Delaware
|
|
58-2342021
|
(State
or other jurisdiction of incorporation or
organization)
|
|
(IRS
Employer Identification No.)
|
Large
accelerated filer
|
☐
|
Accelerated
filer
|
☐
|
Non-accelerated
filer
|
☐
|
Smaller
reporting company
|
☑
|
(do not
check if a smaller reporting company)
|
Emerging
growth company
|
☐
|
Title of Each Class
|
Number of Shares Outstanding
|
Common
Stock, $0.01 par value
|
22,367,631
|
Part 1
Financial Information.
|
3
|
Item 1.
Financial Statements.
|
3
|
Item 2.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations.
|
24
|
Item 3.
Quantitative and Qualitative Disclosures About Market
Risk.
|
35
|
Item 4.
Controls and Procedures.
|
35
|
Part II
Other Information.
|
36
|
Item 1.
Legal Proceedings.
|
36
|
Item
1A. Risk Factors.
|
36
|
Item 2.
Unregistered Sales of Equity Securities and Use of
Proceeds.
|
36
|
Item 3.
Defaults Upon Senior Securities.
|
36
|
Item 4.
Mine Safety Disclosures.
|
36
|
Item 5.
Other Information.
|
36
|
Item 6.
Exhibits.
|
37
|
Signatures.
|
38
|
Index
to Exhibits
|
39
|
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
||
|
2017
|
2016
|
2017
|
2016
|
Revenues
|
$
36,355,187
|
$
30,159,019
|
$
110,256,069
|
$
95,041,024
|
Cost
of revenues, exclusive of depreciation and
|
|
|
|
|
amortization,
shown separately below
|
19,749,188
|
17,431,477
|
59,921,649
|
55,875,267
|
Gross profit
|
16,605,999
|
12,727,542
|
50,334,420
|
39,165,757
|
Depreciation
and amortization
|
3,711,253
|
2,998,628
|
11,149,010
|
8,946,781
|
Selling,
general and administrative expenses
|
13,649,349
|
11,408,048
|
42,115,158
|
34,102,847
|
Total
operating expenses
|
17,360,602
|
14,406,676
|
53,264,168
|
43,049,628
|
Operating loss
|
(754,603
)
|
(1,679,134
)
|
(2,929,748
)
|
(3,883,871
)
|
Other (expenses) income:
|
|
|
|
|
Interest
expense
|
(2,204,520
)
|
(1,625,195
)
|
(6,468,916
)
|
(4,877,828
)
|
(Loss)
gain on change in fair value of derivative liabilities
|
(617,820
)
|
152,057
|
(544,486
)
|
380,099
|
Loss
on disposal of property and equipment
|
(161,037
)
|
(13,959
)
|
(253,087
)
|
(86,777
)
|
Other
income, net
|
47,694
|
32,028
|
177,539
|
120,291
|
Total
other expenses
|
(2,935,683
)
|
(1,455,069
)
|
(7,088,950
)
|
(4,464,215
)
|
Loss
before income taxes
|
(3,690,286
)
|
(3,134,203
)
|
(10,018,698
)
|
(8,348,086
)
|
Provision
for income taxes
|
(10,200
)
|
(10,951
)
|
(41,111
)
|
(10,951
)
|
Net loss
|
(3,700,486
)
|
(3,145,154
)
|
(10,059,809
)
|
(8,359,037
)
|
Less:
Net income attributable to non-controlling interest
|
(2,724
)
|
-
|
(2,724
)
|
-
|
Net loss attributable to Fusion Telecommunications International,
Inc.
