UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-KSB/A
 Amendment
No. 1
 
 (Mark
One)
 
 [X]
                ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For the
fiscal year ended December 31, 2007.
 
 [ 
      ]
                TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For the
transition period from ________ to _________
 Commission
File No. 0-50274
 
 
 
 FUSA
Capital Corporation
 (Name of
small business issuer in its charter)
 
 Nevada
                51-0520296(State
      or other jurisdiction of incorporation or organization)
                (I.R.S.
      Employer Identification No.)1420
      Fifth Avenue, 22nd Floor, Seattle, Washington
                98101(Address
      of principal executive offices)
                (Zip
      Code)
 
 
 Issuer’s telephone number (206) 274-5107
 
 Securities
registered under Section 12(b) of the Exchange Act:
 
 None
 
 Securities
registered under Section 12(g) of the Exchange Act:
 
 Common
Stock, $0.0001 par value
 (Title of
Class)
 
 Check
whether the issuer: (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
 Yes
[X]   No [  ]
 
 Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [  ]
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act)
 Yes
[  ]    No [X]
  
   Revenues
for the fiscal year ended December 31, 2007 were $34,553.
 
 As at
March 24, 2008, the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the average bid and asked
price of such common equity was approximately $7,591,556.
  As at
March 24, 2008, the registrant had outstanding 69,813,749 shares of common
stock, par value $0.0001, of which there is only a single class.
 
 DOCUMENTS
INCORPORATED BY REFERENCE
 
 None
 
 Transitional
Small Business Disclosure Format (Check one): Yes [  ]   No
[X]
 
 THIS AMENDMENT NO. 1 TO THE COMPANY’S
REPORT ON FORM 10KSB FOR THE FISCAL YEAR END DECEMBER 31, 2008 AMENDS PART II,
ITEM 8A REGARDING CONTROLS AND PROCEEDURES.  WE HAVE ALSO MADE CHANGES
TO THE PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
CERTIFICATIONS WHICH ARE EXHIBITS TO THIS REPORT.
 
  
  TABLE OF CONTENTS
 
 Page
                NumberPART
      IITEM 1
              Description of Business.
              1ITEM 2
              Description of Property.
              11ITEM 3
              Legal Proceedings.
              11ITEM 4.
              Submission of Matters to a Vote of Security
      Holders.
              11PART
      IIITEM 5.
              Market for Common Equity and Related Stockholder
      Matters.
              12ITEM 6
              Management’s Discussion and Analysis or Plan of
      Operation.
              15ITEM 7
              Financial Statements.
              F-1ITEM 8
              Changes In and Disagreements With Accountants on Accounting and
      Financial Disclosure.
              27ITEM 8A
              Controls and Procedures.
              27ITEM 8B
              Other Information.
              28PART
      IIIITEM 9.
              Directors, Executive Officers, Promoters and Control Persons
      and Corporate Governance;  Compliance With Section 16(a) of the 
      Exchange Act.
              29ITEM 10
              Executive Compensation.
              31ITEM 11
              Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters.
              32ITEM 12
              Certain Relationships and Related Transactions, and Director
      Independence.
              33ITEM 13
              Exhibits.
              34ITEM 14
              Principal Accountant Fees and Services.
              35
 
 
 
 
 
 
 
 
  
  PART
I
 
 SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
 This Form
10-KSB, press releases and certain information provided periodically in writing
or verbally by our officers or our agents contain statements which constitute
forward-looking statements. The words “may”, “would”, “could”, “will”, “expect”,
“estimate”, “anticipate”, “believe”, “intend”, “plan”, “goal”, and similar
expressions and variations thereof are intended to specifically identify
forward-looking statements. These statements appear in a number of places in
this Form 10-KSB and include all statements that are not statements of
historical fact regarding the intent, belief or current expectations of us, our
directors or our officers, with respect to, among other things: (i) our
liquidity and capital resources; (ii) our financing opportunities and plans;
(iii) our ability to generate revenues; (iv) competition in our business
segments; (v) market and other trends affecting our future financial condition
or results of operations; (vi) our growth strategy and operating strategy; and
(vii) the declaration and/or payment of dividends.
 
 Investors
and prospective investors are cautioned that any such forward-looking statements
are not guarantees of future performance and involve risks and uncertainties,
and that actual results may differ materially from those projected in the
forward-looking statements as a result of various factors. The factors that
might cause such differences include, among others, those set forth in Part II,
Item 6 of this annual report on Form 10-KSB, entitled Management’s Discussion
and Analysis or Plan of Operation, including without limitation the risk factors
contained therein. Except as required by law, we undertake no obligation to
update any of the forward-looking statements in this Form 10-KSB after the date
of this report.
 
 ITEM
1. DESCRIPTION OF BUSINESS.
 
 OVERVIEW
  We are a
development stage technology company focused on the refinement and marketing of
a comprehensive suite of media search engine technologies. Our objective is to
become the leading innovator of search engine technologies for online consumers
as well as digital content providers. To that end we currently operate and
market the website newstowatch.com.
 Newstowatch.com is a
breaking news discovery service that programatically reads thousands of current
news stories and intelligently categorizes, organizes and ranks the most popular
stories and topics from around the web.
  NewsToWatch
makes it easy for users to participate in shaping the news. Along with the
algorithmic news editor, users influence the rank and importance of news stories
by their consumption and contributing new stories into the newstowatch news
network.  We also operate the consumer media search websites searchforvideo.com,
podanza.com and
iheard.com.  It
is the intention of the company to expand the number of sites that the company
develops, operates and markets in the future.
   Return to Table of Contents
 1
  CORPORATE
HISTORY AND DEVELOPMENT
  We were
incorporated in the State of Nevada on September 13, 2000 as Galaxy Championship
Wrestling, Inc., a media and entertainment company focused on developing,
producing and marketing live entertainment in the professional wrestling
sphere.
  On March
31, 2004, unable to generate sufficient revenues to sustain our professional
wrestling business, we ceased operations in this field and began exploring other
business opportunities.
  Also on
March 31, 2004 our controlling shareholders entered into a certain private stock
purchase agreement, wherein they sold an aggregate of 5,750,000 of our common
shares, representing a sixty-two and seventeen twentieths percent (62.85%)
controlling interest, to an unrelated third party.
  By
certificate of amendment filed June 17, 2004, we changed our name from Galaxy
Championship Wrestling, Inc. to FUSA Capital Corporation.
  During
the period from March 31, 2004 until March 7, 2005 we had no meaningful
operations and did not carry on any active business, focusing instead on
identifying and evaluating the merits of alternative potential business and
acquisition opportunities which might allow us to restart
operations.
  On March
7, 2005 we entered into a certain plan and agreement of reorganization with FUSA
Technology Investments Corp. ("FTIC"), a Nevada corporation engaged in the
emerging growth field of audio and video search engine technology, whereby we
acquired all of the issued and outstanding capital stock of FTIC in addition to
obtaining certain intellectual property concepts related to search engine
technology as developed by FTIC and its principals.
  On April
22, 2005, our board of directors declared a three-for-one common stock dividend,
wherein each holder of record of our common shares as of May 3, 2005 received
two additional shares for each common share then held. Unless otherwise noted,
all references to the number of common shares included in this annual report on
Form 10-KSB for the fiscal year ended December 31, 2007 are stated on a
post-dividend basis. Per share amounts have also been restated to reflect the
common share dividend.
  Since
April, 2005, we have been engaged continuously in the development and operation
of consumer focused media search engine technologies and portals.
  Our
principal executive offices are located at 1420 Fifth Avenue, 22nd Floor,
Seattle, Washington 98101. Our phone number is (206) 274-5107.
   Return to Table of Contents
 2
  PRINCIPAL
PRODUCTS AND SERVICES
  The
proliferation of audio and video files on the Internet, as well as in intranets,
corporate and university environments and on individual desktop computers, has
created an enormous volume of available media sources. Audio and video files
themselves contain vast amounts of valuable information and are readily in
demand by consumers and businesses as sources of current news, information and
entertainment, as well as sources of archival media. Any sizable quantity of
information is only as useful as individual users can efficiently sort through
and identify desired data. This identification traditionally takes place via the
gradual collection of metadata about information sources, which is then quickly
searched to obtain desired data. For example, a newspaper article might be
associated with metadata (or information about the data) as to its author,
subject, number of words, keywords and date. Metadata has a long history of use
in information management; library card catalogues containing author, title and
subject information and a Dewey Decimal number were forms of metadata about
books.
  Because
the Internet and information technology has created an exponential increase in
the amount of available data that can be delivered to the individual user,
metadata has been transformed from a helpful method to make book and periodical
retrieval more efficient, to an absolutely essential element of the ability to
find and consume information. Indeed, because of the amount of information
currently available, such information has virtually no value to an individual
user without appropriate metadata and a mechanism or search engine to comb
through that metadata to find desired information
  Our
technology provides customers and consumers with comprehensive search engine
solutions, consisting of multiple modules. The search engine solution modules
work together providing a complete search engine system to discover, scrape,
index and generate metadata in RSS (Really Simple Syndication) format for
syndication to any internet enabled device.
  We have
developed and relaunched our consumer website, NewstoWatch.com, with
significant technological upgrades. We believe these technological upgrades and
site feature enhancements provide us with an opportunity to gain traffic and
exposure with its unique combination of software and community
participation.  Newstowatch.com is a
breaking news discovery service that programatically reads tens of thousands
current news stories and intelligently categorizes, organizes and ranks the most
popular stories and topics from around the web.
  NewstoWatch
makes it easy for users to participate in shaping the news. Along with the
algorithmic news editor, users influence the rank and importance of news stories
by their consumption and contributing new stories into the NewstoWatch news
network.
  In
November, 2007, we partnered with MediaScrape.com, an on-line television news
network that broadcasts BBC and Fox News content among many other global news
partners, to provide increased access for our customers to the latest video news
streams from around the world.  In October 2007, we added the news and
public affairs programming of LinkTV and from Voxant’s TheNewsRoom.com to
searchforvideo.com.
 
 In
October, to capture the growing market for Internet radio consumption, we
launched www.iheard.com, which provides consumers with an interface and powerful
search tools to access thousands of Internet radio stations from around the
world across multiple genres.
 
  Return to Table of Contents
 3
  In
September we also launched www.podanza.com, a
site which utilizes our core media search engine technology to provide consumers
easy access to a wide variety of podcast programming.  The site
aggregates podcast content from over 5,000 international producers.
 
 In 2007,
we substantially expanded our business development relationships and forged a
number of content partnerships through the year, highlights of  which
included content partnerships with Videopinions(SM) Reviews from
ExpoTV,  ON Networks, Inc., CraveOnline, Liberated Films, Inc., the
ClipSyndicate, Photobucket.com, Snowvision, A& E Television Network,
Travelistic.com, VideoJug.com, The Daily Reel, VMIX.com, VEOH and
Newsweek.com.
 
 OPERATIONS
 
 At
present we maintain day-to-day operations from our development and marketing
offices in Vancouver, British Columbia, Canada. We have 2 full-time staff
members and 4 consultants actively engaged in the development of our products
and business, consisting primarily of:
 
 ·
              Further
      development of our core offering of intelligently categorized news from
      around the world at
www.NewstoWatch.com;
 
 ·
              the
      continued development of our core search engine and related proprietary
      search technology;
 
 ·
              Continued
      streamlining of our operations to lower development costs through
      automating processes related to maintenance of our
  portals;
 
 ·
              Development
      of our www.iheard.com and www.podanza.com consumer portal
      properties;
 
 ·
              securing
      additional strategic partners/revenue share partners;
  and
 
 ·
              securing
      partnerships with content owners.
 
 RESEARCH
AND DEVELOPMENT
 
 We need
to expend some additional resources to continue to develop our search engine
products and services. We may need to expend significant resources in
customization or in meeting customer requirements as well as continuing to
respond to competition and competitive developments in the marketplace, however
these resources, while significant, should be less than what we have had to
spend in the past by virtue of our having completed principal development on our
consumer search portals. During the fiscal year ended December 31, 2007 we
incurred expenses of $146,204 on our research and development activities. From
February 9, 2005 (inception) through the fiscal year ended December 31, 2007 we
incurred research and development expenses of $1,936,333. We believe that our
research and development expenses will decrease substantially this year as we
have completed major developments on our consumer web portals.  We
also signed an agreement in 2007 to license the Argon Search Engine technology
and related technologies which may improve and optimize aspects of our core
search engine and consumer media portal technologies, although this license
arrangement has not yet been fully concluded.   We may recognize
a substantial expense for stock which would be issued for the acquisition of the
Argon Search Engine technology and related technologies if that license is
successfully concluded in 2008.
  Return to Table of Contents
 4
  PRINCIPAL
MARKETS
 
 We market
our search engine solutions to companies operating Internet websites with news,
video clip, music and sports content and we offer consumers direct search engine
capabilities through our various Internet websites.
 
 We have
just begun to seek customers for our technology and although we have some
content relationships in place, we are not yet generating substantial revenues
from our customers. Although we have the capability of deriving significant
revenue from our search engine portals, current user traffic levels are not yet
sufficient to produce significant revenue.
 
 We have
also just entered the field of participatory media, with the re-launch of our
www.NewstoWatch.com consumer portal.  Unlike traditional news, which
is static and unidirectional (from news-organization to consumer), the
technology, which powers NewstoWatch.com facilitates user participation in the
development of news related content.  Our tools allow users to rank
stories and to shape the prominence of news within the NewstoWatch.com
portal.  Freshness, relevance and number of viewers contribute to the
rank of a story on the portal, which means that the featured content is
dynamically shifting in response to the behavior of the portal community
combined with site algorithms.
 
 In
addition, while there are finite resources available to us to scan the Internet
for the freshest and most relevant news content, there is a vastly larger body
of news that our portal community members are exposed to.  Our
programmatic editor allows users to post their own stories, giving them
editorial control and a sense of ownership and participation within the portal
community.  In addition, the sheer diversity and volume of the stories
that can be posted by our users eclipses the variety of content we would be able
to access ourselves without this type of community support.
 
