10-K/A

Large accelerated filer

Accelerated filer

Non-accelerated filer

☐ (Do not check if a smaller reporting company)

Smaller reporting company

Emerging growth company

0001193125-18-280111.txt : 20180921 0001193125-18-280111.hdr.sgml : 20180921 20180921172208 ACCESSION NUMBER: 0001193125-18-280111 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 68 CONFORMED PERIOD OF REPORT: 20171231 FILED AS OF DATE: 20180921 DATE AS OF CHANGE: 20180921 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Fuse Medical, Inc. CENTRAL INDEX KEY: 0000319016 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MEDICAL, DENTAL & HOSPITAL EQUIPMENT & SUPPLIES [5047] IRS NUMBER: 591224913 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-10093 FILM NUMBER: 181082218 BUSINESS ADDRESS: STREET 1: 1565 NORTH CENTRAL EXPRESSWAY STREET 2: SUITE 220 CITY: RICHARDSON STATE: TX ZIP: 75080 BUSINESS PHONE: 469-862-3030 MAIL ADDRESS: STREET 1: 1565 NORTH CENTRAL EXPRESSWAY STREET 2: SUITE 220 CITY: RICHARDSON STATE: TX ZIP: 75080 FORMER COMPANY: FORMER CONFORMED NAME: GOLF ROUNDS COM INC DATE OF NAME CHANGE: 19991126 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN METALS SERVICE INC DATE OF NAME CHANGE: 19920703 10-K/A 1 d626605d10ka.htm 10-K/A 10-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

Amendment No. 1

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

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

For the Transition Period from to

Commission File Number: 000-10093

FUSE MEDICAL, INC.

(Exact name of registrant as specified in its charter)


Delaware		59-1224913
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1565 North Central Expressway, Suite 220, Richardson, Texas		75080
(Address of principal executive offices)		(Zip Code)

(469) 862-3030

Registrant’s telephone number, including area code

Securities registered pursuant to section 12(b) of the Act:


Title of each class		Name of each exchange on which registered
None		None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.01 par value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “small reporting company” Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has selected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $2,205,059.

Indicate the number of shares outstanding of each of the registrant’s classes of Common Stock, as of the latest practicable date: As of March 26, 2018, 65,890,808 shares of the registrant’s Common Stock were outstanding.

Explanatory Note

This Amendment No. 1 on Form 10-K/A (“Amendment No. 1”) to the Annual Report (“Annual Report”) on Form 10-K for the fiscal year ended December 31, 2017 (the “Original Filing”) of Fuse Medical, Inc. (“Fuse”), is being filed solely for the purpose of amending and restating in its entirety the following Items (together, the “Amended Items”);

•

Part II, Item 8 to amend the Company’s disclosure of Fair Value Measurements with respect to the Company’s CPM Acquisition Earn-Out Liability.

•

Part II, Item 9A to amend the conclusions regarding the adequacy of Fuse’s disclosure controls and procedures as of December 31, 2017;

•

Part IV, Item 15 to amend the Company’s exhibits and financial statements schedules to reflect updated disclosure of Fair Value Measurements with respect to the Company’s CPM Acquisition Earn-Out Liability.

In accordance with Rule 12b-15 under the U.S. Securities Exchange Act of 1934 (the “Exchange Act”), the Amended Items of the Original Filing have been amended and restated in their entirety. This Amendment No. 1 does not amend or otherwise update any information in the Original Filing. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Filing. Capitalized terms used in this explanatory note not otherwise defined herein have the meaning given to them in the Original Filing.

INDEX


PART II
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	4
ITEM 9A.	CONTROLS AND PROCEDURES	4

PART IV

ITEM 15.	EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES	6
SIGNATURES		9

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report contains forward-looking statements, including, without limitation, in the sections captioned “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere. Any and all statements contained in this Annual Report that are not statements of historical fact may be deemed forward-looking statements. Terms such as “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “pro-forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future,” and terms of similar import (including the negative of any of the foregoing) may be intended to identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this Annual Report may include, without limitation, statements regarding (i) the plans and objectives of management for future operations; (ii) a projection of income (including income/loss), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items; (iii) our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”); (iv) our beliefs regarding potential clinical and other health benefits of our medical products; and (v) the assumptions underlying or relating to any statement described in clauses (i), (ii), (iii), or (iv) above.

Forward-looking statements are not meant to predict or guarantee actual results, performance, events, or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates, and assumptions and are subject to a number of risks, uncertainties, and other influences, many of which we have no control over. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation: (a) our inability to obtain adequate financing; (b) the significant length of time and resources associated with the development of our products and related insufficient cash flows and resulting illiquidity; (c) our inability to expand our business; (d) significant government regulation of our business and the healthcare industry; (e) lack of product diversification; (f) existing or increased competition; (g) results of arbitration and litigation; (h) stock volatility and illiquidity; and (i) our failure to implement our business plans or strategies. Descriptions of some of the risks and uncertainties that could cause our actual results to differ materially from those described by the forward-looking statements in this Annual Report appear in “Item 1A, Risk Factors” and elsewhere in this Annual Report.

Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors. We disclaim any obligation to update the forward-looking statements contained in this Annual Report to reflect any new information, future events or circumstances, or otherwise.

Readers should read this Annual Report in conjunction with (1) the discussion under the caption “Risk Factors,” (2) our financial statements and the related notes therein included in this Annual Report, and (3) other documents which we may file from time to time with the SEC.

PART II

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The requirements of this Item can be found in our Financial Statements beginning on page F-1 herein.

ITEM 9A.

CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Starting in September 2017, under the supervision of our Board and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we began to analyze and assess our internal controls over financial reporting on the basis of the Committee of Sponsoring Organizations of the Treadway Commission on Internal Control – Integrated Framework (“COSO Framework”), which is a subset of our disclosure controls and procedures, to provide the evaluation required by Section 13a-15(b) of the Securities Exchange Act of 1934, as amended. Our analysis and assessment of the internal controls over financial reporting has followed the below timeline and milestones;


Phase		Performed or anticipated to be performed
• Phase I – Risk Assessment and Scoping		Fourth Quarter 2017
• Phase II – Documentation of Key Controls and Processes		Fourth Quarter 2017
• Phase III – Gap Assessment and Remediation		First Quarter 2018
• Phase IV – Walkthroughs, Testing, and Remediation		On-going 2018
• Phase V – Assessment Complete		Fourth Quarter 2018

¹First round of key control walkthroughs and first round of testing completed as of June 30, 2018. Second round of key control testing scheduled for Fourth Quarter 2018.

²Upon second round of key control testing during the fourth quarter 2018, assessment of internal controls over financial reporting will be complete.

Until our assessment of internal controls over financial reporting is completed during the fourth quarter of 2018, our Chief Executive Officer and Chief Financial Officer cannot yet conclude whether our disclosure controls and procedures are effective. As a result, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are not effective as of December 31, 2017.

Because our Chief Executive Officer and Chief Financial Officer were unable to complete their full assessment regarding the establishment and maintenance of adequate internal controls over our financial reporting using the criteria set forth by COSO Framework, we are unable to conclude that internal controls over financial reporting were effective as of December 31, 2017. As a result, we must conclude that our internal controls over financial reporting were not effective as of that date.

Our Board, Chief Executive Officer, and Chief Financial Officer have engaged an independent third-party to assist in establishing a sustainable framework and processes to ensure adequate internal controls over financial reporting. We anticipate that our secondary testing under the COSO Framework will be completed by October 31, 2018.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management has not yet conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control – COSO Framework. Our management cannot conclude our internal control over financial reporting is effective because this assessment has not been completed. As a result, our management has concluded that our internal control over financial reporting was not effective as of December 31, 2017 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

Changes in Internal Control over Financial Reporting

Effective January 1, 2017, the Company relocated its finance and accounting operations from an off-site location in Wellington, Florida, to the CPM Medical Consultants, LLC headquarters located in Richardson, Texas. Prior to that time, the Chief Financial Officer was the sole finance and accounting employee of the Company.

Prior to January 1, 2017, the Company had limited internal controls and procedures over financial reporting. The Company’s Chief Financial Officer initiated all financial transactions, including banking, and payroll processing without evidence of review, approval or oversite. The Company’s books and records did not have monthly closings, reconciliations, or appropriate analysis.

Effective with the relocation of the Company’s finance and accounting operations, the Company’s books and records became subject to the standard operating procedures and internal controls and procedures over financial reporting, including, but not limited to, segregation of duties, banking dual controls, monthly accounting closes and reconciliations with appropriate review and approvals.

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES.

(a)	Documents filed as part of the report.


(1)		Financial Statements. See Index to Consolidated Financial Statements, which appears on page F-1 hereof. The financial statements listed in the accompanying Index to Consolidated Financial Statements are filed herewith in response to this Item.

(2)		Financial Statements Schedules. All schedules are omitted because they are not applicable or because the required information is contained in the consolidated financial statements or notes included in this report.

(3)		Exhibits. The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this report.

(b)

Exhibits.


Exhibit No.		Description

2.1		Agreement and Plan of Merger, dated as of December 18, 2013, by and among GolfRounds.com, Inc. (now known as Fuse Medical, Inc.), Project Fuse LLC, Fuse Medical, LLC and D. Alan Meeker, solely in his capacity as the representative of the Fuse members, as amended by First Amendment to Agreement and Plan of Merger, dated as of March 3, 2014 and Second Amendment to Agreement and Plan of Merger, dated as of April 11, 2014 (filed as exhibit 2.1 to the Form 8-K/A filed on August 29, 2014, and incorporated herein by reference).

2.2		Purchase Agreement by and between Fuse Medical, Inc. and NC 143 Family Holdings, LP dated December 15, 2017 (filed as Exhibit 2.1 to the Company’s Form 8-K, filed on December 19, 2017, and incorporated herein by reference).

2.3		Stock Purchase Agreement, dated as of December 19, 2016, by and among the Company, Reeg Medical Industries, Inc. and NC 143 Family Holdings, LP (filed as Exhibit 10.1 to our Current Report on Form 8-k, filed on December 23, 2016, and incorporated herein by reference).

3.1		Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to our Current Report on Form 8-K, filed on September 15, 2014, and incorporated herein by reference).

3.2		Amendment to the Amended and Restated Certificate of Incorporation of the Company (filed as Appendix A to our Information Statement, filed on December 4, 2015, and incorporated herein by reference).

3.3		Bylaws (filed as Exhibit 3.2 to our Current Report on Form 8-K, filed on May 29, 2014, and incorporated herein by reference).

3.4		Certificate of Merger, as filed with the Secretary of State of the State of Delaware on May 28, 2014 (filed as Exhibit 3.3 to the Form 8-K filed on May 29, 2014).

3.5		Amendment No. 1 to the Bylaws (filed as Exhibit 3.1 to our Current Report on Form 8-K, filed on December 23, 2016, and incorporated herein by reference).

4.1		Specimen Stock Certificate (Filed as Exhibit 4.1 to the Company’s original Form 10-K, filed on June 6, 2018, and incorporated herein by reference) .

4.2		Form of Registration Rights Agreement, dated as of May 28, 2014, by and between the Company and certain stockholders of the Company (filed as Exhibit 10.1 to the Form 8-K/A filed August 29, 2014).

4.3		Form of Lock-Up Agreement, dated as of May 28, 2014, by and between the Company and certain stockholders of the Company (filed as Exhibit 10.2 to the Form 8-K filed May 29, 2014).

4.4		Amended and Restated Promissory Note dated October 19, 2016 payable to NC 143 Family Holdings, LP from the Company in the amount of $50,000.00 (filed as Exhibit 10.31 to the Company’s Form 10-K filed March 20, 2017 and incorporated herein by reference).

4.5		Amended and Restated Promissory Note dated October 19, 2016 payable to Reeg Medical Industries, Inc. from the Company in the amount of $50,000.00 (filed as Exhibit 10.32 to the Company’s Form 10-K filed March 20, 2017 and incorporated herein by reference).


Exhibit No.		Description

4.6		Promissory Note dated October 19, 2016 payable to NC 143 Family Holdings, LP from the Company in the amount of $50,000.00 (filed as Exhibit 10.33 to the Company’s Form 10-K filed March 20, 2017 and incorporated herein by reference).

4.7		Amended and Restated Registration Rights Agreement, dated as of December 19, 2016 by and among the Company, Reeg Medical Industries, Inc. and NC 143 Family Holdings, LP (filed as Exhibit 10.2 to our Current Report on Form 8-K, filed on December 23, 2016, and incorporated herein by reference).

4.8		Voting Rights Agreement, dated December 19, 2016 by and among our Company, Christopher Pratt, Robert Donehew, RMI, and NC 143 (filed as Exhibit 4.1 to our Current Report on Form 8-K filed on December 23, 2016, and incorporate herein by reference).

10.1		Indemnification Agreement, dated as of December 19, 2016, by and between the Company and Mark W. Brooks (filed as Exhibit 10.3 to our Current Report on Form 8-K, filed on December 23, 2016, and incorporated herein by reference).

10.2		Indemnification Agreement, dated as of December 19, 2016, by and between the Company and Christopher C. Reeg (filed as Exhibit 10.4 to our Current Report on Form 8-K, filed on December 23, 2016, and incorporated herein by reference).

10.3		Settlement Agreement, General Release and Covenant Not to Sue, dated to be effective March 31, 2017 (the Settlement Agreement”) by and between Fuse Medical, Inc. and David A. Hexter (filed as Exhibit 10.1 to the Company’s Form 8-K filed April 6, 2017).

10.4		Form Stocking Distribution Agreement, dated as of November 1, 2017, by and between CPM Medical Consultants, LLC and MedUSA Group, LLC. (Filed as Exhibit 10.4 to the Company’s original Form 10-K, filed on April 6, 2018, and incorporated herein by reference).

10.5		Form Commission Agreement, dated as of November 1, 2017, by and between CPM Medical Consultants, LLC and Texas Overlord, LLC. (Filed as Exhibit 10.5 to the Company’s original Form 10-K, filed on April 6, 2018, and incorporated herein by reference).

10.6		Form Stocking Distribution Agreement, dated as of November 1, 2017, by and between CPM Medical Consultants, LLC and N.B.M.J. Inc. (Filed as Exhibit 10.6 to the Company’s original Form 10-K, filed on April 6, 2018, and incorporated herein by reference).

10.7		Form Stocking Distribution Agreement, dated as of November 1, 2017, by and between CPM Medical Consultants, LLC and Maxim Surgical, LLC. (Filed as Exhibit 10.7 to the Company’s original Form 10-K, filed on April 6, 2018, and incorporated herein by reference).

10.8		Form Stocking Distribution Agreement, dated as of November 1, 2017, by and between CPM Medical Consultants, LLC and Sintu, LLC. (Filed as Exhibit 10.8 to the Company’s original Form 10-K, filed on April 6, 2018, and incorporated herein by reference).

10.9		Form Stocking Distribution Agreement, dated as of November 1, 2017, by and between Maxim Surgical, LLC and CPM Medical Consultants, LLC. (Filed as Exhibit 10.9 to the Company’s original Form 10-K, filed on April 6, 2018, and incorporated herein by reference).

10.10		Form Commission Agreement, dated as of March 1, 2018, by and between CPM Medical Consultants, LLC and Neurospine Consultants, LLC. (Filed as Exhibit 10.10 to the Company’s original Form 10-K, filed on April 6, 2018, and incorporated herein by reference).

10.11		Form Commission Agreement, dated as of March 1, 2018, by and between CPM Medical Consultants, LLC and 1012 Jarm, LLC. (Filed as Exhibit 10.11 to the Company’s original Form 10-K, filed on April 6, 2018, and incorporated herein by reference).

10.12		Form Commission Agreement, dated as of March 1, 2018, by and between CPM Medical Consultants, LLC and Max Spine, LLC. (Filed as Exhibit 10.12 to the Company’s original Form 10-K, filed on April 6, 2018, and incorporated herein by reference).

10.13		Private Label Supply Agreement, dated November 1, 2016, by and between Tyber Medical, LLC and CPM Medical Consultants, LLC. (Filed as Exhibit 10.13 to the Company’s original Form 10-K, filed on April 6, 2018, and incorporated herein by reference).

10.14		Commercial Property Lease Agreement dated January 1, 2013 by and between CPM Medical Consultants, LLC and 1565 North Central Expressway, LP. (Filed as Exhibit 10.14 to the Company’s original Form 10-K, filed on April 6, 2018, and incorporated herein by reference).

10.15		Commercial Property Lease Agreement dated July 14, 2017 by and between Fuse Medical, Inc. and 1565 North Central Expressway, LP (filed as Exhibit 10.1 to the Company’s Form 8-K, filed on July 19, 2017, and incorporated herein by reference).

10.16		Assignment of Sublease and Consent, dated July 17, 2017, by and between (i) PBIII-SOP, LP, (ii) PHILLIP GALYEN, PC, d/b/a Bailey & Galyen, (iii) Fuse Medical, Inc., and (iv) LawConnect, Inc. d/b/a GetLegal.com (filed as Exhibit 10.2 to the Company’s Form 8-K, filed on July 19, 2017, and incorporated herein by reference).


Exhibit No.		Description

10.17		Sublease Agreement dated September 1, 2015, by and between Fuse Medical, Inc. and PHILLIP GALYEN, PC, d/b/a Bailey & Galyen (filed as Exhibit 10.3 to the Company’s Form 8-K, filed on July 19, 2017, and incorporated herein by reference).

10.18		Professional Employer Organization Client Service Agreement, dated January 1, 2017 by and between the Company and AmBio Staffing, LLC (filed as Exhibit 10.50 to the Company’s Form 10-K filed on March 20, 2017 and incorporated herein by reference).

