishing relationships with
leading electronic commerce merchants, and technology and infrastructure
providers. If we are unable to establish such relationships or if the parties
with which we have these relationships do not adequately perform their
obligations, reduce their activities with us, choose to compete with us or
provide their services to a competitor, we may have more difficulty attracting
and maintaining visitors to our network and our revenues and profitability may
decline. We have not, as yet, entered into any substantial relationships with
electronic commerce merchants or technology or infrastructure providers. Because
most of our agreements with these third parties are not expected to be
exclusive, our competitors may seek to use the same partners as we do and
attempt to adversely impact our relationships with our partners. We might not be
able to maintain these relationships or replace them on financially attractive
terms. Also, we intend to actively seek additional relationships in the future.
Our efforts in this regard may not be successful.
We will be required to continually enhance and invest in our network to attract
users and advertisers
In order to attract and retain users and advertisers to our network, we
must continually improve the responsiveness, functionality and features of our
network and develop other products and services that are attractive to users and
advertisers. If we are unsuccessful in developing or introducing features,
functions, products and services that visitors and advertisers find attractive
in a timely manner we will likely experience reduced visitor traffic, revenues
and profitability.
Unexpected systems interruptions and capacity constraints could reduce user
traffic, reducing revenues and impeding development of our business
Any systems failure or inadequacy that causes interruptions in the
availability of our services, or increases the response time of our services, as
a result of increased traffic or otherwise, could reduce user satisfaction,
future traffic and our attractiveness to users and advertisers resulting in
reduced revenues. In addition, as the amount of Web pages and traffic increases,
there can be no assurance that we will be able to scale our systems
proportionately. There also can be no assurance that our ad serving technology
can continue to properly track the number of impressions on our advertising
affiliates if traffic increases substantially. We are also dependent upon Web
browsers, ISPs, and other Web site operators in Latin America and elsewhere,
which may experience significant system failures and electrical outages and our
users may experience difficulties due to system failures unrelated to our
systems and services.
We have limited backup systems and redundancy and we may experience system
failures and electrical outages from time to time which disrupt our operations.
We do not presently have a disaster recovery plan in the event of damage from
fire, hurricanes, floods, power loss, telecommunications failures, break-ins and
similar events. If any of the foregoing occurs, we may experience a complete
system shut-down. If we experience delays and interruptions, or if a computer
virus affecting our system is highly publicized, visitor traffic may decrease
and our brand could be adversely affected. In addition, the inadvertent
transmission of computer viruses could expose us to a material risk of loss or
litigation and possible liability. Because our revenues depend on the number of
individuals who use our network, our business may suffer if our efforts to
maintain our system are unsuccessful. Further, any significant equipment,
computer virus or related systems problem, could require us to incur significant
unanticipated expenses to remedy these problems and could divert management's
time and attention. Although we carry general liability insurance, our insurance
may not cover any claims by dissatisfied providers or subscribers or may not be
adequate to indemnify us for any liability that may be imposed in the event that
a claim were brought against us. To improve performance and to prevent
disruption of our services, we may have to make substantial investments to
deploy additional servers or one or more copies of our Web sites to mirror our
online resources.
6
<PAGE>
Development of our business and revenue growth could be impeded if
LatinFusion.com is not successful in establishing brand awareness for the
network
Maintaining the LatinFusion.com brand is critical to our ability to expand
our user base and our revenues. If we fail to promote our brand successfully or
if visitors to our network or advertisers do not perceive our services to be of
high quality, the value of the LatinFusion.com brand could be diminished
resulting in reduced user traffic and revenues. We believe that the importance
of brand recognition will increase as the number of Internet sites in Latin
America grows. In order to attract and retain Internet users, advertisers and
electronic commerce partners, we intend to increase substantially our
expenditures for creating and maintaining brand loyalty. Our success in
promoting and enhancing the LatinFusion.com brand will also depend on our
success in providing high quality content, features and functionality.
We may not be able to obtain sufficient funds to implement our business plan and
grow our business
Implementation of our business plan and growth of our business will require
substantial additional funding. If we are unable to raise additional capital,
our ability to implement our business plan, to grow our business and to operate
profitably could be impeded. Because we expect to generate losses for the
foreseeable future, we do not expect that income from our operations will be
sufficient to meet these needs. Therefore, we will likely have substantial
future capital requirements after the merger. Obtaining additional financing
will be subject to a number of factors, including market conditions, our
operating performance, and investor sentiment. These factors may make the
timing, amount, terms and conditions of additional financing unattractive for
us.
Rapid growth in operations could strain our managerial, operational and
financial resources, resulting in reduced revenues and profitability
The planned growth of our network and operations may place a significant
strain on our managerial, operational and financial resources. Our failure to
expand and integrate these areas in an efficient manner could cause our expenses
to grow and our revenues to decline or grow more slowly than expected. To
accommodate this planned growth, we must implement continually new or upgraded
operating and financial systems, procedures and controls throughout many
different locations. In addition, our future success will also depend on our
ability to expand, train and manage our workforce, in particular our sales and
marketing organization, both domestically and internationally. We will also have
to maintain close coordination among our technical, accounting, finance,
marketing, sales and editorial personnel. We may not succeed with these efforts.
