SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

(Mark one)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                  For the quarterly period ended June 30, 2000

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

               For the transition period from ________to________.


                           Commission File No. 0-23900


                         FUSION NETWORKS HOLDINGS, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Delaware                                        51-0393382
---------------------------------              ---------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)


                   8115 N.W. 29th Street, Miami, Florida 33122
                  ---------------------------------------------
                    (Address of principal executive offices)


                                 (305) 477-6701
               --------------------------------------------------
              (Registrant's telephone number, including area code)


            ---------------------------------------------------------
              (Former name, former address and formal fiscal year,
                         if changed since last report)


     Check  whether  the issuer (1) filed all  reports  required  to be filed by
section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been  subject to such  filing  requirements  for the past 90 days.  Yes X No

     As of August 14, 2000, 37,036,226 shares of Common Stock of the issuer were
outstanding.

<PAGE>


                 FUSION NETWORKS HOLDINGS, INC. AND SUBSIDIARIES

                                      INDEX

                                                                          Page
                                                                          Number
                                                                          ------
PART I - FINANCIAL INFORMATION

         Item 1.  Financial Statements

                  Consolidated Balance Sheets - June 30, 2000 and
                  December 31, 1999..........................................3

                  Consolidated Statements of Operations - For the
                  three and six months ended June 30, 2000 and 1999..........4

                  Consolidated Statements of Cash Flows - For the
                  six months ended June 30, 2000 and 1999....................5

                  Notes to Consolidated Financial Statements.................7

         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations.......................14

         Item 3.  Quantitative and Qualitative Disclosures about
                  Market Risk...............................................19

PART II - OTHER INFORMATION

         Item 6.  Exhibits and Reports on Form 8-K..........................20

SIGNATURES..................................................................21

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                 FUSION NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>


                                                                       Unaudited
                                                                        June 30,        December 31,
ASSETS
                                                                         2000              1999
                                                                      -----------       ------------
<S>                                                                <C>                <C>

Current Assets:
     Cash                                                          $   3,307,159     $  7,044,458
     Accounts receivable                                               4,034,981                -
     Employee and other loans receivable                                 174,820              535
     Recoverable income taxes                                            650,242                -
     Prepaid expenses and other current assets                         2,320,461           21,858
                                                                     ------------     ------------
         Total Current Assets                                         10,487,663        7,066,851

Investments in and advances to unconsolidated affiliates                 929,266                -
Investment in affiliate, at cost                                      27,353,125       25,500,000
Property, plant and equipment, net                                     3,273,922          642,558
Other assets                                                             979,925                -
                                                                     ------------     ------------
                                                                    $ 43,023,901    $  33,209,409
                                                                     ============     ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
     Current portion of long-term debt                               $    12,819    $          -
     Accounts payable and accrued expenses                             9,638,208         131,080
     Billings in excess of costs and estimated earnings                1,130,597               -
     Due to officers                                                     100,418               -
                                                                     ------------     ------------
         Total Current Liabilities                                    10,882,042         131,080

Long-Term Debt                                                         4,015,810               -
                                                                     ------------     ------------
         Total Liabilities                                            14,897,852         131,080
                                                                     ------------     ------------

Commitments and Contingencies

Stockholders' Equity:
     Common stock, authorized 60,000,000 shares $.00001
      par value, issued and outstanding 37,036,226 at
      June 30, 2000 and 33,113,333 at December 31, 1999                      370             331
     Additional paid-in capital                                       65,032,705      54,437,419
     Foreign currency translation                                          7,271          14,551
     Retained earnings (deficit)                                     (36,914,297)    (21,373,972)
                                                                     ------------     ------------
                                                                      28,126,049      33,078,329
                                                                     ------------     ------------
                                                                    $ 43,023,901    $ 33,209,409
                                                                     ============     ============
</TABLE>

       The accompanying notes are an integral part of these consolidated
                              financial statements.

                                       3
<PAGE>


                 FUSION NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>

                                          For the Three Months Ended June 30,   For the Six Months Ended June 30,
                                          -----------------------------------   ---------------------------------
                                                  2000           1999                   2000          1999
                                                 ------         ------                 ------        ------
<S>                                          <C>               <C>                 <C>             <C>


Contract income                               $ 1,978,209 $       -                 $ 1,978,209  $       -

Direct job costs                                1,304,730         -                   1,304,730          -
                                               -----------   ---------              ------------   ----------

Gross Profit (Loss)                               673,479         -                     673,479          -
                                               -----------   ---------              ------------   ----------
Costs and Expenses:
     General and administrative expenses        4,133,896         -                   5,130,776          -
     Product development and engineering        1,007,175         -                   2,518,082          -
     Sales and marketing                          602,863         -                     881,530          -
     Write-down of goodwill                     7,354,181         -                   7,354,181          -
     Depreciation and amortization                158,997         -                     214,396          -
                                               -----------   ---------              ------------   ----------
                                               13,257,112         -                  16,098,965          -
                                               -----------   ---------              ------------   ----------
Loss from Operations                          (12,583,633)        -                 (15,425,486)         -
                                               -----------   ---------              ------------   ----------
Other Income (Expense):
     Loss on disposal of property, plant
       and equipment                              (74,382)        -                     (74,382)         -
     Miscellaneous (expense)                      (75,506)        -                     (72,740)         -
     Interest income (expense)                    (13,528)        -                      32,280          -
                                               -----------   ---------              ------------   ----------
                                                 (163,416)        -                    (114,842)         -
                                               -----------   ---------              ------------   ----------
Net Loss on Common Stock                     $(12,747,049) $       -               $(15,540,328)         -
                                               ===========   =========              ============   ==========
Loss per Share:
     Basic Loss per share                    $      (0.34)                         $      (0.44)
                                               ===========                          ============
     Diluted Loss per share                  $      (0.34)                         $      (0.44)
                                               ===========                          ============
     Basic common shares outstanding           37,036,226                            35,074,780
                                               ===========                          ============
     Diluted common shares outstanding         37,036,226                            35,074,780
                                               ===========                          ============


</TABLE>


       The accompanying notes are an integral part of these consolidated
                              financial statements.

