Annual Report for Fiscal Year Ending September 30, 2025 (Form 10-K)

- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS

The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from the results described in or implied by these forward-looking statements as a result of various factors, including those discussed below and elsewhere in the Annual Report on Form 10-K, particularly under the heading "Risk Factors" and those set forth from time to time in our other filings with the SEC.

Overview

Fuse Group Holding Inc. (the "Company" or "Fuse Group" or "we") was incorporated under the laws of the State of Nevada on December 24, 2013. Fuse Group develops business opportunities in the mining, biotech and consulting areas. On December 6, 2016, the Company incorporated Fuse Processing, Inc. ("Processing") in the State of California. Processing seeks business opportunities in mining and is currently investigating potential mining targets in Asia and North America. Fuse Group is the sole shareholder of Processing. In March 2017, Processing acquired 100% ownership of Fuse Trading Limited ("Trading") for HKD1 ($0.13). Trading had no operations prior to the acquisition by Processing, and Trading was expected to be engaged in mining-related businesses. On April 22, 2022, Processing transferred 100% ownership of Trading to an unrelated third party for HKD1. On May 3, 2018, the Company incorporated Fuse Technology Inc. in the State of Nevada, which changed its name to Fuse Biotech Inc. on November 30, 2020. Fuse Group is the sole shareholder of Fuse Biotech Inc. ("Fuse Biotech"). Currently, Fuse Biotech seeks business opportunities in the biotech area.

Fuse Group and Processing provide consulting services to mining industry clients to find acquisition targets within the parameters set by the clients, when the mine owner is considering selling its mining rights. The services of Fuse Group and Processing include due diligence on the potential mine seller and the mine, such as ownership of the mine and whether the mine meets all operation requirements and/or is currently in operation.

The Company has been diversifying its business to new growth area of consulting services, especially in the catering and culinary consulting service business.

On January 4, 2017, Processing entered into a Consulting and Strategist Agreement with a consulting company for a six-month term. On July 3, 2017, Processing and the consulting company extended the Consulting and Strategist Agreement until January 3, 2018 at no additional cost, and the Agreement was subsequently extended to July 3, 2018. The consultant provides Processing with market research, exploration and advice on business development opportunities in certain countries, and other general business advisory services. Processing paid a deposit of $1,325,000 for the consulting fee, of which, $325,000 was expensed as a consulting fee based on the agreement, and the remaining $1,000,000 of which would have been refunded to the Company if the Company had not made an investment and/or entered into a business relationship in Mexico. The consulting company found acquisition targets for the Company, and on June 22, 2018, the Company entered into a Memorandum of Understanding ("MOU") with a seller to purchase concessions rights to five mineral locations located in different areas of Mexico for $1,000,000. Upon execution of the MOU, the Company acquired the exclusive right to purchase the concessions rights to mines from the seller until September 30, 2018. The parties entered into an oral agreement that the Company would pay a purchase price of $1,000,000 to purchase concessions rights to five mineral locations that would be consolidated into a local company in Mexico upon the approval from the Mexican government allowing the transfer of all mining concession to a Mexican company.

On February 9, 2021, the Company and Processing entered into a Share Exchange Agreement (the "Agreement") with Choo Keam Hui, Goh Hau Guan, Lim Hui Sing, Teh Boon Nee and Tia Chai Teck (collectively as the "Sellers"). Pursuant to the Agreement, the Company agreed to issue to the Sellers in aggregate of 14,285,715 shares (pre-reverse split shares) of common stock of the Company (the "Fuse Shares") in exchange of all the outstanding shares of Portafolio en Investigacion Ambiental S.A. de C.V., a Mexican company ("Portafolio") owned by the Sellers. Portafolio owns concessions rights to five mineral locations and the five mines have not been explored and have no operations, no existing contracts for the sale of output, no permits or licenses to conduct mining operations. Portafolio only has five concessions to explore for minerals and owns no facilities or equipment. There is no assurance that we will be able to obtain the surface rights and permits that are necessary to extract the minerals from the areas covered by the concessions. The Company is waiting for the Sellers to complete the transfer process for the equity interest of Portafolio to the Processing to complete the transaction which is subject to the Mexican government approval and has not happened yet.

Stock certificates for 14,285,715 shares (pre-reverse split shares) were prepared by the Company for the closing of the transaction contemplated in the Agreement but were not delivered to the Sellers. After reevaluation of the Agreement, the Company determined that the transaction was incorrectly recorded, as such stock certificates remained in the custody of the Company and not delivered (i.e. provided as consideration) to the Sellers. On October 20, 2021, the Company cancelled these stock certificates.

