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Item 7. Management’s Discussion and Analysis

2026-04-15 compared with 2025-03-28 · 153 added, 294 removed, 4 unchanged (99% of the section changed)

Management’s Discussion and Analysis

of Financial Condition and Results of Operation.

Overview of our Business

Surfside Acquisition Inc.

was incorporated in

the State of Delaware on December 10, 2021.

Since inception, the Company has been engaged in organizational efforts and obtaining initial

The Company was formed as a vehicle to pursue a business combination and has focused its efforts to identify a possible business

No revenue has been generated by the Company since inception.

It is unlikely the Company will have any revenues unless it

is able to effect an acquisition or merger with an operating company, of which there can be no assurance.

The Company’s plan of

operation for the remainder of the fiscal year shall be to continue its efforts to locate suitable acquisition candidates.

Our principal

business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with

a business rather than immediate, short-term earnings.

The Company will not restrict our potential candidate target companies to any specific

business, industry or geographical location and, thus, may acquire any type of business.

The Company is currently considered to be a “blank

check” company.

The SEC defines those companies as “any development stage company that is issuing a penny stock, within the

meaning of Section 3(a)(51) of the Exchange Act, and that has no specific business plan or purpose, or has indicated that its business

plan is to merge with an unidentified company or companies.” Many states have enacted statutes, rules and regulations limiting the

sale of securities of “blank check” companies in their respective jurisdictions.

The Company is also a “shell company,”

defined in Rule 12b-2 under the Exchange Act as a company with no or nominal assets (other than cash) and no or nominal operations.

does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully

concluded a business combination.

The Company intends to comply with the periodic reporting requirements of the Exchange Act for so long

as we are subject to those requirements.

In addition, the Company is an “emerging

growth company,” as defined in the JOBS Act, and may take advantage of certain exemptions from various reporting requirements that

are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being

required to comply with the auditor attestation requirements of section 404(b) of the Sarbanes-Oxley Act, and exemptions from the requirements

of Sections 14A(a) and (b) of the Exchange Act to hold a nonbinding advisory vote of stockholders on executive compensation and any golden

parachute payments not previously approved.

The Company has also elected to use the extended

transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.

This election allows

us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until

those standards apply to private companies.

As a result of this election, our financial statements may not be comparable to companies

that comply with public company effective dates.

We will remain an “emerging growth

company” until the earliest of (1) the last day of the fiscal year during which our revenues exceed $1.235 billion, (2) the

date on which we issue more than $1 billion in non-convertible debt in a three- year period, (3) the last day of the fiscal year

following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration

statement filed pursuant to the Securities Act, or (4) when the market value of our common stock that is held by non-affiliates

exceeds $700 million as of the last business day of our most recently completed second fiscal quarter.

To the extent that we

continue to qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Exchange Act,

after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may

continue to be available to us as a smaller reporting company, including:

(1) not being required to comply with the auditor

attestation requirements of Section 404(b) of the Sarbanes Oxley Act;

(2) scaled executive compensation disclosures;

requirement to provide only two years of audited financial statements, instead of three years.

The Company has not conducted any

active operations since inception, except for its efforts to locate suitable acquisition candidates.

No revenue has been generated

by the Company since inception.

It is unlikely the Company will have any revenues unless it is able to effect an acquisition or

merger with an operating company, of which there can be no assurance.

The Company’s plan of operation for the remainder of the

fiscal year shall be to continue its efforts to locate suitable acquisition candidates.

Our principal business objective for the

next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than

immediate, short-term earnings.

The Company will not restrict our potential candidate target companies to any specific business,

industry or geographical location and, thus, may acquire any type of business.

The Company does not currently engage in any business

activities that provide cash flow.

The costs of investigating and analyzing business combinations for the next 12 months and beyond such

time will be paid with funds to be loaned to or invested in us by our stockholders, management or other investors.

During the next twelve months, we anticipate incurring

costs related to:

filing Exchange Act reports, and

investigating, analyzing and consummating an acquisition.

