Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
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
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(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
8115 NW 29th Street
Miami, Florida 33122
(305) 477-6701
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(Address, including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Gary Goldfarb, President
Fusion Networks Holdings, Inc.
8115 NW 29th Street
Miami, Florida 33122
(305) 477-6701
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(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
A copy to:
Michael Sanders, Esq.
Vanderkam & Sanders
440 Louisiana, Suite 475
Houston, Texas 77002
(713) 547-8900
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are o be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
_____________________________________
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If this Form is a post effective amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
[ ]___________________________________________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
========================= ================= ====================== ====================== =================
Proposed maximum Proposed maximum Amount of
Title of securities to Amount to be offering price per aggregate offering registration fee
be registered registered (1) share price (2)
------------------------- ----------------- ---------------------- ---------------------- -----------------
<S> <C> <C> <C> <C>
Common stock, $.00001
par value 15,609,940 (2) $ 5,469,143.14 $ 1,367.29
========================= ================= ====================== ====================== =================
</TABLE>
(1) Includes (a) 2,359,574 shares owned by selling shareholders, (b) up to
10,024,840 shares which may become issuable upon conversion of 3%
Convertible Debentures, (c) up to 2,500,000 shares issuable upon
exercise of $0.6728 warrants, (d) up to 500,000 shares issuable upon
exercise of $0.4875 warrants, and (e) an indeterminate number of shares
issuable in payment of interest on 3% Convertible Debentures.
(2) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457 based on the closing price as reported on Nasdaq
on December 19, 2000 with respect to shares outstanding and based on
the conversion or exercise price with respect to shares underlying
convertible debentures and warrants.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER ___, 2000
PROSPECTUS
FUSION NETWORKS HOLDINGS, INC.
15,609,940 Shares of Common Stock
$.00001 par value
---------------------
THE COMPANY:
-- Fusion Networks Holdings, Inc.
8115 N.W. 29th Street
Miami, Florida 33122
(305) 477-6701
-- We develop, market and provide software for One-to-One Internet-based
business solutions. Our products encompass a full range of Internet
Customer Relationship Management tools within "next generation" Internet
platforms and customer-oriented applications including a dynamic multimedia
portal design, e-commerce platforms, integrated One-to-One marketing
solutions, personalized content and community services.
-- Our common stock trades on the Nasdaq National Market under the symbol
"FUSN." The last reported sales price of our common stock on December __,
2000 was $____ per share.
THE OFFERING:
-- This prospectus relates to the resale of up to 15,609,940 shares of common
stock by certain shareholders named in this prospectus. The shares offered
are shares that those selling shareholders currently own or may have a right
to acquire through the exercise of warrants and conversion of debentures. It
is possible that the total number of shares offered by the selling
shareholders will be less than 15,609,940.
-- The selling shareholders will receive all of the proceeds received from the
sale of shares offered by this prospectus. We will not receive any proceeds
from the sale of those shares.
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The selling shareholders may offer their shares of common stock through
public or private transactions in the over-the-counter market, on or off the
United States exchanges, at prevailing market prices or at privately negotiated
prices. The selling shareholders may engage brokers or dealers who may receive
commissions or discounts from the selling shareholders.
Investing in our common stock involves a high degree of risk. You
should read and consider the "RISK FACTORS" beginning on age 10 before you buy
shares of our common stock.
These securities have not been approved or disapproved by the
Securities and Exchange Commission or any state securities commission nor has
the Commission or any state securities commission determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.
The date of this Prospectus is ______________, 2000
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We will pay all expenses of this offering except for commissions, fees
and discounts of any underwriters, brokers, dealers or agents retained by the
selling stockholders. Estimated expenses in connection with this offering are
approximately $20,000. The aggregate proceeds to the selling stockholders from
the common stock will be the purchase price of the common stock sold less the
aggregate agents' commissions and underwriters' discounts, if any. We have
agreed to indemnify the selling stockholders and certain other persons against
certain liabilities, including liabilities under the Securities Act of 1933.
You should rely only on the information contained in this prospectus or
that we have referred you to. We have not authorized any person to give any
information or to make any representation not contained in this prospectus in
connection with the offering covered by this Prospectus..
TABLE OF CONTENTS
Special Note Regarding Forward-Looking Statements................ 2
Available Information............................................ 2
Incorporation of Certain Documents by
Reference....................................................... 3
The Company...................................................... 4
Risk Factors..................................................... 4
Selling Stockholders............................................. 10
Plan of Distribution............................................. 12
Legal Matters.................................................... 13
Experts.......................................................... 13
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "The Company," "Risk Factors" and
elsewhere in this prospectus are forward-looking statements. These statements
involve known and unknown risks, uncertainties, and other factors that may cause
our actual results, levels of activity, performance, or achievements to be
materially different from any future results, levels of activity, performance,
or achievements expressed or implied by those forward-looking statements.
In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," or "continue" or the negative
of those terms or other comparable words.
We believe that the expectations reflected in the forward-looking
statements are reasonable, but we cannot guarantee future results, levels of
activity, performance, or achievements.
