Fuse Science, Inc. - Quarter Report: 2011 June (Form 10-Q)

Unassociated Document

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For Quarter Ended: June 30, 2011

Commission File Number: 000-22991

DOUBLE EAGLE HOLDINGS, LTD.

(Exact name of small business issuer as specified in its charter)

NEVADA		87-0460247
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

20900 NE 30th Avenue, Eighth Floor, Aventura, FL 33180

(Address of principal executive office)

(305) 503-3873

(Issuer's telephone number)

Indicate by check mark whether the registrant (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 ¨.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares outstanding of registrant's common stock, par value $0.001 per share, as of July 31, 2011 was 90,112,039.

DOUBLE EAGLE HOLDINGS, LTD. AND SUBSIDIARIES

(DEVELOPMENT STAGE COMPANIES)

INDEX

		Page
		No.

Part I	Financial Information

Item 1:	Condensed Consolidated Financial Statements (Unaudited)

	Balance Sheets as of June 30, 2011 and September 30, 2010	3
	Statements of Operations – For the Three Months Ended June 30, 2011 and 2010	4
	Statements of Operations – For the Nine Months Ended June 30, 2011 and 2010	5
	Statements of Changes in Stockholders' Deficit - From Inception (January 20, 2009) Through June 30, 2011	6
	Statements of Cash Flows – For the Nine Months Ended June 30, 2011 and 2010 and from inception (January 20, 2009) through June 30, 2011	8
	Notes to Financial Statements	10
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3:	Quantitative and Qualitative Disclosure about Market Risk	23
Item 4:	Controls and Procedures	23

Part II	Other Information	24

Item 5:	Other Information
Item 6:	Exhibits

PART 1: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

DOUBLE EAGLE HOLDINGS, LTD. AND SUBSIDIARIES

(Development Stage Companies)

Condensed Consolidated Balance Sheets

June 30, 2011 and September 30, 2010

	June 30,			September 30,
	2011			2010
ASSETS
Current assets:
Cash and cash equivalents	$	285,314		$	8,619
Prepaid expenses		9,500			5,000
Total current assets		294,814			13,619
Other assets:
Available-for-sale investments		11,050			55,806
Intellectual property, net		127,667			-
Total other assets		138,717			55,806

Total assets	$	433,531		$	69,425
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable		101,412			80,579
Accounts payable - related parties		56,338			30,267
Convertible notes payable, net		336,944			130,803
Accrued expenses		2,398			9,222
Total current liabilities		497,092			250,871

Commitments and contingencies

STOCKHOLDERS' DEFICIT
Preferred stock, $0.001 par value; authorized 12,500 shares; no shares issued and outstanting; $100 per share liquidation preference		-			-
Common stock, $.001 par value; authorized 100,000,000 shares; 90,112,039 and 50,925,820 shares issued and outstanding at June 30, 2011 and September 30, 2010, respectively		90,112			50,926
Additional paid-in capital		10,843,765			9,946,022
Non-controlling interest		(126,344	)		(126,344	)
Deferred consulting fees		(175,500	)		-
Accumulated other comprehensive income (loss)		5,320			(453	)
Accumulated deficit:
During the development stage		(824,060	)		(174,743	)
Other		(9,876,854	)		(9,876,854	)
Total accumulated deficit		(10,700,914	)		(10,051,597	)
Total stockholders' deficit		(63,561	)		(181,446	)
Total liabilities and stockholders' deficit	$	433,531		$	69,425

See accompanying notes to condensed consolidated financial statements.

DOUBLE EAGLE HOLDINGS, LTD. AND SUBSIDIARIES

(Development Stage Companies)

Condensed Consolidated Statements of Operations

Three Months Ended June 30, 2011 and 2010

(Unaudited)

	2011			2010
Revenue
Management income - related party	$	-		$	2,933
Total income		-			2,933
Expenses:
Related party services		162,405			3,000
General and administrative expense		93,352			5,861
Total expenses		255,757			8,861
Loss from operations		(255,757	)		(5,928	)
Other income (expense):
Interest income - related party		-			1,309
Interest expense		(194,209	)		(5,409	)
Other		-			-
Other income (expense)		(194,209	)		(4,100	)
Net loss before non-controlling interest		(449,966	)		(10,028	)
Non-controlling interest		-			-
Net loss		(449,966	)		(10,028	)
Other comprehensive income
Unrealized gain (loss) on available-for-sale securities (none attributed to the non-controlling interest)		(2,130	)		22,552
Net comprehensive loss	$	(452,096	)	$	12,524

Loss per share, basic and diluted	$	(0.01	)	$	(0.00	)

Weighted average shares outstanding		78,807,865			50,925,820

See accompanying notes to condensed consolidated financial statements.