                                       4
<PAGE>

                 FUSION NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>

                                                                     For the Six Months Ended June 30,
                                                                           2000           1999
                                                                          ------         ------
<S>                                                                     <C>             <C>

Cash Flows from Operating Activities:
     Net loss on Common Stock                                           $(15,540,328) $       -
     Adjustments to reconcile net loss on common stock
     to net cash used in operating activities:
         Depreciation and amortization                                       219,311          -
         Compensation cost of consultant stock options                       450,000          -
         Loss on disposal of assets                                           74,382          -
         Write-down of goodwill                                            7,354,181          -

     Decrease (Increase) In:
         Accounts receivable                                                 331,608          -
         Employee and other loans receivable                                (174,285)         -
         Prepaid expenses and other current assets                               497          -

     Increase (Decrease) In:
         Accounts payable and accrued expenses                               766,482          -
         Billings in excess of costs and estimated earnings                 (197,125)         -
                                                                         ------------     -------
             Net cash used in operating activities                        (6,715,277)         -
                                                                         ------------     -------
Cash Flows from Investing Activities:
     Disposal (purchase) of property, plant and equipment                 (1,110,379)         -
     Net cash acquired in acquisition                                        211,175          -
     Loans and advances from (to) officers                                  (120,264)         -
                                                                         ------------     -------
         Net cash used by in investing activities                         (1,019,468)         -
                                                                         ------------     -------
Cash Flows from Financing Activities:
     Principal payments on long-term debt                                     (1,054)         -
     Proceeds from private placement                                       4,000,000          -
     Proceeds from exercise of stock options and warrants                      5,780          -
                                                                         ------------     -------
         Net cash provided by financing activities                         4,004,726          -
                                                                         ------------     -------
Effect of exchange rate changes on cash                                       (7,280)         -
                                                                         ------------     -------
Net (Decrease) in Cash and Cash Equivalents                               (3,737,299)         -

Cash and Cash Equivalents, beginning of period                             7,044,458          -
                                                                         ------------     -------
Cash and Cash Equivalents, end of period                                  $3,307,159  $       -
                                                                         ============     =======

</TABLE>

       The accompanying notes are an integral part of these consolidated
                              financial statements.

                                       5
<PAGE>

                 FUSION NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                   (Continued)


<TABLE>

                                                                            For the Six Months Ended June 30,
                                                                               2000                 1999
                                                                              ------               ------
<S>                                                                        <C>                     <C>

Supplemental Disclosures of Cash Flow Information:

 Cash paid during the year for:
     Interest                                                               $     25,849         $       -
                                                                               ==========          =========
     Income taxes                                                           $          -         $       -
                                                                               ==========          =========
Supplemental Disclosure of Noncash Investing and Financing Activities:

     Acquisition of IDM:
       Fair value of assets acquired other than cash                        $ 12,892,922
       Excess of fair value of assets over purchase price                      7,354,181
       Issuance of common stock for merger costs                                (450,000)
       Liabilities assumed                                                   (10,318,732)
       Common stock issued                                                    (9,689,546)
                                                                               ----------
                                                                            $   (211,175)       $       -
                                                                               ==========          =========
     Issuance of restricted common stock for debt and deposits              $     19,687        $       -
                                                                               ==========          =========
</TABLE>



       The accompanying notes are an integral part of these consolidated
                              financial statements.

                                       6
<PAGE>


                 FUSION NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.   THE COMPANY

     Fusion Networks  Holdings,  Inc. (the "Company") was incorporated under the
     laws of the State of Delaware in August 1999.

     The Company is a holding  company formed to acquire Fusion  Networks,  Inc.
     ("Fusion")  and  IDM  Environmental  Corp.  ("IDM").  In  March  2000,  the
     respective  shareholders  of Fusion  and IDM  approved  the merger of those
     companies with  wholly-owned  subsidiaries of the Company and, on April 13,
     2000, the mergers were  completed.  As a result of the mergers,  Fusion and
     IDM became wholly-owned subsidiaries of the Company. Following the mergers,
     the Company conducts all of its operations through Fusion and IDM and their
     respective subsidiaries.

     Fusion was incorporated under the laws of the State of Delaware on June 30,
     1999.  Fusion is a provider  of  One-to-One  Internet  marketing  software,
     portal  technology,  applications  and content designed to enable corporate
     customers  to develop  effective  Spanish,  English and  Portuguese-related
     Internet  strategies.  As a  United  States-based  company  with  extensive
     development and pilot-testing  operations in Latin America, Fusion Networks
     provides   "next   generation"   Internet   tools   and   customer-oriented
     applications including personalized content, community services, e-commerce
     platforms,  Internet portal design,  customer  relationship  management and
     integrated   One-to-One   marketing.    Designed   to   establish   lasting
     relationships  with Internet users throughout  global Spanish,  English and
     Portuguese-speaking  markets, these integrated multimedia  applications are
     currently in use and can be found within  Fusion's  existing portal network
     of     http://www.latinfusion.com,      http://www.fusionlatina.com     and
     http://www.fusaolatina.com. Vital Content, a subsidiary of Fusion, provides
     customized   web-enabled  and  multimedia   content  to  Internet  industry
     clientele.

     IDM was incorporated under the laws of the State of New Jersey in 1978. IDM
     is a global,  diversified services and project development company offering
     a broad range of design, engineering, construction, project development and
     management,  and environmental  services and technologies to government and
     private industry clients.

