NASDAQ: FUSE

AI
Solutions

At
Fusemachines, we develop industry focused and problem specific AI solutions that combine software products with implementation services
to address complex business challenges. Our core platform, AI Studio, enables experimentation, model training, deployment, and lifecycle
management of AI systems. Built on top of AI Studio, AI Engines provide specialized AI capabilities for targeted use cases such as fraud
detection in food and beverage transactions or information extraction from loan documents. We also offer AI Agents that can assist with
or automate operational tasks such as interviewing candidates during the hiring process.

Our
services complement these products and include activities such as customizing and fine tuning models, integrating AI systems into existing
enterprise workflows, and developing bespoke solutions tailored to specific client needs. Clients can choose to engage with Fusemachines
through software, services, or a combination of both depending on their requirements.

Products

Our
product suite consists of our platform AI Studio, outcome-specific AI Engines, and advanced interactive AI Agents, designed to help organizations
build, deploy, and operationalize AI solutions at scale.

AI
Studio

AI
Studio is the foundational platform that powers Fusemachines’ AI solutions, enabling organizations to build, deploy, and manage
AI applications at scale. By providing a unified environment for data scientists, engineers, and business teams, AI Studio simplifies
the process of developing and operationalizing AI solutions.

AI
Studio is structured into four integrated layers that enable organizations to operationalize AI solutions efficiently. The Business Layer
sits at the top and contains the business applications, workflows, and AI-powered use cases that organizations deploy to support decision-making
and operations. Beneath it, the AI Hub provides the environment for developing, integrating, and managing AI models, engines, and agents
that power these applications. The Data Layer connects and organizes enterprise data from various sources, enabling AI systems to access
and process both structured and unstructured data. Supporting all layers is the Governance Layer, which ensures secure deployment, monitoring,
compliance, and lifecycle management of AI systems across the platform.

AI
Engines

AI
Engines are specialized AI software solutions built on top of AI Studio that are designed to deliver industry- and pain point–specific
outcomes. Each engine focuses on solving targeted business challenges within particular domains by leveraging advanced AI technologies
such as large language models (LLMs), computer vision, machine learning, and deep learning. By addressing clearly defined operational
problems, AI Engines enable organizations to automate processes, improve efficiency, and generate actionable insights that directly support
business objectives. For example, AI Engines can be used to extract information from complex documents, generate accurate answers and
summaries from large datasets, or detect suspicious activities and patterns in financial transactions at retail outlets. By combining
technologies such as document understanding, Retrieval Augmented Generation (RAG), and predictive analytics, these engines enable organizations
to automate workflows, improve operational efficiency, and gain deeper insights from their data.

AI
Engines are designed to be highly customizable and adaptable to the needs of different industries such as finance, legal, healthcare,
and enterprise operations. They can operate within a customer’s existing infrastructure while maintaining strong data security,
governance, and access control.

AI
Agents

AI
Agents are intelligent systems built on top of AI Engines and AI Studio that automate complex workflows and interact with users or systems
to accomplish specific tasks. These agents combine capabilities such as reasoning, retrieval, API execution, data processing, and decision
support, enabling organizations to deploy AI systems that actively assist employees and customers in real-time operations.

For
instance, an AI Agent designed for recruitment can act as an interview assistant, assisting recruiters by asking role-specific questions
and evaluating responses. The agent can analyze candidate answers, generate summaries of strengths and areas for improvement, and produce
standardized evaluation reports for hiring teams. By automating parts of the interview and evaluation process, such agents help organizations
streamline hiring workflows, improve consistency in candidate assessments, and reduce manual effort for recruiters and hiring managers.

Services

Our
services are delivered by Forward Deployed Engineers (FDEs) who work closely with customer teams to design, implement, and operationalize
AI solutions built on top of AI Studio. These services provide hands-on support for organizations that require deeper technical collaboration
to successfully deploy AI within their environments. Leveraging the capabilities of AI Studio, our teams help customers customize and
deploy AI Engines, integrate AI into existing systems, and develop bespoke solutions that address complex challenges across AI, data,
and software systems.

1

Customization,
Model Tuning, and Deployment:

We
assist clients in customizing our AI Engines or AI Agents to meet their specific needs. This includes fine-tuning models, configuring
workflows, and deploying solutions through AI Studio. Our teams also support the integration of these engines and agents into the client’s
existing business workflows, data pipelines, and enterprise systems to ensure seamless operation and alignment with business objectives.

Bespoke
AI Solutions:

For
organizations with specific requirements where existing AI Engines may not fully address their needs, we develop custom AI Engines and
AI Agents tailored to their specific business challenges. This may involve designing new models, building specialized AI capabilities,
and integrating them with enterprise data systems and workflows to deliver solutions that align closely with the client’s operational
requirements.