10.19		Professional Employer Organization Client Service Agreement, dated January 1, 2015 by and between CPM Medical Consultants, LLC and AmBio Staffing, LLC. (Filed as Exhibit 10.19 to the Company’s original Form 10-K, filed on April 6, 2018, and incorporated herein by reference).

10.20		2017 Equity Incentive Plan of Fuse Medical, Inc. dated April 5, 2017 (filed as Exhibit 99.2 to the Company’s Form 8-K filed April 6, 2017).

10.21		Amendment Number 1 to the 2017 Equity Incentive Plan of Fuse Medical, Inc. dated September 21, 2017 (filed as Exhibit 4.1 to the Company’s Form 8-K/A filed November 6, 2017, and incorporated herein by reference.)

10.22		Amendment Number 2 to the 2017 Equity Incentive Plan of Fuse Medical, Inc. dated October 4, 2017 (filed as Exhibit 4.2 to the Company’s Form 8-K/A filed November 6, 2017, and incorporated herein by reference.)

10.23		Amendment Number 3 to the 2017 Equity Incentive Plan of Fuse Medical Inc. dated February 15, 2018 (filed as Exhibit 4.1 to the Company’s Form 8-K filed February 23, 2018, and incorporated herein by reference).

10.24		Form of Restricted Stock Award for Board Compensation of Fuse Medical, Inc. (filed as Exhibit 10.1 to the Company’s Form 8-K filed October 10, 2017, and incorporated herein by reference).

10.25		Form of Restricted Stock Award for Special Board Compensation of Fuse Medical, Inc. (filed as Exhibit 10.2 to the Company’s Form 8-K filed October 10, 2017, and incorporated herein by reference).

21.1		List of Subsidiaries of Fuse Medical, Inc. (Filed as Exhibit 21.1 to the Company’s original Form 10-K, filed on April 6, 2018, and incorporated herein by reference).

31.1*		Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of the Chief Executive Officer and the Chief Financial Officer Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002

101.INS *		XBRL Instance Document

101.SCH *		XBRL Taxonomy Extension Schema Document

101.CAL *		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF *		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB *		XBRL Taxonomy Extension Label Linkbase Document

101.PRE *		XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed Herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Date: September 21, 2018	By:	/s/ Christopher C. Reeg
		Christopher C. Reeg
		Chief Executive Officer and Director (Principal Executive Officer)

Date: September 21, 2018	By:	/s/ William E. McLaughlin, III
		William E. McLaughlin, III
		Chief Financial Officer and Director (Principal Financial Officer)

Date: September 21, 2018	By:	/s/ Mark W. Brooks
		Mark W. Brooks President, Director, and Chairman of the Board

Date: September 21, 2018	By:	/s/ Ricky Raj S. Kalra
		Ricky Raj S. Kalra, MD Director

Date: September 21, 2018	By:	/s/ Renato V. Bosita, Jr.
		Renato V. Bosita, Jr., MD Director

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


	Page
Financial Statements
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2017 and 2016		F-3
Consolidated Statements of Operations for the years ended December 31, 2017 and 2016		F-4
Consolidated Statement of Changes in Stockholders’ Equity for the years ended December 31, 2017 and 2016		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2017 and 2016		F-6
Notes to Consolidated Financial Statements		F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The shareholders and the board of directors of Fuse Medical, Inc. and Subsidiary

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Fuse Medical, Inc. and Subsidiary (the “Company”) as of December 31, 2017 and 2016, and the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for the years in the two-year period ended 2017 and 2016, and the related notes and schedules (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the two-year period ended 2017 and 2016, in conformity with generally accepted accounting principles in the United States of America (“GAAP”).

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board in the United States (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits include performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Montgomery Coscia Greilich, LLP

We have served as the Company’s auditor since 2018.

Plano, Texas

April 5, 2018

F-2

FUSE MEDICAL, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS


	December 31, 2017			December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	804,715		$	778,447
Accounts receivable, net of allowance of $499,099 and $1,682,995, respectively		6,570,382			6,508,286
Inventories, net of allowance of $1,110,742 and $1,134,013, respectively		10,626,769			11,426,828
Prepaid expenses and other current assets		32,466			23,018

Total current assets		18,034,332			18,736,579
Property and equipment, net		16,895			14,747
Security deposit		—			3,822
Deferred tax asset		375,278
Goodwill		820,650			820,650

Total assets	$	19,247,155		$	19,575,798

Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	2,588,091		$	2,452,922
Accrued expenses		1,830,679			3,068,054
Notes payable - related parties		150,000			150,000
Revolving line of credit		3,415,351			3,305,347

Total current liabilities		7,984,121			8,976,323
Earn-out liability		19,244,543			—

Total liabilities		27,228,664			8,976,323

Commitments and contingencies		—			—
Stockholders’ equity (deficit):
Preferred stock, $0.01 par value; 20,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, $0.01 par value; 100,000,000 shares authorized; 69,158,308 issued and 65,890,808 outstanding at December 31, 2017 and 15,890,808 issued and outstanding at December 31, 2016		671,583			158,908
Additional paid-in capital		(8,653,092	)		10,440,567
Retained earnings		—			—

Total stockholders’ equity (deficit)		(7,981,509	)		10,599,475

Total liabilities and stockholders’ equity (deficit)	$	19,247,155		$	19,575,798

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

F-3

FUSE MEDICAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS


(Amounts in dollars, except per share data)	For the Year Ended December 31, 2017			For the Year Ended December 31, 2016
Net revenues	$	26,407,206		$	25,666,650
Cost of revenues		14,582,416			11,256,887

Gross profit		11,824,790			14,409,763

Operating expenses
Selling, general, administrative and other		5,356,475			4,170,835
Commissions		5,641,122			7,056,430
Gain on disposal of property and equipment		(5,367	)		—
Depreciation		14,521			19,091

Total operating expenses		11,006,751			11,246,356

Operating income		818,039			3,163,407

Other income (expense):
Interest expense		(161,669	)		(146,921	)
Extinguishment of debt		43,308			—

Total other income (expense)		(118,361	)		(146,921	)

Net income	$	699,678		$	3,016,486

Net income per common share - basic	$	0.04		$	0.42

Net income per common share - diluted	$	0.04		$	0.33

Weighted average number of common shares outstanding - basic		16,027,794			7,185,890

Weighted average number of common shares outstanding - diluted		19,473,553			9,214,606

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

F-4

FUSE MEDICAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016


	Common Stock				Additional Paid-In			Retained
	Shares		Amount		Capital			Earnings			Total
Balance, December 31, 2015 (successor)		6,890,808	$	68,908	$	7,929,234		$	—		$	7,998,142
Member contribution (successor)		—		—		775,949			—			775,949
Member distribution (successor)		—		—		(2,346,859	)		(134,319	)		(2,481,178	)
Fuse capital, net		9,000,000		90,000		4,082,243			(2,882,167	)		1,290,076
Net income		—		—		—			3,016,486			3,016,486

Balance, December 31, 2016		15,890,808		158,908		10,440,567			—			10,599,475

Restricted stock awards granted		3,267,500		12,675		29,934			—			42,609
Purchase of CPM Medical Consultants, LLC		50,000,000		500,000		(19,744,543	)		—			(19,244,543	)
Deferred tax asset		—		—		375,278			—			375,278
Member contribution (successor)		—		—		1,738,620			—			1,738,620
Member distribution (successor)		—		—		(1,492,948	)		(699,678	)		(2,192,626	)
Net income		—		—		—			699,678			699,678

Balance, December 31, 2017		69,158,308	$	671,583	$	(8,653,092	)	$	—		$	(7,981,509	)

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

F-5

FUSE MEDICAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Year Ended December 31, 2017			For the Year Ended December 31, 2016
Cash flows from operating activities:
Net income	$	699,678		$	3,016,486
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of debt discount		—			13,094
Share-based compensation		42,609			—
Depreciation		14,521			19,091
Gain on disposal of property and equipment		(5,067	)		—
Extinguishment of debt		(43,308	)		—
Bad debt expense		—			—
Changes in operating assets and liabilities:
Accounts receivable		(62,096	)		995,785
Inventories, net		2,022,723			(139,993	)
Prepaid expenses and other current assets		(9,448	)		107
Security deposit		3,822			—
Accounts payable		178,477			(1,313,409	)
Accrued expenses		(1,236,527	)		199,177
Deferred rent		(848	)		—

Net cash provided by operating activities		1,604,536			2,790,338

Cash flows from investing activities:
Purchases of property and equipment		(20,334	)		—
Insurance settlement proceeds		8,732			—
Proceeds from reverse acquisition		—			655,390

Net cash (used in) provided by investing activities		(11,602	)		655,390

Cash flows from financing activities:
Payments on line of credit		(15,580,346	)		(14,118,720	)
Borrowings on line of credit		15,690,350			13,208,210
Member contributions (successor)		273,044			375,210
Member distributions (successor)		(1,949,714	)		(2,395,606	)

Net cash used in financing activities		(1,566,666	)		(2,930,906	)

Net increase in cash and cash equivalents		26,268			514,822
Cash and cash equivalents - beginning of year		778,447			263,625

Cash and cash equivalents - end of year	$	804,715		$	778,447

Supplemental disclosure of cash flow information:
Cash paid for interest	$	139,507		$	150,762

Supplemental disclosure of noncash operating and financing activities:
Member contributions through reduction of accounts payable	$	—			25,000

Member contributions of inventory	$	1,465,576			375,739

Member distributions of inventory	$	242,912			85,572

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

F-6

Note 1. Nature of Operations

Overview

The Company was initially incorporated in 1968 as Golf Rounds.com, Inc., a Florida corporation. During July 1999, GolfRounds, Inc. was re-domesticated to Delaware through a merger into its wholly-owned subsidiary GolfRounds.com, Inc. Effective May 28, 2014, GolfRounds.com, Inc. amended its certificate of incorporation to change its name to Fuse Medical, Inc. (“Fuse”) and merged with and into Fuse Medical, LLC, with Fuse Medical, LLC surviving as a wholly-owned subsidiary of Fuse. The transaction was accounted for as a reverse merger with Fuse the legal acquirer, and Fuse Medical, LLC deemed the accounting acquirer (“Reverse Merger”). During 2015, certificates of termination were filed for Fuse Medical, LLC and its two subsidiaries.

Change in Control

Between the period July 2016 through October 2016, the Company obtained three loans in the aggregate amount of $150,000 in exchange for convertible promissory notes (the “Notes”) bearing 10% interest per annum, with principal due and payable, upon demand of the payee. The Notes were issued as follows: $100,000 to NC 143 Family Holdings, LP, a family limited partnership controlled by Mark W. Brooks (“NC 143”), the Company’s Chairman of the Board of Directors (the “Board”); and $50,000 to Reeg Medical Industries, Inc., an investment holding company owned and controlled by Christopher C. Reeg, the Company’s Chief Executive Officer (“RMI”, and together with NC 143, the “Investors”). The Investors have the sole discretion and right to convert all or any portion of the then unpaid principal and interest balance of the Notes into shares of the Company’s common stock at a conversion price of $0.08 per share.

On December 19, 2016 (the “Change-in-Control Date”), the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) by and between the Investors and the Company, pursuant to which NC 143 acquired 5 million shares of the Company’s common stock for a purchase price of $400,000 and RMI acquired 4 million shares of the Company’s common stock for a purchase price of $320,000 (collectively the “Investor Shares”), effective as of the Change-in-Control Date. Direct offering costs of the Company were $64,609 in connection with the offer and sale of the Investor Shares, and, net proceeds from the offer and sale of the Investor Shares were $655,391.

CPM Acquisition

On December 15, 2017, Fuse entered into an agreement with NC 143 pursuant to which Fuse would purchase all of the outstanding membership interests of CPM Medical Consultants, LLC (“CPM”) (the “CPM Acquisition Agreement” and such transaction, the “CPM Acquisition”).

On December 29, 2017, Fuse completed the previously-announced the CPM Acquisition, pursuant to the CPM Acquisition Agreement by Fuse and NC 143, dated December 15, 2017, whereby the Fuse would purchase all of the outstanding membership interests of CPM. Fuse issued 50 million shares of its common stock, par value $0.01 per share in exchange for 100% of the outstanding membership interests of CPM, at an agreed-upon value of $0.20 per share of common stock. The effective date of the CPM acquisition was December 31, 2017 (the “Effective Date”). The CPM Acquisition provides for contingent payments, (Earn-Out”) to NC 143 subject to certain sales and profitability targets being met by the Company for years after 2017.

Fuse was the legal acquirer and, for accounting purposes, CPM was deemed to have acquired our Company in the CPM Acquisition. CPM is the successor entity and becomes the reporting entity which combines Fuse at the Change-in-Control Date, with the assets and liabilities of both companies combined at historical cost. (see note 3)

Nature of Business

Fuse is a national distributor of medical devices, who provides a broad portfolio of internal and external fixation products; upper and lower extremity plating and total joint reconstruction; soft tissue fixation and augmentation for sports medicine procedures; spinal implants for trauma, degenerative disc disease, and deformity indications (collectively, “Orthopedic Implants”) and a wide array of osteo-biologics and regenerative tissue which include human allografts, substitute bone materials and tendons, as well as regenerative tissues and fluids (“Biologics”). All of our medical devices are approved by the U.S. Food and Drug Administration (“FDA”) for sale in the United States, and all of our Biologics suppliers are licensed tissue banks accredited by the American Association of Tissue Banks (“AATB”).

The Company’s board portfolio of Orthopedic Implants and Biologics provide high-quality products to assist surgeons with positive patient outcomes and cost-effective solutions for its customers, which include hospitals, medical facilities, and sub-distributors. Fuse operates under exclusive and non-exclusive agreements with certain vendors and supply partners in the geographic territories the Company serves.

F-7

Fuse continuously reviews and expands its product lines to ensure that they offer the most comprehensive, high-quality and cost-effective selection of Orthopedic Implants and Biologics so that the Company can be more relevant to its customer needs while continuing to grow its existing customer base.

Note 2. Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. Intercompany transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in accordance with generally accepted accounting principles in the United State, (“GAAP”). GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include the allowances for doubtful accounts and contractual pricing, valuation of inventories, accrued commissions, the fair value calculation of stock based compensation, and fair value of Earn-Out liability.

Earnings Per Share

Basic net income per common share is calculated by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Shares of restricted stock are included in the basic weighted average number of common shares outstanding from the time they vest. Diluted net income per common share is computed by dividing net income attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method. As of December 31, 2017, 700,000 outstanding common stock equivalents have been included with diluted net earnings per share.

As of December 31, 2017, and 2016, common stock equivalents included options to purchase 1,302,052 and 1,304,788 common shares, respectively.

Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy:

Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets;

Level 2—Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and

Level 3—Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities.

In connection with the CPM Acquisition, the Company recorded a $19,244,543 liability related to the Earn-Out portion of the purchase consideration. See Note 3, Acquisition, for further discussion of the Earn-Out Liability. The Company has classified the Earn-Out Liability as a Level 3 liability and the fair value of the Earn-Out Liability will be evaluated each reporting period and changes in its fair value will be included in the Company’s results of operations. The Earn-Out payments are based on the financial performance of the Company between the period of January 1, 2018 and December 31, 2034. The base amount of the Earn-Out is $16,000,000 with an additional bonus payment of $10,000,000. The payments of the base and bonus Earn-Out amounts are subject to the Company meeting certain earnings thresholds as detailed in the purchase agreement. The Earn-Out payments during the Earn-Out period specified above, ranges from $0 to $26,000,000.

F-8

The fair value of the Earn-Out Liability was calculated using the Monte Carlo simulation, which was then applied to estimated Earn-Out payments with a discount rate of 4%. To determine the fair value of the Earn-Out liability, the Company’s management evaluates assumptions that require significant judgement. Significant assumptions used for estimating the Earn-Out liability included gross margins of approximately 48%, net income margins averaging 9% per year, revenue growth of approximately 5% over a forecast horizon period of 11 years.

The Earn-Out liability, which represented contingent consideration associated with the CPM Acquisition is recorded as a liability. This liability is subject to re-measurement to fair value at each reporting date until the contingency is resolved and the changes in fair value is recognized in the statement of operations at each reporting period since the arrangement is not subject to the accounting for hedging instruments.

The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The recorded value of notes payable approximates their fair value based upon their effective interest rates.

Cash and Cash Equivalents

The Company considers highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. There were no cash equivalents at December 31, 2017 and 2016. The Company’s cash is concentrated in large financial institutions that at times may exceed federally insured limits of $250,000 per financial institution. The Company has not experienced any losses from inception through December 31, 2017. As of December 31, 2017, and 2016, there were deposits of $537,388 and $421,636, respectively, greater than federally insured limits.

Accounts Receivable and Allowances

Accounts receivables are non-interest bearing and are stated at gross invoice amounts less an allowance for doubtful accounts receivable and an allowance for contractual pricing. Credit is extended to customers based on an evaluation of their financial condition and other factors. The Company generally does not require collateral or other security to support accounts receivable. The Company performs ongoing credit evaluations of its customers and maintains an allowance for potential bad debts.

The Company estimates its allowance for doubtful accounts by evaluating specific accounts where information indicates the customers may have an inability to meet financial obligations, such as bankruptcy proceedings and receivable amounts outstanding for an extended period beyond contractual terms. In these cases, the Company uses assumptions and judgment, based on the best available facts and circumstances, to record a specific allowance for those customers against amounts due to reduce the receivable to the amount expected to be collected. These specific allowances are re-evaluated and adjusted as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance. The Company may also record a general allowance as necessary.

The Company’s management estimates its allowance for contractual pricing, by evaluating specific accounts where information indicates the customer is offered contractual pricing and discount allowances. In these arrangements, the Company’s management uses assumptions and judgement, based on the best available facts and circumstances to record a specific allowance for the amounts due from those customers. The allowance is offset by a corresponding reduction to revenue. These specific allowances are re-evaluated and adjusted as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance. The Company may also record a general allowance as necessary.

