Deep Isolation Nuclear (DBHL) boosts R&D, loss widens on demo push
Deep Isolation Nuclear, Inc. reported lower revenue and significantly higher losses for the six months ended June 30, 2026 as it accelerated development of its nuclear waste disposal technology. Revenue was $2.766 million, down from $3.154 million a year earlier, with grant revenue falling to $0.795 million while remediation and consulting services rose to $1.971 million.
Operating expenses expanded sharply, driven by research and development of $4.669 million (versus none in 2025) and selling, general and administrative expenses of $5.586 million (up from $3.208 million). Net loss widened to $8.452 million from $1.529 million, or $(0.15) per share versus $(0.04) per share.
Cash used in operating activities increased to $8.044 million, reducing cash to $19.379 million at June 30, 2026, with minimal debt (total liabilities $1.984 million). Freestone contributed $1.712 million of revenue and $0.385 million of segment income, partially offsetting losses in the Deep Isolation US & EMEA segment. The company advanced its strategy through a Halliburton services agreement for a Texas demonstration well, selection for DOE/ARPA‑E programs, and approval for trading on the OTCQB market under the symbol DBHL, while planning non‑radioactive full‑scale demonstrations expected to cost about $8.1 million in 2026 and $7.4 million in 2027.
Positive
- None.
Negative
- Net loss sharply higher: Six‑month net loss increased to $8.452 million from $1.529 million, driven by a large ramp‑up in R&D and SG&A spending.
- Rising cash burn vs. planned spend: Operating cash outflow reached $8.044 million and cash fell to $19.379 million, while the company expects additional demonstration costs of about $8.1 million in 2026 and $7.4 million in 2027 and anticipates continued operating losses.
Filing Explained
The filing records dilution capacity, not dilution completed, while Deep Isolation has no binding implementation contract.
This Form 10-Q is Deep Isolation Nuclear's unaudited quarterly report for the three and six months ended
It reports 57,667,113 common shares outstanding at that date, while 6,288,366 options and 996,397 warrants remained outstanding or unexercised; the current share count therefore excludes those instruments. If exercised, they could result in additional shares and reduce an existing holder's percentage ownership, absent offsetting changes.
The company was authorized to issue 300,000,000 common shares and had reserved 13,054,251 shares under its option arrangements, including 5,992,435 available for issuance. Those authorization and reserve figures are capacities, not shares already issued.
The company states that it has not entered into a binding implementation agreement or implementation contract with a customer. The disclosed commercialization state is therefore strategic appraisal and operational-planning work without a binding implementation commitment.
A named milestone is completion of the non-radioactive, full-scale, at-depth demonstration and related safety testing, which the company says precedes likely commercial adoption; it also says U.S. adoption requires Congressional legislative changes.
Key Figures
Revenue: $2,766,000
Net loss: $8,452,000
Research and development expense: $4,669,000
+5 more
8 metrics
Revenue
$2,766,000
Six months ended June 30, 2026; down from $3,154,000 in 2025
Net loss
$8,452,000
Six months ended June 30, 2026; compared with $1,529,000 in 2025
Research and development expense
$4,669,000
Six months ended June 30, 2026; none incurred in the 2025 period
Cash and cash equivalents
$19,379,000
Balance at June 30, 2026; down from $27,434,000 at December 31, 2025
Net cash used in operating activities
$8,044,000
Six months ended June 30, 2026; versus $618,000 in 2025
Grant revenue
$795,000
Six months ended June 30, 2026; down from $2,255,000 in 2025
Remediation and consulting revenue
$1,971,000
Six months ended June 30, 2026; up from $899,000 in 2025
Shares outstanding
57,667,113 shares
Common stock outstanding as of August 3, 2026
Key Terms
reverse acquisition, deep borehole disposal, ASC 606, OTCQB market, +1 more
5 terms
reverse acquisition financial
"the Merger was treated as a “reverse acquisition” or the equivalent"
A reverse acquisition is when a private company becomes publicly traded by buying a listed company—often a low-activity “shell”—instead of going through a traditional initial public offering. For investors, it can quickly create tradable shares and access to capital but also reshuffles ownership and can bring limited disclosure or integration risks; think of it as buying an existing storefront to start selling immediately rather than building one from the ground up.
deep borehole disposal technical
"permanent disposal of nuclear waste by packing the waste into ... deep boreholes"
ASC 606 financial
"The Company recognizes revenue in accordance with FASB’s ASC 606, “Revenue from Contracts with Customers.”"
A U.S. accounting standard that sets consistent rules for when and how companies record revenue from contracts with customers, focusing on the transfer of promised goods or services. It matters to investors because it affects the timing and amount of reported sales and profit—like deciding whether a contractor can count payment when a job starts, progresses, or finishes—so it improves comparability and helps assess a company's true economic performance.
OTCQB market market
"its shares of common stock were approved to trade on the OTCQB market"
The OTCQB Market is a regulated tier of the over‑the‑counter (OTC) trading system where smaller or early‑stage stocks trade with modest reporting and quality standards. Think of it as a neighborhood market that sits between an informal garage sale and a big supermarket: it offers more information and oversight than the lowest OTC tier, but less liquidity and scrutiny than major exchanges. Investors care because it signals a middle level of transparency and risk, affecting how easy shares are to buy, sell and evaluate.
SCALEUP Ready program regulatory
"selected for the U.S. Department of Energy’s ARPA-E SCALEUP Ready program"
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FAQ
What were Deep Isolation Nuclear (DBHL)'s revenue and net loss for the six months ended June 30, 2026?
Deep Isolation Nuclear reported revenue of $2.766 million and a net loss of $8.452 million for the six months ended June 30, 2026. Revenue declined from $3.154 million a year earlier, while losses expanded significantly as the company increased R&D and SG&A spending.
How did DBHL's cash position and operating cash flow change in the first half of 2026?
Cash decreased to $19.379 million at June 30, 2026 from $27.434 million at December 31, 2025. Net cash used in operating activities rose to $8.044 million, compared with $0.618 million in the prior‑year period, reflecting higher operating expenses and expansion efforts.
What drove the increase in Deep Isolation Nuclear (DBHL)'s operating expenses in 2026?
Operating expenses rose mainly due to research and development expense of $4.669 million, compared with none in 2025, and higher selling, general and administrative costs of $5.586 million. These investments support non‑radioactive full‑scale demonstrations and commercialization of the company’s deep borehole disposal technology.
Who are the major customers contributing to DBHL's 2026 revenue, and how concentrated is sales exposure?
For the six months ended June 30, 2026, about 85% of revenue came from key customers, including CPCCO, H2C (formerly WRPS), the U.S. Trade and Development Agency and Oklo. This concentration highlights reliance on a small group of government and industrial clients for most sales.
What strategic initiatives and contracts did Deep Isolation Nuclear (DBHL) highlight in 2026?
DBHL entered a Master Services Agreement with Halliburton for a Texas demonstration well, was selected for DOE’s ARPA‑E SCALEUP Ready program and three Project GENESIS grants, and obtained approval for its common stock to trade on the OTCQB market under symbol DBHL.
How is Deep Isolation Nuclear (DBHL) allocating funds toward its deep borehole disposal demonstration?
The company plans to spend approximately $8.1 million in 2026 and $7.4 million in 2027 on a non‑radioactive, full‑scale, at‑depth demonstration in Texas, covering well construction, canister manufacturing, emplacement and retrieval testing, and related costs, funded largely from its 2025 private placement.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________________
FORM 10-Q
_______________________________________________________________________
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||
For the quarterly period ended June 30, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||
Commission File Number 000-56406
_______________________________________________________________________
(Exact name of registrant as specified in its charter)
_______________________________________________________________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip code) | |||||||
(Registrant’s telephone number, including area code)
_______________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||||||||
| ☒ | Smaller reporting company | |||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of August 3, 2026, there were outstanding 57,667,113 shares of common stock, $0.0001 par value per share, of the registrant.
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DEEP ISOLATION NUCLEAR, INC. AND SUBSIDIARIES
Table of Contents
PART I. FINANCIAL INFORMATION | 1 | ||||
ITEM 1. FINANCIAL STATEMENTS | 1 | ||||
CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2026 (UNAUDITED) AND DECEMBER 31, 2025 | 1 | ||||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025 | 2 | ||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT (UNAUDITED) FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025 | 3 | ||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 | 4 | ||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | 5 | ||||
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 26 | ||||
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 35 | ||||
ITEM 4. CONTROLS AND PROCEDURES | 35 | ||||
PART II. OTHER INFORMATION | 37 | ||||
ITEM 1. LEGAL PROCEEDINGS | 37 | ||||
ITEM 1A. RISK FACTORS | 37 | ||||
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 38 | ||||
ITEM 3. DEFAULTS UPON SENIOR SECURITIES | 38 | ||||
ITEM 4. MINE SAFETY DISCLOSURES | 38 | ||||
ITEM 5. OTHER INFORMATION | 38 | ||||
ITEM 6. EXHIBITS | 39 | ||||
SIGNATURE | 40 | ||||
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Deep Isolation Nuclear, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
| June 30, 2026 (Unaudited) | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash | $ | $ | |||||||||
Accounts receivable, net of allowance for credit losses of $ | |||||||||||
| Contract assets | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Intangible assets, net | |||||||||||
| Finance lease right-of-use assets | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Goodwill | |||||||||||
| Other non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued payroll | |||||||||||
| Contract liabilities | |||||||||||
| Finance lease liabilities, current | |||||||||||
| Operating lease liabilities, current | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Finance lease liabilities, net of current portion | |||||||||||
| Operating lease liabilities, net of current portion | |||||||||||
| Total liabilities | |||||||||||
| Commitments and Contingencies (Note 16) | |||||||||||
| Stockholders’ Equity | |||||||||||
Common stock, par value $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive income | |||||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Deep Isolation Nuclear, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited) (in thousands, except share and per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of services (exclusive of depreciation shown separately below) | ( | ( | ( | ( | |||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
| Gain on insurance settlement | |||||||||||||||||||||||
| Other income | |||||||||||||||||||||||
| Net loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | |||||||||||||||||||||
| Total other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
| Other comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Net loss per common share – basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Weighted average common shares outstanding - basic and diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Deep Isolation Nuclear, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited) (in thousands, except share and per share data)
| Common Stock | Preferred Stock Series A | Preferred Stock Series A Prime | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2025 | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Retroactive application of Merger | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Balance beginning of quarter | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | - | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2026 | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options and distribution of restricted stock units | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2026 | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options and distribution of restricted stock units | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
*Shares of the Company’s common stock prior to the Merger (refer to Note 1) have been retrospectively recast to reflect the change in the capital structure.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Deep Isolation Nuclear, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited) (in thousands, except share and per share data)
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Depreciation and amortization expense | |||||||||||
| Interest expense | |||||||||||
| Stock based compensation | |||||||||||
| Gain on insurance settlement | ( | ||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Allowance for credit losses | |||||||||||
| Contract assets | ( | ( | |||||||||
| Other current assets | |||||||||||
| Other non current assets | |||||||||||
| Account payable | |||||||||||
| Contract liabilities | ( | ||||||||||
| Accrued expenses | ( | ( | |||||||||
| Other current liabilities | |||||||||||
| Operating lease right-of-use assets and lease liabilities | |||||||||||
| Net cash used in operating activities | ( | ( | |||||||||
| Cash Flows from Investing Activities: | |||||||||||
| Purchases of property, plant and equipment | ( | ( | |||||||||
| Proceeds from insurance on disposal of fixed asset | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Payment of finance lease liability | ( | ( | |||||||||
| Proceeds from exercise of stock options | |||||||||||
| Net cash provided by financing activities | |||||||||||
| Net change in cash and cash equivalents | ( | ( | |||||||||
| Effect of exchange rate on cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents: | |||||||||||
| Beginning of period | |||||||||||
| End of period | $ | $ | |||||||||
| Supplemental schedule of non-cash investing and financing activities: | |||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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DEEP ISOLATION NUCLEAR, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Nature of Operations
Deep Isolation Nuclear, Inc. (formerly, Aspen-1 Acquisition Inc. (“Aspen”)) and its subsidiaries provide nuclear waste disposal and related consulting services globally. Deep Isolation, Inc., our direct, wholly-owned subsidiary (which we acquired in the Merger, as described below), and its subsidiaries are our operating companies and, as such, own all of our material assets and conducts all our business activities and operations.
