UNITED STATESWASHINGTON,xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended June 30, 2016oroTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
____
Fuse Enterprises Inc.
|
| |
(State or | (I.R.S. Employer Identification No.) | |
|
| |
|
|
code)
Large accelerated filer | Accelerated filer | |
Non-accelerated filer | Smaller reporting company |
☐Yes [ ] No [X]
Applicable Only to Corporate Issuers:☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Class | Outstanding | |
Common Stock, $0.001 par value per share | 9,030,000 |
PART I. |
| 1 |
| 1 | |
|
| |
Item 2. |
| |
Item 3. |
| |
Item 4. |
| |
| ||
| PART II. | OTHER INFORMATION | 18 |
Item 1. |
| |
Item 1A. |
| |
Item 2. |
| |
Item 3. |
| |
Item 4. |
| |
Item 5. |
| |
Item 6. |
| 19 |
| ||
2
FUSE ENTERPRISES INC. CONDENSED BALANCE SHEETS (UNAUDITED) June 30, 2016 September 30, 2015 ASSETS Current Assets: Cash $ 27,885 $ 13,581 Prepaid expenses 199 199 Total current assets 28,084 17,300 Property and equipment, net 2,573 3,520 Total Assets $ 30,657 $ 17,300 LIABILITIES AND STOCKHOLDER'S (DEFICIT) Current Liabilities: Accounts payable and accrued liabilities $ 9,648 $ 10,652 Accounts payable - related parties 24,405 15,000 Total current liabilities 34,053 25,652 Total Liabilities 34,053 25,652 Commitments and Contingencies Stockholders' Equity (Deficit): Common stock, par value $0.001 per share, 75,000,000 shares authorized; 9,030,000 and 5,500,000 shares issued and outstanding as of June 30, 2016 and September 30, 2015, respectively 9,030 5,500 Additional paid-in capital 31,770 - Accumulated deficit (44,196) (13,852) Total stockholders' (deficit) (3,396) (8,352) Total Liabilities and Stockholder's (Deficit) $ 30,658 $ 17,300 The accompanying notes are an integral part of these unaudited consolidated financial statements. FUSE ENTERPRISES INC. CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended June 30, 2016 Three Months Ended June 30, 2015 Nine Months Ended June 30, 2016 Nine Months Ended June 30, 2015 Revenue $ 3,600 $ 8,250 $ 17,925 $ 23,450 Cost of revenue 1,500 2,249 5,526 6,733 Gross profit 2,100 6,001 12,399 16,717 Operating Expenses: Compensation – officers 1,500 1,050 3,600 2,850 Professional fees 5,031 565 10,781 9,065 General and administrative 17,780 2,643 28,362 8,467 Total operating expenses 24,311 4,258 42,743 20,382 Income (Loss) from Operations (22,211) 1,743 (30,344) (3,665) Income tax provision - - - - Net Income (Loss) $ (22,211) $ 1,743 $ (30,344) $ ( 3,665) Net Income (Loss) Per Common Share: Net income per common share - Basic and Diluted $ 0.00 $ 0.00 $ 0.00 $ 0.00 Outstanding - Basic and Diluted 8,051,978 5,500,000 6,347,555 5,038,462 FUSE ENTERPRISES INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended June 30, 2016 Nine Months Ended June 30, 2015 Operating Activities: Net Loss $ (30,344) $ (3,665) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 947 543 Changes in Operating Assets and Liabilities- Accounts payable and accrued liabilities (1,004) 2,414 Accounts payable - related party 9,405 9,000 Net Cash Provided by Operating Activities (20,996) 8,292 Investing Activities: Acquisition of property and equipment - (4,378) Net Cash Used in Investing Activities - (4,378) Financing Activities: Proceeds from issuance of common stock 35,300 5,500 Net Cash Provided by Financing Activities 35,300 5,500 Net Change in Cash 14,304 9,414 Cash - Beginning of Period 13,581 914 Cash - End of Period $ 27,885 $ 10,328 Cash paid during the period for: Interest $ - $ - Income tax paid $ - $ - FUSE ENTERPRISES INC. AND SUBSIDIARIES 2015, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods. Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were: (i) Actual results could differ from those estimates. Level Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Pricing inputs that are generally observable inputs and not corroborated by market data. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. property and equipment is provided using the straight-line method for substantially all assets with 10% salvage value and estimated lives as follows: In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. September 30, 2016. position, results of operations, or cash flows. business. Estimated Useful Lives (Years) June 30, 2016 September 30, 2015 Computer equipment 5 $ 3,089 $ 3,089 Less accumulated depreciation (1,321) (616) Computer equipment, net 1,768 2,473 Office furniture 7 1,289 1,289 Less accumulated depreciation (484) (242) Office furniture, net 805 1,047 Total property and equipment, net $ 2,573 $ 3,520 For the Nine Months Ended June 30, 2016 For the Nine Months Ended June 30, 2015 President, Chief Executive Officer $ 4,500 $ 4,500 Chief Financial Officer, Secretary and Treasurer 4,500 4,500 $ 9,000 * $ 9,000 * For the Nine Months Ended June 30, 2016 For the Nine Months Ended June 30, 2015 Company A 16.7 % - % Company B 45.1 % - % Company C 18.1 % - % Company D 20.1 % - % Company E - % 27.7 % Company F - % 17.9 % Company G - % 19.2 % Company H - % 11.7 % Company I - % 23.5 % 100.00 % 100.00 % 10-K. laws of the State of Nevada on December 24, 2013. Fuse Enterprises Inc. is a issued and outstanding shares of common stock, were sold by Pavel Mikhalkov and Aleksandr Kriukov in a series of private transactions to a new shareholder for an aggregate purchase price of $55,000 (collectively, the “Stock Sales”). In Results of operations for the $0 and $4,550 for the three months ended December 31, 2016 and 2015, respectively. The Company did not generate any revenue during the three months ended December 31, 2016 due to the fact the Company did not receive any new orders for our consulting and website development services and