NATURE OF BUSINESS

6 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF BUSINESS

ORGANIZATION

Fuse Science, Inc. (“Company”) was incorporated in Nevada on September 21, 1988. Prior to 2002, the Company’s activities included, developing and marketing data communications and networking infrastructure solutions for business, government and education (which business was sold in 2002) and as a “business development company” under the Investment Company Act of 1940, from 2007 to 2009. From April 2011 through October 1, 2014, the Company’s business involved developing certain sublingual and transdermal delivery systems for bioactive agents. Since October 1, 2014, the Company has focused on two business initiatives: developing and commercializing the Company’s SkyPorts drone support technology, which enables the long distance flight required for drone-based commerce without the need for drones to return “home” every 15 minutes to recharge, and developing and commercializing the Company’s XTRAX® remote monitoring system, which is designed to measure the production of solar and other renewable energy systems and for transmission of the data via the cellular and radio frequency network.

Agreement and Plan of Reorganization with Spiral Energy Tech, Inc.

On October 1, 2014, the Company entered into an Agreement and Plan of Reorganization (the “Merger Agreement”) with Spiral Energy Tech, Inc., a Nevada corporation (“Spiral”), and Spiral Acquisition Sub, Inc., our newly formed, wholly-owned Nevada subsidiary (“Acquisition Sub”). Upon closing of the transactions contemplated under the Merger Agreement (the “Merger”), which occurred concurrently with entering into the Merger Agreement, Acquisition Sub merged with and into Spiral, and Spiral, as the surviving entity, became a 51% majority-owned subsidiary of the Company.  

At the closing of the Merger, 51% of the outstanding shares of Spiral (the “Spiral Shares”) were acquired by the Company for an aggregate of One Hundred and Fifteen Million (115,000,000) newly issued shares of Common Stock, par value $ 0.001 per share, of the Company, (the “Common Stock”) or, at the election of any holder of the Spiral Shares who, as a result of receiving shares of the Company’s Common Stock in connection with the Merger would hold in excess of 5% of the issued and outstanding shares of the Company’s Common Stock, shares of Series C Convertible Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”).  At the closing, 3,269,808 common stock and 3,500,000 convertible Series C preferred stock were issued to the Spiral's shareholders.  Series C preferred stock is convertible into 11,730,192 common shares.

At the closing of the Merger, the Company sold an aggregate of 3,200,000 shares of shares of its Series B Preferred Stock, $0.001 par value per share (the “Series B Preferred Stock”) in a private placement (the “Private Placement”) to certain investors (the “Investors”) at a per share price of $0.50 for gross proceeds to the Company of $1,600,000. Each share of Series B Preferred Stock has a stated value of $0.50 and is convertible into shares of Common Stock equal to the stated value (and all accrued but unpaid dividends) divided by a conversion price equal to the lower of (i) $2.50 and (ii) during the period commencing on the initial issuance date and ending on the first trading day following the six month anniversary of the initial issuance date that there is traded a minimum of 3,000,000 shares at a price of $0.50 or greater, twenty percent (20%) of the lowest VWAP of the Common Stock on the trading day during the twenty  (20) consecutive trading days ending on the trading day immediately preceding the conversion date (subject to adjustment).   The Company is prohibited from effecting the conversion of the Series B Preferred Stock to the extent that, as a result of such conversion, the holder beneficially owns more than 2.49%, in the aggregate, of the issued and outstanding shares of the Company’s Common Stock calculated immediately after giving effect to the issuance of shares of Common Stock upon the conversion of the Series B Preferred Stock.

Upon the closing of the Merger, (i) Brian Tuffin resigned as the Company’s Chief Executive Officer, interim Chief Financial Officer and all other officer positions he holds with the Company (while agreeing to serve as the Company’s Principal Executive, Financial and Accounting Officer for a period terminating with the filing of the Company’s Annual Report for the year ended September 30, 2014), (ii) Jeanne Hebert resigned as Secretary, and all other positions she holds with the Company, and (iii) simultaneously with the effectiveness of the Merger, Ezra Green was appointed as the Company’s Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer.

Effective October 27, 2014, Brian Tuffin, Richard S. Hutchings, and Reginald Hollinger resigned as directors of the Company and Ezra Green and Gelvin Stevenson were appointed as directors of the Company. On November 13, 2014, the Company appointed David Rector to its board of directors.

Assets taken over and liabilities assumed:

As per ASC 805-20, assets and liabilities were measured at fair value. The total assets acquired cash, accounts receivable, investments, and fixed assets in the acquisition were $86,193, $1,278, $1,125, $24,967 respectively and the liability assumed. Accounts payable and accrued expenses in acquisition were $37,382, and $1,500 respectively, for the net asset value of $74,681. In the acquisition process, as per ASC 805-30 goodwill computed was approximately 21 million and non-controlling interest computed was approximately 10 million.

In the merger, the Company issued to Spiral 3,269,808 common shares and 3,500,000 Series C preferred that can be converted into 11,730,192 common shares.

Goodwill and Intangibles:

Merger took place by taking over 51% of Spiral's common shares. Goodwill recognized in the merger transaction $21,633,882 (ASC 350-20). Impairment test for goodwill was performed at the quarter ending December 31, 2014. Management believes that goodwill has impairment due to the following reasons: First, the fair value of the common share of the Company during the time of merger is substantially less than the fair value of the common share of the company at December 31, 2013, and second the management believes that implied value of goodwill is zero because the products are still in the developmental stage. As a result, the management has decided to write off the entire goodwill of $21,633,882 during the quarter ended December 31, 2014.