FILED PURSUANT TO RULE 424(B)(3)
REGISTRATION NO. 333-80823
PROSPECTUS
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17,896 Shares
IFX CORPORATION
Common Stock
($.02 par value per share)
This prospectus relates to 17,896 shares of our common stock that may be
offered for sale or otherwise transferred from time to time by one or more of
the selling stockholders identified in this prospectus. The aggregate net
proceeds to the selling stockholders from the sale of the shares of IFX common
stock will equal the sales price of such shares of common stock, less any
commissions. See "Plan of Distribution." We will not receive any of the
proceeds from the sale of the shares of common stock by the selling
stockholders. The expenses incurred in registering the 17,896 shares of common
stock, including legal and accounting fees, will be paid by us.
All of the 17,896 shares of common stock offered hereby were acquired by
the selling stockholders from us in connection with our May 1999 acquisition of
a Bolivian Internet service provider business. All of the shares offered
hereby will be available immediately for sale hereunder. See "Selling
Stockholders."
Our common stock is listed on the Nasdaq SmallCap Market under the symbol
"FUTR." The last reported sale price of our common stock on June 14, 1999 on
the Nasdaq SmallCap Market was $17 13/16 per share.
Our principal executive offices are located at 200 West Adams Street, Suite
1460, Chicago, Illinois 60606, and our telephone number is (312) 419-9530.
Investing in our common stock involves certain risks. See "Risk Factors"
beginning on page 3.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this Prospectus is June 29, 1999.
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YOU SHOULD RELY ONLY ON INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. NEITHER WE NOR THE SELLING STOCKHOLDERS HAVE
AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING
AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU
SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED BY THE PROSPECTUS IS ACCURATE AS
OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS PROSPECTUS.
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TABLE OF CONTENTS
RISK FACTORS....................................................... 3
FORWARD-LOOKING STATEMENTS......................................... 9
IFX'S BUSINESS..................................................... 9
USE OF PROCEEDS.................................................... 11
SELLING STOCKHOLDERS............................................... 12
PLAN OF DISTRIBUTION............................................... 12
DESCRIPTION OF SECURITIES.......................................... 14
LEGAL MATTERS...................................................... 15
EXPERTS............................................................ 15
WHERE TO FIND MORE INFORMATION..................................... 15
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.................... 16
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RISK FACTORS
You should consider carefully the following factors and the other
information in this Prospectus before deciding to invest in shares of our common
stock, $.02 par value per share (the "Common Stock").
Lack of Operating History and Experience in the Internet Service Business
Prior to July 1996, our primary business was providing commodity brokerage
services. Recently, we have begun to pursue the development of Internet
services and the acquisition of Internet service providers ("ISPs") in South
America and Mexico; however our acquisition and development strategy is in the
early development stages. We have limited experience in providing Internet
services and, accordingly, a limited operating history upon which an evaluation
of our prospects can be made. Such prospects must be considered in light of the
substantial risks, expenses and difficulties encountered by new entrants in the
Internet services industry. These risks include identification of entry
opportunities, intense competition, changing technology and evolving industry
standards, changing user demand for Internet access and other Internet services,
dependence upon the Internet and general economic conditions in the region.
Our success in the ISP business will also depend upon our ability to hire
and retain qualified executive and management employees with significant
experience in managing and expanding an Internet services business in the
markets in which we seek to operate. We can give no assurance that we will be
able to successfully hire, retain or motivate qualified employees. Further, we
can give no assurance that we will be successful in acquiring or building the
necessary Internet service network or that the services we offer over any such
network will be profitable.
Issuance of Additional Shares - Risk of Substantial Dilution
In November 1998, we entered into a joint venture with International
Technology Investments, LC ("International Technology") to provide Internet
services and to make investments in existing ISPs and related businesses,
primarily in Latin America and other international markets. In connection with
the formation of the joint venture, International Technology obtained an option
to purchase up to 5,500,000 shares of our Common Stock for $2.00 per share.
This purchase option expires in January 2002; however, if International
Technology makes additional capital contributions of at least $3,000,000 to the
joint venture before January 2002, the expiration date of the option will be
extended until January 2004. See "IFX's Business." As of the date of this
Prospectus, 5,500,000 shares represents approximately 45% of the outstanding
shares of our Common Stock. The interests of our stockholders, including those
investors purchasing shares of our Common Stock being registered hereunder,
could be substantially diluted by the exercise of this purchase option. In
addition, we cannot predict the effect, if any, that market sales of the shares
issuable upon exercise of such option, or the availability of such shares for
future sales, will have upon the market price of shares of Common Stock
prevailing from time to time.
Dependence upon the Creation of a Network Infrastructure
Our success depends upon our ability to create an Internet network
infrastructure that covers significant regions or areas of Latin American
countries. Our success will also depend upon the ability of our customers to
access this network with ease of use and to have a high quality Internet
experience with consistency of service throughout the network. Our primary
strategy for creating the necessary infrastructure is to acquire ISPs that have
an existing network infrastructure, qualified personnel and an existing
subscriber base and, in certain countries, to develop such ISPs with local
partners. We also anticipate that expansions and adaptations of our network
infrastructure will be necessary to supplement our acquisition strategy. This
will require substantial financial, operational and managerial resources. We
can give no assurance that we will be able to acquire and develop a network
infrastructure in Latin America necessary to compete successfully with the
industry's evolving standards on a timely or cost-effective basis, or at all.