the Company is also in the process of transforming its business by seeking new business opportunities. For the Three Months Ended June 30, 2016 For the Three Months Ended June 30, 2015 Increase (Decrease) Compensation - officers $ 1,500 $ 1,050 $ 450 Professional fees 5,031 565 4,466 General and administrative 17,780 2,643 15,137 $ 24,311 $ 4,258 $ 20,053 Consulting services provided by the Company’s President, Chief Executive Officer, Secretary and Treasurer and Chief Financial Officer for the For the Three Months Ended June 30, 2016 For the Three Months Ended June 30, 2015 President, Chief Executive Officer $ 1,500 $ 1,500 Chief Financial Officer, Secretary and Treasurer 1,500 1,500 $ 3,000 * $ 3,000 * For the Nine Months Ended June 30, 2016 For the Nine Months Ended June 30, 2015 Increase (Decrease) Compensation - officers $ 3,600 $ 2,850 $ 750 Professional fees 10,781 9,065 1,716 General and administrative 28,362 8,467 19,895 $ 42,743 $ 20,382 $ 22,361 For the Nine Months Ended June 30, 2016 For the Nine Months Ended June 30, 2015 President, Chief Executive Officer $ 4,500 $ 4,500 Chief Financial Officer, Secretary and Treasurer 4,500 4,500 $ 9,000 * $ 9,000 * Accounts Payable – Related Parties As of As of June 30, September 30, 2016 2015 Total current assets $ 28,084 $ 17,300 Total current liabilities (34,053) (25,652) Working capital (deficiency) $ (5,969) $ (8,352) If we are not successful in expanding our clientele base, maintaining profitability and positive cash flow, additional capital may be required to maintain ongoing operations. We have explored and are continuing to explore options to provide additional financing to fund future operations as well as other possible courses of action. Such actions include, but are not limited to, securing lines of credit, sales of debt or equity securities (which may result in dilution to existing shareholders), loans and cash advances from our directors or other third parties, and other similar actions. There can be no assurance that we will be able to obtain additional funding (if needed), on acceptable terms or at all, through a sale of our common stock, loans from financial institutions, our directors, or other third parties, or any of the actions discussed above. If we cannot sustain profitable operations, and additional capital is unavailable, lack of liquidity could have a material adverse effect on our business viability, financial position, results of operations and cash flows. For the Nine Months Ended June 30, 2016 For the Nine Months Ended June 30, 2015 Net cash provided (used) by operating activities $ (20,996) $ 8,292 Net cash used in investing activities - (4,378) Net cash provided by financing activities 35,300 5,500 Net increase (decrease) in cash $ 14,304 $ 9,414 a convertible note and $11,645 from capital contributions. increased net loss. 2015. December 31, 2015. 31.2 32.1 32.2 101.INS XBRL Instance 101.SCH XBRL 101.CAL XBRL 101.DEF XBRL 101.LAB XBRL 101.PRE XBRL FUSE ENTERPRISES INC. By: 1 –I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSFinancial Statements For the Nine Months Ended June AND SUBSIDIARIES and 2015(Unaudited)Index to the Condensed Financial StatementsContentsPageCondensed Balance Sheets at June 30, 2016 and September 30, 2015 (unaudited)F-1Condensed Statement of Operations for the Three and Nine Months Ended June 30, 2016 and 2015 (unaudited)F-2Statement of Changes in Stockholders’ Deficit for the Period from December 24, 2013 (Inception) through June 30, 2016 (unaudited)F-3Condensed Statements of Cash Flows for the Nine Months Ended June 30, 2016 and 2015 (unaudited)F-4Notes to the Condensed Financial Statements (unaudited)F-53 DECEMBER 31, 2016 SEPTEMBER 30, 2016 ASSETS CURRENT ASSETS Cash and equivalents $ 6,847,727 $ 8,165 Prepaid expenses 6,667 8,532 Total current assets 6,854,394 16,697 NON-CURRENT ASSETS Property and equipment, net - 2,258 Total non-current assets - 2,258 TOTAL ASSETS $ 6,854,394 $ 18,955 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 3,204 $ 7,742 Accounts payable - related parties - 27,405 Convertible note 6,869,818 - Total current liabilities 6,873,022 35,147 Total liabilities 6,873,022 35,147 CONTINGENCIES AND COMMITMENTS STOCKHOLDERS’ DEFICIT 9,030 9,030 Additional paid in capital 66,885 31,770 Accumulated deficit (94,543 ) (56,992 ) Total stockholders’ deficit (18,628 ) (16,192 ) TOTAL LIABILITIES AND EQUITY $ 6,854,394 $ 18,955 F-1 2016 2015 Revenue $ - $ 6,500 Cost of revenue - 1,950 Gross profit - 4,550 Operating expenses Compensation - officers - 1,050 General and administrative 37,370 2,644 Total operating expenses 37,370 3,694 Income (Loss) from operations (37,370 ) 856 Non-operating expenses Financial expense 181 - Total non-operating expenses, net 181 - Income (loss) before income tax (37,551 ) 856 Income tax provision - - Net income (loss) $ (37,551 ) $ 856 Basic weighted average shares outstanding 9,030,000 5,500,000 Diluted weighted average shares outstanding 9,677,157 5,500,000 Basic net income (loss) per share $ (0 ) $ 0 Diluted net income (loss) per share $ (0 ) $ 0 F-2 2016 2015 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (37,551 ) $ 856 Depreciation 189 316 Changes in assets and liabilities: Accounts receivable - (6,500 ) Prepaid expenses - (2,000 ) Accounts payable and accrued liabilities (4,538 ) (7,915 ) Accounts payable - related party - 3,000 Net cash used in operating activities (41,900 ) (12,243 ) CASH FLOWS FROM INVESTING ACTIVITIES: Net cash provided by (used in) investing activities - - CASH FLOWS FROM FINANCING ACTIVITIES: Increase in paid in capital 11,645 - Proceeds from convertible note 6,869,818 - Net cash provided by financing activities 