The loss of key personnel could impede implementation of our business plan and
reduce profitability
Our future success will depend, in substantial part, on the continued
service of our senior management, including Mr. Hernando Bahamon, our Chief
Executive Officer, and key technical and sales personnel. The loss of the
services of one or more of our key personnel could impede implementation of our
business plan and reduce profitability. We have applied for a key person life
insurance policy in the amount of $5 million on the life of Mr. Bahamon, but
have not, as yet, obtained such policy. Our future success will also depend on
our continuing ability to attract, retain and motivate highly qualified
technical, sales and marketing, customer support, financial and accounting, and
managerial personnel. Competition for this personnel, in particular information
technology professionals, is intense, and we cannot assure you that we will be
able to retain our key personnel or that we will be able to attract, assimilate
or retain other highly qualified personnel in the future.
7
<PAGE>
Latin American Internet Risks
The Latin American Internet industry is a developing market and has not proven
as an effective commercial medium
The market for Internet services in Latin America is in an early stage of
development. If Internet usage in Latin America does not continue to grow or
grows more slowly than we anticipate, the development of our business may be
impeded and our revenues may be insufficient to operate profitably. Since the
Internet is an unproven medium for advertising and other commercial services,
our future operating results will depend substantially upon the increased use of
the Internet for information, publication, distribution and commerce and the
emergence of the Internet as an effective advertising medium in Latin America.
Critical issues concerning the commercial use of the Internet in Latin
America such as security, reliability, cost, ease of deployment, administration
and quality of service may affect the adoption of the Internet to solve business
needs. The most advanced security measures for electronic sales transactions
have been developed to accommodate credit card sales. The use of credit cards is
not, however, a common practice in Latin America. While debit cards are more
common than credit cards in Latin America and a security system has been
developed for use with debit cards, consumers will have to be confident that
adequate security measures protect electronic sales transactions in the Latin
American market before electronic commerce can attain wide acceptance. Further,
cost of access, poor reliability and poor service may prevent many potential
Latin Americans from using the Internet.
Our ability to grow users of our network depends on the establishment of an
adequate telecommunications infrastructure in Latin America
The telecommunications infrastructure in many parts of Latin America is not
as well-developed as in the United States or Europe. If improvements to the
Latin American telecommunications infrastructure do not occur or if access to
the Internet in Latin America does not continue to grow or grows more slowly
than we anticipate, the development of our business may be impeded and our
revenues may be insufficient to operate profitably. Access to the Internet
requires a relatively advanced telecommunications infrastructure. The quality
and continued development of the telecommunications infrastructure in Latin
America will have a substantial impact on our ability to deliver our services
and on the market acceptance of the Internet in Latin America in general. If
further improvements to the Latin American telecommunications infrastructure are
not made, the Internet will not gain broad market acceptance in Latin America.
Social, political and economic risks associated with doing business in Latin
America may impede the development of our business
Social, political and economic conditions in Latin America are volatile and
may cause our operations to fluctuate. This volatility could make it difficult
for us to implement and grow our business and to sustain our expected growth in
revenues and earnings, which could have an adverse effect on our stock price.
Historically, volatility has been caused by significant governmental influence
over many aspects of local economies, political instability, unexpected changes
in regulatory requirements, social unrest, slow or negative growth, imposition
of trade barriers, and wage and price controls.
We have no control over these matters. Volatility resulting from these
matters may decrease Internet availability, create uncertainty regarding our
operating climate and adversely affect our customers' advertising budgets, all
of which may impede the development of our business and result in reduced
revenues and profitability.
8
<PAGE>
Currency exchange rate fluctuation may impede development of our business and
result in exchange rate losses
Currency fluctuations and poor general economic conditions in Latin
American countries may cause our customers to reduce their advertising spending,
which could impede development of our business and could cause our revenue to
decline unexpectedly. Many countries in Latin America, including major Latin
American markets such as Brazil and Argentina, have experienced significant
economic downturns and currency rate volatility. Currency fluctuations, as well
as high interest rates, inflation and high unemployment, have materially and
adversely affected the economies of these countries.
In addition to potentially adversely impacting our revenues, currency
fluctuations may give rise to exchange rate losses. We may bill customers in
Latin America in local currencies. Our accounts receivable from these customers
will decline in value if the local currencies depreciate relative to the U.S.
dollar. Although we may enter into hedging transactions in the future in an
effort to reduce our exposure to exchange rate fluctuations, we may not be able
to do so successfully. In addition, our currency exchange losses may be
magnified if we become subject to exchange control regulations restricting our
ability to convert local currencies into U.S. dollars.
Intense competition in the Latin American Internet industry could cause our
revenues to be insufficient to operate profitably
Intense competition in the Latin American Internet industry could result in
lower advertising rates, price reductions and lower profit margins, loss of
visitors, reduced page views, or loss of market share. Any one of these could
result in reduced revenues and a lack of profitability.
The Latin American Internet market is characterized by an increasing number
of entrants because of low barriers to entry into the market. In addition, the
Internet industry is relatively new and subject to continuing definition and as
a result, our competitors may better position themselves to compete in this
market as it matures. Many of our existing competitors, as well as a number of
potential new competitors, have longer operating histories in the Internet
market, greater name recognition, larger customer bases and databases and
significantly greater financial, technical and marketing resources than do we.
