Fusemachines Inc.

Our business is subject to various risks, including those described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 27, 2026, which we strongly encourage you to review (the “2025 Annual Report”). Other than as set forth below, there have been no material changes from the risk factors described in our 2025 Annual Report.

On April 17, 2026, we entered into the Purchase Agreement with Roth Principal Investments, pursuant to which Roth Principal Investments has committed to purchase up to $20.0 million of shares of Common Stock (“Purchase Shares”), upon the terms and subject to the conditions set forth in the Purchase Agreement. The shares of our Common Stock that may be issued under the Purchase Agreement may be sold by us to Roth Principal Investments at our discretion from time to time over a 36-month period following the effective date of the registration statement covering the resale of such shares, subject to certain conditions. The purchase price for the shares that we may sell to Roth Principal Investments under the Purchase Agreement will fluctuate based on the market price of our Common Stock. Depending on demand and market liquidity at the time, sales of such shares by Roth Principal Investments may cause the trading price of our Common Stock to fall.

We generally have the right to control the timing and amount of any future sales of our shares to Roth Principal Investments. Any sales of our Common Stock to Roth Principal Investments will depend upon market conditions and other factors to be determined by us. We may ultimately decide to sell to Roth Principal Investments all, some or none of the shares of our Common Stock that may be available for us to sell pursuant to the Purchase Agreement. If and when we sell shares to Roth Principal Investments, Roth Principal Investments may then resell all, some or none of those shares at any time or from time to time in its discretion. Therefore, our sales to Roth Principal Investments could result in substantial dilution to the interests of other holders of our Common Stock. Additionally, the sale of a substantial number of shares of our Common Stock to Roth Principal Investments, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.

On April 17, 2026, we entered into the Purchase Agreement with Roth Principal Investments, pursuant to which Roth Principal Investments has committed to purchase up to $20,000,000 of shares of our Common Stock, subject to certain limitations and conditions set forth in the Purchase Agreement. The shares of our Common Stock that may be issued under the Purchase Agreement may be sold by us to Roth Principal Investments at our discretion from time to time during the Commitment Period.

Because the per share purchase price that Roth Principal Investments will pay for Purchase Shares in any market open purchase (“Market Open Purchase”) or intraday purchase (“Intraday Purchase”) that we may elect to effect pursuant to the Purchase Agreement will be determined by reference to the VWAP during the applicable market open purchase valuation period or intraday purchase valuation period, respectively, on the applicable purchase date (“Purchase Date”) for such Market Open Purchase or Intraday Purchase (as the case may be), it is not possible for us to predict the number of shares of Common Stock that we will sell to Roth Principal Investments as Purchase Shares under the Purchase Agreement, the purchase price per share that Roth Principal Investments will pay for Purchase Shares purchased from us under the Purchase Agreement, or the aggregate gross proceeds that we will receive from those purchases by Roth Principal Investments under the Purchase Agreement.

Although the Purchase Agreement provides that we may sell up to $20,000,000 of our Common Stock to Roth Principal Investments, the registration statement filed for the resale of Purchase Shares by Roth Principal Investments covers only 11,363,636 shares of Common Stock. Depending on the market prices of our Common Stock on the Purchase Dates on which we elect to sell Purchase Shares, the number of shares covered by that registration statement may not be sufficient to enable us to receive the full $20,000,000 in aggregate gross proceeds, and we may need to register additional shares of our Common Stock under the Securities Act for resale by Roth Principal Investments in order to do so.

Moreover, to the extent that the Exchange Cap remains applicable to issuances and sales of our common stock under the Purchase Agreement, if we elect to issue and sell to Roth Principal Investments more shares of Common Stock than the exchange cap (or 5,750,000 shares of Common Stock) (the “Exchange Cap”) under the Purchase Agreement, which we have the right, but not the obligation, to do, we must first obtain stockholder approval to issue shares of Common Stock in excess of the Exchange Cap under the Purchase Agreement in accordance with applicable Nasdaq rules. Any issuance and sale by us under the Purchase Agreement of a substantial amount of shares of Common Stock under the Purchase Agreement could cause additional substantial dilution to our stockholders. The number of shares of Common Stock ultimately resold by Roth Principal Investments is dependent upon the number of shares of Common Stock, if any, we elect to sell to Roth Principal Investments under the Purchase Agreement.