DOUBLE EAGLE HOLDINGS, LTD. AND SUBSIDIARIES

(Development Stage Companies)

Condensed Consolidated Statements of Operations

Nine Months Ended June 30, 2011 and 2010 and from Inception

(January 20, 2009) through June 30, 2011

(Unaudited)

							Development
							Stage
							Inception
							(January 20, 2009)
							Through
	2011			2010			June 30, 2011
Revenue
Management income - related party	$	-		$	8,800		$	11,367
Total income		-			8,800			11,367
Expenses:
Related party services		170,605			9,000			238,444
Non-cash compensation		144,000			-			144,000
General and administrative expense		135,452			20,259			188,801
Total expenses		450,057			29,259			571,245
Loss from operations		(450,057	)		(20,459	)		(559,878	)
Other income (expense):
Interest income - related party		-			4,700			9,596
Interest expense		(201,642	)		(9,753	)		(210,864	)
Realized gain (loss) - related party		2,347			-			(15,553	)
Miscellaneous		35			-			35
Other than temporary decline in available-for-sale securities		-			(13,280	)		(50,900	)
Other income (expense)		(199,260	)		(18,333	)		(267,686	)
Net loss before non-controlling interest		(649,317	)		(38,792	)		(827,564	)
Non-controlling interest		-			-			3,504
Net loss		(649,317	)		(38,792	)		(824,060	)
Other comprehensive income (loss)
Unrealized gain (loss) on available-for-sale securities (none attributed to the non-controlling interest)		5,773			(122,145	)		(1,150	)
Net comprehensive loss	$	(643,544	)	$	(160,937	)	$	(825,210	)

Loss per share, basic and diluted	$	(0.01	)	$	(0.00	)

Weighted average shares outstanding		60,484,150			50,925,820

See accompanying notes to condensed consolidated financial statements.

DOUBLE EAGLE HOLDINGS, LTD. AND SUBSIDIARIES

(Development Stage Companies)

Consolidated Statements of Changes in Stockholders' Deficit

From Inception (January 20, 2009) Through June 30, 2011

									Additional
	Preferred Stock				Common Stock				Paid-in
	Shares		Par		Shares		Par		Capital

Balance, January 20, 2009		-	$	-		50,925,820	$	50,926	$	9,946,022
Unrealized loss from available-for-sale securities		-		-		-		-		-
Net loss		-		-		-		-		-
Balance, September 30, 2009		-		-		50,925,820		50,926		9,946,022
Noncontrolling interest		-		-		-		-		-
Unrealized loss from available-for-sale securities		-		-		-		-		-
Net loss		-		-		-		-		-
Balance, September 30, 2010		-		-		50,925,820		50,926		9,946,022
Unrealized gain from available-for-sale securities		-		-		-		-		-
Common stock issued for:
Services		-		-		8,350,000		8,350		311,150
Convertible notes payable		-		-		5,539,219		5,539		134,517
License		-		-		2,000,000		2,000		76,000
Acquisition of Fuse Science, Inc		-		-		23,297,000		23,297		(23,297	)
Convertible notes payable:
Detachable warrants		-		-		-		-		209,218
Beneficial conversion feature		-		-		-		-		190,155
Net loss		-		-		-		-		-
Balance, June 30, 2011		-	$	-		90,112,039	$	90,112	$	10,843,765
									(continued)

See accompanying notes to condensed consolidated financial statements.

DOUBLE EAGLE HOLDINGS, LTD. AND SUBSIDIARIES

(Development Stage Companies)

Consolidated Statements of Changes in Stockholders' Deficit, Continued

From Inception (January 20, 2009) Through June 30, 2011

							Accumulated
	Non			Deferred			Other			Accumulated Deficit
	Controlling			Consulting			Comprehensive			Development
	Interest			Fees			Income			Stage			Other			Total

Balance, January 20, 2009	$	-		$	-		$	279,470		$	-		$	(9,999,694	)	$	276,724
Unrealized loss from available-for-sale securities		-			-			(248,385	)		-			-			(248,385	)
Net loss		-			-			-			(97,895	)		-			(97,895	)
Balance, September 30, 2009		-			-			31,085			(97,895	)		(9,999,694	)		(69,556	)
Noncontrolling interest		(126,340	)					-			3,500			122,840			-
Unrealized loss from available-for-sale securities		-						(31,538	)		-			-			(31,538	)
Net loss		(4	)					-			(80,348	)		-			(80,352	)
Balance, September 30, 2010		(126,344	)		-			(453	)		(174,743	)		(9,876,854	)		(181,446	)
Unrealized gain from available-for-sale securities		-			-			5,773			-			-			5,773
Common stock issued for:
Services		-			(175,500	)		-			-			-			144,000
Convertible notes payable		-			-			-			-			-			140,056
License		-			-			-			-			-			78,000
Acquisition of Fuse Science, Inc.		-			-			-			-			-			-
Convertible notes payable:
Detachable warrants		-			-			-			-			-			209,218
Beneficial conversion feature		-			-			-			-			-			190,155
Net loss		-						-			(649,317	)		-			(649,317	)
Balance, June 30, 2011	$	(126,344	)	$	(175,500	)	$	5,320		$	(824,060	)	$	(9,876,854	)	$	(63,561	)

See accompanying notes to condensed consolidated financial statements.

DOUBLE EAGLE HOLDINGS, LTD. AND SUBSIDIARIES

(Development Stage Companies)

Condensed Consolidated Statements of Cash Flows

Nine Months Ended June 30, 2011 and 2010 and from Inception

(January 20, 2009) through June 30, 2011

(Unaudited)

							Development
							Stage
							Inception
							(January 20, 2009)
							Through
	2011			2010			June 30, 2011

Operating activities:
Net loss	$	(649,317	)	$	(38,792	)	$	(827,560	)
Adjustments to reconcile net increase (decrease) in net assets from operations to net cash used in operating activities:
Amortization		433			-			433
Other than temporary decline in available-for-sale securities		-			13,280			50,900
Convertible notes payable:
Amortization of detachable warrants		1,162			-			1,162
Beneficial conversion feature		190,155			-			190,155
Gain (loss) on sale/impairment of investment in related party		-			-			17,900
Common stock issued for services		144,000			-			144,000
Gain on sale of investment		(2,347	)					(2,347	)
Non-controlling interest		-			-			(4	)
Accrued interest income		-			-			(4,909	)
Amortization of deferred revenue		-			(8,800	)		(8,800	)
Changes in operating assets and liabilities:
Accounts receivable and accrued interest - related parties		-			(4,701	)		(4,686	)
Prepaid expenses		(4,500	)		-			(9,500	)
Accounts payable and accrued expenses		35,582			(1,470	)		64,670
Accounts payable and accrued expenses - related parties		21,411			9,753			66,009
Advances from related parties for working capital		-			-			6,660
Net cash used in operating activities		(263,421	)		(30,730	)		(315,917	)
Investing activities:
Proceeds from investments		52,876			6,500			75,876
Intellectual property		(50,100	)		-			(50,100	)
Net cash provided by investing activities		2,776			6,500			25,776
Financing activities:
Loan proceeds		540,000			-			540,000
Loan repayment		(2,660	)		-			(2,660	)
Loans from related parties		-			23,950			31,650
Net cash provided by investing activities		537,340			23,950			568,990
Net increase (decrease) in cash and cash equivalents		276,695			(280	)		278,849
Cash and cash equivalents, beginning of period		8,619			582			6,465
Cash and cash equivalents, end of period	$	285,314		$	302		$	285,314

							Continued

See accompanying notes to condensed consolidated financial statements.

DOUBLE EAGLE HOLDINGS, LTD. AND SUBSIDIARIES

(Development Stage Companies)

Condensed Consolidated Statements of Cash Flows, Continued

Nine Months Ended June 30, 2011 and 2010 and from Inception

(January 20, 2009) through June 30, 2011

(Unaudited)

					Development
					Stage
					Inception
					(January 20, 2009)
					Through
	2011		2010		June 30, 2011

Supplemental Cash Flow Information:
Cash paid for interest and income taxes:
Interest	$	236	$	-	$	236
Income taxes		-		-		-

Non-cash investing and financing activities:
Note payable issued to acquire investment	$	-	$	-	$	100,000
Accrued interest receivable included in amended notes		-		5,326		8,915
Convertible notes payable issued for advances from affiliates		-		63,310		63,310
Convertible notes payable issued for accounts payable to affiliates		-		67,493		67,493
Comon stock issued for convertible notes payable and accrued interest		140,055		-		140,055
Common stock issued for license		78,000		-		78,000
Common stock issued to acquire Fuse Science, Inc.		23,297		-		23,297

See accompanying notes to condensed consolidated financial statements.