Any of our present or future competitors may provide products and services that
provide significant performance, price, creative or other advantages over those
offered by us. We can provide no assurance that we will be able to compete
successfully against our current or future competitors.
Regulatory and Legal Risks
Regulation of the Internet industry in Latin America and other markets may
impede implementation of our business plan
The laws governing the Internet remain largely unsettled, even in areas
where there has been some legislative action. New legislation and regulation
could increase our cost of doing business, dampen the growth in the use of the
Internet generally, and our network in particular, and decrease the acceptance
of the Internet as a communications and commercial medium, which could impede
implementation of our business plan resulting in reduced revenues and a lack of
profitability. It may take years to determine whether and how existing laws,
including those governing intellectual property, privacy, libel and taxation,
apply to the Internet generally and electronic publishing, advertising and
commerce in particular. In addition to new laws and regulations being adopted,
existing laws may be applied to the Internet. New and existing laws may cover
issues which include: sales and other taxes, user privacy, pricing controls,
characteristics and quality of products and services, consumer protection,
cross-border commerce, libel and defamation, copyright, trademark and patent
infringement, pornography, and other claims based on the nature and content of
Internet materials.
9
<PAGE>
In addition, because the growing popularity and use of the Internet has
burdened the existing telecommunications infrastructure and many areas with high
Internet usage have begun to experience interruptions in phone service, some
local telephone carriers have petitioned governmental agencies to regulate
Internet service providers and online service providers in a manner similar to
long distance telephone carriers and to impose access fees on Internet service
providers and online service providers. If any of these petitions or the relief
that they seek is granted, the costs of communicating on the Internet could
increase substantially, potentially adversely affecting the growth in the use of
the Internet.
Further, due to the global nature of the Internet, it is possible that,
although transmissions relating to our services originate in one state or
country, governments of other states or countries might attempt to regulate our
services or levy sales or other taxes on our activities. We cannot assure you
that violations of local or other laws will not be alleged or charged by local,
state, federal or foreign governments, that we might not unintentionally violate
these laws or that these laws will not be modified, or new laws enacted, in the
future. Any of these developments could impede development of our business
resulting in reduced revenues and a lack of profitability.
Because we expect to have employees, property and business operations in
the United States and throughout Latin America, we will be subject to the laws
and the court systems of many jurisdictions. We may become subject to claims
based on foreign jurisdictions for violations of their laws. In addition, these
laws may be changed or new laws may be enacted in the future. International
litigation is often expensive, time consuming and distracting. Accordingly, any
of the foregoing could result in increased expenses and reduced profitability.
Failure to adequately protect and secure intellectual property rights may result
in reductions in revenues or unexpected expenses
Protection of our rights regarding intellectual property is believed to be
critical to our success. Unauthorized use of our intellectual property by third
parties may adversely affect our reputation resulting in reduced revenues. We
intend to rely on trademark and copyright law, trade secret protection and
confidentiality and/or license agreements with our employees, customers,
partners and others to protect our intellectual property rights. Despite our
precautions, it may be possible for third parties to obtain and use our
intellectual property without authorization. Furthermore, the validity,
enforceability and scope of protection of intellectual property in
Internet-related industries is uncertain and still evolving. The laws of some
foreign countries are uncertain or do not protect intellectual property rights
to the same extent as do the laws of the United States.
Further, we may from time to time license technology from third parties or
develop intellectual property internally for use on our network. We cannot be
certain that our products do not or will not infringe valid patents, copyrights
or other intellectual property rights held by third parties. We may be subject
to legal proceedings and claims from time to time relating to the intellectual
property of others in the ordinary course of our business. We may incur
substantial expenses in defending against these third-party infringement claims,
regardless of their merit. Successful infringement claims against us may result
in substantial monetary liability or may materially disrupt the conduct of our
business.
We may be held liable for information retrieved from our network
Because our services can be used to download and distribute information to
others, there is a risk that claims may be made against us for defamation,
negligence, copyright or trademark infringement or other claims based on the
nature and content of such material. The laws in the United States and in Latin
American countries relating to the liability of companies which provide online
services, like ours, for activities of their visitors are currently unsettled.
We could be subject to claims based on content retrieved from our network and
incur significant costs in their defense. In addition, we could be exposed to
liability for the selection of listings that may be accessible through our
network or through content and materials that our visitors may post in
classifieds, message boards, chat rooms or other interactive services. It is
also possible that if any information provided through our services contains
errors, third parties could make claims against us for losses incurred in
reliance on the information. We intend to offer Web-based e-mail services, which
expose us to potential liabilities or claims resulting from unsolicited e-mail,
lost or misdirected messages, illegal or fraudulent use of e-mail, or
interruptions or delays in e-mail service. We may be subject to claims based on
products and services sold on our network
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We intend to enter into arrangements to offer third-party products and
services on our network which may subject us to additional claims including
product liability or personal injury from the products and services, even if we
do not ourselves provide the products or services. These claims may require us
to incur significant expenses in their defense or satisfaction. While our
agreements with these parties are expected to provide that we will be
indemnified against such liabilities, such indemnification may not be adequate.
Although we carry general liability insurance, our insurance may not cover
all potential claims to which we are exposed or may not be adequate to indemnify
us for all liability that may be imposed. Any imposition of liability that is
not covered by insurance or is in excess of insurance coverage could subject us
to payment of amounts in excess of our available resources or could result in
the imposition of criminal penalties. In addition, the increased attention
focused on liability issues as a result of these lawsuits and legislative
proposals could impact the overall growth of Internet use.