Neither we nor anyone else assumes responsibility for the accuracy and
completeness of the forward-looking statements. We do not promise to update or
revise any of the forward-looking statements, whether as a result of new
information, future events or otherwise. In light of these risks, uncertainties
and assumptions, the forward-looking events discussed in this prospectus may not
occur.
AVAILABLE INFORMATION
We are subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files annual and quarterly reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the Commission's
Regional Offices at 7 World Trade Center, 13th Floor, New York, New York 10048;
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material can be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Our
common stock is quoted on the Nasdaq National Market. Reports and other
information concerning Fusion Networks may be inspected at the National
Association of Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C.
20006. The Commission also maintains a World Wide Web site (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding registrants, including Fusion Networks, that file electronically with
the Commission.
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A registration statement on Form S-3 with respect to the common stock
offered hereby (the "Registration Statement") has been filed with the Commission
under the Act. This Prospectus does not contain all of the information contained
in such Registration Statement and the exhibits and schedules thereto, certain
portions of which have been omitted pursuant to the rules and regulations of the
Commission. For further information with respect to our company and the common
stock offered hereby, reference is made to the Registration Statement and the
exhibits and schedules thereto. Statements contained in this Prospectus
regarding the contents of any contract or any other document are not necessarily
complete and, in each instance, reference is hereby made to the copy of such
contract or document filed as an exhibit to the Registration Statement. The
Registration Statement, including the exhibits thereto, may be inspected without
charge at the Commissions' principal office in Washington, D.C., and copies of
all or any part thereof may be obtained from the Public Reference Section,
Securities and Exchange Commission, Washington, D.C. 20549, upon payment of the
prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed or to be filed with the Commission under
the Exchange Act are hereby incorporated by reference into this Prospectus:
(1) Our Quarterly Reports on Form 10-Q for the quarters ended June 30,
2000 and September 30, 2000.
(2) Our Current Report on Form 8-K dated April 13, 2000, the Current
Report filed on Form 8-K/A dated April 13, 2000, the Current Report filed on
Form 8-K dated June 15, 2000, the Current Report on Form 8-K/A dated June 15,
2000, the Current Report dated August 18, 2000, the Current Report on Form 8-K
dated November 9, 2000, the Current Report filed on Form 8-K/A dated November 9,
2000 as filed on December 11, 2000 and the Current Report filed on Form 8-K
dated December 19, 2000 as filed on December 27, 2000.
(3) The description of our securities included in our Rule 424(b)(3)
Prospectus filed on February 29, 2000.
(4) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the financial
statements included in our Form 8-K/A dated April 13, 2000 referred to in (2)
above.
All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing such documents. Any
statements contained in this Prospectus or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed documents 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,
except as so modified or superseded, to constitute a part of this Prospectus.
We will provide without charge to each person, including any beneficial
owner, to whom this Prospectus has been delivered, upon written or oral request
of such person, a copy of any or all of the documents that have been
incorporated by reference herein (not including exhibits to such documents
unless such exhibits are specifically incorporated by reference herein or into
such documents). Such requests may be directed to Mr. Enrique Bahamon, Chief
Financial Officer, Fusion Networks Holdings, Inc., 8115 NW 29th Street, Miami,
Florida 33122, Telephone Number (305) 477-6701.
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THE COMPANY
Fusion Networks develops, markets and provides software for One-to-One
Internet-based business solutions. Our products encompass a full range of
Internet Customer Relationship Management tools within "next generation"
Internet platforms and customer-oriented applications including a dynamic
multimedia portal design, e-commerce platforms, integrated One-to-One marketing
solutions, personalized content and community services.
We are currently deploying our version 2.0 of our ICRM software suite.
Our broad suite of customizable software applications is provided on an
application service provider model and delivers Internet marketing software,
portal technology, applications and content designed to enable corporate
customers to develop effective multilingual Internet strategies.
We are a Delaware corporation incorporated in August 1999. Our
executive offices are located at 8115 NW 29th Street, Miami, Florida 33122, and
our telephone number is (305) 477-6701.
RISK FACTORS
You should carefully consider the risks described below before making
an investment decision. The risks and uncertainties described below are not the
only ones facing us. Additional risks and uncertainties not presently known to
us or that we currently deem immaterial also may impair our business operations.
If any of the following risks actually occur, our business could be harmed. In
that event, the trading price of our common stock could decline, and you may
lose all or part of your investment.
We have only been in business, and have conducted our current operations, 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. Our predecessor was incorporated in July 1999 to develop and
operate Internet portals targeted to the Latin American market. We substantially
altered our business model beginning in May 2000 to emphasize the development
and marketing of Internet Customer Relationship Management tools.
You must consider the risks, expenses and uncertainties that an early
stage Internet software company like ours faces. These risks include our ability
to:
* fund the ongoing development and marketing of our software solutions;
* increase awareness of our software solutions and build user loyalty;
* attract and retain qualified technical personnel;
* 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 the Prospectus.
We have generated minimal revenues and have not operated profitably to date and
expect to operate at a loss for the foreseeable future.
As of September 2000, we had generated only $106,243 of operating
revenues and had an accumulated deficit of $40,542,829. 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 so.
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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 loses 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. 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.