DOUBLE EAGLE HOLDINGS, LTD. AND SUBSIDIARIES

(DEVELOPMENT STAGE COMPANIES)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1: ORGANIZATION

GENERAL

The financial statements included in this report have been prepared by the Company pursuant to the rules and regulations of the SEC for interim reporting and include all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation. These financial statements have not been audited.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations for interim reporting. The Company believes that the disclosures contained herein are adequate to make the information presented not misleading. However, these financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report for the year ended September 30, 2010, which is included in the Company's Form 10-K for the year ended September 30, 2010. The financial data for the interim periods presented may not necessarily reflect the results to be anticipated for the complete fiscal year.

CONSOLIDATION POLICY AND HISTORY OF BUSINESS

The consolidated financial statements include the accounts of Double Eagle Holdings, Ltd. ("DEGH"), Fuse Science, Inc. ("FUSE") and Ultimate Social Network, Inc. ("USN") its 60% subsidiary (collectively the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. DEGH was originally incorporated in 1985 in Nevada. Its securities now trade on the OTCQB under the symbol DEGH.PK.

WITHDRAWAL OF ELECTION TO BE TREATED AS A BDC

The holders of a majority of the Company’s issued and outstanding common stock, pursuant to a written consent in lieu of a meeting, in accordance with the Company’s certificate of incorporation and Nevada Law, have approved the withdrawal of the Company’s election to be treated as a business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act").

Withdrawal of the Company’s election to be treated as a BDC under the 1940 Act became effective on January 20, 2009, when the Company filed Form N-54c with the U.S. Securities and Exchange Commission (“SEC”).

DEVELOPMENT STAGE

At the time of filing Form N-54c with the SEC on January 20, 2009, the Company had limited resources and did not have sufficient capital to complete its business plans. Accordingly, the operations of the Companies are presented as those of a development stage enterprise, from its inception (January 20, 2009).

GOING CONCERN

The Company has not established sources of revenue sufficient to fund the development of business, projected operating expenses and commitments for the next twelve months. The Company had a net loss from operations of $649,317 and recognized an unrealized gain on investments of $5,773 resulting in a comprehensive loss of $643,544 during the nine months ended June 30, 2011. At June 30, 2011, current assets are $294,814 and current liabilities are $497,092. The Company has completed the acquisition of Fuse Science, Inc. and related licenses, primarily with its common stock.

The Company expects to raise necessary capital from the private placement of its restricted common stock and convertible notes payable. The Company has demonstrated an ability to raise funds as needed to fund operations and investments. During the quarter ended June 30, 2011, the Company issued convertible promissory notes in the total amount of $540,000. However, there can be no assurance that the planned sale of common stock and convertible loan proceeds will provide sufficient funding to develop the Company’s current business plan.

These conditions raise serious doubt about the Company’s ability to continue as a going concern.

STOCK-BASED COMPENSATION

The compensation cost relating to share-based payment transactions (including the cost of all employee stock options) is required to be recognized in the financial statements. That cost is measured based on the estimated fair value of the equity or liability instruments issued. A wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans are included. The Company’s financial statements would include an expense for all share-based compensation arrangements granted on or after January 1, 2006 and for any such arrangements that are modified, cancelled or repurchased after that date based on the grant-date estimated fair value.

INTANGIBLE ASSETS

Other intangible assets primarily consist of intellectual property. We apply an impairment evaluation whenever events or changes in business circumstances indicate that the carrying value of our intangible assets may not be recoverable. Other intangible assets are amortized on a straight-line basis over their estimated economic lives. We believe that the straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained annually by the Company.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company evaluates its long-lived assets and intangible assets for impairment whenever events change or if circumstances indicate that the carrying amount of any assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to the future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is the excess of the carrying amount over the fair value of the asset.

RECLASSIFICATION

Certain reclassifications have been made in the condensed consolidated financial statements at September 30, 2010 and for the three and nine months ended June 30, 2010 to conform to the June 30, 2011 presentation. The reclassifications had no effect on net loss.