6,881,462 - NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 6,839,562 (12,243 ) CASH AND EQUIVALENTS, BEGINNING OF PERIOD 8,165 13,581 CASH AND EQUIVALENTS, END OF PERIOD $ 6,847,727 $ 1,338 Supplemental cash flow data: Income tax paid $ - $ - Interest paid $ - $ - Supplemental Disclosure of Non-Cash Financing Activities Liabilities assumed by shareholders $ 23,470 - F-3The accompanying notes are an integral part of these financial statements.F-4THE CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS – Unaudited Interim Financial InformationaccompanyingCompany’s unaudited interimconsolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for. The consolidated financial statements include the financial statements of the Company and its subsidiary. All significant inter-company transactions and balances have been eliminated in consolidation.withfor the three-month periods ended December 31, 2016 and 2015 have been prepared without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”(the “SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the. Certain information and footnotes required byfootnote disclosures, which are normally included in consolidated financial statements prepared in accordance with U.S. GAAP for completehave not been included. The interim consolidated financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These unaudited interim financial statementsinformation should be read in conjunction with the financial statements ofFinancial Statements and the Companynotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 20152016, previously filed with the SEC.notes thereto contained in the information as partrecurring adjustments) necessary to present a fair statement of the Company’s Registration Statement on Form S-1, which was filed withinterim consolidated financial position as of December 31, 2016, its interim consolidated results of operations and cash flows for the Securitiesthree-month periods ended December 31, 2016 and Exchange Commission on March 31, 2016.companyCompanyInception (Decemberits inception on December 24, 2013)2013 have been considered as part of the Company’s development stage activities.has elected to early adoptadopted Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the companyCompany to remove the inception to date information and all references to the development stage.F-5(ii)Allowance for doubtful accounts:Management’sestimate of the allowance for doubtful accounts is based on historical sales, historical loss levels, and an analysis of the collectability of individual accounts;and general economic conditions that may affect a client’s ability to pay. The Company evaluated the key factors and assumptions used to develop the allowance in determining that it is reasonable in relation to the financial statements taken as a whole.(iii)factorsfactors; 1Level Level Level Level 3F-6arm's-lengtharm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-lengtharm’s-length transactions unless such representations can be substantiated.Propertyrecordedstated at cost.cost, net of accumulated depreciation and impairment losses, if any. Expenditures for major additions and betterments are capitalized. Maintenancemaintenance and repairs are charged to operationsexpensed as incurred. Depreciationincurred; while additions, renewals and improvements are capitalized. When property and equipment are retired or otherwise disposed of, office equipment is computed by the double declining method (200%) over the assets estimated useful life of five (5) years for computer equipment and seven (7) years for office furniture. Upon sale or retirement of office equipment, the related cost and accumulated depreciation areis removed from the respective accounts, and any gain or loss is reflectedincluded in statementsoperations. Depreciation of operations.Building and workshops 20 years Computer and office equipment 5 years Office furniture 7 years Decoration and renovation 10 years Machinery 10 years Autos 5 years F-7Codification.Codification. Paragraph 740-10-25-13 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Underparagraph 740-10-25-13,, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.F-8June 30,December 31, 2016 and 2015.Earnings Per Share is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. Earnings per share ("EPS")pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16 Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period.Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.Pursuant to ASC Paragraphs 260-10-45-45-21 through 260-10-45-45-23Diluted EPS shall be based on the most advantageous conversion rate or exercise price from the standpoint of the security holder. The dilutive effect of outstanding call options andwarrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application ofapplying the treasury stock method unlessfor the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied.Equivalents ofoutstanding unvested restricted stock, options and warrants, include non-vested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions (see paragraph 260–10–55–23). Anti-dilutive contracts, such as purchased put options and purchased call options, shall be excluded from diluted EPS.the if-converted method for the outstanding convertible instruments. Under the treasury stock method: a. Exercise ofmethod, options and warrants shallare assumed to be assumedexercised at the beginning of the period (or at the time of issuance, if later) and common shares shall be assumed to be issued. b. The proceeds from exercise shall be assumed to beas if funds obtained thereby were used to purchase common stock at the average market price during the