BUSINESS DESCRIPTION AND GOING CONCERN

9 Months Ended

Jun. 30, 2015

Notes to Financial Statements

BUSINESS DESCRIPTION AND GOING CONCERN

Organization and Business Description

Fuse Science, Inc. (“Fuse”, “our”, “us”, “we” or the “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. From 2007 to 2009, the Company was a “business development company” under the Investment Company Act of 1940. From April 2011 through October 1, 2014, the Company’s business involved developing and marketing nutraceutical products.

Since October 1, 2014, Fuse, through its 51% owned subsidiary, Spiral Energy Tech, Inc. (“Spiral”) has focused on developing and commercializing its proprietary SkyPorts drone support and Energy Demand Network (“EDEN”) technology. This technology seeks to permit a drone to operate predictably many miles outside of a “home range” limitation, defined by the drone’s finite battery power, by allowing for a flight path of numerous stops (or waypoints) at recharging stations along the way, thus extending the limit of the drone’s useful range. Currently, we do not plan to build or design any drones or autonomous vehicles; rather we intend to employ our technology in non-military drones manufactured by third party commercial manufacturers.

We have filed patents for technology related to SkyPorts and EDEN technology as follows:

· US Provisional patent application No. 62/075,317; Drone Recharging Station and Method of Networking

· US Provisional patent application No. 62/145,216; Controlling Autonomous UAV Delivery Based Fleet Services

Also, through Spiral, we are engaged in developing and commercializing our XTRAX® remote monitoring system, designed to measure the production of solar and other renewable energy systems and to enable transmission of the data via the cellular and radio frequency network (and potentially via microwave transmission network or satellite). On April 25, 2013, we purchased the patents and trademarks relating to the XTRAX® remote monitoring system from Carbon 612 Corporation and one of its creditors. On May 13, 2013, we entered into an agreement with a patent assertion entity, pursuant to which we sold Endeavor the XTRAX® patents and obtained a perpetual, royalty-free, irrevocable, non-exclusive and worldwide license to develop, distribute and sell the products and services covered by the patents and to a portion of the revenues generated by patent enforcement activities. Our principal revenue during the period covered by this report has been amounts paid related to settlement of patent enforcement actions.

As of June 30, 2015, we had no products available for sale. There can be no assurance that our technology will be commercially successful. In addition, we operate in an environment of rapid change in technology and are dependent upon the continued services of our current employees, consultants and subcontractors.

Since our inception in 1988, we have generated losses from operations. As of June 30, 2015, our accumulated deficit amounted to $76,987,436. As a result, we have limited capital resources. As of June 30, 2015, we had $115,729 of cash and cash equivalents and current liabilities of $1,154,977. These conditions raise substantial doubt about our ability to continue as a going concern.

 Subsequent to June 30, 2015, we delivered shares of Spiral formerly held by us as payment for various costs and expenses. As a result of these transfers, we now hold less than 50% of Spiral’s current outstanding shares.

We anticipate that our existing capital resources will enable us to continue operations for the next several months. In order to continue as a going concern beyond such time, we will need, among other things, additional capital resources. Our plan to obtain such resources includes obtaining capital from existing shareholders and third parties, and fees for developmental activities. In addition, we have taken several steps to address our liquidity requirements, including reducing our monthly operating expenses and to settling creditor obligations at less than stated amounts. However, we cannot provide any assurance that that these cost savings measures will be sufficient or that we will be successful in obtaining funds necessary to support ongoing operations. In addition, profitability will ultimately depend upon the level of revenues received from business operations and there is no assurance that we will attain profitability.

These unaudited condensed consolidated financial statements are presented on the basis that we will continue as a going concern. The going concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business. No adjustment has been made to the carrying amount and classification of our assets and the carrying amount of our liabilities based on the going concern uncertainty. We have considered ASU 2014-15 in consideration of reporting requirements of the going concern financial statements.

Our headquarters are located at 5510 Merrick Road, Massapequa, New York 11758. The elected year end is September 30.