We are substantially dependent upon a single, newly developed, product
We expect that a substantial majority of our revenues will be derived
from the sale or licensing of a single product line which has only recently been
developed. While we offer a variety of development, design and technical support
services, fees derived from the sale or licensing of our ICRM software suite,
including individual modules comprising our software suite, are expected to
account for most of our future revenues. If our software suite is not broadly
accepted in the market or customers experience difficulties using our product,
we may experience damage to our reputation, a loss of customers and a
substantial decline in revenues.
The market for our product is in an early stage of development and may not
continue to develop
Our products are targeted to facilitate online commerce which is a new
and developing market. If a viable market fails to develop or is not sustained,
we will be unable to successfully execute our business plan. The viability of
these markets is dependent upon broad acceptance of, and conversion to,
electronic commerce as an alternative to traditional channels of commerce and
communications. Our future revenues and profits will substantially depend on the
Internet being accepted and widely used for commerce and communication. If
Internet commerce does not continue to grow or grows more slowly than expected,
our future revenues and profits may not meet our expectations or those of
analysts. In the emerging marketplace of Internet commerce, our products and
services involve a new approach to the conduct of online business. As a result,
intensive marketing and sales efforts may be necessary to educate prospective
customers regarding the uses and benefits of our products and services, thereby
generating demand. Companies that have already invested substantial resources in
other methods of conducting business may be reluctant to adopt a new approach
that may replace, limit or compete with their existing systems. Similarly,
purchasers with established patterns of commerce may be reluctant to alter those
patterns or may otherwise resist providing the personal data necessary to
support our consumer profiling capability. In addition, the security and privacy
concerns of existing and potential online purchasers may inhibit the growth of
online business generally and the market's acceptance of its products and
services in particular. Accordingly, a viable market for our products and
services may not emerge or be sustainable.
Our products and operations are subject to rapid technological changes which may
result in our products being obsolete and, therefore, non-competitive
Our products and services may become obsolete and, therefore,
non-competitive, if we are unable to keep pace with technological developments
in Internet commerce and communications. Our operations and product offerings
are within industries characterized by rapid technological change, changes in
customer requirements, frequent new product and service introductions and
enhancements and evolving industry standards and practices. The introduction of
products and services embodying new technologies and the emergence of new
industry standards and practices can render existing products and services
obsolete. Our future success will depend, in part, on our ability to:
* develop leading technologies;
* enhance existing products and services;
* develop new products and services that address the increasingly
sophisticated and varied needs of its prospective customers; and
* respond to technological advances and emerging industry standards and
practices on a timely and cost-effective basis.
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Internet commerce technology is complex and new products and
enhancements can require long development periods. If we are unable to develop
and introduce new products and services or enhancements in a timely manner in
response to changing market conditions or customer requirements, or if new
products and services do not achieve market acceptance, our business may fail to
be competitive.
We are substantially dependent upon third-party distribution channels to achieve
revenue growth
A substantial portion of our revenues are expected to be derived from
sales of our products to, and through, third party value added resellers,
primarily Internet consultants and systems integrators who utilize our products
to implement Internet solutions for their customers. If those third-party
distribution channels do not select our products to deliver Internet solutions
to their customers, do not aggressively market those solutions or do not
maintain the technical knowledge, expertise and support needed to deliver our
products as a preferred Internet solution, our revenues may not grow at the
rates anticipated.
Our ability to deliver our products through third-party distribution
channels may be adversely effected by:
* shortages of third-party service providers to support our products;
* shortages of adequately trained personnel to implement solutions
utilizing our products; and
* selection by third-party distributors of alternative products.
If we are unable to recruit, retain and adequately train consultants
and systems integrators to deliver, implement and service our products, our
revenues may not grow as expected.
Our products are subject to product defects
Our software suite is highly complex, and has been newly developed and,
therefore, is susceptible to undetected errors that may not become apparent
until after the products are introduced or when the volume of provided services
increases. It is possible that, despite testing, errors will be found in our
products. Product defects could result in all or any of the following
consequences to our business:
* loss of revenues;
* delay in market acceptance;
* diversion of development resources;
* damage to its reputation; or
* increased service and warranty costs.
Failure of our encryption technology could result in liability, damaged
reputation and loss of customers
Failure of the security technology embedded in our products could
expose us to liability, harm our reputation and cause us to lose customers. A
significant barrier to online commerce and communication is the secure exchange
of valuable and confidential information over public networks. We rely on
encryption and authentication technology to provide the security and
authentication necessary to effect the secure exchange of confidential
information. Advances in computer capabilities, new discoveries in the field of
cryptography or other events or developments could cause a breach of algorithms
that we use to protect customer transaction data.
Demand for our products could be adversely effected by the enactment of sales
and other taxes on products sold over the Internet
Growth of commerce on the Internet and demand for our products could be
limited by the imposition of new sales or other taxes. Recent federal
legislation limits the imposition of state and local taxes on Internet-related
sales. In 1998, Congress passed the Internet Tax Freedom Act, which places a
three-year moratorium on state and local taxes on:
* Internet access, unless the tax was already imposed prior to October
1, 1998; and
* discriminatory taxes on electronic commerce.