period. (See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) c. The incremental shares (the difference betweenUnder the number of sharesif-converted method, outstanding convertible instruments are assumed issued andto be converted into common stock at the number of shares assumed purchased) shall be included in the denominatorbeginning of the period (or at the time of issuance, if later).EPS computation.There were no potentially debt or equity instruments issued and outstanding at any time duringearnings per share for the nine-month periodsthree months ended June 30,December 31, 2016 and 20152015: 2016 2015 Net income (loss) $ (37,551 ) $ 856 Weighted average shares outstanding - basic 9,030,000 5,500,000 Effect of dilutive securities: Convertible notes 647,157 - Weighted average shares outstanding – diluted 9,677,157 5,500,000 Earnings (loss) per share – basic $ (0.00 ) $ 0.00 Earnings (loss) per share – diluted $ (0.00 ) $ 0.00 Codification.F-9Subsequent Eventsfollowsdoes not anticipate that this adoption will have a significant impact on its consolidated financial position, results of operations, or cash flows.Section 855-10-50ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods within that reporting period. In March 2016, the FASB Accounting Standards Codification forissued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue versus Net). In April 2016, the disclosureFASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing. In May 2016, the FASB issued ASU 2016-11, Revenue from Contracts with Customers (Topic 606) and Derivatives and Hedging (Topic 815) - Rescission of subsequent events. SEC Guidance Because of ASU 2014-09 and 2014-16, and ASU 2016-12, Revenue from Contracts with Customers (Topic 606) - Narrow Scope Improvements and Practical Expedients. These ASUs clarify the implementation guidance on a few narrow areas and adds some practical expedients to the guidance Topic 606. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.Recently Issued Accounting PronouncementsManagement does not believeanticipate that any recently issued, but not yet effective accounting pronouncements, if adopted,this adoption will have a material effectsignificant impact on its consolidated financial position, results of operations, or cash flows.accompanyingFASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which includes amendments to accounting for income taxes at settlement, forfeitures, and net settlements to cover withholding taxes. The amendments in ASU 2016-09 are effective for public companies for fiscal years beginning after December 31, 2016, and interim periods within those annual periods. Early adoption is permitted but requires all elements of the amendments to be adopted at once rather than individually. The Company does not anticipate that this adoption will have a significant impact on its consolidated financial statements.business.June 30,December 31, 2016, working capital deficit of $18,628 and net loss of $37,551 for the three months ended December 31, 2016, which raise substantial doubt about the Company’s ability to continue as a going concern.The Company is attempting to commence operations and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support the Company’s daily operations. June 30,December 31, 2016 and September 30, 2015 consisted of the following: Computer equipment 5 $ - $ 3,089 Less accumulated depreciation - (1,556 ) Computer equipment, net - 1,533 Office furniture 7 - 1,289 Less accumulated depreciation - (564 ) Office furniture, net - 725 Total property and equipment, net $ - $ 2,258 nine-month periodsthree months ended June 30,December 31, 2016 and 2015 was $947$189 and $543,$316, respectively.F-10nine-month periodsthree months ended June 30,December 31, 2016 and 2015 were as follows:* - During the nine-month period ended June 30, 2016, $5,400 (June 30, 2015: $6,150) of these related party consulting services was recognized in cost of revenues and $3,600 (June 30, 2015: $2,850) in officers’ compensation within operating expenses. President, Chief Executive Officer $ - $ 1,500 Chief Financial Officer, Secretary and Treasurer - 1,500 $ - * $ 3,000 From time to time, the President, CEO and significant stockholder of the Company advances funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand. June 30, 2016 and 2015, the advance balance was $405 and $Nil respectively.As of June 30,December 31, 2016 and September 30, 20152016 the Company owed its directors and officers $24,405$0 and $15,000$27,405 respectively. These amounts represent unpaid consulting feescash advances asa 6% annual interest rate (the “Note”). The Note will mature on the date that is twenty-four months from the original issue date, and any outstanding principal and interest on the Note may be converted at any time prior to maturity at the lender’s option at a conversion price of $1.50 per share of the endCompany’s common stock. There is no beneficial conversion feature for the Note due to the conversion price being higher than the stock price at the time of the reporting period.issuance of the Note.67 – Stockholders’ EquityauthorizedAuthorizedstockStockat par to its directors at par value for an aggregate purchase price of $5,500 in cash.interim periodfiscal year ended JuneSeptember 30, 2016, the Company sold 3,530,000 common shares at $0.01 per share for total proceeds of $35,300.F-11 Net deferred tax assets – Non-current: Expected income tax benefit from NOL carry-forwards $ 23,398 $ 8,549 Less valuation allowance (23,398 ) (8,549 ) Deferred tax assets, net of valuation allowance $ - $ - Federal statutory income tax expense (benefit) rate (15.00 )% 15.00 % Effect of State income tax expense (benefit) rate to federal tax 