Accounts deemed uncollectible are written-off in the period when the Company has exhausted its efforts to collect overdue and unpaid receivables or otherwise has evaluated other circumstances that indicate that the Company should abandon such efforts. Previously written-off accounts receivable subsequently collected are recognized as a reduction of bad debt expense when funds are received.

F-9

Inventories

Inventories are stated at the net realizable value (first-in, first-out). Inventories consist entirely of finished goods and include Orthopedic Implants and Biologics. The Company reviews the market value of inventories whenever events and circumstances indicate that the carrying value of inventories may not be recoverable from the estimated future sales price less cost of disposal and normal gross profit. In cases where the market values are less than the carrying value, a write-down is recognized equal to an amount by which the carrying value exceeds the market value of inventories.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets per the following table. Leasehold improvements are amortized over the lesser of their useful life or the lease term. Expenditures for additions and improvements are capitalized while repairs and maintenance are expensed as incurred.


Category	Amortization Period
Computer equipment		3 years
Furniture and fixtures		3 years
Office equipment		3 years
Software		3 years

Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation and amortization are removed and a gain or loss is recorded in the consolidated statements of operations.

Long-Lived Assets

The Company assesses potential impairment to its long-lived assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include, but are not limited to: (i) significant changes in performance relative to expected operating results, (ii) significant changes in the use of the assets, (iii) significant negative industry or economic trends, (iv) a significant decline in the Company’s stock price for a sustained period of time, and (v) changes in the Company’s business strategy. An impairment loss is recorded when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds fair value and is recorded as a reduction in the carrying value of the related asset and an expense to operating results. Based upon the Company’s assessment, there were no indicators of impairment of its long-lived assets at December 31, 2017 and 2016.

F-10

Goodwill

Goodwill is the excess of the purchase price over the fair value of net assets of acquired businesses. Goodwill is tested for impairment annually or whenever an event occurs or circumstances change that would indicate that the carrying amount may be impaired. The test for impairment requires us to make several estimates about fair value, most of which are based on projected future cash flows. The Company’s management estimates associated with the goodwill impairment test are considered critical due to the amount of goodwill recorded on our consolidated balance sheets and the judgment required in determining fair value, including projected future cash flows. No goodwill impairment has been recognized during 2017 or 2016.

Revenue Recognition

The Company recognizes revenue when: (i) persuasive evidence of an arrangement exists; (ii) the fees are fixed or determinable; (iii) no significant Company obligations remain; and (iv) collection of the related receivable is reasonably assured. The Company reports revenues for transactions in which it is the primary obligor on a gross basis and revenues in which it acts as an agent (earning a fixed percentage of the sale) on a net basis, (net of related costs). The Company reports funds collected from customers as deferred revenues until all revenue recognition criteria have been met.

Revenues are sales of Orthopedic Implants and Biologics to support orthopedic surgeries and wound care. For customers that purchase products as needed, the Company invoices the customers on the date the product is utilized. For customers that have consigned product, the Company invoices the customers as each unit of the product is utilized. Payment terms are due upon receipt of invoice.

Products that have been sold are not subject to returns unless the product is deemed defective. Credits or refunds are recognized when they are determinable and estimable. Net revenues have been reduced to account for sales returns, discounts and other incentives.

Cost of Revenues

Cost of revenues consists of cost of goods sold, freight and shipping costs for items sold to customers, cost of storage, and related supply chain costs.

Shipping and Handling Fees

The Company includes shipping and handling fees billed to customers in revenues and the related costs in cost of revenues.

Income Taxes

As a result of the CPM Acquisition, Fuse became the sole managing member of CPM and as a result, began consolidating the financial results of CPM. CPM is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, CPM is not subject to U.S. federal and most applicable state and local income tax purposes. As a partnership, CPM is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by CPM is passed through to an included in the taxable income or loss of its members.

The Company uses the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. The Company has deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are subject to periodic recoverability assessments. Realization of the deferred tax assets, net of deferred tax liabilities, is principally dependent upon achievement of projected future taxable income.

The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. As of December 31, 2017, the Company had no liabilities for uncertain tax positions. The Company’s policy is to recognize interest and penalties related to income tax matters as a component of income tax expense. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law, and new authoritative rulings.

F-11

Segment Information

The Company operates in one reportable segment including medical products and supplies. The Company’s chief operating decision maker, is its Chief Executive Officer. The Company’s Chief Executive Officer manages the Company’s operations as a whole, and does not evaluate revenue, expense or operating income information on any component level.

Stock-Based Compensation

Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the requisite service period. For employee stock-based awards, the Company calculates the fair value of the award on the date of grant using the Black-Scholes option pricing model. Determining the fair value of stock-based awards at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based awards represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. For non-employee stock-based awards, the Company calculates the fair value of the award on the date of grant in the same manner as employee awards, however, the awards are revalued at the end of each reporting period and the prorata compensation expense is adjusted accordingly until such time the non-employee award is fully vested, at which time the total compensation recognized to date shall equal the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient’s performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company’s management is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures.

In July 2015, the FASB issued ASU No. 2015-11 — “Inventory (Topic 330)”, which requires an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company adopted ASU 2015-11 as of January 1, 2017 and did not have a material impact on the Company’s financial statements.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases”, which requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company’s management is in the process of evaluating the impact of the adoption of ASU 2016-02 on the Company’s financial statements and disclosures.

F-12

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash payments.” The update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This ASU is effective for the public business entities for fiscal years beginning after December 15, 2017 and for interim periods within those fiscal years. The amendments in this update may be applied retrospectively or prospectively and early adoption is permitted. The Company’s management is in the process of evaluating the impact of ASU 2016-15 on the Company’s financial statements and disclosures.

In November 2016, the FASB issued ASU Update No. 2016-18 — “Statement of Cash Flows (Topic 230): Restricted Cash (A Consensus of the FASB EITF)”. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. These amounts should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This amendment does not provide a definition of restricted cash or restricted cash equivalents. The update will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company’s management is in the process of evaluating the impact of ASU 2016-18 on the Company’s financial statements and disclosures.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission, (the “SEC”) did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

F-13

Note 3. Acquisition

Between the period July 2016 through October 2016, the Company obtained three loans in the aggregate amount of $150,000 in exchange for the Notes bearing 10% interest per annum, with principal due and payable, upon demand of the payee. The Notes were issued as follows: $100,000 to NC 143, and $50,000 to RMI. The Investors have the sole discretion and right to convert all or any portion of the then unpaid principal and interest balance of the Notes into shares of the Company’s common stock at a conversion price of $0.08 per share. (see note 6).

On December 19, 2016, the Company entered into a Stock Purchase Agreement by and between the Investors and the Company, pursuant to which NC 143 acquired 5 million shares of the Company’s common stock for a purchase price of $400,000 and RMI acquired 4 million shares of the Company’s common stock for a purchase price of $320,000 effective as of the Change-in-Control Date. Direct offering costs of the Company were $64,609 in connection with the offer and sale of the Investor Shares, and, net proceeds from the offer and sale of the Investor Shares were $655,391.

The closing of the Stock Purchase Agreement resulted in a change-in-control of the Company whereby the Investors beneficially acquired approximately 61.4% of the Company’s common stock issued and outstanding immediately after the Change-in-Control Date. Mark W. Brooks became our Chairman of the Board and Christopher C. Reeg became our Chief Executive Officer, as described in our Current Report on Form 8-K, filed with the Commission on December 23, 2016, which is herein incorporated by reference. Fuse recorded a goodwill asset of $820,000 to reflect the excess of the carrying value of the Company’s net assets over their fair value as implied by the purchase price paid by the Investors on the Change-in-Control Date.

On December 15, 2017, Fuse entered into the CPM Acquisition Agreement with NC 143 pursuant to which Fuse would purchase all of the outstanding membership interests of CPM.

On December 29, 2017, Fuse completed the previously-announced CPM Acquisition, pursuant to the CPM Acquisition Agreement by Fuse and NC 143, dated December 15, 2017, whereby Fuse would purchase all of the outstanding membership interests of CPM. Fuse issued 50 million shares of its common stock, par value $0.01 per share in exchange for 100% of the outstanding membership interests of CPM, at an agreed-upon value of $0.20 per share of common stock. The effective date of the CPM Acquisition was December 31, 2017. Additional one-time costs incurred with the acquisition totaled approximately $200,000 and are included in the selling, general, administrative and other expenses on the consolidated statements of operations.

The CPM Acquisition Agreement provides for Earn-Out payments to NC 143 subject to certain sales and profitability targets being met by the Company for years after 2017. The fair value of the Earn-Out was recorded at $19,244,543 as of the Effective Date. The Company recorded the Earn-Out at its fair value of the Effective Date. The CPM Acquisition Agreement provides for a working capital post-closing adjustment (“Post-Closing Adjustment”) for certain changes in CPMs current assets and current liabilities pursuant to the CPM Acquisition Agreement. The Post-Closing Adjustment is approximately $397,463 and will be paid in shares of the Company’s common stock within 120 days the Effective Date.

F-14

On the Effective Date of the closing of the CPM acquisition, NC 143 and RMI beneficially acquired approximately 90.4% of the Company’s common stock outstanding.

Fuse is the legal acquirer and, for accounting purposes, CPM was deemed to have acquired the Company in the CPM Acquisition. CPM is the successor entity and becomes the reporting entity which combines Fuse at the Change-in-Control Date, with the assets and liabilities of both companies combined at historical cost. (see note 1).

The following unaudited pro forma summary financial information presents the consolidated results of operations for the Company as if the CPM Acquisition had occurred on January1, 2016. The pro forma results are shown for illustrative purposes only and do not purport to be indicative of the results that would have been reported if the CPM Acquisition had occurred on the date indicated or indicative of the results that may occur in the future.

Unaudited pro forma information for the twelve months ended December 31, 2016 is as follows:


	Year Ended December 31, 2016 - Unaudited
	Historical Fuse Medical, Inc.			Historical CPM Medical Consultants, LLC		Pro forma Adjustments			Pro forma Combined
Revenue	$	567,607		$	25,647,353	$	(103,578	)	$	26,111,382
Net (loss) income	$	(585,935	)	$	3,035,296	$	—		$	2,449,361
Net (loss) income per common share - basic	$	—		$	—	$	—		$	0.34

The supplemental pro forma earnings were adjusted to exclude $103,578 for the year ended December 31, 2016. The number of shares outstanding used in calculating the net (loss) per common share – basic was 7,185,890 for the year ended December 31, 2016.

The Company is managed and operates in one segment, with Fuse merged into the CPM existing operations.

F-15

Note 4. Property and Equipment

Property and equipment consisted of the following at December 31, 2017 and 2016:


	December 31, 2017			December 31, 2016
Computer equipment	$	—		$	29,290
Furniture and fixtures		5,047			6,347
Leasehold improvements		—			6,728
Office equipment		21,913			9,221
Software		—			34,252

		26,960			85,838
Less: accumulated depreciation		(10,065	)		(71,091	)

Property and equipment, net	$	16,895		$	14,747

During the year ended December 31, 2017, the Company sold fixed assets having a net book value of $607 for cash proceeds of $300, retired fixed assets no longer in use with a net book value of $3,058, and recorded $8,732 of insurance settlements proceeds for a fully depreciated fixed asset.

Depreciation expense for the years ended December 31, 2017 and 2016 was $14,521 and $19,091, respectively.

Note 5. Revolving Line of Credit

On December 29, 2017, Fuse became party to a revolving line of credit (“RLOC”) with ZB, N.A. (d/b/a Amegy Bank), to facilitate the December 31, 2017 CPM Acquisition. The RLOC establishes an asset based senior secured revolving credit facility in the amount of $5,000,000. The RLOC bears interest at a variable rate based on the one-month LIBOR rate plus 3.00% (effective rate of 4.56% at December 31, 2017). The RLOC contains customary representation, warranties, covenants, events of default, and is collateralized by substantially all of the Company’s assets. The Chairman of the Board personally guarantees fifty percent (50%) of the outstanding loan amount.

The outstanding balance of the RLOC was $3,415,351 and $3,305,347 at December 31, 2017 and 2016, respectively. Interest expense incurred was $134,668 and $133,334 for 2017 and 2016, respectively.

F-16

Note 6. Notes Payable – Related Parties

During July 2016 through October 2016, the Company obtained three short-term loans in the aggregate amount of $150,000 in exchange for promissory notes bearing 10% interest per annum, which principal shall be due and payable, upon demand of the payee. Notwithstanding, at the holder’s sole discretion, the holder has the right to convert all or any portion of the then unpaid principal and interest balance into shares of the Company’s common stock at a conversion price of $0.08 per share. On each respective date of issuance, the conversion price of each of the promissory notes was less than the market price of the Company’s common stock. This resulted in a beneficial conversion feature in the aggregate amount of $117,500, which was treated as a discount to each of the promissory notes and amortized over the term of each respective promissory note. Subsequent to the issuance of the notes, affiliates of the noteholders entered into the Stock Purchase Agreement with the Company (See Notes 1 and 11).

Notes payable – related parties consisted of the following:


	December 31, 2017			December 31, 2016
Notes Payable originating July 15, 2016; no monthly payments required; bearing interest at 10%; due on December 31, 2016, convertible on demand	$	50,000		$	50,000
Notes Payable originating August 23, 2016; no monthly payments required; bearing interest at 10%; due on December 31, 2016, convertible on demand		50,000			50,000
Notes Payable originating October 19, 2016; no monthly payments required; bearing interest at 10%; due on December 31, 2016, convertible on demand		50,000			50,000

Total		150,000			150,000
Less: current maturities		(150,000	)		(150,000	)

Amount due after one year	$	—		$	—

During the year ended December 31, 2017 and 2016, interest expense of $27,000 and $13,587 (of which $13,094 was related to the amortization of the beneficial conversion feature), respectively, was recognized on outstanding notes payable – related parties. As of December 31, 2017, and 2016, accrued interest payable was $32,096 and $5,096, respectively, which is included in accrued expenses on the accompanying consolidated balance sheets.

F-17

Note 7. Commitments and Contingencies

Legal Matters

On January 27, 2014, M. Richard Cutler and Cutler Law Group, P.C. (the “Plaintiffs”) filed a complaint in the District Court of Harris County, Texas, 201 4-03355, against Fuse, Alan Meeker, Rusty Shelton, Jonathan Brown, Robert H. Donehew and Golf Rounds.com, Inc. (the “Defendants”). On April 21, 2014, the complaint was dismissed for “want of prosecution.”

On September 18, 2015, Plaintiffs refiled a complaint in the District Court of Harris County, Texas, Cause No. 2015-55652 and added PH Squared, LLC as an additional Plaintiff. Thereafter, the term “Plaintiffs” collectively refers to M. Richard Cutler, Cutler Law Group, P.C. and PH Squared, LLC. The new complaint asserts essentially the same claims as the original nonsuited complaint: (i) suit on sworn account against Fuse; (ii) fraud against all Defendants; and (iii) breach of contract against all Defendants for allegedly violating a non-circumvention/non-disclosure agreement. Richard Cutler is the sole principal of Cutler Law Group, P.C., which provided legal representation to its clients, Craig Longhurst and PH Squared, LLC d/b/a PharmHouse Pharmacy (“Cutler’s Client”), during a failed merger attempt between Fuse and Golf Rounds.com, Inc. (the “Failed Transaction”). The Plaintiffs have alleged that the Failed Transaction failed to materialize notwithstanding the efforts of Mr. Cutler, his law firm and PH Squared, LLC. The Plaintiffs have further alleged that the Defendants continued to pursue a similar transaction without Cutler’s Client or the Plaintiffs. The Plaintiffs claim that the Defendants are responsible for damages in the amount of $46,465 plus interest for the breach of contract claim because Plaintiffs were not paid their legal fees by Cutler’s Client and Plaintiffs did not receive equity in the merged company that would have resulted from the Failed Transaction. Plaintiffs are also asking for undisclosed damages related to the fraud and breach of contract claims, and are asking for exemplary damages as a result of allegedly intentional fraud that some or all of the Defendants allegedly committed. Plaintiffs also seek their attorneys’ fees and costs for having brought the action. On November 18, 2015, Fuse filed a counterclaim against PH Squared, LLC for breach of contract and further asserted a counterclaim and third-party claim against PH Squared, LLC’s principle, Craig Longhurst, for fraud in the inducement. Fuse also seeks a declaratory judgment on the intended third-party beneficiary status of Plaintiffs Cutler and Cutler Law Group related to a non-circumvention/non-disclosure agreement. The trial date for the above matter was scheduled for May 1, 2017, but it was moved to July 24, 2017 in order to allow for some additional discovery.

During April 2017, one of the named individuals in the complaint filed for bankruptcy protection. There is currently no trial date set.

The Company’s management continues to believe that the lawsuit is completely without merit and will vigorously contest it and protect the Company’s interests.

Operating Leases

The Company leases office space under a noncancelable operating lease agreement, from a real estate investments company that is owned and controlled by the Company’s Chairman of the Board and President. This lease terminated December 31, 2017 with month-to-month renewals. The lease requires monthly payments of $14,000. Annual rent expense was approximately $142,000 and $120,000 for the years ended December 31, 2017 and 2016, and are included in selling, general, administrative and other expenses.

The Company leases office equipment under two noncancelable operating lease agreements which expire March 2019 and February 2021. In aggregate, these office equipment leases require monthly payments of approximately $779. Rent expense for the equipment leases totaled approximately $11,000 and $8,000 for the years ended December 31, 2017 and 2016, respectively, and are included in selling, general, administrative and other expenses.

