Fusemachines Inc. (Nasdaq: FUSE) reports $22.1M loss and completes SPAC merger
Fusemachines Inc. (formerly CSLM Acquisition Corp.) reported a sharp increase in losses ahead of its business combination. For the quarter ended September 30, 2025, the SPAC posted a net loss of $19.8 million, compared with a loss of $0.1 million a year earlier, driven mainly by a $17.6 million financing expense and a $1.3 million loss from changes in the fair value of a forward purchase agreement liability. For the first nine months of 2025, net loss was $22.1 million, versus net income of $0.4 million in the prior-year period.
At September 30, 2025, the company held $12.3 million of assets, including $12.3 million of marketable securities in its trust account, against $43.9 million of current liabilities, resulting in a shareholders’ deficit of $42.6 million and a working capital deficit of $37.2 million. Only 901,955 Class A shares remained subject to redemption after multiple extension votes and redemptions. Management disclosed substantial doubt about the company’s ability to continue as a going concern, though on October 22, 2025 it completed the Business Combination with Fusemachines, issuing $200 million in new common stock consideration and additional shares to public holders, PIPE investors and noteholders.
Positive
- None.
Negative
- Heavy Q3 and year-to-date losses: Net loss reached $19.8 million for Q3 2025 and $22.1 million for the first nine months, reversing prior-year profitability.
- Highly leveraged pre-merger balance sheet: At September 30, 2025, total assets of $12.3 million were outweighed by $43.9 million of current liabilities and a shareholders’ deficit of $42.6 million.
- Going concern uncertainty: Management disclosed substantial doubt about the company’s ability to continue as a going concern based on its working capital deficit and ongoing costs.
- Significant shareholder redemptions: Multiple extension votes led to substantial redemptions, leaving only 901,955 Class A shares subject to redemption outstanding before the business combination.
Insights
Large non‑cash financing charges and a forward purchase structure drove heavy Q3 losses before the Fusemachines merger closed.
CSLM, now Fusemachines Inc., reported a Q3 2025 net loss of
The balance sheet at
Redemptions remained high: after earlier buybacks, an additional 371,545 Class A shares were redeemed for
UNITED STATES
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EXPLANATORY NOTE
As previously announced, on January 22, 2024, CSLM Acquisition Corp., a Cayman Islands exempted company (“CSLM”), entered into a merger agreement as amended on August 27, 2024, by and among CSLM, CSLM Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of CSLM (“Merger Sub”), Fusemachines Inc., a Delaware company (“ Old Fusemachines”), and CSLM Holdings, Inc., a Delaware corporation (“CSLM Holdings”) (as amended, the “Business Combination Agreement”) to effect the business combination (the “Business Combination”). On October 22, 2025, CSLM consummated the Business Combination. In connection with the consummation of the Business Combination, CSLM merged with and into CSLM Holdings, Merger Sub merged with and into Old Fusemachines, CSLM Holdings changed its name to “Fusemachines Inc.” and Old Fusemachines changed its name to “Fusemachines USA, Inc.” Unless stated otherwise, this report contains information about CSLM before the Business Combination. References to “the Company” in this report refer to CSLM before the consummation of the Business Combination and references to “New Fusemachines” in this report refer to Fusemachines Inc. after the Business Combination.
CSLM ACQUISITION CORP.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2025
TABLE OF CONTENTS
| PART I — FINANCIAL INFORMATION | 1 | |
| Item 1. | Interim Financial Statements | 1 |
| Condensed Consolidated Balance Sheets as of September 30, 2025 (unaudited) and December 31, 2024 | 1 | |
| Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 (unaudited) | 2 | |
| Condensed Consolidated Statements of Changes in Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit for the three and nine months ended September 30, 2025 and 2024 (unaudited) | 3 | |
| Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (unaudited) | 4 | |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | 5 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 30 |
| Item 4. | Controls and Procedures | 30 |
| PART II — OTHER INFORMATION | 31 | |
| Item 1. | Legal Proceedings | 31 |
| Item 1A. | Risk Factors | 31 |
| Item 2. | Unregistered Sales of Equity Securities and Use Of Proceeds | 31 |
| Item 3. | Defaults Upon Senior Securities | 31 |
| Item 4. | Mine Safety Disclosures | 31 |
| Item 5. | Other Information | 31 |
| Item 6. | Exhibits | 32 |
| SIGNATURES | 33 | |
| i |
PART I — FINANCIAL INFORMATION
Item 1. Interim Financial Statements
CSLM ACQUISITION CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2025 (unaudited) | December 31, 2024 | |||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Due from related party | ||||||||
| Other receivable, net of reserve for credit losses of $ | — | — | ||||||
| Marketable securities held in trust account | ||||||||
| Total current assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Promissory note – related party | ||||||||
| Accrued interest – related party | ||||||||
| Forward purchase agreement prepayment payable | — | |||||||
| Forward purchase agreement liability | — | |||||||
| Share redemptions payable | — | |||||||
| Deferred underwriting commissions | ||||||||
| Total current liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 7) | - | - | ||||||
| Class A ordinary shares, $ | ||||||||
| Shareholders’ Deficit: | ||||||||
| Preference shares, $ | — | — | ||||||
| Class A ordinary shares, $ | ||||||||
| Class B ordinary shares, $ | ||||||||
| Common stock value | ||||||||
| Share subscription receivable | ( | ) | — | |||||
| Additional paid-in capital | — | |||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Shareholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 1 |
CSLM ACQUISITION CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Insurance expense | $ | $ | $ | $ | ||||||||||||
| Dues and subscriptions | ||||||||||||||||
| Administrative expenses – related party | ||||||||||||||||
| Legal and accounting expenses | ||||||||||||||||
| Interest, general and administrative expenses | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (loss) income: | ||||||||||||||||
| Loss on extinguishment of debt | — | — | ( | ) | — | |||||||||||
| Financing expense | ( | ) | — | ( | ) | — | ||||||||||
| Change in fair value of forward purchase agreement liability | ( | ) | — | ( | ) | — | ||||||||||
| Dividends on marketable securities held in Trust Account | ||||||||||||||||
| Covenant fees | — | — | ||||||||||||||
| Credit losses | — | ( | ) | — | ( | ) | ||||||||||
| Total other income (loss), net | ( | ) | ( | ) | ||||||||||||
| Net (loss) income | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Basic and diluted weighted average shares outstanding, Class A ordinary shares subject to possible redemption | ||||||||||||||||
| Basic and diluted net (loss) income per share, Class A ordinary shares stock subject to redemption | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Basic and diluted weighted average shares outstanding, non-redeemable Class A ordinary shares | ||||||||||||||||
| Basic and diluted net loss per share, non-redeemable Class A ordinary shares | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted weighted average shares outstanding, non-redeemable Class B ordinary shares | ||||||||||||||||
| Basic and diluted net loss per share, non-redeemable Class B ordinary shares | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 2 |
CSLM ACQUISITION CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CLASS A ORDINARY SHARES
SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT
(unaudited)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025
| Shares | Amount | Shares | Amount | Shares | Amount | Receivable | Capital | Deficit | Deficit | |||||||||||||||||||||||||||||||
|
Class A Temporary Equity |
Class A Ordinary Shares |
Class B Ordinary Shares |
Share Subscription | Additional Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Receivable | Capital | Deficit | Deficit | |||||||||||||||||||||||||||||||
| Balance as of January 1, 2025 | $ | $ | $ | — | $ | — | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||
| Substantial premium on promissory note issuance | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Sponsor waiver of administrative services fees | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Remeasurement of Class A ordinary shares subject to redemption | — | — | — | — | — | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Balance as of March 31, 2025 (unaudited) | $ | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| Sponsor waiver of administrative services fees | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Remeasurement of Class A ordinary shares subject to redemption | — | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Balance as of June 30, 2025 (unaudited) | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
| Forward purchase agreement | — | — | — | — | — | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||||||||
| Redemption of Class A ordinary shares | ( |
) | ( |
) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| Sponsor waiver of administrative services fees | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Remeasurement of Class A ordinary shares subject to redemption | — | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Balance as of September 30, 2025 (unaudited) | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024
Class A Temporary Equity | Class A Ordinary Shares | Class B Ordinary Shares | Share Subscription | Additional Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Receivable | Shares | Amount | Receivable | Capital | Deficit | Deficit | |||||||||||||||||||||||||||||||
| Balance as of January 1, 2024 | $ | $ | $ | $ | — | $ | — | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Sponsor waiver of administrative services fees | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Remeasurement of Class A ordinary shares subject to redemption | — | — | — | — | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Balance as of March 31, 2024 (unaudited) | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Sponsor waiver of administrative services fees | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Remeasurement of Class A ordinary shares subject to redemption | — | — | — | — | — | — | ( | ) | ( | ) | ( | |||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 (unaudited) | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Redemption of Class A ordinary shares | ( | ) | ( | ) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| Sponsor waiver of administrative services fees | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Remeasurement of Class A ordinary shares subject to redemption | — | — | — | — | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net (loss) income | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as of September 30, 2024 (unaudited) | $ | $ | $ | $ | — | $ | — | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | — | $ | — | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 3 |
CSLM ACQUISITION CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| 2025 | 2024 | |||||||
| For the Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Loss on extinguishment of debt | — | |||||||
| Financing expense | — | |||||||
| Change in fair value of FPA liability | — | |||||||
| Accrued dividends on marketable securities held in Trust Account | ||||||||
| Sponsor waiver of administrative services fees | ||||||||
| Changes in current assets and current liabilities: | ||||||||
| Prepaid expense | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Accrued interest – related party | ||||||||
| Due from related party | ( | ) | — | |||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of treasury and other marketable securities | ( | ) | ( | ) | ||||
| Proceeds from redemption of treasury and other marketable securities | ||||||||
| Net cash used in investing activities | ||||||||
| Cash Flows from Financing Activities: | ||||||||
| Payment of redemptions to Class A ordinary shareholders | ( | ) | ( | ) | ||||
| Proceeds from promissory note – related party | ||||||||
| Net cash provided by financing activities | ( | ) | ( | ) | ||||
| Net Change in Cash | ( | ) | ( | ) | ||||
| Cash – Beginning of the period | ||||||||
| Cash – End of the period | $ | $ | ||||||
| Supplemental Disclosure of Non-cash Financing Activities: | ||||||||
| Remeasurement of Class A ordinary shares subject to possible redemption | $ | $ | ||||||
| Substantial premium on promissory note issuance | $ | $ | — | |||||
| Share redemptions payable | $ | $ | — | |||||
| Share subscription receivable | $ | $ | — | |||||
| Forward purchase agreement prepayment payable | $ | $ | — | |||||
| Initial fair value of forward purchase agreement liability | $ | $ | — | |||||
| Reserve for credit losses | $ | — | $ | |||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 4 |
CSLM ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2025
(unaudited)
NOTE 1 — ORGANIZATION AND BUSINESS BACKGROUND
Organization and General
CSLM ACQUISITION CORP. (the “Company” or “CSLM”) is a blank check company incorporated in the Cayman Islands as an exempted company on April 13, 2021. The Company was incorporated for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). We intend to effectuate our initial Business Combination using cash from the proceeds of the initial public offering and the sale of the private placement warrants, our capital stock, debt or a combination of cash, stock and debt. The Company’s unaudited condensed financial statements include CSLM Merger Sub, Inc. (“Merger Sub”) and CSLM Holdings, Inc. (“Pubco”), both wholly- owned subsidiaries of CSLM Acquisition Corp. and are presented on a consolidated basis (the “Financial Statements”).
The Company is not limited to a particular industry or geographic location for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of September 30, 2025, the Company had not commenced any operations. All activity from April 13, 2021 (inception) through September 30, 2025 relates to the Company’s formation, the initial public offering (“Initial Public Offering” or “IPO”), which is described below, and pursuit of a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of investment income from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
On July 13, 2023, the Company submitted a certificate of incorporation of name change to the Cayman Islands Registry of Companies to change our name from “Consilium Acquisition Corp I, LTD.” to “CSLM Acquisition Corp.”. The name change of the Company to CSLM Acquisition Corp. was effected on Nasdaq at the open of trading on July 18, 2023 and continued trading under the same ticker symbol “CSLM”. The name change does not affect the rights of the Company’s securities holders.
Financing
On
January 18, 2022, the Company consummated its Initial Public Offering of
Substantially
concurrently with the closing of the Initial Public Offering, the Company completed the private sale of
rights.
A
total of $
| 5 |
On
July 13, 2023 as approved by its shareholders at an extraordinary general meeting held on July 13, 2023 (the “Special Meeting”),
The Company, and its trustee, Continental Stock Transfer & Trust Company amended (the “Amendment”) the Investment Management
Trust Agreement, dated as of January 12, 2022 (the “Trust Agreement”), by and between the Company and Continental Stock Transfer
& Trust Company (the “Trustee”) and the Company, in order to allow the Company to extend the time to complete a business
combination by fifteen (15) additional one (1) month periods until, October 18, 2024 (the “Termination Date”) by depositing
into the Trust Account $
In
connection with the shareholders’ vote at the Special Meeting,
Immediately
after the Special Meeting, the Company extended the time to complete the business combination by one (1) month to August 18, 2023, and
deposited the sum of $
On
August 18, 2024, as approved by its shareholders at the annual general meeting held on August 18, 2024 (the “Annual Meeting”),
the Company and its trustee, Continental Stock Transfer & Trust Company, amended the Investment Management Trust Agreement dated
January 12, 2022, as amended on July 13, 2023, in order to allow the Company to extend the time to complete a business combination on
a month-to-month basis, until July 18, 2025 (the “Extended Termination Date” or the “Extended Combination Period”)
by placing $
On
July 14, 2025, the shareholders’ at the extraordinary meeting held on July 14, 2025 (the “Extraordinary Meeting”) approved
an amendment to the Trust Agreement that allows the Company to extend the time to complete a business combination on a semi-month basis,
until October 18, 2025 by placing into the Company’s trust account he lesser of $
In
connection with the Extraordinary Meeting,
On
July 28, 2025, the Company held a meeting (the “Approval Meeting”) to approve the Business Combination. At the Meeting,
On
October 14, 2025, as approved by its shareholders at the extraordinary meeting held on October 14, 2025 (the “Final Extension Meeting”),
the Company, and its trustee, Continental Stock Transfer & Trust Company amended the Investment Management Trust Agreement, dated
as of January 12, 2022, as amended (the “Trust Agreement”), in order to allow the Company to extend the time to complete
a business combination on a semi-month basis, until December 18, 2025 (the “Termination Date”) by placing into the Company’s
Trust Account the lesser of $
In
connection with the Final Extension Meeting, on October 16, 2025, the Company deposited $
Merger Agreement
On January 22, 2024, the Company entered into a Merger Agreement, by and among the Company, CSLM Merger Sub Inc., and Fusemachines Inc., a Delaware corporation (“Fusemachines”) (as it may be amended and/or restated from time to time, the “Merger Agreement”). The Merger Agreement provides that, among other things and upon the terms and subject to the conditions thereof, Merger Sub will merge with and into Fusemachines, after which Fusemachines will be the surviving corporation and a wholly owned subsidiary of the Company.
On
August 27, 2024, the Company entered into an amendment to the Merger Agreement (the “Merger Agreement Amendment”) whereby
the Company will continue out of the Cayman Islands and into the State of Delaware to re-domicile and become a newly formed Delaware
corporation by means of a merger with the Company, pursuant to the Cayman Islands Companies law and the applicable provisions of the
Delaware General Corporation Law, with such newly formed Delaware corporation becoming the surviving corporation in the merger. In addition
the Merger Agreement Amendment includes a provision that increases the amount the Company may borrow from the Sponsor from $
On
February 4, 2025, the Company issued a third amended and restated promissory note (the “3rd A&R WC Promissory Note”)
pursuant to which the Company may borrow up to an aggregate principal amount of $
On
February 4, 2025, Fusemachines, the Company, and CSLM Merger Sub, Inc. entered into the second amendment to the Merger Agreement (the
“2nd Amendment”) which amends the Merger Agreement dated January 22, 2024 and the Merger Agreement Amendment dated August
27, 2024 (together, the “Original Merger Agreement”). The 2nd Amendment (a) amends the definition of the “PIPE Investment
Amount” to mean the sum of (i) $
| 6 |
In
connection with the 2nd Amendment, an affiliate (the “Sponsor Affiliate”) of the Sponsor, provided financing to Fusemachines
in the amount of $
On
February 4, 2025, in connection with the 2nd Amendment, the parties to that certain Subscription Agreement dated January 25, 2024 among
Fusemachines, the Company, the Sponsor and an affiliate of the Sponsor (the “Subscription Agreement”), entered into an amendment
to the Subscription Agreement to revise the PIPE Investment Amount to $
On July 31, 2025, in connection with the Business Combination, CSLM, Pubco, and Fusemachines entered into a forward purchase agreement (the “Forward Purchase Agreement”) with each of Meteora Capital Partners, LP (“MCP”), Meteora Select Trading Opportunities Master, LP (“MSTO”) and Meteora Strategic Capital LLC (“MSC”) (with MCP, MSTO and MSC collectively as “Seller”) for an OTC Equity Prepaid Forward Transaction. For purposes of the Forward Purchase Agreement, “Counterparty” refers to CSLM prior to the consummation of the business combination and Holdco after the consummation of the Business Combination. The Forward Purchase Agreement provides that Seller shall be prepaid an aggregate cash amount (the “Prepayment Amount”) equal (x) to the product of (i) the number of shares as set forth in a pricing date notice and (ii) the approximate per share redemption price payable to redeeming shareholders in connection with the Business Combination pursuant to the Counterparty’s Amended and Restated Memorandum and Articles of Association) (the “Initial Price”). Counterparty will pay to the Seller the Prepayment Amount directly from the Trust Account no later than the earlier of (a) one business day after the closing date of the Business Combination and (b) the date any assets from the Trust Account are disbursed in connection with the Business Combination.