FISCAL YEAR

Fiscal 2011 refers to periods in the year ending September 30, 2011. Fiscal 2010 refers to periods in the year ended September 30, 2010.

INVESTMENTS

Investments are classified into the following categories:

Trading securities reported at fair value with unrealized gains and losses included in earnings;

Available-for-sale securities reported at fair value with unrealized gains and losses, net of applicable deferred income taxes, reported in other comprehensive income;

Held-to-maturity securities and other investments reported at amortized cost; and

Investments using the equity method of accounting.

FAIR VALUE

The Company adopted fair value accounting for certain financial assets and liabilities that have been evaluated at least annually. The standard defines fair value as the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. A liability's fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Management has determined that it will not, at this time, adopt fair value accounting for nonfinancial assets or liabilities currently recorded in the financial statements, which includes investments carried at cost, deposits and other assets. Impairment analyses will be made of all assets using fair value measurements.

NEW ACCOUNTING PRONOUNCEMENTS

Below is a listing of the most recent accounting standards and their effect on the Company, as issued by the Financial Accounting Standards Board ("FASB") in the form of Accounting Standards Updates ("ASU"). We have evaluated all recent accounting pronouncements through July 31, 2011 and find none that would have a material impact on the financial statements of the Company, except for those detailed below.

2. INVESTMENTS

While the Company was operating as a BDC and for a period after electing to no longer be subject to the BDC filing requirements, there were a number of relationships established which resulted in the majority of the Company's investments being considered investments in affiliates. Currently, all of those relationships have ceased and the Company no longer has an affiliate relationship with its investments. Available-for-sale investments may be summarized as follows:

			Realized		Unrecognized
			Holding		Holding			Fair
	Cost		Losses		Gains (Losses)			Value
June 30, 2011
Efftec International, Inc.	$	4,200	$	-	$	(800	)	$	3,400
North American Energy		1,530		-		6,120			7,650
	$	5,730	$	-	$	5,320		$	11,050

September 30, 2010
Efftec International, Inc.	$	54,729	$	-	$	(453	)	$	54,276
North American Energy		1,530		-		-			1,530
	$	56,259	$	-	$	(453	)	$	55,806

Efftec International, Inc. ("EFFI") has developed an Internet-based chiller tool which it is installing and selling to its customer base. At June 30, 2011, the Company valued its investment in EFFI at $3,400 based on its posted bid price on that date. During the year ended September 30, 2010, the Company received 20,000 shares of Efftec common stock for a management contract valued at $8,800 (based on the trading price of Efftec on the date of the contract), collected $6,500 in cash as partial payment on its convertible note and received 624,761 shares of Efftec common stock in exchange for the balance of the convertible note and accrued interest receivable (convertible at $0.09 per share). The Company sold 110,000 shares of Efftec for $16,500 during the year ended September 30, 2010 and realized a profit of $6,600. During the three months ended December 31, 2010, the Company sold 528,761 shares of its investment in EFFI for $52,876 and realized a gain of $2,347. The Company owns 20,000 shares on June 30, 2011.

North American Energy Resources, Inc. ("NAEY") is an oil and gas development and production company with operations currently in Oklahoma. The Company valued its investment in NAEY shares at its posted trading price at June 30, 2011. The Company owns 153,000 shares on June 30, 2011.

Fair value for both available-for-sale securities is based on level one inputs, the posted bid/last trading price on June 30, 2011.

3. INTELLECTUAL PROPERTY

The Company has completed its acquisition of Fuse Science, Inc., which is a development stage company with no prior operations. FUSE has a patent pending system including manufactured thin film incorporating natural and synthetic active ingredients that when applied in conjunction with heat and moisture increase the overall health and beauty of your skin.

4. CONVERTIBLE PROMISSORY NOTES

At June 30, 2011 and September 30, 2010, the Company had the following convertible promissory notes.

	June 30,		September 30,
	2011		2010
Convertible notes payable with interest at 12%	$	20,000	$	130,803
Carrying value of 8% One Year Senior Secured Convertible Promissory Note due June 20, 2012, net		316,944		-
	$	336,944	$	130,803

Convertible notes payable includes one note in the amount of $5,000 which is convertible at $0.025 per share and one note in the amount of $15,000 which is convertible at $0.03 per share.

The 8% One Year Senior Secured Convertible Notes are all convertible at $0.03 per share. Additionally, the note holders each received a Warrant which is exercisable at $0.12 per share. The Warrant is for the same number of shares as the Note can be converted into. The Notes can be converted into 17,500,000 shares at $0.03 and the warrant could be exercised for a total of 17,5500,000 shares at $0.12 per share.

