Fusemachines Inc.

Previous wording

The Company entered into an amendment on February 3, 2026 to the Prepaid Forward Purchase Agreement (the “Amendment”) originally entered into on July 31, 2025 with Meteora Capital Partners and affiliates. The Amendment replaces the agreement’s previously fixed Termination Price of $12.00 per share with a weekly-reset Termination Price equal to the lower of (a) $12.00 and (b) the volume-weighted average price (VWAP) of the Shares for the immediately preceding week (as reported by Bloomberg L.P.), subject to Reset Price Floors applied on a tranche basis (50% of the Shares: $2.50 floor; 50% of the Shares: $5.00 floor). The effect of amendment has been taken in change in fair value of forward purchase derivative liabilities (refer to Note 3 - Fair value measurements of unaudited condensed consolidated interim financial statement).

Current wording

The Company entered into an amendment on February 3, 2026 to the Prepaid Forward Purchase Agreement originally entered into on July 31, 2025 (the “Forward Purchase Agreement” or “FPA”) with Meteora Capital Partners, LP, Meteora Select Trading Opportunities Master, LP and Meteora Strategic Capital, LLC (collectively, the “Meteora Parties”). The amendment replaces the agreement’s previously fixed Termination Price of $12.00 per share with a weekly-reset Termination Price equal to the lower of (a) $12.00 and (b) the volume-weighted average price (“VWAP”) of the Shares for the immediately preceding week (as reported by Bloomberg L.P.), subject to Reset Price Floors applied on a tranche basis (50% of the Shares: $2.50 floor; 50% of the Shares: $5.00 floor). On August 2, 2026, the Company and the Meteora Parties entered into a Second Forward Purchase Agreement Confirmation Amendment, which deleted the Reset Price Floors in their entirety. As a result, the Termination Price now resets on the first scheduled trading day of each calendar week to the lower of $12.00 and the prior week’s VWAP, with no floor. Following early terminations effective as of August 4, 2026 (793,566 Terminated Shares) and September 28, 2026 (38,564 Terminated Shares), in each case in connection with sales of such shares by the Meteora Parties, the number of shares of Common Stock under the FPA was reduced from 891,930 to 59,800. The effect of the February 3, 2026 amendment and the August 2, 2026 amendment is reflected in the change in fair value of forward purchase derivative liabilities (refer to Note 3 - Fair value measurements of unaudited condensed consolidated interim financial statement).

Previous wording

On February 3, 2026, the Company entered into an amendment to the Common Stock Purchase Warrant (the “Warrant Amendment”) originally issued on October 22, 2025 in connection with the Business Combination with Meteora Capital Partners, LP, Meteora Select Trading Opportunities Master, LP and Meteora Strategic Capital, LLC (collectively, the “Holder”). Pursuant to the Warrant Amendment, the exercise price of the warrant was reduced from $12.00 to $10.00 per share of the Company’s Class A common stock, subject to customary adjustments as set forth in the warrant agreement. All other terms and conditions of the warrant, including the number of shares issuable upon exercise (2,108,070 shares), remain unchanged and continue in full force and effect. As a result of the reduction in exercise price, the Company recognized a deemed dividend equal to the incremental fair value of the Shortfall Warrants resulting from the Warrant Amendment, measured as of February 3, 2026. The deemed dividend amounting to $84.1 thousand has been recorded as a charge to accumulated deficit with a corresponding credit to additional paid-in capital and, while it does not affect net loss, is deducted from net income (loss) attributable to common stockholders for purposes of computing net loss per share.