1.33 % - % State statutory income tax (benefit) rate (8.84 )% - % Change in valuation allowance on net operating loss carry-forwards 22.51 % (15.00 )% Effective income tax rate 0.00 % 0.00 % 79 – Concentrationsnine-month periodsthree months ended June 30,December 31, 2016 and 2015.Company A - % 46.15 % Company B - % 53.85 % - % 100.00 % 810 – Subsequent EventsIn accordance withwe have analyzed our operationsfor the disclosure of subsequent events. In January 2017, the Company's subsidiary paid $3 million to June 30, 2016 totwo nonaffiliated companies for mining equipment purchase and startup capital for the date of these financial statement were issued, and have determined that we do not have any material subsequent events to disclose in these financial statements other than the events discussed above.F-12ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.Forward-Looking Statements and Associated Risks.Management’s Discussion and Analysis of Financial Condition and Results of Operations. to those statements included elsewhereand with the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterlyour most recent Annual Report on Form 10-Q.10-K. This Quarterly Report on Form 10-Qdiscussion and analysis contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements contained in the MD&A are forward-looking statements that involve risks, uncertainties and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results.assumptions. Our actual results could differ materially from the results contemplateddescribed in or implied by these forward-looking statements due toas a numberresult of various factors, including those discussed in other sections of this Quarterlyreport and those discussed in our most recent Annual Report on Form 10-Q.Our BusinessOverview“we”, “us” or “our”“Fuse Enterprises” or “We”) is a digital marketing company. We generate our revenue by delivering complete marketing solutions to small and medium size businesses. Whether our client needs to develop a social media presence strategy, create a new website, or employ innovative online marketing techniques, we can provide services from acrosswas incorporated under the digital marketing spectrum.development stage company as defined by section 915-10-20full service online marketing agency. On December 6, 2016, the Company incorporated Fuse Processing, Inc, (“Fuse Processing”) in the State of California. Fuse Processing is seeking business opportunities in the mining business and is currently investigating potential mining targets in Asia and North America. Fuse Enterprises is the sole shareholder of Fuse Processing. On November 28, 2016, 5,500,000 shares of the FASB Accounting Standards Codification. Although the Company has recognized nominal amountscommon stock of revenue, it is still devoting substantially all of its efforts on establishing the business. All losses accumulated since Inception (December 24, 2013) have been considered as partFuse Enterprises, representing 60.91% of the Company’s development stage activities.June 2014,connection with the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): EliminationStock Sales, Messrs. Mikhalkov and Kriukov released the Company from certain liabilities and obligations arising out of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation.The amendments in this Update remove the definition of a development stage entity from the Master Glossarytheir service as directors and officers of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Fuse Enterprises has elected to early adopt Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the company to remove the inception to date information and all references to development stage.Our current services include:Marketing.We offer a wide variety of online marketing service to meet our clients’ needs. Our services include Search Engine Optimization (SEO), Pay-Per-Click (PPC) management, affiliate marketing, content creation and marketing, e-mail marketing, Conversion Rate Optimization (CRO) and social media marketing.16Strategy.The foundation of an effective online strategy is based upon an intimate understanding of the offering, the business and its online objectives. Strategy is the starting point of any project. We work with clients to set objectives for each marketing campaign. Using analytics, each campaign is analyzed for its effectiveness. Our marketing strategy planning services include digital review, research & analysis, and campaign planning.Social Media Services.We enable our customers to create an online presence, which builds their customer base. This enables our clients to keep in touch with their customers, supporters, and other businesses using popular social networks such as Facebook, Twitter, and Google+. We attract freelance researchers, bloggers and writers to find relevant information about our clients and writes posts, tweets, and comments, which can be posted on relevant social networks. This is used to increase company visibility and create social media interactions with their potential customers. These activities can also help improve our customers’ search engine rankings. Our social media services include strategy development, research & auditing, social media guidelines, social asset creation, brand monitoring, social advertising, responsive support and reporting & analysis.Website Design. We offer custom website design services for websites targeted at traditional desktop and laptop users, as well as sites optimized for consumption on mobile devices. Our management and our freelance website design team is composed of experienced web design and creation professionals and graphic designers who create customized websites tailored to the needs and goals of our customers.three-month periodsthree months ended MarchDecember 31, 2016 and 2015.services for the three-month periodsthree months ended June 30,December 31, 2016 and 2015 was $3,600$0 and $8,250$6,500, respectively. Our cost of revenues for the three-month periodthree months ended June 30,December 31, 2016 and 2015 was $1,500 (June 30, 2015: $2,249)$0 and $1,950, respectively, resulting in a gross profit of $2,100 (June 30, 2015: $6,001). three- month periodsthree months ended June 30,December 31, 2016 and 2015 are outlined in the table below: Compensation - officers $ - $ 1,050 $ (1,050 ) General and administrative 37,370 2,644 34,726 $ 37,370 $ 3,694 $ 33,676 June 30,December 31, 2016, compared to the same period in our fiscalthree months ended December 31, 2015, was due to an increase in our corporate activities,salary expenses of $10,833, an increase in travel expenses related to implementation of our business plan and$9,335, an increase in consulting fees associated with DTC eligibility of our common stock. General$5,544, and administrativean increase in accounting and auditing expenses of $17,780 incurred during$5,750, as a result of the three months ended June 30, 2016 consistedCompany becoming more aggressive in seeking business opportunities for its development and expansion. filing fees of $635 (June 30, 2015: $1,555), accounting fees of $2,065 (June 30, 2015: $0), consulting fees of $8,500 (June 30, 2015: $0), depreciation expense of $315 (June 30, 2015: $315), office expenses of $540 (June 30, 2015: $174), office rent of $608 (June 30, 2015: $598), travel expenses of $4,570 (June 30, 2015: $0) and bank charges of $547 (June 30, 2015: $0).17three-month periodsthree months ended June 30,December 31, 2016 and 2015 were as follows: * - During the three-month period ended June 30, 2016, $1,500 (June 30, 2015: $1,950) of these related party consulting services was recognized in cost of revenues and $1,500 (June 30, 2015: $1,050) in officers’ compensation within operating expenses.The President of the Company provides management consulting services to the Company. On July 1, 2014, we have entered into consulting agreements with Aleksandr Kriukov, our President, and Pavel Mikhalkov, our Chief Financial Officer. These agreements had a one year term and were renewed on July 1, 2015. The term of the renewed agreements is indefinite. Fuse Enterprises can terminate these agreements by mutual written consent of all parties to the agreements with sixty (60) days advance written notice. During the three-month period ended June 30, 2016 the Company incurred $1,500 (June 30, 2015: $1,500) in management consulting services with the President of the Company. The Chief Financial Officer of the Company provides consulting services to the Company. During the three-month period ended June 30, 2016 consulting services of $1,500 (June 30, 2015: $1,500) were charged to operations.A portion of consulting services for the three-month periods ended June 30, 2016 and 2015 directly related to sales provided by the President and Chief Financial Officer of the Company totaling $1,500 (June 30, 2015: $1,950) was recognized in cost of revenues and $1,500 (June 30, 2015: $1,050) in officer’s compensation within operating expenses.Results of operations for the nine-month periods ended June 30, 2016 and 2015.RevenueOur gross revenue from consulting services for the nine-month periods ended June 30, 2016 and 2015 was $17,925 and $23,450 respectively. Our cost of revenues for the nine-month periods ended June 30, 2016 was $5,526 (June 30, 2015: $6,733) resulting in a gross profit of $12,399 (June 30, 2015: $16,717).Costs and ExpensesThe major components of our expenses for the nine-month periods ended June 30, 2016 and 2015 are outlined in the table below:18 President, Chief Executive Officer $ - $ 1,500 Chief Financial Officer, Secretary and Treasurer - 1,500 $ - * $ 3,000 The increase in our operating costs for the nine months ended June 30, 2016, compared to the same period in our fiscal 2015, was due to an increase in our corporate activities, an increase in expenses related to implementation of our business plan, an increase in professional fees and an increase in consulting fees associated with DTC eligibility of our common stock. General and administrative expenses of $28,362 incurred during the nine months ended June 30, 2016 consisted of filing fees of $3,725 (June 30, 2015: $1,960), accounting fees of $6,065 (June 30, 2015: $3,500), consulting fees of $8,500 (June 30, 2015: $0), depreciation expense of $946 (June 30, 2015: $543), office expenses of $1,271 (June 30, 2015: $929), office rent of $1,803 (June 30, 2015: $1,105), travel expenses of $5,301 (June 30, 2015: $367) and bank charges of $751 (June 30, 2015: $63). Legal expenses were $0 (June 30, 2015: $2,000)Consulting services provided by the President, Chief Executive Officer, Secretary and Treasurer and Chief Financial Officer for the nine-month periods ended June 30, 2016 and 2015 were as follows:* - During the six-month period ended June 30, 2016, $5,400 (June 30, 2015: $6,150) of these related party consulting services was recognized in cost of revenues and $3,600 (June 30, 2015: $2,850) in officers’ compensation within operating expenses.From time to time, the President, CEO and significant stockholder of the Company advances funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand. June 30, 2016 and 2015, the advance balance was $405 and $Nil respectively.As of June 30,December 31, 2016 and September 30, 20152016, the Company owed its directors and officers $24,405$0 and $15,000$27,405 respectively. These amounts represent unpaid consulting