Risks Related to IDM
We have a history of substantial operating losses and may continue to experience
losses
We have experienced significant operating losses during the past four years
and may continue to experience losses in the future. We had net losses
attributable to common stock of $7.2 million, $22.4 million, $9.9 million, $9.1
million and $3.9 million during the years ended December 31, 1999, 1998, 1997,
1996 and 1995, respectively. Until such time as we are able to begin one or more
large projects on which delays in commencement have been experienced, or until
such time as other projects are begun, if ever, we will continue to experience
losses.
Intense competition may limit our ability to secure projects and result in lower
margins
Competition in the environmental services industry is intense. As a result
of such competition, operating margins may be reduced and our ability to secure
profitable contracts may be limited. The industry is dominated by large
architectural engineering firms such as Bechtel, Fluor, Westinghouse, Foster
Wheeler and ICF Kaiser, among others. Additionally, many smaller engineering
firms, construction firms, consulting firms and other specialty firms have
entered the environmental services industry in recent years and additional firms
can be expected to enter into the industry. Many of the firms with which we
compete in the environmental services industry have significantly greater
financial resources and more established market positions than do we.
Various segments of the environmental industry are mature and are not growing
With the entry of increasing competition, the market for certain labor
intensive low technology services, such as asbestos abatement, dismantling and
demolition, has become saturated resulting in lower margins in those segments.
As a result of such maturation and competitive pressures many participants in
the environmental services industry have incurred losses or significant declines
in profitability in recent years. The maturation of those markets and our
determination to avoid those markets reduces the potential market for our
environmental services and potential revenues from such services. Further, there
can be no assurance that other segments of the environmental services market not
previously effected by competition and lower margins will not be adversely
effected in the future.
We may incur write downs and other losses if we are unable to integrate recent
acquisitions
We have undertaken various strategic technology acquisitions and alliances
in recent years in order to improve our competitive position and increase our
potential revenues. In the event we are unable to successfully integrate our
technology acquisitions/alliances with our existing operations or we are unable
or unwilling to meet the funding requirements necessary to fully commercialize
such technologies, it is possible that we could loss some or all of our
investment in such technologies. There can be no assurance that we will be
successful in integrating such new technologies with our existing service
offerings. Further, it is possible that certain state-of-the-art technologies,
including technologies which have been or may in the future be acquired by us,
may not yet be commercially viable or may require ongoing funding beyond our
capabilities before those technologies can be successfully deployed on a
commercial basis.
11
<PAGE>
We may incur write-downs and other losses if we are unable to successfully enter
into the power production market
We have devoted substantial resources to our entry into the power
production market and expect to devote substantial additional resources to such
efforts in the future. If we are unable to translate our efforts and investments
into operating power facilities, we may incur substantial write-downs of our
investments and other losses associated with such efforts. Our ability to profit
from efforts in this regard is contingent upon our ability to successfully
negotiate agreements with governmental, industrial and other entities whereby
those entities agree to purchase all or a substantial portion of the power
produced by those facilities, our ability to finance and construct power
production facilities on terms deemed acceptable and our ability to purchase
feed stocks and operate facilities at sufficiently low cost to generate
operating profits and to recover the cost of constructing such facilities. We
have no experience in constructing or operating power production facilities.
There can be no assurance that we will be successful in consummating
arrangements to construct, operate and sell power from such facilities. Even if
we are successful in consummating such transactions, there can be no assurance
that the facilities can or will be operated profitably or, given the nature of
the anticipated purchasers of such production, that the foreign entities which
have contracted to purchase such production will have the financial capability
to purchase the power committed to be purchased.
Despite our substantial investments to enter into the power production
market, we have been unable to commence any substantial power production
operations, other than of a development nature, and have been unable to secure
adequate power purchase arrangements or financing to begin construction of any
power plants to date.
Additionally, even if we are successful in developing and financing power
projects, a variety of independent power producers and private and government
owned entities may provide power in some of the markets in which we expect to
operate. Should those markets grow and undergo deregulation similar to that
experienced in the United States, it can be expected that new competitors will
enter those markets increasing pricing and competitive pressures.
Accordingly, there can be no assurance that we will be successful in our
efforts to enter that market, that we can operate on a profitable basis in the
markets which we may enter or that any profits which may be generated will be
sufficient to recover the cost of entering the power production market.
Our ability to perform certain environmental services is dependent on our
ability to secure bonding
In order to bid on and successfully secure contracts to perform
environmental services of the nature offered, we may, depending upon the bid
specifications, be required to provide surety bonds for each respective project.
There can be no assurance that we will have adequate bonding capacity to bid on
all of the projects which we would otherwise bid upon were we to have such
bonding capacity or that we will in fact be successful in obtaining additional
jobs on which we may bid. The number and size of contracts which we can perform
is directly dependent upon our ability to obtain bonding which, in turn, is
dependent upon our net worth, liquid working capital, and the nature and
projected profitability of projects undertaken, among other factors. We have,
from time to time, been unable to secure additional and larger contracts as a
result of such bonding requirements and may incur similar difficulties in the
future.