Current wording

On February 3, 2026, the Company entered into an amendment to the Common Stock Purchase Warrant (the “Warrant Amendment”) originally issued to the Meteora Parties on October 22, 2025 in connection with the Business Combination (the “Shortfall Warrants”). Pursuant to the Warrant Amendment, the exercise price of the warrant was reduced from $12.00 to $10.00 per share of the Company’s Common Stock, subject to customary adjustments as set forth in the warrant agreement. The Shortfall Warrants are exercisable for up to 2,108,070 shares of Common Stock. As a result of the reduction in exercise price, the Company recognized a deemed dividend equal to the incremental fair value of the Shortfall Warrants resulting from the Warrant Amendment, measured as of February 3, 2026. The deemed dividend amounting to $84.1 thousand has been recorded as a charge to accumulated deficit with a corresponding credit to additional paid-in capital and, while it does not affect net loss, is deducted from net income (loss) attributable to common stockholders for purposes of computing net loss per share. On August 2, 2026, the Company and the Meteora Parties entered into a Second Common Stock Purchase Warrant Amendment, pursuant to which the exercise price of the Shortfall Warrants was amended to equal the greater of (i) the Termination Price, as reset from time to time under the FPA, and (ii) $0.85 per share, subject to adjustment.

Previous wording

For the three months ended June 30, 2026, and June 30, 2025, we generated revenues of $1.79 million and $2.03 million and reported a net loss of $2.85 million and $3.79 million, respectively. For the six months ended June 30, 2026, and June 30, 2025, we generated revenues of $3.67 million and $3.99 million and reported a net loss of $3.72 million and $4.04 million, respectively. Net cash used in operating activities was $3.51 million for the six months ended June 30, 2026, and $0.15 million for the six months ended June 30, 2025. As noted in our unaudited condensed consolidated interim financial statements, we had an accumulated deficit of $38.95 million as of June 30, 2026 and $35.15 million as of December 31, 2025.

Current wording

For the three months ended September 30, 2026, and September 30, 2025, we generated revenues of $1.85 million and $1.79 million and reported a net loss of $4.62 million and $1.17 million, respectively. The reported net loss for the third quarter of 2026 included a $2.21 million noncash charge resulting from the change in fair value of the forward purchase derivative liability, which contributed significantly to the reported net loss. For the nine months ended September 30, 2026, and September 30, 2025, we generated revenues of $5.52 million and $5.78 million and reported a net loss of $8.34 million and $5.21 million, respectively. Net cash used in operating activities was $4.81 million for the nine months ended September 30, 2026, and $0.49 million for the nine months ended September 30, 2025. As noted in our unaudited condensed consolidated interim financial statements, we had an accumulated deficit of $43.57 million as of September 30, 2026 and $35.15 million as of December 31, 2025.

Previous wording

●Adequate Capital Raise: On April 17, 2026, Fusemachines Inc. entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) and a related Registration Rights Agreement with Roth Principal Investments, LLC (“Roth Principal Investments”), an affiliate of Roth Capital Partners, LLC. Pursuant to the Purchase Agreement, the Company has the right, but not the obligation, to sell to Roth Principal Investments up to $20,000,000 in aggregate gross proceeds of shares of common stock (par value $0.0001 per share) from time to time over a 36-month commitment period, at the Company’s sole discretion. Although we entered into the Purchase Agreement during 2026, we expect that additional capital will be required to fund operations, support product development, expand selling and marketing activities, and meet our working capital requirements. As of the date these unaudited condensed consolidated interim financial statements along with Management Discussion and Analysis were available to be issued, the S-1 is not yet effective, and there can be no assurance as to the timing or ultimate effectiveness thereof.

Current wording

●Adequate Capital Raise: On April 17, 2026, Fusemachines Inc. entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) and a related Registration Rights Agreement with Roth Principal Investments, LLC (“Roth Principal Investments”), an affiliate of Roth Capital Partners, LLC. Pursuant to the Purchase Agreement, the Company has the right, but not the obligation, to sell to Roth Principal Investments up to $20,000,000 in aggregate gross proceeds of shares of common stock (par value $0.0001 per share) from time to time over a 36-month commitment period, at the Company’s sole discretion. Although we entered into the Purchase Agreement during 2026, we expect that additional capital will be required to fund operations, support product development, expand selling and marketing activities, and meet our working capital requirements.