|
(3,703,210
)
|
(3,145,154
)
|
(10,062,533
)
|
(8,359,037
)
|
Preferred
stock dividends
|
(241,191
)
|
(285,646
)
|
(1,735,798
)
|
(2,102,467
)
|
Net loss attributable to common stockholders
|
(3,944,401
)
|
(3,430,800
)
|
(11,798,331
)
|
(10,461,504
)
|
|
|
|
|
|
Basic and diluted loss per common share:
|
$
(0.18
)
|
$
(0.23
)
|
$
(0.54
)
|
$
(0.72
)
|
Weighted average common shares outstanding:
|
|
|
|
|
Basic
and diluted
|
22,352,341
|
14,990,816
|
21,828,816
|
14,536,893
|
|
Nine Months Ended
September 30,
|
|
|
2017
|
2016
|
Cash flows from operating activities:
|
|
|
Net
loss
|
$
(10,059,809
)
|
$
( 8,359,037
)
|
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
|
|
|
Depreciation
and amortization
|
11,149,010
|
8,946,781
|
Loss
on disposal of property and equipment
|
253,087
|
86,777
|
Stock-based
compensation
|
699,668
|
572,996
|
Stock
issued for services rendered or in settlement of
liabilities
|
184,560
|
105,256
|
Amortization
of debt discount and deferred financing fees
|
630,279
|
477,751
|
Loss
(gain) on the change in fair value of derivative
liability
|
544,487
|
(380,099
)
|
Changes in operating assets and liabilities:
|
|
|
Accounts
receivable
|
(4,446,433
)
|
(410,771
)
|
Prepaid
expenses and other current assets
|
(876,267
)
|
(1,373,378
)
|
Other
assets
|
24,885
|
(317,927
)
|
Accounts
payable and accrued expenses
|
5,786,081
|
(1,258,968
)
|
Net cash provided by (used in) operating activities
|
3,889,548
|
(1,910,619
)
|
|
|
|
Cash flows from investing activities:
|
|
|
Purchase
of property and equipment
|
(3,940,382
)
|
(3,782,232
)
|
Proceeds
from the sale of property and equipment
|
96,344
|
28,736
|
Noncontrolling
interest
|
3,211
|
-
|
(Payment)
for acquisitions, net of cash acquired
|
(558,329
)
|
16,895
|
Refunds
of purchase price from acquisitions
|
150,000
|
392,617
|
Return
of security deposits
|
14,788
|
26,750
|
Net cash used in investing activities
|
(4,234,368
)
|
(3,317,234
)
|
|
|
|
Cash flows from financing activities:
|
|
|
Proceeds
from the exercise of common stock purchase warrants
|
780,951
|
-
|
Repayments
of term loan
|
(2,437,500
)
|
(824,973
)
|
Repayments
of revolving debt, net
|
(1,500,000
)
|
|
Payments
for obligations under asset purchase agreements
|
(583,892
)
|
|
Payments
on equipment financing obligations
|
(795,015
)
|
(743,647
)
|
Net cash used in financing activities
|
(4,535,456
)
|
(1,568,620
)
|
Net change in cash and cash equivalents
|
(4,880,276
)
|
(6,796,473
)
|
Cash and cash equivalents, including restricted cash, beginning of
period
|
7,249,063
|
7,705,666
|
Cash and cash equivalents, including restricted cash, end of
period
|
$
2,368,787
|
$
909,193
|
Balance
at December 31, 2016
|
$
35,689,215
|
Increase
in goodwill associated with a 2016 acquisition
|
7,414