Also, we may not be able to deploy successfully any expanded and
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adapted network infrastructure. Failure to create a successful infrastructure
may materially adversely affect our business and operating results.
The process of consolidating our ISPs and integrating our regional
operations may take a significant period of time, may place a significant strain
on our resources, and could prove to be more expensive than predicted. We may
increase expenditures in order to accelerate the integration and consolidation
of our ISPs with the goal of achieving longer-term cost savings and improved
profitability. These expenses may include the following, among others: the
elimination of redundant staffing positions; personnel relocation; the
cancellation of overlapping unnecessary Internet access contracts; the closure
of redundant points of presence; system upgrades; and the integration of these
ISPs' operations onto our network, customer care, billing, financial and other
international support systems. However, we can give no assurance that these
projected long-term cost savings and improvements in profitability can or will
be realized. Further, we can give no assurance that customer support resources
will be sufficient to manage the growth in our business or that we will be
successful in implementing our expansion program in whole or in part.
Challenges of Growth By Acquisitions
We are dependent on our ability to identify and acquire ISPs that meet our
acquisition criteria. We seek to create a market presence internationally, to
become strong in Internet connectivity and web hosting core service platforms,
and to add additional enhanced service capabilities through these acquisitions.
We expect that competition for appropriate acquisition candidates may be
significant. We may compete with other communications companies with similar
acquisition strategies, many of which may be larger, have greater financial and
other resources and be owned or partially-owned by foreign governments.
Competition for independent ISPs is based on a number of factors, including
price, terms and conditions, size and access to capital, ability to offer cash,
stock or other forms of consideration and other matters. We can give no
assurance that we will be able to identify suitable ISPs or be able to complete
any acquisitions of or investments in those targeted ISPs on acceptable terms
and conditions.
Once consummated, these acquisitions will continue to present certain
risks, including:
- the difficulty of integrating the acquired operations, technology and
personnel;
- the possible inability of our management to maximize our financial and
strategic position by the successful incorporation of acquired
technology and products into our service offerings and to maintain
uniform standards, controls, procedures and policies;
- the possible acquisition of substantial contingent or undisclosed
liabilities;
- the risks of entering markets in which we have little or no direct
prior experience; and
- the potential impairment of relationships with employees and customers
as a result of changes in management or other business operations.
We may not be successful in overcoming these risks or any other problems
encountered in connection with future acquisitions. In addition, future
acquisitions could materially adversely affect our operating results as a result
of dilutive issuances of equity securities, the incurrence of additional debt or
the amortization of expenses related to goodwill and other intangible assets.
Further, our ability to complete transactions with ISPs may require significant
additional financial resources.
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Risks Associated With an Internet Business
Our business is exposed to risks associated with the ISP business, many of
which are significant. In particular, the laws relating to the regulation and
liability of Internet access providers in relation to information carried or
disseminated is undergoing a process of development in many countries.
Decisions, laws, regulations and other activities regarding regulation and
content liability may significantly affect the development and profitability of
companies offering on-line and Internet access services. Although we will
implement certain network security measures, such as limiting physical and
network access to our routers, the network's infrastructure is potentially
vulnerable to computer viruses, break-ins and similar disruptive problems caused
by our customers or other Internet users, which could lead to interruptions of,
delays in or cessation of service to our customers. Furthermore, inappropriate
use of the Internet by third parties could also potentially jeopardize the
security of confidential information stored in the computer systems of our
customers and, in turn, could deter potential customers and adversely affect
existing customer relationships. We rely on local telephone companies and
other companies to provide data communications capacity via local
telecommunications lines. We may experience disruptions or capacity constraints
in these telecommunications services and may have no means of replacing these
services on a timely basis, or at all.
Changes in the regulatory environment relating to the Internet connectivity
market, including regulatory changes which directly or indirectly affect
telecommunications costs or increase the likelihood or scope of competition from
telecommunications companies, could affect our pricing. Additional laws could
cover issues such as content, user pricing, privacy, libel, intellectual
property protection and infringement, and technology export and other controls.
We can give no assurance that violations of local laws will not be alleged or
charged by foreign governments, that we might not unintentionally violate such
laws or that such laws will not be modified, or new laws enacted, in the future.
Any of the foregoing developments could have a material adverse effect on our
business, results of operations and financial condition. In addition, our
subscribers may discontinue their service at the end of any month for any
reason. Our revenue will depend on our ability to attract and retain such
subscribers.
We may be dependent on third parties to stimulate demand for our products
and services where we do not have a direct sales force. These channel partners
include computer and telecommunications resellers, value added resellers,
original equipment manufacturers, systems integrators, web designers and
advertising agencies. If we fail to gain commercial acceptance in certain
markets, these channel partners may discontinue their relationships with us.