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There is a possibility that Congress may not renew this legislation in
2001. If Congress chooses not to renew this legislation, state and local
governments would be free to impose taxes on electronically purchased goods.
States or foreign countries may seek to impose sales or other tax collection
obligations on out-of-jurisdiction companies that engage in electronic commerce.
A successful assertion by one or more states or foreign countries that companies
engaged in electronic commerce should collect sales or other taxes on the sale
of their products over the Internet, even though not physically present in the
state or foreign country, could substantially curtail commerce over the Internet
and, in turn, demand for our products.
Growth of Internet commerce and our business could be limited by new and
existing laws
Existing and new laws may have the effect of limiting the growth of the
Internet and, in turn, our business or may our cost of doing business increase.
While the scope of laws relating to Internet related activities is relatively
limited at this time, we expect that many existing laws will be extended, and
new laws enacted, to regulate commerce over the Internet. Potential areas where
regulation might be extended to the Internet include, among others, privacy,
pricing, content and quality of products and services. If enacted, these laws
and regulations could limit the market for our products and services.
Legislation imposing potential liability upon us for information carried on or
disseminated through our products would likely cause us to implement costly
measures to reduce our exposure to this liability or to discontinue some of our
services. Our business could be harmed by the expense involved in reacting to
actual or potential liability associated with the Telecommunications Act or
other Internet-related laws and regulations. In addition, the increased
attention focused upon liability issues as a result of the Telecommunications
Act of 1996 which prohibits the transmission of some types of information and
content over the Internet could limit the growth of Internet commerce, which
could decrease demand for its products. The United States government regulates
the export of encryption technology, which our products incorporate. Export
regulations, either in their current form or as may be subsequently enacted, may
limit our ability to distribute our software outside the United States. Any
revocation or modification of our export authority or adoption of new laws or
regulations relating to the export of software and encryption technology could
limit our international operations. The unlawful export of our software could
also harm our reputation. Although we take precautions against unlawful export
of our software, the global nature of the Internet makes it difficult to
effectively control the distribution of software.
Intense competition may make if difficult for us to acquire and retain customers
If we fail to compete successfully with current or future competitors,
we may be unable to establish, or we may lose, market share. The market for
online interactive one-to-one applications is rapidly evolving and intensely
competitive. Our customers' requirements and the technology available to satisfy
those requirements continually change. We expect competition in this market to
persist and increase in the future. Our primary competition includes the
following:
* other e-business software developers such as Broadvision, Blue
Martini, Invision, Interwoven and Vignette o
* in-house developers at prospective customers or partners;
* Web content and integration service providers that develop custom
software or integrate other application software into custom
solutions; and
* diversified technology and software companies, such as International
Business Machines and Microsoft.
Many of our competitors have longer operating histories and
significantly greater financial, technical, marketing and other resources.
Additionally, our competitors may enjoy advantages associated with: greater name
recognition; the ability to respond more quickly to customer needs and
technological changes; and bundling of products.
As a result of competitive pressures, we may be unable to acquire and
retain customers or we may be required to reduce our prices to attract and
retain customers.
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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
services of our senior management, including, in particular, our Chief Executive
Officer, Gary Goldfarb, and our Chief Technology Officer, Eduardo Cedeno, and
key tecnical and sales personnel. The loss of the services of any of its
executive officers or key employees could cause us to incur increased operating
expenses and divert senior management resources in searching for replacements.
The loss of their services also could harm our reputation if our customers were
to become concerned about our future operations. We do not carry "key person"
life insurance policies on any of our employees. Our future success also depends
on our continuing ability to identify, hire, train and retain other highly
qualified technical and managerial personnel in various regions of Spanish and
Portugese-speaking markets as well as the United States. Competition for these
personnel is intense, especially in the Internet industry.
Rapid growth in operations could strain our managerial, operational and
financial resources, resulting in reduced revenues and profitability
The planned growth of our 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 operational
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 technology and sales
and marketing organizations, both domestically and internationally. We also have
to maintain close coordination among our technical, accounting, finance,
marketing and sales personnel. We may not succeed in these efforts.
Our inability to protect our proprietary technology, or our infringement of
others' technology, could adversely effect our operating results
Our products incorporate proprietary technology which must be
adequately protected in order for us to succeed. Failure to adequately protect
our proprietary rights could result in our loss of exclusive rights with respect
to such technologies and rights, or the outright loss of rights to such
technologies and rights and we may experience lost revenues and extraordinary
expenses as a result of such failure. We rely on copyright, trade secret and
trademark law to protect our technology. It is possible that our competitors
will adopt product names similar to ours, impeding our ability to build brand
identity and possibly confusing customers. We provide our products to end users
generally under nonexclusive, nontransferable licenses during the term of the
relevant agreement, which is expected to be in perpetuity.
As a matter of company policy, we enter into confidentiality and
assignment agreements with our employees, consultants and vendors. We also
control access to and distribution of our software, documents and other
proprietary information. Notwithstanding these precautions, it may be possible
for an unauthorized third party to copy or otherwise obtain and use its software
or other proprietary information or to develop similar software independently.