2.   INTERIM PRESENTATION

     The interim consolidated  financial statements are prepared pursuant to the
     requirements  for  reporting  on Form 10-Q.  These  statements  include the
     accounts of Fusion Networks Holdings,  Inc. (the "Company") and all of it's
     wholly-owned and majority-owned subsidiary companies. The December 31, 1999
     balance sheet data was derived from audited financial  statements of Fusion
     (the acquiror) but does not include all  disclosures  required by generally
     accepted  accounting  principles.  The Merger has been  accounted  for as a
     purchase with Fusion being deemed the acquiror for accounting and financial
     reporting purposes.  Historical financial statements of the Company are the
     financial  statements  of Fusion  with  financial  statements  of IDM being
     included only from the date of the Merger  forward.  The interim  financial
     statements  and  notes  thereto  should  be read in  conjunction  with  the
     financial  statements  and notes included in the Company's Form 8-K/A dated
     April 13,  2000.  In the  opinion  of  management,  the  interim  financial
     statements  reflect all adjustments of a normal  recurring nature necessary
     for a fair statement of the results for the interim periods presented.  The
     current  period  results of operations  are not  necessarily  indicative of
     results which ultimately will be reported for the full year ending December
     31, 2000.

3.   EARNINGS (LOSS) PER SHARE

     Earnings  (loss)  per  share are based on the  weighted  average  number of
     common  shares  outstanding  including  common stock  equivalents.  For the
     periods reported within these consolidated  financial statements,  weighted
     average  shares  for basic  and  diluted  computations  are the same due to
     losses reported for each of the periods.

                                       7
<PAGE>

                 FUSION NETWORKS HOLDINGS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)

4.   MERGER AGREEMENT

     On July 26,  1999,  Fusion and IDM  announced  that they had entered into a
     nonbinding  letter of intent to form a new holding  company with Fusion and
     IDM to become wholly-owned  subsidiaries of the holding company through the
     merger of those  companies with  subsidiaries  of the holding  company (the
     "Merger").  On August 18, 1999, the Company,  Fusion and IDM entered into a
     definitive merger agreement.

     In March 2000,  the Merger was approved by the  shareholders  of Fusion and
     IDM and the Merger was completed on April 13, 2000.

     The  stockholders of Fusion and IDM each received one share of common stock
     of the Company for each share of Fusion or IDM common stock held, resulting
     in the shareholders of Fusion owning  approximately 90% of the common stock
     of the  Company and  shareholders  of IDM owning  approximately  10% of the
     common stock of the Company.

     The Merger has been  accounted  for as a purchase  with Fusion being deemed
     the acquiror for accounting and financial  reporting  purposes.  Historical
     financial  statements of the Company are the financial statements of Fusion
     with  financial  statements of IDM being included only from the date of the
     Merger  forward.  In  connection  with the  Merger,  the  Company  recorded
     goodwill of $7,354,181.  The purchase price and goodwill were determined as
     follows:

                  IDM common shares outstanding                   3,922,893

                  Estimated fair value of shares issued               $2.47  (a)
                                                                 -----------
                  Purchase price before merger costs             $9,689,546

                  Merger costs                                      450,000
                                                                 -----------
                  Purchase price                                 10,139,546

                  IDM net book value                              2,785,365
                                                                 -----------
                  Goodwill                                       $7,354,181
                                                                 ===========

                    (a)  The   estimated   fair  value  of  shares   issued  was
                         determined  using the average  closing  market price of
                         IDM's  common  stock for the 3 days prior to and 3 days
                         subsequent to the public  announcement of the letter of
                         intent.

5.   SALE OF SUBSIDIARY

     On July 25, 2000, the Company  entered into a letter of intent  pursuant to
     which the Company  agreed in  principal  to sell all of its stock of IDM to
     two  principal  officers of IDM. The terms of the sale of IDM have not been
     finalized  and closing of the sale is subject to  execution  of  definitive
     agreements and satisfaction of certain conditions.

                                       8
<PAGE>

5.   SALE OF SUBSIDIARY (Continued)

     Based on the  agreement in principal to sell IDM, the Company,  at June 30,
     2000, recorded a write-down of the goodwill associated with the acquisition
     of IDM.

     In connection with the proposed sale transaction, the Company has presented
     the following condensed pro forma financial statements  reflecting the sale
     of IDM as if the  transaction  had occurred at June 30, 2000. The pro forma
     financial  position of the Company as of June 30, 2000 is reflected without
     IDM. The pro forma results of operations  for the six months ended June 30,
     2000 reflects the loss from continuing  operations of Fusion only and a net
     loss from discontinued  operations  reflecting the results of IDM as of the
     date of the Merger  through June 30, 2000 and includes  the  write-down  of
     goodwill of $7,354,181.

                        PRO FORMA CONDENSED BALANCE SHEET

                                  June 30, 2000
                                   (Unaudited)

         ASSETS
         ------
         Current Assets                                         $ 3,650,343

         Investment in affiliate, at cost                        25,500,000

         Property, plant and equipment, net                       1,655,486
                                                                 -----------
                                                                $30,805,829
                                                                 ===========
         LIABILITIES AND STOCKHOLDERS' EQUITY
         ------------------------------------
         Current Liabilities                                      $ 509,507

         Long-Term Debt                                           4,000,000
                                                                 -----------
                  Total Liabilities                               4,509,507

         Total Stockholders' Equity                              26,296,322
                                                                 -----------
                                                                $30,805,829
                                                                 ===========
                                       9
<PAGE>


5.   SALE OF SUBSIDIARY (Continued)

                 PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

                     For the Six Months Ended June 30, 2000
                                   (Unaudited)

