American Fusion, Inc 10-Q for FY2026 Q2
American Fusion, Inc. (AMFN)
About this 10-Q
American Fusion, Inc filed this 10-Q on August 12, 2026, covering the quarter ended June 30, 2026 (FY2026 Q2).
Headline figures
Quarter ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $58K
- Net loss
- $1.28M
- compared with a net loss of $55.32K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period
ended
For the transition period from ____________ to ____________
Commission file number
| (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(g) of the Act: Common stock, par value $0.001 per share
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 ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 ☐
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 definition 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 ☐
As of August 7, 2026, there were shares of the Company’s common stock issued and 1,619,034,363 shares outstanding.
AMERICAN FUSION, INC.
Form 10-Q
For the Quarter Ended June 30, 2026
TABLE OF CONTENTS
| Page | ||
| Cautionary Note Regarding Forward-Looking Statements | ii | |
| Part I. Financial Information | 1 | |
| Item 1. | Financial Statements | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 21 |
| Item 4. | Controls and Procedures | 22 |
| Part II. Other Information | ||
| Item 1. | Legal Proceedings | 23 |
| Item 1A. | Risk Factors | 23 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 23 |
| Item 3. | Defaults Upon Senior Securities | 23 |
| Item 4. | Mine Safety Disclosures | 23 |
| Item 5. | Other Information | 23 |
| Item 6. | Exhibits | 24 |
| Signatures | 25 | |
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of revenue, expenses, earnings, cash flows, or other financial items, any statements of the plans and objectives of management for future operations, any statements concerning proposed new products or services, any statements regarding future economic conditions or performance, and any statement of belief and any statement of assumptions underlying any of the foregoing. Words such as “may,” “will,” “could,” “should,” “would,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project,” “continue,” “forecast,” and similar expressions are intended to identify forward-looking statements.
Forward-looking 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 the forward-looking statements. Such risks are described in greater detail under “Item 1A. Risk Factors” in our Registration Statement on Form 10 filed with the Securities and Exchange Commission on March 12, 2026. All forward-looking statements are expressly qualified in their entirety by such cautionary statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by law.
ii
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The unaudited consolidated financial statements of American Fusion, Inc. and its subsidiary are listed below:
Index to Consolidated Financial Statements
- Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025
- Consolidated Statements of Operations for the three months and six months ended June 30, 2026 and 2025
- Consolidated Statements of Stockholders’ Deficit for the three months and six months ended June 30, 2026, and 2025
- Consolidated Statements of Cash Flows for the six months ended June 30, 2026, and 2025
- Notes to Consolidated Financial Statements
| 1 |
AMERICAN FUSION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
| June 30, 2026 | December 31, 2025 | |||||||
| (UNAUDITED) | (AUDITED) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Intangible assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Convertible notes payable – related party | ||||||||
| Litigation liability | ||||||||
| Total current liabilities | ||||||||
| Total Liabilities | $ | $ | ||||||
| Stockholders’ deficit: | ||||||||
| Preferred Stock, Series A, par $; authorized; issued | ||||||||
| Common Stock, par $; B authorized; issuable at June 30, 2026; issued and outstanding at June 30, 2026 and issued and outstanding at December 31, 2025 | ||||||||
| Common stock issuable | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Treasury Stock, and shares issued at June 30, 2026 and December 31, 2025, respectively | ||||||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements
| 2 |
AMERICAN FUSION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| THREE MONTHS ENDED JUNE 30, | SIX MONTHS ENDED JUNE 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Total other expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding - basic and diluted | ||||||||||||||||
| Weighted average loss per share - basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
The accompanying notes are an integral part of these consolidated financial statements
| 3 |
AMERICAN FUSION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2026
(UNAUDITED)
| Preferred Stock, Series A | Common Stock | Common Stock Issuable | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Total | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Amount | Amount | Amount | Shares | Amount | |||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | $ | ( | ) | — | $ | ( | ) | ||||||||||||||||||||||||||
| Conversion of notes payable - related party | — | ( | ) | — | |||||||||||||||||||||||||||||||||
| Issuance of prefunded- warrants | — | — | — | ||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | |||||||||||||||||||||||||||||||||||
| Reverse recapitalization | — | — | ( | ) | — | ||||||||||||||||||||||||||||||||
| Net Loss | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | $ | $ | $ | ( | ) | — | $ | ( | ) | ||||||||||||||||||||||||||
