Quarterly Report for Quarter Ending SEPTEMBER 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Note on Forward-Looking Statements.

Certain statements in "Management's Discussion and Analysis and Results of Operations" below, and elsewhere in this quarterly report, are not related to historical results, and are forward-looking statements. Forward-looking statements present our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements frequently are accompanied by such words such as "may," "will," "should," "could," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "potential" or "continue," or the negative of such terms or other words and terms of similar meaning. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or timeliness of such results. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this quarterly report. Subsequent written and oral forward looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements and risk factors set forth in our annual report on Form 10-K filed with the SEC on March 30, 2026, and in other reports filed by us with the SEC.

You should read the following description of our financial condition and results of operations in conjunction with the financial statements and accompanying notes included in this report.

Overview

We are a developer of clean energy technologies. Our current focus is on developing a thermochemical clean hydrogen production technology to lower the cost of clean hydrogen production.

Hydrogen is the cleanest and most abundant element in the universe, and we can't live without it. Hydrogen is the key ingredient in making fertilizers needed to grow food for the world. It is also used for transportation, refining oil and making steel, glass, pharmaceuticals and more. Nearly all the hydrogen today is made from hydrocarbons like coal, oil, and natural gas, which are dirty and limited resources. Water, on the other hand, is an infinite and renewable worldwide resource.

Currently, the most common method of making clean hydrogen is to split water into oxygen and hydrogen with an electrolyzer using clean electricity produced from solar or wind. However, clean electricity is and always will be very expensive. It currently accounts for 73% of the cost of clean hydrogen. By using heat directly, we can skip the expensive process of making electricity, and fundamentally lower the cost of clean hydrogen. Inexpensive heat can be obtained from concentrated solar, geothermal, nuclear reactors and industrial waste heat for use in our novel low-cost thermochemical water splitting process. Working with a world class research team at UC Santa Barbara, our goal is to help usher in the clean hydrogen economy that Goldman Sachs (in a 2022 report) estimated to have a future market value of $12 trillion.

We have previously developed an innovative material technology to reduce the cost per watt of electricity produced by Photovoltaic, or PV, solar modules.

Application of Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our unaudited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to impairment of property, plant and equipment, intangible assets, deferred tax assets and fair value computation using a binomial lattice valuation model. We base our estimates on historical experience and on various other assumptions, such as the trading value of our common stock and estimated future undiscounted cash flows, that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates, including those for the above-described items, are reasonable.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements. Significant estimates made in preparing these financial statements, include the estimate of useful lives of property and equipment, the deferred tax valuation allowance and the fair value of stock options. Actual results could differ from those estimates.

Fair Value of Financial Instruments

Our cash, cash equivalents, prepaid expenses, and accounts payable are stated at cost which approximates fair value due to the short-term nature of these instruments.

Recently Issued Accounting Pronouncements

The Company considers all new pronouncements and management has determined that there have been no recently adopted or issued accounting standards that had or will have a material impact on its financial statements.

Results of Operations - Three months ended September 30, 2026, compared to the Three months ended September 30, 2025.

OPERATING EXPENSES

Selling and Marketing Expenses

Selling and marketing ("S&M") expenses decreased by $22,009 to $73,454 for the three months ended September 30, 2026, compared to $95,463 for the prior period ended September 30, 2025. The primary reason for the decrease in S&M expenses was due to a decrease in ad campaigns offset by an increase in website development.

General and Administrative Expenses

General and administrative ("G&A") expenses increased by $157,878 to $439,126 for the three months ended September 30, 2026, compared to $281,248 for the prior period ended September 30, 2025. The majority of the increase related to increased stock option expense for a vesting amendment, increased legal and accounting fees.

Research and Development

Research and Development ("R&D") expenses increased by $254,528 to $359,217 for the three months ended September 30, 2026, compared to $104,689 for the prior period ended September 30, 2025. This overall increase in R&D expenses was the result of an increase in research agreement costs, and consultant costs.

Depreciation and Amortization Expense

Depreciation and amortization expense for the three months ended September 30, 2026 and 2025 was $820 and $821, respectively.

Net Loss

Our net loss for the three months ended September 30, 2026 was $872,564, compared to $482,096 for the prior period ended September 30, 2025. The Company has not generated any revenues. The majority of the increase in net loss was due to an overall increase in operating expenses and non-cash expense associated with the net change in stock option expense in the current period. The estimates for stock compensation expense were based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. These inputs were subject to significant changes from period to period and to management's judgment; therefore, the estimated fair value of the stock options fluctuate, and the fluctuation may be material.