         Income                                               $          -

         Costs and Expenses:
                  General and administrative expenses            3,242,087
                  Product development and engineering            2,518,082
                  Sales and marketing                              881,530
                  Depreciation and amortization                    148,295
                                                               ------------
                           Total Costs and Expenses              6,789,994
                                                               ------------
         Loss from Operations                                   (6,789,994)

         Other Income (Expense)                                      9,484
                                                               -------------
         Loss from Continuing Operations                        (6,780,510)

         Loss from Discontinued Operations                      (8,759,818)
                                                               -------------
         Net Loss on Common Stock                             $(15,540,328)
                                                               =============
         Loss per Share:
                  Basic and diluted loss per share:
                           From continuing operations$                (.19)
                           From discontinued operations               (.25)
                                                               -------------
                                                              $       (.44)
                                                               =============
         Basic and diluted common shares outstanding            35,074,780

                                       10
<PAGE>


6.   SEGMENT DATA

     The Company is engaged  principally in two lines of businesses as described
     in Note 1 and is reflected between the two merged companies as follows:
<TABLE>

                                                     For the Three Months Ended June 30, 2000
                                                     ----------------------------------------
                                                     Fusion             IDM           Consolidated
                                                     ------           -------         ------------
<S>                                                <C>              <C>              <C>


         Revenues from external customers           $       -       $1,978,209         $1,978,209

         Interest revenue                               36,416               -             36,416

         Interest expense                                    -         (49,944)           (49,944)

         Depreciation and amortization                  92,896          66,101            158,997

         Segment profit (loss)                      (3,987,231)     (1,405,637)        (5,392,868)

         Segment assets                             30,805,829      12,220,962         43,026,791

</TABLE>

         Reconciliation of Segment Information to Consolidated Amounts
         -------------------------------------------------------------

                                      For the Three Months Ended June 30, 2000
                                      ----------------------------------------

         Revenues
         Total revenues for reportable segments                      $1,978,209
                                                                      ---------
         Profit or Loss
         Total profit or loss for reportable segments                (5,392,868)
         Write-down of goodwill                                      (7,354,181)
                                                                      ----------
         Total consolidated loss                                   $(12,747,049)
                                                                    ============
         Assets
         Total assets for reportable segments                      $ 43,026,791
         Elimination of intersegment receivables                         (2,890)
                                                                    ------------
                                                                   $ 43,023,901
                                                                    ============

                                       11
<PAGE>

6.   SEGMENT DATA (Continued)
<TABLE>

                                                             For the Six Months Ended June 30, 2000
                                                        --------------------------------------------------
                                                        Fusion                 IDM           Consolidated
                                                        -------               ------         -------------
       <S>                                            <C>                <C>              <C>

         Revenues from external customers            $       -            $1,978,209       $1,978,209

         Interest revenue                               82,224                     -           82,224

         Interest expense                                    -               (49,944)         (49,944)

         Depreciation and amortization                 148,295                66,101          214,396

         Segment profit (loss)                      (6,780,510)           (1,405,637)      (8,186,147)

         Segment assets                             30,805,829            12,220,962       43,026,791
</TABLE>

         Reconciliation of Segment Information to Consolidated Amounts
         --------------------------------------------------------------
                                       For the Six Months Ended June 30, 2000
                                       --------------------------------------
         Revenues
         Total revenues for reportable segments                      $1,978,209
                                                                     -----------
         Profit or Loss
         Total profit or loss for reportable segments                (8,186,147)
         Write-down of goodwill                                      (7,354,181)
                                                                     -----------
         Total consolidated loss                                   $(15,540,328)
                                                                     ===========
         Assets
         Total assets for reportable segments                      $ 43,026,791
         Elimination of intersegment receivables                         (2,890)
                                                                     -----------
                                                                   $ 43,023,901
                                                                     ===========

7.   CONVERTIBLE DEBENTURES AND WARRANTS

     On June 15, 2000,  the Company sold  $4,000,000  of 6% Secured  Convertible
     Debentures and 1,500,000 Warrants. The Debentures and Warrants were sold to
     three  accredited  investors.  The Debentures and Warrants were sold for an
     aggregate  offering price of $4,000,000.  A finders fee of 5%, or $200,000,
     was paid in connection  with the sale of the Debentures  and Warrants.  The
     Debentures   and  Warrants  were  sold  pursuant  to  the  exemption   from
     registration set out in Rule 506 as promulgated pursuant to Section 4(2) of
     the Securities Act of 1933. The  securities  were offered  without  general
     solicitation in a privately  negotiated  transaction  with three accredited
     investors.

                                       12
<PAGE>

7.   CONVERTIBLE DEBENTURES AND WARRANTS (Continued)

     The Debentures bear interest at 6% per annum,  are due on June 13, 2001 and
     are secured by a pledge of  1,500,000  shares of common  stock of Marketing
     Services Group,  Inc. The Debentures are convertible  into shares of Common
     Stock of the Registrant at a fixed conversion price of $1.75 per share. The
     Warrants are  exercisable  to purchase  Common Stock of the  Registrant  at
     $1.50 per share.

8.   CONTINGENCIES AND COMMITMENTS

     In May 2000 the Company  entered into an employment  contract with Mr. Gary
     Goldfarb to serve as President and Chief  Executive  Officer of the Company
     for an  undisclosed  period of time.  The  contract  provides for a monthly
     compensation  of $18,750 per month.  The contract also grants Mr.  Goldfarb
     1,000,000  five year stock options  exercisable at the closing price of the
     Company's  common stock on the effective date. The options will vest 25% on
     each of the  first  three  anniversaries,  the  remaining  25% will vest at
     various times.

                                       13
<PAGE>

Item 2. Management's  Discussion and Analysis Of Financial Condition And Results
        Of Operations.