|
Settlement
of litigation with Apptix sellers
|
(513,000
)
|
Adjustment
to goodwill associated with acquisition of customer bases (see note
3)
|
(410,000
)
|
Balance
at September 30, 2017
|
$
34,773,629
|
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||
|
2017
|
2016
|
2017
|
2016
|
Numerator
|
|
|
|
|
Net
loss
|
$
(3,700,486
)
|
$
(3,145,154
)
|
$
(10,059,809
)
|
$
(8,359,037
)
|
Undeclared
dividends on Series A-1, A-2 and A-4 Convertible Preferred
Stock
|
(101,729
)
|
(101,729
)
|
( 301,871
)
|
( 302,976
)
|
Conversion
price reduction on Series B-2 Preferred Stock (see note
13)
|
-
|
-
|
( 623,574
)
|
-
|
Series
B-2 warrant exchange (see note 13)
|
-
|
-
|
( 347,191
)
|
-
|
Dividends
declared on Series B-2 Convertible Preferred Stock
|
( 139,462
)
|
( 183,917
)
|
( 463,162
)
|
( 1,799,491
)
|
Net
income attributable to non-controlling interest
|
(2,724
)
|
-
|
(2,724
)
|
-
|
Net
loss attributable to common stockholders
|
$
(3,944,401
)
|
$
(3,430,800
)
|
$
(11,798,331
)
|
$
(10,461,504
)
|
|
|
|
|
|
Denominator
|
|
|
|
|
Basic
and diluted weighted average common shares outstanding
|
22,352,341
|
14,990,816
|
21,828,816
|
14,536,893
|
|
|
|
|
|
Loss per share
|
|
|
|
|
Basic
and diluted
|
$
(0.18
)
|
$
(0.23
)
|
$
(0.54
)
|
$
(0.72
)
|
|
For the Nine Months Ended
September 30,
|
|
|
2017
|
2016
|
Warrants
|
2,658,900
|
2,946,948
|
Convertible
preferred stock
|
2,067,358
|
2,626,518
|
Stock
options
|
2,222,288
|
1,157,512
|
|
6,948,546
|
6,730,978
|
|
September 30, 2017
|
December 31, 2016
|
||||
|
Gross Carrying Amount
|
Accumulated Amortization
|
Total
|
Gross Carrying Amount
|
Accumulated Amortization
|
Total
|
|
|
|
|
|
|
|
Trademarks
and tradename
|
$
1,093,400
|
$
(629,731
)
|
$
463,669
|
$
1,093,400
|
$
(501,982
)
|
$
591,418
|
Proprietary
technology
|
6,670,000
|
(5,028,346
)
|
1,641,654
|
6,670,000
|
(4,036,915
)
|
2,633,085
|
Non-compete
agreement
|
12,128,043
|
(11,389,604
)
|
738,439
|
12,128,043
|
(9,891,892
)
|
2,236,151
|
Customer
relationships
|
67,713,181
|
(11,799,657
)
|
55,913,524
|
65,948,181
|
(7,827,697
)
|
58,120,484
|
Favorable
lease intangible
|
218,000
|
(214,366
)
|
3,634
|
218,000
|
(181,667
)
|
36,333
|
Total
acquired intangibles
|
$
87,822,624
|
$
(29,061,704
)
|
$
58,760,920
|
$
86,057,624
|
$
(22,440,153
)
|
$
63,617,471
|
Year
|
Amortization Expense
|
remainder
of 2017
|
$
1,962,993
|
2018
|
6,561,232
|
2019
|
5,577,500
|
2020
|
5,537,117
|
2021
|
5,362,750
|
|
Nine Months Ended
September 30,
|
|
Supplemental Cash Flow Information
|
2017
|
2016
|
Cash paid for interest
|
$
6,166,497
|
$
4,233,527
|
Cash paid for income taxes
|
$
-
|
$
-
|
|
|
|
Supplemental Non-Cash Investing and Financing
Activities
|
|
|
Property and equipment acquired under capital leases or equipment
financing obligations