Deep Isolation, Inc. was incorporated in Delaware in June 2016. Its subsidiaries are: Deep Isolation EMEA Limited (“Deep Isolation EMEA”), incorporated in England and Wales in February 2020, Deep Isolation US LLC (“Deep Isolation US”), incorporated in Delaware in December 2018, and Freestone Environmental Services, Inc. (“Freestone”), acquired in November 2021. Deep Isolation EMEA serves as the primary international subsidiary, engaging in customer outreach, market development, project proposal coordination, and regulatory and government engagement across the EMEA region. Deep Isolation US LLC serves as the primary US subsidiary, engaging in customer outreach, market development, project proposal coordination, and regulatory and government engagement in the US. Freestone is a well-established environmental consulting firm based in Richland, Washington, providing a range of environmental, engineering, and scientific services to government clients.
All references to “Deep Isolation” refer to Deep Isolation, Inc. and its subsidiaries; unless otherwise stated or the context otherwise indicates, references to “DI Nuclear,” “Deep Isolation Nuclear,” the “Company,” “we,” “our,” “us,” or similar terms refer to Deep Isolation Nuclear, Inc. together with Deep Isolation.
Merger Transaction
On July 23, 2025 (the “Closing Date”), Aspen, its subsidiary Deep Isolation Acquisition Corp. (the “Acquisition Sub”), and Deep Isolation, entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), pursuant to which, on the same day, (i) the Acquisition Sub merged with and into Deep Isolation (together with the other transactions contemplated by the Merger Agreement, the “Merger” or “Merger Transaction”), with the Acquisition Sub ceasing to exist and Deep Isolation surviving and becoming our wholly owned direct subsidiary and (ii) Aspen changed its name to Deep Isolation Nuclear, Inc.
We determined that Deep Isolation was the accounting acquirer in the Merger based on an analysis of the criteria outlined in Accounting Standards Codification (“ASC”) 805, Business Combinations. Accordingly, for accounting purposes, the Merger was treated as a “reverse acquisition” or the equivalent of Deep Isolation issuing stock for the net assets of Aspen, accompanied by a recapitalization. No goodwill or other intangible assets were recorded as a result of the Merger. Refer to Note 3 Reverse Merger for further details.
Because Deep Isolation was deemed the accounting acquirer, the historical financial statements of Deep Isolation became the historical financial statements of the combined company, upon the consummation of the Merger. As a result, the financial statements included herein reflect (i) the historical operating results of Deep Isolation prior to the Merger; (ii) the combined results of Deep Isolation and Aspen following the closing of the Merger; (iii) the assets and liabilities of Deep Isolation at their historical cost; and (iv) the Company’s equity structure for all periods presented.
The equity structure has been retroactively restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company’s common stock, $0.0001 par value per share, issued to Deep Isolation shareholders and Deep Isolation convertible preferred shareholders in connection with the Merger. As such, the shares and corresponding capital amounts and earnings per share related to Deep Isolation Convertible Preferred Stock and Deep Isolation common stock prior to the Merger have been retroactively restated as shares reflecting the exchange ratio established in the Merger.
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements contained herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations, although the Company believes that the
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disclosures made are adequate to make the information not misleading. Accordingly, the condensed consolidated financial statements reflect all normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of interim periods and may not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). The information as of June 30, 2026, and for the three and six months ended June 30, 2026, is unaudited, whereas the consolidated balance sheet as of December 31, 2025, is derived from the Company’s audited consolidated financial statements as of that date. These condensed consolidated financial statements and notes hereto should be read in conjunction with the consolidated financial statements and notes thereto included in the audited financial statements for the year ended December 31, 2025, as provided in the Form 10-K filed with the SEC on March 30, 2026. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for any other interim period or for the year.
The accompanying condensed consolidated financial statements include the accounts of all of our wholly owned subsidiaries, Deep Isolation, Deep Isolation US, Deep Isolation EMEA and Freestone, and are presented in accordance with U.S. GAAP.
Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”).
Principles of Consolidation
The unaudited condensed consolidated financial statements and accompanying notes are prepared in conformity with the accounting principles generally accepted in the United States of America. Our unaudited condensed consolidated financial statements include the financial position, results of operations and cash flows of Deep Isolation Nuclear, Inc. and that of our wholly owned subsidiaries as noted above. We eliminate all material intercompany accounts and transactions.
Use of Estimates
The preparation of our unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of our revenues and expenses during each reporting period. Due to the inherent uncertainty involved in making estimates, actual results may differ significantly from previously estimated amounts under different assumptions or conditions.
Foreign Currency Translation
The Company’s reporting currency is U.S. dollars. The functional currency of the Company is the U.S. dollar. The functional currency of our foreign subsidiary, Deep Isolation EMEA, is generally the local currency of the country in which it operates (British Pound Sterling). The Company translates the assets and liabilities at the exchange rates in effect on the balance sheet date. The Company translates the revenue, costs, and expenses at the average rate of exchange rates in effect during the period. The Company includes translation gains and losses in the stockholders’ equity section of the Company’s condensed consolidated balance sheets in accumulated other comprehensive income or loss. Transactions undertaken in other currencies are translated using the exchange rate in effect as of the transaction date and any exchange gains and losses resulting from these transactions are included in the consolidated statements of operations in other income.
Accounts Receivable and Contract Assets
Accounts receivables are recorded at the price invoiced to customers and are generally due within 30 days of receipt of the invoice. The carrying amount of accounts receivables is reduced by a credit loss determined in accordance with ASU 2016-13, “Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments.” which requires us to consider forward-looking information in estimating the expected loss and is developed using historical collection experience, current and future economic and market conditions that may affect customers’ ability to pay, and a review of the current status of customers’ accounts receivables. We did not apply a credit loss allowance to government related receivables due to our past successful experience in their collectability.
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Revenue Recognition
The Company recognizes revenue in accordance with FASB’s ASC 606, “Revenue from Contracts with Customers.” ASC 606 provides a single, comprehensive revenue recognition model for all contracts with customers. Revenue from government contracts (grants) where the government is the customer are accounted in accordance with ASC 606.
Under ASC 606, a five-step process is utilized in order to determine revenue recognition, depicting the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. Under ASC 606, a performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract transaction price is allocated to each distinct performance obligation and recognized as revenues as the performance obligation is satisfied.
Services Revenues
The Company derives its revenue primarily from environmental remediation supporting services, administrative support services, consulting services and technology development grants related to nuclear waste disposal services globally. The Company recognizes revenue upon transfer of control of promised services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services.
Variable Consideration
The Company’s contracts generally do not give rise to variable consideration. However, from time to time, the Company may submit requests for equitable adjustments under certain of its government contracts for price or other modifications that are determined to be variable consideration. The Company estimates the amount of variable consideration to include in the estimated transaction price based on historical experience with government contracts, anticipated performance and management’s best judgment at the time and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
Prices for our products are based on terms specified in the contracts, which generally do not include financing components, noncash consideration or consideration paid to our customers. As our standard payment terms are less than one year, we have elected the practical expedient, and we have not assessed whether a contract has a significant financing component. We report any tax assessed by a governmental authority that we collect from our customers that is both imposed on and concurrent with our revenue-producing activities (such as sales, use, value added and excise taxes) on a net basis (meaning we do not recognize these taxes either in our revenues or in our costs and expenses).
The Company’s primary obligation to customers in contracts relate to the provision of services to the customer at the direction of the customer. This provision of services at the request of the customer is the performance obligation, which is satisfied over time. Revenue earned from contracts is determined using the input method and is based on contractually defined billing rates applied to per hour of services performed. The identified performance obligations (i.e., Administrative Support Services, Environmental Remediation Support Services) are recognized as revenue over the time when services are provided and invoiced to the customer applying practical expedient. Consulting Services are recognized as revenue over the time when milestones become probable of being achieved (i.e. final submission and acceptance of the report) using the units produced method.
The Company has elected to adopt the “right to invoice” practical expedient for the recognition of its revenue.
For services already completed but not yet billed at the balance sheet date are recognized as contract Assets within the condensed consolidated balance sheets. Advance payments received from customers for which services have not been provided yet at the balance sheet date are recognized as contract liabilities within the consolidated balance sheets.
Research and Development Expenses
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Fair Value Measurement
We measure certain financial assets and liabilities at fair value. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, we use a three-level hierarchy, which prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach).
The levels of hierarchy are described below:
•Level 1 - Quoted prices in active markets for identical instruments;
•Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and
•Level 3 - Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Financial assets and liabilities are classified in their entirety based on the most stringent level of input that is significant to the fair value measurement.
As of June 30, 2026 and December 31, 2025, the fair value of the Company’s financial instruments approximated their carrying values. The carrying amount of certain financial instruments, including cash, accounts receivable, accounts payable and accrued expenses approximate fair value due to their short maturities.
Long-Term Assets
As of June 30, 2026 and December 31, 2025, the Company had $79 thousand and $140 thousand, respectively, recorded in long-term assets related to a prepaid directors’ and officers’ liability insurance tail policy purchased in connection with a Merger, which provides extended coverage for certain pre-merger acts of former directors and officers. The cost is amortized over the coverage period.
Property, Plant and Equipment and Depreciation
We state property and equipment at acquisition cost less accumulated depreciation. Depreciation of property and equipment is computed utilizing the straight-line method over the estimated useful lives of the assets. Furniture and fixtures are depreciated over useful lives of five years . Office and computer equipment is depreciated over useful lives of three to five years . Leasehold improvements are depreciated over the shorter of their estimated useful life or the remaining term of the associated lease.
Upon the sale or retirement of an asset, we remove the related cost and accumulated depreciation from the accounts and recognize any gain or loss in earnings.
We expense expenditures for maintenance, repairs and minor renewals as incurred that do not improve or extend the life of the assets, including planned major maintenance.
ASC 360-10 requires that a long-lived asset group be reviewed for impairment only when events or changes in circumstances indicate that the carrying amount of the long-lived asset (group) might not be recoverable. We perform impairment tests when events or changes in circumstances indicate the carrying value may not be recoverable. We consider all relevant factors. We perform the impairment test by comparing the estimated future undiscounted cash flows (exclusive of interest expense) associated with the asset or asset group to the asset’s net carrying value to determine if a write-down to fair value is required.
Intangible Assets
Intangible assets are composed of two identifiable assets, Tradename and Customer relationships. The useful lives of these assets were determined to be five years each. All intangible assets are amortized on a straight-line basis over their
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Stock-Based Compensation
Stock-based compensation for employees and nonemployees is accounted for under ASC 718, “Compensation - Stock Compensation” which requires these payments to be recognized in the consolidated statements of operations at their fair values.