This report contains  forward-looking  statements  within the meaning of Section
27A of the Securities Act of 1933 and Section 21e of Securities  Exchange Act of
1954.  Actual  results  could  differ  materially  from those  projected  in the
forward-looking  statements  as a result of the risk  factors  set forth in this
report.

On July 26, 1999, Fusion Networks,  Inc.  ("Fusion") and IDM Environmental Corp.
("IDM")  announced  that they had entered into a nonbinding  letter of intent to
form  a  new  holding  company  with  Fusion  and  IDM  to  become  wholly-owned
subsidiaries  of the holding  company through the merger of those companies with
subsidiaries  of the holding  company (the  "Merger").  On August 18, 1999,  the
Company,  Fusion and IDM entered into a definitive  merger  agreement.  In March
2000,  the Merger was  approved  by the  shareholders  of Fusion and IDM and the
Merger was completed on April 13, 2000. The  stockholders of Fusion and IDM each
received  one share of common  stock of the  Company for each share of Fusion or
IDM  common  stock  held,   resulting  in  the  shareholders  of  Fusion  owning
approximately  90% of the common  stock of the Company and  shareholders  of IDM
owning approximately 10% of the common stock of the Company.

The Merger has been  accounted  for as a purchase  with Fusion  being deemed the
acquiror for accounting and financial reporting purposes.  Historical  financial
statements of the Company are the financial  statements of Fusion with financial
statements of IDM being  included only from the date of the Merger  forward.  In
connection with the Merger, the Company recorded goodwill of $7,354,181.

Fusion,  and the  Company,  had no  operations  during  the  three and six month
periods  ended  June 30,  1999.  From July 1999  through  May 2000,  Fusion  was
involved in the  development of its Internet  portal  network,  with sites being
launched in Bogota,  Miami, Buenos Aires, Mexico City, Sao Paulo and Madrid, and
additional  sites  planned to be  launched  in ten  additional  markets in North
America,  South America and Europe.  Fusion's  Internet  portal network has been
developed  to  deliver   improved   local   Internet   content  to  Spanish  and
Portugese-speaking markets.

In May 2000, the Company named a new Chief Executive Officer,  Gary M. Goldfarb.
After Mr.  Goldfarb  joined the Company,  Fusion  expanded its business focus to
begin offering software and services,  including  One-to-One  Internet marketing
software,  portal  technology,  applications  and  content  designed  to  enable
corporate customers to develop effective Spanish, English and Portuguese-related
Internet  strategies.  Fusion's software and service offerings were developed in
conjunction with Fusion's extensive development and pilot-testing  operations in
Latin   America,    and   include   "next   generation"   Internet   tools   and
customer-oriented   applications  including   personalized  content,   community
services,  e-commerce platforms,  Internet portal design,  customer relationship
management and integrated  One-to-One  marketing.  Designed to establish lasting
relationships  with  Internet  users  throughout  global  Spanish,  English  and
Portuguese-speaking   markets,  these  integrated  multimedia  applications  are
currently in use and can be found within  Fusion's  existing  portal  network of
http://www.latinfusion.com,            http://www.fusionlatina.com           and
http://www.fusaolatina.com.  Vital  Content,  a subsidiary  of Fusion,  provides
customized web-enabled and multimedia content to Internet industry clientele.

From the date of the Merger, April 13, 2000, forward, the Company's  operations,
and  operating  results,  include  IDM.  IDM  offers a broad  range  of  design,
engineering, construction, project development and management, and environmental
services and technologies to government and private industry clients.

After joining the Company, Mr. Goldfarb recommended to the directors that IDM be
sold in order to focus the efforts of  management  on the  Internet  services of
Fusion.  The  Company  evaluated  a  number  of  alternatives  relative  to IDM,
including  termination  of  operations,  sale  to  third  parties  and  sale  to
management of IDM.  After  evaluating  the  viability of the  potential  options
relating to IDM and conducting extensive negotiations with management of IDM, on
July 25, 2000, the Company entered into a letter of intent pursuant to which the
Company  agreed in  principal  to sell all of its stock of IDM to two  principal
officers  of IDM.  The  terms of the sale of IDM  have  not been  finalized  and
closing  of the sale is  subject  to  execution  of  definitive  agreements  and
satisfaction of certain conditions.

                                       15
<PAGE>

Based on the agreement in principal to sell IDM, the Company,  at June 30, 2000,
recorded a write-down of the goodwill  associated  with the  acquisition of IDM.
If,  and when,  the sale of IDM is  completed,  the  Company's  operations  will
consist  exclusively  of the  technology  and  software  development  operations
conducted by Fusion.

Because the Company and Fusion were not  operational  until after June 30, 1999,
no prior year comparative financial information is discussed herein.

Results of Operations for the Three Months ended June 30, 2000

The  following  table  reflects  operating  results in the  Company's  principal
business segments:
<TABLE>

                                                       For the Three Months Ended June 30, 2000
                                                     -----------------------------------------------
                                                     Fusion               IDM          Consolidated
                                                     -------             ------        -------------
        <S>                                        <C>                <C>             <C>

         Operating revenues                       $       -           $1,978,209       $1,978,209
         Cost of revenues                                 -            1,304,730        1,304,730
                                                  ----------           ----------      -----------
         Gross profit                                     -              673,479          673,479
         General and administrative               2,245,207            1,891,579        4,133,896
         Product development and engineering      1,007,175                    -        1,007,175
         Sales and marketing                        602,863                    -          602,863
         Depreciation and amortization               92,896               66,101          158,997
         Write-down of goodwill                           -                    -        7,354,181
                                                  ----------           ----------      -----------
         Loss from operations                    (3,948,141)          (1,284,201)     (12,583,633)
         Other income (loss), net                   (39,090)            (121,436)        (163,416)
                                                  ----------           ----------      -----------
         Net loss                               $(3,987,231)         $(1,405,637)    $(12,747,049)
                                                  ==========           ==========      ===========
</TABLE>


Revenues. The Company's consolidated revenues totaled $1,978,209 for the quarter
ended June 30, 2000.