We are subject to potential liabilities and costs in connection with compliance
with environmental regulations
Environmental regulations, at the federal, state and local levels, impose
stringent guidelines on companies which generate and handle hazardous materials
as well as other companies involved in various aspects of the environmental
services industry. Any future increases or changes in regulation may result in
our incurring additional costs for equipment, retraining, development of new
remediation or abatement plans, handling of hazardous materials and other costs.
12
<PAGE>
We have been named in complaints, and may be named in future complaints, as
violating various regulations governing the removal of asbestos. We have settled
certain complaints in the past by agreeing to pay civil fines or penalties
without admitting liability. There can be no assurance, however, that any
complaints which may arise in the future can be settled on a favorable basis. In
any event, because of the nature of our operations and the industry in which we
operate, the potential for liability and the extent of such potential liability
is very substantial. Any such liability which is determined to exist could
result in unexpected expenses, operating losses and demands in excess of our
resources.
We may be exposed to damages or claims not covered by insurance or exceeding the
limits of our insurance coverage
Our environmental impairment insurance policy does not cover any liability
arising from radiological operations other than low level radioactive soil
excavation and facility cleaning. If, in the absence of such insurance, were we
to incur liability for environmental impairment in connection with excluded
radiological services, such liability could result in unexpected expenses and
demands in excess of our resources. Further, as the cost of cleaning or
correcting environmental hazards can be extremely high, even if we are
determined to be liable for costs which are covered by insurance, there is no
assurance that such coverage will be adequate to pay the entire cost thereof
and, therefor, we may incur losses in excess of our insurance coverage.
Our operations are frequently dependent upon a small number of major customers
and projects
A significant portion of our revenues in recent years have come from, and a
significant portion of our resources have been devoted to, one or more large
clients and projects. We are subject to large decreases in revenues following
the completion of large projects. In order for us to replace the revenues
attributable to large projects, we must secure one or more large projects or a
large number of smaller projects upon completion of such projects. There is no
assurance that we can adequately replace such projects with other projects which
will produce as much revenue. Further, there is no assurance that we will not
continue to be dependent upon a small number of major customers for a
significant portion of our revenues and earnings.
We are dependent upon the efforts of key personnel
Our operations are dependent upon the continued efforts of senior
management. Should any of the members of our senior management be unable or
unwilling to continue in their present roles or should such persons determine to
enter into competition with us, our ability to bid on and perform certain
projects could be limited resulting in reduced revenues and operating profits.
We are dependent on temporary labor
The location and other factors effecting jobs performed away from the
immediate vicinity of our headquarters result in our regularly hiring temporary
workers on site. We may experience difficulties in satisfactorily performing
jobs and, in some cases, may be exposed to certain liabilities as a result of
the acts or performance of such temporary workers. There is no assurance that
all such temporary workers will perform at levels acceptable to us and our
customers. Additionally, in some locations, we may be required to hire unionized
temporary labor. The hiring of such unionized workers may give rise to various
other considerations affecting the performance of jobs, including possible work
stoppages and varying wage and benefit demands, among others.
Our substantial working capital and financing requirements and lack of financial
resources may cause us to have to sell assets, curtail operations or secure
third party financing
Pending the receipt of payments for services rendered, we must typically
fund substantial project costs, including significant labor and bonding costs.
If we have inadequate working capital to fund such costs and support ongoing
operations, we must sell assets, curtail operations or secure third party
financing.
13
<PAGE>
As a result of working capital shortages, we were required to raise
additional capital through the sale of equity securities on multiple occasions
since 1995. There is no assurance that we will not require additional financing
in the future. While we have agreed with Fusion Networks that one-half of all
proceeds received from the exercise of outstanding options and warrants will be
contributed to our capital to support operations and we intend to seek any bank
or other financing which may be required in the future, there is no commitment
on the part of any option or warrant holders to exercise those options or
warrants and no source of potential financing has been identified and there is
no assurance that any such financing will be available on terms acceptable to
us, or at all, if needed.
We have been subject to, and may continue to be subject to, legal and
administrative proceedings which may give rise to possible liability
We are periodically subject to lawsuits and administrative proceedings
arising in the ordinary course of our business. We may incur substantial
unexpected expenses as a result of such legal and administrative proceedings.
Included in such proceedings are periodic administrative proceedings initiated
by various environmental regulatory agencies.
We have experienced recurring difficulty collecting amounts owed pursuant to
changes in the scope of services on projects
We have periodically been required to expand the scope of services on
projects due to undisclosed circumstances, delays or disruptions caused by
clients or other contractors and change orders requested by customers. Should we
be unable to collect reasonable compensation for additional services or should
we experience extended delays in paying such amounts, we may experience
substantial losses from projects or substantial negative cash flow from projects
until such time as payment is received. In such situations, we have routinely
sought additional compensation for the additional services rendered as a result
of such undisclosed circumstances, delays or disruptions and change orders. We
have, on a number of occasions, had disputes with our clients as to the amount
of additional compensation owed and delays in the payment of such amounts.
We have been a party to, and are a party to, transactions involving possible
conflicts of interest
We have been controlled, and may continue to be controlled, by Joel
Freedman and Frank Falco, our principal officers, and have periodically engaged
in transactions with Messrs. Freedman and Falco and entities controlled by
Messrs. Freedman and Falco. Any current or future transactions with such
affiliates may involve possible conflicts of interest.