Previous wording

●Finance costs: Historically, the Company issued certain convertible promissory notes to finance its operations, as further described in “Note 5 – Long-Term Debt” to the unaudited condensed consolidated interim financial statements. These instruments bore interest and were subject to automatic conversion. In connection with the consummation of the Business Combination during 2025, the outstanding principal and accrued interest under these convertible notes were converted into equity securities in accordance with their contractual terms. As a result, no convertible promissory notes remained outstanding as of June 30, 2026 other than related party note payable related to Dolma Impact Fund I (“Dolma”) amounting to $300 thousand. Following the conversion, the Company no longer incurs interest expense related to these instruments, which has reduced ongoing finance costs compared to prior periods.

Current wording

●Finance costs: Historically, the Company issued certain convertible promissory notes to finance its operations, as further described in “Note 6 - Debt” to the unaudited condensed consolidated interim financial statements. These instruments bore interest and were subject to automatic conversion. In connection with the consummation of the Business Combination during 2025, the outstanding principal and accrued interest under these convertible notes were converted into equity securities in accordance with their contractual terms. From this previous group of convertible promissory notes, no convertible promissory notes remained outstanding as of September 30, 2026 other than related party note payable related to Dolma Impact Fund I (“Dolma”) amounting to $300 thousand. In August 2026, we issued convertible notes with an aggregate principal amount of $2,500 thousand and an 18% original issue discount, maturing February 12, 2027. Amortization of the original issue discount will increase interest expense through maturity.

Previous wording

We are also a “smaller reporting company” as defined in the Securities Exchange Act of 1934. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies until the fiscal year following the determination that our voting and non-voting common stock held by non-affiliates is $250 million or more measured on the last business day of our second fiscal quarter, or our annual revenues are less than $100 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is $700 million or more measured on the last business day of our second fiscal quarter.

Current wording

We are also a “smaller reporting company” as defined in Rule 12b-2 under the Securities Exchange Act of 1934. Even after we are no longer an emerging growth company, we may continue to be a smaller reporting company and take advantage of certain of the scaled disclosures available to smaller reporting companies until the fiscal year following the determination that we no longer qualify as a smaller reporting company. We will qualify as a smaller reporting company for so long as either (i) the market value of our common stock held by non-affiliates is less than $250 million, measured on the last business day of our most recently completed second fiscal quarter, or (ii) our annual revenues are less than $100 million during our most recently completed fiscal year and the market value of our common stock held by non-affiliates is less than $700 million, measured on the last business day of our most recently completed second fiscal quarter.

Previous wording

The period-to-period comparisons of results of operations have been prepared using the historical periods included in our unaudited condensed consolidated interim financial statements. The following discussion should be read in conjunction with the unaudited condensed consolidated interim financial statements and related notes included elsewhere in this quarterly report. We have derived this data from our unaudited condensed consolidated interim financial statements included elsewhere in this quarterly report.

Current wording

The period-to-period comparisons of results of operations have been prepared using the historical periods included in our unaudited condensed consolidated interim financial statements. The following discussion should be read in conjunction with the unaudited condensed consolidated interim financial statements and related notes included elsewhere in this registration statement. We have derived this data from our unaudited condensed consolidated interim financial statements included elsewhere in this registration statement.

Previous wording

*Cost of revenue –*Cost of revenue primarily consists of consulting and payroll expenses that are assigned to building AI solutions. Cost of revenue increased by $0.003 million, to $0.83 million for the three months ended June 30, 2026, compared to $0.83 million for the three months ended June 30, 2025. The increase was primarily driven by annual salary increments.

Current wording

Cost of revenue –Cost of revenue primarily consists of consulting and payroll expenses that are assigned to building AI solutions. Cost of revenue increased by $0.06 million, to $0.86 million for the three months ended September 30, 2026, compared to $0.80 million for the three months ended September 30, 2025. The increase was primarily driven by annual salary increments.

Previous wording

Cost of revenue increased by $0.07 million, to $1.76 million for the six months ended June 30, 2026, compared to $1.69 million for the six months ended June 30, 2025. The increase was primarily driven by annual salary increments.

Current wording

Cost of revenue increased by $0.14 million, to $2.63 million for the nine months ended September 30, 2026, compared to $2.49 million for the nine months ended September 30, 2025. The increase was primarily driven by annual salary increments.