Fusion was engaged in product  development  during the  quarter and  reported no
operating revenues from its Internet operations.

IDM reported  total revenues from  environmental  services of $1,978,209 for the
quarter  ended June 30, 2000.  Substantially  all of the IDM's  revenues for the
quarter were attributable to performance of one contract.

Cost of Revenues. The Company's consolidated cost of revenues totaled $1,304,730
for the quarter ended June 30, 2000.

Fusion reported no cost of revenues during the quarter.

IDM reported  total cost of revenues of $1,304,730,  or 66% of revenues,  during
the quarter ended June 30, 2000. Cost of revenues  consisted of direct job costs
comprised primarily of job salaries and materials and supplies.

General and  Administrative  Expenses.  The Company's  consolidated  general and
administrative  expense totaled  $4,133,896 for the quarter ended June 30, 2000.
General and administrative  expense  attributable to Fusion totaled  $2,245,207.
General and administrative  expense  attributable to IDM totaled $1,891,579,  or
95.6% of IDM's revenues.  General and administrative expense for both Fusion and
IDM consists primarily of salaries and corporate overhead.

Product  Development  and  Engineering.   The  Company's   consolidated  product
development and engineering  expenses  totaled  $1,007,175 for the quarter ended
June  30,  2000.  Product  development  and  engineering   expenses  consist  of
engineering salaries and consulting fees of Fusion.

                                       16
<PAGE>

Sales and Marketing.  The Company's  consolidated  sales and marketing  expenses
totaled  $602,863  for the  quarter  ended June 30,  2000.  Sales and  marketing
expenses consist of salaries,  travel expense and outdoor  advertising  costs of
Fusion.

Depreciation  and  Amortization.   Consolidated  depreciation  and  amortization
expense  totaled  $158,997 for the quarter  ended June 30, 2000,  consisting  of
$92,896 of  depreciation  and  amortization  expense  attributable to Fusion and
$66,101 of depreciation and amortization expense attributable to IDM.

Write-Down of Goodwill.  The Company  recorded a charge during the quarter ended
June  30,  2000 in  connection  with the  write-down  of the  goodwill  totaling
$7,354,181  arising from the Merger.  The  write-down  of goodwill  reflects the
execution of a letter of intent, after the end of the quarter, pursuant to which
the  Company  agreed in  principal  to sell the stock of IDM to  members  of IDM
management.

Other Expense,  Net.  Consolidated other expense,  net, totaled $163,416 for the
quarter ended June 30, 2000. Other expenses  attributable to Fusion consisted of
$75,506 attributable to foreign currency translation, which was partially offset
by interest income of $36,416.  Other expenses of IDM consisted of a loss on the
disposal of property, plant and equipment of $74,382 and net interest expense of
$49,944, which was partially offset by miscellaneous income of $2,890.

Results of Operations for the Six Months ended June 30, 2000.

The  following  table  reflects  operating  results in the  Company's  principal
business segments:
<TABLE>

                                                        For the Three Months Ended June 30, 2000
                                                      -------------------------------------------------
                                                       Fusion               IDM           Consolidated
                                                      --------             ------        --------------
        <S>                                     <C>                    <C>              <C>

         Operating revenues                      $       -              $1,978,209       $1,978,209
         Cost of revenues                                -               1,304,730        1,304,730
                                                 ----------            ------------      ------------
         Gross profit                                    -                 673,479          673,479
         General and administrative              3,242,087               1,891,579        5,130,776
         Product development and engineering     2,518,082                       -        2,518,082
         Sales and marketing                       881,530                       -          881,530
         Depreciation and amortization             148,295                  66,101          214,396
         Write-down of goodwill                          -                       -        7,354,181
                                                 ----------            ------------      ------------
         Loss from operations                   (6,789,994)             (1,284,201)     (15,425,486)
         Other income (loss), net                    9,484                (121,436)        (114,842)
                                                 ----------            ------------      ------------
         Net loss                              $(6,780,510)            $(1,405,637)    $(15,540,328)
                                                ===========            ============      ============
</TABLE>

Revenues.  The Company's  consolidated  revenues totaled  $1,978,209 for the six
months ended June 30, 2000.

Fusion was  engaged in product  development  during the period and  reported  no
operating revenues from its Internet operations.

IDM reported  total revenues from  environmental  services of $1,978,209 for the
period from  closing of the Merger to June 30,  2000.  Substantially  all of the
IDM's revenues for the quarter were attributable to performance of one contract.

                                       17
<PAGE>

Cost of Revenues. The Company's consolidated cost of revenues totaled $1,304,730
for the six months ended June 30, 2000.

Fusion reported no cost of revenues during the period.

IDM reported  total cost of revenues of $1,304,730,  or 66% of revenues,  during
the period ended June 30, 2000.  Cost of revenues  consisted of direct job costs
comprised primarily of job salaries and materials and supplies.

General and  Administrative  Expenses.  The Company's  consolidated  general and
administrative  expense  totaled  $5,130,776  for the six months  ended June 30,
2000.  General  and  administrative   expense  attributable  to  Fusion  totaled
$3,242,087.  General  and  administrative  expense  attributable  to IDM totaled
$1,891,579,  or 95.6% of IDM's revenues.  General and administrative expense for
both Fusion and IDM consists primarily of salaries and corporate overhead.

Product  Development  and  Engineering.   The  Company's   consolidated  product
development and engineering expenses totaled $2,518,082 for the six months ended
June  30,  2000.  Product  development  and  engineering   expenses  consist  of
engineering salaries and consulting fees of Fusion.