Results of Operations - Nine months ended September 30, 2026, compared to the Nine months ended September 30, 2025.

OPERATING EXPENSES

Selling and Marketing Expenses

S&M expenses decreased by $19,133 to $276,901 for the nine months ended September 30, 2026, compared to $296,034 for the prior period ended September 30, 2025. The primary reason for the decrease in S&M expenses was due to a decrease in ad campaigns offset by an increase in website development.

General and Administrative Expenses

G&A expenses increased by $370,488 to $1,300,242 for the nine months ended September 30, 2026, compared to $929,754 for the prior period ended September 30, 2025. The majority of the increase related to an increase in stock compensation expense for a vesting amendment and an increase in accounting and legal fees. These increases were offset by a decrease to market fees.

Research and Development

R&D expenses increased by $679,530 to $1,033,604 for the nine months ended September 30, 2026, compared to $354,074 for the prior period ended September 30, 2025. This overall increase in R&D expenses was the result of an increase in research agreement costs, and consultant costs.

Depreciation and Amortization Expense

Depreciation and amortization expense for the nine months ended September 30, 2026 and 2025 was $2,462 and $2,462, respectively.

Net Loss

Our net loss for the nine months ended September 30, 2026 was $2,613,382, compared to $1,581,894 for the prior period ended September 30, 2025. The Company has not generated any revenues. The majority of the increase in net loss was due to an overall increase in operating expenses and non-cash expense associated with the net change in stock option expense in the current period. The estimates for stock compensation expense were based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. These inputs were subject to significant changes from period to period and to management's judgment; therefore, the estimated fair value of the stock options fluctuate, and the fluctuation may be material.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

The accompanying unaudited condensed financial statements as of September 30, 2026, have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying unaudited condensed financial statements do not reflect any adjustments that might result if we are unable to continue as a going concern. During the nine months ended September 30, 2026 we recognized a net loss of $2,613,382, and $1,963,639 of cash was used in operations. As of September 30, 2026, we had working capital of $177,028 and a shareholders' deficit of $3,254,818.

Management believes that we will be able to continue to raise funds through the sale of our securities to existing and new investors, including through the use of its equity financing agreement entered into with GHS. Management believes that funding from existing and prospective new investors and future revenue will provide the additional cash needed to meet our obligations as they become due and will allow the development of our core business operations. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt-financing or cause substantial dilution for our stockholders, in case of equity financing.

As of September 30, 2026, we had working capital of $177,028 compared to $1,433,163 for the year ended December 31, 2025. This decrease in working capital was due primarily to a decrease in cash and an increase in accounts payable.

During the nine months ended September 30, 2026, we used $1,963,639 in cash for operating activities, as compared to $1,413,695 for the prior period ended September 30, 2025. The increase in the use of cash for operating activities for the current period was a result of an increase in research and development, and general and administrative costs.

During the nine months ended September 30, 2026, the Company used $608 in cash for investing activities as compared to $0 for the prior period ended September 30, 2025. The increase relates to purchase of fixed assets.

During the nine months ended September 30, 2026, we received $828,827 in cash for financing activities as compared to $615,445 for the prior period ended September 30, 2025. Cash received during both periods was for shares issued through an equity financing agreement.

Due to the Company not yet generating any significant revenue, recurring net losses, negative cashflows from operating activities and an accumulated deficit, management believes there is substantial doubt about the Company's ability to continue as a going concern without additional capital. Our financial statements as of September 30, 2026, have been prepared under the assumption that we will continue as a going concern. Our ability to continue as a going concern, ultimately is dependent upon our ability to generate revenue, which is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies and, ultimately, to achieve profitable operations. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

PLAN OF OPERATION AND FINANCING NEEDS

We are engaged in the development of clean energy technologies to lower the cost of producing clean hydrogen. The Company's current focus is on developing ThermoLoop®™, a breakthrough technology that uses water and heat rather than electricity to potentially produce the world's lowest cost clean hydrogen.

Our plan of operation within the next twelve months is to utilize our cash balances and additional cash investment received during Q4 2026 to maintain the existing ThermoLoop®™ technology development program at UCSB.

We believe that our current cash and investment balances will be sufficient to support development activity and general and administrative expenses for the next twelve months. Management estimates that it will require additional cash resources during Q4 2027, based upon its current operating plan and condition. We do not expect increased expenses until Q4 2027 when we ramp up commercialization efforts related to our thermochemical water splitting technology.