F-18

The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 2017:


Year ending December 31,
2018	$	9,000
2019		5,000
2020		3,000
2021		500

	$	17,500

Note 8. Stockholders’ Equity

Authorized Capital

The Company has authorized 100,000,000 shares of common stock having a par value of $0.01 per share, and its Board is authorized to issue shares of the common stock, in one or more series, and to fix for each such series the voting powers, designations, preferences, or other special rights and the qualifications, limitations or restrictions.

The Company has authorized 20,000,000 shares of preferred stock having a par value of $0.01 per share, and its Board is authorized to issue shares of the preferred stock, in one or more series, and to fix for each such series the voting powers, designations, preferences, or other special rights and the qualifications, limitations or restrictions.

Common Stock

On December 29, 2017, Fuse completed the previously-announced acquisition of CPM, pursuant to the CPM Acquisition Agreement by Fuse and NC 143, dated December 15, 2017, whereby the Fuse would purchase all of the outstanding membership interests of CPM. Fuse issued 50,000,000 shares of its common stock, par value $0.01 per share in exchange for 100% of the outstanding equity interests of CPM, at an agreed-upon value of $0.20 per share of common stock, as reflected in the fairness opinion provided by ValueScope. The Effective Date of the CPM acquisition was December 31, 2017.

On December 19, 2016, the Company entered into the Stock Purchase Agreement by and between the Investors and the Company, pursuant to which NC 143 acquired 5 million shares of the Company’s common stock for a purchase price of $400,000 and RMI acquired 4 million shares of the Company’s common stock for a purchase price of $320,000, effective as of the Change-in-Control Date. Direct offering costs of the Company were $64,609 in connection with the offer and sale of the Investor Shares, and, net proceeds from the sale of the Investor Shares were $655,391. (See Note 6)

F-19

Stock Incentive Plans

The Company has a stock-based compensation plan which provides for the granting of equity awards, including qualified incentive and non-qualified stock options, stock appreciation awards and restricted stock awards to employees, directors, consultants and advisors; the 2017 Equity Incentive Plan (the “2017 Plan”), which was adopted by the Company’s Board on April 5, 2017. The awards are subject to a vesting schedule as set forth in individual agreements.

On September 21, 2017, the Board approved an amendment to the 2017 Plan to increase the number of shares of common stock authorized for issuance under the 2017 Plan from 1,500,000 shares of common stock to 2,500,000 shares of common stock.

On October 4, 2017, the Board approved an amendment to the 2017 Plan to increase the number of shares of common stock authorized for issuance under the 2017 Plan from 2,500,000 shares of common stock to 4,500,000 shares of common stock.

Stock Options

The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of the Company’s stock price over the expected option term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC Topic 718 requirements. These amounts are the Company’s estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award. The Company did not grant stock options in 2017.

F-20

The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to employees during the year ended December 31, 2016:


Assumptions	For the Year Ended December 31, 2017			For the Year Ended December 31, 2016
Expected term (years)		—			2.5
Expected volatility		0	%		162	%
Weighted-average volatility		0	%		162	%
Risk-free interest rate		0.00	%		1.43	%
Dividend yield		0.0	%		0.0	%
Expected forfeiture rate		n/a			n/a

The Company’s management utilized the simplified method to estimate the expected life for stock options granted to employees, as the Company does not have sufficient historical data regarding stock option exercises. The expected volatility is based on historical volatility of the Company’s common stock subsequent to the closing of the Reverse Merger. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected life of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company’s management believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased.

F-21

A summary of the Company’s stock option activity during the year ended December 31, 2017 is presented below:


	No. of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance outstanding at December 31, 2016		1,304,788		$	0.22
Granted		—		$	—
Exercised		—		$	—
Forfeited		—		$	—
Expired		(2,736	)	$	12.13

Balance outstanding at December 31, 2017		1,302,052		$	0.20		3.3	$	1,717,000

Exercisable at December 31, 2017		1,302,052		$	0.20		3.3	$	1,717,000

The weighted-average grant-date fair value of options granted during the year ended December 31, 2016 was $0.09.

Restricted Common Stock

On September 21, 2017, the Company’s Board granted an aggregate of 325,000 Restricted Stock Awards (“RSA’s”) pursuant to the Company’s 2017 Plan, to the Board as annual compensation. The RSA’s have a fair market value of $0.78 on the date of grant and fully vest upon the one-year anniversary of the date of grant or September 21, 2018. As of December 31, 2017, the Company had amortized $21,664 relating to the vesting of these shares which is included in selling, general, and administrative expenses, and $43,336 which will be recognized as an expense in future periods as the shares vest.

F-22

On September 21, 2017, the Company’s Board granted an aggregate of 2,000,000 RSA’s pursuant to the 2017 Plan, to the Company’s independent directors as compensation. The RSA’s have a fair market value of $0.78 on the date of grant and vest fully upon the earlier of a change in control of the Company or the Company’s listing on a national securities exchange. As of December 31, 2017, the Company had not amortized any amounts relating to the vesting of these shares due to the uncertainty of meeting these vesting milestones.

On December 14, 2017, the Board awarded a total of 942,500 shares of common stock of the Company, in the form of RSAs issued in accordance with the 2017 Plan of the Company, to the members of the Board of the Company as annual compensation for services rendered to the Company as Board members. Each member of the Board was granted an RSA constituting 188,500 shares of the Company’s common stock. Based in part on the analysis of the fairness opinion provided by a third-party valuation specialist, the Board determined that the common stock within each RSA had a fair market value of $0.20 on the date of grant. As of December 31, 2017, the Company had amortized $20,945 relating to the vesting of these shares which is included in selling, general, administrative and other expenses, and $167,555 which will be recognized as an expense in future periods as the shares vest.

The Board voted to revise the $0.78 fair market value for each share issued pursuant to each RSA granted on September 21, 2017, to $0.20. The Board voted to amend the indicated fair market value in the September grants to $0.20 based in part on the analysis within the fairness opinion provided by the third-party valuation specialist.

The following table summarizes restricted common stock activity:


	Number of Shares		Fair Value		Weighted Average Grant Date Fair Value
Non-vested, December 31, 2016		—	$	—	$	—
Granted		3,267,500		1,813,500		0.56
Vested		—		—		—
Forfeited		—		—		—

Non-vested, December 31, 2017		3,267,500	$	1,813,500	$	0.56

F-23

Note 9. Income Taxes

Fuse is subject to U.S. federal income taxes, in addition to state and local income taxes.

The components of income tax expense (benefit) are as follows:


	For the Year Ended December 31, 2017		For the Year Ended December 31, 2016
Current:
Federal	$	—	$	—
State		40,818		51,627

		40,818		51,627

Deferred:
Federal		—		—
State		—		—

		—		—

Total Income tax expense (benefit)	$	40,818	$	51,627

F-24

Significant components of the Company’s deferred income tax assets and liabilities are as follows:


	December 31, 2017			December 31, 2016
Deferred tax assets:
Net operating loss carryover	$	172,704		$	224,381
Intangibles		40,342			—
Accounts receivable		81,927			—
Compensation		57,458			80,850
Inventory		25,792			—

Total deferred tax assets		378,223			305,231

Deferred tax liabilities:
Prepaid expenses		—			—
Property and equipment		(2,945	)		2,795

Total deferred tax liabilities		(2,945	)		2,795

Deferred tax assets, net		375,278			308,026

Valuation allowance:
Beginning of year		(308,026	)		(700,713	)
(Increase) decrease during year		308,026			392,687

Ending balance		—			(308,026	)

Net deferred tax asset	$	375,278		$	—

In 2016 and 2017 CPM is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, CPM is not subject to U.S. federal and certain state income taxes. Any taxable income or loss generated by CPM during 2016 and 2017 is passed through to and included in the taxable income or loss of its members. Accordingly, our consolidated financial statements for 2017 do not include a provision for federal or state income tax purposes.

F-25

Fuse is treated as a corporation for U.S. federal and applicable state and local income tax purposes. As a corporation, Fuse is subject to U.S. federal and applicable state income taxes.

A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. The Company has recorded a valuation allowance in 2016 due to the uncertainty of realization. As a result of the organizational transactions of Fuse and CPM in 2017, it is more likely than not that the tax deferred tax assets benefits would be realized.

At December 31, 2017, Fuse had $822,399 of net operating loss carryforwards which will expire from 2018 to 2037. These carry forward benefits may be subject to annual limitations due to the ownership change limitations imposed by the Internal Revenue Code and similar state provisions. The annual limitation, if imposed, may result in the expiration of net operating losses before utilization. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of December 31, 2017, tax years 2012 through 2015 remain open for IRS audit. The Company has received no notice of audit from the Internal Revenue Service for any of the open tax years.

A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax rate is as follows:


	For the Year Ended December 31, 2017			For the Year Ended December 31, 2016
Statutory U.S. federal income tax rate		35.0	%		35.0	%
State income taxes, net of federal tax benefit		5.8	%		1.7	%
Permanent differences		3.8	%		0.3	%
Other reconciling items		20.5	%		19.8	%
LLC flow-through structure		(59.3	%)		(42.1	%)
Valuation allowance		0.0	%		(13.0	%)

Effective income tax rate		5.8	%		1.7	%

F-26

Note 10. Concentrations

Concentration of Revenues, Accounts Receivable and Suppliers

For the years ended December 31, 2017 and 2016, the following significant customers had an individual percentage of total revenues equaling 10% or greater:


	For the Year Ended December 31, 2017			For the Year Ended December 31, 2016
Customer 1 (related party)		18.70	%		18.33	%
Customer 2		18.06	%		11.61	%

Totals		36.76	%		29.94	%

At December 31, 2017 and 2016, the following significant customers had a concentration of accounts receivable representing 10% or greater of accounts receivable:


	December 31, 2017			December 31, 2016
Customer 1 (related party)		24.80	%		25.21	%
Customer 2		15.26	%		12.92	%

Totals		40.06	%		38.13	%

F-27

For the years ended December 31, 2017 and 2016, the following significant suppliers represented 10% or greater of goods purchased:


	For the Year Ended December 31, 2017			For the Year Ended December 31, 2016
Supplier 1		22.34	%		22.36	%

Totals		22.34	%		22.36	%

Note 11. Related Party Transactions

Change in Control

Between the period July 2016 through October 2016, we obtained three loans in the aggregate amount of $150,0in exchange for convertible promissory notes (the “Notes”) bearing 10% interest per annum, with principal due and payable, upon demand of the payee. The Notes were issued as follows: $100,000 to NC 143 Family Holdings, LP, a family limited partnership controlled by Mark W. Brooks (“NC 143”), our Chairman of the Board of Directors (the “Board”); and $50,000 to Reeg Medical Industries, Inc., an investment holding company owned and controlled by Christopher C. Reeg, our Chief Executive Officer (“RMI”, and together with NC 143, the “Investors”). The Investors have the sole discretion and right to convert all or any portion of the then unpaid principal and interest balance of the Notes into shares of our common stock at a conversion price of $0.08 per share.

Since December of 2016, the Company has been controlled by the Investors, who are its two primary stockholders. On the Change- in-Control Date the Company entered into the Stock Purchase Agreement by and between the Investors and the Company, pursuant to which the Investors received the Investor Shares, effective as of the Change-in-Control Date. For more details please see “Item 1. Business” of this 2017 Annual Report

The closing of the Stock Purchase Agreement resulted in a change-in-control of the Company whereby the Investors beneficially acquired approximately 61.4% of the Company’s Common Stock issued and outstanding immediately after the Change-in-Control Date. Mark W. Brooks became the Chairman of the Board and Christopher C. Reeg became our Chief Executive officer, as described in our Current Report on Form 8-K, filed with the SEC on December 23, 2016, which is herein incorporated by reference.

CPM Acquisition

On December 29, 2017, Fuse completed the previously-announced acquisition of CPM Acquisition, pursuant to the CPM Acquisition Agreement by Fuse and NC 143, dated December 15, 2017, whereby Fuse would purchase all of the outstanding membership interests of CPM. Fuse issued 50 million shares of its common stock, par value $0.01 per share in exchange for 100% of the outstanding membership interests of CPM, at an agreed-upon value of $0.20 per share of common stock. The effective date of the CPM Acquisition was December 31, 2017 (the “Effective Date”). The CPM Acquisition provides for contingent payments to NC 143 subject to certain sales and profitability targets being met by the Company for years after 2017.

F-28

For accounting purposes, CPM was deemed to have acquired Fuse in the CPM Acquisition because NC 143 and RMI had combined majority control of our issued and outstanding common stock and they jointly have the power to appoint a majority of our members of the Board. Because Fuse is the legal acquirer, the CPM Acquisition was accounted for as a reverse acquisition of an entity under common control. CPM is the successor entity and becomes the reporting entity which combines Fuse at the Change-in-Control Date, with the assets and liabilities of both companies combined at historical cost (collectively, Fuse and CPM consolidated or the “Company”). (see note 3)

Lease with 1565 North Central Expressway, LP

The Company leases an approximately 11,500 square-foot space as its principal executive office, located at 1565 North Central Expressway, Suite 220, Richardson, Texas 75080 from 1565 North Central Expressway, LP, a real estate investment company that is owned and controlled by the Company’s Chairman of the Board and President. The CPM lease was effective January 1, 2013 and the Fuse lease was effective July 14, 2017. The leases terminated December 31, 2017 with month-to-month renewals. The leased property does not have material costs of complying with environmental laws. The Company believes its present business property is adequate and suitable to support its mid-term strategies and initiatives for growth. They are in the process of renegotiating a lease renewal, but there is a large supply of comparable commercial property available in the general area that we would be able to lease at comparable lease rates.

AmBio Contract

The Company has engaged AmBio Staffing, LLC (“AmBio”) a Texas licensed Professional Employment Organization, (“PEO”) to provide payroll processing, employee benefit administration, and related human capital services effective January 1, 2017. The Company’s Chairman of the Board and President, Mark W. Brooks, owns and controls AmBio. As of March 26, 2018, AmBio operations supports approximately 74 full time equivalents (“FTE”). Of those 74 FTEs, 42 FTEs directly support the Company, 19 FTEs support the operations of other companies and the Company shares 13 FTEs with other companies.

Operations

The Company enters into various related party transactions with entities that are owned by or affiliated with the Company’s Named Executive Officers and Directors. The transactions included sales, purchases, commissions paid for services, and revenues related to services provided to the related party.

MedUSA Group, LLC

MedUSA Group, LLC (“MedUSA”) is a sub-distributor owned and controlled by our Chairman of the Board and Chief Executive Officer.

During the years ended December 31, 2017 and 2016, we had net sales of approximately $5,054,000 and $4,797,000, respectively, to MedUSA for product used in surgical cases.

During the years ended December 31, 2017 and 2016, we incurred commission expense of approximately $962,000 and $642,000, respectively, to MedUSA for services provided to us in surgical cases.

As of December 31, 2017, and 2016, we had balances due from MedUSA of approximately $1,684,000 and $1,752,000, respectively, included in accounts receivable on the accompanying consolidated balance sheets.

Texas Overlord, LLC

Texas Overlord, LLC (“Overlord”) is an investment holding company owned and controlled by our Chairman of the Board.

During the years ended December 31, 2017 and 2016, we had net sales of approximately $1,953,000 and $0.00, respectively, to Overlord for product used in surgical cases.

F-29

During the years ended December 31, 2017 and 2016, we incurred commission expense of approximately $101,000 and $0.00, respectively, to Overlord for services provided to us in surgical cases.

As of December 31, 2017, and 2016, we had balances due from Overlord of approximately $444,000 and $0.00, respectively, included in accounts receivable on the accompanying consolidated balance sheets.

N.B.M.J., Inc.

N.B.M.J., Inc. (“NBMJ”) is a Durable Medical Equipment (“DME”) distributor and a wound care distributor owned and controlled by our Chairman of the Board.

During the years ended December 31, 2017 and 2016, we had net sales of approximately $162,000 and $715,000, respectively, to NBMJ for product used in surgical cases.

During the years ended December 31, 2017 and 2016, we incurred commission expense of approximately $0.00 and $0.00, respectively, to NBMJ for services provided to us in surgical cases.

As of December 31, 2017, and 2016, we had balances due from NBMJ of approximately $0.00 and $47,000, respectively, included in accounts receivable on the accompanying consolidated balance sheets.

Palm Springs Partners d/b/a Maxim Surgical, LLC

Palm Springs Partners d/b/a Maxim Surgical, LLC (“Maxim”) is a manufacturer/distributor owned and controlled by Christopher C. Reeg, our Chief Executive Officer and Secretary, and Mark W. Brooks, our Chairman of the Board and President.

During the year ending December 31, 2017 and 2016, we had net sales of approximately $202,000 and $164,000 to Maxim for product used in surgical cases.

During the year ending December 31, 2017 and 2016, we purchased approximately $468,000 and $458,000 from Maxim.

As of December 31, 2017, and 2016, we had a balance due from Maxim of approximately $50,000 and $45,000, included in accounts receivable on the accompanying consolidated balance sheets.

As of December 31, 2017, and 2016, we had a balance due to Maxim of approximately $93,000 and $102,000, included in accounts payable on the accompanying consolidated balance sheets.

Sintu, LLC

Sintu, LLC (“Sintu”) is a sub-distributor owned and controlled by Mark W. Brooks, our Chairman of the Board and President.

During the year ended December 31, 2017 and 2016, we incurred commission expense of approximately $1,114,000 and $692,000 to Sintu for services provided in surgical cases.

Other

During the years ended December 31, 2017 and 2016, the Company had net sales of approximately $1,055,000 and $396,000, respectively, to these entities for product used in surgical cases.

During the years ended December 31, 2017 and 2016, the Company had purchases of approximately $128,000 and $8,000, respectively, from these entities.

F-30

During the years ended December 31, 2017 and 2016, the Company incurred commission expense of approximately $248,000 and $702,000, respectively, to these entities for services provided in surgical cases.