Policing unauthorized use of our products will be difficult, particularly
because the global nature of the Internet makes it difficult to control the
ultimate destination or security of software and other transmitted data. The
laws of other countries may afford us little or no effective protection of our
intellectual property. The steps we have taken to prevent misappropriation of
its technology, including entering into agreements for that purpose, may be
insufficient. In addition, litigation may be necessary in the future to enforce
our intellectual property rights, to protect our trade secrets, to determine the
validity and scope of the proprietary rights of others or to defend against
claims of infringement or invalidity. Litigation like this, whether successful
or unsuccessful, could result in substantial costs and diversions of our
management resources, either of which could harm its business.
Third parties may claim that we have infringed their patent, trademark,
copyright or other proprietary rights. It is also possible that claims will be
made for indemnification resulting from allegations of infringement. In
addition, intellectual property infringement claims may be asserted against us
as a result of the use by us, our customers or other third parties of our
products for the transmission, dissemination or display of information on the
Internet. Any claims, with or without merit, could be time consuming, costly,
cause product shipment delays or require that we enter into royalty or licensing
agreements. These licenses might not be available on reasonable terms, or at
all.
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Fluctuations in our quarterly operating results may cause our stock price to
decline
Our future quarterly operating results may fluctuate significantly as a
result of a variety of factors, many of which are beyond our control. Our
operating results in one or more future quarters may be below the expectations
of securities analysts and investors. The trading price of our common stock
would likely decline, and possibly decline significantly, if our operating
results are below expectations.
Factors that may affect our quarterly operating results include the
following:
* the timing of introductions or enhancements of products and services
by us or our competitors;
* market acceptance of new products;
* the mix of our products sold;
* changes in pricing policies by us or our competitors;
* changes in our sales incentive plans;
* the budgeting cycles of our customers;
* customer order deferrals in anticipation of new products or
enhancements by us or our competitors;
* nonrenewal of service agreements;
* product life cycles;
* changes in strategy;
* seasonal trends;
* the mix of distribution channels through which our products are sold;
* the mix of international and domestic sales;
* the rate at which new sales people become productive; and
* changes in the level of operating expenses to support projected
growth.
In addition, a limited number of customer orders may account for a
significant portion of our revenues. The timing of receipt and fulfillment of
any of these orders may cause our quarterly operating results to fluctuate.
Short delays in product deliveries at the end of a quarter could harm operating
results for that quarter.
These and other factors, make our quarterly revenues and operating
results difficult to forecast accurately. We believe that period-to-period
comparisons of our operating results may not be meaningful and you should not
rely upon them as any indication of future performance.
Our stock price has been highly volatile, and is likely to continue to be highly
volatile.
The trading price of our Common Stock has been and is likely to
continue to be highly volatile. Our stock price is subject to wide fluctuations
in response to a variety of factors, including:
* quarterly variations in operating results;
* announcements of technological innovations;
* announcements of new software or services by Fusion Networks or its
competitors;
* changes in financial estimates by securities analysts; or
* other events or factors that are beyond our control.
In addition, the stock market has experienced significant price and
volume fluctuations that have particularly affected the trading prices of equity
securities of many technology companies. These fluctuations have often been
unrelated or disproportionate to the operating performance of these companies.
Any negative change in the public's perception of the prospects of Internet or
electronic commerce companies could depress our stock price regardless of our
results. Other broad market fluctuations may decrease the trading price of our
common stock. In the past, following declines in the market price of a company's
securities, securities class action litigation has often been instituted against
that company. Litigation could result in substantial costs and a diversion of
management's attention and resources.
9
<PAGE>
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 conversion or exercise of outstanding
warrants, options or convertible securities, 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.
Shares of our outstanding common stock may increase more than expected because
the conversion price of our 3% convertible debentures is not fixed, but is
determined based on the market value of the common stock at the time of
conversion.
In connection with ongoing capital raising efforts to finance our
operations, in December 2000, we sold $750,000 of 3% convertible debentures. The
convertible debentures have a conversion price equal to the lesser of $0.4875
per share or 85% of the average of the three lowest volume weighted average
prices of our common stock during the thirty trading days prior to conversion.
As a result, if our common stock declines significantly in price, we will have
to issue more shares of common stock than we would if the conversion price were
fixed. A holder of the debentures could continue converting and selling at ever
lower prices without incurring an economic loss. These sales could result in a
major decline in the price of our common stock. They could also make us more
vulnerable to a takeover by an outside party. The holder of the debentures has
agreed with us to never own more than 4.99% of our common stock. As a result the
holder must sell enough shares upon each conversion to not violate our agreement
- possibly depressing our stock price.
The following table illustrates the number of shares that we would be
required to issue at various assumed prices upon conversion of the $750,000 of
debentures, subject to the limitations described in the text following the
table. This table is for illustrative purposes only, and should not be assumed
to represent our projections of the range of future stock prices.