We believe we will be able to meet these costs

through use of funds to be loaned by or invested in us by our stockholders, management or other investors.

There are no assurances that

such funds will be advanced or that the Company will be able to secure any additional funding as needed.

As of December 31, 2024 and 2023,

the Company had cash of $3,464 and $774, respectively.

On December 10, 2021, in connection with advances made in connection with costs

incurred by the Company, the Company issued a promissory note to Mark Tompkins, a stockholder and director of the Company, pursuant to

which the Company agreed to repay Mr.

Tompkins the sum of any and all amounts that Mr.

Tompkins may advance to the Company on or before

the date that the Company consummates a business combination with a private company or reverse takeover transaction or other transaction

after which the Company would cease to be a shell company (as defined in Rule 12b-2 under the Exchange Act).

The Company has used the

proceeds from the note to cover its expenses.

Tompkins has no obligation to advance funds to the Company under the terms

of the note, it is anticipated that he may advance funds to the Company as fees and expenses are incurred in the future.

the Company issued the note in anticipation of such advances.

Interest shall not accrue on the outstanding principal amount of the note

except if an Event of Default (as defined in the note) has occurred.

In the event of an Event of Default, the entire note shall automatically

become due and payable (the “Default Date”) and starting from five (5) days after the Default Date, the interest rate on the

note shall accrue at the rate of eighteen percent (18%) per annum.

As of December 31, 2024, the total amount due under the note was $147,025.

The note is filed herewith as Exhibit 10.1.

Except as disclosed herein, we currently have no other agreements or specific arrangements

in place with our stockholders, management or other investors.

Our ability to continue as a going concern is

dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and

repay our liabilities arising from normal business operations when they come due.

Our ability to continue as a going concern is also dependent

on our ability to find a suitable target company and enter into a possible reverse merger with such company.

Management’s plan includes

obtaining additional funds by equity financing through a reverse merger transaction and/or related party advances, however there is no

assurance of additional funding being available.

As of December 31, 2024, the Company had

$3,464 of cash and has not earned any revenues from operations to date.

In the next 12 months, we expect to incur expenses equal to

approximately $45,000 related to legal, accounting, audit, and other professional service fees incurred in relation to the

Company’s Exchange Act filing requirements.

The costs related to the acquisition of a business combination target company vary

widely and are dependent on a variety of factors including, but not limited to, the amount of time it takes to complete a business

combination, the location of the target company, the size and complexity of the business of the target company, whether stockholders

of the Company prior to the transaction will retain equity in the Company, the scope of the due diligence investigation required,

the involvement of the Company’s auditors in the transaction, possible changes in the Company’s capital structure in

connection with the transaction, and whether funds may be raised contemporaneously with the transaction.

Therefore, we believe such

costs are unascertainable until the Company identifies a business combination target.

These conditions raise substantial doubt about

our ability to continue as a going concern.

The Company is currently devoting its efforts to locating merger candidates.

Company’s ability to continue as a going concern is dependent upon our ability to develop additional sources of capital,

locate and complete a merger with another company, and ultimately, achieve profitable operations.

The Company may consider acquiring a business,

which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets,

is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties

and is in need of additional capital.

Our management believes that the public company status that results from a combination with the

Company will provide such company greater access to the capital markets, increase its visibility in the investment community, and offer

the opportunity to utilize its stock to make acquisitions.

There is no assurance that we will in fact have access to additional capital

or financing as a public company.

In the alternative, a business combination may involve the acquisition of, or merger with, a company

which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding,

among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.

Any target business we select for a potential

business combination may be a financially unstable company or an entity in its early stages of development or growth, including entities

without established records of sales or earnings.

In that event, we will be subject to numerous risks inherent in the business and operations

of financially unstable and early stage or potential emerging growth companies.

In addition, we may effect a business combination with

an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent

in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.

Our management anticipates that it will likely

be able to effect only one business combination, due primarily to our limited financing and the dilution of interest for present and prospective

stockholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business

in order to achieve a tax-free reorganization.