 ADVERTISING
AND MARKETING
 
 We have
been deriving a small amount of advertising revenue from sales of ads on our
consumer media portals as they were in development.  In 2008, as we
conclude major development on our consumer media portals, we now intend to turn
our energies to increasing and improving this revenue stream.  We
cannot be certain that our efforts to increase advertising revenue will be
successful, but we will continue to pursue our marketing strategy in order to
increase revenue from ad sales.  Toward this end, we have developed a
three point marketing plan covering methods of:
 
 ·
              Driving Traffic -
      Driving traffic of consumers to our websites, which will ultimately enable
      us to sell advertising on all of our
websites;
 
 ·
              Gathering Data -
      Developing a valuable library of consumer usage data from our websites
      that will provides potential commercial licensors of our technology with
      current, cutting edge information about how their audio and video content
      is being used by real consumers;
 
 ·
              Content Partnerships -
      Developing relationships and partnerships with a variety of content owners
      who want their content promoted through the company’s various
      websites.
 
  Return to Table of Contents
 5
  In
addition to the above marketing plan, we believe that the nature of the
participatory media experience itself as embodied within NewstoWatch.com
provides a powerful marketing tool to expand usage of the site.  Every
time one of our users adds a story to NewstoWatch, they are increasing their own
ties to the portal community.   Unlike traditional news sites,
which allow users to email stories to friends but not to determine the content
of the site, www.NewstoWatch.com allows those users to refer their friends to a
news community that they themselves are shaping.  We think that this
type of relationship will make our users much more likely to spread the word
about www.NewstoWatch.com
and will supply us with a type of marketing which we cannot buy through
traditional advertising spend...that is an emotional connection, sense of
belonging and sense of ownership and participation within the portal
community.  We believe that this participation will result in
significant growth in the website without substantial increases in our
advertising expenditures.
 
 DISTRIBUTION
 
 We
distribute our products and services via the Internet for our consumer websites
and through direct sales and business development efforts.
 
 Consumer
Websites
 
 We are
the owner of numerous distinctive and easy-to-remember group of URLs
including:
 
 ·
              www.searchforvideo.com;
 
 ·
              www.searchforaudio.com;
 
 ·
              www.searchfortv.com;
 
 ·
              www.searchforipod.com;
 
 ·
              www.searchformedia.com;
 
 ·
              www.searchforpodcasts.com;
      and
 
 ·
              www.newstowatch.com
 
 In
addition, we also own the URLs for www.iheard.com and
www.podanza.com.  We believe that these websites, when sufficiently
promoted and advertised, will become attractive websites for consumers to find
relevant content that meets their needs. We believe that consumers’ use of our
search technology through these sites will provide us with valuable data
regarding actual consumer usage patterns for material on the Internet as well as
catapult us into the position of a suite of leading search engines. This brand
awareness and valuable consumer data will form the basis for our discussions
regarding revenue opportunities through advertising and content
partnerships.
 
 
  Return to Table of Contents
 6
  COMPETITION
 
 Overview
 
 Some of
the largest, best known and most technologically sophisticated companies in the
world compete in the search engine space. GoogleTM,
Yahoo!®,
AOL®,
Microsoft®,
AltaVista® and
Lycos®
represent some of our most well-financed and established competitors.
Additionally, we face competition from a number of start-ups and new market
entrants in the audio/video search subspecialty within the search engine
space.
 
 The
search engine industry can really be divided into two separate industries. These
are, broadly speaking, the web portal/web service or consumer directed search
engine tool and the software based enterprise licensed search tool. All search
engines have in common their primary function of connecting people with useful
information. Our industry has functioned traditionally through three primary
revenue/business models, consisting of search portal advertising, keyword
advertising and software solution sales. As the audio/video search engine
business is just developing, it will probably foster the development of
additional revenue models. For instance, relationships between audio search
engines and music download services may provide a more direct model for search
engine revenue than currently exists, meaning that music download sites may wish
to sponsor audio search engines and then seamlessly integrate purchase
capabilities for those search result songs which exist in their
libraries.
 
 The
methods of competition in the search engine industry tend to involve competition
on the basis of speed, number of pages or data indexed, currency of metadata or
indexed information, number of users, ease of use, downloads of embedded
toolbars and search tools and range of deployment amongst affiliated websites.
Search engines compete against each other by offering consumers higher quality,
faster results and on ease of use and ease of access.
 
 In
addition, as we are now competing in the field of participatory media, there are
a number of sophisticated competitors that compete fiercely within this
space.  Digg.com, youtube.com, facebook.com, LinkedIn.com and others
offer tools that allow users to shape, develop and post the content that makes
the site appealing and valuable to other users.  We believe that
www.NewstoWatch.com can compete successfully because of its focus on the most
relevant, international news content and its proprietary algorithmic tools, but
its success will ultimately be determined by how it competes in the area of
creating a relationship with the members of the portal community that causes
them to invest time on an individual basis posting news content to the
community, as they have done with other types of content on our competitors’
sites.  These competitors all have significantly more financial and
human resources than we have and currently operate large and sophisticated media
companies.  There can be no assurance that we can compete effectively
in this rapidly evolving field.
 
  Return to Table of Contents
 7
  Our
Competitive Position
 
 Many
websites are currently offering functional, beta versions of audio/video search
engines that produce inconsistent results, as this technology has not yet been
deployed on any large scale. While the search engine industry itself is robust,
competitive and well developed, the audio/video search engine industry is
relatively new, and, although our position is one of vulnerable, new entrant, we
believe that the possibility of commercial success for us exists in this field
because:
 
 
 ·
              due
      to the size and diversity of the audio/video search engine market, we
      believe that the market will support a number of different solutions based
      on the preferences of individual corporate
  licensors;
 
 ·
              we
      believe our technology is competitive with any publicly available
      audio/video search engine
technology;
 
 ·
              our
      “agnostic” independent, non-affiliated status in this field is attractive
      to customers who may not wish to align themselves with search engine
      vendors who have competitive products to their own or whose corporate
      parents are direct or indirect competitors;
and
 
 ·
              as
      has been established by the success of Google, search engine technology is
      sufficiently powerful and disruptive that it can create enormous value in
      a short period of time, displacing large, well-financed and established
      market leaders.
 
 We
believe that our competitive position versus other new entrants to the space is
strong because of the flexibility, simplicity and ease of deployment of our
technology as well as our relatively low overhead, anticipated responsiveness to
customer demands and our expertise in the area of Real Simple Syndication (an
HTML programming language which is optimal for the deployment of this kind of
search engine technology). We will rely on what we believe to be our superior
technology and our management’s experience to compete within the search engine
industry. However, we may not be able to effectively compete in this intensely
competitive industry as many of our competitors have longer operating histories,
larger customer bases and greater financial, marketing, service, support,
technical and other resources than we do.
 
 Many
companies also operate websites that compete in the participatory media space
that we have just entered through www.NewstoWatch.com.  We believe we
can compete effectively in this space because of the flexibility and innovative
design embodied in the proprietary features of the website and because we
believe that our particular position within the highly competitive field of
participatory media is an underserved sub-segment in which no brand has yet
achieved dominance and in which our easy-to-remember, intuitive URL is a
possible competitive advantage.
 
 SIGNIFICANT
CUSTOMERS AND SUPPLIERS
 
 As of the
date of this annual report on Form 10-KSB for the fiscal year ended December 31,
2007, we are not and do not anticipate becoming dependent upon any single or
group of major customers. This may, however, change should we be selected by a
substantial media concern as the preferred search engine across its properties
as such a relationship might involve a substantial degree of dependence, but no
such relationships exist to date.
 
  Return to Table of Contents
 8
  REGULATIONS
 
 We are
subject to a number of United States and foreign laws and regulations that
affect companies conducting business on the internet, and which could subject us
to claims or other remedies based on the nature and content of the audio or
video data searched for or displayed by our search engine solutions and could
consequently limit our ability to provide audio or video content regarding
regulated industries and products.
 
 The laws
relating to the liability of providers of online services for the activities of
their users and other third parties are currently unsettled both within the
United States and abroad, and are being tested by a number of claims, including
actions for defamation, libel, invasion of privacy and other data protection
claims, tort, unlawful activity, copyright or trademark infringement and other
theories based on the nature and content of the materials searched for or the
content generated by users. From time to time we may receive notices from
individuals who do not want their names or websites to appear in our audio/video
web search results. It is also possible that we may be held accountable for
obscene or libelous material provided over the web should such audio or video
content appear in our web search results. Any such complaints, should they
arise, may result in liability to us, could be potentially costly, encourage
similar such lawsuits, distract management and harm our reputation and possibly
our business. Furthermore, the application to us of existing federal, state and
international laws regulating obscenity or obscene materials, including metadata
results which could be perceived as obscene, could also cause us significant
liability or technological problems and costs associated with identifying and
complying with any applicable laws and regulations.
 
 Several
other federal laws could also have an impact on our business. For example, the
Digital Millennium Copyright Act has provisions that limit, but do not
necessarily eliminate, our liability for listing or linking to third-party
websites that include materials that infringe copyrights or other rights. The
Children’s Online Protection Act and the Children’s Online Privacy Protection
Act restrict the distribution of materials considered harmful to children and
impose additional restrictions on the ability of online services to collect
information from children under the age of 13. In addition, the Protection of
Children from Sexual Predators Act of 1998 requires online service providers to
report evidence of violations of federal child pornography laws under certain
circumstances. The costs of complying with these laws may increase in the future
as a result of changes in interpretation, and any failure on our part to comply
with these laws may subject us to significant liabilities.
 
 Likewise
we are also subject to federal, state and foreign laws regarding privacy and
protection of user data. The interpretation and application of data protection
laws in Europe and other foreign jurisdictions is still uncertain and in flux.
It is possible that these laws may be interpreted and applied in conflicting
ways from country to country and in a manner that is inconsistent with our
planned data protection practices. Complying with these varying international
requirements could cause us to incur additional costs and force us to change our
business practices. Moreover, any failure by us to protect our users’ privacy
and data, in addition to the possibility of fines, could result in an order
requiring that we change our planned data practices, which in turn could have a
material adverse effect on our business.
 
 In
addition, laws and regulations relating to user privacy, freedom of expression,
content, advertising, information security and intellectual property rights are
being debated and considered for adoption by many states within the United
States and foreign countries throughout the world. We face risks from proposed
legislation that could be passed in the future which may subject us to
additional compliance costs or may materially impact our ability to conduct our
business as currently planned.
 
  Return to Table of Contents
 9
  INTELLECTUAL
PROPERTY
 
 Overview
 
 We rely
for our business on a combination of pending trademarks and trade secrets in
order to protect our intellectual property. Our pending trademarks and trade
secrets are among the most important assets we possess in our ability to
generate revenue and profits and we will depend significantly on these
intellectual property assets in being able to effectively compete in our
markets.
 
 We cannot
be certain that the precautions we have taken to safeguard pending trademarks
and trade secrets will provide meaningful protection from unauthorized use. If
we must pursue litigation in the future to enforce or otherwise protect our
intellectual property rights, or to determine the validity and scope of the
proprietary rights of others, we may not prevail and will likely have to make
substantial expenditures and divert valuable resources in the process. Moreover,
we may not have adequate remedies if our intellectual property is appropriated
or our trade secrets are disclosed.
 
 Trademarks
 
 We have
applied for registration of a number of our trademarks with the United States
Patent and Trademark Office in order to establish and protect our brand names as
part of our intellectual property assets. As of the date of this annual report
on Form 10-KSB for the fiscal year ended December 31, 2007, all of our
registrations are in the preliminary stages of the application process or remain
pending.
 
 Trade
Secrets
 
 Whenever
we deem it important for purposes of maintaining competitive advantages, we
require parties with whom we share, or who otherwise are likely to become privy
to, our trade secrets or other confidential information to execute and deliver
to us confidentiality and/or non-disclosure agreements. Among others, this may
include employees, consultants and other advisors, each of whom may require to
execute such an agreement upon commencement of their employment, consulting or
advisory relationships. These agreements generally provide that all confidential
information developed or made known to the individual by us during the course of
the individual’s relationship with us is to be kept confidential and not to be
disclosed to third parties except under specific circumstances.
 
 As of the
date of this annual report on Form 10-KSB for the fiscal year ended December 31,
2007, we have executed non-disclosure agreements with all of our key employees,
consultants or advisors.
 
  Return to Table of Contents
 10
  EMPLOYEES
 
 For the
fiscal year ended December 31, 2007, we had two full-time and no part-time
employees, and four consultants. We do not intend to significantly expand our
staff over the next twelve months, as we have completed principal development on
our suite of media portals and believe that additional improvements and
maintenance operations can be increasingly automated or outsourced.
 
 We are
not subject to any collective bargaining agreements and believe that our
relationships with our employees are good.
 
 ITEM 2. DESCRIPTION OF PROPERTY.
 
 Our
principal executive offices are located at 1420 Fifth Avenue, 22nd Floor,
Seattle, Washington, 89101. Our telephone number is 206-274-5107. We lease this
space on a month-to-month basis.
 
 We had
previously leased space in Vancouver under a long-term lease. We were able to
terminate this lease and now lease space on a month-to-month basis in
Vancouver.
 
 ITEM 3. LEGAL PROCEEDINGS.
 
 As of the
date of this annual report on Form 10-KSB for the fiscal year ended December 31,
2007, there were no pending material legal proceedings to which we were a party
and we are not aware that any were contemplated. There can be no assurance,
however, that we will not be made a party to litigation in the future. Any
finding of liability imposed against us is likely to have an adverse effect on
our business, our financial condition, including liquidity and profitability,
and our results of operations
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
 
 No
matters were submitted to a vote of our stockholders, through the solicitation
of proxies or otherwise, during the fourth quarter of the fiscal year ended
December 31, 2007.
 