The loss of channel partners, the failure of such parties to perform under
agreements with us, or the inability to attract other channel partners with the
expertise and industry experience required to market our products and services
could have a material adverse effect on our operating results.
Risks Associated With International Operations and Expansion
Our Internet business is focused on Central and South American markets. We
can give no assurance that acceptance of the Internet or demand for Internet
connectivity, web hosting and other enhanced Internet services will increase
significantly in these markets. However we believe that it will be necessary to
move quickly into international markets in order to establish critical market
presence and credibility, though we can give no assurance that we will be able
to do so.
We may need to enter into joint ventures or other strategic relationships
with one or more third parties in order to conduct our foreign operations
successfully. However, we can give no assurance that we will be able to
identify joint venture or strategic partners in these markets or that we will be
able to obtain the permits and operating licenses required to conduct business
and offer Internet services in these markets. In addition to the uncertainty as
to our ability to create an international presence, there are certain additional
risks inherent in doing business on an international level. Such risks include:
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- competition from government-owned or subsidized businesses, including
telecommunication companies and ISPs;
- unexpected changes in or delays resulting from regulatory, licensing
and foreign investment requirements, tariffs, customs, duties and
other trade barriers;
- difficulties in staffing and managing foreign operations;
- longer payment cycles and problems in collecting accounts receivable;
- political instability, expropriation, nationalization, war,
insurrection and other political risks;
- high levels of inflation, fluctuations in currency exchange rates or
foreign exchange controls which restrict or prohibit repatriation of
funds;
- poor quality of telecommunications and lack of technological advances;
- technology export and import restrictions or prohibitions; and
- potentially adverse tax consequences.
We can give no assurance that such factors will not have an adverse effect
on our future international operations. In addition, we can give no assurance
that laws or administrative practice relating to telecommunications, taxation,
foreign exchange or other matters of countries within which we may operate will
not change in a manner adverse to our business. Any such change could have a
material adverse effect on our business, financial condition and results of
operations.
Volatility of Stock Price
The Common Stock may be subject to significant price fluctuations in
response to a variety of factors, including quarterly variations in operating
results, public announcements of acquisitions, strategic alliances and joint
ventures, general conditions in the Internet industry, and general economic and
market conditions in the markets in which we operate. In addition, the stock
market has experienced significant price and volume fluctuations that have
adversely affected the market prices of equity securities of some companies,
including companies in the Internet service business, and that often have been
unrelated to the operating performance of such companies.
Competition; Pricing Fluctuation
The market for Internet connectivity and related services is extremely
competitive, characterized by rapidly changing technology and evolving standards
which can be significantly influenced by the marketing and pricing decisions of
the largest industry participants. We anticipate that competition will continue
to intensify as the use of the Internet grows. The tremendous growth and
potential market size of the Internet access market has attracted and likely
will continue to attract many new start-ups as well as existing businesses from
different industries.
In some cases, we will be forced to compete with and/or buy services from
government-owned or subsidized telecommunications providers. Some of these
providers may enjoy a monopoly on telecommunications services essential to our
business or other competitive advantages. We can give no assurance that we will
be able to purchase such services at a reasonable price or at all. In addition
to the risks associated with our previously described competitors, foreign
competitors may pose an even greater risk, as they may possess a better
understanding of their local markets and customs, and enjoy better relationships
with customers and suppliers.
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We can give no assurance that we can obtain similar levels of local knowledge,
access or expertise. Failure to obtain that knowledge could place us at a
significant competitive disadvantage.
Dependence on Key Personnel
Competition for qualified employees and personnel in the Internet services
industry is intense and there are a limited number of people with knowledge of
and experience in the Internet service industry. The process of locating
personnel with the combination of skills and attributes required to carry out
our strategies may often be lengthy. Our success depends to a significant degree
upon our ability to attract and retain qualified management, technical,
marketing and sales personnel and upon the continued contributions of such
people. Our employees may voluntarily terminate their employment with us at any
time. We can give no assurance that we will be successful in attracting and
retaining qualified executives and personnel. The loss of the services of key
personnel, or the inability to attract additional qualified personnel, could
have a material adverse effect our business, financial condition or results of
operations.
Possible Need for Financing
To achieve our business plan, we may require significant financing for
acquisitions, capital expenditures and working capital requirements. Although we
believe that we will be able to obtain such financing, as necessary, through
additional borrowings or placements of debt or equity securities, there can be
no assurance that these sources of funds will be available or, if available, on
favorable terms. In addition, such financing could substantially dilute or
diminish the value of our outstanding Common Stock, including the Common Stock
offered hereby. Presently, the majority of our revenues consist of earn-out
payments from the sale of our commodities business in 1996 and income from
operations of our majority-owned British subsidiary, IFX Ltd. The amount of the
earn-out payments depends upon the profitability of the business that was sold
and decrease, successively, over the remainder of the payment period which ends
on December 31, 2001. There can be no assurance that such revenues will continue
or will continue at their current levels, or that we will have sufficient
financial resources to acquire ISPs or develop our own network infrastructure,
which would have significant adverse effects on our future financial results. No
assurance can be given that actual cash requirements will be met, that such
requirements will not exceed our budget or that anticipated revenues will be
realized.