| Conversion of notes payable - related party | — | ( | ) | — | |||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | |||||||||||||||||||||||||||||||||||
| Issuance of prefunded warrants | — | — | — | ||||||||||||||||||||||||||||||||||
| Security purchase agreements - units | — | — | |||||||||||||||||||||||||||||||||||
| Issuable common stock | — | ( | ) | — | |||||||||||||||||||||||||||||||||
| Treasury stock acquired | ( | ) | |||||||||||||||||||||||||||||||||||
| Cancellation of common stock | — | ( | ) | ( | ) | — | |||||||||||||||||||||||||||||||
| Net Loss | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
| 4 |
AMERICAN FUSION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2025
(UNAUDITED)
| Preferred Stock, Series A | Common Stock | Common Stock Issuable | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Total | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Amount | Amount | Amount | Shares | Amount | ||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Net Loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Net Loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
| 5 |
AMERICAN FUSION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Convertible notes payable – related party issued for consulting services | ||||||||
| Stock-based compensation | ||||||||
| Accrued interest on convertible notes payable – related party | ||||||||
| Accrued interest on litigation liability | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ||||||
| Cash flows used in investing activities: | ||||||||
| Capitalized intangible assets | $ | ( | ) | $ | ||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of prefunded warrants | $ | $ | ||||||
| Proceeds from issuance of security purchase agreements - units | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Convertible notes payable – related party conversion to common stock | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements
| 6 |
AMERICAN FUSION INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION
Organization and Business
American Fusion Inc. ("AMFN" or the "Company") is a Texas corporation. On February 27, 2026, the Company completed its reverse merger with Kepler Fusion Technologies Inc. ("Kepler") pursuant to the Master Sales Agreement dated December 16, 2025 and the related Share Exchange Agreement. Upon closing, Kepler became a wholly owned subsidiary of the Company, and Kepler's former shareholders shall obtain approximately 89.7% of the common voting rights in the combined entity. As of June 30, 2026, the Company's principal operating focus is the development of advanced fusion energy technologies. The reverse merger was accounted for as a reverse recapitalization as further explained in Note 9.
Redomestication and Name Change
In February 2026, the Company completed a statutory conversion and redomestication from the State of Delaware to the State of Texas. The redomestication became effective on February 10, 2026, upon the filing of the applicable conversion and formation documents with the Texas Secretary of State, at which time the Company ceased to be a Delaware corporation and continued its existence as a Texas corporation. The redomestication did not result in any change to the Company’s business, operations, assets, liabilities, or stockholders’ equity.
Effective March 19, 2026, the Company completed its corporate name change from Renewal Fuels, Inc. to American Fusion, Inc. and FINRA processed the related ticker symbol change from RNWF to AMFN. Unless the context otherwise requires, references in these financial statements to the “Company” refer to American Fusion Inc., formerly Renewal Fuels, Inc.
Basis of Presentation and Principles of Consolidation
The unaudited consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The financial statements reflect the operations and financial position of the Company and its consolidated subsidiary for the three-month and six-month periods ended June 30, 2026. Under ASC 805-40, Kepler Fusion Technologies Inc. is treated as the accounting acquirer; consequently, the historical financial statements of the combined entity reflect Kepler’s historical results for pre-acquisition periods, with AMFN's identifiable assets and liabilities added at carrying value as of February 27, 2026. Certain subsidiaries were inactive during the period and had no assets, liabilities, revenues, expenses, or operations. Accordingly, consolidation of these entities would have no effect on the accompanying consolidated financial statements. All intercompany transactions and balances have been eliminated in consolidation.
Going Concern
The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. As of June 30, 2026, the Company has an accumulated deficit
of approximately $
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Reclassifications
Certain prior-period amounts have been reclassified to conform to the current-period presentation. These reclassifications had no effect on previously reported net income, total assets, or stockholders’ equity.
| 7 |
AMERICAN FUSION INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Accounts Receivable
Accounts receivable are stated at amounts due from customers, net of an allowance for doubtful accounts, and the Company generally does not require collateral. As a general policy, the Company determines an allowance for doubtful accounts by considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and industry as a whole. The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts.
