10-K: Fuse Group Reports Steep Revenue Decline, Widening Losses

Fuse Group Holding Inc. reported a significant revenue drop and increased net losses for fiscal year 2025, raising substantial doubt about its ability to continue as a going concern.

Summary

• Revenue for the fiscal year ended September 30, 2025, decreased significantly to $45,942 from $332,024 in the prior year, primarily due to lower client demand for consulting services.
• The company incurred a net loss of $283,702 for FY2025, a substantial increase from the $40,361 net loss in FY2024.
• An accumulated deficit of $8,233,082 was reported as of September 30, 2025.
• Working capital deficit worsened to $(355,615) in FY2025 from $(67,412) in FY2024.
• Cash used in operating activities increased to $(289,894) in FY2025 from $(60,009) in FY2024.
• The company's ability to continue as a going concern is in substantial doubt due to recurring operating losses, accumulated deficit, and negative cash flows from operations.
• Material weaknesses in internal control over financial reporting persist, including the lack of an audit committee, insufficient information technology controls, and a lack of sufficient accounting personnel.
• Two new directors, Kai Xu and Anming Jiang, were appointed to the Board on September 15, 2025.
• The company completed two convertible promissory note sales in March and May 2025, raising $70,000 in principal amount.

Sentiment

Score: 2

Explanation: The company faces severe financial distress, evidenced by a drastic revenue decline, significantly widened net losses, a worsening working capital deficit, and negative cash flows from operations. The 'going concern' warning, persistent material weaknesses in internal controls, and multiple failed acquisition attempts highlight significant operational and strategic challenges. While there are efforts to raise capital and address some governance issues, the overall financial health and operational execution are very poor.

Positives

• The company engaged an outside CPA with U.S. GAAP knowledge and experience to assist in financial statement preparation, addressing one aspect of its accounting personnel deficiency.

Negatives

• Revenue decreased by approximately 86% from $332,024 in FY2024 to $45,942 in FY2025.
• Net loss widened significantly to $283,702 in FY2025 from $40,361 in FY2024.
• The accumulated deficit grew to $8,233,082 as of September 30, 2025.
• Working capital deficit deteriorated from $(67,412) in FY2024 to $(355,615) in FY2025.
• Cash used in operating activities increased substantially from $(60,009) in FY2024 to $(289,894) in FY2025.
• The consulting agreement with Beijing Jixiang Fengqi Tech Company Limited, which generated $10,000 per month, was not renewed upon its expiration on December 12, 2024.
• The potential acquisition of Beijing Catering Inc. (a Yomie Yogurt store) expired and terminated as of May 31, 2024, as parties did not reach an agreement to extend the deadline.
• The company's office lease expired on November 30, 2024, and it is currently negotiating renewal, paying month-to-month.

Risks

• Uncertainty of profitability based on a history of losses and an accumulated deficit of $8,233,082.
• Risks related to failure to obtain adequate financing on a timely basis and on acceptable terms to continue as a going concern.
• Dependence on the continued retention of key personnel, specifically Mr. Umesh Patel (CEO and CFO), whose loss could significantly impact the business.
• Intense competition in the mining, biotech, and consulting industries, with many competitors having greater resources and established client bases.
• Ineffective internal control over financial reporting due to the lack of an audit committee, insufficient information technology controls, and inadequate accounting personnel.
• Lack of a majority of independent directors on the Board and absence of voluntarily implemented corporate governance measures, potentially limiting shareholder protections.
• Concentrated ownership by Landbond Home Limited (31.7% of outstanding common stock) gives it significant influence over key decision-making.
• Limitations of 15(d) reporting requirements, which do not require the same level of disclosure as a fully reporting company, potentially reducing investor visibility.
• Potential negative effects on operations and financial results from uncontrollable events such as pandemics (e.g., COVID-19), which previously disrupted mine projects and consulting services.
• Increased costs and demands on management from complying with public company laws and regulations, which could disproportionately harm operating results.
• No intention to pay dividends, meaning any gain on investment must come from stock price appreciation.
• Risks associated with future acquisitions, including significant cash expenditures, debt incurrence, or stock issuance, which could dilute current shareholders.
• Very limited public market for common stock on the over-the-counter exchange, leading to potential illiquidity and high volatility.
• Cybersecurity incidents could disrupt business operations, result in loss of confidential information, and adversely impact reputation and results of operations, especially given the lack of formalized cybersecurity measures and a dedicated team.
• Application of Penny Stock rules could adversely affect the market price of common shares and increase transaction costs for investors.

Future Outlook

Management intends to raise additional funds through private or public offerings or loans to maintain ongoing operations, acknowledging no assurance of obtaining such funding on acceptable terms. The company does not currently plan to spend funds on research and development activities in the near future. Global growth forecasts remain uncertain, which could affect investment desires in mining and international projects.

Management Comments

• Management believes that an audit committee, including a financial expert member, is of the utmost importance for entity-level control over the company's financial statements, despite not being legally obligated to have one.
• Management acknowledges that the company's disclosure controls and procedures were ineffective in ensuring material information is included in SEC reports.
• Management believes that the company's internal control over financial reporting is not effective as of September 30, 2025, based on COSO criteria.
• Management intends to promote honest and ethical conduct, full and fair disclosure in SEC reports, and comply with applicable governmental laws and regulations, in lieu of a formal code of ethics.

Industry Context

The company operates in highly competitive and diverse sectors including mining, biotech, and consulting, with a recent diversification into catering and culinary consulting. The significant decline in consulting revenue suggests challenges in securing and retaining clients in these competitive markets. The global economic uncertainty mentioned in the filing could further dampen investment in mining and other project-based consulting services, impacting the company's ability to generate revenue and achieve profitability.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• The company is not currently a party to any legal proceedings.

Related Party Transactions

• As of September 30, 2025, the company had an advance of $22,154 from its CEO, Umesh Patel, for working capital needs. This advance did not bear any interest and was payable upon demand.

Stakeholder Impact

• Shareholders face significant risk of investment loss due to the company's 'going concern' uncertainty, recurring losses, and potential for further dilution from future capital raises.
• Employees (currently only two full-time) face job insecurity given the company's financial instability and limited operations.
• Creditors, including holders of convertible notes and loan providers, face increased risk of delayed or non-repayment due to the company's liquidity challenges and accumulated deficit.
• Potential customers and partners may be hesitant to engage with the company due to its financial instability and operational challenges, impacting future business development.

Next Steps

• Remediate material weaknesses in internal control over financial reporting, including potentially hiring additional accounting personnel and implementing appropriate IT controls.
• Continue efforts to raise additional funds through private or public offerings or loans to support ongoing operations.
• Negotiate renewal of the office lease, which expired on November 30, 2024.
• Continue business development in mining, biotech, and consulting areas, and investigate potential mining targets in Asia and North America.
• Revisit the adoption of a code of ethics and potentially expand Board membership to include additional independent directors and establish audit and other committees.

Key Dates

Recommendation

The company's financial performance is severely deteriorating, marked by an 86% revenue decline, a significantly widened net loss, and a worsening working capital deficit. The explicit 'going concern' warning from auditors, coupled with persistent material weaknesses in internal controls and a history of failed business development initiatives (e.g., multiple terminated acquisitions), indicates profound operational and financial instability. While management is seeking additional capital, there is no assurance of success, and any new financing would likely result in substantial dilution for existing shareholders. The lack of robust corporate governance further exacerbates the risk profile. Given these critical issues, the stock presents an extremely high-risk investment with a strong likelihood of further value erosion.

Keywords

mining, biotech, consulting services, SEC filing, 10-K, financial results, net loss, revenue decline, going concern, internal controls, corporate governance, reverse stock split, convertible notes, risk factors