|
$
457,475
|
$
188,497
|
Conversion
of preferred stock into common stock
|
$
2,958,000
|
$
-
|
Dividends on Series B-2 Preferred Stock paid with the issuance of
Fusion common stock
|
$
463,163
|
$
599,491
|
Obligations under purchase agreements
|
$
1,350,000
|
$
961,606
|
|
September 30, 2017
|
December 31, 2016
|
Insurance
|
$
5,327
|
$
160,262
|
Rent
|
16,326
|
5,389
|
Marketing
|
39,333
|
74,665
|
Software
subscriptions
|
697,261
|
419,431
|
Comisssions
|
109,688
|
159,146
|
Other
|
908,137
|
265,316
|
Total
|
$
1,776,072
|
$
1,084,209
|
|
September 30, 2017
|
December 31, 2016
|
Trade
accounts payable
|
$
7,275,546
|
$
6,358,548
|
Accrued
license fees
|
3,140,568
|
2,881,331
|
Accrued
sales and federal excise taxes
|
3,214,289
|
2,863,363
|
Deferred
revenue
|
1,523,045
|
1,874,641
|
Accrued
network costs
|
5,047,912
|
1,416,000
|
Accrued
sales commissions
|
798,835
|
819,106
|
Property
and other taxes
|
927,002
|
581,956
|
Accrued
payroll and vacation
|
408,570
|
421,733
|
Customer
deposits
|
378,783
|
365,249
|
Interest
payable
|
7,849
|
304,409
|
Credit
card payable
|
117,214
|
265,985
|
Accrued
USF fees
|
498,441
|
249,825
|
Accrued
bonus
|
376,890
|
249,361
|
Professional
and consulting fees
|
151,948
|
164,878
|
Rent
|
129,428
|
127,781
|
Other
|
1,678,626
|
778,672
|
Total
|
$
25,674,946
|
$
19,722,838
|
|
September 30,
|
December 31,
|
|
2017
|
2016
|
Equipment
financing obligations
|
$
1,902,120
|
$
2,239,661
|
Less:
current portion
|
(1,186,115
)
|
(1,002,578
)
|
Long-term
portion
|
$
716,005
|
$
1,237,083
|
Year ending December 31:
|
Principal
|
remainder
of 2017
|
$
321,854
|
2018
|
1,140,586
|
2019
|
429,486
|
2020
|
10,194
|
|
$
1,902,120
|
|
September 30,
|
December 31,
|
|
2017
|
2016
|
Term
loan
|
$
62,562,500
|
$
65,000,000
|
Less:
|
|
|
Deferred
financing fees
|
(1,092,906
)
|
(1,289,629
)
|
Current
portion
|
(5,687,500
)
|
(2,979,167
)
|
Term
loan - long-term portion
|
$
55,782,094
|
$
60,731,204
|
|
|
|
Indebtedness
under revolving credit facility
|
$
1,500,000
|
$
3,000,000
|
|
September 30,
|
December 31,
|
|
2017
|
2016
|
Subordinated
notes
|
$
33,588,717
|
$
33,588,717
|
Discount
on subordinated notes
|
(1,122,282
)
|
(1,368,629
)
|
Deferred
financing fees
|
(643,662
)
|
(788,486
)
|
Total
notes payable - non-related parties
|
31,822,773
|
31,431,602
|
Less:
current portion
|
-
|
-
|
Long-term
portion
|
$
31,822,773
|
$
31,431,602
|
|
September 30,
|
December 31,
|
|
2017
|
2016
|
Notes
payable to Marvin Rosen
|
$
928,081
|
$
928,081
|
Discount
on notes
|
(9,946
)
|
(52,331
)
|
Total
notes payable - related parties
|
$
918,135
|
$
875,750
|
|
September 30,
|
December 31,
|
|
2017
|
2016
|
Root
Axcess
|
$
-
|
$
166,668
|
Customer
base acquisitions
|
1,007,397
|
334,025
|
Technology
For Business, Inc.