<TABLE>
------------------- -------------------------------- -----------------------------------------
Conversion Share Shares of Common Stock Common Stock Underlying 3%
----------------- ---------------------- --------------------------
Price Issuable Under the Convertible Debentures as a Percentage
----- ------------------ --------------------------------------
3% Convertible Debentures of Total Common Stock Outstanding(1)
------------------- -------------------------------- -----------------------------------------
<S> <C> <C>
$0.10 7,500,000 16.0%
----- --------- -----
------------------- -------------------------------- -----------------------------------------
$0.20 3,750,000 8.7%
----- --------- ----
------------------- -------------------------------- -----------------------------------------
$0.30 2,500,000 6.0%
----- --------- ----
------------------- -------------------------------- -----------------------------------------
$0.40 1,875,000 4.6%
----- --------- ----
------------------- -------------------------------- -----------------------------------------
$0.4875 1,538,462 3.8%
------- --------- ----
------------------- -------------------------------- -----------------------------------------
</TABLE>
---------------
(1) Based on 39,249,310 shares outstanding on December 22, 2000.
Investors could therefore experience substantial dilution of their ownership
percentage upon conversion of the convertible debentures. The issuance of such a
large amount of stock, especially if close in time, may have a substantial
negative effect on the market price of our common stock.
We may be required to redeem the debentures for an amount that would force us to
go out of business.
The agreement for sale of the debentures requires us to maintain an effective
registration statement covering resale of the shares of common stock that may be
issued upon conversion. If we are unable to maintain the effectiveness of that
registration statement or otherwise do not comply with agreements we make with
holders of that debentures, we will have to redeem all the outstanding
debentures at the face value of $750,000 per share plus accrued interest and
subject to certain penalties relating to default. There is no provision in the
agreement for payment of this obligation over time, and we will not have any
commitment for credit to finance the payment of the redemption price. As a
result, a redemption may leave us with not enough liquid assets to continue
paying our other debts and we may be forced to go out of business.
10
<PAGE>
If our common stock is delisted from Nasdaq, liquidity in our common stock will
likely be adversely affected.
Our common stock is listed for trading on the Nasdaq National Market. In order
to continue to be listed on Nasdaq, however, we must meet certain criteria,
including one of the following:
* maintaining $4,000,000 in net tangible assets and a minimum bid price
of $1.00,
* having a market capitalization of at least $50,000,000, a market value
of public float of at least $15,000,000 and a minimum bid price of
$5.00, or
* having total assets and total revenues of at least $50,000,000, a
market value of public float of at least $15,000,000 and a minimum bid
price of $5.00.
Our bid price was below $1.00 at December 22, 2000. The dilution to our
stockholders which could be caused by the conversion of a substantial amount of
our debentures could further depress the per share value of our common stock. As
of December 22, 2000, we did not satisfy the requirements for market
capitalization, total assets or total revenues. The failure to meet Nasdaq's
maintenance criteria may result in the delisting of the our common stock from
Nasdaq, and trading, if any, in our securities would thereafter be conducted in
the non-Nasdaq over-the-counter market. As a result of such delisting, an
investor could find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, our securities.
If our common stock is delisted from Nasdaq, our common stock may become subject
to the penny stock rules.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by certain rules adopted by the Securities and Exchange Commission.
Penny stocks generally are equity securities with a price of less than $5.00
other than securities registered on certain national securities exchanges or
quoted on Nasdaq provided that current price and volume information with respect
to transactions in such securities is provided by the exchange or system. The
rules require that, prior to a transaction in a penny stock not otherwise exempt
from the rules, the broker-dealer must:
* deliver a standardized risk disclosure document that provides
information about penny stocks and the risks in the penny stock
market;
* provide the customer with current bid and offer quotations for the
penny stock;
* disclose the compensation of the broker-dealer and its salesperson in
connection with the transaction;
* provide the customer monthly account statements showing the market
value of each penny stock held in the customer's account; and
* make a special written determination that the penny stock is a
suitable investment for the customer and receive the customer's
written agreement to the transaction.
These disclosure requirements may have the effect of reducing the liquidity of
penny stocks. If our securities are subject to the penny stock rules, you may
find it more difficult to sell your shares of our common stock.
We are subject to numerous risks associated with our international operations
Because our technology development and marketing operations are conducted
primarily outside of the United States, with a focus on Spanish- and
Portugese-speaking markets, we are exposed to numerous additional risks. We
expect a large portion of our revenues will be derived from sales outside of
North America. As a result of our international operations, we are subject to
the following additional risks, among others:
* unexpected changes in regulatory requirements;
* export controls relating to encryption technology and other export
restrictions;
* tariffs and other trade barriers;
* difficulties in staffing and managing foreign operations;
* political and economic instability;
* fluctuations in currency exchange rates;
* reduced protection for intellectual property rights in some countries;
* cultural barriers;
* seasonal reductions in business activity during the summer months in
Mexico, Europe and certain other parts of the world; and
* potentially adverse tax consequences.
11
<PAGE>
SELLING STOCKHOLDERS
We have issued shares of our Common Stock and Warrants in connection with our
acquisition of Visualcom, Inc. and have issued shares of Common Stock in a
private placement in conjunction with the acquisition of Visualcom.
Additionally, we will sell 3% Convertible Debentures and $0.4875 Warrants in a
transaction exempt from registration under the Securities Act of 1933. As part
of the above transactions, we agreed to register the shares being offered by
this Prospectus.