Risk of Internet Technology Trends and Evolving Industry Standards
Our products and services will be targeted toward users of the Internet,
which has experienced rapid growth. The market for Internet access and related
services is relatively new and characterized by rapidly changing technology,
evolving industry standards, changes in customer needs and frequent new product
and service introductions. Our future success will depend, in part, on our
ability to effectively use leading technologies, to continue to develop our
technical expertise, to enhance our current services, to develop new products
and services that meet changing customer needs, and to influence and respond to
emerging industry standards and other technological changes on a timely and
cost-effective basis. We can give no assurance that we will be successful in
accomplishing these tasks or that such new technologies or enhancements will
achieve market acceptance. We believe that our ability to compete successfully
is also dependent upon the continued compatibility and interoperability of our
services with products and architectures offered by various vendors. We can give
no assurance that we will be able to effectively address the compatibility and
interoperability issues raised by technological changes or new industry
standards. In addition, we can give no assurance that services or technologies
developed by others will not render our services or technology uncompetitive or
obsolete. If the market for Internet access services fails to develop, develops
more slowly than expected, or becomes saturated with competitors, or if the
Internet access and services offered by us and our ISPs are not broadly
accepted, our business, operating results and financial condition will be
materially adversely affected.
In addition, critical issues concerning the commercial use of the Internet
remain unresolved and may impact the growth of Internet use, especially in our
target business market. Despite growing interest in the many
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commercial uses of the Internet, many businesses have been deterred from
purchasing Internet access services for a number of reasons, including:
- inconsistent quality of service;
- lack of availability of cost-effective, high-speed options;
- a limited number of local access points for corporate users;
- inability to integrate business applications on the Internet;
- the need to deal with multiple and frequently incompatible vendors;
- inadequate protection of the confidentiality of stored data and
information moving across the Internet; and
- a lack of tools to simplify Internet access and use.
In particular, numerous published reports have indicated that a perceived
lack of security of commercial data, such as credit card numbers, has
significantly impeded commercial use of the Internet to date. There can be no
assurance that encryption or other technologies will be developed that
satisfactorily address these security concerns. Published reports have also
indicated that capacity constraints caused by growth in the use of the Internet
may, unless resolved, impede further development of the Internet to the extent
that users experience delays, transmission errors and other difficulties. The
adoption of the Internet for commerce and communications, particularly by those
individuals and enterprises which have historically relied upon alternative
means of commerce and communication, generally requires the understanding and
acceptance of a new way of conducting business and exchanging information. In
particular, enterprises that have already invested substantial resources in
other means of conducting commerce and exchanging information may be
particularly reluctant or slow to adopt a new strategy that may make their
existing personnel and infrastructure obsolete. The failure of the market for
business-related Internet solutions to continue to develop would adversely
impact our business financial condition and result of operations.
Year 2000 Compliance
We are aware of the issues associated with the programming code in existing
computer systems as the year 2000 approaches. The "Year 2000" problem is
concerned with whether computer systems will properly recognize date sensitive
information when the year changes to 2000. Systems that do not properly
recognize such information could generate wrong data or fail. The Year 2000
problem is pervasive and complex, as virtually every company's computer
operations will potentially be affected in some way.
We are currently engaged in a process to evaluate our internal status with
respect to the Year 2000 issue, utilizing certain employees in our evaluation of
possible Year 2000 problems. The costs and expenses of such an evaluation have
not been material. To date, we have not discovered Year 2000 issues in the
course of our assessment that would have a material adverse effect on our
business, results of operations or financial condition; however, we can give no
assurance that all Year 2000 issues were discovered during the assessment or
that we will not discover additional Year 2000 issues that could have such an
effect.
Concurrently with the analysis of our internal systems, we have begun to
survey third-party entities with which we transact business, including critical
vendors and financial institutions, for Year 2000 compliance. With respect to
the most critical vendors, we are in the process of evaluating the Year 2000
preparedness of our telecommunications providers, on which we are reliant for
the network services crucial to web hosting and Internet connectivity services.
We are actively working to mitigate any potential impact by maintaining diverse
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providers for such network services. However, failure of any one provider may
have a material impact on our operations. We expect to complete this survey in
the third quarter of 1999. At this time, we cannot estimate the effect, if any,
that non-compliant systems at these entities could have on us, and we can give
no assurance that the impact, if any, will not be material.
FORWARD-LOOKING STATEMENTS
The statements contained in this Prospectus that are not historical fact
are "forward-looking statements" (within the meaning of the Private Securities
Litigation Reform Act of 1995). The safe harbor provisions provided in Section
27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), apply to forward-looking statements the Company makes. These statements
can be identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. The Company wishes to caution you
that these forward-looking statements addressing the timing, costs and scope of
the Company's acquisition of, or investments in, existing or future ISPs, the
revenue and profitability levels of the ISPs in which the Company invests, the
anticipated reduction in operating costs resulting from the integration and
optimization of those ISPs, and other matters contained above and in this
Prospectus regarding matters that are not historical facts, are only
predictions. The Company can give no assurance that the future results
indicated, whether expressed or implied, will be achieved. These projections and
other forward-looking statements are based upon a variety of assumptions
relating to the Company's business, which, although the Company considered
reasonable, may not be realized. Because of the number and uncertainties of the
assumptions underlying the Company's projections and forward-looking statements,
some of the assumptions may not materialize and unanticipated events and
circumstances may occur subsequent to the date of this Prospectus. These
forward-looking statements are based on current expectations, and the Company
assumes no obligation to update this information. The inclusion of projections
and other forward-looking statements should not be regarded as a representation
by the Company or any person that these estimates and projections will be
realized, and actual results may vary materially.