 
 
 
 
 
 
 
 
  Return to Table of Contents
 11
  PART
II
  ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
 
 Our
common stock is quoted on the OTC Bulletin Board, a service provided by the
Nasdaq Stock Market Inc., under the symbol “FSAC”, and on the Frankfurt Stock
Exchange under the symbol “F3S”.
 
 The
following table sets forth the high and low bid prices for our common stock as
reported each quarterly period within the last two fiscal years on the OTC
Bulletin Board, and as obtained from BigCharts.com. The high and low prices
reflect inter-dealer prices, without retail mark-up, markdown or commission and
may not necessarily represent actual transactions.
 
 Period
              
              High*
              
              
              Low*Fiscal
      year ended 2005 Quarter endedMarch
      31, 2005**
              
              $
              0.517
              
              
              $
              0.933June
      30, 2005
              
              $
              0.817
              
              
              $
              1.350September
      30, 2005
              
              $
              0.920
              
              
              $
              1.570December
      31, 2005
              
              $
              0.890
              
              
              $
              1.410Fiscal
      year ended 2006 Quarter endedMarch
      31, 2006
              
              $
              1.120
              
              
              $
              3.500June
      30, 2006
              
              $
              1.010
              
              
              $
              1.780September
      30, 2006
              
              $
              0.590
              
              
              $
              1.180December
      31, 2006
              
              $
              0.830
              
              
              $
              1.660Fiscal
      year ended 2007 Quarter endedMarch
      31, 2007
              
              $
              0.740
              
              
              $
              1.380June
      30, 2007
              
              $
              0.750
              
              
              $
              1.160September
      30, 2007
              
              $
              0.520
              
              
              $
              0.780December
      31, 2007
              
              $
              0.160
              
              
              $
              0.750* 
      All stock prices are adjusted to reflect three-for-one common stock
      dividend paid on May 13, 2005 to all stockholders of record as of May 3,
      2005.
  STOCKHOLDERS
 
 As of
March 24, 2008, there were approximately 60 holders of record of our common
shares.
 
  Return to Table of Contents
 12
  DIVIDENDS
 
 From our
inception we have never declared or paid any cash dividends on shares of our
common stock and we do not anticipate declaring or paying any cash dividends in
the foreseeable future. The decision to declare any future cash dividends will
depend upon our results of operations, financial condition, current and
anticipated cash needs, contractual restrictions, restrictions imposed by
applicable law and other factors that our board of directors deem relevant.
Although it is our intention to utilize all available funds for the development
of our business, no restrictions are in place that would limit our ability to
pay dividends. The payment of any future cash dividends will be at the sole
discretion of our board of directors.
 
 
 RECENT
SALES OF UNREGISTERED SECURITIES
  Date
      Securities Issued
              Securities
      Title
              Issued
      to
              
              Number
      of Securities Issued
              
              
              Consideration *
              
              FootnotesCommon
      Stock IssuancesIssued for
      cash2/16/2006
              Common
      Stock
              Hypo
      Bank
              
              
              400,000
              
              
              $
              400,000
              
              (A)(1)5/24/2006
              Common
      Stock
              Hypo
      Bank
              
              
              200,000
              
              
              $
              150,000
              
              (A)(2)6/5/2006
              Common
      Stock
              UBS
              
              
              133,334
              
              
              $
              100,000
              
              (A)(2)8/16/2006
              Common
      Stock
              Investor’s
      Link Ventures
              
              
              42,670
              
              
              $
              32,000
              
              (A)(2)8/23/2006
              Common
      Stock
              Investor’s
      Link Ventures
              
              
              93,340
              
              
              $
              70,000
              
              (A)(2)10/20/2006
              Common
      Stock
              Investor’s
      Link Ventures
              
              
              133,334
              
              
              $
              100,000
              
              (A)(2)12/18/2006
              Common
      Stock
              Investor’s
      Link Ventures
              
              
              133,334
              
              
              $
              100,000
              
              (A)(2)2/20/2007
              Common
      Stock
              Various
              
              
              200,000
              
              
              $
              150,000
              
              (A)(3)5/20/2007
              Common
      Stock
              Various
              
              
              250,000
              
              
              $
              150,000
              
              (A)(4)07/10/2007
              Common
      Stock
              Various
              
              
              250,000
              
              
              $
              100,000
              
              (A)(5)8/22/2007
              Common
      Stock
              Various
              
              
              400,000
              
              
              $
              100,000
              
              (A)(6)11/16/2007
              Common
      Stock
              Various
              
              
              1,500,000
              
              
              $
              150,000
              
              (A)(7)
 
 *      There
were no underwriter discounts or commissions associated with these sales of
common stock for cash.
  (1)
                Valued
      at $1.00 per common share.
 
 (2)
                Valued
      at $0.75 per common share.
 
 (3)
                Valued
      at $0.75 per common share.
 
 (4)
                Valued
      at $0.60 per common share.
 
 (5)
                Valued
      at $0.40 per common share.
 
 (6)
                Valued
      at $0.25 per common share.
 
 (7)
                Valued
      at $0.10 per common
share.
 
 Return to Table of Contents
 13
 Date
                Securities
                Issued
              Securities
      Title
              Issued
      to
              
              Number
      of Securities
                Issued
              
              
              Consideration
              
              FootnotesCommon
      Stock IssuancesIssued as
      compensation to independent contractors5/24/2006
              Common
      Stock
              Jonathan
      Dariyanani, Esq.
              
              
              10,000
              
              
              
              14,000
              
              (B)(1)12/22/2006
              Common
      Stock
              Alexander
      Khersonski
              
              
              25,000
              
              
              
              24,000
              
              (B)(2)
  (1)
                Issued
      as compensation for legal services. Valued at $1.40 per common
      share.
 
 (2)
                Issued
      as compensation for services as a member of the board of directors. Valued
      at $0.96 per common share.
   Date
      Securities Issued
              Securities
      Title
              Issued
      to
              
              Number
      of
                Securities
                Issued
              
              
              Consideration
              
              FootnotesCommon
      Stock IssuancesIssued
      upon conversion of debt2/2/2006
              Common
      Stock
              Unrelated
      Third-Parties
              
              
              1,073,507
              
              
              $
              985,133
              
              (B)(1)
  (1)
                Issued
      upon conversion of all advances payable included as debt on our December
      31, 2005 consolidated balance sheet. Valued at $0.91 per common
      share.
   Return to Table of Contents
 14
  General
Footnotes
 
 (A)
              We
      relied in each case for these unregistered sales on the private offering
      exemption of Section 4(2) of the Securities Act and/or the private
      offering safe harbor provision of Rule 506 of Regulation D promulgated
      thereunder based on the following factors: (i) the number of offerees or
      purchasers, as applicable, (ii) the absence of general solicitation, (iii)
      representations obtained from the acquirors relative to their
      accreditation and/or sophistication (or from offeree or purchaser
      representatives, as applicable), (iv) the provision of appropriate
      disclosure, and (v) the placement of restrictive legends on the
      certificates reflecting the securities coupled with investment
      representations obtained from the
acquirors.
 
 (B)
              We
      relied in each case for these unregistered sales on the private offering
      exemption of Section 4(2) of the Securities Act based on the following
      factors: (i) the number of offerees, (ii) the absence of general
      solicitation, (iii) representations obtained from the acquirors relative
      to their sophistication (or from offeree representatives, as applicable),
      (iv) the provision of appropriate disclosure, and (v) the placement of
      restrictive legends on the certificates reflecting the securities coupled
      with investment representations obtained from the
    acquirors.
  ITEM 6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
 
 The
following discussion and analysis of our financial condition, results of
operations and liquidity should be read in conjunction with our consolidated
financial statements for the fiscal years ended December 31, 2007 and 2006 and
the related notes appearing elsewhere in this annual report. Our consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles, contemplate that we will continue as a going concern, and
do not contain any adjustments that might result if we were unable to continue
as a going concern, however, our independent registered public accounting firms
have added explanatory paragraphs in Notes 4 and 3 of each of our consolidated
financial statements for the fiscal years ended December 31, 2007 and 2006,
respectively, raising substantial doubt as to our ability to continue as a going
concern.
 
 CRITICAL
ACCOUNTING POLICIES
 
 Our
critical accounting policies, including the assumptions and judgments underlying
those policies, are more fully described in the notes to our consolidated
financial statements. We have consistently applied these policies in all
material respects. Investors are cautioned, however, that these policies are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially. Set forth below are the accounting
policies that we believe most critical to an understanding of our financial
condition, results of operations and liquidity.
 
  Return to Table of Contents
 15
  Use
of Estimates
 
 The
preparation of our consolidated financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that affect the amounts of assets, liabilities,
revenues and expenses reported in our consolidated financial statements and the
accompanying notes. We evaluate our estimates on an ongoing basis, and make our
estimates and assumptions based on actual historical experience which we believe
to be reasonable under the circumstances at that time. Actual results may differ
materially from our current estimates.
 
 Research and
Development Costs
 
 We
account for research and development expenses in accordance with Statement of
Financial Accounting Standards (“SFAS”) No. 2,“Accounting for Research and Development
Costs”. Our research and development costs, which include expenses
relating to the development of software to be used in our search
engine technology, are expensed in the period in which they are
incurred.
 
 We
capitalize
the cost of materials and equipment acquired for research and
development activities that have alternative future
uses, such as computer equipment, in the period in which they are
acquired.
 
 Property
and Equipment
 
 Property
and equipment are stated at cost. Depreciation of property and
equipment are provided over the estimated
useful lives of the related assets using
the straight-line method and the half-year
convention.
 
 Impairment
Long-lived Assets
 
 We test
long-lived assets for impairment whenever events or changes
in circumstances indicate their carrying amount may not
be recoverable.
The determination of any impairment loss includes a comparison
of estimated undiscounted future cash flows anticipated during the remaining
life of the asset or group of assets to the net carrying value of the asset
or group of assets.  Where the net carrying value is less than the
undiscounted future cash flows, an impairment loss is recognized.
 
 Income Taxes
 
 We
determine deferred tax liabilities and assets based on the
differences between the book values and the tax
bases of assets and liabilities, using tax
rates in effect for the years in which the
differences are expected to reverse. A
valuation allowance is provided to offset any deferred
tax asset if, based upon the
available evidence, it is more likely than
not that some or all of the deferred
tax assets will not be realized.
 
 Foreign
Currency Transactions
 
 We incur
a substantial number of operational transactions in Canada which
we carry out in Canadian currency through
a bank account maintained
for that purpose. Included among such transactions
are payment of salaries, rent, consulting and other related
expenses. At the time of such payment each Canadian
disbursement is translated into U.S. dollar
equivalents and an exchange gain or loss on currency is
recorded.
 
  Return to Table of Contents
 16
  OVERVIEW
 
 FUSA
Capital Corporation is a development stage technology company focused on the
refinement and marketing of a comprehensive suite of media search engine
technologies. Our objective is to become the leading innovator of search engine
technologies for online consumers as well as digital content providers as well
as a leading participatory media site in the field of breaking news. To that end
we currently operate and market the websites www.Newstowatch.com,
www.searchforvideo.com, www.iheard.com and
www.podanza.com.   These websites provide consumers with multiple
portals to access various media using our proprietary search engine technology
as well as our robust tools that create participatory media
experiences.
 
 PLAN
OF OPERATIONS
  Over the
next six to twelve months we intend to focus on expanding the recognition,
traffic and participatory aspects of our existing consumer media search portals,
particularly www.Newstowatch.com.  We believe our other portals,
www.searchforvideo.com, www.iheard.com and www.podanza.com, will continue to
grow as consumers recognize the unique content, ease-of-use, speed of search
tools and quality of indexed content.   We will expand our
participatory media offerings over the course of the year so that we continue to
lead in the development of tools for the participatory media
market.  It is believed that the combination of the growth of our
participatory media website, www.Newstowatch.com and the organic growth of our
other consumer portals will increase the company’s overall value by increasing
its assets and marketability. It is also believed that this direction will give
the company an increased ability to better monetize our traffic.
 
 We
currently produce a small amount of advertising revenue that we have derived
during the principal development phase of our various consumer
portals.  Now that principal development is complete, we expect to
expand significantly our advertising revenues during the next 12
months.  However, we have no basis to estimate how substantial these
increases might be.  We could experience significant advertising
revenue growth, lead by revenues on www.searchforvideo.com and
www.Newstowatch.com or it may turn out that our organic growth and participatory
media growth strategies are less successful than we anticipate and growth is
disappointing.  However, we believe that by September 30, 2008, we
will have enough visits to our sites, and therefore enough customer usage data
and evidence of interest and usability, for our advertising revenue to begin
generating profits for us in excess of our operating expenses.  There
can be no assurance, however, that this will occur.
 
 We also
anticipate spending much less on operations and salaries and costs related to
marketing and research and development over the course of the next twelve months
now that principal development on our consumer portals has been completed. In
addition to the payments for office space, we believe that we will have to spend
approximately $100,000 for our servers and network administration
costs.
 
  Return to Table of Contents
 17
  Our
twelve-month plan requires us to accomplish the following steps:
  ·
                Increase
      traffic to all websites by focusing on retention of current users and
      driving traffic for significant increases in new users to all
      websites.
 
 ·
                Continue
      to develop automation process to reduce
  expenses;
 
 ·
                Compile
      usage statistics for our websites;
 
 ·
                Continue
      to develop our participatory media capabilities and to build out the
      associated community of
www.Newstowatch.com;
 
 ·
                Develop
      rapport with likely strategic partners ;
and
 
 ·
                Architect
      and begin development of subsequent versions and upgrades to core
      technology.
   RESULTS
OF OPERATIONS FROM FEBRUARY 9, 2005 (INCEPTION) AND THE FISCAL YEAR ENDED
DECEMBER 31, 2007
 
 Revenues
 
 Our
revenues increased $20,440 from $14,113 for the twelve months ended December 31,
2006 to $34,553 for the fiscal year ended December 31, 2007. This increase was
primarily attributable to increased advertising revenue.
 