The Company recorded an allowance for doubtful
accounts of $
Intangibles and Impairment of Long-Lived Assets
During the six months ended June 30, 2026, certain patent related filing costs totaling $33,472 as well as certain website development costs totaling $15,000 have been capitalized on the Company’s balance sheet in accordance with ASC Topic 350, Intangibles, Goodwill and Other. Upon receipt or acquisition of a patent, a determination of useful life and amortization period will be made. Capitalized website development costs are amortized effective July 1, 2026 over three years. Upon launch and usage of the website, a determination of useful life and amortization will be made. In accordance with FASB ASC Topic 360, Property, Plant and Equipment, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized on long-lived assets when indicators of impairment are present and the undiscounted future cash flows estimated to be generated by those assets are less than the carrying amount of the assets. In such cases, the carrying value of these assets are adjusted to their estimated fair values and assets held for sale are adjusted to their estimated fair values less selling expenses.
Reverse Recapitalization
On February 27, 2026, Renewal Fuels, Inc. (RNWF, subsequently renamed American Fusion Inc., “AMFN” or the “Company”) consummated a share-exchange transaction with Brent Nelson, the sole shareholder of Kepler Fusion Technologies Inc. (“Kepler”), pursuant to which the Company acquired 100% of the issued and outstanding equity interests of Kepler in exchange for newly issued common stock of the Company. See Note 9.
Concurrently, an entity controlled by the Company’s CEO sold to an entity controlled by Brent Nelson the one (1) share of Special 2020 Series A Preferred Stock of the Company (the “Control Share”) for $1,000 cash.
The transaction has been accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, American Fusion, Inc. is treated as the “acquired” company and Kepler is treated as the accounting acquirer for financial reporting purposes. The reverse recapitalization accounting treatment was primarily determined based on the fact that Nelson (an individual shareholder) who controlled Kepler before the transaction continued to control American Fusion, Inc. post-transaction and hence Kepler has not undergone a change in control and is the accounting acquirer in a reverse recapitalization transaction.
Accordingly, for accounting purposes, the financial statements of AMFN. represent a continuation of the financial statements of Kepler with the merger being treated as the equivalent of Kepler issuing shares for the net assets of American Fusion, Inc., accompanied by a recapitalization. The net assets of American Fusion, Inc. were recognized as of the closing at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the merger are presented as those of Kepler and the accumulated deficit of Kepler has been carried forward after closing.
Fair Value Measurements
The disclosure requirements within Accounting Standards Codification (ASC) Topic 820-10, Fair Value Measurement, require disclosure of estimated fair values of certain financial instruments. For financial instruments recognized at fair value in the Company’s statements of operations, the disclosure requirements of ASC Topic 820-10 also apply. The methods and assumptions are set forth below:
| ● | Cash and cash equivalents are carried at cost, which approximates fair value. |
| ● | The carrying amounts of receivables approximate fair value due to their short-term maturities. |
| ● | The carrying amounts of payables approximate fair value due to their short-term maturities. |
| 8 |
AMERICAN FUSION INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
Asset and liabilities measured and reported at fair value are classified and disclosed in one of the following categories based on inputs:
Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
Level 3 — Pricing inputs include significant unobservable inputs used in determining the fair value of investments. The types of investments, which would generally be included in this category include equity securities issued by private entities.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.
There were no Level 3 assets or liabilities at June 30, 2026 and December 31, 2025.
Lease Commitment
The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. Lease expense for variable lease components are recognized when the obligation is probable. Operating lease right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company’s lease, the incremental borrowing rate is used based on the information available at commencement date in determining the present value of lease payments.
Variable lease payments not dependent on a rate or index associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented as operating expenses in the Company’s statement of operations in the same line as expense arising from fixed lease payments. The Company entered into various operating leases at June 30, 2026, effective beginning in July 2026. See Note 10
Revenue Recognition
Revenues are recognized in accordance with Accounting
Standards Codification (“ASC”) 606, Revenue from Contracts with Customers when performance obligations are satisfied through
the transfer of promised goods to the Company’s customers. Control transfers upon shipment of product or when the title has been
passed to the customers. This includes the transfer of legal title, physical possession, the risks and rewards of ownership, and customer
acceptance. Revenue is recorded net of sales taxes collected from customers on behalf of taxing authorities, allowance for estimated
returns, chargebacks, and markdowns based upon management’s estimates and the Company’s historical experience. The Company’s
liability for sales return refunds is recognized within other current liabilities, and an asset for the value of inventory that is expected
to be returned is recognized within other current assets on the balance sheets. The Company generally allows a 30-day right of return
to its customers. As of both June 30, 2026 and December 31, 2025, the sales returns allowance was $
The Company determines the amount of revenue to be recognized through the application of the following steps:
| · | identification of the contract, or contracts, with a customer; |
| · | identification of the performance obligations in the contract; |
| · | determination of the transaction price; |
| · | allocation of the transaction price to the performance obligations in the contract; and |
| · | recognition of revenue when or as the Company satisfies the performance obligations. |
| 9 |
AMERICAN FUSION INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables, and deferred revenue (contract liabilities) on the accompanying balance sheet. On occasion, billing occurs subsequent to revenue recognition, resulting in unbilled receivables. There were no unbilled receivables or deferred revenue recorded as of June 30, 2026 and December 31, 2025.