On April 29, 2019, the Board of Directors ("BOD") of the Company approved an amendment to the Company's Articles of Incorporation (the "Amendment") to change its name from Fuse Enterprises Inc. to Fuse Group Holding Inc. Also on April 29, 2019, stockholders holding a majority of the Company's outstanding capital stock approved the Amendment. The Amendment was filed with the Secretary of State for the State of Nevada on April 30, 2019, and became effective on May 13, 2019. On May 29, 2019, the Company changed its trading symbol on OTC Markets from FNST to FUST.

On September 19, 2024, the Company filed a Certificate of Change with the State of Nevada (the "Certificate") to effect a 1-for-5 reverse stock split of the Company's authorized shares of common stock, par value $0.001 (the "Common Stock"), accompanied by a corresponding decrease in the Company's issued and outstanding shares of Common Stock (the "Reverse Stock Split"), effective upon filing. Following the Reverse Stock Split, the number of authorized shares of Common Stock of the Company shall be reduced from 375,000,000 to 75,000,000.

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, and the pandemic resulted in quarantines, travel restrictions, and the temporary closure of office buildings and facilities in the US. Our business and services and results of operations were adversely affected during the outbreak of COVID-19. The pandemic negatively impacted our business development, and disrupted or delayed our mine projects and services to our clients. Quarantines, travel restrictions, shelter-in-place and other restrictions related to COVID-19 impacted our abilities to visit mines in Mexico and Asian counties as well as to meet with potential clients and mine owners for our consulting business and our own investment in mine projects. The businesses are back to normal in the U.S. and in California, however, the U.S. and global growth forecast are still uncertain, which would seriously affect people's investment desires in mines in Mexico, Asia and internationally.

We received a $49,600 Paycheck Protection Program loan ("PPP loan") and a $105,500 Economic Injury Disaster Loan ("EIDL loan") from US Small Business Administration ("the SBA") during the year ended September 30, 2020. The forgiveness of $49,600 PPP loan was approved in June 2021.

On March 11, 2021, Fuse Group and Fuse Biotech entered into a Share Exchange Agreement with E-Mo Biotech Holding Inc., a company incorporated under the laws of Nevada (the "E-Mo Biotech"), Qiyi Xie, a resident of California ("Xie"), Quan Qinghua, a citizen and resident of China ("Quan"), Jing Li, a citizen and resident of China ("Li") and HWG Capital Sdn Bhd, a company incorporated under laws of Malaysia ("HWG" and hereinafter collectively with Xie, Quan and Li, the "Sellers"). Pursuant to the Agreement, the Company will issue the Sellers 100,000,000 shares (pre-reverse split shares) of Company's common stock (the "Fuse Shares") for all the issued and outstanding shares of E-Mo Biotech (the "E-Mo Shares") owned by the Sellers. E-Mo Biotech Holding Inc. is a start-up, development-stage company involving in vaccine, immunological treatment and diagnostic product research and development and has no commercial sales of vaccines, treatments, or diagnostic products. The acquisition was not completed, and the Fuse Shares were not issued. On September 30, 2021, the Company and Fuse Biotech entered into a Termination Agreement with E-Mo Biotech, the Sellers, effective on September 30, 2021. Pursuant to the Termination Agreement, the parties agreed to terminate the Share Exchange Agreement, which was originally entered into by and among the Company, Fuse Biotech, the Sellers and E-Mo Biotech on March 11, 2021.

On June 30, 2023, the Company received a written notice from Liu Marketing (M) SDN BHD (the "Lender"), pursuant to certain Convertible Promissory Notes made by the Company in favor of Lender on February 15, 2022, March 23, 2022, June 9, 2022, July 1, 2022, August 19, 2022, October 6, 2022, November 7, 2022, December 16, 2022, January 30, 2023, February 24, 2023, April 10, 2023 and May 29, 2023 (the "Notes"), that the Lender elected to convert all of the Notes balances (including principal and interest of the Notes) of $716,767 for 1,592,816 shares (pre-reverse split shares) of common stock of the Company (the "Shares") at the conversion price of $0.45 (pre-reverse split) per share. On July 7, 2023, the Shares were issued to the Lender pursuant to an exemption from registration under Regulation S, promulgated under the Securities Act of 1933, as amended.