 Research
and Development
 
 Research
and development expenses increased $317,819 from $(464,023) for the twelve
months ended December 31, 2006 to $146,204 for the fiscal year ended December
31, 2007. This increase was primarily attributable to the 2006 cancellation of
stock compensation previously issued for development services.
 
 General
and Administrative Expenses
 
 General
and administrative expenses principally include salary expenses, professional
fees, investor relations fees, rent and general corporate overhead. General and
administrative expenses decreased $305,470, from $904,643 for the twelve months
ended December 31, 2006 to $599,173 for the fiscal year ended December 31, 2007.
This decrease is primarily attributable to a decrease in the amount of
administrative overhead due to our completion of principal development on our
consumer portals.
 
 LIQUIDITY
AND CAPITAL RESOURCES
 
 As of the
fiscal year ended December 31, 2007 we had $5,255 of cash on hand.
 
  Return to Table of Contents
 18
  Our net
loss increased $290,652 from $435,407 for the twelve months ended December 31,
2006 to $726,059 for the fiscal year ended December 31, 2007, and our working
capital surplus decreased $76,059, from $80,428 for the twelve months ended
December 31, 2006 to $4,369 for the fiscal year ended December 31,
2007.
 
 Net cash
used in operating activities decreased $508,758, from $1,217,179 for the twelve
months ended December 31, 2006 to $708,421 for the fiscal year ended December
31, 2007. This increase was primarily the result of the completion of principal
development activities on our consumer portals.
 
 Net cash
provided by financing activities decreased $302,000, from $952,000 for the
twelve months ended December 31, 2006 to $650,000 for the fiscal year ended
December 31, 2007. Net cash provided by financing activities was primarily in
the form of sales of our common stock and the difference attributable to lower
proceeds from the sale of common stock.
 
 Although
we have raised an additional $300,000 in financing from the sale of our common
stock in January 2008, we do not believe that our current financial resources
are sufficient to meet our working capital needs over the next twelve months
and, accordingly, we will need to secure additional external financing to
continue our operations. We may seek to raise additional capital though private
equity or debt financings and further shareholder loans. As of the date of this
annual report on Form 10-KSB for the fiscal year ended December 31, 2007, we
have obtained, in addition to the financing noted above, verbal commitments from
our security holders to make further investments in our company; however, there
can be no assurance that those further investments, if and when made, will be
sufficient to sustain our required level of operations. Moreover, there can be
no assurance that we will be able to secure additional external financing, or,
if we are able to secure such external financing, that it will be on terms
favorable, or even acceptable, to us. If necessary, we may explore strategic
alternatives, including a merger, asset sale, joint venture or other comparable
transactions. Any inability to achieve or sustain profitability or otherwise
secure external financing or locate a strategic partner would have a material
adverse effect on our business, financial condition, and results of operations,
raising substantial doubts as to our ability to continue as a going concern, and
we may ultimately be forced to seek protection from creditors under the
bankruptcy laws or cease operations.
 
 Our
short-term prospects are challenging considering our lack of financial
resources. In the absence of additional financing, sales of our products or
services, or locating a strategic partner willing to finance our further
development, our short-term and long-term prospects for growth are minimal over
and above incremental sales of our existing products and services.
 
 RISK
FACTORS
 
 Our
business entails a significant degree of risk and uncertainty, and an investment
in our securities should be considered highly speculative. What follows is a
general description of the material risks and uncertainties, which may adversely
affect our business, our financial condition, including liquidity and
profitability, and our results of operations, ultimately affecting the value of
an investment in shares of our common stock. In addition to other information
contained in this annual report on Form 10-KSB, you should carefully consider
the following cautionary statements and risk factors.
 
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 19
  GENERAL
BUSINESS RISKS
 
 We
are a development stage company and based on our historical operating losses and
negative cash flows from operating activities there is uncertainty as to our
ability to continue as a going concern.
 
 We have a
history of operating losses and negative cash flows from operating activities.
In the event that we are unable to achieve or sustain profitability or are
otherwise unable to secure external financing, we may not be able to meet our
obligations as they come due, raising substantial doubts as to our ability to
continue as a going concern. Any such inability to continue as a going concern
may result in our security holders losing their entire investment. Our
consolidated financial statements, which have been prepared in accordance with
generally accepted accounting principles, contemplate that we will continue as a
going concern and do not contain any adjustments that might result if we were
unable to continue as a going concern. Changes in our operating plans, our
existing and anticipated working capital needs, the acceleration or modification
of our expansion plans, lower than anticipated revenues, increased expenses,
potential acquisitions or other events will all affect our ability to continue
as a going concern.
 
 Our
liquidity and capital resources are very limited.
 
 Our
ability to fund working capital and anticipated capital expenditures will depend
on our future performance, which is subject to general economic conditions, our
customers, actions of our competitors and other factors that are beyond our
control. Our ability to fund operating activities is also dependent upon (i) the
extent and availability of bank and other credit facilities, (ii) our ability to
access external sources of financing, and (iii) our ability to effectively
manage our expenses in relation to revenues. There can be no assurance that our
operations and access to external sources of financing will continue to provide
resources sufficient to satisfy our liabilities arising in the ordinary course
of business.
 
 Our
accumulated deficit makes it more difficult to borrow funds.
 
 As of the
fiscal year ended December 31, 2007, and as a result of historical operating
losses from prior operations and losses accumulated during our development
stage, our consolidated accumulated deficit was $5,252,623. Lenders generally
regard an accumulated deficit as a negative factor in assessing
creditworthiness, and for this reason, the extent of our accumulated deficit
coupled with our historical operating losses will negatively impact our ability
to borrow funds if and when required. Any inability to borrow funds, or a
reduction in favorability of terms upon which we are able to borrow funds,
including the amount available to us, the applicable interest rate and the
collateralization required, may affect our ability to meet our obligations as
they come due, and adversely affect on our business, financial condition, and
results of operations, raising substantial doubts as to our ability to continue
as a going concern.
 
 From
inception, we have historically generated minimal revenues while sustaining
considerable operating losses and we anticipate incurring continued operating
losses and negative cash flows in the foreseeable future resulting in
uncertainty of future profitability and limitation on our
operations.
 
  Return to Table of Contents
 20
  From
inception, we have generated minimal revenues and experienced negative cash
flows from operating losses. We anticipate continuing to incur such operating
losses and negative cash flows in the foreseeable future, and to accumulate
increasing deficits as we increase our expenditures for (i) infrastructure, (ii)
sales and marketing, (iii) research and development, and (iv) general business
enhancements. Any increases in our operating expenses will require us to achieve
significant revenue before we can attain profitability. In the event that we are
unable to achieve profitability or raise sufficient funding to cover our losses
we may not be able to meet our obligations as they come due, raising substantial
doubts as to our ability to continue as a going concern.
 
 RISKS
ASSOCIATED WITH OUR BUSINESS AND INDUSTRY
 
 We face serious competition in our
business segment from new market entrants as well as a number of established
companies with greater resources and existing customer
bases.
 
 The
market for search engine solutions rapidly evolves and is intensely competitive
as established companies and new market entrants are regularly introducing new
or enhanced search technologies. Competition in our market segment is based
primarily upon:
  ·
                brand
      recognition;
 
 ·
                ease
      of use and access;
 
 ·
                availability
      of financial resources;
 
 ·
                the
      quality of search results, in terms of speed and relevance;
      and
 
 ·
                reviews
      received from independent reviewers who publish in magazines, websites,
      newspapers and other industry
publications;
  To remain
competitive in our market segments we rely heavily upon what we believe to be
the superior quality of our products and services, our marketing and sales
abilities, technology, product and service development capabilities and our
management’s experience. However, we may not be able to effectively compete in
this intensely competitive market, as some of our competitors have longer
operating histories, larger customer bases and greater financial, marketing,
service, support, technical and other resources, affording them the ability to
undertake more extensive marketing campaigns and adopt more aggressive pricing
policies, than we can. Moreover, we believe that competition from new entrants
will increase as the market for search engine solutions expands. If our products
and services are not successful, our business, financial condition and results
of operations will be negatively affected.
 
 Our
intellectual property may not be adequately protected from unauthorized use by
others, which could increase our litigation costs and adversely affect our
business.
 
  Return to Table of Contents
 21
  Our
intellectual properties are the most important assets that we possess in our
ability to generate revenues and profits and we rely very significantly on these
intellectual property assets in being able to effectively compete in industry.
However, our intellectual property rights may not provide meaningful protection
from unauthorized use by others, which could result in an increase in competing
services and a reduction in our own revenues. Moreover, if we must pursue
litigation in the future to enforce or otherwise protect our intellectual
property rights, or to determine the validity and scope of the proprietary
rights of others, we may not prevail and will likely have to make substantial
expenditures and divert valuable resources in any case. We may not have adequate
remedies if our proprietary content is appropriated.
 
 If
our products and services infringe upon the proprietary rights of others,
lawsuits may be brought requiring us to pay large legal expenses and judgments,
redesign some or all of our products and services or discontinue our use of
certain technologies and practices.
 
 We are
not aware of any circumstances under which our products or services infringe
upon any valid existing proprietary rights of third parties. Infringement
claims, however, could arise at any time, whether or not meritorious, and could
result in time consuming and costly litigation or require us to enter into
royalty or licensing agreements. If we are found to have infringed the
proprietary rights of others, we could be required to pay damages, redesign some
or all of our products and services or discontinue our use of certain
technologies and practices. Any of these outcomes, individually or collectively,
would negatively affect on our business, financial condition and results of
operations.
 
 If
we are unable to successfully break into the search engine industry, implement
our growth strategy or manage our business as it does grow, our future operating
results could suffer.
 
 As a
development stage company we face several challenges in entering the search
engine industry, particularly users’ lack of awareness of our company, competing
for market share with established consumer retail product manufacturers and
difficulties in competing for, hiring and retaining representative personnel in
each of our respective potential markets. In addition, we face several
challenges common to any new market entrant, including problems typically
associated with unfamiliarity of local market conditions and market
demographics. Each new market we enter may also have different competitive
conditions, consumer tastes and discretionary spending patterns, which may
require us to adjust our growth strategy or modify the way in which we manage
our business. To the extent that we are unable to break into or meet the
challenges associated with establishing ourselves in a new market, our future
operating results could suffer and our financial condition and business may be
negatively affected. See “Business—Marketing and Advertising”.
 
 We
are subject to a variety of United States and foreign laws which could subject
us to claims or other remedies based on the nature and content of the
information searched for or displayed by our products and services.
 
 The laws
relating to the liability of providers of online services are currently
unsettled both within the United States and abroad. Claims have been threatened
and filed under both United States and foreign law for defamation, libel,
invasion of privacy and other data protection claims, tort, unlawful activity,
copyright or trademark infringement, or other theories based on the nature and
content of the information searched for or displayed by our products and
services.
 
  Return to Table of Contents
 22
  In
addition, compliance with these laws is complex and may impose significant
additional costs on us. For example, the Digital Millennium Copyright Act has
provisions that limit, but do not necessarily eliminate, our liability for
listing or linking to third-party websites that include materials that infringe
copyrights or other rights. The Children’s Online Protection Act and the
Children’s Online Privacy Protection Act restrict the distribution of materials
considered harmful to children and impose additional restrictions on the ability
of online services to collect information from children under the age of 13. In
addition, the Protection of Children from Sexual Predators Act of 1998 requires
online service providers to report evidence of violations of federal child
pornography laws under certain circumstances. The costs of complying with these
laws may increase in the future as a result of changes in interpretation, and
any failure on our part to comply with these laws may subject us to significant
liabilities.
 
 We
face substantial competition in attracting and retaining qualified senior
management and highly skilled key personnel and may be unable to develop and
grow our business if we cannot attract and retain as necessary, or if we were to
lose our existing, senior management and key personnel.
 
 As a
development stage company, our success, to a large extent, depends upon our
ability to attract, hire and retain highly qualified and knowledgeable senior
management and key personnel who possess the skills and experience necessary to
satisfy our business and client service needs. Our ability to attract and retain
such senior management and key personnel will depend on numerous factors,
including our ability to offer salaries, benefits and professional growth
opportunities that are comparable with and competitive to those offered by more
established internet and media search engine companies. We may be required to
invest significant time and resources in attracting and retaining, as necessary,
additional senior management and highly skilled key personnel, and many of the
companies with which we will compete for any such individuals have greater
financial and other resources, affording them the ability to undertake more
extensive and aggressive hiring campaigns, than we can. Furthermore, an
important component to the overall compensation offered to our senior management
and key personnel may be equity. If our stock prices do not appreciate over
time, it may be difficult for us to attract and retain senior management and
highly skilled key personnel. Moreover, should we lose any members of our senior
management or key personnel, we may be unable to prevent the unauthorized
disclosure or use of our trade secrets, including our technical knowledge,
practices, procedures or client. The normal running of our operations may be
interrupted, and our financial condition and results of operations negatively
affected, as a result of any inability on our part to attract or retain the
services of qualified and experienced senior management and highly skilled key
personnel, any member of our existing senior management or key personnel leaving
and a suitable replacement not being found, or should any of our former senior
management or key personnel disclose our trade secrets.
 
 
  Return to Table of Contents
 23
  RISKS
ASSOCIATED WITH AN INVESTMENT IN OUR COMMON STOCK
 
 Substantial
dilution could occur as a result of our license transaction.
 
 On August
23, 2007, we entered into a Technology License Agreement with Minerva
Technologies Ltd., an Indian corporation.  This agreement allows us to
license certain search engine technology from Minerva for a one-time license
payment of 23,000,000 common shares of our stock.  Currently, Minerva
has not yet completed delivery under the Agreement, so it is unclear if the
license will proceed.  If this license does proceed, you could be
subject to substantial dilution with an increase of approximately 33% in our
issued and outstanding shares.  If the license turns out not to be as
valuable as we anticipate, this could result in a significant decrease in our
share price.
  Unless
an active trading market develops for our securities, you may not be able to
sell your shares.
 
