What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-12 compared with 2026-05-20 · 137 added, 35 removed, 32 unchanged (84% of the section changed)

15 unchanged sentences

and we have fully integrated its assets, technology, and operations.

We are pre-commercial and have no revenue from operations.

Our activities

during the three months ended March 31, 2026 continued to focus on research and development, prototype testing (including advancement

of the Version 9 prototype in Midland, Texas), intellectual property expansion, and preparation for commercial deployment.

While the Company generated limited revenue during the quarter, we

remain in the early stages of commercialization.

Our activities during the six months ended June 30, 2026 continued to focus on research

and development, prototype testing (including advancement of the Version 9 prototype in Midland, Texas), intellectual property expansion,

and preparation for commercial deployment.

Recent Development

On July 17, 2026, subsequent to the end of the

fiscal quarter, the Company received Certificate of Registration No.

R54726 from the Texas Department of State Health Services (“DSHS”),

authorizing the Company to receive, possess, acquire, transfer and use registered industrial radiation machines for research and development

activities at its authorized testing location in Lubbock, Texas, subject to the terms and conditions of the registration and applicable

Texas radiation control regulations.

The registration designates Dr.

Brandenburg as the Company’s Radiation Safety Officer,

remains effective through February 28, 2034, and covers twelve registered Texatron™ Fusion Engine™ research model classes

ranging from 500 kW through 1 GW.

The Company believes receipt of the registration

represents a significant operational milestone supporting the continued engineering, prototype testing, technical validation and research

activities associated with its Texatron™ Fusion Engine™ development program.

The registration authorizes research and development

activities only and does not constitute certification of the Company’s technology or commercial performance.

Following receipt of

the registration, the Company commenced preparations for research testing activities at its authorized testing location.

Results of Operations

Three Months Ended March 31, 2026 Compared

to Three Months Ended March 31, 2025

We reported a net loss of $632,583 for the three

months ended March 31, 2026, compared to a net loss of $100,000 for the three months ended March 31, 2025.

The increase in net loss was

primarily attributable to increased professional fees and advertisement and marketing costs associated with operating as a public reporting

company as well as certain patent filing costs.

Operating expenses for the three months ended

March 31, 2026 consisted primarily of:

General and administrative expenses, including

legal, accounting, compliance, and public-company costs

Personnel and consulting expenses

Patent filing costs

There was no revenue during either period.

We expect operating expenses to increase in future

periods as we advance our technology development, expand our team, and prepare for commercial demonstration projects.

Three Months Ended June 30, 2026 Compared to

Three Months Ended June 30, 2025

The following table sets forth the unaudited results

of our operations for the three months ended June 30:

Cost of revenue

Operating expenses

Loss from operations

Other expense

$ (1,275,208 )

Our sales totaled $58,000 for the three months

ended June 30,2026 and $0 for the three months ended June 30, 2025.

The increase is primarily related to a sale to a new customer.

cost related to this sale totaled $50,000, resulting in a gross margin of $8,000.

Our cost of sales consists of the cost of materials

and distribution expenses.

The following table sets forth the operating expenses

for the three months ended June 30:

Consulting fees

Professional fees

Corporate communications and marketing

Research and development

Other operating expenses

The following table sets forth the stock-based compensation

expense included in the above operating expenses for the three months ended June 30:

Consulting fees

Professional fees

Corporate communications and marketing

Research and development

Consulting fees totaling $543,232, consist of

advisory services agreements entered into for key management positions and which are primarily stock compensation based.

fees totaling $217,268 are comprised primarily of legal and accounting fees reflecting costs associated with the reverse recapitalization

and additional public company filings.

Corporate communications and marketing costs reflect increased activity related to investor relations,

product awareness and trade shows.

The increase in research and development costs relates to acceleration of engineering efforts towards

development of the Company’s prototypes.

Included in other operating expenses totaling $135,249, are public company expenses totaling

$47,488, travel and entertainment expenses totaling $53,525 and costs related to various outside service providers.

Six Months Ended June 30, 2026 Compared to

Six Months Ended June 30, 2025

The following table sets forth the unaudited

results of our operations for the six months ended June 30:

Cost of revenue

Operating expenses

Loss from operations

Other expense

$ (1,944,958 )

Our sales totaled $58,000 for the six months ended

June 30, 2026 and $0 for the six months ended June 30, 2025.