|
861,606
|
936,606
|
|
1,869,003
|
1,437,299
|
Less:
current portion
|
(603,192
)
|
(546,488
)
|
Long-term
portion
|
$
1,265,811
|
$
890,811
|
|
Nine Months Ended
September 30,
|
|
|
2017
|
2016
|
Dividend
yield
|
0.0
%
|
0.0
%
|
Expected
volatility
|
92.40
%
|
94.6-96.7
%
|
Average
Risk-free interest rate
|
2.18
%
|
1.56
%
|
Expected
life of stock option term (years)
|
8.00
|
8.00
|
|
Number of Options
|
Weighted Average Exercise Price
|
Weighted Average Remaining Contract Term
|
Outstanding
at December 31, 2016
|
2,183,723
|
$
2.56
|
8.56
years
|
Granted
|
126,300
|
1.49
|
|
Exercised
|
-
|
-
|
|
Forfeited
|
( 61,460
)
|
1.60
|
|
Expired
|
( 26,275
)
|
18.80
|
|
Outstanding
at September 30, 2017
|
2,222,288
|
2.33
|
7.95
|
Exercisable
at September 30, 2017
|
712,542
|
3.89
|
6.35
|
|
Three Months Ended September 30, 2017
|
|||
|
Carrier Services
|
Business Services
|
Corporate and Unallocated
|
Consolidated
|
Revenues
|
$
7,058,137
|
$
29,297,050
|
$
-
|
$
36,355,187
|
Cost
of revenues (exclusive of depreciation and
amortization)
|
6,704,077
|
13,045,111
|
-
|
19,749,188
|
Gross
profit
|
354,060
|
16,251,939
|
-
|
16,605,999
|
Depreciation
and amortization
|
45,269
|
3,470,310
|
195,674
|
3,711,253
|
Selling,
general and administrative expenses
|
547,654
|
11,790,690
|
1,311,005
|
13,649,349
|
Impairment
charge
|
|
-
|
|
-
|
Interest
expense
|
-
|
(2,125,158
)
|
(79,361
)
|
(2,204,519
)
|
Loss
on change in fair value of derivative liability
|
-
|
-
|
(617,820
)
|
(617,820
)
|
Loss
on extinguishment of debt
|
-
|
-
|
-
|
-
|
Other
expenses, net
|
9,371
|
112,816
|
8,844
|
131,032
|
Income
tax provision
|
-
|
(10,200
)
|
-
|
(10,200
)
|
Net
loss
|
$
(248,234
)
|
$
(1,257,235
)
|
$
(2,195,016
)
|
$
(3,700,486
)
|
|
|
|
|
|
Total
assets
|
$
4,895,761
|
$
119,113,665
|
$
2,467,319
|
$
126,476,745
|
|
Nine Months Ended September 30, 2017
|
|||
|
Carrier Services
|
Business Services
|
Corporate and Unallocated
|
Consolidated
|
Revenues
|
$
22,496,958
|
$
87,759,111
|
$
-
|
$
110,256,069
|
Cost
of revenues (exclusive of depreciation and
amortization)
|
21,746,819
|
38,174,830
|
-
|
59,921,649
|
Gross
profit
|
750,139
|
49,584,281
|
-
|
50,334,420
|
Depreciation
and amortization
|
339,633
|
10,408,551
|
400,824
|
11,149,008
|
Selling,
general and administrative expenses
|
1,639,020
|
36,517,317
|
3,958,821
|
42,115,158
|
Impairment
charge
|
|
-
|
|
-
|
Interest
expense
|
-
|
(6,262,106
)
|
(206,810
)
|
(6,468,916
)
|
Loss
on change in fair value of derivative liability
|
-
|
-
|
(544,485
)
|
(544,485
)
|
Other
(expenses) income, net
|
(9,454
)
|
50,516
|
(116,613
)
|
(75,551
)
|
Income
tax provision
|
-
|
(41,111
)
|
-
|
(41,111
)
|
Net
loss
|
$
(1,237,968
)
|
$
(3,594,288
)
|
$
(5,227,553
)
|
$
(10,059,809
)
