Aspen-1 Acquisition Inc.

05/15/2026 | Press release | Distributed by Public on 05/15/2026 09:57

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

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 three months ended March 31, 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.
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 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-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-Kfor 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.
Appointment of Directors and Officers
On January 21, 2026, the Board appointed Mr. Ralph L. Hunter as a Class C director, effective immediately.
Effective as of February 3, 2026, the Board appointed Paula Whitten-Doolin to serve as the General Counsel of the Company.
Effective as of February 24, 2026, the Board appointed Joseph Nelson to serve as the Chief Financial Officer of the Company.
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") 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 partners 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.
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.
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.
Comparison of the Three Months Ended March 31, 2026 and 2025
The following table sets forth our summarized consolidated financial information for the periods indicated (in thousands):
Three Months Ended March, 31
2026 2025 $ Change % Change
Revenue $ 1,447 $ 1,520 $ (73) (5 %)
Cost of services (681) (662) (19) 3 %
Gross profit 766 858 (92) 62 %
Operating Expenses:
Selling, general and administrative expenses 2,840 993 1,847 186 %
Research and development 3,489 - 3,489 NM
Depreciation and amortization expense 25 29 (4) (14 %)
Total operating expenses 6,354 1,022 5,332 522 %
Loss from operations (5,588) (164) (5,424) 3,307 %
Other income, net 172 (1) 173 NM
Net loss before income taxes (5,416) (165) (5,251) 3,182 %
Provision for income taxes - 1 (1) -%
Net loss $ (5,416) $ (166) $ (5,250) 3,163 %
Other comprehensive loss:
Foreign currency translation adjustments 48 (49) 97 (198) %
Total other comprehensive loss (income) 48 (49) 97 (198) %
Net loss and other comprehensive loss $ (5,368) $ (215) $ (5,153) 2,397 %
NM= Not Meaningful
Revenue
Revenue decreased by approximately $73 thousand, or 5%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The decrease in revenue was primarily attributable to lower revenues at Deep Isolation following the completion of certain projects during 2025, offset by higher revenues at Freestone due to an increase in the number of active contracts.
Operating Expenses
Cost of services increased by approximately $19 thousand, or 3%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase in cost of services was primarily attributable to an increase in subcontractor costs at Freestone.
Depreciation and amortization expense decreased by $14 thousand, or 48%, for the three months ended March 31, 2026 compared to the threes months ended March 31, 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.
Selling, General and Administrative expenses increased by approximately $1,847 thousand, or 186%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase in selling, general and administrative expenses was primarily attributable to higher accounting, audit, legal and travel expenses along with addition of 4 new employees, including the Chief Financial Officer and General Counsel.
Research and development expense increased by approximately $3,489 thousand for the three months ended March 31, 2026, compared to the three months ended March 31, 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.
Other Income, Net
Other income, net increased by approximately $173 thousand for three months ended March 31, 2026, compared to the three months ended March 31, 2025, due to interest income received from the investment of the Merger proceeds.
Net Loss
Net loss increased by $5,251 thousand for the three months ended March 31, 2026, compared to the three months ended March 31, 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 March 31, 2026, our principal source of liquidity was our cash balance of $22.2 million. Since inception, we have generated significant operating losses, as reflected in our accumulated deficit of $37.9 million as of March 31, 2026, and have experienced negative cash flows from operations of $5.2 million for the three months ended March 31, 2026.
Net cash used in operating activities was $5.2 million for the three months ended March 31, 2026, primarily due to our net loss offset by changes in working capital. Net cash used in investing activities was $17 thousand. Net cash provided by financing was minimal.
We expect that our investments and operating expenses will be approximately $15.9 million over the next twelve months, comprised of approximately $7.7 million in research and development expenses related to the development of the non-radioactive, full-scale, at-depth demonstration program in Texas and approximately $8.2 million in operating costs. In the twelve months thereafter, we anticipate research and development expenses of approximately $7.3 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.
As of March 31, 2026, our cash and cash equivalents were $22.2 million. The following table shows a summary of our cash flows for the periods presented (in thousands):
Three Months Ended March 31,
2026 2025 Change Change %
Net cash (used in) provided by operating activities $ (5,242) $ 12 $ (5,254) (43,783 %)
Net cash used in investing activities (17) (31) 14 (45 %)
Net cash provided by financing activities 3 69 (66) (96 %)
Net increase (decrease) in cash (5,256) 50 (5,306) (10,612 %)
Effect of exchange rate on cash and cash equivalents 48 (50) 98 (196 %)
Cash, beginning of period 27,434 2,149 25,285 1,177 %
Cash, end of period $ 22,226 $ 2,149 $ 20,077 934 %
Operating Activities
Net cash used in operating activities increased by $5.3 million for the three months ended March 31, 2026 compared to the net cash generated in operating activities of $12 thousand for the three months ended March 31, 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 $14 thousand to $17 thousand for the three months ended March 31, 2026 compared to $31 thousand net cash used in investing activities for the three months ended March 31, 2025. Net cash used in investing activities during the three months ended March 31, 2026 was related to the purchase of a new server at Freestone.
Financing Activities
Net cash provided by financing activities decreased by $66 thousand to $4 thousand for the three months ended March 31, 2026 compared to the net cash provided by financing activities of $69 thousand for the three months ended March 31, 2025. The decrease in net cash provided by financing activities was primarily attributable to $65 thousand less proceeds received from the exercise of stock options.
Aspen-1 Acquisition Inc. published this content on May 15, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 15, 2026 at 15:57 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]