Our long-term incentive plan provides for grants of nonqualified or incentive stock options, restricted stock units, performance units, performance shares, stock appreciation rights, and other stock based awards within the discretion of the plan administrator. Stock-based compensation is measured using a fair value-based method for all equity-based awards. The cost of awarded equity instruments is recognized based on each instrument’s grant-date fair value over the period during which the grantee is required to provide service in exchange for the award. The determination of fair value for nonqualified or incentive stock options requires significant judgment and the use of estimates, particularly with regard to Black-Sholes assumptions such as stock price, volatility and expected option lives to value equity-based compensation, while forfeitures are recognized as incurred.
The option valuation model used to calculate the Company’s options uses the treasury yield curve rates for the risk-free interest rate for a period equal to the expected option life and the simplified method to calculate the expected option life. Volatility is determined by reference to the actual volatility of several publicly traded companies that are similar to Deep Isolation in its industry sector. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option valuation model. Forfeitures are recognized as they occur. All equity-based payment awards are amortized on a straight-line basis over the requisite service periods of the awards.
Stock-based compensation is recorded as a cost of services expense or selling, general, and administrative expense in the accompanying consolidated statements of operations. Shares are issued concurrently with the exercise of options. Shares are reserved for option grants without requiring the repurchase of common shares for grant issuance.
Loss Per Common Share
We calculate basic loss per common share in accordance with ASC 260, “Earnings Per Share,” based on the weighted-average number of outstanding common shares during the fiscal period. Diluted loss per common share is based on the weighted-average number of outstanding common shares plus the weighted-average number of potential outstanding common shares. In periods where they are anti-dilutive, such amounts are excluded from the calculations of dilutive loss earnings per share. Loss per common share is computed separately for each period presented.
Income Taxes
We and our subsidiaries are members of Deep Isolation Nuclear, Inc.’s consolidated U.S federal income tax group (the “Deep Isolation Tax Group”). We and certain of our subsidiaries also file consolidated income tax returns with Deep Isolation Nuclear, Inc. in various U.S. state jurisdictions. As a member of the Deep Isolation Tax Group, we are jointly and severally liable for the federal income tax liability of Deep Isolation US and the other companies included in the Deep Isolation Tax Group for all periods in which we are included in the Deep Isolation Tax Group.
Income taxes are accounted for in accordance with ASC 740, “Income Taxes.” Under ASC 740, the provision for income taxes is comprised of taxes that are currently payable and deferred taxes that relate to the temporary differences between financial reporting carrying values and tax bases of assets and liabilities. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that the deferred tax assets will be realized. Deferred tax assets and liabilities are calculated by applying existing tax laws and the rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
The Company accounts for uncertainty in income taxes using a recognition and measurement threshold for tax positions taken or expected to be taken in a tax return, which are subject to examination by federal and state taxing authorities. The
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tax benefit from an uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination by taxing authorities based on technical merits of the position. The amount of the tax benefit recognized is the largest amount of the benefit that has a greater than 50 % likelihood of being realized upon ultimate settlement. The effective tax rate and the tax basis of assets and liabilities reflect management’s estimates of the ultimate outcome of various tax uncertainties. Once identified, the Company will recognize penalties and interest related to uncertain tax positions within the provision (benefit) for income taxes line in the accompanying consolidated statements of operations.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in connection with business combinations accounted for using the acquisition method of accounting. The Company tests goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit. The Company has determined that the reporting unit subject to goodwill impairment testing is Freestone.
In evaluating goodwill for impairment, the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 %) that the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative impairment test.
Leases
The Company has adopted the lease accounting requirements of ASU 2016-02, Leases (“Topic 842”). Under Topic 842, the Company determines if an arrangement is a lease at inception, and leases are classified at commencement as either operating or finance leases.
Right-of-use (“ROU”) assets and lease liabilities are recognized at commencement based on the present value of the minimum lease payments over the lease term. The Company utilizes certain practical expedients and policy elections available under Topic 842, including (i) leases with an initial term of 12 months or less are not recognized on the balance sheet, (ii) lease components are not separated from non-lease components for all asset classes, and (iii) non-lease components that are not fixed are expensed as incurred as variable lease costs. The Company uses its incremental borrowing rate based on information available at the commencement date in determining the present value of future lease payments.
The Company leases facilities under non-cancellable operating lease agreements. Certain lease agreements contain rent escalations that are included in the present value calculation of minimum lease payments. The lease term begins on the date the Company has the right to use the leased property. Lease terms may include options to extend or terminate the lease and these options are included in the ROU asset and lease liability when it is reasonably certain that the option will be exercised. The Company’s lease agreements do not contain residual value guarantees or covenants.
Warrants
The Company accounts for its warrants as equity-classified based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own Common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance.
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Segments
Subsequent Events
Commitments and Contingencies
In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of its business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter.
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive income – Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 will require more detailed information about the types of expenses in commonly presented income statement captions such as “Cost of sales” and “Selling, General and Administrative expenses”. The new guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027 with early adoption permitted. The Company is currently evaluating the impact that this standard will have on the Company’s disclosures.
In March 2024, the SEC issued its final climate disclosure rules, which require the disclosure of climate-related information in annual reports and registration statements. The rules require disclosure in the audited financial statements of certain effects of severe weather events and other natural conditions above certain financial thresholds, as well as amounts related to carbon offsets and renewable energy credits or certificates, if material. Under the rules as originally issued, disclosure requirements begin phasing in for fiscal years beginning on or after January 1, 2027. However, on April 4, 2024, the SEC determined to voluntarily stay the final rules pending certain legal challenges. The Company is currently evaluating the impact of new rules and continues to monitor the status of the related legal challenges.
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
Note 3. Reverse Merger
As discussed in Note 1, the Company completed the Merger Transaction on July 23, 2025. Pursuant to the Company’s amended and restated certificate of incorporation, the Company is authorized to issue 300,000,000 shares of common stock, par value of $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 .
Immediately prior to the time the certificate of merger effectuating the Merger was filed with the Secretary of State of the State of Delaware (the “Effective Time”), an aggregate of 2,833,333 shares of Company common stock (out of the 5,000,000 2,166,667 shares of Company common stock held by such stockholders immediately after the Merger.
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In connection with the consummation of the Merger Transaction, the Deep Isolation board of directors approved the accelerated vesting of all options to purchase Deep Isolation common stock that were issued under Deep Isolation’s 2018 Equity Incentive Plan and remained outstanding as of immediately prior to the Effective Time. Compensation expense recognized for the accelerated vesting was $185 thousand.
Pursuant to the Merger, among other things, the following transactions occurred on the Acquisition Date:
(1)All issued and outstanding shares of Deep Isolation common stock and Deep Isolation Preferred Stock (defined below) as of immediately prior to the Effective Time, were converted at a conversion ratio of 25.837283 (the “Conversion Ratio”) for an aggregate of 44,247,429 shares of the Company’s common stock;
(2)Each issued and outstanding stock option to purchase Deep Isolation common stock converted into a stock option to purchase shares of the Company’s common stock, with an exercise price and number of shares of the Company’s common stock purchasable based on the Conversion Ratio and other terms contained in the Merger Agreement (the “Assumed Options”). On an as-converted basis, the Assumed Options constitute options to purchase an aggregate of 5,752,566 shares of the Company’s common stock;
(3)The Company approved and adopted the 2025 Equity Incentive Plan (the “2025 Plan”) and reserved 10,752,566 shares of the Company’s common stock for future issuance in connection therewith, comprised of (i) 5,752,566 shares of the Company’s common stock issuable upon the exercise of the Assumed Options and (ii) the remainder reserved for future issuances of incentive awards under the 2025 Plan; and
(4)The Company issued 83,333 shares of the Company’s common stock to an advisor in consideration for services rendered in connection with the Merger (the “Advisor Shares”).
As discussed in Note 1, the Merger was accounted for as a reverse acquisition accompanied by a recapitalization in accordance with U.S. GAAP. Deep Isolation was determined to be the accounting acquirer in the Merger primarily based on the following: (i) Deep Isolation stockholders have a controlling voting interest in the combined company, (ii) Deep Isolation designated the entire governing body of the combined company, (iii) the executive officers of the combined company immediately after the Acquisition Date are the same individuals as those of Deep Isolation immediately prior to the Effective Time, (iv) the relative size of Deep Isolation and Aspen and (v) Deep Isolation’s operations comprise the ongoing operations of the combined company.
Accordingly, all historical financial information presented in the condensed consolidated financial statements represents the accounts of Deep Isolation and its wholly owned subsidiaries. Net assets were stated at historical cost, and no goodwill or other intangible assets were recorded as a result of the Merger, consistent with the treatment of the Merger as a reverse acquisition.
Concurrently with the consummation of the Merger, the Company also issued and sold 11,012,387 shares of common stock pursuant to a private placement offering at a purchase price of $3.00 per share (the “Offering” or "Private Placement") for gross proceeds of $33.0 million and total offering costs of $4.2 million. In connection with the Offering, the Company also issued to (i) each of the placement agents, A Warrants to purchase an aggregate of 829,730 shares of Company common stock at an exercise price of $3.00 per share and (ii) certain of the placement agents, B Warrants to purchase an aggregate of 166,667 shares of Company common stock at an exercise price of $0.0001 per share. Refer to Note 7 for further details.
Transaction costs consist of direct legal, accounting and other fees relating to the consummation of the Merger and are included in the offering costs of $4.2 million. Transaction costs related to the issuance of shares were recorded as a reduction to additional paid-in capital.
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The number of shares of common stock issued and outstanding immediately following the consummation of the Merger and Offering was as follows:
| Shares | |||||
| Common stock – Deep Isolation, converted to Deep Isolation Nuclear stock | |||||
| Common stock – Issued in Offering | |||||
| Common stock – Aspen, outstanding prior to Merger | |||||
| Common stock – Advisor Shares | |||||
| Total shares outstanding immediately after the Merger and Offering | |||||
Because Aspen was a non-operating public shell with nominal activity and neither conducted substantive operations nor generated significant revenues or expenses prior to the Merger, management determined that providing supplemental pro forma information as if the Merger had occurred on January 1, 2024 would be impracticable and immaterial to these condensed consolidated financial statements.
Note 4. Revenue Recognition
The Company is in the business of developing geologic repository technology for the purpose of nuclear waste storage or disposal activities, including any related consulting services for such activities.
Disaggregation of Revenue
The Company’s business segments are organized based on the nature and economic characteristics of our services, ensuring meaningful disaggregation of each segment’s operational results. The following tables provide a detailed breakdown of our revenue:
Revenue by Contract Type (in thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Grant revenue | $ | $ | $ | $ | |||||||||||||||||||
| Remediation, administrative and consulting services and other revenue | |||||||||||||||||||||||
| Total revenue by contract type | $ | $ | $ | $ | |||||||||||||||||||
Contract Balances
The timing of revenue recognition and billings results in unbilled receivables (contract assets). The Company’s contract liabilities consist of deferred revenues which represent advance payments from customers in advance of the completion of our performance obligations.
The following table represents changes in our contract assets. Our contract assets as of June 30, 2026 relate to various customers for nuclear waste disposal services which are expected to be completed in 2026.
| Contract Assets (in thousands) | Amount | |||||||
| Balance as of January 1, 2026 | $ | |||||||
| Add: Revenue recognized but not yet billed | ||||||||
| Less: Billed and transferred to receivables | ( | |||||||
| Balance as of June 30, 2026 | $ | |||||||
Revenue recognized in each period relates to performance obligations satisfied within the respective period. The Company has no contract liabilities as of June 30, 2026 and $150 thousand as of December 31, 2025.