|
|
|
|
|
|
Capital
expenditures
|
$
21,443
|
$
4,376,414
|
$
-
|
$
4,397,857
|
|
Three Months Ended September 30, 2016
|
|||
|
Carrier Services
|
Business Services
|
Corporate and Unallocated
|
Consolidated
|
Revenues
|
$
8,864,791
|
$
21,294,318
|
$
-
|
$
30,159,109
|
Cost
of revenues (exclusive of depreciation and
amortization)
|
8,487,912
|
8,943,655
|
-
|
17,431,567
|
Gross
profit
|
376,879
|
12,350,663
|
-
|
12,727,542
|
Depreciation
and amortization
|
38,094
|
2,747,822
|
212,712
|
2,998,628
|
Selling,
general and administrative expenses
|
653,462
|
9,547,547
|
1,207,039
|
11,408,048
|
Impairment
charge
|
|
-
|
|
-
|
Interest
expense
|
-
|
(1,551,534
)
|
(73,661
)
|
(1,625,195
)
|
Gain
on change in fair value of derivative liability
|
-
|
-
|
152,057
|
152,057
|
Other
(expenses) income, net
|
-
|
(247,070
)
|
265,139
|
18,069
|
Provision
for income taxes
|
-
|
(10,951
)
|
|
(10,951
)
|
Net
loss
|
$
(314,677
)
|
$
(1,754,261
)
|
$
(1,076,216
)
|
$
(3,145,154
)
|
|
|
|
|
|
Total
assets
|
$
3,783,321
|
$
90,027,291
|
$
2,312,655
|
$
96,123,267
|
|
Nine Months Ended September 30, 2016
|
|||
|
Carrier Services
|
Business Services
|
Corporate and Unallocated
|
Consolidated
|
Revenues
|
$
30,711,086
|
$
64,329,938
|
$
-
|
$
95,041,024
|
Cost
of revenues (exclusive of depreciation and
amortization)
|
29,341,982
|
26,533,285
|
-
|
55,875,267
|
Gross
profit
|
1,369,104
|
37,796,653
|
-
|
39,165,757
|
Depreciation
and amortization
|
116,102
|
8,128,378
|
702,301
|
8,946,781
|
Selling,
general and administrative expenses
|
2,119,119
|
28,052,965
|
3,930,763
|
34,102,847
|
Impairment
charge
|
|
-
|
|
-
|
Interest
expense
|
-
|
(4,647,847
)
|
(229,981
)
|
(4,877,828
)
|
Gain
on change in fair value of derivative liability
|
-
|
-
|
380,099
|
380,099
|
Other
(expenses) income, net
|
-
|
(764,308
)
|
797,822
|
33,514
|
Provision
for income taxes
|
-
|
(10,951
)
|
|
(10,951
)
|
Net
loss
|
$
(866,117
)
|
$
(3,807,796
)
|
$
(3,685,124
)
|
$
(8,359,037
)
|
|
|
|
|
|
Capital
expenditures
|
$
41,584
|
$
3,929,145
|
$
-
|
$
3,970,729
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
As of September 30, 2017
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Contingent
purchase price liability
|
-
|
-
|
$
603,192
|
$
603,192
|
Non-current
liabilities:
|
|
|
|
|
Contingent
purchase price liability
|
-
|
-
|
$
1,265,811
|
$
1,265,811
|
Derivative
liability (see note 12)
|
-
|
-
|
$
760,965
|
$
760,965
|
As of December 31, 2016
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Contingent
purchase price liability
|
-
|
-
|
$
546,488
|
$
546,488
|
Non-current
liabilities:
|
|
|
|
|
Contingent
purchase price liability
|
-
|
-
|
$
890,811
|
$
890,811
|
Derivative
liability (see note 12)
|
-
|
-
|
$
348,650
|
$
348,650