Share-based Compensation
We account for share-based awards granted to employees, directors and third parties by recording compensation expense based on estimated fair values. We estimate the fair value of share-based payment awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our consolidated statements of operations. Share-based awards are attributed to expense using the straight-line method over the vesting period. as permitted under ASC 718, Compensation—Stock Compensation. The assumptions used in calculating the fair value of share-based payment awards represent our best estimates. Our estimates of the fair values of share-based awards granted and the resulting amounts of share-based compensation recognized may be impacted by certain variables.
Research and Development Costs
Research and development costs are expensed as
incurred. Total research and development costs amounted to $
Contingencies
The Company follows ASC 450, Contingencies, to account for loss contingencies. Liabilities are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated.
Treasury Stock
The Company accounts for treasury stock under the cost method as defined in ASC 505-30. Treasury stock is recorded at the total cost paid to repurchase shares, debited to the treasury stock account, and credited to cash. Treasury stock is presented as a contra-equity account in the stockholders’ equity section of the balance sheet. Reissuance of treasury stock is recorded at the reissuance price, with any excess over cost credited to additional paid-in capital from treasury stock, and any deficiency first charged to additional paid-in capital from treasury stock and then to retained earnings. No gain or loss is recognized in net income; all adjustments are made directly to equity accounts.
Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Diluted net earnings or loss per share reflect the actual weighted average of common shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of the diluted net loss per share if their inclusion is anti-dilutive. All potentially dilutive securities are anti-dilutive as of June 30, 2026 and 2025 and, therefore, diluted net loss per share is the same as basic net loss per share. Convertible notes payable – related party and warrants, with underlying shares totaling at June 30, 2026 have not been included in the net loss per share calculation. Convertible notes payable - related party with underlying shares totaling at June 30, 2025, have not been included in the net loss per share calculation. The number of underlying shares related to convertible notes payable may vary based upon the actual date of conversion. In addition, all treasury shares and later to be determined shares in conjunction with deferred stock compensation agreements have also been excluded from the calculation.
Income Taxes
The Company accounts for income taxes under ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts and their respective tax bases. A valuation allowance is established when it is more likely than not that deferred tax assets will not be realized. The Company experienced a change in control on February 27, 2026 in connection with the Kepler reverse acquisition; accordingly, the utilization of net operating loss carryforwards of the legal acquirer may be limited under IRC Section 382. A Section 382 study is expected to be completed in a future period.
| 10 |
AMERICAN FUSION INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
NOTE 3 – INCOME TAXES
As of June 30, 2026 and December 31, 2025, the
Company had estimated net operating loss carryforwards of approximately $
NOTE 4 – STOCKHOLDERS' DEFICIT
Preferred Stock
The Company has authorized shares of preferred stock, par value $ per share. As of June 30, 2026, one () share of Series A Preferred Stock (the "Special 2020 Series A Preferred Control Share") was issued and outstanding, held by an entity controlled by Brent Nelson, following its transfer at closing of the Kepler transaction on February 27, 2026. The Control Share carries 60% voting power in the Company. See Note 7.
Common Stock
Effective May 1, 2026, the Company filed a Certificate of Amendment with the Texas Secretary of State reducing its authorized common stock, par value $ per share from shares to shares. As of June 30, 2026 shares were issued and were outstanding. As of December 31, 2025, shares of common stock were issued and outstanding, respectively. During the six months ended June 30, 2026, shares were returned by Pinnacle Consulting Services, Inc. and shares were returned by a third-party shareholder to the Company at no cost. These shares are recorded as Treasury Stock on the Company’s balance sheet at June 30, 2026. See Note 7.
During the six months ended June 30, 2026, the Company issued shares of common stock pursuant to conversion notices received from holders of outstanding convertible notes. See Note 7.