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Allowance for Credit Losses
An allowance of $124 thousand and $118 thousand has been recorded as of June 30, 2026 and December 31, 2025, respectively.
| Amount (in thousands) | |||||
| Balance, January 1, 2026 | $ | ||||
| Add: Additions | |||||
| Less: Write-offs and Recoveries | |||||
| Balance, June 30, 2026 | $ | ||||
Note 5. Property, Plant and Equipment, Net
Property, plant and equipment consisted of the following at (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Furniture and fixtures | $ | $ | |||||||||
| Office and computer equipment | |||||||||||
| Software | |||||||||||
| Automobiles | |||||||||||
| Leasehold improvements | |||||||||||
| Property, plant and equipment | |||||||||||
| Less: accumulated depreciation | ( | ( | |||||||||
| Property, plant and equipment, net | $ | $ | |||||||||
For the six months ended June 30, 2026, additions by the Company to property, plant and equipment totaled $74 thousand. Depreciation expense recognized was $4 thousand and $9 thousand during the three months ended June 30, 2026 and 2025, respectively, and $8 thousand and $17 thousand during the six months ended June 30, 2026 and 2025, respectively, which are included in depreciation and amortization expense on the condensed consolidated statements of operations.
Note 6. Intangible Assets
Intangible assets consist of the following at (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Tradename | $ | $ | |||||||||
| Customer relationships | |||||||||||
| Less: accumulated amortization | ( | ( | |||||||||
| Intangible assets, net | $ | $ | |||||||||
| Useful life (years) | |||||||||||
For the three months ended June 30, 2026 and 2025, amortization expense of $10 10 20 20 0.4 years and 0.9 years as of June 30, 2026 and December 31,
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2025, respectively. The following table summarizes the expected future amortization for our definite-lived intangible assets (in thousands):
| Amount | |||||
| Six months ending December 31, 2026 | $ | ||||
Note 7. Stockholders’ Equity
Common stock
As discussed in Note 3, in connection with the Merger consummation, the Company filed its amended and restated certificate of incorporation, which authorized the issuance of up to 300,000,000 shares of common stock with a par value of $0.0001 per share. Pursuant to the Offering, the Company issued and sold 11,012,387 shares of common stock at a purchase price of $3.00 per share for gross proceeds of $33 million and total offering costs of $4.2 million.
As of June 30, 2026 and December 31, 2025, the Company had 300,000,000 57,667,113 57,542,113 242,332,887 and 242,457,887 shares available for issuance, respectively.
Holders of common stock are entitled to receive dividends whenever funds are legally available and when declared by the Board of Directors, subject to the priority rights of holders of preferred stock outstanding. Holders of common stock are entitled to one vote for each share of common stock held at all meetings of stockholders.
Preferred stock
As discussed in Note 3, in connection with the Merger consummation, the Company filed its amended and restated certificate of incorporation, which authorized the issuance of up to 10,000,000 shares of preferred stock with a par value of $0.0001 per share. As of June 30, 2026 and December 31, 2025, no
Long-term incentive compensation plan
The Company previously maintained the 2018 Equity Incentive Plan, as amended (the “2018 Plan”), under which the Company previously granted stock options. The 2018 Plan was terminated and all outstanding options issued under the 2018 Plan were assumed by the 2025 Equity Incentive Plan (the “2025 Plan” and together with the 2018 Plan, the “Plans”). The Company currently maintains the 2025 Plan, which was approved and adopted pursuant to the Merger Agreement, under which the Company may grant options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares and other stock-based awards to employees, directors and consultants of the Company.
The Company has reserved 10,752,566 shares of the Company’s common stock for future issuance in connection therewith, comprised of (i) 5,752,566 shares of common stock issuable upon the exercise of the Assumed Options and (ii) the remainder reserved for future issuances of incentive awards under the 2025 Plan at the discretion of the Board of Directors (the “Board”) to officers, key employees, consultants and directors. Refer to Note 13 Stock-Based Compensation for further details.
Warrants
In connection with the Offering, the Company issued to (i) each of the placement agents, A Warrants to purchase an aggregate of 829,730 shares of Company common stock at an exercise price of $3.00 per share and (ii) certain of the placement agents, B Warrants to purchase an aggregate of 166,667 shares of Company common stock at an exercise price of $0.0001 per share (the “Warrants”). The Warrants are exercisable at any time following their issuance. They will expire on the earlier of (i) five years from the issuance date or (ii) the third anniversary of the date on which the Company’s common stock is first listed for trading on a recognized trading market.
The Warrants qualify for the derivative scope exception under ASC 815 and are therefore presented as a component of stockholders’ equity on the condensed consolidated balance sheets at their issuance date fair value without subsequent fair value re-measurement. The weighted average exercise price of the warrants is $2.50 and the expected term is 4.5 years.
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Note 8. Leases
We entered into various arrangements (or leases) that convey the rights to use and control identified underlying assets for a period of time in exchange for consideration.
We lease various offices and equipment. From time to time, we may also enter into an arrangement in which the right to use and control an identified underlying asset is embedded in another type of contract.
The components of lease cost for the Company’s leases are as follows (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Operating Leases: | |||||||||||||||||||||||
| Lease cost | $ | $ | $ | $ | |||||||||||||||||||
| Finance Leases: | |||||||||||||||||||||||
| Amortization of ROU assets | |||||||||||||||||||||||
| Interest on lease liability | |||||||||||||||||||||||
| Total lease cost | $ | $ | |||||||||||||||||||||
Supplemental information related to the Company’s leases are as follows:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Operating lease | |||||||||||
| Weighted-average remaining lease term (in years) | |||||||||||
| Weighted-average discount rate | % | % | |||||||||
| Finance lease | |||||||||||
| Weighted-average remaining lease term (in years) | |||||||||||
| Weighted-average discount rate | % | % | |||||||||
The remaining future minimum lease payments under the Company’s leases are as follows (in thousands):
| Operating Leases | Finance Leases | ||||||||||
| Six months ending December 31, 2026 | $ | $ | |||||||||
| Year ending December 31, | |||||||||||
| 2027 | |||||||||||
| 2028 | |||||||||||
| 2029 | |||||||||||
| Total future minimum lease obligations | $ | $ | |||||||||
| Less: imputed interest on lease obligations | ( | ( | |||||||||
| Net present value of lease obligations | $ | $ | |||||||||
| Net present value of lease obligations – current portion | |||||||||||
| Net present value of lease obligations – non-current portion | $ | $ | |||||||||
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Supplemental cash flow and other information related to our leases were as follows (in thousands):
| June 30, 2026 | June 30, 2025 | ||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
| Operating cash flow from operating leases | $ | $ | |||||||||
| Operating cash flow from finance leases | |||||||||||
| Financing cash flow from finance leases | |||||||||||
| ROU assets obtained in exchange for lease obligations for: | |||||||||||
| Operating liabilities | |||||||||||
| Finance liabilities | |||||||||||
Note 9. Accrued Expenses
Accrued expenses are composed of Accrued payroll and Other current liabilities on the condensed consolidated balance sheets and include the following as of include the following as of (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Salaries and employee benefits | $ | $ | |||||||||
| Other current liabilities: | |||||||||||
| Accrued legal fees | |||||||||||
| Accrued research and development expenses | |||||||||||
| Accrued franchise taxes | |||||||||||
| Accrued subcontractor cost | |||||||||||
| Accrued property, plant, and equipment | |||||||||||
| Other accrued expenses | |||||||||||
| Total other current liabilities | |||||||||||
| Totals | $ | $ | |||||||||
Note 10. Related Party Transactions
Deep Borehole Demonstration Center. Deep Isolation is a member of the Deep Borehole Demonstration Center (“DBDC”). The DBDC is a 501(c)(3) organization that is seeking to obtain multinational membership and funding to demonstrate borehole disposal technology. Deep Isolation employees fill the positions of Chair of the board, Secretary and Treasurer for the DBDC. The DBDC has external members and independent directors, but was started by Deep Isolation and Deep Isolation continues to be involved in the organization. This includes an Administrative Services Agreement that allows Deep Isolation to charge the DBDC for the time the Secretary and Treasurer spend on DBDC business. The amount payable to Deep Isolation from the DBDC was $124 thousand and $117 thousand as of June 30, 2026 and December 31, 2025, respectively, which are fully reserved as of the respective period-ends.
NAC International, Inc. NAC International, Inc. (“NAC”) is a stockholder of the Company and its CEO previously served as a director on the Company Board. NAC also provides services to Deep Isolation for revenue generating contracts and has rights to manufacture canisters for Deep Isolation. As of June 30, 2026 and December 31, 2025, Deep Isolation had an outstanding payable to NAC of $274 thousand and $60 thousand, respectively.
Deep Fission, Inc. Deep Fission, Inc. (“DFI”), a company co-founded by Deep Isolation’s co-founders and Board Chair, is a related party. In the three and six months ended June 30, 2026, Deep Isolation did not provide services to DFI. In the three and six months ended June 30, 2025, Deep Isolation provided $0 and $25 thousand respectively, in certain services to DFI. As of June 30, 2026 and June 30, 2025, Deep Isolation had $0 and $13 thousand, respectively, in an outstanding receivable from DFI.
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Below is a summary of related party activities for the six months ended June 30, 2026 and 2025 (in thousands):
| Related Party | Balance Sheet Account | As of January 1, 2026 | Expenses Incurred (COS) | Revenue | Cash Received / Paid | As of June 30, 2026 | ||||||||||||||||||||||||||||||||
| DBDC (1) | Accounts Receivable | $ | $ | — | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
| NAC | Accounts Payable | — | ( | |||||||||||||||||||||||||||||||||||
| Related Party | Balance Sheet Account | As of January 1, 2025 | Expenses Incurred (COS) | Revenue | Cash Received / Paid | As of June 30, 2025 | ||||||||||||||||||||||||||||||||
| DBDC (1) | Accounts Receivable | $ | $ | — | $ | $ | $ | |||||||||||||||||||||||||||||||
| NAC | Accounts Payable | — | ( | |||||||||||||||||||||||||||||||||||
| DFI | Accounts Receivable | — | ( | |||||||||||||||||||||||||||||||||||
(1) The amount payable to Deep Isolation from DBDC is fully reserved as of June 30, 2026, December 31, 2025, and June 30, 2025.
Note 11. Income Tax
For the three and six months ended June 30, 2026, the Company did not record no none and $1 thousand of income tax expense, respectively.
The effective tax rate for three months ended June 30, 2026 and June 30, 2025 was (0.01 )% and (0.43 )%, respectively. The effective tax rate differs from the U.S. Federal statutory rate primarily due to recording a valuation allowance against the deferred tax assets in the U.S and foreign jurisdictions along with permanent differences including changing fair value of derivative warrant liabilities and stock compensation.
Note 12. Employee Benefits – 401(k) Plan
Note 13. Stock-Based Compensation
Stock Options
As discussed in Note 7, Deep Isolation previously maintained the 2018 Plan, under which Deep Isolation previously granted stock options. The 2018 Plan had authorized only Nonstatutory Stock Options (“NSOs”) and Incentive Stock Options (“ISOs”).
The Company currently maintains the 2025 Plan, which was approved and adopted pursuant to the Merger Agreement, under which the Company may grant options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares and other stock-based awards to employees, directors and consultants of the Company. Upon the termination of the 2018 Plan, the Assumed Options from the 2018 Plan were assumed by the 2025 Plan and are now subject to the terms and conditions of the 2025 Plan.