Pursuant to the Purchase Agreement, we will have discretion, subject to market demand, to vary the timing, prices, and numbers of shares sold to Roth Principal Investments. If and when we do elect to sell shares of our Common Stock to Roth Principal Investments pursuant to the Purchase Agreement, after Roth Principal Investments has acquired such shares, Roth Principal Investments may resell all, some or none of such shares at any time or from time to time in its discretion and at different prices. As a result, investors who purchase shares from Roth Principal Investments at different times will likely pay different prices for those shares, and so may experience different levels of dilution, and in some cases substantial dilution, and different outcomes in their investment results.

Investors may experience a decline in the value of the shares they purchase from Roth Principal Investments as a result of future sales made by us to Roth Principal Investments at prices lower than the prices such investors paid for their shares. In addition, if we sell a substantial number of shares to Roth Principal Investments under the Purchase Agreement, or if investors expect that we will do so, the actual sales of shares or the mere existence of our arrangement with Roth Principal Investments may make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect such sales.

Our management team will have broad discretion as to the use of the net proceeds from our sale of shares of Common Stock to Roth Principal Investments, if any, and we could use such proceeds for purposes other than those currently contemplated. Accordingly, you will be relying on the judgment of our management team with regard to the use of those net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. It is possible that, pending their use, we may invest those net proceeds in a way that does not yield a favorable, or any, return for us. The failure of our management team to use such funds effectively could have a material adverse effect on our business, financial condition, operating results and cash flows.

Roth Principal Investments will pay less than the then-prevailing market price for our shares of Common Stock, which could cause the price of our Common Stock to decline.

The purchase price of our Common Stock to be sold to Roth Principal Investments under the Purchase Agreement is derived from the market price of our Common Stock on Nasdaq. Common stock to be sold to Roth Principal Investments pursuant to the Purchase Agreement will be purchased at a discounted price. The actual amount of proceeds we receive pursuant to each purchase notice (each, the “Purchase Amount”) is determined by multiplying the Purchase Amount requested by the applicable purchase price.

Roth Principal Investments may sell the shares it receives immediately after receipt of such shares, and/or may sell such shares short prior to the purchase of such shares, which may be prior to final determination of the purchase price for such shares and could cause the price of our Common Stock to decrease. If the price of our Common Stock declines, then Roth Principal Investments may pay a lower purchase price for such shares.

The extent we rely on Roth Principal Investments as a source of funding will depend on a number of factors, including the prevailing market price of our Common Stock and the extent to which we are able to secure working and other capital from other sources. If obtaining sufficient funding from Roth Principal Investments were to prove unavailable or prohibitively dilutive, we will need to secure another source of funding in order to satisfy our working and other capital needs. Even if we were to sell to Roth Principal Investments all of the shares of Common Stock available for sale to Roth Principal Investments under the Purchase Agreement, we may still need additional capital to fully implement our business, operating and development plans. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences may be a material adverse effect on our business, operating results, financial condition and prospects. Depending on the type and the terms of any financing we pursue, stockholders’ rights and the value of their investment in our Common Stock could be reduced. A financing could involve one or more types of securities including Common Stock, convertible debt or warrants to acquire Common Stock. These securities could be issued at or below the then prevailing market price for our Common Stock. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences could be a material adverse effect on our business, operating results, financial condition and prospects.

The issuance of shares upon conversion of the Notes and exercise of the Warrants will dilute our stockholders, and our obligation to register the resale of those shares, or our failure to meet the applicable filing and effectiveness deadlines, could adversely affect the trading price of our Common Stock and result in an event of default under the Notes.

On August 2, 2026, we entered into separate Securities Purchase Agreements with certain accredited and institutional investors (collectively, the “Purchasers”), pursuant to which we issued 18% original issue discount senior unsecured convertible promissory notes due February 12, 2027 (the “Notes”) in an aggregate original principal amount of $2,500,000, for an aggregate purchase price of $2,050,000, together with common stock purchase warrants (the “Warrants”) to purchase up to an aggregate of 2,050,000 shares of our Common Stock. The Notes are convertible at the option of the holders at a fixed conversion price of $4.20 per share, which would result in the issuance of up to approximately 595,238 shares of Common Stock if converted in full, and the Warrants are exercisable at a fixed exercise price of $4.20 per share. The issuance of shares upon conversion of the Notes and exercise of the Warrants will dilute the ownership interests of our existing stockholders, and any sales of those shares in the public market, or the perception that such sales may occur, could adversely affect the market price of our Common Stock.