Using Black-Scholes, the Company calculated a value of $209,218 for the detachable warrants and $190,155 for the beneficial conversion feature of the convertible promissory notes. Since the notes are immediately convertible, the beneficial conversion feature was expensed as interest expense. The value assigned to the warrant is classified as a debt discount and is being amortized to interest expense over the five year life of the warrant. The carrying value of the convertible promissory notes is summarized as follows.

Face value of notes				$	525,000
Debt discount:
Value of warrants	$	209,218
Amortization		(1,162	)		(208,056	)
Carrying value of convertible notes				$	316,944

5. RELATED PARTY TRANSACTIONS

The Company operated as a BDC until January 20, 2009, when it elected to no longer be treated as a BDC. As a part of its operations and consistent with the operating parameters of a BDC, the Company developed a number of relationships with its portfolio company investments, including members of the Company's board of directors becoming officers and directors of its portfolio company investments. The Company made loans to the portfolio companies and entered into management agreements with the portfolio companies. As a result of operating as a BDC and then converting to an operating company, a number of its previous relationships were originally required to be categorized as related party transactions. As a result of changes in relationships, i.e. no longer being actively involved in the operation of the investments, these investments are no longer considered affiliates. Other related party amounts and transactions are described as follows:

While operating as a BDC the Company had management contracts and made loans to its 60% owned subsidiary USN. These transactions are eliminated in consolidation with USN.

Related party amounts included in the balance sheet may be summarized as follows:

Accounts payable - related parties:

	2011		2010

Hank Durschlag	$	16,178	$	30,267
Brian Tuffin		9,260		-
Aitan Zacharin		21,640		-
Adam Adler		9,260		-
	$	56,338	$	30,267

Brian Tuffin is a stockholder , the Company's new President, Chief Operating Officer and a director. Aitan Zacharin is a stockholder, the Company's new director of Marketing and a director. Adam Adler is a stockholder, the Company's new CEO and a director.

Transactions with related parties in the statement of operations for the three months ended June 30, 2011 and 2010 include:

	2011		2010

Management income - Efftec International, Inc.	$	-	$	4,440

	2011		2010

Interest income - Efftec International, Inc.	$	-	$	1,592

	2011		2010
Related party expenses:
Prior CEO compensation	$	-	$	3,000
New officer compensation		162,405		-
	$	162,405	$	3,000

Transactions with related parties in the statement of operations for the nine months ended June 30, 2011 and 2010 include:

	2011		2010

Management income - Efftec International, Inc.	$	-	$	8,800

	2011		2010

Interest income - Efftec International, Inc.	$	-	$	4,700

	2011		2010
Related party expenses:
Hank Durschlag - former CEO	$	6,000	$	9,000
Non-cash compensation - Aitan Zacharin		144,000		-
Compensation of new officers and directors		164,605		-
	$	314,605	$	9,000

6. STOCKHOLDERS EQUITY

Common stock

At June 30, 2011 and September 30, 2010, the Company had 100,000,000 shares authorized and 90,112,039 and 50,925,820 shares issued and outstanding, respectively, of its $0.001 par value common stock.

Transactions during the nine-month period ended June 30, 2011

During the nine-month period ended June 30, 2011, the Company issued 8,350,000 shares of its common stock in exchange for services. Of this amount, 1,950,000 shares valued at $175,500 at June 30, 2011 were for services to be performed in the next year and the related cost was deferred in stockholders' equity. The conversion option was exercised for convertible notes payable with total principal and interest of $140,056 and 5,539,219 shares were issued. A license agreement for the formulation of the Company's new products was acquired for 2,000,000 shares valued at $78,000. Fuse Science, Inc. was acquired for 23,297,000 shares of the Company's common stock, using the acquisition method of accounting.

Transactions during the year ended September 30, 2010

None.

Warrants

The Company issued five-year warrants to acquire 17,500,000 shares of its common stock at $0.12 per share as a part of the issuance of $525,000 of its 8% One Year Senior Secured Convertible Promissory Notes. The warrants expire on June 19, 2016.

7. COMMITMENTS AND CONTINGENCIES

A vendor of the Company is claiming he is owed $40,200 for services rendered in 2008 and 2009, which amount is included in accounts payable. The attorney for the vendor has offered to accept $5,000 for full settlement of the obligation.