In January 2026, the Company entered into agreements with third-party service providers in exchange for compensation of shares of common stock with fair values of $-$ per share. Compensation expense totaling $ is included in selling, general and administrative expense in the Company’s statement of operations for the six-month period ended June 30, 2026. In May 2026, the Company entered into an agreement with a third-party service provider in exchange for compensation of shares of common stock with a fair value of $ per share. Compensation expense totaling $ is included in selling, general and administrative expense in the Company’s statement of operations for the three- and six-month periods ended June 30, 2026.
Cancellation of Legacy Share Issuances
In March, 2026, the Company obtained an amended default judgment in the Superior Court of Washington, King County, rescinding certain legacy asset purchase agreements and declaring void ab initio the prior issuance of an aggregate shares of the Company’s common stock. Pursuant to the order, the Company’s transfer agent was authorized and directed to cancel such shares and correct the Company’s stock ledger accordingly.
Common Stock Issuable
The Company had recorded common stock issuable
of $
Pursuant to the Master Sales Agreement, RH2 Equity
Partners, LP is entitled to receive
| 11 |
AMERICAN FUSION INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
Prepaid Warrants
Between January 1, 2026, and May 1, 2026, the
Company entered into a Master Prepaid Common Stock Purchase Warrant Agreement (the “Agreement”) with Pinnacle Consulting
Services, Inc. (“Pinnacle”) establishing a prepaid warrant financing facility of up to $
If the Company, while any warrant is outstanding, (i) pays a stock dividend on the common stock, (ii) subdivides its outstanding common stock into a greater number of shares (including by forward stock split), (iii) combines its outstanding common stock into a smaller number of shares (including by reverse stock split), or (iv) issues any shares in a reclassification or recapitalization of the common stock, then the number of warrant shares issuable on exercise of each warrant and the then-applicable nominal remaining exercise price shall be proportionally adjusted.
If, at any time while any warrant is outstanding, the Company issues or is deemed to issue any shares of common stock (or any securities convertible into, exchangeable for, or exercisable into common stock) at an effective price per share of common stock less than the then-current initial effective purchase price per warrant share, (a “Dilutive Issuance”), then the exercise price shall be reduced, to equal the lower effective price per share.
During
the six months ended June 30, 2026, the Company issued prepaid warrants to Pinnacle Consulting Services Inc. aggregating $
Securities Purchase Agreements
In May 2026, the Company entered into Securities
Purchase Agreements with third party investors for the sale of equity units (“Units”). Each unit consists of one share of
restricted common stock, $ par value, and one warrant to purchase one share of common stock at an exercise price of $0.50 per share.
The Company sold Units at a per unit price of $0.05 for a total of $. See Note 8. Shares were issued as of June 30, 2026
for 4,000,000 Units. The remaining 500,000 units were recorded as an accrued liability in the Company’s balance sheet at June 30,
2026, totaling $
Stock Compensation Agreements
During the six months ended June 30, 2026, the
Company entered into certain consulting services and independent director advisory agreements. As full and complete consideration for
the consulting and advisory services to be rendered, the
If the Anniversary price is less than the Initial Valuation Price, the Company shall issue to consultant or director, such additional number of shares as are necessary so that the aggregate fair market value of all shares issued calculated using the Anniversary Price, equals the contractual compensation amount. This adjustment shall operate as a hard minimum value backstop and shall apply automatically without the need for further action by the consultant or director. Vesting of the to-be determined shares and compensation is over the twelve-month term of each of the agreements. Compensation expense totaling $537,205 has been recorded in selling, general and administrative expenses for the six months ended June 30, 2026. During the three months ended June 30, 2026, the Company recorded $178,192 of consultant and director compensation expense relating to services rendered during the three months ended March 31, 2026. The Company evaluated the effect of this amount on its previously issued condensed consolidated financial statements for the three months ended March 31, 2026 and concluded that the effect was not material. The amount has no effect on cash flows, on loss per share, or on the condensed consolidated financial statements for the six months ended June 30, 2026.
In May 2026, the Company also entered into two
contingent consulting services contracts as full and complete consideration for the consulting and advisory services to be rendered, the
If the Anniversary price is less than the Initial Valuation Price, the Company shall issue to consultant or director, such additional number of shares as are necessary so that the aggregate fair market value of all shares issued calculated using the Anniversary Price, equals the contractual compensation amount. This adjustment shall operate as a hard minimum value backstop and shall apply automatically without the need for further action by the consultant or director.