fees and cash advances as of the end of the reporting period. As of As of December 31, September 30, 2016 2016 Total current assets $ 6,854,394 $ 16,697 Total current liabilities (6,873,022 ) (35,147 ) Working capital (deficiency) $ (18,628 ) $ (18,450 ) operations.Duringoperations. During the nine-month periodsthree months ended June 30,December 31, 2016 and 2015, the Company reported net loss from operations of $30,344$37,551 and $3,665,net income from operations of $856, respectively.19To date we financed our operations by cash generated from sales of our services and shares of our common stock. We were able to sustain our operations by increasing the number of our clients. We have sold 5,500,000 shares of common stock at $0.001 per share to our Directors for total proceeds of $5,500 during the period from inception to March 31, 2016.During the third quarter of our fiscal 2016 ended June 30, 2016, the Company’s Registration Statement on the Form S-1 filed with the Securities and Exchange Commission was declared effective. The Company completed the sale of 3,530,000 shares of common stock at $0.01 per share for total proceeds of $35,300 pursuant to this Registration Statement. Net cash used in operating activities $ (41,900 ) $ (12,243 ) Net cash used in investing activities - - Net cash provided by financing activities 6,881,462 - Net increase (decrease) in cash $ 6,839,562 $ (12,243 ) $17,925$0 and $23,450$6,500 during the nine-month periodsthree months ended June 30,December 31, 2016 and 2015, respectively. In addition to cash received from marketing and web development services, duringDuring the periodthree months ended June 30,December 31, 2016, and 2015, we received proceeds of $35,300 (June 30, 2015: $5,500)$6,869,818 from sale of our common stock. We had no other sources of cash inflow during the reporting periods. provided by (used by)used in operating activities as of June 30, 2016 of $(20,996) (June 30, 2015: $8,292) is a net result of cash generated from sales of our marketing and web development services, sales of our common stock and changes in our current assets and liabilities.This portion of our cash flow represents the most significant source of funding for our operations. The major uses of our operating cash include funding general operating expenses (legal and professional expenses, consulting, travel, office expenses and office rent) and cost of revenues.20Cash flows resulting from changes in assets and liabilities for the nine-month period ended June 30, 2016, include an increase of $9,000 (June 30, 2015: $9,000) in the officers’ accrued compensation and decrease in accounts payable and accrued liabilities of $1,004. The decrease in accounts payable reflected the company’s payments to the vendors during the ninethree months ended June 30, 2016.December 31, 2016 and 2015 was $41,900 and $12,243, respectively. The increase in the officers’ accrued compensation isnet cash used in operating activities was mainly due to the consulting fees incurred by the Company during the nine months ended June 30, 2016 and 2015 that remained unpaid as at the end of this period.nine-month periodthree months ended June 30, 2016.During the nine-month period ended June 30, 2015 we used a portion of our cash of $4,378 provided by operating activities for purchasing computerDecember 31, 2016 and office equipment.nine-month periodthree months ended June 30,December 31, 2016, the Company’s Registration Statement on the Form S-1 filed with the Securities and Exchange Commission was declared effective. The Company completed the sale of 3,530,000 shares of common stock at $0.01 per share for totalwe received proceeds of $35,300 pursuant$11,645 through the payment of certain expenses made by our management as capital contributions, and $6,869,818 from issuing a convertible note to this Registration Statement.Duringone of our major shareholders. We did not generate any cash from financing activities during the nine-month periodthree months ended June 30, 2015 the Company sold 5,500,000 shares of common stock at par value to the Company Directors for $5,500 in cash.June 30,December 31, 2016, we did not have any significant off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.OTCBB and OTCQB quotation16Our common stock has been quoted on the OTC Bulletin Board and in OTC Link since June 22, 2016 under the symbol “FSNT”. Subsequent to the nine-month period ended June 30, 2016 the Company filed an application with theOTC Markets Group, Inc.to be quoted on the OTCQB quotation medium. Our application was approved on August 8, 2016 and our common stock has been quoted on the OTC Links under the symbol “FSNT” effective August 9, 2016. We paid a one-time $2,500 application fee and $10,000 annual fees that covers a period from August 1, 2016 to July 31, 2017. To be eligible for trading on the OTCQB marketplace companies are required to:-Meet a minimum bid price test$0.01 and not be subject to bankruptcy or reorganization proceedings. Securities that do not meet the minimum bid price test or that are in bankruptcy will be downgraded to OTC Pink;-Submit an application to OTCQB and pay an application and annual fee;-Submit an OTCQB Annual Certification confirming the Company Profile displayed on otcmarkets.com is current and complete and providing additional information on officers, directors, and controlling shareholders.21Quantitative and Qualitative Disclosures about Market Risk ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.We are a smaller reporting company as defined by Rule 12b-2Evaluation of Disclosure Controls and Procedures Exchange Act and are not required to provideend of the information requiredperiod