The Company also had other income related to charges for shared services it provided to the related party of approximately $33,000 and $114,000 for the years ended December 31, 2017 and 2016, respectively, included with selling, general, and administrative expenses on the accompanying consolidated statements of operations.

As of December 31, 2017, and 2016, the Company had balances due from these entities of approximately $169,000 and $159,000, respectively, included in accounts receivable on the accompanying consolidated balance sheets.

The Company engages AmBio, a licensed PEO to provide payroll processing, employee benefit administration, and related human capital services. AmBio is controlled by the Chairman of the Board and President. As of December 31, 2017, and 2016, the Company had balances due to AmBio of approximately $112,000 and $107,000. As of December 31, 2017, and 2016, approximately $162,000 and $162,000 of fees were paid to AmBio for such services, respectively, and are reflected with in selling, general, and administrative expenses on the accompanying consolidated statements of operations.

Note 12. Subsequent Events

In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through April 5, 2018, the date the financial statements were available to be issued.

On January 30, 2018, the Company received notice from UOC USA, Inc. (“UOC”) that UOC has elected to terminate the distribution agreement dated January 1, 2011, as amended (the “UOC Agreement”) between the Company’s wholly-owned subsidiary, CPM, and UOC. While the UOC Agreement terminated on February 28, 2018, in accordance with its terms and conditions, the UOC Agreement also authorized the continued provision of UOC products at UOC-contracted facilities until March 15, 2018. Because we hold title to our UOC inventory, we may continue selling UOC products until we deplete our UOC inventory.

Pursuant to the UOC Agreement, in consideration for mutual promises and covenants, the Company was appointed as a non-exclusive authorized distributor of UOC orthopedic implants and instruments for an initial fixed term of two years with auto-renewals thereafter. Either the Company or UOC could terminate the UOC Agreement at any time and for any reason upon ninety (90) days prior written notice to the other party.

At UOC’s sole discretion, the termination notice provides for the repurchase of the Company’s unsold UOC orthopedic implants by UOC on or before April 30, 2018. The Company’s revenue derived from the sale and distribution of UOC products was approximately $4.3 million or 16% and $4.9 million or 19%, for the year-ended December 31, 2017, and December 31, 2016, respectively.

The Company’s Management concluded there are no other material events or transactions for potential recognition or disclosure.

F-31

EX-31.1 2 d626605dex311.htm EX-31.1 EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Christopher C. Reeg, certify that:

I have reviewed this annual report on Form 10-K/A of Fuse Medical, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 21, 2018

/s/ Christopher C. Reeg

Christopher C. Reeg

Chief Executive Officer

(Principal Executive Officer)

EX-31.2 3 d626605dex312.htm EX-31.2 EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, William E. McLaughlin, III, certify that:

I have reviewed this annual report on Form 10-K/A of Fuse Medical, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 21, 2018

/s/ William E. McLaughlin, III

William E. McLaughlin, III

Chief Financial Officer

(Principal Financial Officer)

EX-32.1 4 d626605dex321.htm EX-32.1 EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Fuse Medical, Inc. (the “Company”) on Form 10-K/A for the year ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof, I, Christopher Reeg, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

The annual report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

The information contained in the annual report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Christopher C. Reeg

Christopher C. Reeg

Chief Executive Officer

(Principal Executive Officer)

Dated: September 21, 2018

In connection with the annual report of Fuse Medical, Inc. (the “Company”) on Form 10-K/A for the year ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof, I, William McLaughlin, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

The annual report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

The information contained in the annual report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William E. McLaughlin, III

William E. McLaughlin, III

Chief Financial Officer

(Principal Financial Officer)

Dated: September 21, 2018

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3 This Amendment No. 1 on Form 10-K/A (“Amendment No. 1”) to the Annual Report (“Annual Report”) on Form 10-K for the fiscal year ended December 31, 2017 (the “Original Filing”) of Fuse Medical, Inc. (“Fuse”), is being filed solely for the purpose of amending and restating in its entirety the following Items (together, the “Amended Items”);•Part II, Item 8 to amend the Company’s disclosure of Fair Value Measurements with respect to the Company’s CPM Acquisition Earn-Out Liability.•Part II, Item 9A to amend the conclusions regarding the adequacy of Fuse’s disclosure controls and procedures as of December 31, 2017;•Part IV, Item 15 to amend the Company’s exhibits and financial statements schedules to reflect updated disclosure of Fair Value Measurements with respect to the Company’s CPM Acquisition Earn-Out Liability.In accordance with Rule 12b-15 under the U.S. Securities Exchange Act of 1934 (the “Exchange Act”), the Amended Items of the Original Filing have been amended and restated in their entirety. This Amendment No. 1 does not amend or otherwise update any information in the Original Filing. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Filing. Capitalized terms used in this explanatory note not otherwise defined herein have the meaning given to them in the Original Filing.

<div> Note 1. Nature of Operations Overview The Company was initially incorporated in 1968 as Golf Rounds.com, Inc., a Florida corporation. During July 1999, GolfRounds, Inc. was re-domesticated to Delaware through a merger into its wholly-owned subsidiary GolfRounds.com, Inc. Effective May 28, 2014, GolfRounds.com, Inc. amended its certificate of incorporation to change its name to Fuse Medical, Inc. (“Fuse”) and merged with and into Fuse Medical, LLC, with Fuse Medical, LLC surviving as a wholly-owned subsidiary of Fuse. The transaction was accounted for as a reverse merger with Fuse the legal acquirer, and Fuse Medical, LLC deemed the accounting acquirer (“Reverse Merger”). During 2015, certificates of termination were filed for Fuse Medical, LLC and its two subsidiaries. Change in Control Between the period July 2016 through October 2016, the Company obtained three loans in the aggregate amount of $150,000 in exchange for convertible promissory notes (the “Notes”) bearing 10% interest per annum, with principal due and payable, upon demand of the payee. The Notes were issued as follows: $100,000 to NC 143 Family Holdings, LP, a family limited partnership controlled by Mark W. Brooks (“NC 143”), the Company’s Chairman of the Board of Directors (the “Board”); and $50,000 to Reeg Medical Industries, Inc., an investment holding company owned and controlled by Christopher C. Reeg, the Company’s Chief Executive Officer (“RMI”, and together with NC 143, the “Investors”). The Investors have the sole discretion and right to convert all or any portion of the then unpaid principal and interest balance of the Notes into shares of the Company’s common stock at a conversion price of $0.08 per share. On December 19, 2016 (the “Change-in-Control Date”), the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) by and between the Investors and the Company, pursuant to which NC 143 acquired 5 million shares of the Company’s common stock for a purchase price of $400,000 and RMI acquired 4 million shares of the Company’s common stock for a purchase price of $320,000 (collectively the “Investor Shares”), effective as of the Change-in-Control Date. Direct offering costs of the Company were $64,609 in connection with the offer and sale of the Investor Shares, and, net proceeds from the offer and sale of the Investor Shares were $655,391. CPM Acquisition On December 15, 2017, Fuse entered into an agreement with NC 143 pursuant to which Fuse would purchase all of the outstanding membership interests of CPM Medical Consultants, LLC (“CPM”) (the “CPM Acquisition Agreement” and such transaction, the “CPM Acquisition”). On December 29, 2017, Fuse completed the previously-announced the CPM Acquisition, pursuant to the CPM Acquisition Agreement by Fuse and NC 143, dated December 15, 2017, whereby the Fuse would purchase all of the outstanding membership interests of CPM. Fuse issued 50 million shares of its common stock, par value $0.01 per share in exchange for 100% of the outstanding membership interests of CPM, at an agreed-upon value of $0.20 per share of common stock. The effective date of the CPM acquisition was December 31, 2017 (the “Effective Date”). The CPM Acquisition provides for contingent payments, (Earn-Out”) to NC 143 subject to certain sales and profitability targets being met by the Company for years after 2017. Fuse was the legal acquirer and, for accounting purposes, CPM was deemed to have acquired our Company in the CPM Acquisition. CPM is the successor entity and becomes the reporting entity which combines Fuse at the Change-in-Control Date, with the assets and liabilities of both companies combined at historical cost. (see note 3) Nature of Business Fuse is a national distributor of medical devices, who provides a broad portfolio of internal and external fixation products; upper and lower extremity plating and total joint reconstruction; soft tissue fixation and augmentation for sports medicine procedures; spinal implants for trauma, degenerative disc disease, and deformity indications (collectively, “Orthopedic Implants”) and a wide array of osteo-biologics and regenerative tissue which include human allografts, substitute bone materials and tendons, as well as regenerative tissues and fluids (“Biologics”). All of our medical devices are approved by the U.S. Food and Drug Administration (“FDA”) for sale in the United States, and all of our Biologics suppliers are licensed tissue banks accredited by the American Association of Tissue Banks (“AATB”). The Company’s board portfolio of Orthopedic Implants and Biologics provide high-quality products to assist surgeons with positive patient outcomes and cost-effective solutions for its customers, which include hospitals, medical facilities, and sub-distributors. Fuse operates under exclusive and non-exclusive agreements with certain vendors and supply partners in the geographic territories the Company serves.   Fuse continuously reviews and expands its product lines to ensure that they offer the most comprehensive, high-quality and cost-effective selection of Orthopedic Implants and Biologics so that the Company can be more relevant to its customer needs while continuing to grow its existing customer base. </div>

<div> Cash and Cash Equivalents The Company considers highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. There were no cash equivalents at December 31, 2017 and 2016. The Company’s cash is concentrated in large financial institutions that at times may exceed federally insured limits of $250,000 per financial institution. The Company has not experienced any losses from inception through December 31, 2017. As of December 31, 2017, and 2016, there were deposits of $537,388 and $421,636, respectively, greater than federally insured limits. </div>

<div> Note 7. Commitments and Contingencies Legal Matters On January 27, 2014, M. Richard Cutler and Cutler Law Group, P.C. (the “Plaintiffs”) filed a complaint in the District Court of Harris County, Texas, 201 4-03355, against Fuse, Alan Meeker, Rusty Shelton, Jonathan Brown, Robert H. Donehew and Golf Rounds.com, Inc. (the “Defendants”). On April 21, 2014, the complaint was dismissed for “want of prosecution.” On September 18, 2015, Plaintiffs refiled a complaint in the District Court of Harris County, Texas, Cause No. 2015-55652 and added PH Squared, LLC as an additional Plaintiff. Thereafter, the term “Plaintiffs” collectively refers to M. Richard Cutler, Cutler Law Group, P.C. and PH Squared, LLC. The new complaint asserts essentially the same claims as the original nonsuited complaint: (i) suit on sworn account against Fuse; (ii) fraud against all Defendants; and (iii) breach of contract against all Defendants for allegedly violating a non-circumvention/non-disclosure agreement. Richard Cutler is the sole principal of Cutler Law Group, P.C., which provided legal representation to its clients, Craig Longhurst and PH Squared, LLC d/b/a PharmHouse Pharmacy (“Cutler’s Client”), during a failed merger attempt between Fuse and Golf Rounds.com, Inc. (the “Failed Transaction”). The Plaintiffs have alleged that the Failed Transaction failed to materialize notwithstanding the efforts of Mr. Cutler, his law firm and PH Squared, LLC. The Plaintiffs have further alleged that the Defendants continued to pursue a similar transaction without Cutler’s Client or the Plaintiffs. The Plaintiffs claim that the Defendants are responsible for damages in the amount of $46,465 plus interest for the breach of contract claim because Plaintiffs were not paid their legal fees by Cutler’s Client and Plaintiffs did not receive equity in the merged company that would have resulted from the Failed Transaction. Plaintiffs are also asking for undisclosed damages related to the fraud and breach of contract claims, and are asking for exemplary damages as a result of allegedly intentional fraud that some or all of the Defendants allegedly committed. Plaintiffs also seek their attorneys’ fees and costs for having brought the action. On November 18, 2015, Fuse filed a counterclaim against PH Squared, LLC for breach of contract and further asserted a counterclaim and third-party claim against PH Squared, LLC’s principle, Craig Longhurst, for fraud in the inducement. Fuse also seeks a declaratory judgment on the intended third-party beneficiary status of Plaintiffs Cutler and Cutler Law Group related to a non-circumvention/non-disclosure agreement. The trial date for the above matter was scheduled for May 1, 2017, but it was moved to July 24, 2017 in order to allow for some additional discovery. During April 2017, one of the named individuals in the complaint filed for bankruptcy protection. There is currently no trial date set. The Company’s management continues to believe that the lawsuit is completely without merit and will vigorously contest it and protect the Company’s interests. Operating Leases The Company leases office space under a noncancelable operating lease agreement, from a real estate investments company that is owned and controlled by the Company’s Chairman of the Board and President. This lease terminated December 31, 2017 with month-to-month renewals. The lease requires monthly payments of $14,000. Annual rent expense was approximately $142,000 and $120,000 for the years ended December 31, 2017 and 2016, and are included in selling, general, administrative and other expenses. The Company leases office equipment under two noncancelable operating lease agreements which expire March 2019 and February 2021. In aggregate, these office equipment leases require monthly payments of approximately $779. Rent expense for the equipment leases totaled approximately $11,000 and $8,000 for the years ended December 31, 2017 and 2016, respectively, and are included in selling, general, administrative and other expenses.   The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 2017:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="68%" align="center" border="0"> <tr> <td width="88%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom" nowrap="nowrap"> Year ending December 31, </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> 2018 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">9,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> 2019 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> 2020 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> 2021 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">500</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">17,500</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

FY 2017 10-K/A

0.04

<div> Earnings Per Share Basic net income per common share is calculated by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Shares of restricted stock are included in the basic weighted average number of common shares outstanding from the time they vest. Diluted net income per common share is computed by dividing net income attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method. As of December 31, 2017, 700,000 outstanding common stock equivalents have been included with diluted net earnings per share. As of December 31, 2017, and 2016, common stock equivalents included options to purchase 1,302,052 and 1,304,788 common shares, respectively. </div>

0.350

0.000

0.205

0000319016 No

<div> Inventories Inventories are stated at the net realizable value (first-in, first-out). Inventories consist entirely of finished goods and include Orthopedic Implants and Biologics. The Company reviews the market value of inventories whenever events and circumstances indicate that the carrying value of inventories may not be recoverable from the estimated future sales price less cost of disposal and normal gross profit. In cases where the market values are less than the carrying value, a write-down is recognized equal to an amount by which the carrying value exceeds the market value of inventories. </div>

<div> Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company’s management is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures. In July 2015, the FASB issued ASU No. 2015-11 — “Inventory (Topic 330)”, which requires an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company adopted ASU 2015-11 as of January 1, 2017 and did not have a material impact on the Company’s financial statements. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases”, which requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company’s management is in the process of evaluating the impact of the adoption of ASU 2016-02 on the Company’s financial statements and disclosures.   In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash payments.” The update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This ASU is effective for the public business entities for fiscal years beginning after December 15, 2017 and for interim periods within those fiscal years. The amendments in this update may be applied retrospectively or prospectively and early adoption is permitted. The Company’s management is in the process of evaluating the impact of ASU 2016-15 on the Company’s financial statements and disclosures. In November 2016, the FASB issued ASU Update No. 2016-18 — “Statement of Cash Flows (Topic 230): Restricted Cash (A Consensus of the FASB EITF)”. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. These amounts should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This amendment does not provide a definition of restricted cash or restricted cash equivalents. The update will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company’s management is in the process of evaluating the impact of ASU 2016-18 on the Company’s financial statements and disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission, (the “SEC”) did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. </div>

<div> The components of income tax expense (benefit) are as follows:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Current: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Federal </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> State </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">40,818</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">51,627</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">40,818</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">51,627</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Deferred: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Federal </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> State </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Total Income tax expense (benefit) </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">40,818</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">51,627</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

