Fusemachines Plunges to $22.1M Loss Amidst SPAC Merger & Redemptions

Ticker: FUSEW · Form: 10-Q · Filed: Nov 28, 2025 · CIK: 2033383

Sentiment: bearish

Topics: SPAC, Net Loss, High Liabilities, Share Redemptions, Financial Distress, Q3 2025 Earnings, Business Combination

Related Tickers: FUSEW, FUSE

TL;DR

**FUSEW is a burning fuse; the massive net loss and soaring liabilities make it a clear sell.**

AI Summary

Fusemachines Inc. (FUSEW) reported a significant net loss of $22,105,674 for the nine months ended September 30, 2025, a stark contrast to the net income of $437,633 in the same period of 2024. This substantial loss was primarily driven by a $17,573,073 financing expense and a $1,822,844 loss on extinguishment of debt, both non-existent in the prior year. Operating expenses also increased to $1,914,687 from $1,411,507 year-over-year. The company's cash position significantly declined from $83,227 at December 31, 2024, to $9,284 by September 30, 2025. Marketable securities held in the trust account decreased from $16,053,202 to $12,289,337. A key business change was the consummation of the Business Combination with Old Fusemachines on October 22, 2025, following a merger agreement from January 22, 2024. The company also faced substantial redemptions of Class A ordinary shares, with 470,732 shares redeemed for $5,715,425 during the quarter, and a total of 14,202,813 Class A shares redeemed for $149,486,187 in July 2023. The company's total liabilities surged to $43,910,706 from $10,819,675 at December 31, 2024, largely due to a $18,842,073 forward purchase agreement liability and an $11,005,073 forward purchase agreement prepayment payable.

Why It Matters

This filing reveals a company in a precarious financial state post-SPAC merger, with a massive net loss and dwindling cash reserves. For investors, the significant share redemptions and the substantial increase in liabilities, particularly the forward purchase agreement liability, signal high risk and potential dilution or further financial strain for New Fusemachines. Employees and customers of the newly combined entity might face uncertainty if the financial instability impacts operational capabilities or future growth plans. In the broader market, this highlights the inherent risks and potential pitfalls associated with SPAC transactions, especially when significant redemptions occur, impacting the capital available for the de-SPACed company and potentially setting a negative precedent for similar deals.

Risk Assessment

Risk Level: high — The company reported a net loss of $22,105,674 for the nine months ended September 30, 2025, a significant deterioration from a net income of $437,633 in the prior year. Total liabilities surged from $10,819,675 to $43,910,706, driven by a $18,842,073 forward purchase agreement liability and an $11,005,073 forward purchase agreement prepayment payable, indicating substantial financial obligations and a highly leveraged position.

Analyst Insight

Investors should exercise extreme caution and consider divesting from FUSEW. The substantial net loss, rapidly increasing liabilities, and significant share redemptions indicate severe financial distress and a challenging path forward for the newly combined entity. Avoid new positions until a clear path to profitability and financial stability is demonstrated.

Financial Highlights

debt To Equity
N/A
revenue
$0
operating Margin
N/A
total Assets
N/A
total Debt
$43,910,706
net Income
-$22,105,674
eps
N/A
gross Margin
N/A
cash Position
$9,284
revenue Growth
N/A

Key Numbers

Key Players & Entities

FAQ

What caused Fusemachines Inc.'s significant net loss in Q3 2025?

Fusemachines Inc.'s net loss of $22,105,674 for the nine months ended September 30, 2025, was primarily due to a $17,573,073 financing expense and a $1,822,844 loss on extinguishment of debt, both absent in the prior year.

How did the Business Combination impact Fusemachines Inc.'s financial position?

The Business Combination with Old Fusemachines, consummated on October 22, 2025, led to significant changes, including a surge in total liabilities to $43,910,706 from $10,819,675, largely due to new forward purchase agreement liabilities totaling over $29 million.

What are the key risks for Fusemachines Inc. investors based on this 10-Q?

Key risks for Fusemachines Inc. investors include the substantial net loss of $22.1 million, the dramatic increase in total liabilities to $43.9 million, and the significant share redemptions, which reduce the capital available to the company.

What was the change in Fusemachines Inc.'s cash balance?

Fusemachines Inc.'s cash balance decreased significantly from $83,227 at December 31, 2024, to just $9,284 as of September 30, 2025, indicating a concerning decline in liquidity.

How much did Fusemachines Inc. pay out in share redemptions?

During the three months ended September 30, 2025, Fusemachines Inc. paid $5,715,425 for the redemption of 470,732 Class A ordinary shares. Earlier, in July 2023, $149,486,187 was distributed for the redemption of 14,202,813 Class A shares.

What is the status of Fusemachines Inc.'s trust account?

The marketable securities held in Fusemachines Inc.'s trust account decreased from $16,053,202 at December 31, 2024, to $12,289,337 as of September 30, 2025, reflecting outflows related to redemptions and other activities.

Did Fusemachines Inc. experience an increase in operating expenses?

Yes, Fusemachines Inc.'s operating expenses increased to $1,914,687 for the nine months ended September 30, 2025, compared to $1,411,507 for the same period in 2024.

What is the significance of the forward purchase agreement liability for Fusemachines Inc.?

The forward purchase agreement liability of $18,842,073 and the related prepayment payable of $11,005,073 represent significant new financial obligations for Fusemachines Inc., contributing substantially to its increased total liabilities and potential future cash outflows.

What was the net loss per share for Fusemachines Inc. Class A ordinary shares subject to redemption?

For the nine months ended September 30, 2025, the basic and diluted net loss per share for Class A ordinary shares subject to redemption was $(3.23), a significant decline from a net income per share of $0.36 in the prior year.

What was the purpose of CSLM Acquisition Corp. before the merger?

CSLM Acquisition Corp. was a blank check company incorporated to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses, which it ultimately did with Old Fusemachines.

Risk Factors

Industry Context

Fusemachines Inc. operates within the technology sector, likely focusing on AI and software solutions following its business combination. As an early-stage company, it faces intense competition from established tech giants and nimble startups. The industry is characterized by rapid innovation, high R&D investment, and a constant need to adapt to evolving market demands and technological advancements. Success hinges on product differentiation, effective go-to-market strategies, and securing adequate funding for growth.

Regulatory Implications

As a publicly traded entity (FUSEW), Fusemachines Inc. is subject to SEC regulations, including timely financial reporting and disclosure requirements. The significant financial events, such as the business combination, large net loss, and substantial debt, necessitate clear and accurate communication to investors to avoid potential regulatory scrutiny or investor lawsuits related to misrepresentation or non-disclosure.

What Investors Should Do

  1. Monitor Post-Combination Performance Closely
  2. Assess Liquidity and Cash Burn Rate
  3. Evaluate Debt Structure and Repayment Capacity
  4. Analyze Revenue Streams and Profitability Drivers