This lack of diversification should be considered a substantial risk in investing in us,

because it will not permit us to offset potential losses from one venture against gains from another.

The Company anticipates that the selection of

a business combination will be complex and extremely risky.

While the Company is in a competitive market with a small number of business

opportunities, through information obtained from industry professionals including attorneys, investment bankers, and other consultants

with experience in the reverse merger industry, our management believes that there are opportunities for a business combination with firms

seeking the perceived benefits of becoming a publicly traded corporation.

Such perceived benefits of becoming a publicly traded corporation

include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity

for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees,

and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock.

Potentially available

business combinations may occur in many different industries and at various stages of development, all of which will make the task of

comparative investigation and analysis of such business opportunities extremely difficult and complex.

We do not currently intend to retain any entity

to act as a “finder” to identify and analyze the merits of potential target businesses.

However, we contemplate that Montrose

Capital may introduce business combination opportunities to us.

There are currently no agreements or preliminary agreements between us

and Montrose Capital.

We have not established a specific timeline, nor

have we created a specific plan to identify an acquisition target and consummate a business combination.

We expect that our management

and the Company, through its various contacts and affiliations with other entities, including Montrose Capital, will locate a business

combination target.

We expect that funds in the amount of approximately $45,000 will be required in order for the Company to satisfy its

Exchange Act reporting requirements during the next 12 months, in addition to any other funds that will be required in order to complete

a business combination.

Such funds can only be estimated upon identifying a business combination target.

Our management and stockholders

have indicated an intent to advance funds on behalf of the Company as needed in order to accomplish its business plan and comply with

its Exchange Act reporting requirements, however, there are no agreements in effect between the Company and our management or stockholders

specifically requiring they provide any funds to the Company.

Therefore, there are no assurances that the Company will be able to obtain

the required financing as needed in order to consummate a business combination transaction.

As of the date of this Form 10-K, the Company

has not entered into any definitive agreement with any party, nor have there been any specific discussions with any potential business

combination candidates regarding business opportunities for the Company.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with the consolidated financial statements and the notes to those statements included elsewhere in this Annual Report.

Certain statements contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are forward-looking statements that involve risks and uncertainties as described under the heading “Cautionary Note on Forward-Looking Statements” and Item 1A, “Risk Factors”.

The forward-looking statements are not historical facts, but rather are based on management’s current expectations, estimates, forecasts, projections, beliefs and assumptions and on information available to us as of the date of this Annual Report about our industry and business.

Our actual results could differ materially from the results contemplated by these forward-looking statements.

We are a nuclear energy technology company developing a SMR based on established PWR technology, with novel emplacement in deep boreholes approximately one mile below the Earth’s surface.

Our reactor, which we refer to as the Gravity Reactor, will leverage subsurface conditions to support key containment and operating functions, including the use of hydrostatic pressure from a water column within the borehole to support reactor operating pressure and cooling, and the surrounding geological formation to provide structural confinement and shielding.

This approach is intended to reduce reliance on large surface containment structures and other safety-related infrastructure associated with conventional nuclear power plants, support faster deployment timelines, improve security, enhance safety, and enable lower capital and operating costs relative to conventional nuclear facilities, while reducing exposure to environmental and other surface-level hazards.

Each Gravity Reactor is targeted to produce up to 15 MWe.

Individual reactors may be deployed as standalone installations or grouped in clusters of boreholes at a single site, which may enable longer refueling cycles through coordinated fuel management, staggered refueling schedules and more efficient utilization of shared infrastructure, and support larger installations capable of supplying hundreds and potentially thousands of MWe of generation capacity.

The Company’s commercialization strategy is based on a phased deployment plan designed to move toward commercialization in the next three years.

Given that reactor criticality using established PWR technology is well understood, the Company is prioritizing validation of the hardest and most differentiated parts of our system, to reduce risk earlier and move more directly toward a commercialization outcome.