 Although,
we are a reporting company and our common shares are listed on the OTC Bulletin
Board (owned and operated by the Nasdaq Stock Market, Inc.) under they symbol
“FSAC”, there is currently a volatile and thinly traded market for our common
stock which may not be maintained. Failure to develop maintain adequate trading
volumes and price stability in the stock will have a generally negative affect
on the price of our common stock, and you may be unable to sell your common
stock or any attempted sale of such common stock may have the affect of lowering
the market price and therefore your investment could be a partial or complete
loss.
 
 Since
our common stock is thinly traded it is more susceptible to extreme rises or
declines in price, and you may not be able to sell your shares at or above the
price paid.
 
 Since our
common stock is thinly traded its trading price is likely to be highly volatile
and could be subject to extreme fluctuations in response to various factors,
many of which are beyond our control, including:
  ·
                the
      trading volume of our shares;
 
 ·
                the
      number of securities analysts, market-makers and brokers following our
      common stock;
 
 ·
                changes
      in, or failure to achieve, financial estimates by securities
      analysts;
 
 ·
                new
      products introduced or announced by us or our
  competitors;
 
 ·
                announcements
      of technological innovations by us or our
  competitors;
 
 ·
                actual
      or anticipated variations in quarterly operating
  results;
 
 ·
                conditions
      or trends in our business
industries;
 
 ·
                announcements
      by us of significant acquisitions, strategic partnerships, joint ventures
      or capital commitments;
 
 ·
                additions
      or departures of key personnel;
 
 ·
                sales
      of our common stock; and
 
 ·
                general
      stock market price and volume fluctuations of publicly-traded, and
      particularly microcap,
companies.
  Return to Table of Contents
 24
  You may
have difficulty reselling shares of our common stock, either at or above the
price you paid, or even at fair market value. The stock markets often experience
significant price and volume changes that are not related to the operating
performance of individual companies, and because our common stock is thinly
traded it is particularly susceptible to such changes. These broad market
changes may cause the market price of our common stock to decline regardless of
how well we perform as a company. In addition, securities class action
litigation has often been initiated following periods of volatility in the
market price of a company’s securities. A securities class action suit against
us could result in substantial legal fees, potential liabilities and the
diversion of management’s attention and resources from our business. Moreover,
and as noted below, our shares are currently traded on the OTC Bulletin Board
and, further, are subject to the penny stock regulations. Price fluctuations in
such shares are particularly volatile and subject to manipulation by
market-makers, short-sellers and option traders.
 
 Trading
in our common stock on the OTC Bulletin Board may be limited thereby making it
more difficult for you to resell any shares you may own.
 
 Our
common stock trades on the OTC Bulletin Board (owned and operated by the Nasdaq
Stock Market, Inc.). The OTC Bulletin Board is not an exchange and, because
trading of securities on the OTC Bulletin Board is often more sporadic than the
trading of securities listed on a national exchange or on the Nasdaq National
Market, you may have difficulty reselling any of the shares of our common stock
that you may own.
 
 Our
common stock is subject to the “penny stock” regulations, which are likely to
make it more difficult to sell.
 
 Our
common stock is considered a “penny stock,” which generally is a stock trading
under $5.00 and not registered on a national securities exchange or quoted on
the Nasdaq National Market. The SEC has adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. These
rules generally have the result of reducing trading in such stocks, restricting
the pool of potential investors for such stocks, and making it more difficult
for investors to sell their shares once acquired. Prior to a transaction in a
penny stock, a broker-dealer is required to:
  ·
                deliver
      to a prospective investor a standardized risk disclosure document that
      provides information about penny stocks and the nature and level of risks
      in the penny stock market;
 
 ·
                provide
      the prospective investor with current bid and ask quotations for the penny
      stock;
 
 ·
                explain
      to the prospective investor the compensation of the broker-dealer and its
      salesperson in the transaction;
 
 ·
                provide
      investors monthly account statements showing the market value of each
      penny stock held in the their account;
and
 
 ·
                make
      a special written determination that the penny stock is a suitable
      investment for the purchaser and receive the purchaser’s written agreement
      to the transaction.
  Return to Table of Contents
 25
  These
requirements may have the effect of reducing the level of trading activity in
the secondary market for a stock that is subject to the penny stock rules. Since
our common stock is subject to the penny stock rules, investors in our common
stock may find it more difficult to sell their shares.
 
 We
do not intend to pay any common stock dividends in the foreseeable
future.
 
 We have
never declared or paid a dividend on our common stock and, because we have very
limited resources and a substantial accumulated deficit, we do not anticipate
declaring or paying any dividends on our common stock in the foreseeable future.
Rather, we intend to retain earnings, if any, for the continued operation and
expansion of our business. It is unlikely, therefore, that the holders of our
common stock will have an opportunity to profit from anything other than
potential appreciation in the value of our common shares held by them. If you
require dividend income, you should not rely on an investment in our common
stock.
 
 Future issuances of our common stock
may depress our stock price and dilute your interest.
 
 We may
issue additional shares of our common stock in future financings or grant stock
options to our employees, officers, directors and consultants under our stock
incentive plan. Any such issuances could have the affect of depressing the
market price of our common stock and, in any case, would dilute the percentage
ownership interests in our company by our shareholders. In addition, we could
issue serial preferred stock having rights, preferences and privileges senior to
those of our common stock, including the right to receive dividends and/or
preferences upon liquidation, dissolution or winding-up in excess of, or prior
to, the rights of the holders of our common stock. This could depress the value
of our common stock and could reduce or eliminate amounts that would otherwise
have been available to pay dividends on our common stock (which are unlikely in
any case) or to make distributions on liquidation.
 
 
 
  Return to Table of Contents
 26
  ITEM 7. FINANCIAL STATEMENTS.
 
 
 FUSA
CAPITAL CORPORATION
 (A
DEVELOPMENT STAGE COMPANY)
 
 
 TABLE
OF CONTENTS
 
 PageReport of Independent Registered Public Accounting
      Firm
              F-2Consolidated Balance Sheets as of December 31, 2007 and
      2006
              F-3Consolidated Statements of Operations for the Years Ended
      December 31, 2007 and December 31, 2006, and for the period from February
      9, 2005 (Inception) through the Year Ended December 31,
      2007
              F-4Consolidated Statements of Cash Flows for the Years Ended
      December 31, 2007 and December 31, 2006, and for the period from February
      9, 2005 (Inception) through the Year Ended December 31,
      2007
              F-5Consolidated Statements of Stockholders’ Equity
      (Deficit)
              F-6Notes to the Consolidated Financial
    Statements
              F-7
 
 
   
  
 
 
 
 
 
 
  Return to Table of Contents
 F-1
  MOORE & ASSOCIATES, CHARTERED
 ACCOUNTANTS AND
ADVISORS
 PCAOB
REGISTERED
 
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   To
the Board of Directors
 FUSA
Capital Corporation
 (A
Development Stage Company)
   We have
audited the accompanying balance sheets of FUSA Capital Corporation (A
Development Stage Company) as of December 31, 2007 and 2006, and the related
statements of operations, stockholders’ equity and cash flows for the years
ended December 31, 2007, 2006 and Inception on February 9, 2005 through December
31, 2007. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
  We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
  In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of FUSA Capital Corporation (A
Development Stage Company) as of December 31, 2007 and 2006, and the results of
its operations and its cash flows through December 31, 2007, 2006 and Inception
on February 9, 2005 through December 31, 2007, in conformity with accounting
principles generally accepted in the United States of America.
  The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has not commenced its planned principle operations and
has not generated revenues as of December 31, 2007, which raises substantial
doubt about its ability to continue as a going concern. Management’s plans
concerning these matters are also described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
   /s/Moore & Associates, Chartered
  Moore
& Associates Chartered
 Las
Vegas, Nevada
 February
20, 2008
 
 
 2675 S. Jones Blvd. Suite
109, Las Vegas, NV 89146 (702) 253-7499 Fax (702) 253-7501
  Return to Table of Contents
 F-2
  FUSA CAPITAL CORPORATION
 (A
DEVELOPMENT STAGE COMPANY)
 CONSOLIDATED
BALANCE SHEETS
 DECEMBER
31, 2007 AND DECEMBER 31, 2006
 
 
 December
      31
              
              
              December
      312007
              
              
              2006ASSETSCURRENT
      ASSETSCash
              
              $
              5,255
              
              
              $
              68,923Restricted
      cash-Note 2
              
              
              28,750
              
              
              
              28,750Prepaid
      expenses
              
              
              500
              
              
              
              500Total
      Current Assets
              
              
              34,505
              
              
              
              98,173Property
      and equipment-Note 4
              
              
              23,806
              
              
              
              29,344Lease
      deposits
              
              
              -
              
              
              
              2,155Total
      Assets
              
              $
              58,311
              
              
              $
              129,672LIABILITIES AND STOCKHOLDERS’
      EQUITYCURRENT
      LIABILITIESAccounts
      payable and accrued liabilities
              
              $
              53,942
              
              
              $
              49,244Total
      Current Liabilities
              
              
              53,942
              
              
              
              49,244COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS’
      EQUITY (DEFICIT)Preferred
      stock, $.0001 par value, 5,000,000Shares
      authorized, none issued
              
              
              -
              
              
              
              -Common
      stock, par value $.0001, 500,000,000Shares
      authorized, 62,447,083 issued and outstanding
              
              
              6,243
              
              
              
              5,983(2006-59,847,083
      issued and outstanding)Paid
      in capital
              
              
              5,250,749
              
              
              
              4,601,009Deficit
      accumulated during the development stage
              
              
              (5,252,623
              )
              
              
              (4,526,564
              )Total
      Stockholders’ Equity
              
              
              4,369
              
              
              
              80,428$
              58,311
              
              
              $
              129,672
 
 
 
 
 
 
 SEE
ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
 
 
  Return to Table of Contents
 F-3
  FUSA CAPITAL CORPORATION
 (A
DEVELOPMENT STAGE COMPANY)
 CONSOLIDATED
STATEMENT OF OPERATIONS
 for
the years ended December 31, 2007 and December 31, 2006
 for
the period February 9, 2005 (Inception) to December 31, 2007
  Year
              
              
              Year
              
              
              February
      9, 2005ended
              
              
              ended
              
              
              (Inception)
      toDecember
      31, 2007
              
              
              December
      31, 2006
              
              
              December
      31, 2007REVENUESales
              
              $
              33,117
              
              
              $
              13,150
              
              
              $
              46,267Interest  and
      other
              
              
              1,416
              
              
              
              963
              
              
              
              2,56134,553
              
              
              
              14,113
              
              
              
              48,828EXPENSESSelling,
      general and administrative
              
              
              599,173
              
              
              
              904,643
              
              
              
              3,105,614Research
      and development-Note 4
              
              
              146,204
              
              
              
              (464,023
              )
              
              
              1,936,333Beneficial
      conversion expense
              
              
              -
              
              
              
              -
              
              
              
              230,900Interest
              
              
              -
              
              
              
              -
              
              
              
              1,631Loss
      on disposal of property and equipment
              
              
              1,393
              
              
              
              -
              
              
              
              1,393Foreign
      exchange loss
              
              
              4,430
              
              
              
              -
              
              
              
              4,430Depreciation
      and amortization
              
              
              9,392
              
              
              
              8,900
              
              
              
              21,150Total
      Expenses
              
              
              760,592
              
              
              
              449,520
              
              
              
              5,301,451NET
      INCOME (LOSS)
              
              $
              (726,059
              )
              
              $
              (435,407
              )
              
              $
              (5,252,623
              )NET
      LOSS PER COMMON SHARE, BASIC
              
              $
              (0,01
              )
              
              $
              (0.00
              )WEIGHTED
      AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
              
              
              60,738,750
              
              
              
              54,424,256
 
 
 
 
 
 
 
 
  Return to Table of Contents
 F-4
  FUSA CAPITAL CORPORATION
 (A
DEVELOPMENT STAGE COMPANY)
 CONSOLIDATED
STATEMENT OF CASH FLOWS
 for
the years ended December 31, 2007 and December 31, 2006
 for
the period from February 9, 2005 (Inception) to December 31,
2007
 Year
                
                
                Year
                
                
                February
      9, 2005Ended
                
                
                Ended
                
                
                (Inception)
      toDecember
      31, 2007
                
                
                December
      31, 2006
                
                
                December
      31, 2007OPERATING
      ACTIVITIESNet
      loss from operations
                
                $
                (726,059
                )
                
                $
                435,407
                )
                
                $
                (5,252,623
                )Adjustments
      to reconcile net loss to netCash
      (used) by operating activities:Common
      stock issued (cancelled) for compensation
                
                
                -
                
                
                
                (732,000
                )
                
                
                2,129,250Common
      stock issued for services
                
                
                -
                
                
                
                38,000
                
                
                
                47,000Stock
      options issued for services
                
                
                -
                
                
                
                8,728
                
                
                
                55,669Beneficial
      conversion feature on warrant issuance
                
                
                -
                
                
                
                -
                
                
                
                230,900Depreciation
      and amortization
                
                
                9,392
                
                
                
                8,900
                
                
                
                21,150Loss
      on disposal of property and equipment
                
                
                1,393
                
                
                
                -
                
                
                
                5,879Changes
      in operating assets and liabilities:Decrease
      (increase) in prepaid expenses
                
                
                -
                
                
                
                10,620
                
                
                
                (500
                )Decrease
      (increase) in accounts payable and accrued liabilities
                
                
                4,698
                
                
                
                (121,468
                )
                
                
                43,262Decrease
      (increase) in lease deposits
                
                
                2,155
                
                
                
                5,448
                
                
                
                -Total
      adjustments
                
                
                17,638
                
                
                
                (781,772
                )
                
                
                2,532,610Net
      cash (used by) operating activities
                
                
                (708,421
                )
                
                
                (1,217,179
                )
                
                
                (2,720,013
                )INVESTING
      ACTIVITIESProceeds
      on disposal of capital assets
                
                
                494
                
                
                
                -
                
                
                
                494Acquisition
      of property and equipment
                
                
                (5,741
                )
                
                
                (7,992
                )
                
                
                (51,327
                )Net
      cash (used by) investing activities
                
                
                (5,244
                )
                
                
                (7,992
                )
                
                
                (50,833
                )FINANCING
      ACTIVITIESCash
      received in recapitalization of the company
                
                
                -
                
                
                
                -
                
                
                
                184Proceeds
      from issuance of common stock
                
                
                650,000
                
                
                
                952,000
                
                
                
                1,912,000Offering
      costs from issuance of stock
                
                
                -
                
                
                
                -
                
                
                
                (4,000
                )Increase
      (decrease) in advances payable
                
                
                -
                
                
                
                -
                
                
                
                896,667Net
      cash provided by financing activities
                
                
                650,000
                
                
                
                952,000
                
                
                
                2,804,851Net
      increase (decrease) in cash
                
                
                (63,668
                )
                
                
                (273,171
                )
                
                
                34,005Cash,
      beginning of period
                
                
                97,673
                
                
                
                370,844
                
                
                
                -Cash,
      end of period
                
                $
                34,005
                
                
                $
                97,673
                
                
                $
                34,005Cash
      Summary, December 31Cash
                
                $
                5,255
                
                
                $
                68,923
                
                
                $
                5,255Restricted
      Cash
                
                
                28,750
                
                
                
                28,750
                
                
                
                28,750Total
                
                $
                34,005
                
                
                $
                97,673
                
                
                $
                34,005SUPPLEMENTAL
      DISCLOSURES OF NON-CASH INVESTING AND FINANCING
  ACTIVITIESNon-monetary
      net liabilities assumed in a recapitalization of the Company on March 7,
      2005:Liabilities
      assumed
                
                $
                -
                
                
                $
                -
                
                
                $
                102,140Less
      cash received
                
                
                --
                
                
                
                
                
                
                
                184Total
      non-monetary net liabilities assumed
                
                $
                -
                
                
                $
                -
                
                
                $
                101,956Interest
      paid
                
                $
                -
                
                
                $
                -
                
                
                $
                1,631
 SEE
ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
  Return to Table of Contents
 F-5
  FUSA CAPITAL CORPORATION
 (A
DEVELOPMENT STAGE COMPANY)
 CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
  Common Stock
              
              
              Paid-in
              
              
              Deficit
      Accumulated During Development
              
              
              Total
      Stockholders’Shares
              
              
              Amount
              
              
              Capital
              
              
              Stage
              
              
              EquityInception,
      Feb 9, 2005, Stock issued for services @ $.0001 per share
              
              
              27,000,000
              
              
              $
              2,700
              
              
              $
              6,300
              
              
              $
              -
              
              
              $
              9,000Net
      (Loss), for the period ended March 6, 2005
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (11,605
              )
              
              
              (11,605
              )Balances,
      March 6, 2005
              
              
              27,000,000
              
              
              
              2,700
              
              
              
              6,300
              
              
              
              (11,605
              )
              
              
              (2,605
              )Restated
      Recapitalization March 7, 2005
              
              
              27,447,564
              
              
              
              2,744
              
              
              
              (104,701
              )
              
              
              
              
              
              
              (101,957
              )Shares
      issued for cash in a private PlacementMarch
      9, 2005 Stock issued for cash @ $.34 per share
              
              
              300,000
              
              
              
              30
              
              
              
              99,970
              
              
              
              
              
              
              
              100,000March
      31, 2005 Stock issued for cash @ $.34 per share
              
              
              390,000
              
              
              
              39
              
              
              
              129,961
              
              
              
              
              
              
              
              130,000April
      5, 2005 Stock issued for cash @ $.34 per share
              
              
              60,000
              
              
              
              6
              
              
              
              9,994
              
              
              
              
              
              
              
              20,000April
      15, 2005 Stock issued for cash $.34 per share
              
              
              120,000
              
              
              
              12
              
              
              
              39,988
              
              
              
              
              
              
              
              40,000April
      21, 2005 Stock issued for cash @ $.34 per share
              
              
              60,000
              
              
              
              6
              
              
              
              19,994
              
              
              
              
              
              
              
              20,000Offering
      costs
              
              
              
              
              
              
              
              
              
              
              (4,000
              )
              
              
              
              
              
              
              (4,000
              )Beneficial
      conversion feature-930,000
      warrants issued in above PPM
              
              
              230,900
              
              
              
              
              
              
              
              230,900Shares
      issued as compensationJune
      15, 2005 Stock issued @ FMV of $.89 per share
              
              
              1,200,000
              
              
              
              120
              
              
              
              1,066,380
              
              
              
              
              
              
              
              1,066,500July
      29, 2005 Stock issued @ FMV of $1.02 per share
              
              
              900,000
              
              
              
              90
              
              
              
              917,910
              
              
              
              
              
              
              
              918,000September
      21, 2005 Stock issued @ FMV of $1.22 per share
              
              
              600,000
              
              
              
              60
              
              
              
              731,940
              
              
              
              
              
              
              
              732,000September
      22, 2005 Stock issued @ FMV of $1.21 per share
              
              
              50,000
              
              
              
              5
              
              
              
              60,495
              
              
              
              
              
              
              
              60,500October
      26, 2005 Stock issued @ FMV of $1.19 per share
              
              
              25,000
              
              
              
              3
              
              
              
              29,748
              
              
              
              
              
              
              
              29,750November
      10, 2005 Stock issued @ FMV of $.89 per share
              
              
              50,000
              
              
              
              5
              
              
              
              54,495
              
              
              
              
              
              
              
              54,500Stock
      options issued for Compensation
      to non-employeesApril
      18, 2005 120,000 options vested @ FMV of $.32 per share
              
              
              
              
              
              
              
              
              
              
              38,298
              
              
              
              
              
              
              
              38,298April
      18, 2005 21,819 options vested @ FMV of $.40 per share
              
              
              
              
              
              
              
              
              
              
              8,643
              
              
              
              
              
              
              
              8,643Loss
      for the period from March 6, 2005 to March 31, 2006
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (4,079,552
              )
              
              
              (4,079,552
              )Balances,
      December 31, 2005
              
              
              58,202,564
              
              
              $
              5,820
              
              
              $
              3,346,315
              
              
              $
              (4,091,157
              
              
              $
              (739,022
              )Stock
      options issued for Compensation
      to non-employeesJanuary
      1, 2006 7,273 options vested @ FMV $.41 per share
              
              
              
              
              
              
              
              
              
              
              2,996
              
              
              
              
              
              
              
              2,996April
      7, 2006, 21,819 options vested @FMV of $.40 per share
              
              
              
              
              
              
              
              
              
              
              8,728
              
              
              
              
              
              
              
              8,728Shares
      issued for services to non-employeesMay
      24, 2006, stock issued for FMV of $1.40
              
              
              10,000
              
              
              
              1
              
              
              
              13,999
              
              
              
              
              
              
              
              14,000December
      11, 2006, stock issued for FMV of $ .96
              
              
              25,000
              
              
              
              3
              
              
              
              23,997
              
              
              
              
              
              
              
              24,000Shares
      issued for cash in a private placementFebruary
      16, 2006 Stock issued for cash @ $1.00 per share
              
              
              400,000
              
              
              
              40
              
              
              
              399,960
              
              
              
              
              
              
              
              400,000May
      24, 2006 Stock issued for cash@ $.75 per share
              
              
              200,000
              
              
              
              20
              
              
              
              149,980
              
              
              
              
              
              
              
              150,000June
      5, 2006 Stock issued for cash @ $.75 per share
              
              
              133,334
              
              
              
              13
              
              
              
              99,987
              
              
              
              
              
              
              
              100,000August
      16, 2006 Stock issued for cash @ $.75 per share
              
              
              42,670
              
              
              
              4
              
              
              
              31,996
              
              
              
              
              
              
              
              32,000August
      23, 2006 Stock issued for cash @ $.75 per share
              
              
              93,340
              
              
              
              9
              
              
              
              69,991
              
              
              
              
              
              
              
              70,000October
      20, 2006 Stock issued for cash @$.75 per share
              
              
              133,334
              
              
              
              13
              
              
              
              99,987
              
              
              
              
              
              
              
              100,000December
      18,2006 Stock issued for cash @.75 per share
              
              
              133,334
              
              
              
              13
              
              
              
              99,987
              
              
              
              
              
              
              
              100,000Shares
      exchanged for debtFebruary
      2, 2006 Stock issued for cash @ $.91 per share
              
              
              1,073,507
              
              
              
              107
              
              
              
              985,026
              
              
              
              
              
              
              
              985,133Cancellation
      of share issued as compensation to employees
              
              
              (600,000
              )
              
              
              (60
              )
              
              
              (731,940
              )
              
              
              
              
              
              
              (732,000
              )Loss
      for the period ended December 31, 2006
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (435,407
              )
              
              
              (435,407
              )Balances,
      December 31, 2006
              
              
              59,847,083
              
              
              
              5,983
              
              
              
              4,601,009
              
              
              
              (4,526,564
              )
              
              
              80,428Shares
      issued for cash in a private placementFebruary
      20, 2007 Stock issued for cash @ $.75 per share
              
              
              200,000
              
              
              
              20
              
              
              
              149,980
              
              
              
              
              
              
              
              150,000May
      20, 2007 Stock issued for cash @ $.60 per share
              
              
              250,000
              
              
              
              25
              
              
              
              149,975
              
              
              
              
              
              
              
              150,000July
      10, 2007 Stock issued for cash @ $.40 per share
              
              
              250,000
              
              
              
              25
              
              
              
              99,975
              
              
              
              
              
              
              
              100,000August  22,
      2007 Stock issued for cash @ $.25 per share
              
              
              400,000
              
              
              
              40
              
              
              
              99,960
              
              
              
              
              
              
              
              100,000November
      16, 2007 Stock issued for Cash @ $.10 per share
              
              
              1,500,000
              
              
              
              150
              
              
              
              149,850
              
              
              
              
              
              
              
              150,000Loss
      for the year endedDecember
      31, 2007
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (726,059
              )
              
              
              (726,059
              )Balances,
      December 31, 2007
              
              
              62,447,083
              
              
              
              6,243
              
              
              
              5,250,749
              
              
              
              (5,252,623
              )
              
              
              4,369
  SEE
ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
  Return to Table of Contents
 F-6
 FUSA CAPITAL CORPORATION
 (A
Development Stage Company)
 Notes
to  Consolidated Financial Statements
 December
31, 2007
 Note
1    Significant accountingpolicies
 
 Use
of estimates
 
 The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
revenue and expenses during the reporting period.  Actual results
could differ from these estimates.
 
 Restricted
cash
 
 At
December 31, 2007 current assets include restricted cash of $28,750, which is
held as short term, interest bearing collateral to support a bank credit
facility for the Company.
 
 Cash
Equivalents
 
 The
Company considers all highly liquid investments with the original maturities of
three months or less to be cash equivalents.
 
 Financial
instruments
 
 The fair
value of cash, accounts payable and accrued liabilities are comparable to the
carrying amounts thereof given their short-term maturity.
 
 Concentrations
of credit risk
 
 The
Company is subject to concentrations of credit risk on their temporary cash
investments due to the use of a limited number of banking institutions. The
Company mitigates this risk by placing temporary cash investments with major
financial institutions, which have all been accorded high ratings by primary
rating agencies.
  Return to Table of Contents
 F-7
  FUSA
CAPITAL CORPORATION
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2007
  Advertising
Costs
 
 We
expense all advertising, promotion and marketing costs as they so far have not
included any direct- response advertising costs requiring
capitalization.  Non direct and related costs incurred during the year
December 31, 2007 within this category, which are included in selling, general
and administrative expense, amounted to approximately $93,796 (
2006-113,251).
 
 Stock-based
compensation
 
 As
permitted by SFAS No. 123, AccountingforStock-BasedCompensation,the Company has elected
to follow Accounting Principles Board Opinion (“APB”) No. 25, Accounting forStockIssued toEmployees, and related
interpretations in accounting for its stock-based compensation to employees.
Under APB No. 25, when the exercise price of the Company’s employee stock
options is equal to or greater than the fair value of the underlying stock on
the date of grant, no compensation expense is recognized.
 
 In
December 2004, the FASB issued SFAS 123R, ShareBasedPayments. SFAS 123R is applicable to
transactions in which an entity exchanges its equity instruments for goods and
services. It focuses primarily on transactions in which an entity obtains
employee services in share-based payment transactions. SFAS No. 123R supersedes
the intrinsic value method prescribed by APB No. 25, requiring that the fair
value of such equity instruments be recorded as an expense as services are
performed. Prior to SFAS 123R, only certain pro forma disclosures of accounting
for these transactions at fair value were required. SFAS 123R will be effective
for the  first quarter 2007 consolidated financial statements, and
permits varying transition methods including retroactive adjustment of prior
periods or prospective application beginning in 2007.  The Company
will adopt SFAS 123R using the modified prospective method effective January 1,
2007. Under this transition method the Company began recording stock option
expense prospectively, starting in first quarter 2007.
 
 For stock
based compensation to non-employees, the Company is required to follow SFAS No.
123, which requires that stock awards granted to directors, consultants and
other non-employees be recorded at the fair value of the award
granted.
 
 Research
and development costs
 
 Pursuant
to SFAS No. 2, "AccountingforResearchandDevelopmentCosts," our research and
development costs, which relate to the development of software to be used in our
search engine technology, were expensed as technological feasibility of the
software had not been reached as of December 31, 2007.
 