2736

P3Y3M18D

12.13

<div> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Note 2. Significant Accounting Policies <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Principles of Consolidation <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. Intercompany transactions have been eliminated in consolidation. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Use of Estimates <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> The preparation of the consolidated financial statements in accordance with generally accepted accounting principles in the United State, (“GAAP”). GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include the allowances for doubtful accounts and contractual pricing, valuation of inventories, accrued commissions, the fair value calculation of stock based compensation, and fair value of Earn-Out liability. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Earnings Per Share <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Basic net income per common share is calculated by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Shares of restricted stock are included in the basic weighted average number of common shares outstanding from the time they vest. Diluted net income per common share is computed by dividing net income attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method. As of December 31, 2017, 700,000 outstanding common stock equivalents have been included with diluted net earnings per share. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> As of December 31, 2017, and 2016, common stock equivalents included options to purchase 1,302,052 and 1,304,788 common shares, respectively. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Fair Value Measurements <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy: <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; MARGIN-LEFT: 62px; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets; <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; MARGIN-LEFT: 62px; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Level 2—Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; MARGIN-LEFT: 62px; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Level 3—Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> In connection with the CPM Acquisition, the Company recorded a $19,244,543 liability related to the Earn-Out portion of the purchase consideration. See Note 3, Acquisition, for further discussion of the Earn-Out Liability. The Company has classified the Earn-Out Liability as a Level 3 liability and the fair value of the Earn-Out Liability will be evaluated each reporting period and changes in its fair value will be included in the Company’s results of operations. The Earn-Out payments are based on the financial performance of the Company between the period of January 1, 2018 and December 31, 2034. The base amount of the Earn-Out is $16,000,000 with an additional bonus payment of $10,000,000. The payments of the base and bonus Earn-Out amounts are subject to the Company meeting certain earnings thresholds as detailed in the purchase agreement. The Earn-Out payments during the Earn-Out period specified above, ranges from $0 to $26,000,000. <p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial">   <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> The fair value of the Earn-Out Liability was calculated using the Monte Carlo simulation, which was then applied to estimated Earn-Out payments with a discount rate of 4%. To determine the fair value of the Earn-Out liability, the Company’s management evaluates assumptions that require significant judgement. Significant assumptions used for estimating the Earn-Out liability included gross margins of approximately 48%, net income margins averaging 9% per year, revenue growth of approximately 5% over a forecast horizon period of 11 years. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> The Earn-Out liability, which represented contingent consideration associated with the CPM Acquisition is recorded as a liability. This liability is subject to re-measurement to fair value at each reporting date until the contingency is resolved and the changes in fair value is recognized in the statement of operations at each reporting period since the arrangement is not subject to the accounting for hedging instruments. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The recorded value of notes payable approximates their fair value based upon their effective interest rates. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Cash and Cash Equivalents <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> The Company considers highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. There were no cash equivalents at December 31, 2017 and 2016. The Company’s cash is concentrated in large financial institutions that at times may exceed federally insured limits of $250,000 per financial institution. The Company has not experienced any losses from inception through December 31, 2017. As of December 31, 2017, and 2016, there were deposits of $537,388 and $421,636, respectively, greater than federally insured limits. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Accounts Receivable and Allowances <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Accounts receivables are non-interest bearing and are stated at gross invoice amounts less an allowance for doubtful accounts receivable and an allowance for contractual pricing. Credit is extended to customers based on an evaluation of their financial condition and other factors. The Company generally does not require collateral or other security to support accounts receivable. The Company performs ongoing credit evaluations of its customers and maintains an allowance for potential bad debts. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> The Company estimates its allowance for doubtful accounts by evaluating specific accounts where information indicates the customers may have an inability to meet financial obligations, such as bankruptcy proceedings and receivable amounts outstanding for an extended period beyond contractual terms. In these cases, the Company uses assumptions and judgment, based on the best available facts and circumstances, to record a specific allowance for those customers against amounts due to reduce the receivable to the amount expected to be collected. These specific allowances are re-evaluated and adjusted as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance. The Company may also record a general allowance as necessary. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> The Company’s management estimates its allowance for contractual pricing, by evaluating specific accounts where information indicates the customer is offered contractual pricing and discount allowances. In these arrangements, the Company’s management uses assumptions and judgement, based on the best available facts and circumstances to record a specific allowance for the amounts due from those customers. The allowance is offset by a corresponding reduction to revenue. These specific allowances are re-evaluated and adjusted as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance. The Company may also record a general allowance as necessary. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Accounts deemed uncollectible are written-off in the period when the Company has exhausted its efforts to collect overdue and unpaid receivables or otherwise has evaluated other circumstances that indicate that the Company should abandon such efforts. Previously written-off accounts receivable subsequently collected are recognized as a reduction of bad debt expense when funds are received. <p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial">   <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Inventories <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Inventories are stated at the net realizable value (first-in, first-out). Inventories consist entirely of finished goods and include Orthopedic Implants and Biologics. The Company reviews the market value of inventories whenever events and circumstances indicate that the carrying value of inventories may not be recoverable from the estimated future sales price less cost of disposal and normal gross profit. In cases where the market values are less than the carrying value, a write-down is recognized equal to an amount by which the carrying value exceeds the market value of inventories. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Property and Equipment <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets per the following table. Leasehold improvements are amortized over the lesser of their useful life or the lease term. Expenditures for additions and improvements are capitalized while repairs and maintenance are expensed as incurred. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial">   <table style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; ORPHANS: 2; WIDOWS: 2; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial" cellspacing="0" cellpadding="0" width="68%" align="center" border="0"> <tr> <td width="85%"></td> <td valign="bottom" width="8%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid"> <td valign="bottom" nowrap="nowrap"> Category </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center">Amortization Period</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF"> <td valign="top"> Computer equipment </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3 years</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid"> <td valign="top"> Furniture and fixtures </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3 years</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF"> <td valign="top"> Office equipment </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3 years</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid"> <td valign="top"> Software </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3 years</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation and amortization are removed and a gain or loss is recorded in the consolidated statements of operations. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Long-Lived Assets <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> The Company assesses potential impairment to its long-lived assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include, but are not limited to: (i) significant changes in performance relative to expected operating results, (ii) significant changes in the use of the assets, (iii) significant negative industry or economic trends, (iv) a significant decline in the Company’s stock price for a sustained period of time, and (v) changes in the Company’s business strategy. An impairment loss is recorded when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds fair value and is recorded as a reduction in the carrying value of the related asset and an expense to operating results. Based upon the Company’s assessment, there were no indicators of impairment of its long-lived assets at December 31, 2017 and 2016. <p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial">   <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Goodwill <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Goodwill is the excess of the purchase price over the fair value of net assets of acquired businesses. Goodwill is tested for impairment annually or whenever an event occurs or circumstances change that would indicate that the carrying amount may be impaired. The test for impairment requires us to make several estimates about fair value, most of which are based on projected future cash flows. The Company’s management estimates associated with the goodwill impairment test are considered critical due to the amount of goodwill recorded on our consolidated balance sheets and the judgment required in determining fair value, including projected future cash flows. No goodwill impairment has been recognized during 2017 or 2016. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Revenue Recognition <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> The Company recognizes revenue when: (i) persuasive evidence of an arrangement exists; (ii) the fees are fixed or determinable; (iii) no significant Company obligations remain; and (iv) collection of the related receivable is reasonably assured. The Company reports revenues for transactions in which it is the primary obligor on a gross basis and revenues in which it acts as an agent (earning a fixed percentage of the sale) on a net basis, (net of related costs). The Company reports funds collected from customers as deferred revenues until all revenue recognition criteria have been met. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Revenues are sales of Orthopedic Implants and Biologics to support orthopedic surgeries and wound care. For customers that purchase products as needed, the Company invoices the customers on the date the product is utilized. For customers that have consigned product, the Company invoices the customers as each unit of the product is utilized. Payment terms are due upon receipt of invoice. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Products that have been sold are not subject to returns unless the product is deemed defective. Credits or refunds are recognized when they are determinable and estimable. Net revenues have been reduced to account for sales returns, discounts and other incentives. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Cost of Revenues <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Cost of revenues consists of cost of goods sold, freight and shipping costs for items sold to customers, cost of storage, and related supply chain costs. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Shipping and Handling Fees <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> The Company includes shipping and handling fees billed to customers in revenues and the related costs in cost of revenues. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Income Taxes <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> As a result of the CPM Acquisition, Fuse became the sole managing member of CPM and as a result, began consolidating the financial results of CPM. CPM is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, CPM is not subject to U.S. federal and most applicable state and local income tax purposes. As a partnership, CPM is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by CPM is passed through to an included in the taxable income or loss of its members. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> The Company uses the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. The Company has deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are subject to periodic recoverability assessments. Realization of the deferred tax assets, net of deferred tax liabilities, is principally dependent upon achievement of projected future taxable income. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. As of December 31, 2017, the Company had no liabilities for uncertain tax positions. The Company’s policy is to recognize interest and penalties related to income tax matters as a component of income tax expense. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law, and new authoritative rulings. <p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial">   <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Segment Information <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> The Company operates in one reportable segment including medical products and supplies. The Company’s chief operating decision maker, is its Chief Executive Officer. The Company’s Chief Executive Officer manages the Company’s operations as a whole, and does not evaluate revenue, expense or operating income information on any component level. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Stock-Based Compensation <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the requisite service period. For employee stock-based awards, the Company calculates the fair value of the award on the date of grant using the Black-Scholes option pricing model. Determining the fair value of stock-based awards at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based awards represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. For non-employee stock-based awards, the Company calculates the fair value of the award on the date of grant in the same manner as employee awards, however, the awards are revalued at the end of each reporting period and the prorata compensation expense is adjusted accordingly until such time the non-employee award is fully vested, at which time the total compensation recognized to date shall equal the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient’s performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Recent Accounting Pronouncements <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company’s management is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> In July 2015, the FASB issued ASU No. 2015-11 — “Inventory (Topic 330)”, which requires an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company adopted ASU 2015-11 as of January 1, 2017 and did not have a material impact on the Company’s financial statements. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases”, which requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company’s management is in the process of evaluating the impact of the adoption of ASU 2016-02 on the Company’s financial statements and disclosures. <p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial">   <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash payments.” The update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This ASU is effective for the public business entities for fiscal years beginning after December 15, 2017 and for interim periods within those fiscal years. The amendments in this update may be applied retrospectively or prospectively and early adoption is permitted. The Company’s management is in the process of evaluating the impact of ASU 2016-15 on the Company’s financial statements and disclosures. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> In November 2016, the FASB issued ASU Update No. 2016-18 — “Statement of Cash Flows (Topic 230): Restricted Cash (A Consensus of the FASB EITF)”. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. These amounts should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This amendment does not provide a definition of restricted cash or restricted cash equivalents. The update will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company’s management is in the process of evaluating the impact of ASU 2016-18 on the Company’s financial statements and disclosures. <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: 400; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial"> Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission, (the “SEC”) did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. </div>

FZMD

19473553

16027794

true

<div> Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. Intercompany transactions have been eliminated in consolidation. </div>

0.058

<div> Goodwill Goodwill is the excess of the purchase price over the fair value of net assets of acquired businesses. Goodwill is tested for impairment annually or whenever an event occurs or circumstances change that would indicate that the carrying amount may be impaired. The test for impairment requires us to make several estimates about fair value, most of which are based on projected future cash flows. The Company’s management estimates associated with the goodwill impairment test are considered critical due to the amount of goodwill recorded on our consolidated balance sheets and the judgment required in determining fair value, including projected future cash flows. No goodwill impairment has been recognized during 2017 or 2016. </div>

<div> Note 9. Income Taxes As a result of the CPM Acquisition, Fuse became the sole managing member of CPM and as a result, began consolidating the financial results of CPM. CPM is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, CPM is not subject to U.S. federal and most applicable state and local income tax purposes. As a partnership, CPM is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by CPM is passed through to an included in the taxable income or loss of its members. Fuse is subject to U.S. federal income taxes, in addition to state and local income taxes. The components of income tax expense (benefit) are as follows:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Current: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Federal </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> State </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">40,818</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">51,627</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">40,818</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">51,627</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Deferred: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Federal </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> State </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Total Income tax expense (benefit) </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">40,818</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">51,627</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table>   Significant components of the Company’s deferred income tax assets and liabilities are as follows:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="11%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="11%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Deferred tax assets: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Net operating loss carryover </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">172,704</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">224,381</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Intangibles </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">40,342</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Accounts receivable </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">81,927</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Compensation </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">57,458</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">80,850</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Inventory </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">25,792</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Total deferred tax assets </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">378,223</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">305,231</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Deferred tax liabilities: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Prepaid expenses </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Property and equipment </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(2,945</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,795</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Total deferred tax liabilities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(2,945</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,795</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Deferred tax assets, net </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">375,278</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">308,026</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Valuation allowance: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Beginning of year </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(308,026</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(700,713</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> (Increase) decrease during year </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">308,026</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">392,687</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Ending balance </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(308,026</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Net deferred tax asset </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">375,278</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> In 2016 and 2017 CPM is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, CPM is not subject to U.S. federal and certain state income taxes. Any taxable income or loss generated by CPM during 2016 and 2017 is passed through to and included in the taxable income or loss of its members. Accordingly, our consolidated financial statements for 2017 do not include a provision for federal or state income tax purposes.   Fuse is treated as a corporation for U.S. federal and applicable state and local income tax purposes. As a corporation, Fuse is subject to U.S. federal and applicable state income taxes. A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. The Company has recorded a valuation allowance in 2016 due to the uncertainty of realization. As a result of the organizational transactions of Fuse and CPM in 2017, it is more likely than not that the tax deferred tax assets benefits would be realized. At December 31, 2017, Fuse had $822,399 of net operating loss carryforwards which will expire from 2018 to 2037. These carry forward benefits may be subject to annual limitations due to the ownership change limitations imposed by the Internal Revenue Code and similar state provisions. The annual limitation, if imposed, may result in the expiration of net operating losses before utilization. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of December 31, 2017, tax years 2012 through 2015 remain open for IRS audit. The Company has received no notice of audit from the Internal Revenue Service for any of the open tax years. A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax rate is as follows:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="15%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="15%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Statutory U.S. federal income tax rate </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">35.0</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">35.0</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> State income taxes, net of federal tax benefit </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5.8</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1.7</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Permanent differences </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3.8</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.3</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Other reconciling items </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">20.5</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">19.8</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> LLC flow-through structure </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(59.3</td> <td valign="bottom" nowrap="nowrap">%) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(42.1</td> <td valign="bottom" nowrap="nowrap">%) </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Valuation allowance </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.0</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(13.0</td> <td valign="bottom" nowrap="nowrap">%) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Effective income tax rate </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5.8</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1.7</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

January 27, 2014

Fuse, Alan Meeker, Rusty Shelton, Jonathan Brown, Robert H. Donehew and Golf Rounds.com, Inc.

<div> The following table summarizes restricted common stock activity:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="84%" align="center" border="0"> <tr> <td width="69%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2" align="center"> Number of Shares </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2" align="center">Fair Value</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2" align="center"> Weighted Average Grant Date Fair Value </td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Non-vested, December 31, 2016 </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Granted </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,267,500</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,813,500</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.56</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Vested </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Forfeited </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Non-vested, December 31, 2017 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,267,500</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,813,500</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.56</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

<div> The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 2017:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="68%" align="center" border="0"> <tr> <td width="88%"></td> <td valign="bottom" width="6%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom" nowrap="nowrap"> Year ending December 31, </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> 2018 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">9,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> 2019 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> 2020 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> 2021 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">500</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">17,500</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

<div> Property and equipment consisted of the following at December 31, 2017 and 2016:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Computer equipment </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">29,290</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Furniture and fixtures </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5,047</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">6,347</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Leasehold improvements </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">6,728</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Office equipment </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">21,913</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">9,221</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Software </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">34,252</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">26,960</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">85,838</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Less: accumulated depreciation </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(10,065</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(71,091</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Property and equipment, net </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">16,895</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">14,747</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

<div> Revenue Recognition The Company recognizes revenue when: (i) persuasive evidence of an arrangement exists; (ii) the fees are fixed or determinable; (iii) no significant Company obligations remain; and (iv) collection of the related receivable is reasonably assured. The Company reports revenues for transactions in which it is the primary obligor on a gross basis and revenues in which it acts as an agent (earning a fixed percentage of the sale) on a net basis, (net of related costs). The Company reports funds collected from customers as deferred revenues until all revenue recognition criteria have been met. Revenues are sales of Orthopedic Implants and Biologics to support orthopedic surgeries and wound care. For customers that purchase products as needed, the Company invoices the customers on the date the product is utilized. For customers that have consigned product, the Company invoices the customers as each unit of the product is utilized. Payment terms are due upon receipt of invoice. Products that have been sold are not subject to returns unless the product is deemed defective. Credits or refunds are recognized when they are determinable and estimable. Net revenues have been reduced to account for sales returns, discounts and other incentives. </div>

<div> Significant components of the Company’s deferred income tax assets and liabilities are as follows:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="11%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="11%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Deferred tax assets: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Net operating loss carryover </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">172,704</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">224,381</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Intangibles </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">40,342</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Accounts receivable </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">81,927</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Compensation </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">57,458</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">80,850</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Inventory </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">25,792</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Total deferred tax assets </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">378,223</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">305,231</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Deferred tax liabilities: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Prepaid expenses </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Property and equipment </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(2,945</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,795</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Total deferred tax liabilities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(2,945</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,795</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Deferred tax assets, net </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">375,278</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">308,026</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Valuation allowance: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Beginning of year </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(308,026</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(700,713</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> (Increase) decrease during year </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">308,026</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">392,687</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Ending balance </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(308,026</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Net deferred tax asset </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">375,278</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

<div> Stock-Based Compensation Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the requisite service period. For employee stock-based awards, the Company calculates the fair value of the award on the date of grant using the Black-Scholes option pricing model. Determining the fair value of stock-based awards at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based awards represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. For non-employee stock-based awards, the Company calculates the fair value of the award on the date of grant in the same manner as employee awards, however, the awards are revalued at the end of each reporting period and the prorata compensation expense is adjusted accordingly until such time the non-employee award is fully vested, at which time the total compensation recognized to date shall equal the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient’s performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. </div>