The Selling Stockholders are (1) the holders of (a) shares of Common Stock
issued in a private placement and (b) shares of Common Stock and $0.6728
Warrants issued in connection with our acquisition of Visualcom, and (2) the
subscribers for 3% Convertible Debentures and $0.4875 Warrants which may be
issued in a private placement. The shares of Common Stock covered by this
Prospectus are being registered so that the Selling Stockholders may offer the
shares of Common Stock, including shares of Common Stock underlying the
Debentures, the $0.6728 Warrants and the $0.4875 Warrants, for resale from time
to time. See "Plan of Distribution." Except as described below, none of the
Selling Stockholders has had a material relationship with the Company within the
past three years other than as a result of the ownership of the above referenced
securities and the Common Stock issuable pursuant to the conversion or exercise
of, or interest on, convertible securities.
The following table sets forth the names of the Selling Stockholders, the number
of shares of Common Stock owned beneficially by each of the Selling Stockholders
as of December 19, 2000, and the number of shares which may be offered for
resale pursuant to this Prospectus. For the purposes of calculating the number
of shares of Common Stock beneficially owned by the Selling Stockholders, the
number of shares of Common Stock calculated to be issuable in connection with
the payment of interest on the Debentures is based on the full principal amount
of the Debentures remaining outstanding as of December 19, 2003.
The information included below is based upon information provided by the Selling
Stockholders. Because the Selling Stockholders may offer all, some or none of
their Common Stock, no definitive estimate as to the number of shares that will
be held by the Selling Stockholders after such offering can be provided and the
following table has been prepared on the assumption that all shares of Common
Stock offered under this Prospectus will be sold.
<TABLE>
Shares of Shares of
Common Stock Shares of Common Stock
Beneficially Common Stock Owned After
Name Owned (1)(2) Offered Offering
------------- ------------ ------------------- ---------------
<S> <C> <C> <C>
GEM Global Yield Fund Limited (3)(5)........... 11,212,788 11,212,788 0
Advanced Multimedia Group (4)(5)............... 1,273,272 1,273,272 0
Daly Gamma (4)................................. 37,850 37,850 0
Critical Infrastructure (4)(5)................. 191,989 191,989 0
HIAS AS (4)(5)................................. 174,978 174,978 0
Sintra AS (4)(5)............................... 105,800 105,800 0
Schwendiman International IT Fund (4)(5)....... 134,529 134,529 0
ING Barings LLC (4)(5)......................... 18,925 18,925 0
Netcom AS (4)(5)............................... 182,437 182,437 0
Holmsbu AS (4)(5).............................. 182,533 182,533 0
Christian Tybring (4)(5)....................... 91,920 91,920 0
Andre Vanyi-Robin (5)(6)....................... 609,129 609,129 0
Rock Financial Services (5).................... 138,727 138,727 0
Albert Collet (5).............................. 168,548 168,548 0
Norwegian Venture Capital Group (5)............ 26,536 26,536 0
Gunnar Reitan (5).............................. 9,644 9,644 0
Pecos Ventures LP (5).......................... 131,022 131,022 0
1/0 Developing Market Technology Fund (5)...... 115,604 115,604 0
Mark Silverman (5)............................. 61,655 61,655 0
Michelle Battelle (5).......................... 7,709 7,709 0
Chris Scileppi (5)............................. 64,740 64,740 0
James Scileppi (5)............................. 6,166 6,166 0
Alexander Enterprises (5)...................... 231,212 231,212 0
Dominque Robert (5)............................ 129,892 129,892 0
Gary and Rebecca Perrine (5)................... 107,496 107,496 0
Paul Denamiel (5).............................. 20,156 20,156 0
Michael Gyure (5).............................. 16,796 16,796 0
Willard Soper (5).............................. 13,437 13,437 0
Antoine Reiger (5)............................. 8,957 8,957 0
Ronald and Jean Bell (5)....................... 2,231 2,231 0
RW Baird (5)................................... 16,807 16,807 0
Melvin Kay (5)................................. 4,480 4,480 0
Brian Nelson (5)............................... 4,480 4,480 0
Toby Redshaw (5)............................... 2,239 2,239 0
Jaime Reusche (5).............................. 89,579 89,579 0
Frank Kardonski Trust (5)...................... 5,598 5,598 0
Doug Dale (5).................................. 4,480 4,480 0
Alvaro de Castro (5)........................... 5,598 5,598 0
</TABLE>
12
<PAGE>
(1) Unless otherwise indicated in the footnotes to this table, the persons
and entities named in the table have sole voting and sole investment
power with respect to all shares beneficially owned, subject to
community property laws where applicable.
(2) As required by regulations of the Commission, the number of shares
shown as beneficially owned includes shares which can be purchased
within 60 days after December 19, 2000. The actual number of shares of
Common Stock beneficially owned is subject to adjustment and could be
less or more than the estimated amount indicated depending upon factors
which cannot be predicted by the Company at this time, including, among
others whether or to what extent interest to the holders of the
Debentures is paid in Common Stock.