 The cost
of materials and equipment that are acquired for research and development
activities and that have alternative future uses are capitalized when acquired,
such as computer equipment.
  Return to Table of Contents
 F-8
  FUSA
CAPITAL CORPORATION
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements
 December
31, 2007
  Property
and equipment
 
 Property
and equipment are recorded at cost.  Depreciation is provided over the
estimated useful lives of the related assets using the straight-line method and
the half year convention. Estimated useful lives for property and equipment
categories are as follows:
 
 Furniture
      and fixtures
              7
      yearsComputer
      systems
              5
      yearsLeasehold
      improvements
              Lease
      term
 
 Long
lived assets are tested for impairment whenever events or changes in
circumstances indicate their carrying amount may not be
recoverable.  The determination of any impairment loss includes a
comparison of estimated undiscounted future cash flows anticipated to be
generated during the remaining life of the asset or group of assets to the net
carrying value of the asset or group of assets.  Where the net
carrying amount of the asset or the group of assets is less than the
undiscounted future cash flows, an impairment loss is recognized.
 
 Income
taxes
 
 Deferred
tax liabilities and assets are determined based on the differences between the
book values and the tax bases of assets and liabilities, using tax rates in
effect for the years in which the differences are expected to reverse. A
valuation allowance is provided to offset any deferred tax asset if, based upon
the available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized.
 
 Foreign
currency transactions
 
 The
business of the Company from Canada involves incurring a substantial number of
operational transactions in Canada for which it transacts payments in Canadian
currency through a bank account maintained for that purpose. Included in such
transactions are payments for salaries, rent, consulting and many other
expenses. At the time of payment, each Canadian disbursement is translated into
the U. S. dollar equivalent amount and an exchange gain or loss on currency is
recorded at that time. During the year ended December 31, 2007, the currency
exchange transactions resulted in a (loss) gain of $ (4,430) (2006 –$30). As of
December 31, 2007, the Canadian bank account balance, which was the only account
balance maintained in foreign currency at that date was converted into a U. S.
dollar equivalent amount.
 
 
 Note
2    Goingconcern
 
 The
Company's consolidated financial statements are prepared using the accounting
principles generally accepted in the United States of America applicable to a
going concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business.  However, the Company
has not commenced its planned principal operations and has not generated
revenues. It has incurred a significant operating loss as of December 31,
2007.
 
 The
Company is dependent upon its ability to secure equity and/or debt financing and
there are no assurances that the Company will be successful. Without sufficient
financing, completion of the technology and achievement of profitable operations
thereby, it would be unlikely for the Company to continue as a going concern.
Management’s plan is to complete the development of its video and audio search
engine technology and to utilize it as an internet service for
profit.
  Return to Table of Contents
 F-9
  FUSA
CAPITAL CORPORATION
 (A
Development Stage Company)
 Notes
to  Consolidated Financial Statements
 December
31, 2007
  Note
3    Relatedpartytransactions
 
 During
the year ended December 31, in lieu of paying its technology officer’s his
earned compensation directly of $30,234 ( 2006- $ 90,518), it paid it to a
consulting company owned by the Officer. This amount relates principally to his
efforts through December 31, 2007, in furthering the development of the
Company’s video and audio search engine technology, accordingly, the entire
amount was included in research and development expense.
 
 During
the year ended December 31, 2006, a director of the Company received 25,000
shares with fair market value of $ 24,000 for services
rendered.  Compensation expense related to the share issue is included
in selling and administrative expenses.
 
 
 Note
4    Property andequipment
 
 
 A summary
of property and equipment as of December 31, 2007 follows:
 
 Accumulated
      Net BookDepreciation ValueCost
              
              
              2007
              
              
              2006Furniture
      and fixtures
              
              $
              8,228
              
              
              $
              3,048
              
              
              $
              5,18
              
              
              $
              6,356Computer
      systems
              
              
              26,713
              
              
              
              10,721
              
              
              
              15,992
              
              
              
              17,480Leasehold
      improvements
              
              
              8,621
              
              
              
              5,987
              
              
              
              2,634
              
              
              
              5,508$
              43,562
              
              
              $
              19,756
              
              
              $
              23,80
              
              
              
              29,344
 
 
 Note5    Commitments andcontingencies
 
 Operating
Leases
 
 The
Company conducts its operations from two separate office facilities in
Vancouver, Canada and one office in Seattle, Washington.  One of the
facilities in Vancouver is leased under a three-year operating lease expiring in
October 2008. The other lease is short term as of March 31, 2007.
  The
office in Seattle is leased under a month to month rental.
 
 The
following is a schedule of future minimum lease payments, exclusive of all
executory costs, required under the long-term operating lease above as of
December 31, 2007 for the fiscal years ended:
  2008
                $  23,593
  Lease and
rental expense included in selling and administrative expenses for the year
totaled $11,543 (2006-
$ 61,370)
   Return to Table of Contents
 F-10
  FUSA
CAPITAL CORPORATION
 (A
Development Stage Company)
 Notes
to  Consolidated Financial Statements
 December
31, 2007
  Note
6    IssuanceofCommon Stock
 
 In
February 2006, all of the advances included as debt on the December 31, 2005
consolidated balance totaling $985,133 were converted to equity through the
issuance of a total of 1,073,507 shares of restricted common stock.
 
 During
the year ended December 31, 2007, the company issued 2,600,000 (2006-1,209,346)
shares of common stock for proceeds of $ 650,000 ( 2006-$952,000).
 
 During
the year, the company issued nil (2006-10,000) shares of common stock for
services rendered. The resulting value of stock compensation of $ nil (
2006-$14,000) has been included in selling, general and administrative expenses
and also included as a component of shareholders’ equity as at December 31,
2007.
 
 During
the year, the company issued nil (2006-25,000) shares of common stock to a
director of the company for services rendered. The resulting value of stock
compensation of nil ( 2006-$ 24,000) has been included in selling, general and
administrative expenses and also included as a component of shareholders’ equity
as at December 31, 2007.
 
 In
addition, the company cancelled nil (2006-600,000) shares of common stock which
had previously been issued for services rendered.  The previously
recorded value of stock compensation of nil ( 2006-$ 722,000) has been credited
to research and development expenses and  included as a component of
shareholders’ equity as at December 31, 2007.
 
 
 Note
7    Deferred Tax
Assets
 
 The
following table summarizes the significant components of the Company's deferred
tax assets:
  Deferred
      tax Assets
              
              2007
              
              
              2006Non-capital
      loss carryforward
              
              $
              246,840
              
              
              $
              148,038Less:  valuation
      allowance
              
              
              (246,840
              )
              
              
              (148,038
              )$
              -
              
              
              $
              -
  The
amount taken into income as deferred tax assets must reflect that portion of the
income tax loss carryforwards that is likely to be realized from future
operations.  The Company has chosen to provide an allowance of 100%
against all available income tax loss carryforwards regardless of their
expiry
 
 Note
8    Income
Taxes
 
 No provision for income taxes has been
provided for in these financial statements due to the net loss.  At
December 31, 2007, the Company has a net operating loss carryforward which
expires commencing in 2025, totaling approximately $5,252,000 the benefit of
which has not been recorded in the financial statements.
 
 Note
9    Technology License
Agreement
 
 During
the period, the company entered into a technology license agreement with Minerva
Technologies Pvt. Ltd. to acquire a perpetual, fully-paid, royalty free
exclusive license to technology Minerva has related to the Argon Search Engine
Software.  As consideration for the license, the company has agreed to
pay Minerva a one-time license fee of 23,000,000 shares of common stock of the
company
   Return to Table of Contents
 F-11
 
 ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AN ACCOUNTING
FINANCIAL DISCLOSURE.
  There
were no previously unreported events under this Item 8 during the fiscal year
ended December 31, 2006.
 
 ITEM 8A. CONTROLS AND PROCEDURES.
  Evaluation
of Disclosure Controls and Procedures
 
 As
required by Rule 13a-15 under the Exchange Act, we carried out an evaluation of
the effectiveness of the design and operation of our disclosure controls and
procedures as of December 31, 2007.  This evaluation was carried out
under the supervision and with the participation of our Chief Executive Officer
and Principal Financial and Accounting Officer, as well as a team of outside
consultants.  In assessing the effectiveness of our internal control
over financial reporting we utilized the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission as published in "Internal
Control over Financial Reporting – Guidance for Smaller Public
Companies."  Based on that evaluation, our Chief Executive Officer and
Principal Financial and Accounting Officer found material weaknesses in our
disclosure controls and procedures and therefore concluded that our disclosure
controls and procedures as of the end of the period covered by this report were
ineffective.
  The
determination of ineffective internal control is based upon the lack of
separation of duties. Our entire management is comprised of one individual. It
is impossible to create a system of checks and balances with oversight in this
circumstance. It is management’s intention to bring additional people into the
management team. Once there are more members of management, responsibilities can
be divided and oversight roles created.  Although the Company does not
currently have sufficient financial resources to hire additional management, the
Company expects to have such resources, make such hires and create segregation
of duties and proper oversight within 12 months.  The Company
estimates the annual costs of such remediation efforts in the form of additional
management will be $150,000 per year.
 
 We
understand that remediation of disclosure controls is a continuing work in
progress due to the issuance of new standards and
promulgations.  However, remediation of the material weaknesses
described above is among our highest priorities.  Our management will
periodically assess the progress and sufficiency of our ongoing initiatives and
make adjustments as and when necessary.  As of the date of this
report, our management believes that our efforts will remediate the material
weaknesses in internal control over financial reporting as described
above.
  Notwithstanding
these material weaknesses which are described below, our management performed
additional analyses, reconciliations and other post-closing procedures and has
concluded that the Company’s consolidated financial statements for the periods
covered by and included in the Annual Report previously filed on Form 10-KSB are
fairly stated in all material respects in accordance with generally accepted
accounting principles in the U.S. for each of the periods presented
herein.
  Inherent
Limitations Over Internal Controls
 
 The
Company's internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. The Company's internal control over
financial reporting includes those policies and procedures that:
 
 (i)   pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the Company's assets;
  (ii)   provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that the Company's receipts and expenditures are
being made only in accordance with authorizations of the Company's management
and directors; and
  (iii)   provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company's assets that could have a
material effect on the financial statements.
  Management
does not expect that the Company's internal controls will prevent or detect all
errors and all fraud. A control system, no matter how well designed and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of internal controls
can provide absolute assurance that all control issues and instances of fraud,
if any, have been detected. Also, any evaluation of the effectiveness of
controls in future periods are subject to the risk that those internal controls
may become inadequate because of changes in business conditions, or that the
degree of compliance with the policies or procedures may
deteriorate.
  Return to Table of Contents
 27
  Management's
Report on Internal Control Over Financial Reporting
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act. Our internal control over financial
reporting is designed to provide reasonable assurance regarding the (i)
effectiveness and efficiency of operations, (ii) reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles, and (iii) compliance
with applicable laws and regulations. Our internal controls framework is based
on the criteria set forth in the Internal Control - Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
 
 Management,
consisting of our Chief Executive Officer and Principal Accounting and Financial
Officer, is responsible for establishing and maintaining adequate internal
control over the Company's financial reporting.
 
 Management
assessed the effectiveness of our internal control over financial reporting as
of December 31, 2007, utilizing the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission as published in "Internal
Control over Financial Reporting – Guidance for Smaller Public
Companies."  Based on the assessment by management, we determined that
our internal control over financial reporting was ineffective as of December 31,
2007.
 
 As a
non-accelerated smaller reporting filer, management's assessment of the
effectiveness of our internal control over financial reporting as of December
31, 2007 is not required to be audited by Moore & Associates, Chartered, our
independent registered public accountant until our fiscal year ending December
31, 2009.
 
 Changes
in Internal Control of Financial Reporting
 
 During
the quarters ended December 31, 2007,  March 31, 2008 and June 30,
2008, there were no changes in our internal control over financial reporting
that have materially affected, or are reasonably likely to affect, our internal
control over financial reporting.
  ITEM 8B. OTHER INFORMATION.
 
 There
were no reportable events under this Item 8B during the fiscal quarter ended
December 31, 2007.
  Return to Table of Contents
 28
  
 ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND
CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
ACT.
 
 The
following table sets forth our directors and executive officers and their ages
as of the fiscal year ended December 31, 2007:
 
 Name
              
              Age
              
              PositionJenifer
      Osterwalder
              
              42
              
              Chief
      Executive Officer, Principal Accounting Officer, President, Treasurer,
      Secretary and Director.Tommy
      Jo St. John
              
              33
              
              Chief
      Technology OfficerAlexander
      Khersonski
              
              35
              
              Director
 
 Jenifer Osterwalder - Chief Executive Officer, Principal
Accounting Officer, President, Treasurer, Secretary and
Director
 
 Jenifer
Osterwalder has served as our Chief Executive Officer, Principal Accounting
Officer, President, Treasurer, Secretary and as a director since March 7, 2005.
Previously, from January 2005 to March 2005, Ms. Osterwalder served as
President, Chief Executive Officer, Treasurer, Secretary and as a director FUSA
Technology Investments Corp. From January 2000 to January 2005 she served as an
consultant investment banker to Five Seas Securities, Ltd., a securities firm in
British Columbia, Canada. From August 2004 to December 2004 Ms. Osterwalder
served as a consultant Manger to International Conference Services, Ltd., a
conference and destination management firm in British Columbia, Canada. From
January 2003 to December 2003, she served as a consultant Investment Liaison and
Marketing Director for Terrikon Corporation, in British Columbia, Canada. Ms.
Osterwalder received her Bachelor of Science in Business Administration in
marketing and logistics from Ohio State University.
  Tommy
Jo St. John - Chief Technology
Officer
 
 Tommy Jo
St. John has served as our Chief Technology officer since March 7, 2005. In
addition, Mr. St. John serves as the Principal of Newport Technologies, an
information technology consulting firm. He has served in that position since
June of 2000.
 