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The term of each stock option granted under the 2025 Plan shall be fixed by the Board, or the Board may delegate administration of the Plan to the Board’s Compensation Committee (the “Plan Administrator”). For most grants governed by the 2025 Plan, 25 % of the options granted vest after one year of service and then on a monthly basis over three years of service thereafter. Most grants under the 2025 Plan have been for a term of ten years for continued service. Options are granted in varying amounts and frequency to the Company’s directors, advisors and employees at the discretion of the Board. No stock options will be exercisable more than ten years after the grant date, or, in the case of an ISO granted to a 10 % stockholder, more than five years after the grant date. The exercise price of any ISO granted under the Plans to an individual who is not a 10 % stockholder at the time of the grant shall not be less than the fair market value of the shares at the time of the grant. The exercise price of any ISO granted to a 10 % stockholder shall not be less than 110 % of the fair market value at the time of the grant. The exercise price of any NSOs granted under the Plans shall not be less than the fair market value of the shares at the time of the grant. The number of shares reserved for issuance under the 2025 Plan will increase automatically at the beginning of each fiscal year in an amount by 4 % of the shares of the Company’s common stock outstanding on the last day of the immediately preceding fiscal year. On January 1, 2026, the number of shares reserved for issuance under the 2025 Plan increased by 2,301,685 shares. As of June 30, 2026, the Company has reserved 13,054,251 shares of the Company’s common stock (the “Share Reserve”) for future issuance under all option arrangements and had 5,992,435 shares available for issuance.
The total compensation expense recognized for common share options during the six months ended June 30, 2026 and 2025, were $885 thousand and $55 thousand, respectively. Stock-based compensation is recognized in cost of services and selling, general and administrative expense.
The summary of the Company’s Plans as of June 30, 2026, and changes during the period then ended are presented as follows:
| Stock Options | Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||||
| Outstanding, December 31, 2025 | $ | |||||||||||||||||||||||||
| Granted | ||||||||||||||||||||||||||
| Exercised | ( | |||||||||||||||||||||||||
| Forfeited | ||||||||||||||||||||||||||
| Expired | ( | |||||||||||||||||||||||||
| Outstanding, June 30, 2026 | $ | $ | ||||||||||||||||||||||||
| Exercisable, June 30, 2026 | $ | $ | ||||||||||||||||||||||||
The weighted average grant date fair value of options granted during the three months ended June 30, 2026 was $1.10 per share, and during the six months ended June 30, 2026 was $1.07 per share based on the following assumptions used in the Black-Scholes option pricing model:
| June 30, 2026 | |||||
| Expected volatility | % | ||||
| Expected dividend yield | % | ||||
| Expected term (in years) | |||||
| Risk-free interest rate | |||||
The fair value of options granted for the six months ended June 30, 2026 was $131 thousand. Total unrecognized stock option compensation expense as of June 30, 2026 and 2025 were $407 thousand and $193 thousand, respectively, with a weighted-average period over which it is expected to be recognized of 5.7 years and 2.8 years, respectively . Cash received from the exercise of stock options totaled $4 thousand for the six months ended June 30, 2026. The Company estimates fair value of stock options using the Black-Scholes valuation model.
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Performance Options
During the year ended December 31, 2025, the Company issued 12,500 performance options to the CEO which would have vested upon the satisfaction of certain performance conditions as of March 31, 2026. These performance conditions were not met as of March 31, 2026 and the options were forfeited. No compensation expense was recorded for performance options for the six months ended June 30, 2026.
Restricted Stock Units
The summary of the Company’s restricted stock units (“RSUs”) activity for the six months ended June 30, 2026 are presented as follows:
| Number of RSUs | Weighted Average Grant Date Fair Value per RSU | |||||||||||||
| Unvested RSUs, December 31, 2025 | $ | |||||||||||||
| Granted | ||||||||||||||
| Vested/Issued | ( | |||||||||||||
| Forfeited, cancelled, or expired | ||||||||||||||
| Unvested RSUs, June 30, 2026 | $ | |||||||||||||
Performance Stock Units
Note 14. Loss Per Common Share
The Company computes basic and diluted earnings per share by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted earnings per share are similarly calculated with the inclusion of dilutive common stock equivalents. For the three months ended June 30, 2026 and 2025, basic and dilutive net loss per common share were the same since the inclusion of common shares issuable pursuant to the exercise of common stock equivalents in the calculation of diluted net loss per common share would have been anti-dilutive.
The following table reconciles the loss and average share amounts used to compute both basic and diluted loss per share (amounts in thousands, except for share and per share data):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Loss per common share - basic and diluted | |||||||||||||||||||||||
| Net loss available to common stockholders - basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Weighted average shares outstanding - basic and diluted | |||||||||||||||||||||||
| Basic and diluted loss per common share | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
In accordance with the contingently issuable shares guidance of ASC 260, the calculation of diluted net loss per share excludes the following dilutive securities because their inclusion would have been anti-dilutive:
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| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Stock options (Treasury stock method) | |||||||||||
| Warrants | |||||||||||
| Total | |||||||||||
Note 15. Segment Reporting
In accordance with ASC 280, operating segments are defined as components of an enterprise about which separate financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in assessing performance and deciding how to allocate resources. The Company’s CODM is its CEO, who performs such assessments and allocates resources based on information at the consolidated level.
The Company’s two reportable segments are: (1) Deep Isolation Inc, Deep Isolation US & EMEA and (2) Freestone. See Note 2 for a description of the Company’s reportable segments. The Company had no inter-segment sales for the periods presented.
The Company’s income statements by segment, significant segment expenses, and segment assets are presented below (in thousands):
| Three Months Ended June 30, 2026 | |||||||||||||||||
| Deep Isolation US & EMEA | Freestone | Total | |||||||||||||||
| Revenues | $ | $ | $ | ||||||||||||||
| Cost of services | |||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||
| Research and development | |||||||||||||||||
| Depreciation and amortization expense | ( | ||||||||||||||||
| Operating (loss) income | ( | ( | |||||||||||||||
| Gain on insurance settlement | |||||||||||||||||
| Other income, net | |||||||||||||||||
| Segment (loss) income before income tax | ( | ( | |||||||||||||||
| Income tax (benefit) expense | |||||||||||||||||
| Segment (loss) income | $ | ( | $ | $ | ( | ||||||||||||
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| Six Months Ended June 30, 2026 | |||||||||||||||||
| Deep Isolation US & EMEA | Freestone | Total | |||||||||||||||
| Revenues | $ | $ | $ | ||||||||||||||
| Cost of services | |||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||
| Research and development | |||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||
| Operating (loss) income | ( | ( | |||||||||||||||
| Gain on insurance settlement | |||||||||||||||||
| Other income, net | |||||||||||||||||
| Segment (loss) income before income tax | ( | ( | |||||||||||||||
| Income tax (benefit) expense | |||||||||||||||||
| Segment (loss) income | $ | ( | $ | $ | ( | ||||||||||||
| As of June 30, 2026 | |||||||||||||||||
| Deep Isolation US & EMEA | Freestone | Total | |||||||||||||||
| Cash and cash equivalents | $ | $ | $ | ||||||||||||||
| Accounts receivable, net | |||||||||||||||||
| Contract assets | |||||||||||||||||
| Other current assets | |||||||||||||||||
| Property, plant and equipment, net | |||||||||||||||||
| Intangible assets, net | |||||||||||||||||
| Finance lease right-of-use assets | |||||||||||||||||
| Operating lease right-of-use assets | |||||||||||||||||
| Goodwill | |||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||
| Deep Isolation US & EMEA | Freestone | Total | |||||||||||||||
| Revenues | $ | $ | $ | ||||||||||||||
| Cost of services | |||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||
| Research and development | |||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||
| Operating (loss) Income | $ | ( | $ | $ | ( | ||||||||||||
| Other income/(expense), net | |||||||||||||||||
| Segment (loss) income before income tax | $ | ( | $ | $ | ( | ||||||||||||
| Income tax (benefit) expense | |||||||||||||||||
| Segment (loss) income | $ | ( | $ | $ | ( | ||||||||||||
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| Six Months Ended June 30, 2025 | |||||||||||||||||
| Deep Isolation US & EMEA | Freestone | Total | |||||||||||||||
| Revenues | $ | $ | $ | ||||||||||||||
| Cost of services | |||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||
| Research and development | |||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||
| Operating (loss) income | ( | ( | |||||||||||||||
| Gain on insurance settlement | |||||||||||||||||
| Other income, net | |||||||||||||||||
| Segment (loss) income before income tax | ( | ( | |||||||||||||||
| Income tax (benefit) expense | |||||||||||||||||
| Segment (loss) income | $ | ( | $ | $ | ( | ||||||||||||
| As of December 31, 2025 | |||||||||||||||||
| Deep Isolation US & EMEA | Freestone | Total | |||||||||||||||
| Cash and cash equivalents | $ | $ | $ | ||||||||||||||
| Accounts receivable, net | |||||||||||||||||
| Contract assets | |||||||||||||||||
| Other current assets | |||||||||||||||||
| Property, plant and equipment, net | |||||||||||||||||
| Intangible assets, net | |||||||||||||||||
| Finance lease right-of-use assets | |||||||||||||||||
| Operating lease right-of-use assets | |||||||||||||||||
| Other non-current assets | |||||||||||||||||
| Goodwill | |||||||||||||||||
Geographical Information
The Company is domiciled in the United States, but also has operations in EMEA (UK). The following table summarizes net sales by geographic area (in thousands).
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| U.S. | $ | $ | $ | $ | |||||||||||||||||||
| EMEA | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
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The following table summarizes long-lived assets by geographic area (in thousands):
| As of June 30, 2026 | As of December 31, 2025 | ||||||||||
| U.S. | $ | $ | |||||||||
| EMEA | |||||||||||
| Total | $ | $ | |||||||||
Major Customers
During the three months ended June 30, 2026 and 2025, four customers accounted for approximately 87 % and 71 % of the Company’s revenue, respectively (in thousands):
| 2026 | 2025 | ||||||||||||||||||||||
| $ | % | $ | % | ||||||||||||||||||||
| Revenue earned from the U.S. Department of Energy | $ | % | $ | % | |||||||||||||||||||
| Revenue earned from the U.S. Trade and Development Agency (USTDA) | % | % | |||||||||||||||||||||
| Revenue earned from the CPCCO | % | % | |||||||||||||||||||||
| Revenue earned from Oklo | % | % | |||||||||||||||||||||
| Revenue earned from the H2C (formerly WRPS) | % | % | |||||||||||||||||||||
| Total revenues from major customers | $ | % | $ | % | |||||||||||||||||||
During the six months ended June 30, 2026 and 2025, four customers accounted for approximately 85 % and 71 % of the Company’s revenue, respectively (in thousands):
| 2026 | 2025 | ||||||||||||||||||||||
| $ | % | $ | % | ||||||||||||||||||||
| Revenue earned from the U.S. Department of Energy | $ | % | $ | % | |||||||||||||||||||
| Revenue earned from the U.S. Trade and Development Agency (USTDA) | % | % | |||||||||||||||||||||
| Revenue earned from the CPCCO | % | % | |||||||||||||||||||||
| Revenue earned from Oklo | % | % | |||||||||||||||||||||
| Revenue earned from the H2C (formerly WRPS) | % | % | |||||||||||||||||||||
| Total revenues from major customers | $ | % | $ | % | |||||||||||||||||||
Note 16. Commitments and Contingencies
Legal Matters
In the normal course of conducting our business, the Company may be involved in various litigation. The Company is not a party to any litigation or governmental proceeding which our management believes could result in any judgments or fines against us that would have a material adverse effect on our financial position, liquidity or results of future operations.