We have amended and restated our financial statements
As a result of cost overruns and unapproved change orders on a series of
projects during 1996 and the first quarter of 1997, we implemented certain
changes in the manner in which we account for job costs and revenues. In
conjunction with those accounting changes, we restated our financial statements
and amended our reports on Forms 10-Q for the quarters ended March 31, 1996,
June 30, 1996, September 30, 1996, March 31, 1997, June 30, 1997 and September
30, 1997 and on Form 10-K for the year ended December 31, 1996.
Other Risks
The principal officers and stockholders of Fusion Networks may significantly
influence matters to be voted on by stockholders following the merger
The executive officers and 5% stockholders of Fusion Networks currently
beneficially own approximately 70% of the outstanding shares of our common
stock. Accordingly, they will have significant influence in determining the
outcome of any corporate transaction or other matter submitted to the
stockholders for approval, including the election of directors, mergers,
consolidations and the sale of all or substantially all of our assets, and also
the power to prevent or cause a change in control. The interests of these
stockholders may differ from the interests of the other stockholders. You may
experience substantial dilution as a result of our ability to issue substantial
amounts of additional shares without shareholder approval
14
<PAGE>
We have an aggregate of approximately 50,943,000 shares of common stock
authorized but unissued and not reserved for specific purposes and an additional
12,167,000 shares of common stock unissued but reserved for issuance pursuant to
outstanding warrants and options. Although there are no other present plans,
agreements, commitments or undertakings with respect to the issuance of
additional shares, or securities convertible into any such shares, any shares
issued would further dilute the percentage ownership held by the public
shareholders. All of such shares may be issued without any action or approval by
shareholders.
In addition to the above referenced shares of common stock which may be
issued without shareholder approval, we have 1,000,000 shares of authorized
preferred stock, of which no shares are outstanding. Prior to the distributions
of any amounts to the holders of common stock, whether as dividends or on
liquidation, the holders of outstanding preferred stock must have received their
cumulative dividend or liquidation preference, as appropriate. While we have no
present plans to issue any shares of preferred stock, the board of directors
will have the authority, without shareholder approval, to create and issue one
or more series of such preferred stock and to determine the voting, dividend and
other rights of holders of such preferred stock. The issuance of any of such
series of preferred stock could have an adverse effect on the holders of common
stock.
The ability of the board of directors to fix the terms of and issue shares
of preferred stock without shareholder approval, and other anti-takeover
provisions in our certificate of incorporation and bylaws and available under
Delaware law, could (1) result in our being less attractive to a potential
acquiror and (2) result in shareholders receiving less for their shares than
otherwise might be available in the event of a take over attempt.
The market price of our shares may experience price and volume fluctuations
Broad market fluctuations may adversely affect the market price of our
common stock. The stock market has, from time to time, experienced extreme price
and volume fluctuations. The market prices of the securities of Internet-related
companies have been especially volatile, including fluctuations that are often
unrelated to the operating performance of the affected companies.
The market price of our common stock could be subject to significant
fluctuations due to a variety of factors, including:
- public announcements concerning us or our competitors, or the Internet
industry;
- fluctuations in operating results;
- introductions of new products or services by us or our competitors;
- changes in analysts' earnings estimates; and
- announcements of technological innovations.
In the past, companies that have experienced volatility in the market price
of their stock, including IDM, have been the object of securities class action
litigation. If we were the object of securities class action litigation, it
could result in substantial costs and a diversion of our management's attention
and resources and have a material adverse effect on our business, results of
operation and financial condition.
Future sales of shares of our common stock may negatively affect our stock price
If our stockholders sell substantial amounts of our common stock, including
shares issuable upon the exercise of outstanding options and warrants in the
public market, the market price of our common stock could fall. These sales also
might make it more difficult for us to sell equity securities in the future at a
time and price that we deem appropriate. Persons who may be deemed to be
affiliates of either IDM or Fusion include individuals or entities that control,
are controlled by, or are under common control of either IDM or Fusion and may
include some of the officers, directors, or principal shareholders of IDM or
Fusion. Affiliates may not sell their shares of common stock acquired in
connection with the merger except pursuant to:
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- an effective registration statement under the Securities Act covering
the resale of those shares;
- an exemption under paragraph (d) of Rule 145 under the Securities Act;
or
- another applicable exemption under the Securities Act.
We do not expect to pay dividends for the foreseeable future
We have not declared or paid, and do not anticipate declaring or paying in
the foreseeable future, any cash dividends on our Common Stock. Our ability to
pay dividends is dependent upon, among other things, our future earnings,
operating and financial condition, our capital requirements, general business
conditions and other pertinent factors, and is subject to the discretion of our
board of directors. Further, as noted above, no distributions may be made with
respect to the common stock unless all cumulative dividends with respect to
outstanding preferred stock, if any, have been paid. Accordingly, there is no
assurance that any dividends will ever be paid on our common stock.
USE OF PROCEEDS
We will not receive any of the proceeds from the reoffer and resale of the
Shares by the Selling Stockholders.