Previous wording

Selling and marketing expenses increased by $0.05 million, from $0.33 million for the three months ended June 30, 2025, to $0.38 million for the three months ended June 30, 2026. The increase was primarily attributable to higher consulting fees and advertising expenses.

Current wording

Selling and marketing expenses increased by $0.07 million, from $0.29 million for the three months ended September 30, 2025, to $0.36 million for the three months ended September 30, 2026. The increase was primarily attributable to higher consulting fees and advertising expenses.

Previous wording

Selling and marketing expenses increased by $0.15 million, from $0.64 million for the six months ended June 30, 2025, to**$**0.79 million for the six months ended June 30, 2026. The increase was primarily attributable to higher consulting fees and advertising expenses.

Current wording

Selling and marketing expenses increased by $0.22 million, from $0.93 million for the nine months ended September 30, 2025, to $1.15 million for the nine months ended September 30, 2026. The increase was primarily attributable to higher consulting fees and advertising expenses.

Previous wording

General and administrative expenses increased by $1.41 million, from $1.57 million for the three months ended June 30, 2025, to $2.98 million for the three months ended June 30, 2026. The increase was primarily driven by a rise in stock-based compensation expense of $0.40 million attributable to the issuance of restricted stock units (“RSUs”) during the current period, which did not exist in the prior year quarter. Further, the Professional services costs increased by $0.47 million, driven by an increment in audit and consulting fees. In 2025, $0.15 million of the professional service cost was capitalized as IPO transaction cost in 2025 whereas it is NIL in 2026. In addition, other general expenses, payroll increased by $0.26 million due to annual salary increments, insurance policy by $0.11 million, other operating expenses by $0.10 million and BOD’s compensation by $0.07 million.

Current wording

General and administrative expenses increased by $1.02 million, from $1.63 million for the three months ended September 30, 2025, to $2.65 million for the three months ended September 30, 2026. The increase was primarily attributable to a rise in stock-based compensation expense of $0.39 million related to the issuance of restricted stock units (“RSUs”) during the current period, which did not exist in the same period of previous year. Further, the Professional service costs increased to $0.64 million reflecting higher audit and consulting fees. In addition, other general expenses, payroll expenses increased to $0.93 million due to annual salary increments, insurance policy to $0.15 million, BOD’s compensation to $0.07 million and other general & administrative to $0.47 million.

Previous wording

General and administrative expenses increased by $2**.75 million, from $3.5 million for the six months ended June 30, 2025, to $6.**25 million for the six months ended June 30, 2026. The increase was primarily driven by a rise in stock-based compensation expense of $0.74 million attributable to the issuance of restricted stock units (“RSUs”) during the current period, which did not exist in the prior year quarter. Further, the Professional services costs increased by $0.97 million, driven by an increment in audit and consulting fees. In 2025, $0.14 million of the professional service cost was capitalized as IPO transaction cost whereas as it is NIL in 2026. In addition, other general expenses, payroll increased by $0.55 million due to annual salary increments, insurance policy by $0.21 million, other operating expenses by $0.15 million and BOD’s compensation by $0.13 million.

Current wording

General and administrative expenses increased by $3.78 million, from $5.13 million for the nine months ended September 30, 2025, to $8.91 million for the nine months ended September 30, 2026. The increase was primarily attributable to a rise in stock-based compensation expense of $1.21 million related to the issuance of restricted stock units (“RSUs”) during the current period, which did not exist in the same period of previous year. Further, the Professional service costs increased to $2.68 million reflecting higher audit and consulting fees. In addition, other general expenses, payroll expenses increased to $2.96 million due to annual salary increments, insurance policy to $0.43 million, BOD’s compensation to $0.20 million and other general & administrative to $1.43 million.

Previous wording

Research and development expenses for the three months ended June 30, 2026, increased by**$**0.13 million to $0.29 million as compared to $0.16 million for the three months ended June 30, 2025. The increase was primarily due to increase in payroll expenses.