Specifically, the tests that we want to focus on are drilling to depth at commercial scale, installing and integrating a nuclear system a mile underground, and operating as part of a complete energy ecosystem.

We also want to prove that we can do this in time to meet the AI-driven surge in demand for energy.

The Company is currently participating in the DOE Reactor Pilot Program, and we expect to demonstrate our system as part of the DOE Reactor Pilot Program.

The first phase of the Company’s phased deployment plan involves engineering validation and proof of concept wells.

The Company has a long-term lease for approximately 100 acres located within the Kansas Site and has commenced initial field development activities at the site.

As part of this, the Company already drilled its first data acquisition well to gather real-world data up to 6,000 feet deep.

Next, the Company will demonstrate its ability to drill a commercial-scale borehole and safely deploy a prototype reactor.

The Company continues to advance its reactor design in parallel with these activities, including planning additional drilling activities and conducting related engineering and emplacement work, and is targeting completion of these activities in the coming months.

The balance of this year and into early 2027 will be focused on delivery of key components for full-system installation, including well casing, our reactor canister, and heat exchanger, as well as LEU fabrication and loading.

The second phase of the Company’s phased deployment plan involves DOE authorization and one or more commercial pilot wells.

Specifically, subject to DOE authorization, the Company intends to demonstrate the Gravity Reactor, and to apply for a commercial license with the NRC in the first half of 2027, converting the same pilot reactor to commercial operation.

We are working closely with both the DOE and the NRC to align demonstration and licensing, as we are aiming to move these efforts forward together rather than advancing them in sequence.

The third and final phase of the Company’s phased deployment plan involves the construction of surface facilities and seeking high-volume commercial licensing for deployment of multiple reactors at a single site through clustered boreholes, and subsequently, at multiple sites.

We are targeting as early as 2027 to seek such high-volume commercial licensing with the NRC.

The Company’s approach to subsurface reactor deployment is supported by its intellectual property portfolio, which includes issued patents and pending patent applications relating to reactor configuration, deep subsurface emplacement, drilling and casing techniques, thermal-hydraulic performance, instrumentation and monitoring, and other technologies supporting the deployment of underground nuclear reactors.

The Company believes that its intellectual property, together with its engineering expertise and ongoing development activities, supports its competitive position.

Legacy Deep Fission was incorporated in July 2023 and remains in the development stage.

The Gravity Reactor remains in conceptual and early engineering stages, and the Company has not constructed or operated a commercial reactor or generated revenue.

Current activities include reactor development, geological evaluation, large-diameter borehole drilling research and development, geothermal testing, safety analysis, regulatory engagement, site development, and commercialization planning.

On the Merger Closing Date, Surfside completed the Merger with Legacy Deep Fission, pursuant to which a wholly owned subsidiary of Surfside merged with and into Legacy Deep Fission, with Legacy Deep Fission continuing as the surviving corporation and becoming a wholly owned subsidiary of Surfside.

In connection with the transaction, Surfside changed its name to Deep Fission, Inc.

On the Merger Closing Date, we issued 38,538,922 shares of our common stock to existing holders of Legacy Deep Fission common stock and 85,000 shares of our common stock (the “Advisor Shares”) to an accredited investor in consideration for services rendered in connection with the Merger, while Surfside’s existing stockholders continued to hold an aggregate of 2,166,667 shares of our common stock (the “Retained Pre-Merger Shares”).

We also reserved a total of 9,500,884 shares of our common stock under the 2025 Equity Incentive Plan (“2025 EIP”) for future issuances of equity awards at the discretion of our board of directors to officers, employees, consultants and directors and reserved 1,000,000 shares of our common stock under the 2025 Employee Stock Purchase Plan (“2025 ESPP”) for future purchase by employees.

The Private Placement

Concurrently with the consummation of the Merger, the Company also issued and sold 10,000,000 shares of our common stock in a private placement to certain accredited and institutional investors at a purchase price of $3.00 per share (the “Private Placement”, and together with the Merger, the “Transactions”).