|
Balance
at December 31, 2016
|
$
348,650
|
Change
for the period:
|
|
Change
in fair value included in net loss
|
544,486
|
Warrant
exercises (see note 12)
|
(132,171
)
|
Balance
at September 30, 2017
|
$
760,965
|
Balance
at December 31, 2016
|
$
1,437,299
|
Change
for the period:
|
|
Acquired
customer base
|
1,350,000
|
Increase
in amounts due from Technology Opportunity Group
|
(334,404
)
|
Payments
made
|
(583,892
)
|
Balance
at September 30, 2017
|
$
1,869,003
|
|
2017
|
2016
|
||
|
$
|
%
|
$
|
%
|
Revenues
|
$
36,355,187
|
100.0
|
$
30,159,019
|
100.0
|
Cost
of revenues *
|
19,749,188
|
54.3
|
17,431,477
|
57.8
|
Gross profit
|
16,605,999
|
45.7
|
12,727,542
|
42.2
|
Depreciation
and amortization
|
3,711,253
|
10.2
|
2,998,628
|
9.9
|
Selling,
general and administrative expenses
|
13,649,349
|
37.5
|
11,408,048
|
37.8
|
Total
operating expenses
|
17,360,602
|
47.8
|
14,406,676
|
47.8
|
Operating loss
|
( 754,603
)
|
(2.1
)
|
( 1,679,134
)
|
(5.6
)
|
Other (expenses) income:
|
|
|
|
|
Interest
expense
|
( 2,204,520
)
|
(6.1
)
|
( 1,625,195
)
|
(5.4
)
|
(Loss)
gain on change in fair value of derivative liability
|
( 617,820
)
|
(1.7
)
|
152,057
|
0.5
|
Loss
on disposal of property and equipment
|
( 161,037
)
|
(0.4
)
|
(13,959
)
|
(0.0
)
|
Other
income, net
|
47,694
|
0.1
|
32,028
|
0.1
|
Total
other expenses
|
( 2,935,683
)
|
(8.1
)
|
( 1,455,069
)
|
(4.8
)
|
Loss before income taxes
|
( 3,690,286
)
|
(10.2
)
|
( 3,134,203
)
|
(10.4
)
|
Provision
for income taxes
|
(10,200
)
|
(0.0
)
|
(10,951
)
|
(0.0
)
|
Net loss
|
$
(3,700,486
)
|
(10.2
)
|
$
(3,145,154
)
|
(10.4
)
|
|
2017
|
2016
|
||
|
$
|
%
|
$
|
%
|
Revenues
|
$
110,256,069
|
100.0
|
$
95,041,024
|
100.0
|
Cost
of revenues *
|
59,921,649
|
54.3
|
55,875,267
|
58.8
|
Gross profit
|
50,334,420
|
45.7
|
39,165,757
|
41.2
|
Depreciation
and amortization
|
11,149,010
|
10.1
|
8,946,781
|
9.4
|
Selling,
general and administrative expenses
|
42,115,158
|
38.2
|
34,102,847
|
35.9
|
Total
operating expenses
|
53,264,168
|
48.3
|
43,049,628
|
45.3
|
Operating loss
|
( 2,929,748
)
|
(2.7
)
|
( 3,883,871
)
|
(4.1
)
|
Other (expenses) income:
|
|
|
|
|
Interest
expense
|
( 6,468,916
)
|
(5.9
)
|
( 4,877,828
)
|
(5.1
)
|
(Loss)
gain on change in fair value of derivative liability
|
( 544,486
)
|
(0.5
)
|
380,099
|
0.4
|
Loss
on disposal of property and equipment
|
( 253,087
)
|
(0.2
)
|
(86,777
)
|
(0.1
)
|
Other
income, net
|
177,539
|
0.2
|
120,291
|
0.1
|
Total
other expenses
|
( 7,088,950
)
|
(6.4
)
|
( 4,464,215
)
|
(4.7
)
|
Loss before income taxes
|
( 10,018,698
)
|
(9.1
)
|
( 8,348,086
)
|
(8.8
)
|
Provision
for income taxes
|
(41,111
)
|
(0.0
)
|
(10,951
)
|
(0.0
)
|
Net loss
|
$
(10,059,809
)
|
(9.1
)
|
$
(8,359,037
)
|
(8.8
)
|
|
|
EXHIBIT NO.