| 12 |
AMERICAN FUSION INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
Vesting on one
of these contracts is contingent upon two vesting conditions as defined. The entirety of the stock-based rights shall vest when both
a restructuring event has occurred and the consultant shall have (i) remained continuously engaged under this agreement through the date
on which the restructuring event condition is satisfied, or (ii) completed the initial twelve (12) month term of service prior to the
restructuring event. If a minimum of six months of service has been performed, and this agreement terminated prior to the restructuring
event, a pro-rata amount of shares shall be considered earned by the consultant. If either condition is not satisfied, then the stock-based
rights shall be forfeited in their entirety without consideration, and the Company shall have no obligation to issue any shares. Compensation expense totaling $
In the event the trading price of the Company’s common stock increases following the effective date, no reduction, clawback, or forfeiture shall apply. All shares issued pursuant to the agreements shall include piggyback registration rights in the Company’s next registration statement on Form S-1 or Form 1-A, subject to customary underwriter limitations, if any.
Shares Issued in Reverse Recapitalization
In connection with the closing of the Kepler reverse recapitalization on February 27, 2026, the Company is obligated to issue additional common stock to Kepler's former shareholders pursuant to the Share Exchange Agreement. These shares will represent approximately 89.7% of the post-merger outstanding common shares, subject to a restructuring event, and constitute the consideration deemed to have been transferred to the former owners of the legal acquirer (AMFN) under ASC 805-40. See Note 9 for additional information.
NOTE 5 – LITIGATION LIABILITY
On December 12, 2024, the Court of Alaska entered
a judgment against the Company. The total judgment recognized in the year ended December 31, 2024 was $
Interest expense totaled $
The Company is actively pursuing legal remedies to vacate the judgment on the grounds that the underlying asset purchase agreement was never consummated and no assets were delivered. The full amount of the judgment, together with accrued interest, has been recognized as a litigation payable in the accompanying consolidated balance sheet, as the obligation constitutes a determinable legal liability recorded in accordance with ASC 450.
NOTE 6 – CONVERTIBLE NOTES PAYABLE – RELATED PARTY
As of June 30, 2026 and December 31, 2025, convertible notes payable-related party consisted of the following:
| Schedule of notes payable related parties | ||||||||
| Description | June 30, 2026 | December 31, 2025 | ||||||
| Pinnacle Consulting Services – May 2023 Note | $ | $ | ||||||
| Pinnacle Consulting Services – January 2024 Note | ||||||||
| CMB Communications – June 2023 Note | ||||||||
| Pinnacle Consulting Services – January 2025 Note | ||||||||
| CMB Communications – January 2025 Note | ||||||||
| Total | $ | $ | ||||||
Upon the occurrence of an event of default,
the lenders shall have the option to convert all or any portion of the unpaid principal, accrued interest, and any other fees or
charges into shares of the Company’s common stock at a fixed price of $
During the six months ended June 30, 2026,
Pinnacle Consulting Services, Inc. (“Pinnacle”) converted $
| 13 |
AMERICAN FUSION INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
NOTE 7 – RELATED PARTY TRANSACTIONS
On March 1, 2026, the Company entered into a consulting
agreement with Brent Nelson, CEO of Kepler Fusion Technologies, Inc., a wholly owned subsidiary of the Company. On March 1, 2026, the
Board of Directors appointed Brent Nelson as Executive Chairman of the Board of Directors of the Company. The agreement includes monthly
compensation of $
In addition, Brent Nelson, through Earth Sciences
Fund I LLC (an entity owned by him), holds the Special 2020 Series A Preferred Share, which carries super-voting rights sufficient to
control stockholder matters, as transferred on February 27, 2026. This share does not represent common stock ownership but provides majority
voting power. An immediate family member of Mr. Nelson has been paid $
Compensation earned by the Company’s
CEO prior to 2026 has been accrued and recorded as a liability pursuant to promissory notes issued CMB Communications, LLC
(“CMB”) to an affiliated consulting entity controlled by the CEO. Compensation expense under the notes totaled $
On March 1, 2026, the Company entered into a consulting
agreement with its CEO. The agreement includes monthly compensation of $
As part of the reverse recapitalization (Note
9), an entity controlled by the CEO sold the one share of AMFN Special 2020 Series A Preferred Stock (the “Control Share”)
for $
In conjunction with the terms of the Master
Sales Agreement, the Company entered into a separate consulting agreement with RH2 Equity Partners, LP (“RH2”). RH2 is
an entity controlled by the Company’s CEO and the principal of Pinnacle. The terms of the agreement provide (i) a one-time
cash fee of twenty thousand dollars ($20,000) upon execution , (ii) to allow CMB and Pinnacle to retain certain outstanding notes in
the aggregate principal amount of approximately $500,000 subject to the Settlement and Exchange Agreements being executed
contemporaneously with the Master Sales Agreement, and (iii) to issue to RH2 one million (
Under the Settlement and Exchange Agreements described above, the Company agreed to issue (i) 450,000 authorized, validly issued, fully paid and non-assessable shares of the Company’s common stock to CMB Communications LLC in exchange for the conversion of $4,500 of indebtedness at a fixed conversion price of $0.01 per share, and (ii) 550,000 authorized, validly issued, fully paid and non-assessable shares of the Company’s common stock to Pinnacle Consulting Services, Inc. in exchange for the conversion of $5,500 of indebtedness at a fixed conversion price of $0.01 per share. The aggregate issuance of 1,000,000 common shares (“Settlement Shares”) is fixed and shall not be adjusted, increased, or decreased as a result of any reverse stock split, recapitalization, or similar corporate action. Within five (5) business days following the effectiveness of a reverse stock split, each applicable holder is required to deliver to the Company’s transfer agent a completed notice of conversion irrevocably electing to convert the applicable indebtedness into shares of Company common stock. Failure to timely deliver such notice constitutes a breach of the applicable Settlement and Exchange Agreement. Upon issuance of the applicable Settlement Shares, only the portion of the indebtedness converted under the applicable agreement shall be deemed fully satisfied, extinguished, cancelled, released and discharged. All remaining conversion shares associated with the broader debt conversion transaction are issuable by the Company, at its direction, to Earth Sciences Fund I, LLC, CMB Communications LLC, Pinnacle Consulting Services, Inc., and/or such other persons or entities as the Company or Earth Sciences Fund I, LLC may designate in writing pursuant to the transaction.
During the six months ended June 30, 2026, the
Company issued prepaid warrants to Pinnacle Consulting Services Inc. aggregating $
In 2025, the Company entered into an advisory agreement with Pinnacle, whereby compensation totaling $
Beginning in April 2026, the
Beginning in June 2026, the Company initiated
monthly payments of $
| 14 |
AMERICAN FUSION INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
NOTE 8- WARRANTS
In May 2026, the Company entered in Securities
Purchase Agreements with third party investors for the sale of equity units (“Units”). Each unit consists of one share of
restricted common stock, $
The warrant contains customary proportional anti-dilution adjustments for stock splits, stock dividends, combinations, and reorganizations, together with a 4.99% beneficial ownership blocker. See Note 4.
The warrants qualify for equity accounting as they do not fall within the scope of ASC Topic 480, Distinguishing Liabilities from Equity Both the common stock and the warrant meet the requirements of freestanding equity instruments within the scope of ASC Topic 505, Equity. The warrants were measured at their relative fair value at the time of issuance and classified as equity.
The Company valued the warrant using the Black-Scholes valuation model. The following table summarizes the assumptions used in the valuation model to determine the fair value of the warrant:
| Schedule of warrants assumptions | ||||
| Fair Value of Common Share | $ | |||
| Exercise Price | $ | |||
| Risk Free Rate | % | |||
| Expected Life (Yrs.) | ||||
| Volatility | % | |||
NOTE 9 – REVERSE RECAPITALIZATION
Overview of Transaction
On December 16, 2025, the Company entered into a Master Sales Agreement (the “MSA”) among Manufacturing 360, LLC (“Seller”), Earth Sciences Fund I LLC (“ESF” or “Buyer”), RH2 Equity Partners, LP ("Consultant"), and the Company, and a Share Exchange Agreement (the “SEA”) between the Company and Brent Nelson, the sole shareholder of Kepler Fusion Technologies Inc. (“Kepler”). The agreements contemplate a reverse-merger share exchange transaction under which RNWF acquired 100% of the issued and outstanding equity interests of Kepler in exchange for newly issued shares of RNWF common stock.
Closing of the Transaction
The transfer of the Special 2020 Series A Preferred Control Share from Manufacturing 360, LLC to Earth Sciences Fund I LLC occurred on February 27, 2026, at which point all closing conditions under the MSA and SEA were satisfied. Accordingly, the acquisition date under ASC 805 is February 27, 2026.
Accounting Treatment — Reverse Recapitalization
The transaction has been accounted for as a reverse recapitalization in accordance with ASC 805-40. Although AMFN is the legal acquirer, Kepler has been identified as the accounting acquirer for financial reporting purposes. The following factors support this determination: (1) Kepler's former shareholders shall hold approximately 89.7% of the common voting rights in the combined entity; (2) Kepler's designees will control the board of directors; (3) Kepler's management comprises the senior management team of the combined entity; and (4) AMFN was a non-operating public shell with minimal assets at the acquisition date.