0.000

0.0000

P3Y3M18D

<div> Note 3. Acquisition Between the period July 2016 through October 2016, the Company obtained three loans in the aggregate amount of $150,000 in exchange for the Notes bearing 10% interest per annum, with principal due and payable, upon demand of the payee. The Notes were issued as follows: $100,000 to NC 143, and $50,000 to RMI. The Investors have the sole discretion and right to convert all or any portion of the then unpaid principal and interest balance of the Notes into shares of the Company’s common stock at a conversion price of $0.08 per share. (see note 6). On December 19, 2016, the Company entered into a Stock Purchase Agreement by and between the Investors and the Company, pursuant to which NC 143 acquired 5 million shares of the Company’s common stock for a purchase price of $400,000 and RMI acquired 4 million shares of the Company’s common stock for a purchase price of $320,000 effective as of the Change-in-Control Date. Direct offering costs of the Company were $64,609 in connection with the offer and sale of the Investor Shares, and, net proceeds from the offer and sale of the Investor Shares were $655,391. The closing of the Stock Purchase Agreement resulted in a change-in-control of the Company whereby the Investors beneficially acquired approximately 61.4% of the Company’s common stock issued and outstanding immediately after the Change-in-Control Date. Mark W. Brooks became our Chairman of the Board and Christopher C. Reeg became our Chief Executive Officer, as described in our Current Report on Form 8-K, filed with the Commission on December 23, 2016, which is herein incorporated by reference. Fuse recorded a goodwill asset of $820,000 to reflect the excess of the carrying value of the Company’s net assets over their fair value as implied by the purchase price paid by the Investors on the Change-in-Control Date. On December 15, 2017, Fuse entered into the CPM Acquisition Agreement with NC 143 pursuant to which Fuse would purchase all of the outstanding membership interests of CPM. On December 29, 2017, Fuse completed the previously-announced CPM Acquisition, pursuant to the CPM Acquisition Agreement by Fuse and NC 143, dated December 15, 2017, whereby Fuse would purchase all of the outstanding membership interests of CPM. Fuse issued 50 million shares of its common stock, par value $0.01 per share in exchange for 100% of the outstanding membership interests of CPM, at an agreed-upon value of $0.20 per share of common stock. The effective date of the CPM Acquisition was December 31, 2017. Additional one-time costs incurred with the acquisition totaled approximately $200,000 and are included in the selling, general, administrative and other expenses on the consolidated statements of operations. The CPM Acquisition Agreement provides for Earn-Out payments to NC 143 subject to certain sales and profitability targets being met by the Company for years after 2017. The fair value of the Earn-Out was recorded at $19,244,543 as of the Effective Date. The Company recorded the Earn-Out at its fair value of the Effective Date. The CPM Acquisition Agreement provides for a working capital post-closing adjustment (“Post-Closing Adjustment”) for certain changes in CPMs current assets and current liabilities pursuant to the CPM Acquisition Agreement. The Post-Closing Adjustment is approximately $397,463 and will be paid in shares of the Company’s common stock within 120 days the Effective Date.   On the Effective Date of the closing of the CPM acquisition, NC 143 and RMI beneficially acquired approximately 90.4% of the Company’s common stock outstanding. Fuse is the legal acquirer and, for accounting purposes, CPM was deemed to have acquired the Company in the CPM Acquisition. CPM is the successor entity and becomes the reporting entity which combines Fuse at the Change-in-Control Date, with the assets and liabilities of both companies combined at historical cost. (see note 1). The following unaudited pro forma summary financial information presents the consolidated results of operations for the Company as if the CPM Acquisition had occurred on January1, 2016. The pro forma results are shown for illustrative purposes only and do not purport to be indicative of the results that would have been reported if the CPM Acquisition had occurred on the date indicated or indicative of the results that may occur in the future. Unaudited pro forma information for the twelve months ended December 31, 2016 is as follows:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="56%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center">Year Ended December 31, 2016 - Unaudited</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Historical Fuse Medical, Inc.</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Historical CPM Medical Consultants, LLC</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Pro forma Adjustments</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Pro forma Combined</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Revenue </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">567,607</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">25,647,353</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(103,578</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">26,111,382</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Net (loss) income </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(585,935</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">3,035,296</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,449,361</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Net (loss) income per common share - basic </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.34</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> </table> The supplemental pro forma earnings were adjusted to exclude $103,578 for the year ended December 31, 2016. The number of shares outstanding used in calculating the net (loss) per common share – basic was 7,185,890 for the year ended December 31, 2016. The Company is managed and operates in one segment, with Fuse merged into the CPM existing operations. </div>

<div> Cost of Revenues Cost of revenues consists of cost of goods sold, freight and shipping costs for items sold to customers, cost of storage, and related supply chain costs. </div>

--12-31

0.04

2017-12-31 Yes Smaller Reporting Company

2014-04-21

1604536

<div> Note 4. Property and Equipment Property and equipment consisted of the following at December 31, 2017 and 2016:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Computer equipment </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">29,290</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Furniture and fixtures </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5,047</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">6,347</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Leasehold improvements </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">6,728</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Office equipment </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">21,913</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">9,221</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Software </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">34,252</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">26,960</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">85,838</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Less: accumulated depreciation </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(10,065</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(71,091</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Property and equipment, net </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">16,895</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">14,747</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> During the year ended December 31, 2017, the Company sold fixed assets having a net book value of $607 for cash proceeds of $300, retired fixed assets no longer in use with a net book value of $3,058, and recorded $8,732 of insurance settlements proceeds for a fully depreciated fixed asset. Depreciation expense for the years ended December 31, 2017 and 2016 was $14,521 and $19,091, respectively. </div>

<div> A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax rate is as follows:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="15%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="15%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Statutory U.S. federal income tax rate </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">35.0</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">35.0</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> State income taxes, net of federal tax benefit </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5.8</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1.7</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Permanent differences </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3.8</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.3</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Other reconciling items </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">20.5</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">19.8</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> LLC flow-through structure </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(59.3</td> <td valign="bottom" nowrap="nowrap">%) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(42.1</td> <td valign="bottom" nowrap="nowrap">%) </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Valuation allowance </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.0</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(13.0</td> <td valign="bottom" nowrap="nowrap">%) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Effective income tax rate </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5.8</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1.7</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

<div> A summary of the Company’s stock option activity during the year ended December 31, 2017 is presented below:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="62%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">No. of Shares</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Weighted Average Exercise Price</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Weighted Average Remaining Contractual Term</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Aggregate Intrinsic Value</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Balance outstanding at December 31, 2016 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,304,788</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.22</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Granted </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Exercised </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Forfeited </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Expired </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(2,736</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">12.13</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Balance outstanding at December 31, 2017 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,302,052</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.20</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3.3</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,717,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Exercisable at December 31, 2017 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,302,052</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.20</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3.3</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,717,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

<div> The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to employees during the year ended December 31, 2016:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="72%"></td> <td valign="bottom" width="11%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="11%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom" nowrap="nowrap"> Assumptions </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Expected term (years) </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2.5</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Expected volatility </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">162</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Weighted-average volatility </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">162</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Risk-free interest rate </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.00</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1.43</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Dividend yield </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.0</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.0</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Expected forfeiture rate </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">n/a</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">n/a</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> </table> </div>

<div> Segment Information The Company operates in one reportable segment including medical products and supplies. The Company’s chief operating decision maker, is its Chief Executive Officer. The Company’s Chief Executive Officer manages the Company’s operations as a whole, and does not evaluate revenue, expense or operating income information on any component level. </div>

<div> Shipping and Handling Fees The Company includes shipping and handling fees billed to customers in revenues and the related costs in cost of revenues. </div>

<div> Note 8. Stockholders’ Equity Authorized Capital The Company has authorized 100,000,000 shares of common stock having a par value of $0.01 per share, and its Board is authorized to issue shares of the common stock, in one or more series, and to fix for each such series the voting powers, designations, preferences, or other special rights and the qualifications, limitations or restrictions. The Company has authorized 20,000,000 shares of preferred stock having a par value of $0.01 per share, and its Board is authorized to issue shares of the preferred stock, in one or more series, and to fix for each such series the voting powers, designations, preferences, or other special rights and the qualifications, limitations or restrictions. Common Stock On December 29, 2017, Fuse completed the previously-announced acquisition of CPM, pursuant to the CPM Acquisition Agreement by Fuse and NC 143, dated December 15, 2017, whereby the Fuse would purchase all of the outstanding membership interests of CPM. Fuse issued 50,000,000 shares of its common stock, par value $0.01 per share in exchange for 100% of the outstanding equity interests of CPM, at an agreed-upon value of $0.20 per share of common stock, as reflected in the fairness opinion provided by ValueScope. The Effective Date of the CPM acquisition was December 31, 2017. On December 19, 2016, the Company entered into the Stock Purchase Agreement by and between the Investors and the Company, pursuant to which NC 143 acquired 5 million shares of the Company’s common stock for a purchase price of $400,000 and RMI acquired 4 million shares of the Company’s common stock for a purchase price of $320,000, effective as of the Change-in-Control Date. Direct offering costs of the Company were $64,609 in connection with the offer and sale of the Investor Shares, and, net proceeds from the sale of the Investor Shares were $655,391. (See Note 6)   Stock Incentive Plans The Company has a stock-based compensation plan which provides for the granting of equity awards, including qualified incentive and non-qualified stock options, stock appreciation awards and restricted stock awards to employees, directors, consultants and advisors; the 2017 Equity Incentive Plan (the “2017 Plan”), which was adopted by the Company’s Board on April 5, 2017. The awards are subject to a vesting schedule as set forth in individual agreements. On September 21, 2017, the Board approved an amendment to the 2017 Plan to increase the number of shares of common stock authorized for issuance under the 2017 Plan from 1,500,000 shares of common stock to 2,500,000 shares of common stock. On October 4, 2017, the Board approved an amendment to the 2017 Plan to increase the number of shares of common stock authorized for issuance under the 2017 Plan from 2,500,000 shares of common stock to 4,500,000 shares of common stock. Stock Options The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of the Company’s stock price over the expected option term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC Topic 718 requirements. These amounts are the Company’s estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award. The Company did not grant stock options in 2017.   The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to employees during the year ended December 31, 2016:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="72%"></td> <td valign="bottom" width="11%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="11%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom" nowrap="nowrap"> Assumptions </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Expected term (years) </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2.5</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Expected volatility </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">162</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Weighted-average volatility </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">162</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Risk-free interest rate </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.00</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1.43</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Dividend yield </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.0</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.0</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Expected forfeiture rate </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">n/a</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">n/a</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> </table> The Company’s management utilized the simplified method to estimate the expected life for stock options granted to employees, as the Company does not have sufficient historical data regarding stock option exercises. The expected volatility is based on historical volatility of the Company’s common stock subsequent to the closing of the Reverse Merger. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected life of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company’s management believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased.   A summary of the Company’s stock option activity during the year ended December 31, 2017 is presented below:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="62%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">No. of Shares</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Weighted Average Exercise Price</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Weighted Average Remaining Contractual Term</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Aggregate Intrinsic Value</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Balance outstanding at December 31, 2016 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,304,788</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.22</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Granted </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Exercised </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Forfeited </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Expired </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(2,736</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">12.13</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Balance outstanding at December 31, 2017 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,302,052</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.20</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3.3</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,717,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Exercisable at December 31, 2017 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,302,052</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.20</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3.3</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,717,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> The weighted-average grant-date fair value of options granted during the year ended December 31, 2016 was $0.09. Restricted Common Stock On September 21, 2017, the Company’s Board granted an aggregate of 325,000 Restricted Stock Awards (“RSA’s”) pursuant to the Company’s 2017 Plan, to the Board as annual compensation. The RSA’s have a fair market value of $0.78 on the date of grant and fully vest upon the one-year anniversary of the date of grant or September 21, 2018. As of December 31, 2017, the Company had amortized $21,664 relating to the vesting of these shares which is included in selling, general, and administrative expenses, and $43,336 which will be recognized as an expense in future periods as the shares vest.   On September 21, 2017, the Company’s Board granted an aggregate of 2,000,000 RSA’s pursuant to the 2017 Plan, to the Company’s independent directors as compensation. The RSA’s have a fair market value of $0.78 on the date of grant and vest fully upon the earlier of a change in control of the Company or the Company’s listing on a national securities exchange. As of December 31, 2017, the Company had not amortized any amounts relating to the vesting of these shares due to the uncertainty of meeting these vesting milestones. On December 14, 2017, the Board awarded a total of 942,500 shares of common stock of the Company, in the form of RSAs issued in accordance with the 2017 Plan of the Company, to the members of the Board of the Company as annual compensation for services rendered to the Company as Board members. Each member of the Board was granted an RSA constituting 188,500 shares of the Company’s common stock. Based in part on the analysis of the fairness opinion provided by a third-party valuation specialist, the Board determined that the common stock within each RSA had a fair market value of $0.20 on the date of grant. As of December 31, 2017, the Company had amortized $20,945 relating to the vesting of these shares which is included in selling, general, administrative and other expenses, and $167,555 which will be recognized as an expense in future periods as the shares vest. The Board voted to revise the $0.78 fair market value for each share issued pursuant to each RSA granted on September 21, 2017, to $0.20. The Board voted to amend the indicated fair market value in the September grants to $0.20 based in part on the analysis within the fairness opinion provided by the third-party valuation specialist. The following table summarizes restricted common stock activity:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="84%" align="center" border="0"> <tr> <td width="69%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2" align="center"> Number of Shares </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2" align="center">Fair Value</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom" colspan="2" align="center"> Weighted Average Grant Date Fair Value </td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Non-vested, December 31, 2016 </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Granted </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,267,500</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,813,500</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.56</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Vested </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Forfeited </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Non-vested, December 31, 2017 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,267,500</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,813,500</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.56</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

<div> Accounts Receivable and Allowances Accounts receivables are non-interest bearing and are stated at gross invoice amounts less an allowance for doubtful accounts receivable and an allowance for contractual pricing. Credit is extended to customers based on an evaluation of their financial condition and other factors. The Company generally does not require collateral or other security to support accounts receivable. The Company performs ongoing credit evaluations of its customers and maintains an allowance for potential bad debts. The Company estimates its allowance for doubtful accounts by evaluating specific accounts where information indicates the customers may have an inability to meet financial obligations, such as bankruptcy proceedings and receivable amounts outstanding for an extended period beyond contractual terms. In these cases, the Company uses assumptions and judgment, based on the best available facts and circumstances, to record a specific allowance for those customers against amounts due to reduce the receivable to the amount expected to be collected. These specific allowances are re-evaluated and adjusted as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance. The Company may also record a general allowance as necessary. The Company’s management estimates its allowance for contractual pricing, by evaluating specific accounts where information indicates the customer is offered contractual pricing and discount allowances. In these arrangements, the Company’s management uses assumptions and judgement, based on the best available facts and circumstances to record a specific allowance for the amounts due from those customers. The allowance is offset by a corresponding reduction to revenue. These specific allowances are re-evaluated and adjusted as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance. The Company may also record a general allowance as necessary. Accounts deemed uncollectible are written-off in the period when the Company has exhausted its efforts to collect overdue and unpaid receivables or otherwise has evaluated other circumstances that indicate that the Company should abandon such efforts. Previously written-off accounts receivable subsequently collected are recognized as a reduction of bad debt expense when funds are received. </div>

<div> Use of Estimates The preparation of the consolidated financial statements in accordance with generally accepted accounting principles in the United State, (“GAAP”). GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include the allowances for doubtful accounts and contractual pricing, valuation of inventories, accrued commissions, the fair value calculation of stock based compensation, and fair value of Earn-Out liability. </div>

<div> Unaudited pro forma information for the twelve months ended December 31, 2016 is as follows:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0"> <tr> <td width="56%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center">Year Ended December 31, 2016 - Unaudited</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Historical Fuse Medical, Inc.</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Historical CPM Medical Consultants, LLC</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Pro forma Adjustments</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Pro forma Combined</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Revenue </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">567,607</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">25,647,353</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(103,578</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">26,111,382</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Net (loss) income </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(585,935</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">3,035,296</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,449,361</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Net (loss) income per common share - basic </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.34</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> </table> </div>

<div> Note 10. Concentrations Concentration of Revenues, Accounts Receivable and Suppliers For the years ended December 31, 2017 and 2016, the following significant customers had an individual percentage of total revenues equaling 10% or greater:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="14%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="14%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Customer 1 (related party) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">18.70</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">18.33</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Customer 2 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">18.06</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">11.61</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Totals </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">36.76</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">29.94</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> At December 31, 2017 and 2016, the following significant customers had a concentration of accounts receivable representing 10% or greater of accounts receivable:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="14%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="14%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Customer 1 (related party) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">24.80</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">25.21</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Customer 2 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">15.26</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">12.92</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Totals </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">40.06</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">38.13</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table>   For the years ended December 31, 2017 and 2016, the following significant suppliers represented 10% or greater of goods purchased:   <table style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="14%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="14%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Supplier 1 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">22.34</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">22.36</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Totals </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">22.34</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">22.36</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

0.058

Fuse Medical, Inc. No

<div> Long-Lived Assets The Company assesses potential impairment to its long-lived assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include, but are not limited to: (i) significant changes in performance relative to expected operating results, (ii) significant changes in the use of the assets, (iii) significant negative industry or economic trends, (iv) a significant decline in the Company’s stock price for a sustained period of time, and (v) changes in the Company’s business strategy. An impairment loss is recorded when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds fair value and is recorded as a reduction in the carrying value of the related asset and an expense to operating results. Based upon the Company’s assessment, there were no indicators of impairment of its long-lived assets at December 31, 2017 and 2016. </div>

<div> Income Taxes As a result of the CPM Acquisition, Fuse became the sole managing member of CPM and as a result, began consolidating the financial results of CPM. CPM is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, CPM is not subject to U.S. federal and most applicable state and local income tax purposes. As a partnership, CPM is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by CPM is passed through to an included in the taxable income or loss of its members. The Company uses the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. The Company has deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are subject to periodic recoverability assessments. Realization of the deferred tax assets, net of deferred tax liabilities, is principally dependent upon achievement of projected future taxable income. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. As of December 31, 2017, the Company had no liabilities for uncertain tax positions. The Company’s policy is to recognize interest and penalties related to income tax matters as a component of income tax expense. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law, and new authoritative rulings. </div>

2017-12-31

M. Richard Cutler and Cutler Law Group, P.C.

<div> Property and Equipment Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets per the following table. Leasehold improvements are amortized over the lesser of their useful life or the lease term. Expenditures for additions and improvements are capitalized while repairs and maintenance are expensed as incurred.   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="68%" align="center" border="0"> <tr> <td width="85%"></td> <td valign="bottom" width="8%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom" nowrap="nowrap"> Category </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Amortization Period</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Computer equipment </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3 years</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Furniture and fixtures </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3 years</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Office equipment </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3 years</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Software </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3 years</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> </table> Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation and amortization are removed and a gain or loss is recorded in the consolidated statements of operations. </div>