 Alexander Khersonski
- Director
 
 Alexander
Khersonski has served as one of our directors since March 7, 2005. In addition,
Mr. Khersonski currently serves as a Senior Accountant for Service Corporation
International (formerly Alderwood Group, Inc.), a provider of funeral, cremation
and cemetery services throughout North America, a position which he has held
since November 2004. From August 2004 to October 2004 Mr. Khersonski served as
Assistant Controller for Scorpio Mining Corporation, a publicly traded mineral
exploration company in British Columbia, Canada. From September 2003 to July
2004 he served as a Corporate Accountant in client services at Dawn Pacific
Management Corporation, an accounting and regulatory maintenance services firm
in British Columbia, Canada. From January 2000 to August 2000 he served as a
consultant to ICC International Business Services Ltd., in British Columbia,
Canada. Additionally, from September 2000 to August 2003 Mr. Khersonski served
as a Senior Accountant for the Jewish Community Centre of Greater Vancouver. Mr.
Khersonski received holds a Certified General Accountant Designation from the
Certified General Accountants Association of British Columbia, Canada. He
received his Bachelor of Science in economics and management from Chelyabinsk
State Technical University, Chelyabinsk, Russia.
 
  Return to Table of Contents
 29
  FAMILY
RELATIONSHIPS
 
 There are
no family relationships, by blood or marriage, among any of our directors or
executive officers.
 
 INVOLVEMENT
IN CERTAIN LEGAL PROCEEDINGS
 
 During
the past five years, none of our directors, executive officers and control
persons have been involved in any of the following events:
  ·
                any
      bankruptcy petition filed by or against any business of which such person
      was an executive officer either at the time of the bankruptcy or within
      two years prior to that time;
 
 ·
                any
      conviction in a criminal proceeding or being subject to a pending criminal
      proceeding (excluding traffic violations and other minor
      offenses);
 
 ·
                being
      subject to any order, judgment, or decree, not subsequently reversed,
      suspended or vacated, of any court of competent jurisdiction, permanently
      or temporarily enjoining, barring, suspending or otherwise limiting his
      involvement in any type of business, securities or banking activities;
      and
 
 ·
                being
      found by a court of competent jurisdiction (in a civil action), the
      Securities and Exchange Commission or the Commodity Futures Trading
      Commission to have violated a federal or state securities or commodities
      law, and the judgment has not been reversed, suspended, or
      vacated.
 BOARD
OF DIRECTORS COMMITTEES
 
 As of the
date of this annual report on Form 10-KSB for the fiscal year ended December 31,
2007, we have no standing committees and our entire board of directors serves as
our audit, compensation and nominating committees. Our board of directors has
determined that Alexander Khersonski, a member of our board, qualifies as an
audit committee financial expert (as defined in Regulation 228.407(d)(5)(ii) of
Regulation S-B).
 
 As of the
date of this annual report on Form 10-KSB for the fiscal year ended December 31,
2007, there have been no material changes to the procedures by which our
security holders may recommend nominees to our board of directors.
 
 CODE
OF ETHICS
 
 As of the
date of this annual report on Form 10-KSB for the fiscal year ended December 31,
2007, we have not yet adopted a code of ethics for our principal executive
officer, principal financial officer or principal accounting officer. We are,
however, in the process of drafting such a code of ethics and, upon adoption, it
we will provide a copy of our code of ethics, without charge, to any person who
so requests a copy, in writing, at: FUSA Capital Corporation., 1420 Fifth
Avenue, 22nd Floor, Seattle, Washington 98101.
 
 COMPLIANCE
WITH SECTION 16(A)
 
 Section
16(a) of the Exchange Act requires our directors and executive officers, and
persons who own more than ten percent of a registered class of our equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of our common stock and other equity securities of ours.
Officers, directors and greater than ten percent stockholders are required by
the SEC’s regulations to furnish us with copies of all Section 16(a) forms they
filed.
 
  Return to Table of Contents
 30
  
 The
following table sets for the compliance reporting under Section 16(a) during the
last fiscal year.
 
 Number
      of
                Late
      Reports
              
              Number
      of
                Transactions
      Not
                Timely
      Reported
              
              Failure
                to
      FileJenifer
      Osterwalder
              0
              
              0
              
              1Alexander
      Khersonski
              0
              
              1
              
              1Tommy
      Jo St. John
              0
              
              2
              
              1
 
 ITEM 10. EXECUTIVE COMPENSATION.
 
 The
following table sets forth the total compensation awarded to, earned by, or paid
to our Chief Executive Officer during each of the last two completed fiscal
years. No other individuals are employed by us or have earned a total annual
salary and bonus in excess of $100,000 during any of the last two completed
fiscal years.
 
 SUMMARY COMPENSATION
TABLE
 
 Name
      and Principal Position
              
              Year
              
              Salary
              
              Bonus
              
              Stock
      Awards
              
              Option
      Awards
              
              Non-Equity
      Incentive Plan Compensation
              
              Nonqualified
      Deferred Compensation Earnings
              
              All
      Other Compensation
              
              TotalJenifer
      Osterwalder
              
              2007
              
              $125,000
              
              -
              
              -
              
              -
              
              -
              
              -
              
              -
              
              $125,000Chief
      Executive Officer
              
              2006
              
              $100,000
              
              -
              
              -
              
              -
              
              -
              
              -
              
              -
              
              $100,000
  EMPLOYMENT
AGREEMENTS
 
 Ms.
Osterwalder is employed pursuant to a month to month employment agreement, which
commenced on April 26, 2005. The agreement originally provided for an annual
base salary of $51,000 with a potential for an annual bonus equal to 150% of the
base salary, however, in 2007 the annual base salary was increased to $125,000.
The agreement also provides for the issuance of options to purchase up 3,000,000
common shares subject to vesting to be determined by the board of directors.
Since the agreement was entered into, the Board of Directors elected to grant
Ms. Osterwalder options to purchase 5,000,000 common shares in lieu of the
3,000,000 that had been specified in her employment agreement. In the event Ms.
Osterwalder is terminated by us, other than for cause, we are required to pay
her severance of up to 150% of her base salary plus the acceleration of all then
outstanding options.
 
 As of the
date of this annual report on Form 10-KSB for the fiscal year ended December 31,
2007, we have no other employment agreements in place with any of our other
executive officers, directors or employees.
 
 OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END
 
 There
were no unexercised options, stock that had not vested, or equity incentive plan
awards outstanding for our Chief Executive Officer as of the end of the fiscal
year ended December 31, 2007.
  Return to Table of Contents
 31
 
 COMPENSATION
OF DIRECTORS
 
 Pursuant
to authority granted under our Article II, Section 2.16 of our bylaws, directors
are entitled to such compensation as our board of directors shall from time to
time determine. The following table sets forth the compensation of our directors
for the fiscal year ended December 31, 2007:
  
  DIRECTOR COMPENSATIONName
              
              Fees
      Earned
                or
      Paid
                in
      Cash
              
              Stock
      Awards
              
              Option
      Awards
              
              Non-Equity
      Incentive Plan Compensation
              
              Non-
                Qualified
      Deferred Compensation Earnings
              
              All Other
      Compensation
              
              TotalAlexander
      Khersonski
              
              $
              0
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              $
              0
   ITEM
11. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
 
 SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
 
 The
following table sets forth information with respect to compensation plans under
which our equity securities are authorized for issuance as of the end of the
fiscal year ended December 31, 2007.
 
 EQUITY
COMPENSATION PLAN INFORMATION
 
 Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
                
                (a)
              
              Weighted-average
      exercise price of outstanding options, warrants and rights
                
                (b)
              
              Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities reflected in column
      (a))
                
                (c)Equity
      compensation plans approved by security holders
              
              --
              
              --
              
              --Equity
      compensation plans not approved by security holders
              
              454,549
              
              $0.74
              
              5,545,451Total
 
 SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
 The
following table sets forth certain information regarding the beneficial
ownership of our common stock as of March 15, 2007. The information in these
tables provides ownership information for:
  ·
                each
      person known by us to be the beneficial owner of more than a 5% of our
      common stock
 
 ·
                each
      of our directors and executive officers;
and
 
 ·
                all
      of our directors and executive officers as a
  group.
 Return to Table of Contents
 32
  Beneficial
ownership has been determined in accordance with the rules and regulations of
the SEC and includes voting or investment power with respect to our common stock
and those rights to acquire additional shares within sixty days. Unless
otherwise indicated, the persons named in the table below have sole voting and
investment power with respect to the number of shares of common stock indicated
as beneficially owned by them, except to the extent such power may be shared
with a spouse. Common stock beneficially owned and percentage ownership are
based on 59,913,749 shares of common stock currently outstanding (reflects a
three-for-one common stock dividend of our common shares that occurred on April
22, 2005) and no additional shares potentially acquirable within sixty days. The
address of each person listed is care of FUSA Capital Corporation., 1420 Fifth
Avenue, 22nd Floor, Seattle, Washington 98101.
  Name
              
              Amount
      and
                Nature
      of Ownership
              
              Percent of
      Class*Jenifer
      Osterwalder (1)
              
              5,900,000
              
              8.45 %Tommy
      Jo St. John (2)
              
              6,436,976
              
              9.22
      %Alexander
      Khersonski (3)
              
              100,000
              
              0.1 %All
      officers, directors, and 5% or greater shareholders as a group (3
      persons)
              
              12,436,976
              
              17.77%
  (1)
              Consists
      of stock options to acquire up to 5,000,000 shares of common stock, none
      of which are presently exercisable and 900,000 shares of common stock
      directly owned.
 
 (2)
              Consists
      of 7,510,000 shares of common stock directly
  owned.
 
 (3)
              Consists
      of stock options to acquire up to 100,000 shares of common stock, none of
      which are presently exercisable and 55,000 shares of common stock directly
      owned.




ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE.


During
the year ended December 31, 2007, in lieu of paying our former Chief Technology
Officer, Tommy Jo St. John, his earned compensation of $30,234 directly, we paid
it instead to a consulting company owned by Mr. St John. This amount relates
principally to Mr. St John’s efforts, through December 31, 2007, in furthering
the development of our audio and video search engine
technology.
  Return to Table of Contents
 33
  ITEM 13. EXHIBITS.
 
 
 No.
              Description
      of Exhibit2.1
              Plan
      and Agreement of Reorganization by and between FUSA Capital Corporation
      and FUSA Technology Investment Corporation, dated March 7, 2005,
      incorporated by reference to Exhibit 2.1 on Form 8-K filed March 8,
      2005.3(i)(1)
              Articles
      of Incorporation of FUSA Capital Corporation, dated September 13, 2000,
      incorporated by reference to Exhibit 3(a) on Form 10-SB filed May 1,
      2003.3(i)(2)
              Certificate
      of Amendment to Articles of Incorporation of FUSA Capital Corporation,
      dated June 17, 2007, incorporated by reference to Exhibit 2.1 on Form 8-K
      filed July 7, 2004.3(ii)
              By-laws
      of FUSA Capital Corporation, dated September 14, 2000, incorporated by
      reference to Exhibit 3(b) on Form 10-SB filed May 1,
  2003.10.1
              Technology
      License Agreement between the registrant and Minerva Technologies, Ltd.
      Dated August 23, 2007 and incorporated by reference to Exhibit 10.1to Form
      8K filed on August 23, 2007.10.2
              2005
      Stock Option Plan, dated April 18, 2005, incorporated by reference to
      Exhibit 99.1 on Form 8-K filed April 19, 2005.31.1
              Certification
      of FUSA Capital Corporation Chief Executive Officer, Jenifer Osterwalder,
      required by Rule 13a-14(a) or Rule 15d-14(a), dated September 3, 2008.
      FILED HEREWITH31.2
              Certification
      of FUSA Capital Corporation Chief Financial Officer, Jenifer Osterwalder,
      required by Rule 13a-14(a) or Rule 15d-14(a), dated September 3, 2008.
      FILED HEREWITH32.1
              Certification
      of FUSA Capital Corporation Chief Executive Officer, Jenifer Osterwalder,
      required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter
      63 of Title 18 of the United States Code (18 U.S.C. 1350), dated September
      3, 2008. FILED HEREWITH.32.2
              Certification
      of FUSA Capital Corporation Chief Financial Officer, Jenifer Osterwalder,
      required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter
      63 of Title 18 of the United States Code (18 U.S.C. 1350), dated September
      3, 2008. FILED HEREWITH.
 
  Return to Table of Contents
 34
 
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
 
 The
following table sets forth the aggregate amount of various professional fees
billed by our principal accountants with respect to our last two fiscal
years:
 
 2007
              
              2006Audit
      fees
              
              $
              6,000
              
              $
              36,500Audit-related
      fees
              
              
              -
              
              
              -Tax
      fees
              
              
              -
              
              
              -All
      other fees
              
              
              -
              
              
              -Total
              
              $
              6,000
              
              $
              36,500
 
 All audit
fees are approved by our board of directors. Moore & Associates, Chartered
(“Moore”) were our principal accountants for the fiscal year ended December 31,
2006 and December 31, 2007, they did not provide any non-audit services to
us.
 
 Audit
Fees
 
 Audit
fees billed for professional services rendered by Moore & Associated, during
the fiscal year ended December 31, 2007 and the twelve months ended December 31,
2006, respectively, for the audit of our annual consolidated financial
statements, review of the consolidated financial statements included in our
quarterly reports on Form 10-QSB, and any services provided in connection with
statutory and regulatory filings or engagements for those year ended, totaled
approximately $6,000 and $36,500, respectively.
 
 Audit-Related
Fees
 
 Audit-related
fees billed by Moore & Associates during the fiscal year ended December 31,
2006 and December 31, 2007, respectively, for assurance and related services and
totaled approximately $0 and $0, respectively.
 
 Tax
Fees
 
 Tax fees
billed by Moore & Associates during the fiscal year ended December 31, 2007
and the twelve months ended December 31, 2006, respectively, for tax compliance,
tax advice and tax planning services totaled approximately $0 and $0,
respectively.
 
 All
Other Fees
 
 There
were no fees billed by Moore & Associates during the fiscal year ended
December 31, 2007 and the twelve months ended December 31, 2006, for services
rendered other than the amounts set forth above.
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 35
 
 Signatures
 
 In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
  
  Date:
      September 3, 2008
              FUSA CAPITAL
      CORPORATIONBy:
              /s/ Jenifer
      OsterwalderJenifer
      OsterwalderChief
      Executive Officer &
                Principal
      Financial Officer
  
 
 
 
 
 
 
 
 
 
 
 
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 36