IFX'S BUSINESS
Former and Current Business of IFX
Prior to July 1996, the primary business of IFX Corporation ("IFX" or the
"Company") was providing commodity brokerage services. On July 1, 1996, IFX sold
substantially all of its brokerage assets (other than certain assets of its
majority-owned U.K. subsidiary) to E.D. & F. Man International, Inc., a unit of
E.D. & F. Man Group, plc, a London-based international trading and finance
conglomerate, for a purchase price consisting of cash earn-out payments based
upon the sold business's profitability during the sixty-six months following the
sale. Since July 1996, IFX's revenues have consisted primarily of earn-out
payments from the sale, interest income and income from operations of the
Company's majority-owned British subsidiary, IFX Ltd., which conducts foreign
exchange business as a registrant of the British Securities and Futures
Authority. IFX currently is assessing the advisability of its continuing
investment in IFX Ltd.
Through December 31, 1998, IFX received approximately $8.7 million of earn-
out payments from the July 1996 sale of its brokerage assets. Prior to 1999, the
earn-out payments were based on 40% of the sold business' profitability.
Presently, the earn-out payments are based on 30% of the sold business'
profitability and, in 2000 and 2001, will be based on 20% of the sold business'
profitability.
IFX believes that the Internet and telecommunications industries present
significant opportunities for IFX's future investment and growth. In particular,
IFX believes that the market for Internet services in Latin
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America presents substantial growth potential due to the increasing demand for
Internet services, relatively low market penetration and the absence of any
dominant regional or pan-regional (i.e., intercountry) service providers.
Accordingly, IFX has begun to pursue, and intends to continue to pursue, the
acquisition and development of Internet access and related services businesses,
initially in Venezuela, Chile, Columbia, Argentina, Bolivia and Mexico, with the
proceeds from the sale of its brokerage assets, private equity offerings and
possibly through joint venture transactions. Ultimately, IFX seeks to form a
Latin American pan-regional network of ISPs under the brand name UNETE, such
that a subscriber travelling in Latin America would be able to access the
Internet by making a local telephone call, regardless of whether or not such
subscriber was in his or her home country.
IFX is incorporated under the laws of the State of Delaware. Our principal
executive offices are located at 200 West Adams Street, Suite 1460, Chicago,
Illinois 60606, and our telephone number is (312) 419-9530. Our web site is
http://www.ifxcorp.com.
Recent Developments and Acquisitions
Joint Venture with International Technology. In November 1998, IFX entered
into a joint venture with International Technology. The purpose of the joint
venture is to provide Internet services and to make investments in existing ISPs
and related businesses, primarily in Latin America and other international
markets. IFX chose to pursue this joint venture because it believes that
International Technology has extensive experience and existing business
relationships with participants in the computer distribution and communications
industries in Latin America, which relationships will be useful in developing
IFX's Internet access and related services business in these markets.
IFX and International Technology each contributed $1,000,000 to the joint
venture and may contribute up to an additional $3,000,000 each to the venture;
however, neither party is required to make any additional capital contributions.
In connection with the formation of the joint venture, International Technology
purchased 500,000 shares of Common Stock from IFX at a purchase price of $2.00
per share and obtained an option to purchase up to an additional 5,500,000
shares of Common Stock for $2.00 per share. International Technology's purchase
option expires in January 2002; however, if International Technology makes
additional capital contributions of at least $3,000,000 to the joint venture
before January 2002, the expiration date of the option will be extended until
January 2004.
Investment in Telcom.Net, L.P. In December 1998, IFX acquired a 25% limited
partnership interest in Telcom.Net, L.P. ("Telcom.Net"), a telecommunications
and Internet software development company based in Miami, Florida. As a result,
IFX's subscribers will have the option to receive voice-over Internet services
provided by Telcom.Net. The general partner and co-founder of Telcom.Net is Joel
M. Eidelstein, IFX's President. The limited partnership interest entitles IFX to
receive priority distributions of up to $200,000, the amount of capital invested
by IFX in Telcom.Net, and, after all of Telecom.Net's other partners have
received priority distributions equal to their aggregate invested capital, IFX
is entitled to receive 25% of the profits of Telcom.Net. In addition, IFX has
guaranteed certain liabilities owed by Telcom.Net to Qwest/LCI, International.
Argentinean License. On March 23, 1999, IFX was granted a license from the
government of Argentina to offer full value added telecommunications services
and data transmission throughout the country of Argentina.