Accounting Considerations

The historical financial statements and related footnotes included in this Annual Report include descriptions of Legacy Deep Fission’s previously outstanding common stock;

however, in connection with the Merger, all shares of Legacy Deep Fission common stock were converted into the right to receive shares of our common stock.

See “ The Merger” and “ The Private Placement ” above for detailed information regarding the Transactions and the related conversion of the shares of Legacy Deep Fission’s common stock.

For financial reporting purposes, the Merger was treated as a recapitalization and reverse acquisition.

Legacy Deep Fission is considered the acquirer for accounting purposes, meaning that the historical financial results of Legacy Deep Fission prior to the Merger are considered our historical financial results under applicable accounting principles.

Accordingly, the historical financial statements included in this Annual Report and discussed in this section, for all periods prior to the Merger, are those of Legacy Deep Fission and not Surfside.

Our Intended Business

As described under “Business Model and Revenue Streams” in Item 1, “Business,” our business model is designed to generate revenue from (i) project-level equity participation, including indirect participation in project-level cash flows from electricity sales, (ii) one-time upfront revenue, generally expected to be associated with Gravity Reactor deployment and related upfront project development services and (iii) recurring revenue, generally expected to be associated with technology licensing and operations and maintenance services of Gravity Reactor installations.

Because we have not yet commercialized a Gravity Reactor, none of these revenue streams have begun to materialize and are not reflected in our historical results.

Components of Results of Operations

Operating Expenses

General and administrative expenses primarily consist of costs associated with administrative staff salaries, facilities, utilities, insurance, marketing and advertising, stock-based compensation, legal fees and other office expenses related to our business functions.

Research and development (“R&D”) expenses primarily represent costs incurred to develop our technology.

These costs consist of personnel costs, including salaries, employee benefit costs, bonuses and stock-based compensation expenses, software costs, computing costs, hardware and experimental supplies, and expenses for outside engineering contractors for analytical work and consulting costs.

We expense all R&D costs in the periods in which they are incurred.

Other Non-Operating Income (Expense)

Other non-operating income (expense) consists primarily of change in fair value of SAFE Notes (as defined below), interest income, interest expenses, and other miscellaneous expenses.

Restatement of Prior Period Financial Statements

As previously discussed under the heading “Explanatory Note,” we are restating our previously issued consolidated financial statements and related notes for the year ended December 31, 2024 and the unaudited condensed consolidated financial information for the periods ended June 30, 2024, September 30, 2024, June 30, 2025, and September 30, 2025.

Refer to Note 2 in the notes to the consolidated financial statements in this Annual Report for additional information.

The impact of the restatement is reflected in the “Results of Operations” section within this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Results of Operations

Comparison of the Year Ended December 31, 2025 and 2024

The following table sets forth our summarized financial information for the periods indicated:

For the Years Ended December 31,

(As Restated)

Operating expenses

General and administrative expenses

Research and development expenses

Operating expenses

Operating loss

Other non-operating income (expense)

Interest income

Change in fair value of SAFE Notes

Total non-operating income (expense)

Operating Expenses

General and administrative expenses increased by $11.3 million for the year ended December 31, 2025, compared to the year ended December 31, 2024.

The increase in general and administrative expenses was primarily attributable to an increase in the number of employees, which resulted in increase in salary and stock-based compensation expense, as well as increased legal, benefits, and marketing costs.

Research and development expenses increased by $6.0 million for the year ended December 31, 2025, compared to the year ended December 31, 2024.

The increase in research and development expenses was primarily attributable to the progression of the Company’s operating plans and the increase in salary and benefits corresponding with our increase in headcount, as well as increased consulting fees paid to our research and development advisors.

Other Non-Operating Income (Expense)

Other non-operating expense increased by $38.0 million for the year ended December 31, 2025, compared to the year ended December 31, 2024, largely due to the approximately $39.8 million loss the Company recorded from the change in fair value on the date of conversion of the Company’s previously issued SAFE Notes, which converted into common stock as a result of the Merger.