SELLING SHAREHOLDERS
This Prospectus relates to the reoffer and resale of the following Shares
which may be issued to the following affiliates of the Company (the "Selling
Shareholders"):
<TABLE>
Shares Purchasable
Number of Shares Under Stock Options Shares Held After
Name and Position Held Prior to Offering And Offered Hereby Exercise and Sale
- ------------------ ---------------------- ------------------- -----------------
<S> <C> <C> <C>
Joel A. Freedman
Director of the Company
and President and Chief
Executive Officer of IDM (1) 813,750 813,750 0
Frank A. Falco
Director of the Company
and Executive Vice President and
Chief Operating Officer of IDM (1) 860,855 813,750 47,105
</TABLE>
- -------------------------
(1) Includes 813,750 shares issuable upon the exercise of options which are
currently exercisable and exercisable within 60 days from the date hereof.
PLAN OF DISTRIBUTION
Pursuant to this prospectus, the selling stockholders may sell shares of
common stock from time to time in transactions on such exchanges or markets as
the common stock may be listed for trading from time to time, in
separately-negotiated transactions, in an underwritten offering, or by a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. As used herein, "selling
stockholder" includes pledgees, donees, transferees and other successors in
interest to the selling stockholders selling shares received from a selling
stockholder after the date of this prospectus. The selling stockholders may
effect such transactions by selling the shares of common stock to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders or the
purchasers of the shares for whom such broker-dealers may act as agent or to
whom they sell as principal, or both (which compensation to a particular
broker-dealer might be in excess of customary commissions). Other methods by
which the shares of common stock may be sold include, without limitation: (i)
transactions which involve cross or block trades or any other transaction
permitted by the Nasdaq National Market or other trading markets, (ii) "at the
market" to or through market makers or into an existing market for the common
stock, (iii) in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected through agents,
(iv) through transactions in options or swaps or other derivatives (whether
exchange-listed or otherwise), (v) through short sales, or (vi) any combination
of any such methods of sale. The selling stockholders may also enter into option
or other transactions with broker-dealers which require the delivery to such
broker dealers of the common stock offered hereby, which common stock such
broker-dealers may resell pursuant to this prospectus. The selling stockholders
may also make sales pursuant to Rule 144 under the Securities Act of 1933, as
amended, if such exemption from registration is otherwise available.
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The selling stockholders and any broker-dealers who act in connection with
the sale of shares of common stock hereunder will be subject to the prospectus
delivery requirements because they may be deemed to be "underwriters" as that
term is defined in the Securities Act, and any commissions received by them and
profit on any resale of the shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act. All costs,
expenses and fees in connection with the registration of the common stock
offered hereby will be borne by us. Brokerage commissions attributable to the
sale of common stock, if any, will be borne by the selling stockholders. We have
informed the selling stockholders that the anti-manipulative provisions of
Regulation M promulgated under the Securities Exchange Act of 1934 may apply to
their sales in the market.
LEGAL MATTERS
The legality of the securities offered hereby will be passed on for us by
Vanderkam & Sanders, Houston, Texas. Vanderkam & Sanders owns 5,000 shares of
Common Stock, and a partner in the firm of Vanderkam & Sanders holds options to
purchase 13,000 shares of Common Stock, of the Company.
EXPERTS
The consolidated financial statements and schedules of IDM included in the
Annual Report on Form 10-K of IDM for the year ended December 31, 1999 and
incorporated by reference herein have been audited by Samuel Klein & Co.,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated herein by reference in reliance upon the authority
of said firm as experts in accounting and auditing in giving said reports.
The consolidated financial statements and schedules of Fusion included in
the Company's joint proxy statement/prospectus and incorporated by reference
herein have been audited by Samuel Klein & Co., independent public accountants,
as indicated in their reports with respect thereto, and are incorporated herein
by reference in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
17
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Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents, which have been filed with or furnished to the
Securities and Exchange Commission (the "Commission") by the Registrant, are
incorporated herein by reference and made a part hereof:
(a) The Registrant's Form 424(b) Prospectus (Commission File No.
333-92949) filed February 29, 2000;
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
since the end of the fiscal year covered by the document referred to
in (a) above; and
(c) The description of securities included in Form S-4 declared effective
by the Commission on February 15, 2000 (Commission File No.
333-92949).
All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the effective date of this
Registration Statement, prior to the filing of a post-effective amendment to
this Registration Statement indicating that all securities offered hereby have
been sold or deregistering all securities then remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
filing of such documents. Any statement contained herein or in any document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed to constitute a part of this Registration
Statement, except as so modified or superseded.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
The law firm of Vanderkam & Sanders has rendered an opinion in connection
with the shares offered under the Plans. Vanderkam & Sanders holds 5,000 shares
of common stock of the Registrant and a partner in the firm of Vanderkam &
Sanders holds 13,000 stock options under the Plans.
Item 6. Indemnification of Directors and Officers
Subsection (a) of Section 145 of the Delaware General Corporation Law
("DGCL") empowers a corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that the person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful.
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Subsection (b) of Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that the
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by the person in
connection with the defense or settlement of such action or suit if the person
acted under similar standards, except that no indemnification may be made in
respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnification for such expenses which the Court of Chancery or
such other court shall deem proper.
Section 145 of the DGCL further provides that, to the extent that a
director or officer of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145, or in the defense of any claim, issue or
matter therein, the person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by the person in connection
therewith; and that indemnification provided by, or granted pursuant to, Section
145 shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled. Section 145 further empowers the corporation to
purchase and maintain insurance on behalf of any person who is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether or
not the corporation would have the power to indemnify such person against such
liabilities under Section 145 of the DGCL.