Columbian Lease. IFX is presently leasing, and is awaiting approval of, a
license from the government of Columbia which would permit it to offer full
value added telecommunications services and data transmission throughout the
country of Columbia.
Creation of Direct U.S. Internet Connection. On March 25, 1999, IFX entered
into an agreement with InterPacket Group, Inc., a provider of high speed
Internet access and telephony services to the international
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wholesale market, to provide IFX up to 50 Mbps of Internet connectivity to be
allocated among IFX's planned sites throughout Latin America.
Interweb Mexico, S.A. de C.V. On April 8, 1999, IFX purchased all of the
capital stock of Interweb Mexico, S.A. de C.V. ("Interweb"), a leading ISP in
Mexico City, Mexico. Interweb currently serves customers throughout Mexico City,
providing standard dial-up connections, dedicated Internet products, wireless
access and web hosting.
International Connection Service 1500, C.A. On April 15, 1999, IFX
acquired, through an indirect wholly-owned subsidiary, all of the capital stock
of International Connection Service 1500, C.A. ("Intercon"), an ISP based in
Caracas, Venezuela. Intercon currently serves customers throughout Venezuela's
nine largest cities, providing standard dial-up connections, dedicated Internet
products, wireless access and web hosting. In connection with the acquisition of
Intercon, the Company also entered into a consulting agreement with a former
owner and employee of Intercon, who will provide consulting services to Intercon
in exchange for compensation based on customer growth and retention.
Certain of the shares of Common Stock of the Company which are being
registered hereby were issued to the sellers of Intercon. See "Selling
Stockholders" below.
Eldish Marketing, C.A. On April 16, 1999, through Intercon, the Company
acquired certain Internet service-related assets, including customer lists, from
Eldish Marketing, C.A. ("Eldish"), an ISP located in Caracas, Venezuela. The
Company intends to consolidate the customers acquired from Eldish into Intercon.
Certain of the shares of Common Stock of the Company which are being offered
hereby were issued in connection with the acquisition of these assets. See
"Selling Stockholders" below.
Yupi Internet, Inc. On April 23, 1999, IFX entered into an agreement with
Yupi Internet, Inc. ("Yupi"), a Miami, Florida based company. Yupi has developed
a Spanish-language web navigation and portal site where customers and businesses
from Latin America, Spain and the U.S. may gather, interact, transact business
with one another and return to during their Internet access periods. Pursuant to
such agreement, IFX invested $3 million into Yupi in exchange for convertible
preferred stock and received the right to acquire up to 25,901 shares of the
common stock of Yupi at an exercise price of $23.16 per share.
Interaccess, S.A. On May 13, 1999, IFX purchased all of the capital stock
of Interaccess, S.A. ("Interaccess"), a leading ISP located in Santiago, Chile.
Interaccess currently serves customers throughout Chile, providing standard
dial-up connections, dedicated Internet products, wireless access and web
hosting.
Zupernet Ltda. On May 27, 1999, IFX purchased substantially all of the
capital stock of Zupernet, Ltda. ("Zupernet"), an ISP located in La Paz,
Bolivia. Zupernet currently serves customers throughout Bolivia, providing
standard dial-up connections, dedicated Internet products, wireless access and
web hosting.
USE OF PROCEEDS
IFX will not receive any proceeds from the sale by the stockholders
identified in this Prospectus (the "Selling Stockholders") of any of the shares
of Common Stock (the "Shares") covered by this Prospectus.
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SELLING STOCKHOLDERS
The following table sets forth with respect to each of the Selling
Stockholders (i) the number of Shares beneficially owned as of June 15, 1999 and
prior to the offering contemplated hereby, (ii) the maximum number of Shares
which may be sold in the offering pursuant to this Prospectus and (iii) the
number of Shares which will be beneficially owned after the offering, assuming
the sale of all Shares set forth in (ii) above:
Beneficial Ownership Beneficial Ownership
Prior to Offering After Offering
----------------------- Shares to Be --------------------
Selling Stockholders Shares(1) Percentage Offered Shares Percentage
- ---------------------- ---------- ----------- ------------ ------- -----------
Samy Schwartz Urbach........... 8,948 * 8,948 0 -
Brian Reale.................... 8,948 * 8,948 0 -
___________
* Less than 1%.
(1) For purposes of this table, a person is deemed to have "beneficial
ownership" of any shares of Common Stock which such person has the right to
acquire within 60 days after the date of this Prospectus. For purposes of
computing the percentage of outstanding shares of Common Stock held by each
person named above, any security which such person has the right to acquire
from IFX within 60 days after the date of this Prospectus is deemed to be
outstanding, but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person.
___________
The Shares offered hereby were acquired by the Selling Stockholders from
IFX in connection with IFX's acquisition in May 1999 of substantially all of the
share capital of Zupernet, an ISP located in La Paz, Bolivia. See "IFX's
Business". The Shares acquired by the Selling Stockholders from IFX are
"restricted securities" within the meaning of the Securities Act. Consequently,
in accordance with the provisions of the acquisition agreement, this Prospectus
has been prepared for the purpose of registering the Shares under the Securities
Act to enable the Selling Stockholders to make future sales without restriction.