Liquidity and Capital Resources

As of December 31, 2024, the Company had total

assets equal to $3,464 comprised exclusively of cash.

The Company’s current liabilities as of December 31, 2024, totaled $157,725

and was comprised of accounts payable and accrued expenses, and amounts due under a note payable to a stockholder.

The Company can provide

no assurance that it can continue to satisfy its cash requirements for at least the next twelve months.

The following is a summary of the Company’s

cash flows provided by (used in) operating and financing activities:

For the Years Ended

Since our inception, we have financed our operations primarily through the issuance and sale of our equity securities.

Our primary requirements for liquidity and capital are to finance working capital and capital expenditures associated with operating and managing the Company, as well as for general corporate purposes.

As of December 31, 2025, our principal source of liquidity was our cash and cash equivalents of $23.7 million.

On February 5, 2026, the Company issued and sold 5,333,333 shares of common stock (the “Shares”) at a purchase price of $15.00 per share, to certain accredited and institutional investors pursuant to the subscription agreements for an aggregate purchase price of $80.0 million.

The aggregate net proceeds to the Company from the offering was approximately $76.0 million, after deducting fees to the placement agents and expenses payable by the Company.

We anticipate that future sources of liquidity will principally come from sales of common stock and other equity instruments.

Since our inception, we have generated significant operating losses as reflected in our accumulated deficit of $66.7 million as of December 31, 2025.

We generated a positive cash flow of $17.0 million for the year ended December 31, 2025 due to financing activities.

We expect to use our proceeds from the 2026 Private Placement for general working capital and corporate purposes, including towards the engineering, research and development of our first pilot nuclear reactor and related technologies.

A portion of the net proceeds from the 2026 Private Placement will also be used to cover management, overhead, legal and accounting fees and expenses relating to the Merger and the 2026 Private Placement and could include potential acquisitions of complementary businesses or assets (though none is currently contemplated).

Based on our expectation of continued operating losses for at least the near term, we anticipate our existing cash and cash equivalents, together with net proceeds from the 2026 Private Placement, will not be sufficient to operate our business for the next twelve months.

Accordingly, we determined that there is substantial doubt about our ability to continue as a going concern.

In order to continue to operate our business beyond that time, we will need to raise substantial additional capital.

Our independent registered public accounting firm included an explanatory paragraph regarding substantial doubt about the Company’s ability to continue as a going concern in its report on our financial statements for the year ended December 31, 2025.

In addition to our cash and cash equivalents currently available to support these activities, which was approximately $80 million as of April 15, 2026, we estimate that we will require $200 million of additional capital to complete development of, and license and commercially deploy, our first commercial reactor, but we expect we can complete the development and begin operation of an initial test reactor with approximately half that amount of additional capital.

We are actively evaluating potential financing sources, including equity issuances, debt financing, strategic partnerships, and other capital raising transactions.

However, there can be no assurance that such financing will be available on acceptable terms, on a timely basis, or at all.

To the extent that we raise additional capital through the issuance of equity or convertible securities, the ownership interests of our existing stockholders will be diluted.

Moreover, the terms of such securities or any other financing may include preferences or other rights that adversely affect the value of, or rights of holders of, our common stock.

Debt financing, if available, could result in additional debt service obligations, and debt financings or other financings may involve covenants that restrict our operations or financial flexibility.

However, our management team will have broad discretion in making strategic decisions to execute our growth plans, and there can be no assurance that management’s decisions will result in successful achievement of our business objectives.

In addition, our estimate as to the sufficiency of our current cash, cash equivalents and short-term investments and our current operating plan as discussed above are based on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we currently anticipate.

Year ended December 31, 2025 and 2024

As of December 31, 2025, our cash and cash equivalents were $23.7 million.

The following table shows a summary of our cash flows for the periods presented:

December 31, 2025

December 31, 2024

(As Restated)

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net Change in Cash

The Company has only cash assets and has generated

no revenues since inception.