Note 17. Subsequent Events
Management has evaluated subsequent events through August 6, 2026, the date the financial statements were available to be issued. Based on this evaluation, other than disclosed below, there were no additional material events identified which require adjustment or disclosure in these financial statements.
On July 10, 2026 the Company was notified that its shares of common stock were approved to trade on the OTCQB market under the symbol DBHL.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the audited financial statements for the years ended December 31, 2025, and 2024 as well as the unaudited interim condensed financial statements for the six months ended June 30, 2026 and 2025 and the related notes thereto, included elsewhere in this report. Some of the information contained in this discussion and analysis or set forth elsewhere in this report that are not purely historical are forward-looking statements involving risks and uncertainties. Forward-looking statements relate to, among others, our plans, objectives and expectations for our business, operations and financial performance and condition, and can be identified by terminology such as “may,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “will,” “could,” “project,” “target,” “potential,” “continue” and similar expressions not relating solely to historical matters or actual results. Forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management. Although we believe that the expectations reflected in forward-looking statements are reasonable, such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. You should review Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 30, 2026 and Part II, Item 1A of this report for a discussion of some of the important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements and could otherwise affect our intended plans of operations.
Overview
Global demand for reliable, clean energy is growing rapidly, fueled by increased power demand, (including from AI and data centers) climate change and extreme weather events, recent geopolitical events, and increased load forecasts. Nuclear energy is, as the Company believes it should be, a critical contributor to the energy future. One of the biggest challenges to the adoption and deployment of nuclear energy solutions has been managing the disposal of nuclear waste.
Deep Isolation’s mission is to revolutionize the disposal of nuclear waste through the development of innovative solutions for temporary storage and transportation of HLW and SNF, and for permanent disposal of HLW via deep underground boreholes. The world’s current nuclear waste management model is limited to two options: above-ground interim storage and geologic disposal via mined repositories. Both options are extremely costly and, to date, neither has presented a viable, long-term solution to the global nuclear waste disposal problem. There are currently no operational mined repository facilities for the disposal of HLW or SNF; above-ground interim storage, which does not provide a permanent disposal solution, currently is the only waste management solution for HLW and SNF being practiced worldwide.
Following years of research and technical due diligence, Deep Isolation developed a solution for the permanent disposal of nuclear waste by packing the waste into patent-protected, corrosion-resistant canisters and then employing directional drilling to isolate the canisters in deep boreholes drilled into suitable rock formations deep underground. This technology will allow nuclear waste to be stored much deeper below the Earth’s surface than waste stored in mined repositories, increasing the safety of nuclear waste storage. The Company’s patented canisters can also be used for above-ground interim storage with no repackaging (or minimal repackaging where alternative canisters have been used for interim storage purposes). Deep Isolation believes its solutions will offer viable nuclear waste disposal solutions, reducing both human exposure to radioactive isotopes and the overall cost of nuclear waste disposal.
To date and for the foreseeable future, we will pursue grants, contracts, and awards from the U.S. federal government and certain foreign governments and NGOs to support research and development efforts geared toward studying and demonstrating the feasibility of our technologies and the use of deep borehole disposal (“DBD") generally. We have also entered into strategic appraisal and operational planning contracts with customers; however, we have not yet entered into a binding implementation agreement with any customer to temporarily store or permanently dispose of nuclear waste through the implementation of our solutions, and there is no guarantee that we will be able to do so in the future.
Deep Isolation’s wholly owned subsidiary, Freestone, is an environmental and water resources consulting firm to federal, state, municipal and private clients. We believe its array of services is complimentary to Deep Isolation’s core disposal solution business. The Company receives cash flows from Freestone’s operations that are supplemental to cash flows produced by the Company’s core business, which reduces the Company’s consolidated use of cash and results in lower fundraising needs.
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Our leadership team has extensive direct experience with nuclear solutions and engineering, government and community engagement and global strategy development. Our advisory board includes preeminent experts and a Nobel laureate in nuclear science, technology and policy, as well as business leaders and entrepreneurs. We believe that the depth of our expertise and our technology solutions uniquely position us to become the market leader in the nuclear waste storage and disposal industry.
Products and Services
The Company currently offers the following products and services, in addition to the services offered by Freestone: (i) strategic appraisal, which involves analysis of the costs and benefits of our DBD solution as compared with other disposal solutions; and (ii) operational planning, which involves the completion of a comprehensive feasibility assessment, including the preparation of a generic design for our deep borehole repositories, an International Atomic Energy Agency (IAEA) -compliant economic and strategic business case and a Generic Safety Case, a commercial model for implementation and a roadmap for all work needed to commission and implement our solutions. The Company also offers implementation services, which include the deployment of an IAEA-compliant disposal or storage system (depending on the customer’s needs) and consultancy services for siting, licensing, construction, hot and cold commissioning, operations, closure, post-closure monitoring and stakeholder engagement.
We also plan to continue engaging with domestic and foreign lawmakers to advocate for the legal and regulatory changes necessary to allow for the commercialization of DBD and to update regulatory guidance on nuclear waste disposal methods. We expect that our operations in the near term will be funded by additional government grants, contract awards and strategic appraisal and operational planning contracts. To the extent additional funding is needed and subject to market and other conditions, the Company may also pursue offerings of its debt and equity securities from time to time to support operations and capital expenditures.
Next Steps
The Company also offers implementation services, which include the deployment of an IAEA-compliant disposal or storage system (depending on the customer’s needs) and consultancy services for siting, licensing, construction, hot and cold commissioning, operations, closure, post-closure monitoring and stakeholder engagement. To date, we have not yet entered into any implementation contracts with customers. While implementation contracts could be executed and related consultancy services could begin on a small scale prior to the completion of the non-radioactive, full-scale, at-depth demonstration in anticipation of the successful completion of such demonstration and related safety testing, demand for and commercial adoption of our DBD solution likely will not occur until such demonstration and testing is complete. We expect that a non-radioactive, full-scale, at-depth demonstration of our DBD solution, if successful, will spur demand for our implementation services in the coming years:
•Non-Radioactive, Full-Scale, At-Depth Demonstration — we expect to use the net proceeds from the Private Placement primarily to fund a non-radioactive, full-scale, at-depth demonstration of our DBD technologies. We have begun the process of developing a demonstration facility in Texas to facilitate such demonstration, which involves constructing a new well at the facility that will be used for non-radioactive, full-scale, at-depth demonstrations and related safety testing. We expect that construction, preparation and initial demonstration will take approximately two years to complete. We expect to incur demonstration costs, including construction, canister manufacturing, casing, surface handling, emplacement and retrieval testing, general and administrative, travel and other related costs, of approximately $8.1 million and $7.4 million in 2026 and 2027, respectively, of the project. We believe that non-radioactive, full-scale, at-depth demonstrations of our DBD technologies will validate the safety and feasibility of our solution and foster enhanced engagement and support both from potential clients identified in our pre-sales engagement stage and current clients who have engaged us for strategic appraisal and operational planning services.
•Increased Client Engagement — we expect that such validation of our DBD technologies through non-radioactive, full-scale, at-depth demonstrations will further support the execution of our sales pipeline, including active proposals for commercial contracts and additional governmental subsidies. We believe such demonstrations will also foster enhanced client engagement generally and facilitate advancement of clients through the familiarization, confidence-building and product adoption stages of our client engagement process.
•Product Adoption — ultimately, our goal is to be the leading provider of permanent HLW and SNF disposal services globally. We believe that the broader client engagement expected to result from non-radioactive, full-
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scale, at-depth demonstrations of our DBD technologies will lead to additional strategic appraisal and operational planning contracts, which are in turn expected to result in implementation contracts.
However, we anticipate that we will continue to experience operating losses in 2026 and 2027 as we seek to implement our long-term strategic plan. Additionally, the adoption of our technologies in the United States will require Congressional action in the form of legislative changes, which we cannot guarantee will occur or, even if they do occur, be favorable to our objectives and business plan. As a result, we may not achieve the growth potential we expect or may grow more slowly than expected, and it is difficult to project the success of our business model and operations. See Part I Item 1, “Business—Government Regulations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 30, 2026 for further discussion of current regulatory limitations on our operations. Our ability to promote and facilitate the adoption of our technologies, as well as our future success and financial performance, is dependent upon numerous factors, including those discussed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 30, 2026 and Part II, Item 1A of this report.
RECENT DEVELOPMENTS
The Merger
As described in Note 3 to the Financial Statements, on the Closing Date, we completed the Merger, as a result of which Deep Isolation became our wholly owned subsidiary. It will continue its existing business operations. At the Effective Time of the Merger, we issued 44,247,429 shares of our common stock to existing holders of Deep Isolation capital stock (including to holders of 2018 Plan options who elected to exercise their options before the Effective Time of the Merger). We also assumed the Assumed Options and reserved a total of 10,752,566 shares of our common stock under the 2025 Plan, of which 5,752,566 of such shares of our common stock are issuable upon the valid exercise of the Assumed Options, with the remainder available for future issuances of awards under the 2025 Plan. Aspen’s existing stockholders continued to hold an aggregate of 2,166,667 Retained Pre-Merger Shares, and on the Closing Date we also issued 83,333 Advisor Shares to Ali Kashani in consideration for services rendered in connection with the Merger.
The Private Placement
Immediately following the Effective Time of the Merger, we sold 11,012,387 shares of our common stock at a price of $3.00 per share in the Private Placement. In connection with the Private Placement, we also issued to (i) each of the Placement Agents A Warrants to purchase an aggregate of 829,730 shares of our common stock at an exercise price of $3.00 per share and (ii) certain of the Placement Agents B Warrants to purchase an aggregate of $500,000 worth of shares of our common stock at an exercise price of $0.0001 per share.
Halliburton Agreement
On January 28, 2026, Deep Isolation US LLC, a wholly owned subsidiary of the Company, entered into a Master Services Agreement (the “MSA”) with Halliburton Energy Services, Inc. (“Halliburton”), pursuant to which Halliburton will provide certain services to the Company in connection with the construction of a full-scale-at-depth demonstration test well (the “Well”) located at Halliburton’s site in Cameron, Texas and will provide the Company with certain rights of access to and use of the Well. Such a demonstration (without nuclear waste) of the deployment of the Company’s Universal Canister System and deep borehole drilling solution is the next critical step in its commercialization strategy.
SCALEUP Ready program
On April 7, 2026, the Company announced that it was selected for the U.S. Department of Energy’s (“DOE”) Advanced Research Projects Agency–Energy (“ARPA-E”) Seeding Critical Advances for Leading Energy technologies with Untapped Potential (“SCALEUP") Ready program to support the commercial deployment of the Company’s Universal Canister System for integrated nuclear waste management. The Company applied for an award of a grant in an amount of up to $20 million under the SCALEUP Ready program and was one of the two applicants selected for award negotiations. If we were successful in negotiating an award, we plan to use proceeds from the award under the SCALEUP Ready program to support our validation of the physical feasibility of our DBD technologies and to work alongside NAC and other industry collaborators to seek certification from the Nuclear Regulatory Commission to use the Universal Canister System to store and transport spent fuel from Westinghouse’s eVinci™ microreactor.
OTCQB Quotation
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In July 2026, the Company’s common stock was approved to trade on the OTCQB market under the symbol DBHL.
Project GENESIS program
On July 23, 2026, the Company was selected as the sole industrial partner on three competitive federal grants awarded through the U.S. Department of Energy’s (DOE) Project GENESIS program. Two initiatives are led by Lawrence Berkeley National Laboratory (LBNL) and one is led by the University of South Carolina and aim to advance artificial intelligence-enabled repository site screening, design and performance analysis for nuclear waste disposal.