Consulting agreement - The Company entered into a consulting agreement with Mr. Durschlag under which he should receive $100,000 over the next year. In addition, in accordance with the terms of his patent assignment and technology transfer agreement, Mr. Durschlag is entitled to royalties on Fuse Science sales as follows:

Sales Range	Commission Rate

$0 - $100,000		0.00	%
$100,001 - $10,000,000		5.00	%
$10,000,001 - $50,000,000		2.50	%

Employment agreements - The Company entered into at-will basis employment agreements with Adam Adler, Aitan Zacharin and Brian Tuffin under the same terms and conditions: $18,000 monthly salary, provided the Company has adequate funds to make such payment; monthly car allowance of $1,000; and a discretionary performance bonus.

8. DISCLOSURES ABOUT FAIR VALUE

Assets and liabilities measured at fair value on a recurring basis are summarized in the following tables according to FASB ASC 820 pricing levels.

	Fair Value Measurement Using
			Quoted prices
			in active		Significant
			markets of		other		Significant
			identical		observable		Unobservable
	Recorded		assets		inputs		Inputs
	value		(Level 1)		(Level 2)		(Level 3)

June 30, 2011
Assets:
Available-for-sale securities	$	11,050	$	11,050	$	-	$	-

September 30, 2010
Assets:
Available-for-sale securities	$	55,806	$	55,806	$	-	$	-

At June 30, 2011 and September 30, 2010, the Company's available-for-sale equity securities were valued using Level 1 inputs as summarized above. Level 1 inputs are based on unadjusted prices for identical assets in active markets that the Company can access.

Level 2 inputs are based on quoted prices for similar assets other than quoted prices in Level 1, quoted prices in markets that are not yet active, or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets. The Company does not have any investments that are measured on a recurring basis using Level 2 inputs.

Level 3 inputs have significant inputs which are not observable. The Company does not have any investments that are measured on a recurring basis using Level 3 inputs.

Certain assets are not carried at fair value on a recurring basis, including investments accounted for under the equity and cost methods. Accordingly, such investments are only included in the fair value hierarchy disclosure when the investment is subject to re-measurement at fair value after initial recognition and the resulting re-measurement is reflected in the consolidated financial statements.

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

From time to time, the Company may publish forward-looking statements relative to such matters as anticipated financial performance, business prospects, technological developments and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. All statements other than statements of historical fact included in this section or elsewhere in this report are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include: 1. General economic factors including, but not limited to, changes in interest rates and trends in disposable income; 2. Information and technological advances; 3. Competition; and 4. Success of marketing, advertising and promotional campaigns.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

Management's Discussion and Analysis of Financial Condition and Results of Operations discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, we will evaluate our estimates and judgments, including those related to revenue recognition, valuation of investments, accrued expenses, financing operations, contingencies and litigation. We will base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. These accounting policies are described at relevant sections in this discussion and analysis and in the "Notes to Financial Statements" included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2010 and 2009.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2011, we had a working capital deficit of $202,278 as compared to a working capital deficit of $237,252 at September 30, 2010.

We will need capital in the next twelve months which we expect to raise through private placements of our restricted common stock and convertible loan proceeds in order to pursue our development plan for FUSE.

RESULTS OF OPERATIONS

Comparison of three months ended June 30, 2011 and 2010 –

Revenues – We had management income in the three months ended June 30, 2010 of $2,933. We received 20,000 shares of Efftec common stock valued at $8,800, based on the trading price of the Efftec common stock on the date received, for management services provided to Efftec. The agreement was for a period of six months, and the remaining balance of $2,933 was reported during the three months ended June 30, 2010. We had no revenue during the 2011 period.

Related party services increased from $3,000 in 2010 to $162,405 in 2011, primarily due to the employment contracts discussed in Note 7 to the condensed consolidated financial statements.

Other general and administrative expense increased from $5,861 in the three months ended June 30, 2010 to $93,352 in the three months ended June 30, 2011. This increase is primarily a result of the increased level of professional services,(legal, accounting and consulting) involved with the fund raising and start-up of the business.

Other income (expense) for the three months ended June 30, 2011 and 2010 was as follows:

	2011			2010

Interest income - related party	$	-		$	1,309
Interest expense		(194,209	)		(5,409	)
	$	(194,209	)	$	(4,100	)

The increase in interest expense is primarily the $190,155 charge to expense for the beneficial conversion feature of the 8% Senior Secured Convertible Notes Payable.