<div> Note 11. Related Party Transactions Change in Control Between the period July 2016 through October 2016, we obtained three loans in the aggregate amount of $150,0in exchange for convertible promissory notes (the “Notes”) bearing 10% interest per annum, with principal due and payable, upon demand of the payee. The Notes were issued as follows: $100,000 to NC 143 Family Holdings, LP, a family limited partnership controlled by Mark W. Brooks (“NC 143”), our Chairman of the Board of Directors (the “Board”); and $50,000 to Reeg Medical Industries, Inc., an investment holding company owned and controlled by Christopher C. Reeg, our Chief Executive Officer (“RMI”, and together with NC 143, the “Investors”). The Investors have the sole discretion and right to convert all or any portion of the then unpaid principal and interest balance of the Notes into shares of our common stock at a conversion price of $0.08 per share. Since December of 2016, the Company has been controlled by the Investors, who are its two primary stockholders. On the Change- in-Control Date the Company entered into the Stock Purchase Agreement by and between the Investors and the Company, pursuant to which the Investors received the Investor Shares, effective as of the Change-in-Control Date. For more details please see “Item 1. Business” of this 2017 Annual Report The closing of the Stock Purchase Agreement resulted in a change-in-control of the Company whereby the Investors beneficially acquired approximately 61.4% of the Company’s Common Stock issued and outstanding immediately after the Change-in-Control Date. Mark W. Brooks became the Chairman of the Board and Christopher C. Reeg became our Chief Executive officer, as described in our Current Report on Form 8-K, filed with the SEC on December 23, 2016, which is herein incorporated by reference. CPM Acquisition On December 15, 2017, Fuse entered into an agreement with NC 143 pursuant to which Fuse would purchase all of the outstanding membership interests of CPM Medical Consultants, LLC (“CPM”) (the “CPM Acquisition Agreement” and such transaction, the “CPM Acquisition”). On December 29, 2017, Fuse completed the previously-announced acquisition of CPM Acquisition, pursuant to the CPM Acquisition Agreement by Fuse and NC 143, dated December 15, 2017, whereby Fuse would purchase all of the outstanding membership interests of CPM. Fuse issued 50 million shares of its common stock, par value $0.01 per share in exchange for 100% of the outstanding membership interests of CPM, at an agreed-upon value of $0.20 per share of common stock. The effective date of the CPM Acquisition was December 31, 2017 (the “Effective Date”). The CPM Acquisition provides for contingent payments to NC 143 subject to certain sales and profitability targets being met by the Company for years after 2017.   For accounting purposes, CPM was deemed to have acquired Fuse in the CPM Acquisition because NC 143 and RMI had combined majority control of our issued and outstanding common stock and they jointly have the power to appoint a majority of our members of the Board. Because Fuse is the legal acquirer, the CPM Acquisition was accounted for as a reverse acquisition of an entity under common control. CPM is the successor entity and becomes the reporting entity which combines Fuse at the Change-in-Control Date, with the assets and liabilities of both companies combined at historical cost (collectively, Fuse and CPM consolidated or the “Company”). (see note 3) Lease with 1565 North Central Expressway, LP The Company leases an approximately 11,500 square-foot space as its principal executive office, located at 1565 North Central Expressway, Suite 220, Richardson, Texas 75080 from 1565 North Central Expressway, LP, a real estate investment company that is owned and controlled by the Company’s Chairman of the Board and President. The CPM lease was effective January 1, 2013 and the Fuse lease was effective July 14, 2017. The leases terminated December 31, 2017 with month-to-month renewals. The leased property does not have material costs of complying with environmental laws. The Company believes its present business property is adequate and suitable to support its mid-term strategies and initiatives for growth. They are in the process of renegotiating a lease renewal, but there is a large supply of comparable commercial property available in the general area that we would be able to lease at comparable lease rates. AmBio Contract The Company has engaged AmBio Staffing, LLC (“AmBio”) a Texas licensed Professional Employment Organization, (“PEO”) to provide payroll processing, employee benefit administration, and related human capital services effective January 1, 2017. The Company’s Chairman of the Board and President, Mark W. Brooks, owns and controls AmBio. As of March 26, 2018, AmBio operations supports approximately 74 full time equivalents (“FTE”). Of those 74 FTEs, 42 FTEs directly support the Company, 19 FTEs support the operations of other companies and the Company shares 13 FTEs with other companies. Operations The Company enters into various related party transactions with entities that are owned by or affiliated with the Company’s Named Executive Officers and Directors. The transactions included sales, purchases, commissions paid for services, and revenues related to services provided to the related party. MedUSA Group, LLC MedUSA Group, LLC (“MedUSA”) is a sub-distributor owned and controlled by our Chairman of the Board and Chief Executive Officer. During the years ended December 31, 2017 and 2016, we had net sales of approximately $5,054,000 and $4,797,000, respectively, to MedUSA for product used in surgical cases. During the years ended December 31, 2017 and 2016, we incurred commission expense of approximately $962,000 and $642,000, respectively, to MedUSA for services provided to us in surgical cases. As of December 31, 2017, and 2016, we had balances due from MedUSA of approximately $1,684,000 and $1,752,000, respectively, included in accounts receivable on the accompanying consolidated balance sheets. Texas Overlord, LLC Texas Overlord, LLC (“Overlord”) is an investment holding company owned and controlled by our Chairman of the Board. During the years ended December 31, 2017 and 2016, we had net sales of approximately $1,953,000 and $0.00, respectively, to Overlord for product used in surgical cases.   During the years ended December 31, 2017 and 2016, we incurred commission expense of approximately $101,000 and $0.00, respectively, to Overlord for services provided to us in surgical cases. As of December 31, 2017, and 2016, we had balances due from Overlord of approximately $444,000 and $0.00, respectively, included in accounts receivable on the accompanying consolidated balance sheets. N.B.M.J., Inc. N.B.M.J., Inc. (“NBMJ”) is a Durable Medical Equipment (“DME”) distributor and a wound care distributor owned and controlled by our Chairman of the Board. During the years ended December 31, 2017 and 2016, we had net sales of approximately $162,000 and $715,000, respectively, to NBMJ for product used in surgical cases. During the years ended December 31, 2017 and 2016, we incurred commission expense of approximately $0.00 and $0.00, respectively, to NBMJ for services provided to us in surgical cases. As of December 31, 2017, and 2016, we had balances due from NBMJ of approximately $0.00 and $47,000, respectively, included in accounts receivable on the accompanying consolidated balance sheets. Palm Springs Partners d/b/a Maxim Surgical, LLC Palm Springs Partners d/b/a Maxim Surgical, LLC (“Maxim”) is a manufacturer/distributor owned and controlled by Christopher C. Reeg, our Chief Executive Officer and Secretary, and Mark W. Brooks, our Chairman of the Board and President. During the year ending December 31, 2017 and 2016, we had net sales of approximately $202,000 and $164,000 to Maxim for product used in surgical cases. During the year ending December 31, 2017 and 2016, we purchased approximately $468,000 and $458,000 from Maxim. As of December 31, 2017, and 2016, we had a balance due from Maxim of approximately $50,000 and $45,000, included in accounts receivable on the accompanying consolidated balance sheets. As of December 31, 2017, and 2016, we had a balance due to Maxim of approximately $93,000 and $102,000, included in accounts payable on the accompanying consolidated balance sheets. Sintu, LLC Sintu, LLC (“Sintu”) is a sub-distributor owned and controlled by Mark W. Brooks, our Chairman of the Board and President. During the year ended December 31, 2017 and 2016, we incurred commission expense of approximately $1,114,000 and $692,000 to Sintu for services provided in surgical cases. Other During the years ended December 31, 2017 and 2016, the Company had net sales of approximately $1,055,000 and $396,000, respectively, to these entities for product used in surgical cases. During the years ended December 31, 2017 and 2016, the Company had purchases of approximately $128,000 and $8,000, respectively, from these entities.   During the years ended December 31, 2017 and 2016, the Company incurred commission expense of approximately $248,000 and $702,000, respectively, to these entities for services provided in surgical cases. The Company also had other income related to charges for shared services it provided to the related party of approximately $33,000 and $114,000 for the years ended December 31, 2017 and 2016, respectively, included with selling, general, and administrative expenses on the accompanying consolidated statements of operations. As of December 31, 2017, and 2016, the Company had balances due from these entities of approximately $169,000 and $159,000, respectively, included in accounts receivable on the accompanying consolidated balance sheets. The Company engages AmBio, a licensed PEO to provide payroll processing, employee benefit administration, and related human capital services. AmBio is controlled by the Chairman of the Board and President. As of December 31, 2017, and 2016, the Company had balances due to AmBio of approximately $112,000 and $107,000. As of December 31, 2017, and 2016, approximately $162,000 and $162,000 of fees were paid to AmBio for such services, respectively, and are reflected with in selling, general, and administrative expenses on the accompanying consolidated statements of operations. </div>

0.00

<div> Note 12. Subsequent Events In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through April 5, 2018, the date the financial statements were available to be issued. On January 30, 2018, the Company received notice from UOC USA, Inc. (“UOC”) that UOC has elected to terminate the distribution agreement dated January 1, 2011, as amended (the “UOC Agreement”) between the Company’s wholly-owned subsidiary, CPM, and UOC. While the UOC Agreement terminated on February 28, 2018, in accordance with its terms and conditions, the UOC Agreement also authorized the continued provision of UOC products at UOC-contracted facilities until March 15, 2018. Because we hold title to our UOC inventory, we may continue selling UOC products until we deplete our UOC inventory. Pursuant to the UOC Agreement, in consideration for mutual promises and covenants, the Company was appointed as a non-exclusive authorized distributor of UOC orthopedic implants and instruments for an initial fixed term of two years with auto-renewals thereafter. Either the Company or UOC could terminate the UOC Agreement at any time and for any reason upon ninety (90) days prior written notice to the other party. At UOC’s sole discretion, the termination notice provides for the repurchase of the Company’s unsold UOC orthopedic implants by UOC on or before April 30, 2018. The Company’s revenue derived from the sale and distribution of UOC products was approximately $4.3 million or 16% and $4.9 million or 19%, for the year-ended December 31, 2017, and December 31, 2016, respectively. The Company’s Management concluded there are no other material events or transactions for potential recognition or disclosure. </div>

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848

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-118361

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40818

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300

128000

42609

40818

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5356475

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19244543 5641122 <div> Note 5. Revolving Line of Credit On December 29, 2017, Fuse became party to a revolving line of credit (“RLOC”) with ZB, N.A. (d/b/a Amegy Bank), to facilitate the December 31, 2017 CPM Acquisition. The RLOC establishes an asset based senior secured revolving credit facility in the amount of $5,000,000. The RLOC bears interest at a variable rate based on the one-month LIBOR rate plus 3.00% (effective rate of 4.56% at December 31, 2017). The RLOC contains customary representation, warranties, covenants, events of default, and is collateralized by substantially all of the Company’s assets. The Chairman of the Board personally guarantees fifty percent (50%) of the outstanding loan amount. The outstanding balance of the RLOC was $3,415,351 and $3,305,347 at December 31, 2017 and 2016, respectively. Interest expense incurred was $134,668 and $133,334 for 2017 and 2016, respectively. </div> 0.038 0.614 1738620 375278 5067 242912 2192626 1465576 700000 1302052 0.614 3058 -0.593 <div> Expenditures for additions and improvements are capitalized while repairs and maintenance are expensed as incurred.   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="68%" align="center" border="0"> <tr> <td width="85%"></td> <td valign="bottom" width="8%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom" nowrap="nowrap"> Category </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Amortization Period</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Computer equipment </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3 years</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Furniture and fixtures </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3 years</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Office equipment </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3 years</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Software </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3 years</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> </table> </div> 2018 2037 <div> Note 6. Notes Payable – Related Parties During July 2016 through October 2016, the Company obtained three short-term loans in the aggregate amount of $150,000 in exchange for promissory notes bearing 10% interest per annum, which principal shall be due and payable, upon demand of the payee. Notwithstanding, at the holder’s sole discretion, the holder has the right to convert all or any portion of the then unpaid principal and interest balance into shares of the Company’s common stock at a conversion price of $0.08 per share. On each respective date of issuance, the conversion price of each of the promissory notes was less than the market price of the Company’s common stock. This resulted in a beneficial conversion feature in the aggregate amount of $117,500, which was treated as a discount to each of the promissory notes and amortized over the term of each respective promissory note. Subsequent to the issuance of the notes, affiliates of the noteholders entered into the Stock Purchase Agreement with the Company (See Notes 1 and 11). Notes payable – related parties consisted of the following:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Notes Payable originating July 15, 2016; no monthly payments required; bearing interest at 10%; due on December 31, 2016, convertible on demand </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">50,000</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">50,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Notes Payable originating August 23, 2016; no monthly payments required; bearing interest at 10%; due on December 31, 2016, convertible on demand </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">50,000</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">50,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Notes Payable originating October 19, 2016; no monthly payments required; bearing interest at 10%; due on December 31, 2016, convertible on demand </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">50,000</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">50,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">150,000</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">150,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Less: current maturities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(150,000</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(150,000</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Amount due after one year </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> During the year ended December 31, 2017 and 2016, interest expense of $27,000 and $13,587 (of which $13,094 was related to the amortization of the beneficial conversion feature), respectively, was recognized on outstanding notes payable – related parties. As of December 31, 2017, and 2016, accrued interest payable was $32,096 and $5,096, respectively, which is included in accrued expenses on the accompanying consolidated balance sheets. </div> 14000 <div> Notes payable – related parties consisted of the following:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Notes Payable originating July 15, 2016; no monthly payments required; bearing interest at 10%; due on December 31, 2016, convertible on demand </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">50,000</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">50,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Notes Payable originating August 23, 2016; no monthly payments required; bearing interest at 10%; due on December 31, 2016, convertible on demand </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">50,000</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">50,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Notes Payable originating October 19, 2016; no monthly payments required; bearing interest at 10%; due on December 31, 2016, convertible on demand </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">50,000</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">50,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Total </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">150,000</td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">150,000</td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Less: current maturities </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(150,000</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(150,000</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Amount due after one year </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> <td valign="bottom">  </td> <td valign="bottom" nowrap="nowrap">$</td> <td valign="bottom" nowrap="nowrap" align="right"> —  </td> <td valign="bottom" nowrap="nowrap"> </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div> 2

0.56

3267500

1813500

Fully vest upon the one-year anniversary of the date of grant or September 21, 2018.

20945

21664

0.0300

2017-12-31

one-month LIBOR rate plus 3.00%

134668

0.50

due and payable, upon demand of the payee. The Notes were issued as follows: $100,000 to NC 143 Family Holdings, LP, a family limited partnership controlled by Mark W. Brooks (“NC 143”), our Chairman of the Board of Directors (the “Board”); and $50,000 to Reeg Medical Industries, Inc., an investment holding company owned and controlled by Christopher C. Reeg, our Chief Executive Officer (“RMI”, and together with NC 143, the “Investors”). The Investors have the sole discretion and right to convert all or any portion of the then unpaid principal and interest balance of the Notes into shares of our common stock at a conversion price of $0.08 per share.

Principal shall be due and payable, upon demand of the payee. Notwithstanding, at the holder's sole discretion, the holder has the right to convert all or any portion of the then unpaid principal and interest balance into shares of the Company's common stock

0.904

5054000

962000

2017-12-31

11500

162000

202000

468000

162000

0.00

1114000

1953000.00

101000.0

0.16 P2Y P90D 4300000

November 18, 2015

2017-07-24 2017-05-01

0.2234

699678

29934

19744543 1738620 375278 1492948

3267500

50000000

12675

-500000 397463 P120D 779

11000

19244543 2018-01-01 2034-12-31 16000000 10000000 0.04 0.48 0.09 0.05 P11Y 26000000 0

<div> For the years ended December 31, 2017 and 2016, the following significant suppliers represented 10% or greater of goods purchased:   <table style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="14%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="14%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Supplier 1 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">22.34</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">22.36</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Totals </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">22.34</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">22.36</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

0.2234

<div> For the years ended December 31, 2017 and 2016, the following significant customers had an individual percentage of total revenues equaling 10% or greater:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="14%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="14%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">For the Year Ended December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Customer 1 (related party) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">18.70</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">18.33</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Customer 2 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">18.06</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">11.61</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Totals </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">36.76</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">29.94</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

0.3676

0.1870

0.1806

<div> At December 31, 2017 and 2016, the following significant customers had a concentration of accounts receivable representing 10% or greater of accounts receivable:   <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0"> <tr> <td width="64%"></td> <td valign="bottom" width="14%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="14%"></td> <td></td> <td></td> <td></td> </tr> <tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2017</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">December 31, 2016</td> <td valign="bottom"> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Customer 1 (related party) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">24.80</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">25.21</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid"> <td valign="top"> Customer 2 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">15.26</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">12.92</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF"> <td valign="top"> Totals </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">40.06</td> <td valign="bottom" nowrap="nowrap">% </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">38.13</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

0.4006

0.2480

0.1526

33000

248000

142000

2019-03 2021-02

P3Y

0.34

0.33

0.350

-0.130

0.198

P2Y6M

9214606

7185890

0.017

0.000

0.0143

0.42

2790338

0.017

1.62

-392687

25666650

396000

2395606

3163407

3016486

150762

139993

-995785

14409763

2449361

1290076

14118720

-146921

-107

26111382

19091

51627

-1313409

146921

8000

13094

51627

655390

4170835

199177

13587

13208210

514822

11256887

51627

-2930906

11246356

375210

7056430 0.003 775949 85572 2481178 655390 25000 375739 1304788 13094 -0.421

133334

4797000

642000

162000

164000

458000

715000

0.00

692000

0.00

0.0

0.19 4900000

0.2236

3016486

-2882167

134319

4082243

775949 2346859

9000000

90000

8000

-103578

3035296

25647353

0.2236

0.2994

0.1833

0.1161

0.3813

0.2521

0.1292

-585935

567607

114000

702000

120000

0.09

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