Following completion of such acquisition, Mr. Reale became a general manager of
a subsidiary of IFX.
PLAN OF DISTRIBUTION
IFX is registering the Shares on behalf of the Selling Stockholders. The
Shares covered by this Prospectus may be offered and sold by the Selling
Stockholders, or by purchasers, transferees, donees, pledgees or other
successors in interest, directly or through brokers, dealers, agents or
underwriters who may receive compensation in the form of discounts, commissions
or similar selling expenses paid by a Selling Stockholder or by a purchaser of
the Shares on whose behalf such broker-dealer may act as agent. Sales and
transfers of the Shares may be effected from time to time in one or more
transactions, in private or public transactions, on the Nasdaq SmallCap Market,
in the over-the-counter market, in negotiated transactions or otherwise, at a
fixed price or prices that may be changed, at market prices prevailing at the
time of sale, at negotiated prices, without consideration or by any other
legally available means. Any or all of the Shares may be sold from time to time
by means of (a) a block trade, in which a broker or dealer attempts to sell the
Shares as agent but may position and resell a portion of the Shares as principal
to facilitate the transaction; (b) purchases by a broker or dealer as principal
and the subsequent sale by such broker or dealer for its account pursuant to
this Prospectus; (c) ordinary brokerage transactions (which may include long or
short sales) and transactions in which the broker solicits purchasers; (d) the
writing (sale) of put or call options on the Shares; (e) the pledging of the
Shares as collateral to secure loans, credit or other financing arrangements
and, upon any subsequent foreclosure, the disposition of the Shares by the
lender thereunder; and (f) any other legally available means.
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To the extent required with respect to a particular offer or sale of the
Shares, a Prospectus Supplement will be filed pursuant to Section 424(b)(3) of
the Securities Act, and will accompany this Prospectus, to disclose (a) the
number of Shares to be sold, (b) the purchase price, (c) the name of any broker,
dealer or agent effecting the sale or transfer and the amount of any applicable
discounts, commissions or similar selling expenses, and (d) any other relevant
information.
The Selling Stockholders may transfer the Shares by means of gifts,
donations and contributions. This Prospectus may be used by the recipients of
such gifts, donations and contributions to offer and sell the Shares received by
them, directly or through brokers, dealers or agents and in private or public
transactions; however, if sales pursuant to this Prospectus by any such
recipient could exceed 500 Shares, then a Prospectus Supplement would need to be
filed pursuant to Section 424(b)(3) of the Securities Act to identify the
recipient as a Selling Stockholder and disclose any other relevant information.
Such Prospectus Supplement would be required to be delivered, together with this
Prospectus, to any purchaser of such Shares.
In connection with distributions of the Shares or otherwise, the Selling
Stockholders may enter into hedging transactions with brokers, dealers or other
financial institutions. In connection with such transactions, brokers, dealers
or other financial institutions may engage in short sales of IFX's Common Stock
in the course of hedging the positions they assume with Selling Stockholders.
To the extent permitted by applicable law, the Selling Stockholders also may
sell the Shares short and redeliver the Shares to close out such short
positions.
The Selling Stockholders and any broker-dealers who participate in the
distribution of the Shares may be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act and any discounts, commissions or similar
selling expenses they receive 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. As a result, IFX has informed the Selling
Stockholders that Regulation M, promulgated under the Exchange Act, may apply to
sales by the Selling Stockholders in the market. The Selling Stockholders may
agree to indemnify any broker, dealer or agent that participates in transactions
involving the sale of the Shares against certain liabilities, including
liabilities arising under the Securities Act. The aggregate net proceeds to the
Selling Stockholders from the sale of the Shares will be the purchase price of
such Shares less any discounts, concessions or commissions.
Each of the Selling Stockholders is acting independently of IFX in making
decisions with respect to the timing, price, manner and size of each sale. No
broker, dealer or agent has been engaged by IFX in connection with the
distribution of the Shares. There is no assurance, therefore, that the Selling
Stockholders will sell any or all of the Shares. In connection with the offer
and sale of the Shares, IFX has agreed to make available to the Selling
Stockholders copies of this Prospectus and any applicable Prospectus Supplement
and has informed the Selling Stockholders of the need to deliver copies of this
Prospectus and any applicable Prospectus Supplement to purchasers at or prior to
the time of any sale of the Shares offered hereby.
The Shares covered by this Prospectus may qualify for sale pursuant to
Section 4(1) of the Securities Act or Rule 144 promulgated thereunder, and may
be sold pursuant to such provisions rather than pursuant to this Prospectus.
IFX will not receive any proceeds from the sale of the Shares covered by
this Prospectus and has agreed to pay all of the expenses incident to the
registration of the Shares, other than discounts and selling concessions or
commissions, if any, and fees and expenses of counsel for the Selling
Stockholders, if any.
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DESCRIPTION OF SECURITIES
Pursuant to the Company's Certificate of Incorporation, as amended (the
"Certificate"), the Company is authorized to issue an aggregate of 150,000,000
shares of Common Stock, par value $.02 per share. As of June 14, 1999, there
were 6,835,943 shares of Common Stock outstanding. As of June 14, 1999, there
were approximately 886 holders of record of Common Stock. The Common Stock is
listed on the Nasdaq SmallCap Market under the symbol "FUTR."