Directors and Officers Appointments
Effective as of February 24, 2026, Joseph Nelson was appointed Chief Financial Officer and Treasurer of the Company, though Mr. Baltzer, the Company’s President and Chief Executive Officer acted as the principal financial officer until April 2026 when Mr. Nelson becomes fully familiar with the Company’s systems and processes.
Effective February 24, 2026, Paula Whitten-Doolin was appointed General Counsel and Corporate Secretary of the Company.
On June 16, 2026, at 2026 Annual Meeting of the Stockholders of the Company the stockholders of the Company elected three (3) Class A directors, Rod Baltzer, Christa Steele, Renee Hornbaker, to serve until the 2029 Annual Meeting of Stockholders or until their respective successors have been duly elected and qualified.
Accounting Considerations
The historical financial statements and related footnotes included herein include descriptions of Deep Isolation’s previously outstanding capital stock; however, in connection with the Merger, all shares of Deep Isolation’s capital stock, including all shares of Deep Isolation’s Preferred Stock, were converted into shares of our common stock. See Note 3. Reverse Merger and Note 7. Stockholders’ Equity in the Notes to the Unaudited Condensed Consolidated Financial Statements for detailed information regarding the Merger, the Private Placement and the related conversion of the shares of Deep Isolation’s capital stock.
For financial reporting purposes, the Merger was treated as a recapitalization and reverse acquisition. Deep Isolation is considered the acquirer for accounting purposes, meaning that the historical financial results of Deep Isolation prior to the Merger are considered our historical financial results under applicable accounting principles. Thus, a discussion of the past financial results of Aspen is not pertinent.
CRITICAL ACCOUNTING ESTIMATES
This management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events, and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions.
We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statements that require estimation but are not deemed critical, as defined above.
Please also refer to Note 2. Basis of Presentation and Summary of Significant Accounting Policies in the Notes to the Unaudited Condensed Consolidated Financial Statements for more information.
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RESULTS OF OPERATIONS
Components of Results of Operations
Revenue
The Company derives its revenue primarily from environmental remediation supporting services, consulting services, licensing fees, and technology development grants related to nuclear waste disposal services globally. Revenue is recognized when the Company satisfies its performance obligations to its customers, which generally occurs at a set delivery of the deliverables as specified in its customer contracts, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company reports any tax assessed by a governmental authority that the Company collects from its customers that is both imposed on and concurrent with its revenue-producing activities (such as sales, use, value-added and excise taxes) on a net basis (meaning the Company does not recognize these taxes in either its revenues or its costs and expenses).
Operating Expenses
Cost of services includes all direct costs incurred in delivering the Company’s nuclear waste disposal solutions and services. These costs are primarily comprised of salaries, subcontractor fees, and direct costs which are directly attributable to the provision of the services described above.
Depreciation and amortization expenses include depreciation of property, plant and equipment and amortization of intangible assets. Depreciation is based on the estimated useful lives of the assets using the straight-line method. All intangible assets are amortized on a straight-line basis over their respective estimated useful lives.
Selling, general and administrative expenses primarily consist of costs associated with administrative staff salaries, facilities, utilities, insurance, marketing & advertising, stock-based compensation, legal fees and other office expenses related to the Company’s business functions.
Research and development expenses consists primarily of costs incurred to design, develop, test, and validate the Company’s technologies and services for the deep borehole disposal of nuclear waste. Research and development expenses are expensed as incurred and may vary based on the timing and scope of engineering programs, demonstration activities, and regulatory support efforts.
Other Income (Expense), Net
Other income (expense) consists primarily of interest income, interest expenses, foreign currency exchange gain (loss) and other miscellaneous expenses.
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Comparison of the Three Months Ended June 30, 2026 and 2025
The following table sets forth our summarized consolidated financial information for the periods indicated (in thousands):
| Three Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| Revenue | $ | 1,319 | $ | 1,634 | $ | (315) | (19 | %) | |||||||||||||||
| Cost of services (exclusive of depreciation shown separately below) | (612) | (756) | 144 | (19 | %) | ||||||||||||||||||
| Gross profit | 707 | 878 | (171) | (19 | %) | ||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||
| Selling, general and administrative expenses | 2,746 | 2,215 | 531 | 24 | % | ||||||||||||||||||
| Research and development | 1,180 | — | 1,180 | NM | |||||||||||||||||||
| Depreciation and amortization expense | 25 | 30 | (5) | (17 | %) | ||||||||||||||||||
| Total operating expenses | 3,951 | 2,245 | 1,706 | 76 | % | ||||||||||||||||||
| Loss from operations | (3,244) | (1,367) | (1,877) | 137 | % | ||||||||||||||||||
| Gain on insurance settlement | 27 | — | 27 | NM | |||||||||||||||||||
| Other income, net | 181 | 4 | 177 | 4,425 | % | ||||||||||||||||||
| Net loss before income taxes | (3,036) | (1,363) | (1,673) | 123 | % | ||||||||||||||||||
| Provision for income taxes | — | — | — | NM | |||||||||||||||||||
| Net loss | $ | (3,036) | $ | (1,363) | $ | (1,673) | 123 | % | |||||||||||||||
| Other comprehensive loss: | |||||||||||||||||||||||
| Foreign currency translation adjustments | (15) | 9 | (24) | (267) | % | ||||||||||||||||||
| Total other comprehensive loss (income) | (15) | 9 | (24) | (267) | % | ||||||||||||||||||
| Net loss and other comprehensive loss | $ | (3,051) | $ | (1,354) | $ | (1,697) | 125 | % | |||||||||||||||
| NM= Not Meaningful | |||||||||||||||||||||||
Revenue
Revenue decreased by approximately $315 thousand, or 19%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The decrease in revenue was primarily attributable to lower revenues at Deep Isolation following the completion of certain projects during 2025.
Operating Expenses
Cost of services decreased by approximately $144 thousand, or 19%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The decrease in cost of services was primarily attributable to decreased subcontractor costs due to lower revenue.
Selling, General and Administrative expenses increased by approximately $531 thousand, or 24%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase in selling, general and administrative expenses was primarily attributable to higher accounting, audit, legal and travel expenses along with addition of 7 new employees since the beginning of 2026, including the Chief Financial Officer and General Counsel.
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Research and development expense increased by approximately $1.2 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase in research and development expense was attributed to the ordering of long-lead items and front-end engineering work related to the Company's non-radioactive, full-scale, at-depth demonstration of its DBD technologies.
Depreciation and amortization expense decreased by $5 thousand, or 17%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease in depreciation and amortization expense is primarily related to lower depreciation and amortization expense at Freestone due to a vehicle reaching the end of its depreciable life in 2025. Depreciation and amortization expense includes depreciation of property, plant and equipment and amortization of intangible assets.
Other Income, Net
Other income, net increased by approximately $177 thousand for three months ended June 30, 2026, compared to the three months ended June 30, 2025, due to interest income received from the investment of the Merger proceeds.
Net Loss
Net loss increased by $1.7 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, due to the fluctuations described above under “Revenue,” “Operating Expenses,” and “Other Income (Expense), Net.”
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Comparison of the Six Months Ended June 30, 2026 and 2025
The following table sets forth our summarized consolidated financial information for the periods indicated (in thousands):
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| Revenue | $ | 2,766 | $ | 3,154 | $ | (388) | (12 | %) | |||||||||||||||
| Cost of services (exclusive of depreciation shown separately below) | (1,293) | (1,418) | 125 | (9 | %) | ||||||||||||||||||
| Gross profit | 1,473 | 1,736 | (263) | (15 | %) | ||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||
| Selling, general and administrative expenses | 5,586 | 3,208 | 2,378 | 74 | % | ||||||||||||||||||
| Research and development | 4,669 | — | 4,669 | NM | |||||||||||||||||||
| Depreciation and amortization expense | 50 | 59 | (9) | (15 | %) | ||||||||||||||||||
| Total operating expenses | 10,305 | 3,267 | 7,038 | 215 | % | ||||||||||||||||||
| Loss from operations | (8,832) | (1,531) | (7,301) | 477 | % | ||||||||||||||||||
| Gain on insurance settlement | 27 | — | 27 | NM | |||||||||||||||||||
| Other income, net | 353 | 3 | 350 | NM | |||||||||||||||||||
| Net loss before income taxes | (8,452) | (1,528) | (6,924) | 453 | % | ||||||||||||||||||
| Provision for income taxes | — | 1 | (1) | NM | |||||||||||||||||||
| Net loss | $ | (8,452) | $ | (1,529) | $ | (6,923) | 453 | % | |||||||||||||||
| Other comprehensive loss: | |||||||||||||||||||||||
| Foreign currency translation adjustments | 33 | (40) | 73 | (183) | % | ||||||||||||||||||
| Total other comprehensive loss (income) | 33 | (40) | 73 | (183) | % | ||||||||||||||||||
| Net loss and other comprehensive loss | $ | (8,419) | $ | (1,569) | $ | (6,850) | 437 | % | |||||||||||||||
| NM= Not Meaningful | |||||||||||||||||||||||
Revenue
Revenue decreased by approximately $388 thousand, or 12%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The decrease in revenue was primarily attributable to lower revenues at Deep Isolation following the completion of certain projects during 2025.
Operating Expenses
Cost of services decreased by approximately $125 thousand, or 9%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The decrease in cost of services was primarily attributable to a decrease in subcontractor costs.
Selling, General and Administrative expenses increased by approximately $2.4 million, or 74%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase in selling, general and administrative
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expenses was primarily attributable to higher accounting, audit, legal and insurance expenses along with addition of 7 new employees, including the Chief Financial Officer and General Counsel.
Research and development expense increased by approximately $4.7 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase in research and development expense was attributed to the ordering of long-lead items and front-end engineering work related to the Company's non-radioactive, full-scale, at-depth demonstration of its DBD technologies.
Depreciation and amortization expense decreased by $9 thousand, or 15%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease in depreciation and amortization expense is primarily related to lower depreciation and amortization expense at Freestone due to a vehicle reaching the end of its depreciable life in 2025. Depreciation and amortization expense includes depreciation of property, plant and equipment and amortization of intangible assets.
Other Income, Net
Other income, net increased by approximately $350 thousand for six months ended June 30, 2026, compared to the six months ended June 30, 2025, due to interest income received from the investment of the Merger proceeds.
Net Loss
Net loss increased by $6.9 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, due to the fluctuations described above under “Revenue,” “Operating Expenses,” and “Other Income (Expense), Net.”
Liquidity and Capital Resources
Since inception, we have financed our operations primarily through the issuance and sale of our equity and debt securities. Our primary sources of liquidity have been cash on hand and proceeds from equity financings. 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 June 30, 2026, our principal source of liquidity was our cash balance of $19.4 million. Since inception, we have generated significant operating losses, as reflected in our accumulated deficit of $41.0 million as of June 30, 2026, and have experienced negative cash flows from operations of 8.0 million for the six months ended June 30, 2026.
Net cash used in operating activities was $8.0 million for the six months ended June 30, 2026, primarily due to our net loss offset by changes in working capital. Net cash used in investing activities was $47 thousand. Net cash provided by financing was minimal for the six months ended June 30, 2026.
We expect that our investments and operating expenses will be approximately $16.3 million over the next twelve months, comprised of approximately $6.4 million in research and development expenses related to the development of the non-radioactive, full-scale, at-depth demonstration program in Texas and approximately $9.9 million in operating costs. In the twelve months thereafter, we anticipate research and development expenses of approximately $3.7 million, along with a comparable level of operating costs.