The increase is primarily related to a sale to a new customer.

The cost related

to this sale totaled $50,000, resulting in a gross margin of $8,000.

Our cost of sales consists of the cost of materials and distribution

The following table sets forth the operating expenses

for the six months ended June 30:

Consulting fees

Professional fees

Corporate communications and marketing

Research and development

Other operating expenses

The following table sets forth the stock-based

compensation expense included in the above operating expenses for the six months ended June 30:

Consulting fees

Professional fees

Corporate communications and marketing

Research and development

Consulting fees totaling $573,233 consist of advisory

services agreements entered into for key management positions and which are primarily stock compensation based.

Professional fees totaling

$423,938 are comprised primarily of legal and accounting fees reflecting costs associated with the reverse recapitalization and additional

public Company filings.

Professional fees in the 2026 period include $170,150 related to stock-based compensation agreements with legal

Corporate communications and marketing costs reflect increased activity related to investor relations, product awareness and

Corporate communications and marketing costs in the 2026 period include $246,800 related to stock-based compensation agreements

with various third-party providers.

The increase in research and development costs relates to acceleration of engineering efforts towards

development of the Company’s prototype.

Included in other operating expenses totaling $158,502 are public company expenses totaling

$51,844, travel and entertainment expenses totaling $63,786 and costs related to various outside service providers.

Liquidity and Capital Resources

As of March 31, 2026, we had $99,594 in cash and

cash equivalents.

Cash flows used in operations of $415,931 were offset by cash flows provided by financing activities of $513,000, Cash

flows provided by financing activities increased as a result of prepaid warrant funding.

We have historically funded our operations primarily

through equity issuances and related-party loans.

During the six months ended June 30, 2026 our

cash and cash equivalents increased by $76,816 reflecting cash used in operating activities of $1,042,712 and cash used in investing activities

of $48,472, offset by cash provided from financing activities of $1,168,000.

At June 30, 2026, the Company had a working capital deficit

of $1,708,451 and cash on hand of $79,341.

During the six months ended June 30, 2025 there was no change in our cash and cash equivalents

due to minimal operational and financing activity.

Operating Activities

Cash flows used in operating activities totaled

$1,042,712 for the six months ended June 30, 2026 as compared to cash flows used of $0 or the six months ended June 30, 2025.

used in operating activities primarily reflect the net loss of $1,944,958 partially offset by stock-based compensation of $881,526.

Investing Activities

Cash flows used in investing activities of $48,472

reflect costs associated with the filing of new patents and website development.

There were no investing activities in the 2025 period.

Financing Activities

Cash flows provided by financing activities increased

as a result of prepaid warrant funding totaling $943,000 and the sale of equity units totaling $225,000.

In May 2026, the Company entered

in Securities Purchase Agreements with third party investors for the sale of equity units (“Units”).

Each unit consists of

one share of restricted common stock, $0.001 par value, and one warrant to purchase one share of common stock at an exercise price of

$0.50 per share.

There were no financing activities in the 2025 period.

Historically, we have funded our operations through equity issuances

and related-party loans.

We continue to incur significant losses and negative cash flows from operations.

1 unchanged sentence

to fund our research and development activities, prototype testing, intellectual property filings, and preparation for commercial deployment.

Management is actively pursuing financing opportunities, including the previously announced $50 million capital raise targeted for 2026.

Management is actively pursuing financing opportunities, including the previously announced $50 million capital raise.

Going Concern

The Company’s consolidated financial

statements have been prepared assuming that the Company will continue as a going concern.

As of March 31, 2026, the Company has an accumulated

deficit of approximately $9.6 million and has incurred recurring losses from operations.

These factors raise substantial doubt about the

Company's ability to continue as a going concern.

The accompanying consolidated financial statements do not include any adjustments that

might result from the outcome of this uncertainty.

The Company’s consolidated financial statements

have been prepared assuming that the Company will continue as a going concern.

As of June 30, 2026, the Company has an accumulated deficit

of approximately $10.9 million and has incurred recurring losses from operations.

These factors raise substantial doubt about the Company's

ability to continue as a going concern.

The accompanying consolidated financial statements do not include any adjustments that might result

from the outcome of this uncertainty.

Management believes that the completion of the Kepler business merger and planned capital-raising

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis