Note 8. Revenue

Under ASC 606, revenue is recognized throughout the life of the executed agreement. The Company measures revenue based on consideration specified in a contract with a customer. Furthermore, the majority of the Company’s revenues are recognized over time as services are performed. The Company recognizes revenue when a performance obligation is satisfied by transferring control of the product or service to the customer.

The Company provides services to customers worldwide, with the majority of revenues being derived from contracts with customers located within the United States. The table below presents the breakdown of the Company’s revenues, based on the customer’s location (in thousands).

 Schedule of Revenues, Based on Customer’s Location

The table below presents the breakdown of the Company’s revenues, based on the customer’s service type (in thousands).

 Schedule of Revenues, Based on Customer’s Service Type

Deferred Revenue

During the three months and nine months ended September 30, 2026, the Company recognized revenue of Nil from the deferred revenue balance as of June 30, 2026 and December 31, 2025. During the three and nine months ended September 30, 2025, the Company recognized revenue of Nil and $53.7 thousand from the deferred revenue balance as of June 30, 2025 and December 31, 2024 respectively.

Contract Costs

The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. Management expects that commission fees paid to sales representatives as a result of obtaining service contracts and contract renewals, are recoverable and therefore the Company’s unaudited condensed consolidated interim balance sheets included capitalized balances in the amount of $ 10 thousand and $ 19 thousand as of September 30, 2026 and December 31, 2025 which represents the current portion and is included within prepaid expenses and other current assets, respectively and $1 thousand and $3.2 thousand, as of September 30, 2026 and December 31, 2025, respectively, which are included within other assets. Capitalized commission fees are amortized on a straight-line basis over the average period of service contracts of approximately two years and are included in selling and marketing in the accompanying the unaudited condensed consolidated interim statements of operations and comprehensive loss. Amortization recognized during the three months ended September 30, 2026 and 2025 was $11.8 thousand and Nil respectively, whereas during the nine month ended September 30, 2026, and 2025 was $27.5 thousand and $15.9 thousand respectively.

Transaction price allocated to remaining performance obligations

The Company elected to apply the practical expedient for the right to invoice and does not disclose performance obligations that have original expected durations of one year or less.

The opening and closing balances of contract assets, deferred revenue and unbilled revenue are as follows (in thousands):

 Schedule of Contract Assets, Deferred Revenue and Unbilled Revenue

Fusemachines Inc. and Subsidiaries Notes to the Condensed Consolidated Interim Financial Statements