|
DESCRIPTION
|
10.1.1
|
First
Amendment to Agreement and Plan of Merger, dated as of September
15, 2017, by and among Fusion Telecommunications International,
Inc., Fusion BCHI Acquisition LLC and Birch Communications
Holdings, Inc.
|
10.1.2
|
Second
Amendment to Agreement and Plan of Merger, dated as of September
29, 2017, by and among Fusion Telecommunications International,
Inc., Fusion BCHI Acquisition LLC and Birch Communications
Holdings, Inc.
|
10.1.3
|
Amended
and Restated Third Amendment to Agreement and Plan of Merger, dated
as of October 27, 2017, by and among Fusion Telecommunications
International, Inc., Fusion BCHI Acquisition LLC and Birch
Communications Holdings, Inc.
|
10.1.4
|
Lease
Agreement, dated as of June 30, 2017, between LMR USA LLC and
Network Billing Systems LLC relating to leased premises located at
695 Route 46, Fairfield, NJ 07004.
|
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 pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification
of 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
|
|
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC
.
|
|
|
|
|
|
|
November
13, 2017
|
By:
|
/s/
Michael R. Bauer
|
|
|
|
Michael
R. Bauer
|
|
|
|
Chief
Financial Officer
|
|
|
|
|
|
November
13, 2017
|
By:
|
/s/
Lisa Taranto
|
|
|
|
Lisa
Taranto
|
|
|
|
Principal
Accounting Officer
|
|
|
|
|
|
EXHIBIT NO.
|
DESCRIPTION
|
10.1.1
|
First
Amendment to Agreement and Plan of Merger, dated as of September
15, 2017, by and among Fusion Telecommunications International,
Inc., Fusion BCHI Acquisition LLC and Birch Communications
Holdings, Inc.
|
10.1.2
|
Second
Amendment to Agreement and Plan of Merger, dated as of September
29, 2017, by and among Fusion Telecommunications International,
Inc., Fusion BCHI Acquisition LLC and Birch Communications
Holdings, Inc.
|
10.1.3
|
Amended
and Restated Third Amendment to Agreement and Plan of Merger, dated
as of October 27, 2017, by and among Fusion Telecommunications
International, Inc., Fusion BCHI Acquisition LLC and Birch
Communications Holdings, Inc.
|
10.1.4
|
Lease
Agreement, dated as of June 30, 2017, between LMR USA LLC and
Network Billing Systems LLC relating to leased premises located at
695 Route 46, Fairfield, NJ 07004.
|
Certification
of the Chief Executive Officer, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
Certification
of the Acting Chief Financial Officer, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
|
|
Certification
of the Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
Certification
of the Acting 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
|
YEAR
|
ANNUAL BASE RENT
|
MONTHLY BASE RENT
|
Amount P.S.F
|
Year 1
|
$32,651.58
|
$16,325.79
|
14.50
|
Year 2
|
$202,665.00
|
$16,888.75
|
15.00
|
Year 3
|
$209,420.50
|
$17,451.71
|
15.50
|
Year 4
|
$216,176.00
|
$18,014.67
|
16.00
|
Year 5
|
$222,931.50
|
$18,577.63
|
16.50
|
Year 6
|
$229,687.00
|
$19,140.58
|
17.00
|
Year 7
|
$236,442.50
|
$19,703.54
|
17.50
|
Year 8
|
$243,198.00
|
$20,266.50
|
18.00
|
Year 9
|
$249,953.50
|
$20,829.46
|
18.50
|
Year 10
|
$256,709.00
|
$21,392.42
|
19.00
|
10 months
|
$219,553.75
|
$21,955.38
|
19.50
|
LMR USA LLC.
|
|
NETWORK BILLING SYSTEMS, LLC D/B/A FUSION
|
|
|
|
|
|
|
/s/ Joseph Weiss
|
|
/s/ Gordon Hutchins, Jr.
|
Name:
Joseph
Weiss
|
|
Name: Gordon Hutchins, Jr.
|
Title:
Manager
|
|
Title: Executive Vice President
|