The Registrant's Certificate of Incorporation provides for the
indemnification of directors, officers and employees of the Registrant to the
fullest extent permitted under Section 145 of the DGCL.
Section 102(b)(7) of the DGCL enables a Delaware corporation to provide in
its certificate of incorporation for the elimination or limitation of the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. Any such provision
cannot eliminate or limit a director's liability (1) for any breach of the
director's duty of loyalty to the corporation or its stockholders; (2) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (3) under Section 174 of the DGCL (which imposes
liability on directors for unlawful payment of dividends or unlawful stock
purchase or redemption); or (4) for any transaction from which the director
derived an improper personal benefit. The Certificate of Incorporation of the
Registrant eliminates the liability of a director of the Registrant to the
Registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director to the fullest extent permitted by the DGCL.
The Registrant will carry policies of insurance which cover the individual
directors and officers of the Registrant for legal liability and which would pay
on behalf of the Registrant for expenses of indemnification of directors and
officers in accordance with the Certificate of Incorporation.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
Exhibit
No. Description of Exhibit
--------- ------------------------
5.1 Opinion of Vanderkam & Sanders as to the legality of the
securities being registered
23.1 Consent of Vanderkam & Sanders (included in Exhibit 5.1).
23.2 Consent of Samuel Klein and Company
II-2
<PAGE>
Item 9. Undertakings
(a) The registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in aggregate, represent a fundamental change
in the information set forth in this Registration Statement;
and
(iii)to include any material information with respect to the
plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement;
provided, however, that the undertakings set forth in paragraphs
(1)(i) and (1)(ii) above do not apply if the information required
to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement;
(2) That, for the purpose of determining liability under the Securities
Act of 1933, each post-effective amendment shall be treated as a new
registration statement of the securities offered, and the offering of
the securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Fusion Networks Holdings, Inc., a Delaware corporation, certifies that it has
reasonable grounds to believe it meets all the requirements for filing on Form
S-8, and has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of South River, State
of New Jersey, on the 12 day of April, 2000.
FUSION NETWORKS HOLDINGS, INC.
By: /s/ Joel Freedman
----------------------------
Joel Freedman
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on April 12, 2000 by the following
persons in the capacities indicated:
Name and Signature Title
- --------------------------- -------------
/s/ Joel A. Freedman President, Principal Executive Officer
- --------------------------- and Director
Joel A. Freedman
/s/ Michael B. Killeen Chief Financial Officer and Director
- ---------------------------
Michael B. Killeen
/s/ Frank A. Falco Director
- ---------------------------
Frank A. Falco
II-4
April 12, 2000
To the Board of Directors of
Fusion Networks Holdings, Inc.
Gentlemen:
We have acted as counsel to Fusion Networks Holdings, Inc., a Delaware
corporation (the "Company"), in connection with the registration of 7,487,723
shares of common stock, $.00001 par value (the "Shares"), with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "1933 Act") pursuant to a registration statement on Form S-8 (the
"Registration Statement"). The Shares will be issued pursuant to the IDM
Environmental Corp. 1993 Stock Option Plan, the IDM Environmental Corp. 1995
Stock Option Plan, the IDM Environmental Corp. 1998 Comprehensive Stock Option
and Award Plan, Executive Stock Option Grants under Employment Agreement of IDM
Environmental Corp., and the Fusion Networks, Inc. 1999 Stock Option Plan
(collectively, the "Plans"), each of which has been assumed by the Company.
As counsel to the Company, we have examined such documents and records as
we deemed appropriate.
In rendering this opinion, we have relied, as to matters of fact, upon
representations and certificates of officers and employees of the Company, and
communications from, government authorities and public officials; and we have
assumed the genuineness of signatures of all persons signing any documents, the
authority of all persons signing any document, the authority of all governmental
authorities and public officials, the truth and accuracy of all matters of fact
set forth in all certificates furnished to us, the authenticity of all documents
submitted to us as originals and the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies.
Based upon the foregoing, we are of the opinion that the Shares issuable
upon exercise of options issued under the Plans, when issued and delivered upon
exercise of such options in accordance with the terms of the Plans, will be
validly issued, fully paid and non-assessable.
We are not admitted to practice in any jurisdiction other than the State of
Texas. We do not purport to be expert on, and we are not expressing an opinion
with respect to, laws other than the laws of the United States and the State of
Texas.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
1933 Act or the rules and regulations of the Commission thereunder.
Very truly yours,
VANDERKAM & SANDERS
/s/ Vanderkam & Sanders
CONSENT OF INDEPENDENT AUDITORS
As independent certified public accountants, we hereby consent to the
incorporation by reference in the Registration Statement filed by Fusion
Networks Holdings, Inc. on Form S-8 of our report relating to the financial
statements of IDM Environmental Corp., which report appears in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and our report
relating to the financial statements of Fusion Networks, Inc., which report
appears in the Registration Statement of Fusion Networks Holdings, Inc. on Form
S-4 (File No. 333-92949) declared effective February 15, 2000, and to all
references to this firm included in such Registration Statement.
SAMUEL KLEIN AND COMPANY
/s/ Samuel Klein and Company
Newark, New Jersey
April 13, 2000