Key Dates

Glossary

Business Combination
A merger, share exchange, asset acquisition, stock purchase, reorganization, or similar business transaction between two or more entities. (The consummation of the business combination with Old Fusemachines on October 22, 2025, is a pivotal event for Fusemachines Inc., fundamentally altering its operational and financial landscape.)
Class A Ordinary Shares Subject to Possible Redemption
Shares that holders have the right to redeem for cash, typically at the time of a business combination or other specified events. (Significant redemptions of these shares ($5,715,425 in Q3 2025) represent a cash outflow and a reduction in equity, impacting the company's liquidity and capital structure.)
Forward Purchase Agreement Liability
An obligation to purchase a specified amount of securities or assets at a future date, recognized as a liability on the balance sheet. (A substantial new liability ($18,842,073) as of September 30, 2025, contributing significantly to the company's increased total liabilities.)
Loss on Extinguishment of Debt
A loss recognized when debt is paid off or retired before its scheduled maturity, often due to unfavorable terms or refinancing. (The $1,822,844 loss in the nine months ended September 30, 2025, indicates costs associated with restructuring or settling existing debt obligations.)
Financing Expense
Costs incurred in connection with obtaining or maintaining financing, which can include interest, fees, and other related charges. (The $17,573,073 financing expense is a major driver of the net loss for the period, highlighting the significant costs associated with the company's capital structure and transactions.)
Marketable Securities
Investments in financial instruments that are easily bought or sold on public exchanges, such as stocks and bonds. (The decrease in marketable securities held in the trust account from $16,053,202 to $12,289,337 suggests either sales to fund operations/redemptions or market value fluctuations.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, which showed a net income of $437,633, Fusemachines Inc. has experienced a dramatic downturn, reporting a net loss of $22,105,674 for the nine months ended September 30, 2025. This shift is largely due to significant new financing expenses and losses on debt extinguishment, which were absent previously. Total liabilities have ballooned from $10,819,675 to $43,910,706, driven by new forward purchase agreement obligations. Operating expenses have also increased, further pressuring profitability. The company's cash position has deteriorated severely, falling from $83,227 to just $9,284, indicating a critical need for capital management and operational improvement post-business combination.

Filing Stats: 4,648 words · 19 min read · ~15 pages · Grade level 16.9 · Accepted 2025-11-26 19:36:02

Key Financial Figures

Filing Documents

— FINANCIAL INFORMATION

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 30 Item 4.

Controls and Procedures

Controls and Procedures 30

— OTHER INFORMATION

PART II — OTHER INFORMATION 31 Item 1.

Legal Proceedings

Legal Proceedings 31 Item 1A.

Risk Factors

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

SIGNATURES 33 i PART I — FINANCIAL INFORMATION Item1. Interim Financial Statements CSLM ACQUISITION CORP. CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2025 (unaudited) December 31, 2024 Assets: Current assets: Cash $ 9,284 $ 83,227 Prepaid expenses 21,484 6,670 Due from related party 32,546 31,849 Other receivable, net of reserve for credit losses of $ 0 and $ 505,000 as of September 30, 2025 and December 31, 2024, respectively — — Marketable securities held in trust account 12,289,337 16,053,202 Total current assets 12,352,651 16,174,948 Total Assets $ 12,352,651 $ 16,174,948 Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders' Deficit Current liabilities: Accounts payable $ 351,472 $ 330,180 Accrued expenses 1,941,000 968,615 Promissory note – related party 3,665,000 2,750,000 Accrued interest – related party 242,207 129,630 Forward purchase agreement prepayment payable 11,005,073 — Forward purchase agreement liability 18,842,073 — Share redemptions payable 1,222,631 — Deferred underwriting commissions 6,641,250 6,641,250 Total current liabilities 43,910,706 10,819,675 Total Liabilities 43,910,706 10,819,675 Commitments and Contingencies (Note 7) - - Class A ordinary shares, $ 0.0001 par value; 500,000,000 shares authorized, 901,955 and 1,372,687 shares subject to redemption as of September 30, 2025 and December 31, 2024, respectively 11,066,706 16,053,202 Shareholders' Deficit: Preference shares, $ 0.0001 par value; 5,000,000 shares authorized; none issued and outstanding — — Class A ordinary shares, $ 0.0001 par value; 500,000,000 shares authorized; 4,743,749 issued and outstanding, excluding 901,955 and 1,372,687 shares subject to possible redemption as of September 30, 2025 and December 31, 2024, respectively 474 474 Class B ordinary shares, $ 0.0001 par value; 50,000,000 shares authorized; 1 share

financial statements include CSLM Merger Sub, Inc. ("Merger Sub") and CSLM Holdings, Inc. ("Pubco"), both wholly-

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 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 Sh

View Full Filing

View this 10-Q filing on SEC EDGAR

View on Read The Filing