Sales and Marketing.  The Company's  consolidated  sales and marketing  expenses
totaled  $881,530 for the six months ended June 30,  2000.  Sales and  marketing
expenses consist of salaries, travel and outdoor advertising costs of Fusion.

Depreciation  and  Amortization.   Consolidated  depreciation  and  amortization
expense totaled  $214,396 for the six months ended June 30, 2000,  consisting of
$148,295 of depreciation  and  amortization  expense  attributable to Fusion and
$66,101 of depreciation and amortization expense attributable to IDM.

Write-Down  of  Goodwill.  The Company  recorded a charge  during the six months
ended June 30, 2000 in connection  with the write-down of the goodwill  totaling
$7,354,181  arising from the Merger.  The  write-down  of goodwill  reflects the
execution of a letter of intent, after the end of the quarter, pursuant to which
the  Company  agreed in  principal  to sell the stock of IDM to  members  of IDM
management.

Other Expense,  Net.  Consolidated other expense,  net, totaled $114,842 for the
six months ended June 30, 2000. Other expenses  attributable to Fusion consisted
of $72,740 attributable to foreign currency translation, which was offset by net
interest  income of $82,224.  Other  expenses of IDM  consisted of a loss on the
disposal of property, plant and equipment of $74,382 and net interest expense of
$49,944, which was partially offset by miscellaneous income of $2,890.

Liquidity and Capital Resources

The Company is a holding  company whose  primary  assets are the stock of Fusion
and IDM.

At June 30, 2000,  the Company had a  consolidated  working  capital  deficit of
approximately  $0.4  million  and a cash  balance  of $3.3  million.  Fusion had
working  capital of $3.1 million and a cash balance of $3.2 million  compared to
working capital of $6.9 million and a cash balance of $7 million at December 31,
1999.  IDM had a working  capital  deficit of $3.5 million and a cash balance of
$0.1  million.   The  decrease  in  working  capital  and  cash  of  Fusion  was
attributable  to losses  incurred in  connection  with the  roll-out of Fusion's
portal  network and  development  of various  technologies  which was  partially
offset by the sale of $4 million of convertible debentures.

                                       18
<PAGE>

On June  15,  2000,  the  Company  sold  $4,000,000  of 6%  Secured  Convertible
Debentures  and 1,500,000  Warrants.  The  Debentures  and Warrants were sold to
three  accredited  investors.  The  Debentures  and  Warrants  were  sold for an
aggregate  offering price of $4,000,000.  A finders fee of 5%, or $200,000,  was
paid in connection with the sale of the Debentures and Warrants.  The Debentures
and Warrants were sold pursuant to the exemption  from  registration  set out in
Rule 506 as promulgated  pursuant to Section 4(2) of the Securities Act of 1933.
The  securities  were  offered  without  general  solicitation  in  a  privately
negotiated transaction with three accredited investors.

The Debentures  bear interest at 6% per annum,  are due on June 13, 2001 and are
secured by a pledge of 1,500,000  shares of common  stock of Marketing  Services
Group,  Inc. The Debentures are  convertible  into shares of Common Stock of the
Registrant  at a fixed  conversion  price of $1.75 per share.  The  Warrants are
exercisable to purchase Common Stock of the Registrant at $1.50 per share.

Both  Fusion and IDM  require  substantial  working  capital to support  ongoing
operations.

Fusion had yet to realize any  operating  revenues as of June 30, 2000.  Monthly
expenditures  averaged  $1.2  million per month during the six months ended June
30, 2000.  Projected  monthly  expenditures  for the following twelve months are
approximately  $10.8  million,  or  $900,000  per  month.  The  decrease  in the
projected  monthly  expenditures  is  attributable  to a  decision  to defer the
opening of additional portal sites in favor of an increased emphasis on Fusion's
offering of  Internet  software  packages  which are  expected  to produce  more
predictable  revenue streams more rapidly and at less initial cost. There can be
no assurance that actual expenditures will not exceed the projected expenditures
over the next twelve months.

With  respect  to IDM,  as is common  in the  environmental  services  industry,
payment for services  rendered are generally  received pursuant to specific draw
schedules after services are rendered. Thus, pending the receipt of payments for
services rendered,  IDM must typically fund substantial project costs, including
significant  labor and bonding costs,  from financing sources within and outside
of IDM. Certain contracts,  in particular those with United States  governmental
agencies, may provide for payment terms of up to 90 days or more and may require
the posting of  substantial  performance  bonds which are generally not released
until  completion of a project.  Operations  of IDM have, in recent years,  been
funded  through  a  combination  of  operating  cash flow and the sale of equity
securities and securities convertible into equity securities.  At June 30, 2000,
IDM  had no bank  debt  and no  significant  long-term  debt  and  were  funding
operations entirely through cash on hand and operating cash flow.  Following the
Merger,  IDM's access to  additional  capital will be  substantially  limited to
one-half of the  exercise  proceeds,  if any,  from  options and warrants of IDM
which  were  assumed  by the  Company  pursuant  to the  Merger  and such  other
resources as the Company may elect to make  available to IDM.  Management of the
Company  does not  presently  intend to utilize any of the  Company  existing or
future capital resources to fund operations of IDM.

With the  change  in the  Company's  Chief  Executive  Officer  in May  2000,  a
determination  was made that the Company's  management and other resources would
best be used to focus on the growth of Fusion's  business.  In  connection  with
that  determination,  management  determined that  alternatives  relating to the
termination or disposal of IDM should be evaluated.  After reviewing each of the
viable options, management entered into negotiations with management of IDM and,
on July 25, 2000,  entered into a letter of intent to sell IDM to  management of
IDM.  The terms of the sale of IDM have not been  finalized  and  closing of the
sale is subject to  execution  of  definitive  agreements  and  satisfaction  of
certain  conditions.  If the sale of IDM is  consummated,  the  Company  will no
longer reflect the assets or  liabilities of IDM and it is anticipated  that the
Company  will  receive  certain  amounts  from the sale of the stock and will be
relieved of salary guarantees delivered pursuant to the Merger.