(3) The listed Selling Stockholders have subscribed for an aggregate of
$750,000 of 3% Convertible Debentures and 500,000 $0.4875 Warrants
which may be issued pursuant to the terms of a private placement. The
Debentures are convertible into Common Stock at the lesser of (i)
$0.932 per share, (ii) 130% of the average of the two lowest closing
prices of our Common Stock for the five trading days immediately prior
to the date of the purchase agreement covering the sale of the
Debentures ($0.4875), or (iii) 85% of the average of the three lowest
volume weighted average prices of our Common Stock during the thirty
trading days prior to conversion of a Debenture. Interest on the
Debentures is payable in cash or in stock, at our option. The $0.4875
Warrants are exercisable until December 19, 2003 to purchase 500,000
shares of Common Stock at $0.4875 per share. The number of shares shown
as being offered in the table includes: (x) 10,024,840 shares which is
four times the number of shares issuable assuming conversion of all
Debentures at the applicable conversion price on December 19, 2000
($0.2993), (y) 500,000 shares issuable on exercise of all $0.4875
Warrants, and (z) 225,526 shares issuable as payment of all interest on
the Debentures assuming the payment at maturity based on the applicable
conversion price at December 19, 2000.
(4) The listed Selling Stockholders hold an aggregate of 359,574 shares of
Common Stock issued pursuant to the terms of a private placement.
(5) The listed Selling Stockholders hold an aggregate of 2,000,000 shares
of Common Stock and 2,500,000 $0.6728 Warrants issued pursuant to the
Company's acquisition of Visualcom. The number of shares shown as being
offered in the table is based on the assumed exercise of all $0.6728
Warrants. For a further description of the rights of the holders of the
$0.6728 Warrants, see the form of Warrant filed as an exhibit to the
Company's Current Report on Form 8-K dated November 9, 2000.
(6) Andre L. Vanyi-Robin has served as Chief Strategy Officer of Fusion
Networks since the acquisition of Visualcom in November 2000.
PLAN OF DISTRIBUTION
The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
. ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
. block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction; . purchases by a
broker-dealer as principal and resale by the broker-dealer for its
account;
13
<PAGE>
. an exchange distribution in accordance with the rules of the
applicable exchange;
. privately negotiated transactions;
. short sales to the extent permissible under the agreements with Fusion
Networks;
. broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;
. a combination of any such methods of sale; and
. any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The Selling Stockholders may pledge their shares to their brokers under
the margin provisions of customer agreements. If a Selling Stockholder defaults
on a margin loan, the broker may, from time to time, offer and sell the pledged
shares.
Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the
Selling Stockholders. We have agreed to indemnify the Selling Stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.
LEGAL MATTERS
Certain legal matters will be passed upon for Fusion Networks by
Vanderkam & Sanders, of Houston, Texas.
EXPERTS
The consolidated financial statements of Fusion Networks, Inc.
appearing in our Current Report on Form 8-K/A dated April 13, 2000, have been
audited by Samuel Klein and Company, independent certified public accountants,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following is a list of the estimated expenses to be incurred in
connection with the issuance and distribution of the securities being registered
hereby, all of which are payable by the Company, other than underwriting
discounts and commissions.
Registration Fee............................................ $ 1,367.29
Accountants' Fees and Expenses.............................. 5,000.00
Legal Fees and Expenses..................................... 10,000.00
Miscellaneous............................................... 3,632.71
----------
Total.................................................... $20,000.00
==========
Item 15. 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.
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.
II-1
<PAGE>
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 16. Exhibits
5.1* Opinion and consent of Vanderkam & Sanders re: the legality of
the shares being
registered
10.1 Form of $0.6728 Warrant (1)
10.2 Form of 3% Convertible Debenture (2)
10.3 Form of $0.4875 Warrant (2)
10.4 Registration Rights Agreement (2)
23.1* Consent of Vanderkam & Sanders (including in Exhibit 5.1)
23.2* Consent of Samuel Klein and Company
------------------
* Filed herewith
(1) Incorporated by reference to the respective exhibits filed with the
Company's Current Report on Form 8-K dated November 9, 2000.
(2) Incorporated by reference to the respective exhibits filed with the
Company's Current Report on Form 8-K dated December 19, 2000.
Item 17. Undertakings
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 provisions described in Item 15, 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.
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
Act;
(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 the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
II-2
<PAGE>
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post effective amendment by these
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the Act,
each post-effective amendment that contains a form of prospectus 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Act, each
filing of the Company's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit's plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Miami, State of Florida on the 27th day of December,
2000.
FUSION NETWORKS HOLDINGS, INC.
By: /s/ Gary M. Goldfarb
---------------------------
GARY M. GOLDFARB, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
Signatures Title Date
---------- ------- -------
/s/ Gary M. Goldfarb
-------------------- President, Chief Executive Officer December 27, 2000
GARY M. GOLDFARB and Director (Principal Executive
Officer)
/s/ Enrique Bahamon Chief Financial Officer and
-------------------- Director (Principal Financial and December 27, 2000
ENRIQUE BAHAMON Accounting Officer)
/s/ Hernando Bahamon
-------------------- Director
HERNANDO BAHAMON December 27, 2000
/s/ Felipe Santos
-------------------- Director
FELIPE SANTOS December 27, 2000
-------------------- Director
JEREMY BARBERA December __, 2000
-------------------- Director December __, 2000
TRACI HAMMES
II-4