Amendments to our existing Forward Purchase Agreement and Shortfall Warrants with Meteora, entered into concurrently with the Notes and Warrants, could increase the dilutive impact and volatility of those instruments.

Concurrently with the issuance of the Notes and Warrants, we entered into a Second Forward Purchase Agreement Confirmation Amendment and a Second Common Stock Purchase Warrant Amendment with certain of the Meteora entities. The Second Forward Purchase Agreement Confirmation Amendment resets the Termination Price under our existing Forward Purchase Agreement weekly to the lower of $12.00 per share or the prior week’s volume-weighted average price of our Common Stock, without the minimum price floors that applied under the prior amendment to that agreement. The Second Common Stock Purchase Warrant Amendment replaces the fixed $10.00 per share exercise price of our outstanding Shortfall Warrants, which are exercisable for up to 2,108,070 shares of Common Stock, with a floating exercise price equal to the greater of the Termination Price under the Forward Purchase Agreement (as so amended) or $0.85 per share. As a result of these amendments, the exercise price of the Shortfall Warrants could decline if the trading price of our Common Stock declines, which could result in increased dilution to our stockholders and increased volatility in the fair value of our forward purchase derivative liability and warrant liabilities. We accounted for these amendments in our condensed consolidated financial statements for the quarter ended September 30, 2026.

Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in its securities and subject us to additional trading restrictions.

Currently, our common stock and public warrants are listed on the Nasdaq Global Market under the symbols “FUSE” and “FUSEW.” In order to continue the listing of these securities on the Nasdaq Global Market, we are required to maintain certain financial, distribution and stock price levels. On January 15, 2026, we received a notification letter from the staff of the Listing Qualifications Department of The Nasdaq Stock Market (the “Nasdaq Staff”) indicating that we were not in compliance with the continued listing requirement to maintain a minimum Market Value of Publicly Held Shares (“MVPHS”) of $15,000,000 for the Nasdaq Global Market, as set forth in Nasdaq Listing Rule 5450(b)(2)(C). On July 7, 2026, Nasdaq notified us that we had regained compliance with this requirement, closing out that matter. However, on July 24, 2026, we received a new notification letter from the Nasdaq Staff indicating that we are not in compliance with the MVPHS requirement, based on our MVPHS having been below $15,000,000 for the 30 consecutive business days from June 10, 2026 through July 23, 2026. In accordance with Nasdaq Listing Rule 5810(c)(3)(D), we have 180 calendar days, or until January 20, 2027, to regain compliance with the MVPHS requirement. If at any time before January 20, 2027, our MVPHS closes at or above $15,000,000 for a minimum of 10 consecutive business days, Nasdaq will provide written confirmation that we have regained compliance. Further, on March 27, 2026, we received a deficiency notice from the Nasdaq Staff notifying us that for the last 30 consecutive business days our securities had not maintained the minimum Market Value of Listed Securities (“MVLS”) of $50,000,000 required by the continued listing requirements of Nasdaq Listing Rule 5450(b)(2)(A). On September 24, 2026, Nasdaq notified the Company that, based upon the Company’s continued non-compliance with the MVLS Requirement as of September 23, 2026, the Company’s securities were subject to delisting from Nasdaq unless the Company requested a hearing before the Nasdaq Hearings Panel (the “Panel”). On October 1, 2026, the Company requested a hearing before the Panel, which stayed any further suspension or delisting action by Nasdaq pending the hearing and the expiration of any extension that the Panel may grant following the hearing. Nasdaq granted the Company’s request, and the hearing is scheduled for November 3, 2026. There can be no assurance that the Panel will grant the Company’s request for continued listing or any extension. Although the Company is considering all available options to regain compliance with the MVLS Requirement, there can be no assurance that the Company will be able to do so.

If Nasdaq delists our securities from trading on its exchange and we are not able to list its securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Since our common stock and public warrants are listed on the Nasdaq Global Market, they are covered securities. However, if our securities were no longer listed on the Nasdaq Global Market, they would not be covered securities and we would be subject to regulation in each state in which we offer our securities.