On December 13, 2023, the Company entered into a Consulting Agreement (the "Agreement") with Beijing Jixiang Fengqi Tech Company Limited, a company organized under the laws of China (the "Customer"). Pursuant to the Agreement, the Company will provide consulting services to the Customer, including marketing research, competitive analysis and business development strategy in North America as well as marketing strategies, product development, identifying and partnering with local businesses or distributors and other general business advisory services. The Agreement had a term of one year from December 13th, 2023 to December 12th, 2024 and may be renewed by the parties. For the services rendered by the Company as required by the Agreement, the Customer agrees to pay a service fee to the Company of $10,000 per month, payable monthly. The Agreement has not been renewed upon its expiration as of December 12, 2024.

On December 28, 2023, the Company entered into a Letter of Intent ("LOI") with Beijing Catering Inc., a company incorporated in California (the "Beijing Catering") and Fengyuan Jia, an individual and shareholder owns 100% equity interest of Beijing Catering (the "Seller"). Beijing Catering owns and operates a Yomie Yogurt store in California, and Seller intends to sell, and the Company intends to purchase from the Seller, all issued and outstanding equity interest of Beijing Catering at the total purchase price to be negotiated by the parties and confirmed in the definitive agreement. The LOI is intended to reflect the parties' agreement on terms, but is not intended to be binding as it is subject to the due diligence and execution of definitive documents, except for the provisions of "Confidentiality" and "Governing Law". The parties plan to close the transaction no later than 120 days from the date of the LOI, unless mutually extended by the parties. The LOI terminates if the closing does not occur before the 120 days period or has not been extended or if either party provides a written notice of termination to other parties. On April 25, 2024, the parties entered into a LOI Extension Agreement to extend the deadline for the closing of potential acquisition to May 31, 2024. The potential acquisition of Beijing Catering has not been closed on or before May 31, 2024 and parties did not reach an agreement to further extend the deadline. Pursuant to the LOI, it has expired and terminated as of May 31, 2024.

On May 15, 2024, the Company received a written notice from Liu Marketing (M) SDN BHD (the "Lender"), pursuant to certain Convertible Promissory Note made by the Company in favor of Lender on June 29, 2023 (the "Note"), that the Lender elected to convert all of the Note balances (including principal and interest of the Note) of $51,319 for 114,043 shares (pre-reverse split shares) of common stock of the Company (the "Shares") at the conversion price of $0.45 (pre-reverse split) per share.

On March 21, 2025, the Company entered into a Convertible Promissory Notes Purchase Agreement with Chen Fei Li, a Chinese citizen (the "Purchaser"). Pursuant to the agreement, the Company sold a Convertible Promissory Note to the Purchaser for a principal amount of $40,000. The Note bears interest at the rate of 3% per annum, which is payable on March 20, 2026 and 2027. The Note will mature on the date that is twenty-four months from the date that the purchase price of the Note is paid to the Company. Any outstanding principal and interest on the Note may be converted to shares of common stock of the Company at the holder's option at a conversion price of $0.33 per share at any time until the total outstanding balance of the Note is paid.

On May 1, 2025, Fuse Group Holding Inc. (the "Company"), entered into a Convertible Promissory Note Purchase Agreement (the "Agreement") with Chen Fei Li, a Chinese citizen (the "Purchaser"). Pursuant to the Agreement, the Company sold a Convertible Promissory Note to the Purchaser with a principal amount of $30,000 (the "Note"). The Note bears interest at the rate of 3% per annum, which are payable on May 1 of 2026 and 2027. The Note will mature on the date that is twenty-four months from the date that the purchase price of the Note is paid to the Company. Any outstanding principal and interest on the Note may be converted to the shares of common stock of the Company at the holder's option at a conversion price of $0.33 per share at any time until the total outstanding balance of the Note is paid.

Results of operations for the year ended September 30, 2025 and 2024

Revenue and Cost of Revenue

We develop our business in mining and investigate potential mining targets in Asia and North America. In addition to our own investment in mining businesses, we provide consulting services to clients which are mining business investors with potential mine acquisition targets within the specific parameters set by those clients, where the mine owner is considering selling its mining rights. Our services include due diligence on the potential mine seller and the mine, such as ownership of the mine and whether the mine meets all operation requirements and/or is currently in operation. We also provide consulting services for the business development in the U.S., especially in the catering and culinary consulting services business.

For the year ended September 30, 2025, the Company recorded revenue of $45,942 for the services provided. Our revenue for the year ended September 30, 2024 was $332,024. Our cost of revenues for the year ended September 30, 2025 and 2024 was nil and nil, respectively, resulting in a gross profit of $45,942 and $332,024 for the year ended September 30, 2025 and 2024, respectively. The revenues were generated from the hospitality industry consulting service for both the year ending September 30, 2025 and 2024. The decrease in revenue was mainly due to the lower demands from clients and less consulting services provided.

Costs and Expenses

The major components of our expenses for the year ended September 30, 2025 and 2024 are in the table below:

		2025				2024				Increase (Decrease)
General and administrative		$	323,804			$	345,710			$	(21,906	)
Consulting fees			-				19,667				(19,667	)
Total operating expenses		$	323,804			$	365,377			$	(41,573	)

The decrease in our general and administrative expenses for the year ended September 30, 2025, compared to the year ended September 30, 2024, was mainly due to a decrease in personnel costs by $31,159, a decrease in professional fee by $5,737, a decrease in office expense by $2,615, and a decrease in license and regulatory fee by $1,655, partly offset by an increase in auto expense by $21,813.

Non-operating income (expenses), net

Net non-operating expenses were $3,440 for the year ended September 30, 2025, compared to net non-operating expenses of $4,608 for the year ended September 30, 2024. For the year ended September 30, 2025, non-operating expenses consisted of only interest expense of $3,440. For the year ended September 30, 2024, non-operating expenses mainly consisted of interest expense of $5,104, which was partly offset by other income of $496.

Liquidity and Capital Resources

The table below provides selected working capital information as of September 30, 2025 and 2024:

		September 30, 2025				September 30, 2024
Total current assets		$	34,678			$	85,374
Total current liabilities			390,293				152,786
Working capital (deficit)		$	(355,615	)		$	(67,412	)

Liquidity

During the year ended September 30, 2025 and 2024, we had net loss of $283,702 and net loss of $40,361, respectively.

If we are not successful in developing the mining and consulting service business and establishing profitability and positive cash flow, additional capital may be required to maintain ongoing operations. We have explored and continue to explore options to obtain additional financing to fund future operations as well as other possible courses of action. Such actions may include, but are not limited to, securing lines of credit, sales of debt or equity securities (which may result in dilution to existing shareholders), loans and cash advances from other third parties or banks, and other similar actions. There can be no assurance we will be able to obtain additional funding (if needed), on acceptable terms or at all, through a sale of our common stock, loans from financial institutions, or other third parties, or any of the actions discussed above. If we cannot sustain profitable operations, and additional capital is unavailable, lack of liquidity could have a material adverse effect on our business viability, financial position, results of operations and cash flows.

Cash Flows

The table below, for the periods indicated, provides selected cash flow information for the year ended September 30, 2025 and 2024:

		2025				2024
Net cash used in operating activities		$	(289,894	)		$	(60,009	)
Net cash provided by financing activities			243,453				101,022
Net (decrease) increase in cash		$	(46,441	)		$	41,013

Cash Flows from Operating Activities

Our cash used in operating activities for the year ended September 30, 2025 and 2024 was $289,894 and $60,009, respectively. The increase in cash outflow during the year ended September 30, 2025 was mainly due to an increased cash outflow resulted from an increase in net loss after noncash adjustments by $267,763, despite we had a decreased cash outflow on other payable by $12,886 and a decreased cash outflow on lease payment by $25,110.

Cash Flows from Investing Activities

During the year ended September 30, 2025, and 2024, we did not have any investing activities.

Cash Flows from Financing Activities

Our cash provided by financing activities for the year ended September 30, 2025 was $243,453, and cash provided by financing activities for the year ended September 30, 2024 was $101,022. For the year ended September 30, 2025, cash provided by financing activities consisted of proceeds from convertible notes of $70,000, and proceeds from loan payable of $294,567, which was partly offset by repayment to related party of $117,369 and repayment to EIDL loan of $3,745. For the year ended September 30, 2024, cash provided by financing activities consisted of cash advance from related party of $103,550 for Company's working capital needs, which was partly offset by repayment to EIDL loan of $2,528.

Recent Accounting Pronouncements

See Note 2 to the Consolidated Financial Statements.

Off Balance Sheet Arrangements

As of September 30, 2025, we did not have any off-balance-sheet arrangements.