Fusemachines Inc. Leases Disclosure
Note 18. Leases
The Company has operating leases for office space. These leases have expected remaining lease terms ranging from less than one year to 7 years. The Company currently has two leases with an initial term of 12 months or less that are accounted for as short-term leases. The Company does not separate lease and fixed non-lease components of lease contracts. The Company’s lease terms may include options to extend or terminate the lease. These options are included in the lease term only when it is reasonably certain that the Company will elect the option.
There are no material residual guarantees associated with any of the Company’s leases, and there are no significant restrictions or covenants included in the Company’s lease agreements. Certain leases include variable payments related to common area maintenance and property taxes, which are billed by the landlord, as is customary with these types of charges for office space.
There was no sublease rental income for the year ended December 31, 2025 and 2024, and the Company is not the lessor in any lease arrangement. There were no related party lease arrangements during the year ended December 31, 2025, and 2024.
The table below presents certain information related to the Company’s lease costs for the period ended (in thousands):
For the Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating lease expense | $ | 171 | $ | 204 | ||||
| Short-term lease cost | 98 | 122 | ||||||
| Variable lease cost | 18 | 17 | ||||||
| Total lease cost | $ | 287 | $ | 343 | ||||
Lease Position
Operating lease right-of-use assets and operating lease liabilities were recorded in the consolidated balance sheets as follows (in thousands):
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Operating lease right-of-use assets | $ | 744 | $ | 870 | ||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Operating lease liability, current | 85 | 74 | ||||||
| Noncurrent liabilities: | ||||||||
| Operating lease liability | 751 | 878 | ||||||
| Total operating lease liability | $ | 836 | $ | 952 | ||||
The table below presents certain information related to the weighted-average remaining lease term and the weighted-average discount rate for the Company’s operating leases:
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Weighted average remaining lease term (in years) - operating leases | 6.17 | 7.17 | ||||||
| Weighted average discount rate - operating leases | 9.25 | % | 9.25 | % | ||||
Cash Flows
The table below presents certain information related to the cash flows for the Company’s operating leases for the period ended (in thousands):
For the Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Amortization of right-of-use assets | $ | 88 | $ | 111 | ||||
| Change in operating lease liability | $ | (73 | ) | $ | (87 | ) | ||
Future minimum lease payments required under operating leases are as follows (in thousands):
| Period Ended December 31, | Future Minimum Rents | |||
| 2026 | $ | 159 | ||
| 2027 | 167 | |||
| 2028 | 175 | |||
| 2029 | 185 | |||
| 2030 and thereafter | 430 | |||
| Total minimum lease payments | 1,116 | |||
| Less: effects of discounting | (280 | ) | ||
| Present value of future minimum lease payments | $ | 836 | ||
Fusemachines Inc. and Subsidiaries Notes to the Consolidated Financial Statements
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.