The Company is also dependent upon the receipt of capital investment or other financing to fund its ongoing

operations and to execute its business plan of seeking a combination with a private operating company.

In addition, the Company is dependent

upon certain related parties to provide continued funding and capital resources.

If continued funding and capital resources are unavailable

at reasonable terms, the Company may not be able to implement its plan of operations.

Issuance of Promissory Note to a Stockholder and Director

On December 10, 2021, the Company issued a promissory

note (the “Note”) to the majority stockholder of the Company, Mark Tompkins, a stockholder and director of the Company, pursuant

to which the Company agreed to repay Mr.

Tompkins the sum of any and all amounts that Mr.

Tompkins may advance to the Company on or before

the date that the Company consummates a business combination with a private company or reverse takeover transaction or other transaction

after which the Company would cease to be a shell company (as defined in Rule 12b-2 under the Exchange Act).

The Company has used the

proceeds from the note to cover its expenses.

Tompkins has no obligation to advance funds to the Company under the terms

of the note, it is anticipated that he may advance funds to the Company as fees and expenses are incurred in the future.

the Company issued the note in anticipation of such advances.

Interest shall not accrue on the outstanding principal amount of the note

except if an Event of Default (as defined in the note) has occurred.

In the Event of Default, the entire note shall automatically become

due and payable (the “Default Date”) and starting from five (5) days after the Default Date, the interest rate on the note

shall accrue at the rate of eighteen percent (18%) per annum.

As of December 31, 2024, the total amount due under the note was $147,025.

Results of Operations

The Company has not conducted any active operations

since inception, except for its efforts to locate suitable acquisition candidates.

No revenue has been generated by the Company for the

years ended December 31, 2024 and 2023.

It is unlikely the Company will have any revenues unless it is able to effect an acquisition or

merger with an operating company, of which there can be no assurance.

It is management’s assertion that these circumstances may

hinder the Company’s ability to continue as a going concern.

The Company’s plan of operations for the next twelve months shall

be to continue its efforts to locate suitable acquisition candidates.

For the years ended December 31, 2024, and 2023,

the Company had a net loss of $44,810 and $47,625, respectively, comprised of accounting, audit and other professional service fees incurred

in relation to the preparation and filing of the Company’s SEC filings and general and administrative expenses.

As of December 31, 2024, the Company had $3,464

in cash and has not earned any revenues from operations to date.

In the next 12 months, we expect to incur expenses equal to approximately

$45,000 related to legal, accounting, audit, and other professional service fees incurred in relation to the Company’s Exchange

Act filing requirements.

The costs related to the acquisition of a business combination target company vary widely and are dependent on

a variety of factors including, but not limited to, the amount of time it takes to complete a business combination, the location of the

target company, the size and complexity of the business of the target company, whether stockholders of the Company prior to the transaction

will retain equity in the Company, the scope of the due diligence investigation required, the involvement of the Company’s auditors

in the transaction, possible changes in the Company’s capital structure in connection with the transaction, and whether funds may

be raised contemporaneously with the transaction.

Therefore, we believe such costs are unascertainable until the Company identifies a

business combination target.

These conditions raise substantial doubt about our ability to continue as a going concern.

The Company is

currently devoting its efforts to locating merger candidates.

The Company’s ability to continue as a going concern is dependent

upon our ability to develop additional sources of capital, locate and complete a merger with another company, and ultimately, achieve

profitable operations.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet

arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes

in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material

to investors.

Critical Accounting Estimates

Accounting estimates are an integral part of the

financial statements prepared by management and are based on management’s knowledge and experience about past and current events

and assumptions about future events.

Management’s estimate of the current portion of note payable - stockholder is based on the

possibility that within one year of the balance sheet date a transaction will occur that requires the Company to repay the note payable.

Management’s estimate of the deferred tax benefit arising from the net operating loss carry forwards available to reduce future

federal and state taxable income and the related valuation allowance in the same amount assumes that the Company will be acquired by a

target company and the benefit will not be realized.