In order to fund  operations at its current level,  Fusion  anticipates  that it
will require as much as $9 million of  additional  funding over the following 12
months. Other than funds expected to be provided by operations and the potential
receipt of funds from the exercise of  outstanding  warrants  and  options,  the
Company  presently  has no  sources  of  financing  or  commitments  to  provide
financing.

                                       19
<PAGE>

Certain Factors Affecting Future Operating Results

Beginning  with the hiring of a new Chief  Executive  Officer  in May 2000,  the
Company has substantially  altered certain aspects of its operating plan. First,
the focus of Fusion has been  modified to adopt as its  principal  objective the
marketing,  sales and support of turnkey Internet software and service packages.
Second, Fusion has begun to re-develop its integrated software as seven separate
stand  alone  components,  which  are  applications  suitable  for any  Internet
presence  (Website  or Portal) as well as  working  along with most third  party
applications.  These "new" products are scheduled to begin Beta testing and roll
out starting on September 15, 2000 with the last of these  components  scheduled
for  roll  out by  March  15,  2001.  The  Beta  testing  phase of each of these
components is expected to last between 30 to 45 days. Third, a determination was
made to abandon the Company's  efforts to turn-around and grow the environmental
services business of IDM.

Relative to Fusion's Internet software business model, new management determined
that, in order to expand and accelerate the revenue and profit  potential of the
Fusion, Fusion should utilize, package and market the "next generation" Internet
capabilities  which it had developed in connection with the roll-out of Fusion's
portal network to develop and offer turnkey web-site development and maintenance
software  and  services.  To that end, in August  2000,  Fusion  began  actively
marketing and providing a suite of "next  generation"  Internet tools,  services
and  customer-oriented  applications  including  integrated  One-to-One Internet
marketing software,  portal technology,  applications and personalized  content,
community services,  Internet portal design and e-commerce  platforms which will
be sold separately as add-on  applications,  suitable for any website or portal,
as well as an entire portal package,  all designed to enable corporate customers
to  develop  effective   Spanish,   English  and   Portuguese-related   Internet
strategies.

Fusion  continues to operate its portal  network of  http://www.latinfusion.com,
http://www.fusionlatina.com and http://www.fusaolatina.com as a virtual showroom
of the  capabilities  offered  by Fusion,  as well as a channel  for the sale of
advertising, e-commerce and related online products and services .

Initial efforts with respect to the marketing of turnkey  Internet  software and
service  packages  has  produced,  from July 1, 2000 to August  14,  2000,  five
agreements  to create and maintain  co-branded  portals for  customers.  Each of
those  contracts  provides for a revenue share in the range of 50% to 75% of the
ongoing portal's  revenues.  Fusion will serve the future portals it licenses as
an  ASP  (Application  Service  Provider)  hosting,  maintaining,  updating  and
invoicing on behalf of its  customers  for a licensing  fee of $ 6,800 per month
for the basic package.  Additional implementation and customization fees will be
charged, as specifications require at the time of deployment.

Relative  to IDM,  the  proposed  sale of IDM is  expected  to  produce  certain
proceeds  to the  Company as well as a release  of the  Company's  guarantee  of
salaries in the  aggregate  amount of  $300,000.  Additionally,  the sale of IDM
would eliminate the Company's  entire interest in any ongoing losses of IDM, and
potential income of IDM.

This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21e of the Securities Exchange Act
of 1934.  Actual  results  could differ  materially  from those set forth in the
forward-looking  statements.  Certain factors that might cause such a difference
include the  following:  uncertainty  with respect to the market  acceptance  of
Fusion's  offering of turnkey Internet  services and software;  uncertainty with
respect to the timing of collection of turnkey fees;  the ability of the Company
to finance  continuing  operating losses; the ability of the Company to complete
the sale of IDM and the terms of that  sale;  increases  in  competition  in the
Internet  software and services  market which may adversely  impact revenues and
profitability;  and other factors generally  affecting the timing and receipt of
revenues and cost of operations.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

         Not Applicable.

                                       20
<PAGE>



                           PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits

          Exhibit No.                       Description

           10.1         Employment Agreement dated May 23, 2000 with Gary
                        Goldfarb
           10.2         Consulting Agreement dated July 24, 2000 with Big Dog
                        Ventures, Inc.
           27.1         Financial Data Schedule

     (b)  Reports on Form 8-K

          Form 8-K, dated April 13, 2000, was filed  reporting,  under Item 1, a
          change in  control  of the  Company  pursuant  to the merger of Fusion
          Networks and IDM with wholly-owned  subsidiaries of the Company, under
          Item 2, the acquisition of Fusion Networks and IDM, and, under Item 5,
          a change in the Company's principal offices.

          Form 8-K, dated June 15, 2000, was filed reporting,  under Item 5, the
          sale of $4,000,000 of convertible debentures and warrants.


                                       21
<PAGE>

                                   SIGNATURES

     In accordance  with the  requirements  of the Exchange Act, the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                        FUSION NETWORKS HOLDINGS, INC.


Dated:  August 14, 2000                 By:  /s/ Gary M. Goldfarb
                                           ------------------------------
                                             Gary M. Goldfarb, President


Dated:  August 14, 2000                 By:  /s/ Enrique Bahamon
                                           -------------------------------
                                             Enrique Bahamon, Principal
                                             Financial and Accounting Officer