covered by this report, we conducted an evaluation under this item.ITEM 4. CONTROLS AND PROCEDURES.Evaluation of Disclosure Controls and ProceduresUnder the supervision and with the participation of our management, including our principal executive officerChief Executive Officer and principal financial officer, we have conducted an evaluationChief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosureamended (“Exchange Act”), means controls and other procedures were effective suchof a company that the materialare designed to ensure that information required to be includeddisclosed by the company in our Securities andthe reports it files or submits under the Exchange Commission reportsAct is recorded, processed, summarized and reported, within the time periods specified in SECthe SEC’s rules and forms relatingforms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.particularlyin a timely manner. Due to our small size and the early stage of our business, segregation of duties may not always be possible and may not be economically feasible. We have limited capital resources and have given priority in the use of those resources to our business development efforts. As a result, we have not been able to take steps to improve our internal controls over financial reporting during the periodquarter ended December 31, 2016. However, we continue to evaluate the effectiveness of internal controls and procedures on an on-going basis. As our operations grow and become more complex, we intend to hire additional personnel in financial reporting and other areas. However, there can be no assurance of when, this report was being prepared.Additionally, thereif ever, we will be able to remediate the identified material weaknesses. significant changes in our internal controlscontrol over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended December 31, 2016 that have materially affected, or in other factors that could significantlyare reasonably likely to materially affect, these controls subsequentour internal control over financial reporting.Item 1. evaluation date.ordinary course of business. As we grow and gain prominence in the marketplace we may become party to an increasing number of litigation matters and claims. The outcome of litigation and claims cannot be predicted with certainty, and the resolution of these matters could materially affect our future results of operations, cash flows or financial position. We haveare not identified any significant deficiencies or material weaknesses in our internal controls, and therefore there were no corrective actions taken.PART II – OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS.We were not subjectcurrently a party to any legal proceedings duringproceedings.Item 1A. Item 2. nine-month periods ended June 30, 2016Company entered into a Convertible Promissory Note Purchase Agreement (the “Agreement”) with one of its major shareholders. Under the Agreement, the Company sold a Convertible Promissory Note to the lender with a principal amount of $6,869,818 and 2015,a 6% annual interest rate (the “Note”). The Note will mature on the date that is twenty-four months from the original issue date, andcurrently we are not involved in any pending litigation or legal proceeding.ITEM 1A. RISK FACTORS.We areoutstanding principal and interest on the Note may be converted at any time prior to maturity at the lender’s option at a smaller reporting company as defined by Rule 12b-2conversion price of $1.50 per share of the Securities Exchange ActCompany’s common stock. The Agreement was executed pursuant to an exemption from registration under Regulation S. The Company intends to use the proceeds from the sale of 1934the Note for operating expenses and are not required to provide the information under this item. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.None.ITEM 3. DEFAULTS UPON SENIOR SECURITIES.No senior securities were issued and outstanding during the nine-month periods ended June 30, 2016 and 2015.ITEM 4. MINE SAFETY DISCLOSURES.Not applicable to our Company.ITEM 5. OTHER INFORMATION.None.22ITEM 6. EXHIBITSThe following documents are filed as a part of this report or are incorporated by reference to previous filings, if so indicated:EXHIBITNUMBER DESCRIPTION3.1Item 4. Articles of Incorporation. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on March 24, 2015.Item 5. Item 6. Exhibit No. Description 3.2Bylaws. Incorporated4.2Subscription Agreement. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on March 24, 2015.10.1Management Consultant Agreement (President). Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on March 2, 2016.10.2Management Consultant Agreement (C.F.O.). Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on March 2, 2016.31.1Document **Taxonomy Extension Schema Document ** Taxonomy Extension Calculation Linkbase Document ** Taxonomy Extension Definition Linkbase Document ** Taxonomy Extension Label Linkbase Document ** Taxonomy Extension Presentation Linkbase Document ** * Filed herewith.** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part* filed herewith Date: August 15, 2016 Aleksandr Kriukov Yong ZhangAleksandr KriukovPresident, Chief Executive Officer (Principal(Principal Executive Officer) and Director23In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of Fuse Enterprises Inc. and in the capacities and on the dates indicated.SIGNATURESTITLEDATE/s/ Aleksandr KriukovPresident, C.E.O. and DirectorAugust 15, 2016Aleksandr KriukovBy: Pavel MikhalkovRoy KangTreasurer, Secretary, C.F.O., Principal AccountingRoy KangChief Financial Officer (Principal Financial Officer and DirectorAugust 15, 2016Pavel MikhalkovFebruary 13, 2017 24