Other comprehensive income amounted to a loss of $2,130 in the 2011 period and income of $22,552 in the 2010 period, from temporary changes in the value of the Company's investment in Efftec and NAEY.

Comparison of nine months ended June 30, 2011 and 2010 –

Revenues – We had management income in the nine months ended June 30, 2010 of $8,800. We received 20,000 shares of Efftec common stock valued at $8,800, based on the trading price of the Efftec common stock on the date received, for management services provided to Efftec. The agreement was for a period of six months. We had no revenue during the 2011 period.

Related party services increased from $9,000 in 2010 to $170,605 in 2011, primarily due to the employment contracts discussed in Note 7 to the condensed consolidated financial statements.

Other general and administrative expense increased from $20,259 in the nine months ended June 30, 2010 to $137,652 in the nine months ended June 30, 2011. This increase is primarily a result of the increased level of professional services,(legal, accounting and consulting) involved with the fund raising and start-up of the business and the due diligence on the Company's acquisition of FUSE.

Non-cash compensation amounted to $144,000 for the 6,400,000 shares of common stock granted to Aitan Zacharin as an employment bonus, based on the value of the stock at the date of the grant.

Other income (expense) for the nine months ended June 30, 2011 and 2010 was as follows:

	2011			2010

Interest income - related party	$	-		$	4,700
Interest expense		(201,642	)		(9,753	)
Realized gain - related party		2,347			-
Other than temporary decline in available-for-sale securities		-			(13,280	)
Miscellaneous		35			-
	$	(199,260	)	$	(18,333	)

The increase in interest expense is primarily the $190,155 charge to expense for the beneficial conversion feature of the 8% Senior Secured Convertible Notes Payable.

Other comprehensive income amounted to income of $5,773 in the 2011 period and a loss of $122,145 in the 2010 period, from temporary changes in the value of the Company's investment in Efftec and NAEY.

Our Plan of Operation for the Next Twelve Months

Management’s Analysis of Business

The Company has not established sources of revenue sufficient to fund the development of business, projected operating expenses and commitments for the next twelve months. The Company had a loss of $649,317 for the nine months ended June 30, 2011, and had a unrealized gain of $5,773 on available-for-sale securities for a total comprehensive loss of $643,544. Expenses have been reduced to the minimum until additional capital can be obtained.

The Company expects to raise any necessary additional capital from the private placement of its restricted common stock and convertible loan proceeds. The Company has demonstrated an ability to raise funds as needed to fund operations and investments. During the quarter ended June 30, 2011, the Company issued convertible promissory notes in the total amount of $540,000. However, there can be no assurance that the planned sale of common stock and loans from stockholders will provide sufficient funding to develop the Company’s current business plan. The Company is currently seeking additional investment capital to complete its business plan.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Off Balance Sheet Arrangements - None

Contractual Obligations - None

ITEM 3:

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4: CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Under the PCAOB standards, a control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit the attention by those responsible for oversight of the company's financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of June 30, 2011. Our management has determined that, as of June 30, 2011, the Company's disclosure controls and procedures are effective.

Changes in internal control over financial reporting

There have been no significant changes in internal controls or in other factors that could significantly affect these controls during the quarter ended June 30, 2011, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II – OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

None.

ITEM 1A: RISK FACTORS

Not applicable.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended June 30, 2011, the Company issued 3,485,546 common shares for convertible notes payable with a principal balance and accrued interest of $88,713; issued 2,000,000 common shares in exchange for a license valued at $78,000; issued 23,297,000 shares in exchange for the common stock of Fuse Science, Inc and issued 1,950,000 common shares in exchange for a consulting agreement valued at $175,500 for services to be performed over the next twelve months.

The shares were sold pursuant to an exemption from registration under Section 4(2) promulgated under the Securities Act of 1933, as amended.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5: OTHER INFORMATION

We do not currently employ a Chief Financial Officer. Mr. Adam Adler, Chief Executive Officer, since April 14, 2011, also serves as Chief Financial Officer.

ITEM 6: EXHIBITS

(a) EXHIBITS

31.1

Certification pursuant to 18 U.S.C. Section 1350 Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification pursuant to 18 U.S.C. Section 1350 Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DOUBLE EAGLE HOLDINGS, LTD.

August 12, 2011	By:	/s/Adam Adler
	Adam Adler,
	Chief Executive Officer and
	Chief Financial Officer