We believe our existing cash will be sufficient to meet our operating, working capital and research and development needs for at least the next twelve months. However, our future capital requirements will depend on many factors, including the progress of our development activities and the timing and extent of expenditures to support our growth strategy. There can be no assurance that additional capital will be available on acceptable terms, or at all, if needed. See Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 30, 2026 and Part II, Item 1A of this report.
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As of June 30, 2026, our cash and cash equivalents were $19.4 million. The following table shows a summary of our cash flows for the periods presented (in thousands):
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||
| 2026 | 2025 | Change | Change % | ||||||||||||||||||||
| Net cash used in operating activities | $ | (8,044) | $ | (618) | $ | (7,426) | 1,202 | % | |||||||||||||||
| Net cash used in investing activities | (47) | (31) | (16) | 53 | % | ||||||||||||||||||
| Net cash (used in) provided by financing activities | 3 | 392 | (389) | (99) | % | ||||||||||||||||||
| Net increase (decrease) in cash | (8,088) | (257) | (7,831) | 3,047 | % | ||||||||||||||||||
| Effect of exchange rate on cash and cash equivalents | 33 | (40) | 73 | (183) | % | ||||||||||||||||||
| Cash, beginning of period | 27,434 | 2,149 | 25,285 | 1,177 | % | ||||||||||||||||||
| Cash, end of period | $ | 19,379 | $ | 1,852 | $ | 17,527 | 946 | % | |||||||||||||||
| NM=Not Meaningful | |||||||||||||||||||||||
Operating Activities
Net cash used in operating activities increased by $7.4 million for the six months ended June 30, 2026 compared to the net cash used in operating activities of 0.6 million for the six months ended June 30, 2025. The increase in cash used in operating activities was primarily attributable the increase in net loss driven by higher research and development expenses along with increased accounting, audit, legal and travel expenses associated with the reporting and other requirements associated with the Company becoming a public reporting company.
Investing Activities
Net cash used in investing activities increased by $16 thousand to $47 thousand for the six months ended June 30, 2026 compared to $31 thousand net cash used in investing activities for the six months ended June 30, 2025. Net cash used in investing activities during the six months ended June 30, 2026 was related to the purchase of a new server.
Financing Activities
Net cash provided by financing activities of $3 thousand for the six months ended June 30, 2026 was a decrease of $389 thousand from net cash provided by financing activities of $392 thousand for the six months ended June 30, 2025. The decrease in net cash provided by financing activities was primarily attributable to $394 thousand received from the exercise of stock options in the six months ended June 30, 2025.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for this reporting period and are not required to provide the information required under this item.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of
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achieving the desired control objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Our management, including our Chief Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2026 and identified the following material weaknesses:
•Ineffective implementation of Information Technology General Controls (“ITGCs”) to ensure appropriate change management and segregation of duties.
•Inadequate controls relating to the documentation of the review and approval of reconciliations and other schedules prepared internally to be included or disclosed in the financial statements.
•A lack of segregation of duties in the accounting and finance functions.
•The Company did not complete a Sarbanes-Oxley (SOX) Section 404A assessment.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
As previously reported and stated above, material weaknesses were identified in our internal control over financial reporting. We have therefore concluded that our internal controls over financial reporting are not effective at the reasonable assurance level. A material weakness is a deficiency, or combination of deficiencies, in our internal controls over financial reporting such that there is a reasonable possibility that a material misstatement of our consolidated financial statements would not be prevented or detected on a timely basis. The Company is continuing to actively work to remediate the material weaknesses described above, including the need for additional remediation steps and implementing additional measures to remediate the underlying causes that give rise to the material weaknesses. In February 2026, the Company hired Joseph Nelson as Chief Financial Officer who has extensive experience in a public company setting.
Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties. Therefore, it is difficult to effectively segregate accounting duties which comprises a material weakness in internal controls. To the extent reasonably possible given our limited resources, we intend to take measures to cure the weaknesses, including, but not limited to, increasing the capacity of our qualified financial personnel to ensure that accounting policies and procedures are consistent across the organization and that we have adequate controls over our Exchange Act reporting disclosures. As such, we consider these material weaknesses to not be remediated as of June 30, 2026.
The material weaknesses will be considered remediated when the Company concludes that, through testing, the applicable remedial controls are designed, implemented and operating effectively. As the Company continues to evaluate and improve disclosure controls and procedures and internal control over financial reporting, the Company may decide to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures identified.
Except as described above, there were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the fiscal quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the normal course of conducting our business, the Company may be involved in various litigation. The Company is not a party to any litigation or governmental proceeding which our management believes could result in any judgments or fines against us that would have a material adverse effect on our financial position, liquidity or results of future operations.
ITEM 1A. RISK FACTORS
Except as disclosed below, there have been no material changes to the risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 30, 2026 and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the period ended March 31, 2026, filed with the SEC on May 15, 2026.
In addition, the following risk factors included in Part I Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 30, 2026 are no longer applicable to the Company because the Company’s shares of common stock were quoted for trading on OTCQB in July 2026:
–There is currently no market for our common stock and there can be no assurance that any market will ever develop. You may therefore be unable to re-sell shares of our common stock at times and prices that you believe are appropriate;
–Our common stock may not be eligible for listing or quotation on any securities exchange or over-the-counter trading system;
–The market price and trading volume of our common stock may be volatile and could decline significantly following any listing or quotation, if any.
Trading on the OTC Markets is volatile and sporadic, which could depress the market price of our common stock and make it difficult for our security holders to resell their common stock
The OTC Market is a network of security dealers who buy and sell stock. The dealers are connected by a computer network that provides information on current 'bids' and 'asks' as well as volume information. Trading in securities quoted on the OTC Markets is often thin and characterized by wide fluctuations in trading prices, due to many factors, some of which may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTC Markets is not a stock exchange, and trading of securities on the OTC Markets is often more sporadic than the trading of securities listed on a national stock exchange. These factors may result in investors having difficulty reselling any shares of our common stock.
We may be unable to maintain OTCQB Compliance
There can be no assurance that we will be able to maintain compliance with the continued listing requirements for the OTCQB Venture Market. If we fail to maintain compliance with any such continued listing requirement, there can also be no assurance that we will be able to regain compliance with any such continued listing requirement in the future.
The market price and trading volume of our common stock may be volatile and could decline significantly following any listing or quotation, if any.
The quotation systems, including the OTCQB, or stock exchanges, including Nasdaq, on which our common stock is currently quoted, or on which our common stock may be listed in the future have from time to time experienced significant price and volume fluctuations. Even if an active, liquid and orderly trading market develops and is sustained for our common stock following our recent quotation on OTCQB, the market price of our common stock may be volatile and could decline significantly. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur. If the market price of our common stock declines significantly, you may be unable to resell your shares at or above the market price of our common stock as of the date of the consummation of the Merger. We cannot assure you that the market price of common stock will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following:
● the realization of any of the risk factors presented in our periodic reports and other filings with the SEC;
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● actual or anticipated differences in our estimates, or in the estimates of analysts, for our revenues, results of operations, level of indebtedness, liquidity or financial condition;
● additions and departures of key personnel;
● failure to comply with the requirements of the OTCQB market, or following any potential listing on Nasdaq;
● failure to comply with the Sarbanes-Oxley Act or other laws or regulations;
● future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases, of our common stock;
● publication of research reports about us, or our industry;
● the performance and market valuations of other similar companies;
● broad disruptions in the financial markets, including sudden disruptions in the credit markets;
● speculation in the press or investment community;
● actual, potential or perceived control, accounting or reporting problems; and
● changes in accounting principles, policies and guidelines.
In addition, as a company operating in the nuclear energy and nuclear waste management sector, our stock price and market capitalization may be particularly sensitive to changes in sector-wide investor sentiment, regardless of our actual operating performance or progress. Such sentiment may be influenced by factors beyond our control, including nuclear incidents or accidents anywhere in the world, shifts in public or political attitudes toward nuclear technologies, negative developments affecting other nuclear or advanced-energy companies, or broader market dislocations affecting early-stage or pre-commercial technology companies. Market volatility or negative sentiment affecting the nuclear sector or comparable companies could reduce liquidity in our shares, depress our stock price, increase our cost of capital, or impair our ability to raise additional funds on acceptable terms, even if our business fundamentals, technical progress or long-term prospects remain unchanged. Any such effects could materially and adversely affect our financial condition and strategic flexibility.
In the past, securities class-action litigation has often been instituted against companies following periods of volatility in the market price of their shares. This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have a material adverse effect on us.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a) In addition to the issuances of unregistered securities described in the Current Reports on Form 8-K filed by the Company with the SEC, and Item 15. Recent Sales of Unregistered Securities contained in our registration statement on Form S-1/A filed with the SEC on May 6, 2026, which item is incorporated herein by reference, in the second quarter of 2026 the Company issued the following securities which were not registered under the Securities Act.
On May 13, 2026, we issued options to purchase an aggregate of 10,000 shares of our common stock at an exercise price of $3.00 per share and 5,000 RSUs, each representing a contingent right to receive one share of our common stock upon settlement, to certain of our service providers and employees pursuant to our 2025 Plan.
For the above issuances, we relied upon the exemption from registration provided by Rule 701 of the Securities Act.
(b) Not applicable.
(c) None
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the three months ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted terminated
ITEM 6. EXHIBITS
(a) Exhibits
| 2.1 | Agreement and Plan of Merger and Reorganization among the Company, Aspen Acquisition Corp., and Deep Isolation, Inc., dated July 23, 2025 (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on July 28, 2025 and incorporated herein by reference). | ||||
| 3.1 | Certificate of Merger relating to the merger of Acquisition Sub. with and into Deep Isolation, Inc., filed with the Secretary of State of the State of Delaware on July 23, 2025 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on July 28, 2025). | ||||
| 3.2 | Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on July 23, 2025 (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on July 28, 2025 and incorporated herein by reference). | ||||
| 3.3 | Amended and Restated Bylaws (filed as Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on July 28, 2025 and incorporated herein by reference). | ||||
| 31.1(a) | Sarbanes-Oxley Section 302 certification of Chief Executive Officer. | ||||
| 31.2(a) | Sarbanes-Oxley Section 302 certification of Principal Financial Officer. | ||||
| 32.1(b) | Sarbanes-Oxley Section 906 certification of Chief Executive Officer. | ||||
| 32.2(b) | Sarbanes-Oxley Section 906 certification of Principal Financial Officer. | ||||
| 101.SCH(a) | Inline XBRL Taxonomy Schema Document. | ||||
| 101.CAL(a) | Inline XBRL Calculation Linkbase Document. | ||||
| 101.DEF(a) | Inline XBRL Definition Linkbase Document. | ||||
| 101.LAB(a) | Inline XBRL Label Linkbase Document. | ||||
| 101.PRE(a) | Inline XBRL Presentation Linkbase Document. | ||||
| 104 | Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101). | ||||
_______________________________________________________________________
(a)Filed herewith
(b)Furnished herewith
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DEEP ISOLATION NUCLEAR, INC.
(Registrant)
| By: | /s/ Rodney Baltzer | |||||||
| Rodney Baltzer | ||||||||
| Duly authorized officer and Principal Executive Officer | ||||||||
| By: | /s/ Joseph Nelson | |||||||
| Joseph Nelson | ||||||||
| (Duly authorized officer and Principal Financial Officer) | ||||||||
Dated: August 6, 2026
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