Current wording

Research and development expenses for the three months ended September 30, 2026, increased by $0.12 million to 0.29 million as compared to 0.17 million for the three months ended September 30, 2025. The increase was primarily due to increase in payroll expenses.

Previous wording

Research and development expenses for the six months ended June 30, 2026, increased by $0.27 million to $0.59 million as compared to $0.32 million for the six months ended June 30, 2025. The increase was primarily due to increase in payroll expenses.

Current wording

Research and development expenses for the nine months ended September 30, 2026, increased by $0.39 million to $0.88 million as compared to $0.49 million for the nine months ended September 30, 2025. The increase was primarily due to increase in payroll expenses.

Previous wording

Interest expense decreased by $0.02 million to $0.05 million for the three months ended June 30, 2026, from $0.07 million for the three months ended June 30, 2025.

Current wording

Interest expense increased by $0.28 million to $0.35 million for the three months ended September 30, 2026, from $0.07 million for the three months ended September 30, 2025. The increase was due to the interest on the convertible notes issued in August 2026.

Previous wording

Loss on extinguishment of debt – Loss on extinguishment of debt for the three months ended June 30, 2026 and 2025 was Nil. Loss on extinguishment of debt for the six months ended June 30, 2026 was Nil as compared to $0.39 million for the six months ended June 30, 2025, represents $0.1 million related to April 2024 Convertible Note, $0.1 million related to June 2024 Convertible Note and $0.2 million related to September 2024 Convertible Notes. Loss on extinguishment of debt are related to modification of the aforementioned loans on account of change in conversion price from $4.94 to $3.15 was accounted for under the substantial premium model in accordance with ASC 470, Debt where the excess above the fair value of these notes was recorded as loss on extinguishment of debt.

Current wording

Loss on extinguishment of debt – Loss on extinguishment of debt for the three months ended September 30, 2026 and 2025 was Nil. Loss on extinguishment of debt for the nine months ended September 30, 2026 was Nil as compared to $0.39 million for the nine months ended September 30, 2025.

Previous wording

Gain on extinguishment of payable- During the three months ended June 30, 2026 , gain on extinguishment of payable of $0.01 million and three months ended June 30, 2025 gain on extinguishment of payable was NIL. During the six months ended June 30, 2026, the Company recognized a gain on extinguishment of payable of $0.51 million, with no corresponding amount recorded in the six months ended June 30, 2025.

Current wording

Gain on extinguishment of payable- During the three months ended September 30, 2026 and 2025, gain on extinguishment of payable was $0.1 million and NIL respectively. During the nine months ended September 30, 2026, the Company recognized a gain on extinguishment of payable of $0.61 million, with no corresponding amount recorded in the nine months ended September 30, 2025.

Previous wording

The difference between the carrying value of the original obligation recorded on the Company’s books and the agreed settlement amount was recognized as a gain on extinguishment of payable in the current quarter in accordance with applicable accounting guidance.

Current wording

The difference between the carrying value of the original obligation recorded on the Company’s books and the agreed settlement amount was recognized as a gain on extinguishment of payable in accordance with applicable accounting guidance.

Previous wording

Gain on change in fair value for the three months ended June 30, 2026 was $0.01 million as compared to loss of $2.86 million for the three months ended June 30, 2025. Out of the aforementioned gain for the three months ended June 30, 2026, gain of $0.02 million related to fair value of forward purchase derivative liability and remaining loss in fair value of $0.01 million related to common stock warrant liability. This gain in fair value of common stock warrant liability was primarily driven by changes in key valuation inputs, including the Company’s relatively low share price of $1.05, elevated equity volatility of 65.0%, and the remaining contractual term of approximately 7.16 years. These factors increased the probability-weighted value of the potential share settlement under the arrangement. In addition, gain of approximately $0.02 million in the fair value of forward purchase derivative liability is driven by changes in key valuation inputs, including the Company’s relatively Volume weighted average price (VWAP) of $1.06, elevated equity volatility of 65%, and the remaining contractual term of approximately 2.32 years. These factors increased the probability-weighted value of the potential share settlement under the arrangement. Further impacted by adjustments for counterparty credit risk of 6.6%.