Net increase (decrease) in cash

Cash, beginning of period

Cash, end of period

Operating Activities

Net cash used in operating activities increased by $10.3 million, to $13.1 million for the year ended December 31, 2025, compared to the net cash used in operating activities of $2.8 million for the year ended December 31, 2024.

The increase in net cash used in operating activities was primarily attributable to increased net losses, changes in working capital, including prepaids and accounts payable, and other current liabilities.

Investing Activities

Net cash used in investing activities increased by $40.8 thousand, to $43.4 thousand for the year ended December 31, 2025, compared to the net cash used in investing activities of $2.7 thousand for the year ended December 31, 2024.

The increase was driven by additions by the Company to property and equipment.

Financing Activities

Net cash provided by financing activities increased by $21.5 million, to $30.1 million for the year ended December 31, 2025, compared to the net cash provided by financing activities of $8.6 million for the year ended December 31, 2024.

The increase in net cash provided by financing activities was primarily attributable to proceeds from the Private Placement and additional issuances of SAFE Notes.

Contractual Obligations and Commitments

As of December 31, 2025 and December 31, 2024, we did not have any material contractual obligations or commitments.

Off-Balance Sheet Transactions

We did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with entities or financial partnerships, such as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Estimates

Our financial statements and the related notes thereto included in this Annual Report are prepared in accordance with United States generally accepted accounting principles.

The preparation of financial statements also requires us to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures.

These estimates are developed based on historical experience and various other assumptions that we believe to be reasonable under the circumstances.

Actual results could differ significantly from the estimates made by management.

To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.

We believe that the accounting policies described below involve a greater degree of judgment and complexity.

Accordingly, these are the estimates we believe are most critical to aid in fully understanding and evaluating our financial condition, results of operations and future performance.

We have described our significant accounting policies within Note 3 to our financial statements included in this Annual Report.

In 2024 and 2025, the Company issued SAFE Notes in exchange for cash financing.

The Safe Notes converted into our common stock in connection with the Merger, and are no longer outstanding.

The Company accounted for its SAFE Notes as derivatives under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging , and presented them as long-term liabilities in the accompanying consolidated balance sheets.

The determination of fair value for the Company’s SAFE Notes required significant judgment and the use of estimates.

We have described the valuation of the SAFE Notes in Note 5 to our financial statements included in this Annual Report.

Stock-Based Compensation

We account for stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation.

We measure all stock-based awards granted to employees, directors and non-employee consultants based on the fair value on the date of the grant and recognize compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model.

We have historically been a private company and lack company-specific historical information for our stock.

Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions.

The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

As a result, if factors change and management uses different assumptions, stock-based compensation expenses could be materially different for future awards.

Recent Accounting Pronouncements

Our management does not believe that any other

recently issued, but not yet effective, accounting pronouncement if currently adopted would have a material effect on the accompanying

financial statements.

Emerging Growth Company

As an “emerging growth company” under

the JOBS Act, the Company has elected to use the extended transition period for complying with new or revised accounting standards under

Section 102(b)(1) of the JOBS Act.

This election allows us to delay the adoption of new or revised accounting standards that have different

effective dates for public and private companies until those standards apply to private companies.

As a result of this election, our financial

statements may not be comparable to companies that comply with public company effective dates.

Our fiscal year ends on December 31.

Quantitative and Qualitative Disclosures

about Market Risk.

As a “smaller reporting company” defined

by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.

A discussion of recently issued accounting pronouncements and recently adopted accounting pronouncements is included in Note 3 to our financial statements included in this Annual Report under the heading “Summary of Significant Accounting Policies.”

Quantitative and Qualitative Disclosure About Market Risk

As a “smaller reporting company” we are not required to provide information required by this Item.

Financial Statements and Supplementary Data

Reference is made to pages F-1 through F-24 comprising a portion of this Annual Report, which are incorporated herein by reference.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 7. Management’s Discussion and Analysis