To
manage these engagements at scale, we developed Squadery, an internal platform that supports multiple teams within Fusemachines. Squadery
centralizes operational data from various sources including our CRM and HR systems to streamline project management, resource allocation,
and delivery coordination across service engagements.

Intellectual
Property

Intellectual
property (IP) is a critical asset for Fusemachines, and we take significant measures to protect our innovations. Our IP portfolio includes
patents, trademarks, copyrights, and trade secrets, all of which are designed to safeguard our technology and maintain our competitive
edge.

●Patent
Portfolio: As of December 31, 2025, Fusemachines holds 8 patent applications. These
patents cover a range of technologies that are central to our AI solutions, and we continue
to pursue additional IP protection as we develop new products and solutions.

●IP
Strategy: We rely on a combination of IP protection strategies, including license
agreements, intellectual property assignment agreements, confidentiality agreements, and
non-disclosure agreements. These measures help us secure our intellectual property rights
and ensure that they are respected globally.

For
more information, please see “Risk Factors – Risks Related to Business, Industry, and Operations”.

Competition
and Market Opportunity

Competition

The
AI and digital transformation landscape is highly competitive, with a wide range of players offering various solutions. Fusemachines
faces competition from several sources, including:

●
Corporate
IT organizations that develop internal AI solutions.

●
Commercial
enterprise and point solution software providers that offer specialized AI tools.

●
Open-source
software platforms with data management, machine learning, and analytics capabilities.

●
Public
cloud providers offering discrete tools and microsolutions for AI and analytics.

●
System
integrators that provide custom software solutions tailored to specific business needs.

Market
Opportunity

The
global AI market is set for substantial growth, with the global AI market itself is expected to reach nearly $1.4 trillion by 2029, and
the AI software segment is anticipated to generate around $791.5 billion in revenue by 2025. However, this expansion is challenged by
a global shortage of AI talent, with 63% of businesses citing AI and machine learning as their biggest skills gap.

We
believe we are well-positioned to capitalize on this market opportunity. With over a decade of experience in developing AI solutions,
we have gained valuable insights into addressing customer challenges. Our solutions, including AI Studio and AI Engines, along with our
comprehensive AI services, allow us to provide highly specialized and problem-specific solutions that deliver substantial ROI. Moreover,
our AI talent development programs, such as the AI Fellowship program, support our ability to cultivate skilled talent as needed, fueling
our growth and helping us capture a significant share of the market in the years ahead.

Our
Corporate History

We
were originally organized as CSLM Acquisition Corp. (“CSLM”), a Cayman Islands exempted company. CSLM was formed as a special
purpose acquisition company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses. CSLM closed its IPO (the “CSLM IPO”) in January 2022, generating
gross proceeds of $189,750,000.

2

On
January 22, 2024, CSLM, entered into a business combination 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 (“Legacy
Fusemachines”), and CSLM Holdings, Inc. (“CSLM Holdings”) (as amended, the “Business Combination Agreement”).

On
October 22, 2025, (a) CSLM merged with and into CSLM Holdings, at which time the separate existence of CSLM ceased and CSLM Holdings
became the surviving corporation (the “Company” or “Fusemachines”) (such transactions, the “Business
Combination”). In connection with the Business Combination, the Company was renamed “Fusemachines Inc.”
and Legacy Fusemachines was renamed “Fusemachines USA, Inc.”

Available
Information

Our principal offices are located at 251 West 30th Street, 5th Floor, New
York, New York 10001. We also maintain a website at www.fusemachines.com and https://ir.fusemachines.com/, where additional information
about our company and solutions can be found. Information contained on or that can be accessed through our website is neither a part of,
nor incorporated by reference into, this Annual Report on Form 10-K, and you should not consider information on our website to be part
of this Annual Report on Form 10-K.

Human
Capital

As of December 31, 2025, we had more
than 270 full-time employees. As of December 31, 2025, none of our employees were represented by
labor unions or covered by collective bargaining agreements. We consider our relationship with our employees to be good. We
emphasize several measures and objectives in managing our human capital assets, including, among others, (i) employee safety and
wellness, (ii) talent acquisition and retention, (iii) employee engagement, development, and training, (iv) diversity and inclusion
and (v) compensation. These targeted ideals may include annual bonuses, stock-based compensation awards, a 401(k) plan., healthcare,
and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, and/or
employee assistance programs. We also provide our employees with access to various innovative, flexible, and convenient health and
wellness programs. We designed these programs to support employees’ physical and mental health by providing tools and
resources to improve or maintain their health status and encourage engagement in healthy behaviors.