The holders of outstanding shares of Common Stock are entitled to receive
dividends out of assets legally available therefor, if and when declared by the
Board of Directors and in such amounts as the Board of Directors may from time
to time determine. The shares of Common Stock are neither redeemable nor
convertible and the holders thereof have no preemptive or subscription rights to
purchase any securities of the Company. Upon liquidation, dissolution or winding
up of the Company, the holders of Common Stock are entitled to receive, pro
rata, the assets of the Company that are legally available for distribution,
after payment of all debts and other liabilities of the Company. Each
outstanding share of Common Stock is entitled to one vote on all matters
submitted to a vote of stockholders. There is no cumulative voting in the
election of directors.
Delaware Statutory Business Combination Provision
Section 203 of the Delaware General Corporation Law (the "DGCL") is
applicable to corporate takeovers in Delaware. Subject to certain exceptions
set forth therein, Section 203 of the DGCL provides that a corporation shall not
engage in any business combination with any "interested shareholder" for a
three-year period following the date that such shareholder becomes an interested
shareholder unless (a) prior to such date, the board of directors of the
corporation approved either the business combination or the transaction that
resulted in the shareholder becoming an interested shareholder, (b) upon
consummation of the transaction that resulted in the shareholder becoming an
interested shareholder, the interested shareholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding certain specified shares) or (c) on or after such date, the
business combination is approved by the board of directors of the corporation
and by the affirmative vote of at least 66 2/3% of the outstanding voting stock
that is not owned by the interested shareholder. Except as specified therein, an
"interested shareholder" is defined to include any person that is (i) the owner
of 15% or more of the outstanding voting stock of the corporation, (ii) an
affiliate or associate of that corporation who or which and owned 15% or more of
the outstanding voting stock of the corporation at any time within three years
immediately prior to the relevant date, and (iii) an affiliate or associate of
the persons described in the foregoing clauses (i) or (ii).
In its Certificate, the Company has elected not to be governed by the
restrictions imposed by Section 203 of the DGCL. Accordingly, in the event the
Company becomes the subject of a takeover or third party acquisition attempt, it
may not be able to avail itself of the benefits afforded by Section 203 of the
DGCL.
Transfer Agent and Registrar
The Transfer Agent and Registrar for the Common Stock is Harris Trust and
Savings Bank.
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LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for IFX by
Neal, Gerber & Eisenberg, Chicago, Illinois.
EXPERTS
The consolidated financial statements of IFX as of June 30, 1998 and 1997
and for each of the three years in the period ended June 30, 1998, incorporated
in this Prospectus by reference to IFX's Annual Report on Form 10-K for the
fiscal year ended June 30, 1998, have been audited by Arthur Andersen LLP,
independent public accountants, as set forth in their report with respect
thereto, which is incorporated by reference herein. Such financial statements
are incorporated by reference herein in reliance upon the authority of such firm
as experts in auditing and accounting.
WHERE TO FIND MORE INFORMATION
IFX has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act, relating to the shares of common stock to
be sold or otherwise transferred by the Selling Stockholders identified herein.
This Prospectus is a part of the Registration Statement, but the Registration
Statement also contains additional information and exhibits not included herein.
IFX is subject to the informational requirements of the Exchange Act.
Accordingly, we file annual, quarterly and current reports with the Commission.
You can read and copy the Registration Statement and the other statements and
reports that we file with the Commission at the Commission's public reference
rooms at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, 7 World
Trade Center, Suite 1300, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can also be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. Our filings with the
Commission are also available from the Commission's web site at
http://www.sec.gov. Please call the Commission's toll-free telephone number at
1-800-SEC-0330 if you need further information about the operation of the
Commission's public reference rooms. The Common Stock is listed on the Nasdaq
SmallCap Market and our reports can also be inspected at the offices of the
Nasdaq National Market, 1735 K Street, N.W., Washington, D.C. 20549.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We file annual, quarterly and special reports and other information with
the Commission. The Commission allows us to "incorporate by reference" the
information we file with it, which means that we can disclose important
information to you by referring to those documents. The information incorporated
by reference is an important part of this Prospectus. Any statement contained in
a document which is incorporated by reference in this Prospectus is
automatically updated and superseded if information contained in this
Prospectus, or information that we later file with the Commission, modifies or
replaces this information. We incorporate by reference the following documents:
1. Our Annual Report on Form 10-K for the fiscal year ended June 30,
1998, filed September 17, 1998;
2. Our Quarterly Report on Form 10-Q for the fiscal quarter ended
October 31, 1998, filed November 16, 1998;
3. Our Current Report on Form 8-K, filed November 25, 1998; and
4. Our Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 1998, filed February 11, 1999.
5. Our Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1999, filed May 14, 1999.
To receive a free copy of any of the documents incorporated by reference in
this Prospectus (other than exhibits), call or write IFX Corporation, 200
West Adams Street, Suite 1460, Chicago, Illinois 60606, Attention:
Secretary, Telephone (312) 419-9530.
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