Seller in its sole discretion may request warrants of the Counterparty exercisable for shares in an amount equal to (i) the maximum number of shares less (ii) the number of shares specified in the pricing date notice (the “Shortfall Warrants,” and the shares underlying the Shortfall Warrants, the “Shortfall Warrant Shares”). The Shortfall Warrants shall have an exercise price equal to the reset price. The Form of Shortfall Warrant shall be agreed upon by the parties hereto within 45 days of the date of the Forward Purchase Agreement.
On
October 22, 2025 (the “Closing Date”), the Business Combination was consummated whereby (a) Merger Sub merged with and into
Fusemachines with Fusemachines as the surviving corporation and becoming a wholly-owned subsidiary of Pubco; (b) the issued and outstanding
shares of Fusemachines were exchanged for $
Risks and Uncertainties
Results of operations and the Company’s ability to complete an Initial Business Combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond its control. The business could be impacted by, among other things, downturns in the financial markets or in economic conditions, inflation, increases in interest rates, adverse developments affecting the financial services industry, and geopolitical instability, such as the military conflict in the Ukraine and the middle east.
Any of the foregoing consequences, including those we cannot yet predict, may cause our business, financial condition, results of operations and the price of our ordinary shares to be adversely affected. The Financial Statements do not include any adjustments that might result from the outcome of this uncertainty.
Going Concern Consideration
As
of September 30, 2025 and December 31, 2024, the Company had $
The
Company’s liquidity needs through September 30, 2025 had been satisfied through a payment from the Sponsor of $
The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period within one year after the date that the Financial Statements are issued. Management plans to address this uncertainty through related party loans from the Sponsor, an affiliate of the Sponsor, or certain of the Company’s officers and directors or their affiliates (“Working Capital Loans”) (see Note 5) and effecting a Business Combination. However, there is no assurance that the Company’s plans to raise capital or to consummate a Business Combination will be successful or successful within the Combination Period.
The Financial Statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying Financial Statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair statement of the financial position, operating results and cash flows for the periods presented.
| 7 |
The accompanying Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on April 11, 2025, which contains the audited financial statements and notes thereto. The financial information as of December 31, 2024 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The interim results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any future interim periods
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies.
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires the Company’s 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 financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
Marketable Securities Held in Trust Account
Following
the closing of the Initial Public Offering on January 18, 2022, an amount of $
| 8 |
Net Income (Loss) Per Ordinary Share
The statements of operations include a presentation of income (loss) per Class A redeemable ordinary shares and income (loss) per non-redeemable Class A and Class B ordinary shares following the two-class method of income per common stock. In order to determine the net income (loss) attributable to both the Class A redeemable ordinary shares and non-redeemable Class A and Class B ordinary shares, the Company first considered the total income (loss) allocable to both sets of stock. This is calculated using the total net income (loss) less any dividends paid. For purposes of calculating net income (loss) per share, any remeasurement of the Class A ordinary shares subject to possible redemption was treated as dividends paid to the public shareholders. Subsequent to calculating the total income (loss) allocable to both sets of shares, the Company split the amount to be allocated using the total number of shares outstanding for each share class at each respective period, before and after redemptions and conversions, for the three and nine months ended September 30, 2025 and 2024, reflective of the respective participation rights.
The following tables reflect the calculation of basic and diluted net income (loss) per ordinary shares for the three and nine months ended September 30, 2025 (in dollars, except per share amounts):
SCHEDULE OF NET INCOME LOSS ORDINARY SHARE
| For the Three Months Ended September 30, 2025 | ||||
| Net loss | $ | ( | ) | |
| Remeasurement of temporary equity to redemption value | ( | ) | ||
| Net loss including remeasurement of temporary equity to redemption value | $ | ( | ) | |
| For the Three Months Ended September 30, 2025 | ||||||||||||
| Class A Redeemable | Class A Non-redeemable | Class B Non-redeemable | ||||||||||
| Total number of shares | ||||||||||||
| Basic and diluted net income (loss) per share | ||||||||||||
| Numerator: | ||||||||||||
| Allocation of net loss including remeasurement of temporary equity to redemption value based on ownership percentage | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Deemed dividend for remeasurement of temporary equity to redemption value | — | — | ||||||||||
| Total net loss allocated by class | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Denominator: | ||||||||||||
| Weighted-average shares outstanding | ||||||||||||
| Basic and diluted net loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| For the Nine Months Ended September 30, 2025 | ||||
| Net loss | $ | ( | ) | |
| Remeasurement of temporary equity to redemption value | ( | ) | ||
| Net loss including remeasurement of temporary equity to redemption value | $ | ( | ) | |
| For the Nine Months Ended September 30, 2025 | ||||||||||||
| Class A Redeemable | Class A Non-redeemable | Class B Non-redeemable | ||||||||||
| Total number of shares | ||||||||||||
| Basic and diluted net income (loss) per share | ||||||||||||
| Numerator: | ||||||||||||
| Allocation of net loss including remeasurement of temporary equity to redemption value based on ownership percentage | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Deemed dividend for remeasurement of temporary equity to redemption value | — | — | ||||||||||
| Total net loss allocated by class | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Denominator: | ||||||||||||
| Weighted-average shares outstanding | ||||||||||||
| Basic and diluted net loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| 9 |
The following tables reflect the calculation of basic and diluted net income (loss) per ordinary shares for the three and nine months ended September 30, 2024 (in dollars, except per share amounts):
| For the Three Months Ended September 30, 2024 | ||||
| Net loss | $ | ( | ) | |
| Remeasurement of temporary equity to redemption value | ( | ) | ||
| Net loss including remeasurement of temporary equity to redemption value | $ | ( | ) | |
| For the Three Months Ended September 30, 2024 | ||||||||||||
| Class A Redeemable | Class A Non-redeemable | Class B Non-redeemable | ||||||||||
| Total number of shares | ||||||||||||
| Basic and diluted net income (loss) per share | ||||||||||||
| Numerator: | ||||||||||||
| Allocation of net income including remeasurement of temporary equity to redemption value based on ownership percentage | $ | ( | ) | $ | ( | ) | $ | |||||
| Deemed dividend for remeasurement of temporary equity to redemption value | — | — | ||||||||||
| Total net income (loss) allocated by class | $ | $ | ( | ) | $ | |||||||
| Denominator: | ||||||||||||
| Weighted-average shares outstanding | ||||||||||||
| Basic and diluted net income (loss) per share | $ | $ | ( | ) | $ | ( | ) | |||||
| For the Nine Months Ended September 30, 2024 | ||||
| Net income | $ | |||
| Remeasurement of temporary equity to redemption value | ( | ) | ||
| Net loss including remeasurement of temporary equity to redemption value | $ | ( | ) | |
| For the Nine Months Ended September 30, 2024 | ||||||||||||
| Class A Redeemable | Class A Non-redeemable | Class B Non-redeemable | ||||||||||
| Total number of shares | ||||||||||||
| Basic and diluted net income (loss) per share | ||||||||||||
| Numerator: | ||||||||||||
| Allocation of net income including remeasurement of temporary equity to redemption value based on ownership percentage | $ | ( | ) | $ | ( | ) | $ | |||||
| Deemed dividend for remeasurement of temporary equity to redemption value | — | — | ||||||||||
| Total net income (loss) allocated by class | $ | $ | ( | ) | $ | |||||||
| Denominator: | ||||||||||||
| Weighted-average shares outstanding | ||||||||||||
| Basic and diluted net income (loss) per share | $ | $ | ( | ) | $ | ( | ) | |||||
| 10 |
Fair value of Financial Instruments
ASC Topic 820, Fair Value Measurement, defines fair value as the amount that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants.
Fair value measurements are classified on a three-tier hierarchy as follows:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as calculations derived from valuation techniques in which one or more significant inputs or significant value drivers are observable. |
In many cases, if a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy described above, the lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.
The fair value of the Company’s assets and liabilities, which qualify as financial instruments approximates the carrying amounts represented in the balance sheet, primarily due to its short-term nature.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, Derivatives and Hedging. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Warrants and Rights
The Company accounts for the public and private warrants and rights as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in FASB ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). Pursuant to the Company’s evaluation, the Company concluded that the public and private warrants and rights do not meet the criteria to be accounted for as liability under ASC 480. The Company further evaluated the public and private warrants and rights under “ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity” (“ASC 815-40”) and concluded that the public warrants, private placement warrants and rights are indexed to the Company’s own stock and meet the criteria to be classified in shareholders’ deficit.
Ordinary Shares Subject to Possible Redemption
Ordinary
shares subject to mandatory redemption (if any) are classified as a liability instrument and is measured at fair value. Conditionally
redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder
or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary
equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares feature
certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain
future events. In connection with the shareholders’ vote at the Special meeting of shareholders held by the Company on June 29,
2023,
The
proceeds of the offering were allocated to the Class A ordinary shares and the Public Warrants and Rights based on their relative fair
values. The Company recognizes changes in redemption value of Class A ordinary shares subject to possible redemption immediately as they
occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period.
Such changes are reflected in additional paid-in capital, or in the absence of additional capital, in accumulated deficit. The Company
has recorded remeasurements of $
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Income taxes
The Company accounts for income taxes in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under the asset and liability, method as required by this accounting standard, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities in the financial statements and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to the period when assets are realized or liability is settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in the operation of statement in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
ASC
740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements
uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the
financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax
positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than
The Company is considered an exempted Cayman Islands Company and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the period presented.
Covenant Fees
Pursuant
to the Merger Agreement, Fusemachines is covenanted to deliver to the Company its audited financial statements for the twelve month periods
ended December 31, 2023 and 2022 (the “Fusemachines Audited Financial Statements”) for inclusion in the registration statement
on Form S-4 to be filed by the Company in connection with the Business Combination (the “Registration Statement”), and that
such Fusemachines Audited Financial Statements have been prepared in conformity with U.S. GAAP applied on a consistent basis and in accordance
with the requirements of the Public Company Accounting Oversight Board for public companies. Fusemachines has covenanted to provide the
Fusemachines Audited Financial Statements no later than February 29, 2024, or incur delay fees in the amount equal to $
Related Parties
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
| 12 |
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed Federally insured limits. Exposure to cash and cash equivalents credit risk is reduced by placing such deposits with major financial institutions and monitoring their credit ratings. At September 30, 2025 and December 31, 2024, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. ASU 2023-09 will become effective for annual periods beginning after December 15, 2024. The Company is still reviewing the impact of ASU 2023-09.
The Company has considered all new accounting pronouncements and has concluded that there are no additional new pronouncements that may have a material impact on the results of operations, financial condition, or cash flows, based on the current information.
NOTE 3 — INITIAL PUBLIC OFFERING
Pursuant
to the Initial Public Offering, the Company sold
An
aggregate of $
NOTE 4 — PRIVATE PLACEMENT
The
Company entered into an agreement with the Sponsor pursuant to which the Sponsor purchased an aggregate of
| 13 |
NOTE 5 — RELATED PARTY TRANSACTIONS
Founder Shares
In
July 2021, the Sponsor purchased
The
Sponsor has agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier
of (A) one year after the completion of a Business Combination or (B) subsequent to a Business Combination, (x) if the last reported
sale price of the Class A ordinary shares equals or exceeds $
Administrative Services Agreement
The
Company entered into a support services agreement, commencing on the effective date of the initial public offering, pursuant to which
the Company will pay the Sponsor a total of $
Promissory Note — Related Party
In
July 2021, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the
Company may borrow up to an aggregate principal amount of $
In
February 2023, the Sponsor issued an unsecured promissory note to the Company (the “WC Promissory Note”), pursuant to which
the Company may borrow up to an aggregate principal amount of $
| 14 |
On
February 4, 2025, the Company issued a third amended and restated promissory note (the “3rd A&R WC Promissory Note”)
pursuant to which the Company may borrow up to an aggregate principal amount of $
The
Company determined that the third amendment to the WC Promissory note is not considered a troubled debt restructuring and that the inclusion
of a conversion feature is a substantive modification. As a result, the issuance of the 3rd A&R WC Promissory Note on February 4,
2025 is accounted for as a debt extinguishment in accordance with ASC 470-50, “Modification and Extinguishments”. During
the three and nine months ended September 30, 2025, the Company recognized a loss on extinguishment of debt of $0 and $
On
May 23, 2025, the Company amended the 3rd A&R WC Promissory Note solely to increase the amount the Company may borrow from $
As
of September 30, 2025 and December 31, 2024, the Company had borrowed $
Related Party Loans
In
addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor,
or certain of the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds as
may be required (“Working Capital Loans”). The Working Capital Loans would either be repaid upon consummation of a Business
Combination, without interest, or, at the lender’s discretion, up to $
| 15 |
NOTE 6 — SHAREHOLDERS’ DEFICIT
Preference
Shares — The Company is authorized to issue
Class
A Ordinary shares — The Company is authorized to issue
Class
B Ordinary shares — The Company is authorized to issue
With respect to any other matter submitted to a vote of our shareholders, including any vote in connection with our initial business combination, except as required by law, holders of our Founder Shares and holders of our public shares will vote together as a single class, with each share entitling the holder to one vote. However, prior to the consummation of the Business Combination, holders of the Class B ordinary shares will have the right to elect all of the Company’s directors and may remove members of the board of directors for any reason.
The
shares of Class B ordinary shares will automatically convert into Class A ordinary shares at the time of a Business Combination on a
one-for-one basis, subject to adjustment. In the case that additional Class A ordinary shares, or equity-linked securities, are issued
or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of a Business Combination,
the ratio at which shares of Class B ordinary shares shall convert into Class A ordinary shares will be adjusted (unless the holders
of a majority of the outstanding shares of Class B ordinary shares agree to waive such adjustment with respect to any such issuance or
deemed issuance) so that the number of Class A ordinary shares issuable upon conversion of all shares of Class B ordinary shares will
equal, in the aggregate, on an as-converted basis,
| 16 |
Rights — Except in cases where the Company is not the surviving company in a Business Combination, each holder of a right will automatically receive one-tenth (1/10) of one Class A ordinary share upon consummation of a Business Combination, even if the holder of a right converted all shares held by him, her or it in connection with a Business Combination or an amendment to the Company’s Amended and Restated Certificate of Incorporation with respect to its pre-business combination activities. In the event that the Company will not be the surviving company upon completion of a Business Combination, each holder of a right will be required to affirmatively convert his, her or its rights in order to receive the one-tenth (1/10) of a share underlying each right upon consummation of the Business Combination.
The Company will not issue fractional shares in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Cayman Islands law. As a result, the holders of the rights must hold rights in multiples of 10 in order to receive shares for all of the holders’ rights upon closing of a Business Combination. If the Company is unable to complete an initial Business Combination within the Combination Period and the Company redeems the Public Shares for the funds held in the Trust Account, holders of rights will not receive any of such funds for their rights and the rights will expire worthless.
Warrants — Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. Accordingly, unless a unit holder purchases at least two units, they will not be able to receive or trade a whole warrant. The Public Warrants will become exercisable on the later of (a) 12 months from the closing of the Initial Public Offering and (b) 30 days after the completion of a Business Combination.
| 17 |
The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act with respect to the Class A ordinary shares underlying the Public Warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No Public Warrant will be exercisable, and the Company will not be obligated to issue any Class A ordinary shares upon exercise of a Public Warrant unless the share of Class A ordinary shares issuable upon such Public Warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the Public Warrants.
The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of a Business Combination, it will use its commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the public warrants, and the Company will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of a Business Combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those Class A ordinary shares until the public warrants expire or are redeemed, as specified in the public warrant agreement; provided that if the Class A ordinary shares is at the time of any exercise of a public warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of public warrants who exercise their public warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but it will use its commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If a registration statement covering the Class A ordinary shares issuable upon exercise of the public warrants is not effective by the 60th business day after the closing of a Business Combination, public warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise public warrants on a “cashless basis” in accordance with Section 3(a) (9) of the Securities Act or another exemption, but the Company will use its commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption
of warrants when the price per Class A ordinary shares equals or exceeds $
| ● | in whole and not in part; | |
| ● | at
a price of $ | |
| ● | upon not less than 30 days’ prior written notice of redemption to each warrant holder; and | |
| ● | if,
and only if, the closing price of the Class A ordinary shares equals or exceeds $ |
If and when the Public Warrants become redeemable by the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
In
addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection
with the closing of a Business Combination at an issue price or effective issue price of less than $
The Private Placement Warrants are identical to the Public Warrants included in the Units being sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants are not transferable, assignable or saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants are exercisable for cash or on a cashless basis, at the holder’s option, and are non-redeemable by the Company.
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NOTE 7 — COMMITMENTS AND CONTINGENCIES
Registration and Shareholder Rights
The holders of the Founder Shares, Private Placement Warrants, and warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of the Initial Public Offering, requiring the Company to register such securities for resale. The holders will have the right to require us to register for resale these securities pursuant to a shelf registration under Rule 415 under the Securities Act. The holders of a majority of these securities will also be entitled to make up to three demands, plus short form registration demands, that we register such securities. In addition, the holders will be entitled to certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial business combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The
Company granted the underwriter a
On
November 28, 2023, the Company and the underwriter entered into an agreement under which (i) the Sponsor will transfer
Financial Services Agreement
Consulting Agreements
The
Sponsor entered into consulting services agreements (the “Consulting Services Agreements”) with a service provider (the “Consultant”)
on April 10, 2023 and September 5, 2023 to provide consulting, advisory and related services to the Sponsor and to the Company on behalf
of the Sponsor. In accordance with the Consulting Services Agreements, the Consultant will purchase and the Sponsor will sell
Capital Markets Advisory Agreement
The
Company entered into a capital markets advisory agreement (the “Advisory Agreement”) with a service provider (the “Advisor”)
on June 21, 2024 to provide capital markets advisory services to the Company. In accordance with the Advisory Agreement, the Advisor
will be paid an advisory fee comprised of $
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NOTE 8 — FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements
At
September 30, 2025 and December 31, 2024, the Company’s marketable securities held in the Trust Account were valued at $
The
Company entered into the Forward Purchase Agreement on July 31, 2025. The Company accounts for the Forward Purchase Agreement as a
share subscription receivable on the Company’s balance sheet and recorded an initial fair value of $
The Company accounts for the FPA Liability as a liability
on the Company’s balance sheet as the instrument is subject to variable settlement until receipt of a pricing date notice. The Company
recorded an initial fair value of $
The following table presents the fair value information, as of September 30, 2025 and December 31, 2024, of the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. The Company’s marketable securities held in the Trust Account are based on dividend and interest income and market fluctuations in the value of invested marketable securities, which are considered observable. The fair value of the marketable securities held in trust is classified within Level 1 of the fair value hierarchy. The FPA Liability is classified within Level 3 of the fair value hierarchy
The following table sets forth by level within the fair value hierarchy the Company’s assets and liabilities that were accounted for at fair value on a recurring basis:
SUMMARY OF FAIR VALUE HIERARCHY THE COMPANY’S ASSETS AND LIABILITIES
| (Level 1) | (Level 2) | (Level 3) | ||||||||||
| As of September 30, 2025 | ||||||||||||
| Assets: | ||||||||||||
| Treasury Trust Funds held in Trust Account | $ | $ | — | $ | — | |||||||
| Liabilities: | ||||||||||||
| Forward Purchase Agreement Liability | $ | — | $ | — | $ | |||||||
| As of December 31, 2024 | ||||||||||||
| Assets: | ||||||||||||
| Treasury Trust Funds held in Trust Account | $ | $ | — | $ | — | |||||||
The following table presents the change in fair value of recurring Level 3 fair value measurements for the three and nine months ended September 30, 2025:
SUMMARY OF FAIR VALUE MEASURED ON RECURRING BASIS
| Balance – December 31, 2024 | $ | — | ||
| Change in fair value | — | |||
| Balance – March 31, 2025 | — | |||
| Change in fair value | — | |||
| Balance – June 30, 2025 | — | |||
| Forward Purchase Agreement Liability | ||||
| Change in fair value | ||||
| Balance – September 30, 2025 | $ |
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The fair value of the FPA Liability is derived from a Monte Carlo simulation of the Company’s share price from the valuation date to maturity. The FPA Liability is classified within Level 3 of the fair value hierarchy due to unobservable inputs including estimated volatility and discount rate. The following are key inputs of the simulation as of July 31, 2025 and September 30, 2025:
SCHEDULE OF FAIR VALUE HIERARCHY DUE TO UNOBSERVABLE INPUTS
| July 31, | September 30, | |||||||
| 2025 | 2025 | |||||||
| Closing share price | $ | $ | ||||||
| Maturity date | ||||||||
| Estimated volatility | % | % | ||||||
| Risk-free rate | % | % | ||||||
| Discount rate | % | % | ||||||
Non-Recurring Fair Value Measurements
On
February 4, 2025, the Company entered into a third amendment on its WC Promissory Note which resulted in the Company accounting for the
3rd A&R WC Promissory Note as a debt extinguishment (see Note 5). As a result, the Company measured the 3rd A&R WC Promissory
Note at its reacquisition price, which is the fair value of the amended debt instrument on February 4, 2025, or $
The
Company valued the reacquisition price of the 3rd A&R WC Promissory Note as the difference between the probability -weighted
value of cash payoff amount and the present value of stock payoff amount. Significant assumptions utilized in the analysis include an
estimated Class A ordinary share price of the post-business combination entity of $
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NOTE 9 — SEGMENT INFORMATION
ASC Topic 280, “Segment Reporting,” establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise that engage in business activities from which it may recognize revenues and incur expenses, and for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker, or group, in deciding how to allocate resources and assess performance.
The Company’s CODM has been identified as the Chief Executive Officer, who reviews the assets, operating results, and financial metrics for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that there is only one reportable segment.
The CODM assesses performance for the single segment and decides how to allocate resources based on net income or loss that also is reported on the statements of operations as net income or loss. The CODM uses net income or loss to manage the business and forecasts to ensure enough capital is available to complete a business combination or similar transaction within the business combination period. The CODM also reviews significant expenses, which are consistent with those reported on the statements of operations, to manage, maintain, and enforce contractual agreements to ensure costs are aligned with agreements and the budget. The measure of segment assets is reported on the balance sheets as total assets. All segment items included in net income or loss are reported on the statements of operations and described within their respective disclosures.
NOTE 10 — SUBSEQUENT EVENTS
On
October 3, 2025, the Company deposited $
On
October 14, 2025, as approved by its shareholders at the Final Extension Meeting held on October 14, 2025 the Company, and its trustee,
Continental Stock Transfer & Trust Company amended the Investment Management Trust Agreement, dated as of January 12, 2022, as amended
(the “Trust Agreement”), in order to allow the Company to extend the time to complete a business combination on a semi-month
basis, until December 18, 2025 by placing into the Company’s Trust Account the lesser of $
In
connection with the Final Extension Meeting, on October 16, 2025, the Company deposited $
On
October 22, 2025, the Business Combination was consummated whereby (a) Merger Sub merged with and into Fusemachines with Fusemachines
as the surviving corporation and becoming a wholly-owned subsidiary of Pubco; (b) the issued and outstanding shares of Fusemachines were
exchanged for $
On October 23, 2025, the Company paid an aggregate of $
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References to the “Company,” “CSLM Acquisition Corp.,” “Consilium Acquisitions Corp. I,” “our,” “us” or “we” refer to CSLM Acquisition Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward- looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public Offering filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
CSLM Acquisition Corp. (the “Company”) is a blank check company incorporated in the Cayman Islands as an exempted company on April 13, 2021. The Company was incorporated for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (“Business Combination”). We intend to effectuate our initial Business Combination using cash from the proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, our capital stock, debt or a combination of cash, stock and debt.
The Company is not limited to a particular industry or geographic location for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of September 30, 2025, the Company had not commenced any operations. All activity from April 13, 2021 (inception) through September 30, 2025 relates to the Company’s formation, the initial public offering (“Initial Public Offering”), which is described below, and pursuit of a business combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
On July 13, 2023, the Company submitted a certificate of incorporation of name change to the Cayman Islands Registry of Companies to change our name from “Consilium Acquisition Corp I, LTD.” to “CSLM Acquisition Corp.”. The name change of the Company to CSLM Acquisition Corp. was effected on Nasdaq at the open of trading on July 18, 2023 and continued trading under the same ticker symbol “CSLM”. The name change does not affect the rights of the Company’s securities holders.
On January 18, 2022, the Company consummated its Initial Public Offering of 18,975,000 units (the “Units”), including the issuance of 2,475,000 Units as a result of the underwriter’s exercise of its over-allotment option. Each Unit consists of one Class A ordinary share of the Company, par value $0.0001 per share (an “Ordinary Share”), one right to acquire one-tenth of an Ordinary Share, and one-half of one redeemable warrant of the Company. Each whole warrant entitles the holder thereof to purchase one Ordinary Share for $11.50 per share, subject to adjustment. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $189,750,000.
Substantially concurrently with the closing of the Initial Public Offering, the Company completed the private sale of 7,942,500 private placement warrants (the “Private Placement Warrants”) at a purchase price of $1.00 per Private Placement Warrant, to the Company’s sponsor, Consilium Acquisition Sponsor I, LLC (the “Sponsor”), generating gross proceeds to the Company of $7,942,500. The Private Placement Warrants are identical to the warrants sold as part of the Units in the Initial Public Offering except that, so long as they are held by the Sponsor or its permitted transferees: (1) they will not be redeemable by the Company (except in certain redemption scenarios when the price per Ordinary Share equals or exceeds $10.00 (as adjusted)); (2) they (including the Ordinary Shares issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion of the Company’s initial business combination; (3) they may be exercised by the holders on a cashless basis; and (4) they (including the Ordinary Shares issuable upon exercise of these warrants) are entitled to registration rights.
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A total of $2,250,000 was deposited to the Company’s operating account and a total of $191,647,500, comprised of a portion of proceeds from the IPO and the sale of the Private Placement Warrants, was placed in a U.S.-based trust account at JP Morgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust Company, acting as trustee (the “Trust Account”). Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its taxes, if any, the funds held in the Trust Account will not be released from the Trust Account until the earliest to occur of: (1) the Company’s completion of an initial business combination; (2) the redemption of any public shares properly submitted in connection with a shareholder vote to amend the Company’s amended and restated memorandum and articles of association (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with its initial business combination or to redeem 100% of the Company’s public shares if the Company does not complete its initial business combination by October 18, 2024 after depositing $70,000 into the Trust Account for each one-month Extension or (B) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity; and (3) the redemption of the Company’s public shares if the Company has not completed its initial business combination by October 18, 2024, subject to applicable law.
On July 13, 2023 as approved by its shareholders at an extraordinary general meeting held on July 13, 2023 (the “Special Meeting”), The Company, and its trustee, Continental Stock Transfer & Trust Company amended (the “Amendment”) the Investment Management Trust Agreement, dated as of January 12, 2022 (the “Trust Agreement”), by and between the Company and Continental Stock Transfer & Trust Company (the “Trustee”) and the Company, in order to allow the Company to extend the time to complete a business combination by fifteen (15) additional one (1) month periods until, October 18, 2024 (the “Termination Date”). The Company is required to deposit $70,000 into the Trust Account for each one-month Extension.
In connection with the shareholders’ vote at the Special Meeting, 14,202,813 Class A shares were tendered for redemption. Shareholders validly redeemed their shares for $149,486,187, or approximately $10.53 per class A share. The trustee processed the redemptions on July 11, 2023 and distributed amounts from the Trust Account to the redeeming shareholders on July 26, 2023.
Immediately after the Special Meeting, the Company extended the time to complete the business combination by one (1) month to August 18, 2023, and deposited the sum of $70,000 into the Trust Account in accordance with the terms of the Trust Agreement. The Company exercised twelve (13) of the fifteen (15) additional one (1) month extension periods, depositing an aggregate of $910,000 into the Trust Account, to extend the time to complete the business combination to July 18, 2024. On July 17, 2024, the Company deposited $70,000 into the Trust Account to extend the time to complete the business combination by one (1) month from July 18, 2024 to August 18, 2024.
On August 18, 2024, as approved by its shareholders at the annual general meeting held on August 18, 2024 (the “Annual Meeting”), the Company and its trustee, Continental Stock Transfer & Trust Company, amended the Investment Management Trust Agreement dated January 12, 2022, as amended on July 13, 2023, in order to allow the Company to extend the time to complete a business combination on a month-to-month basis, until July 18, 2025 (the “Extended Termination Date” or the “Extended Combination Period”) by placing $30,000 into the Company’s Trust Account. The Company exercised eleven (11) additional one-month extension periods, depositing an aggregate of $330,000 into the Trust Account to extend the time to complete the business combination to July 18, 2025.
On July 14, 2025, the shareholders’ at the extraordinary meeting held on July 14, 2025 (the “Extraordinary Meeting”) approved an amendment to the Trust Agreement that allows the Company to extend the time to complete a business combination on a semi-month basis, until October 18, 2025 by placing into the Company’s trust account he lesser of $0.02 per non-redeemed Class A ordinary share, or $15,000. The Company exercised six (6) additional semi-monthly extension periods, depositing an aggregate of $75,000 into the Trust Account to extend the time to complete the business combination to October 18, 2025.
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In connection with the Extraordinary Meeting, 371,545 Class A shares were tendered for redemption. Shareholders validly redeemed their Class A ordinary shares for $4,492,794, or approximately $12.10 per Class A ordinary share.
On July 28, 2025, the Company held a meeting (the “Approval Meeting”) to approve the Business Combination. At the Meeting, 5,186,264 or 84.79% of such Shares were represented in person or by proxy, and the Business Combination was approved. In connection with the Approval Meeting, 99,187 Class A ordinary shares were tendered for redemption. Shareholders validly redeemed their Class A ordinary shares for $1,222,631, or approximately $12.33 per Class A ordinary share. As a result, 901,955 Class A ordinary shares subject to redemption remained outstanding.
On October 14, 2025, as approved by its shareholders at the extraordinary meeting held on October 14, 2025 (the “Final Extension Meeting”), the Company, and its trustee, Continental Stock Transfer & Trust Company amended the Investment Management Trust Agreement, dated as of January 12, 2022, as amended (the “Trust Agreement”), in order to allow the Company to extend the time to complete a business combination on a semi-month basis, until December 18, 2025 (the “Termination Date”) by placing into the Company’s Trust Account the lesser of $0.02 per non-redeemed Class A Ordinary Share (as defined below), or $15,000. At the Final Extension Meeting, the shareholders of the Company approved by a special resolution, to amend Trust Agreement to extend the time by which the Company has to consummate a business combination until December 18, 2025 in accordance with the Company’s Amended and Restated Memorandum and Articles of Association, adopted by special resolution dated January 5, 2022, as amended.
In connection with the Final Extension Meeting, on October 16, 2025, the Company deposited $15,000 into the Company’s Trust Account to extend the time it has to complete its business combination until November 3, 2025. The Company has until December 18, 2025 to complete its business combination depositing $15,000 for each semi-month extension into the Trust Account. No Class A Shares were redeemed in connection with the Final Extension Meeting.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less deferred underwriting fees and income taxes payable), to complete our Initial Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Initial Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete an Initial Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with an Initial Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete an Initial Business Combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that an Initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. Up to $2,000,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant, at the option of the lender. The warrants would be identical to the Private Placement Warrants.
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Merger Agreement
On January 22, 2024, the Company entered into a Merger Agreement, by and among the Company, CSLM Merger Sub Inc. (“Merger Sub”), and Fusemachines Inc., a Delaware corporation (“Fusemachines”) (as it may be amended and/or restated from time to time, the “Merger Agreement”). The Merger Agreement provides that, among other things and upon the terms and subject to the conditions thereof, Merger Sub will merge with and into Fusemachines, after which Fusemachines will be the surviving corporation and a wholly owned subsidiary of the Company.
On August 27, 2024, the Company entered into an amendment to the Merger Agreement (the “Merger Agreement Amendment”) whereby the Company will continue out of the Cayman Islands and into the State of Delaware to re-domicile and become a newly formed Delaware corporation by means of a merger with the Company, pursuant to the Cayman Islands Companies law and the applicable provisions of the Delaware General Corporation Law, with such newly formed Delaware corporation becoming the surviving corporation in the merger. In addition the Merger Agreement Amendment includes a provision that increases the amount the Company may borrow from the Sponsor from $2,000,000 to $2,750,000.
On February 4, 2025, the Company issued a third amended and restated promissory note (the “3rd A&R WC Promissory Note”) pursuant to which the Company may borrow up to an aggregate principal amount of $3,000,000. The 3rd A&R Promissory Note additionally includes a conversion feature whereby, notwithstanding the foregoing in the event of the Business Combination, the outstanding balance may be repaid at the Sponsor’s discretion, in cash or $1,491,000 of the principal and accrued and unpaid interest shall be converted into the Company’s Class A ordinary shares at a share price of four dollars ($4.00), the balance of which shall be payable in cash at the closing of the Business Combination.
On February 4, 2025, Fusemachines, the Company, and CSLM Merger Sub, Inc. entered into the second amendment to the Merger Agreement (the “2nd Amendment”) which amends the Merger Agreement dated January 22, 2024 and the Merger Agreement Amendment dated August 27, 2024 (together, the “Original Merger Agreement”). The 2nd Amendment (a) amends the definition of the “PIPE Investment Amount” to mean the sum of (i) $8,840,000, and (ii) the Contingent PIPE Investment Amount, if any; and (b) removes the delay fees incurred in connection with delivery of Fusemachines’ financial statements.
In connection with the 2nd Amendment, an affiliate (the “Sponsor Affiliate”) of the Sponsor, provided financing to Fusemachines in the amount of $2,160,000, in exchange for a new convertible note which note shall convert into shares of common stock of Fusemachines at a price of $0.44 per share (a) automatically at the time of the Business Combination, or (b) on July 12, 2025 at the option of the holder, if not, then payable in cash (the “Escrow Note”). The funds from the Escrow Note shall be put in an escrow account held at Continental Stock Transfer and Trust Company, CSLM’s transfer agent (“CST”) pursuant to an escrow agreement among CSLM, the Sponsor Affiliate, Fusemachines and CST (the “Escrow Agreement”) and shall be released to the Surviving Corporation upon the consummation of the Business Combination. In addition, the maturity dates on the two promissory notes issued by Fuse to the Sponsor Affiliate on January 25, 2024 in the amounts of $4.5 million and $2 million, were extended to July 12, 2025.
On February 4, 2025, in connection with the 2nd Amendment, the parties to that certain Subscription Agreement dated January 25, 2024 among Fusemachines, the Company, the Sponsor and an affiliate of the Sponsor (the “Subscription Agreement”), entered into an amendment to the Subscription Agreement to revise the PIPE Investment Amount to $8,840,000 (the “Subscription Agreement Amendment”).
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On July 31, 2025, in connection with the Business Combination, CSLM, Pubco, and Fusemachines entered into a forward purchase agreement (the “Forward Purchase Agreement”) with each of Meteora Capital Partners, LP (“MCP”), Meteora Select Trading Opportunities Master, LP (“MSTO”) and Meteora Strategic Capital LLC (“MSC”) (with MCP, MSTO and MSC collectively as “Seller”) for an OTC Equity Prepaid Forward Transaction. For purposes of the Forward Purchase Agreement, “Counterparty” refers to CSLM prior to the consummation of the business combination and Holdco after the consummation of the Business Combination. The Forward Purchase Agreement provides that Seller shall be prepaid an aggregate cash amount (the “Prepayment Amount”) equal (x) to the product of (i) the number of shares as set forth in a pricing date notice and (ii) the approximate per share redemption price payable to redeeming shareholders in connection with the Business Combination pursuant to the Counterparty’s Amended and Restated Memorandum and Articles of Association) (the “Initial Price”). Counterparty will pay to the Seller the Prepayment Amount directly from the Trust Account no later than the earlier of (a) one business day after the closing date of the Business Combination and (b) the date any assets from the Trust Account are disbursed in connection with the Business Combination.
Seller in its sole discretion may request warrants of the Counterparty exercisable for shares in an amount equal to (i) the maximum number of shares less (ii) the number of shares specified in the pricing date notice (the “Shortfall Warrants,” and the shares underlying the Shortfall Warrants, the “Shortfall Warrant Shares”). The Shortfall Warrants shall have an exercise price equal to the reset price. The Form of Shortfall Warrant shall be agreed upon by the parties hereto within 45 days of the date of the Forward Purchase Agreement.
On October 22, 2025 (the “Closing Date”), the Business Combination was consummated whereby (a) Merger Sub merged with and into Fusemachines with Fusemachines as the surviving corporation and becoming a wholly-owned subsidiary of Pubco; (b) the issued and outstanding shares of Fusemachines were exchanged for $200,000,000 in the form of newly-issued shares of Pubco common stock valued at $10.00 per share (the “Aggregate Base Consideration”). On the Closing Date, (a) the shareholders of Fusemachines were issued an aggregate of 19,214,201 shares of New Fusemachines Common Stock, an aggregate of 693,420 shares of New Fusemachines Common Stock were reserved for issuance upon the exercise of stock options, and an aggregate of 122,211 shares of New Fusemachines Common Stock were reserved for issuance upon the exercise of common stock warrants; (b) the public shareholders of CSLM received an aggregate of 901,955 shares of New Fusemachines Common Stock, (c) all public rights were converted into 1,897,500 shares of New Fusemachines Common Stock; (d) New Fusemachines issued an aggregate of 4,743,750 shares of New Fusemachines Common Stock to private placement investors; (e) New Fusemachines issued an aggregate of 1,184,000 shares of New Fusemachines Common Stock, in connection with the PIPE Financing; and (f) the Sponsor Convertible Notes were exchanged for an aggregate of 408,639 newly-issued shares of New Fusemachines Common Stock.
Results of Operations
Our entire activity from inception through September 30, 2025 relates to our formation, the Initial Public Offering and, since the closing of the Initial Public Offering, a search for a Business Combination candidate. We will not be generating any operating revenues until the closing and completion of our Business Combination at the earliest.
For the three months ended September 30, 2025, we had a net loss of $19,839,905, which consisted of a $17,573,073 financing expense, a $1,269,000 loss on the change in fair value of the forward purchase agreement liability, $884,768 of legal and accounting expenses, $45,000 of insurance expense, $130,793 of dues and subscriptions expense, $30,000 of administrative expense – related party, and $42,098 of interest, general and administrative expenses, offset by $134,827 dividends on marketable securities held in the Trust Account.
For the nine months ended September 30, 2025, we had a net loss of $22,105,674, which consisted of a $17,573,073 financing expense, a $1,269,000 loss on the change in fair value of forward purchase agreement liability, $1,822,844 loss on extinguishment of debt, $1,376,774 of legal and accounting expenses, $135,522 of insurance expense, $199,785 of dues and subscriptions expense, $90,000 of administrative expense – related party, and $112,606 of interest, general and administrative expenses, offset by $473,930 dividends on marketable securities held in the Trust Account.
For the three months ended September 30, 2024, we had a net loss of $132,909, which consisted of $210,000 of expected credit losses, $432,298 of legal and accounting expenses, $50,072 of insurance expense, $73,370 of dues and subscriptions expense, $30,000 of administrative expense – related party, and $27,287 of interest expense, offset by $480,118 dividends on marketable securities held in the Trust Account and $210,000 of covenant fees.
For the nine months ended September 30, 2024, we had a net income of $437,633, which consisted of $1,849,140 dividends on marketable securities held in the Trust Account and $435,000 of covenant fees, offset by $435,000 of expected credit losses, $946,736 of legal and accounting expenses, $164,185 of insurance expense, $140,971 of dues and subscriptions expense, $90,000 of administrative expense – related party, and $69,615 of interest expense.
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Liquidity and Capital Resources
As of September 30, 2025 and December 31, 2024, the Company had $9,284 and $83,227 in cash, respectively, and a working capital deficit of $37,206,142 and $4,056,679, respectively, excluding Marketing Securities held in the Trust Account and the Deferred Underwriter Fee liability.
The Company’s liquidity needs through September 30, 2025 had been satisfied through a payment from the Sponsor of $25,000 for Class B ordinary shares, par value $0.0001 per share (“Class B ordinary shares” and shares thereof, “founder shares”), the Initial Public Offering and the sale of the private placement warrants. Additionally, the Company drew on an unsecured promissory note to pay certain offering costs and an unsecured promissory note bearing interest at 4.75% per annum to pay for working capital needs.
The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period within one year after the date that the financial statements are issued. Management plans to address this uncertainty through related party loans from the Sponsor, an affiliate of the Sponsor, or certain of the Company’s officers and directors or their affiliates (“Working Capital Loans”) and effecting a Business Combination. However, there is no assurance that the Company’s plans to raise capital or to consummate a Business Combination will be successful or successful within the Combination Period. In addition, management is currently evaluating the impact of various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond its control. The business could be impacted by, among other things, downturns in the financial markets or in economic conditions, inflation, increases in interest rates, adverse developments affecting the financial services industry, and geopolitical instability, such as the military conflict in the Ukraine.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern one year from the date these financial statements are issued. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities as of September 30, 2025.
The underwriter of the IPO is entitled to a deferred discount of $0.35 per Unit, or $6,641,250 in the aggregate. The deferred discount will become payable to the underwriter from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
On November 28, 2023, the Company and the underwriter entered into an agreement under which (i) the Sponsor will transfer 426,000 Class A ordinary shares held by the Sponsor to the underwriter upon the closing of the Company’s initial business combination and (ii) the underwriter will waive the deferred underwriter fee payable and any deferred underwriting commissions payable pursuant to the underwriter agreement dated April 22, 2021. For avoidance of doubt, the agreement applies only if the initial Business Combination is consummated, and the transfer of shares is effective and completed. Except as specifically amended in the agreement, all terms of the underwriting agreement dated April 22, 2021 shall remain in full force and effect.
Commitments and Contingencies
Registration and Shareholder Rights
The holders of the Founder Shares, Private Placement Warrants, and warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of the Initial Public Offering, requiring the Company to register such securities for resale. The holders will have the right to require us to register for resale these securities pursuant to a shelf registration under Rule 415 under the Securities Act. The holders of a majority of these securities will also be entitled to make up to three demands, plus short form registration demands, that we register such securities. In addition, the holders will be entitled to certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial business combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
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Underwriting Agreement
The Company granted the underwriter a 45-day option from the date of the Initial Public Offering to purchase up to 2,475,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discount. The underwriters exercised the over-allotment option in full on January 18, 2022, the date of the Initial Public Offering. The underwriter was entitled to a cash underwriting discount of $0.20 per Unit, or $3,795,000 in the aggregate, which was paid upon the closing of the Initial Public Offering. In addition, the underwriter is entitled to a deferred fee of $0.35 per Unit, or $6,641,250 in the aggregate. The deferred fee is payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement. On November 28, 2023, the Company and BTIG entered into an agreement under which BTIG waived its entitlement to the payment of the deferred compensation and instead receive 426,000 Class A ordinary shares from shares held by the Sponsor only in the event of the closing of a Business Combination. Accordingly, BTIG will not receive any portion of the $6,641,250 deferred underwriting fee in the event of the closing of a Business Combination. Pursuant to the Waiver, BTIG resigned from every capacity, role or involvement in which BTIG may otherwise be described in any registration statement as acting or agreeing to act in the future with respect to any business combination of CSLM and/or its Sponsor. The Company has agreed to register shares received by BTIG from Consilium Acquisition Sponsor I, LLC, the Company’s Sponsor, upon the closing of its initial Business Combination. In the event that such shares are not registered, the underwriter’s deferred fee shall be reinstated.
Financial Services Agreement
The Sponsor entered into a financial services agreement (the “Financial Services Agreement”) with a service provider (the “Broker-Dealer”) for a period of twelve (12) months commencing October 13, 2022, to provide broker-dealer services. In accordance with the Financial Services Agreement, the Broker-Dealer will be paid a fee in the form of 125,000 shares of common stock in the surviving entity of the proposed business combination with Fusemachines. Compensation due to the Broker-Dealer is in scope of ASC 718 Compensation — Stock Compensation (“ASC 718”) and SAB Topic 5T. The consummation of the initial business combination is considered a performance condition under ASC 718 and stock based compensation should not be recognized until the performance condition is considered probable. As business combinations are not considered probable until consummated, the Company will not recognize compensation costs related to the Consulting Services Agreements until the consummation of the initial business combination. The unrecognized stock-based compensation expense related to the Consulting Agreements was $533,750 as of September 30, 2025 and December 31, 2024.
Consulting Agreements
The Sponsor entered into consulting services agreements (the “Consulting Services Agreements”) with a service provider (the “Consultant”) on April 10, 2023 and September 5, 2023 to provide consulting, advisory and related services to the Sponsor and to the Company on behalf of the Sponsor. In accordance with the Consulting Services Agreements, the Consultant will purchase and the Sponsor will sell 75,000 shares of its Class B ordinary shares of the Company at a price of $0.006 per share in return for such services. The Consulting Services Agreements are contingent upon the consummation of the initial business combination. Compensation due to the Consultant is in scope of ASC 718 Compensation - Stock Compensation (“ASC 718”) and SAB Topic 5T. The consummation of the initial business combination is considered a performance condition under ASC 718 and stock based compensation should not be recognized until the performance condition is considered probable. As business combinations are not considered probable until consummated, the Company will not recognize compensation costs related to the Consulting Services Agreements until the consummation of the initial business combination. The unrecognized stock-based compensation expense related to the Consulting Agreements was $819,950 as of September 30, 2025 and December 31, 2024.
Capital Markets Advisory Agreement
The Company entered into a capital markets advisory agreement (the “Advisory Agreement”) with a service provider (the “Advisor”) on June 21, 2024 to provide capital markets advisory services to the Company. In accordance with the Advisory Agreement, the Advisor will be paid an advisory fee comprised of $100,000 in cash and 75,000 common shares of the post initial business combination entity (the “Advisory Fee”). The Advisory agreement is contingent upon consummation of the initial business combination. The cash compensation due to the Advisor is in scope of ASC 450 Contingencies (“ASC 450”) and the share based compensation due to the Advisor is in scope of ASC 718. The consummation of the initial business combination is considered a loss contingency under ASC 450 and is considered a performance condition under ASC 718 and the Advisory Fee should not be recognized until considered probable. As business combinations are not considered probable until consummated, the Company will not recognize compensation costs related to the Advisory Fee until the consummation of the initial business combination. The unrecognized stock-based compensation expense related to the Advisory Agreement was $607,500 as of September 30, 2025 and December 31, 2024.
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Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates.
We have not identified any critical accounting estimates.
Recent Accounting Pronouncements
Refer to Note 2 - Summary of Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2025. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.
Changes in Internal Control Over Financial Reporting
During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us or any of our officers or directors in their corporate capacity.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in the Company’s annual report on Form 10-K as filed with the SEC on April 11, 2025. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds
Unregistered Sales
Prior to our initial public offering, our sponsor, paid an aggregate of $25,000 to cover certain expenses on behalf of us in exchange for 4,743,750 founder shares, resulting in an effective purchase price paid for the founder shares of approximately $0.006 per share. The number of founder shares issued was determined based on the expectation that the founder shares would represent 20% of the issued and outstanding ordinary shares upon completion of this offering.
Our sponsor purchased 7,942,500 private placement warrants, each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $1.00 per warrant ($7,942,500 in the aggregate), in a private placement that closed substantially concurrently with the closing of our initial public offering.
These issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. No underwriting discounts or commissions were paid with respect to such sales.
Use of Proceeds
On January 18, 2022, the Company consummated its initial public offering of 18,975,000 units at $10.00 per unit, generating gross proceeds of $189,750,000. BTIG, LLC and I-Bankers Securities, Inc. acted as the book-running managers of the offering and BTIG, LLC acted as the representative of the underwriters. The securities sold in the initial public offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-261570). The SEC declared the registration statements effective on January 12, 2022.
In connection with the initial public offering, we incurred offering costs of approximately $11,236,250 (including deferred underwriting commissions of approximately $6,641,250). Other incurred offering costs consisted principally of preparation fees related to the initial public offering. After deducting the underwriting discounts and commissions (excluding the deferred portion, which amount will be payable upon consummation of the initial business combination, if consummated) and the initial public offering expenses, $191,647,500 million of the net proceeds from our initial public offering and certain of the proceeds from the private placement of the private placement warrants (or $10.00 per unit sold in the initial public offering) was placed in the Trust Account. The net proceeds of the initial public offering and certain proceeds from the sale of the private placement warrants are held in the Trust Account and invested as described elsewhere in this Quarterly Report on Form 10-Q.
On July 13, 2023 as approved by its shareholders at an extraordinary general meeting held on June 29, 2023 (the “Special Meeting”), CSLM and its trustee, Continental Stock Transfer & Trust Company amended (the “Amendment”) the Investment Management Trust Agreement, dated as of January 12, 2022 (the “Trust Agreement”), by and between the Company and Continental Stock Transfer & Trust Company (the “Trustee”) and the Company, in order to allow the Company to extend the time to complete a business combination by fifteen (15) additional one (1) month periods until, October 18, 2024 (the “Termination Date”) by depositing into the Trust Account $70,000 for each one-month extension (each an “Extension”).
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| Exhibit No. | Description | |
| 31.1* | Certification of Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification of Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1** | Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2** | Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS* | XBRL Instance Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.SCH* | XBRL Taxonomy Extension Schema Document | |
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | XBRL Taxonomy Extension Labels Linkbase Document | |
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
| * | Filed herewith |
| ** | Furnished herewith |
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SIGNATURES
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.
| FUSEMACHINES INC. | ||
| Date: November 26, 2025 | By: | /s/ Christine Chambers |
| Christine Chambers | ||
| Chief Financial Officer | ||
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FAQ
What did Fusemachines Inc. (FUSE) report for the quarter ended September 30, 2025?
For Q3 2025, the company, then operating as CSLM Acquisition Corp., reported a net loss of $19.8 million, compared with a net loss of $0.1 million in the same quarter of 2024. The loss was driven mainly by a $17.6 million financing expense and a $1.3 million loss from changes in the fair value of a forward purchase agreement liability, on top of $1.1 million in operating expenses.
Why did Fusemachines (FUSE) show such a large loss in the first nine months of 2025?
For the nine months ended September 30, 2025, the company recorded a net loss of $22.1 million, versus net income of $0.4 million a year earlier. The swing was mainly due to a $17.6 million financing expense, a $1.3 million loss on the forward purchase agreement liability, and a $1.8 million loss on extinguishment of debt, all related to transaction and financing structures around the business combination, rather than recurring operations.
What was CSLM/Fusemachines’ financial position and working capital at September 30, 2025?
At September 30, 2025, the company reported total assets of $12.4 million, including $12.3 million of marketable securities in its trust account and cash of $9,284. Current liabilities totaled $43.9 million, led by a $18.8 million forward purchase agreement liability, a $3.7 million related-party promissory note, and a $11.0 million forward purchase prepayment payable. This produced a working capital deficit of $37.2 million and a shareholders’ deficit of $42.6 million.
How many CSLM public shares remained after redemptions before the Fusemachines merger?
Following several shareholder votes and extensions, redemptions significantly reduced the public float. In July 2025, 371,545 Class A shares were redeemed for $4.49 million, and 99,187 Class A shares were redeemed for $1.22 million. After these transactions, 901,955 Class A ordinary shares remained subject to redemption as of September 30, 2025.
What are the key terms of the Fusemachines business combination completed in October 2025?
On October 22, 2025, CSLM completed its business combination with Fusemachines. Merger Sub merged into Fusemachines, which became a wholly owned subsidiary of the new Delaware holding company, renamed Fusemachines Inc. Fusemachines shareholders received $200 million of consideration in newly issued common stock valued at $10.00 per share, or 19,214,201 shares. Additional issuances included 901,955 shares to public shareholders, 1,897,500 shares from public rights, 4,743,750 shares to private placement investors, 1,184,000 shares for PIPE financing, and 408,639 shares upon exchange of Sponsor Convertible Notes.
Did the company raise any going concern issues in its Q3 2025 report?
Yes. Management stated that as of September 30, 2025 the company had cash of $9,284 and a working capital deficit of $37.2 million, and that it expected to continue incurring significant costs pursuing a business combination. These factors led to a disclosure of substantial doubt about the company’s ability to continue as a going concern absent successful completion of its business combination or additional financing.