Current wording

Loss on change in fair value for the three months ended September 30, 2026 was 2.17 million as compared to loss of $0.06 million for the three months ended September 30, 2025. Out of the aforementioned loss for the three months ended September 30, 2026, loss of $2.21 million related to fair value of forward purchase derivative liability whereas there was a gain in fair value of $0.04 million related to common stock warrant liability. This gain in fair value of common stock warrant liability was primarily driven by changes in key valuation inputs, including the Company’s relatively low share price of $0.52, elevated equity volatility of 65.0%, and the remaining contractual term of approximately 6.9 years. These factors increased the probability-weighted value of the potential share settlement under the arrangement. In addition, loss of approximately $2.21 million in the fair value of forward purchase derivative liability is driven by changes in key valuation inputs, including the Company’s low share price of $0.52, elevated equity volatility of 65%, early termination of 832,130 underlying shares and the remaining contractual term of approximately 2.06 years. These factors increased the probability-weighted value of the potential share settlement under the arrangement.

Previous wording

Other loss for the six months ended June 30, 2026, was $50 thousand, compared to other income of**$**4 thousand for the six months ended June 30, 2025, representing other loss primarily related to foreign exchange.

Current wording

Other Income for the three months ended September 30, 2026, was $109 thousand, compared to other income of $55 thousand for the three months ended September 30, 2025, primarily related to foreign exchange gain.

Previous wording

Provision for income tax is Nil thousand for the three months ended June 30, 2026 and Nil for the three months ended June 30, 2025.

Current wording

Provision for income tax is Nil for the three months ended September 30, 2026 and Nil for the three months ended September 30, 2025.

Previous wording

Provision for income tax is $4 thousand for the six months ended June 30, 2026 and Nil for the six months ended June 30, 2025.

Current wording

Provision for income tax is $4 thousand for the nine months ended September 30, 2026 and Nil for the nine months ended September 30, 2025.

Previous wording

The reconciliation of our net loss to EBITDA and Adjusted EBITDA for the three months ended June 30, 2026, and June 30, 2025, as well as for six months ended June 30, 2026, and June 30, 2025, are as follows:

Current wording

The reconciliation of our net loss to EBITDA and Adjusted EBITDA for the three months ended September 30, 2026, and September 30, 2025, as well as for nine months ended September 30, 2026, and September 30, 2025, are as follows:

Previous wording

We formally evaluated our liquidity and cash position most recently in 2026 when preparing our 2026 unaudited condensed consolidated interim financial statements. As of June 30, 2026, we had cash of approximately $0.37 million and a net working capital deficit of approximately $16.75 million. As of that date, we also had an accumulated deficit of approximately $38.95 million and a net loss of $3.72 million for the six months ended June 30, 2026.

Current wording

We formally evaluated our liquidity and cash position most recently in 2026 when preparing our 2026 unaudited condensed consolidated interim financial statements. As of September 30, 2026, we had cash of approximately $1.45 million and a net working capital deficit of approximately $9.05 million. As of that date, we also had an accumulated deficit of approximately $43.57 million and a net loss of $8.34 million for the nine months ended September 30, 2026.

Previous wording

As of June 30, 2025, we had cash of approximately $0.47 million and a net working capital deficit of approximately $13.80 million. As of June 30, 2025, we had an accumulated deficit of $38.26 million and a net loss of $4.04 million for the six months ended June 30, 2025.

Current wording

As of December 31, 2025, we had cash of approximately $4.22 million and a net working capital deficit of approximately $13.80 million. As of December 31, 2025, we had an accumulated deficit of $35.15 million and a net loss of $0.93 million for the year ended December 31, 2025.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2026 increased by $3.36 million to $3.51 million, compared to $0.15 million in the same period in 2025. This increase was primarily driven by an increase in Selling and marketing expenses, General and administrative, Research and development, Gain on extinguishment of payable and decrease in Interest expense, Gain/loss on change in fair value. Further, changes in working capital decreased to $1.32 million from $1.8 million in the prior year. The $3.51 million net cash used in operating activities in 2026 was primarily related to (i) a net loss of $3.72 million, offset by; (ii) depreciation and amortization of $0.12 million; (iii) provision for credit losses of ($0.04) million; (iv) stock-based compensation and restricted stock unit compensation of $0.88 million; (v) amortization of right-of-use assets of $0.04 million; (vi) Changes in fair value of common stock warrant liability and forward purchase derivative liability at fair value of ($1.61) million (vii) Accretion of cumulative mandatorily redeemable common and preferred stock liability of $0.06 million; (viii) Gain on extinguishment of payable of ($0.51) million (ix) Working capital changes of $1.3 million.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2026 increased by $4.32 million to $4.81 million, compared to $0.49 million in the same period in 2025. This increase was primarily driven by an increase in Selling and marketing expenses, General and administrative, Research and development, Interest expense, Gain on extinguishment of payable and decrease in Gross profit, Gain/loss on change in fair value and Loss on extinguishment of convertible notes payable. Further, changes in working capital decreased to $1.54 million from $2.44 million in the prior year. The $4.81 million net cash used in operating activities in 2026 was primarily related to (i) a net loss of $8.34 million, offset by; (ii) depreciation and amortization of $0.20 million; (iii) stock-based compensation of $1.31 million; (iv) amortization of right-of-use assets of $0.22 million; (v) unwinding of convertible note discount of $0.29 million; (vi) Changes in fair value of convertible notes, warrant liability and forward purchase derivative liability of $0.51 million; (vii) Accretion of cumulative mandatorily redeemable common and preferred stock liability of $0.08 million; (viii) Gain on extinguishment of payable of ($0.61) million and (ix) Working capital changes of $1.54 million.

Previous wording

Net cash used in operating activities during the six months ended June 30, 2025 was $0.15 million. The $0.15 million net cash used in operating activities in 2025 was primarily related to (i) a net loss of $4.04 million, offset by; (ii) depreciation and amortization of $0.09 million; (iii) provision for credit losses of $0.06 million; (iv) stock-based compensation of $0.12 million; (v) amortization of right-of-use assets of $0.04 million; (vi) changes in fair value of convertible notes and common stock warrant liability ($1.34) million; (vii) Accretion of cumulative mandatorily redeemable common and preferred stock liability of $0.05 million; (viii) Loss on extinguishment of convertible note payable of $0.39 million and (ix) Working capital changes of $1.8 million.

Current wording

Net cash used in operating activities during the nine months ended September 30, 2025 was $0.49 million. The $0.49 million net cash used in operating activities in 2025 was primarily related to (i) a net loss of $5.21 million, offset by; (ii) depreciation and amortization of $0.14 million; (iii) provision for credit losses of $0.05 million; (iv) stock-based compensation of $0.18 million; (v) amortization of right-of-use assets of $0.07 million; (vi) changes in fair value of convertible notes and warrant liability of $1.41 million; (vii) Accretion of cumulative mandatorily redeemable common and preferred stock liability of $0.07 million; (viii) Loss on extinguishment of convertible notes payable of $0.39 million; (ix) unrealized foreign exchange gain of ($0.01) million and (x) Working capital changes of $2.44 million.

Previous wording

Net cash used in investing activities during the six months ended June 30, 2026, was $(0.12) million compared to ($0.06) million during the six months ended June 30, 2025. The $0.12 million net cash used in investing activities in 2026 consisted of $0.09 million in costs capitalized for internally developed software and $0.03 million in purchases of property and equipment.

Current wording

Net cash used in investing activities was $0.18 million for the nine months ended September 30, 2026, compared with $0.08 million for the nine months ended September 30, 2025. In 2026, this consisted of $ 0.16 million of costs capitalized for internally developed software and $0.03 million of purchases of property and equipment, compared with $0.07 million and $0.01 million, respectively, in 2025. The $ 0.10 million increase in net cash used was driven by an $ 0.09 million increase in capitalized internally developed software costs and a $0.01 million increase in property and equipment purchases.

Previous wording

Net cash used in investing activities for the six months ended June 30, 2025 was $(0.06) million and consisted of purchases of property and equipment of $0.006 million, costs capitalized for internally developed software of $0.05 million.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2025 was $0.08 million and consisted of purchases of property and equipment of $0.01 million, costs capitalized for internally developed software of $0.07 million.

Previous wording

Net cash provided by financing activities was $0.18 million in the six months ended June 30, 2025. The $0.18 million net cash provided by financing activities in 2025 consisted of Proceeds from convertible notes payable of $0.18 million.

Current wording

Net cash provided by financing activities was $2.23 million in the nine months ended September 30, 2026, compared to $0.18 million on September 30, 2025, representing an increase of $2.05 million over the respective periods. The 2.23 million net cash provided by financing activities on September 30, 2026 consisted of Proceeds from convertible loan 1.83 million, settlement proceeds received from forward contract 0.68 million, and payment of director and officer insurance liability 0.28 million. Net cash provided by financing activities was $0.18 million in the nine months ended September 30, 2025. The $0.18 million net cash provided by financing activities in 2025 consisted of Proceeds from convertible notes payable of $0.18 million.

Previous wording

Our contractual cash obligations as of June 30, 2026, are summarized in the table below:

Current wording

**Contractual Obligations and Commitments:**Our contractual cash obligations as of September 30, 2026, are summarized in the table below:

Previous wording

For fixed-fee arrangements that include distinct, milestone-based deliverables (for example, discrete design, architecture, or platform-development phases), where either of the criterion laid down in ASC 606-10-25-27(a), (b) or (c) are met, the Company recognizes revenue over time under a percentage-of-completion (“POC”) method, rather than the right-to-invoice practical expedient. Further theprogress toward completion of these arrangements is measured using the output method i.e. based on the deliverables completed and accepted by the customer relative to total contractual deliverables for that performance obligation.

Current wording

For fixed-fee arrangements that include distinct, milestone-based deliverables (for example, discrete design, architecture, or platform-development phases), where either of the criterion laid down in ASC 606-10-25-27(a), (b) or (c) are met, the Company recognizes revenue over time under a percentage-of-completion (“POC”) method, rather than the right-to-invoice practical expedient. Further the progress toward completion of these arrangements is measured using the output method i.e. based on the deliverables completed and accepted by the customer relative to total contractual deliverables for that performance obligation.

Previous wording

Company’s AI Solutions includes product revenues primarily comprising of software license fees from sales of term-based license contracts, under which we grant customers the license right to use the software for a specified period (i.e. when the customer can access, use, and benefit from the software license). Term software licenses are satisfied at a point in time and associated revenue is recognized upon the later of 1) delivery of the software, or 2) the beginning of the period in which the customer has received the license right to use the software. For customer contracts that include software license fees, implementation and/or other consulting services, the portion of the transaction price allocated to software licenses is generally recognized when delivered. Implementation, customization, or model tuning services if applicable, when included, are evaluated as separate performance obligations when they are distinct from the software and not highly interdependent. These services are generally satisfied over time as the work progresses. During the three and six months ended June 30, 2026 and June 30, 2025 the product revenues were insignificant.

Current wording

Company’s AI Solutions includes product revenues primarily comprising of software license fees from sales of term-based license contracts, under which we grant customers the license right to use the software for a specified period (i.e. when the customer can access, use, and benefit from the software license). Term software licenses are satisfied at a point in time and associated revenue is recognized upon the later of 1) delivery of the software, or 2) the beginning of the period in which the customer has received the license right to use the software. For customer contracts that include software license fees, implementation and/or other consulting services, the portion of the transaction price allocated to software licenses is generally recognized when delivered. Implementation, customization, or model tuning services if applicable, when included, are evaluated as separate performance obligations when they are distinct from the software and not highly interdependent. These services are generally satisfied over time as the work progresses. During the three- and nine-months period ended September 30, 2026, and September 30, 2025, the product revenues were insignificant.