Key Terms of Transaction
The MSA provides for: (a) the sale of one share of RNWF Special 2020 Series A Preferred Stock (the “Control Share”) from Manufacturing 360, LLC to ESF for $1,000, which carries 60% voting power; (b) the simultaneous share exchange with Kepler; and (c) a consulting engagement with RH2 Equity Partners, LP. The Share Exchange Agreement contemplated the issuance of 240,000,000 shares of RNWF common stock recorded as common stock issuable as of March 31, 2026 (see Note 4), and the issuance of additional shares to Kepler's former shareholders. RH2 Equity Partners, LP will receive 1,000,000 shares of post-reverse-split common stock vesting quarterly over 36 months for extended advisory services. See Note 7.
| 15 |
AMERICAN FUSION INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
NOTE 10– COMMITMENTS AND CONTINGENCIES
Legal Matters
In the normal course of business, the Company may be subject to various legal proceedings and claims. Other than the litigation payable described in Note 5, management is not aware of any pending or threatened litigation that would have a material adverse effect on the Company's financial position or results of operations.
Lease Commitments
In June 2026, the
Risks and Uncertainties
The Company's operations are subject to significant risks and uncertainties, including financial, operational, regulatory, and technological risks. The Company is in an early stage of development with limited operating history and may require substantial additional capital to fund its operations and the commercialization of its fusion energy technology.
NOTE 11 – SUBSEQUENT EVENTS
The Company has evaluated events and transactions occurring subsequent to June 30, 2026 and through the date these consolidated financial statements were issued for potential recognition or disclosure in the financial statements. No material subsequent events have been identified that would require recognition or disclosure in the accompanying financial statements, other than as may be disclosed herein.
On July 21, 2026, the Company also entered into
a consulting services contract. As full and complete consideration for the consulting and advisory services to be rendered, the Company
shall issue shares of the Company’s common stock having a fair market value of $
If the Anniversary price is less than the Initial Valuation Price, the Company shall issue to consultant or director, such additional number of shares as are necessary so that the aggregate fair market value of all shares issued calculated using the Anniversary Price, equals the contractual compensation amount. This adjustment shall operate as a hard minimum value backstop and shall apply automatically without the need for further action by the consultant or director.
Vesting on these contracts is contingent upon two vesting conditions as defined. The entirety of the stock-based rights shall vest when both a restructuring event has occurred and the consultant shall have (i) remained continuously engaged under this agreement through the date on which the restructuring event condition is satisfied, or (ii) completed the initial twelve (12) month term of service prior to the restructuring event.
| 16 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with the audited financial statements and related notes included in our Registration Statement on Form 10 filed with the Securities and Exchange Commission on March 12, 2026.
Overview
We are a development-stage advanced energy company focused on the development and commercialization of the Texatron™, a compact pulsed toroidal fusion reactor designed to provide clean, scalable baseload electricity. We operate under a Power-as-a-Service business model, intending to own and operate Texatron™ units and sell electricity under long-term contracts.
The Company completed its reverse recapitalization with Kepler Fusion Technologies Inc. on February 27, 2026. As a result of the transaction, Kepler Fusion became our wholly owned subsidiary, and we have fully integrated its assets, technology, and operations. While the Company generated limited revenue during the quarter, we remain in the early stages of commercialization. Our activities during the six months ended June 30, 2026 continued to focus on research and development, prototype testing (including advancement of the Version 9 prototype in Midland, Texas), intellectual property expansion, and preparation for commercial deployment.
Recent Development
On July 17, 2026, subsequent to the end of the fiscal quarter, the Company received Certificate of Registration No. R54726 from the Texas Department of State Health Services (“DSHS”), authorizing the Company to receive, possess, acquire, transfer and use registered industrial radiation machines for research and development activities at its authorized testing location in Lubbock, Texas, subject to the terms and conditions of the registration and applicable Texas radiation control regulations. The registration designates Dr. John E. Brandenburg as the Company’s Radiation Safety Officer, remains effective through February 28, 2034, and covers twelve registered Texatron™ Fusion Engine™ research model classes ranging from 500 kW through 1 GW.
The Company believes receipt of the registration represents a significant operational milestone supporting the continued engineering, prototype testing, technical validation and research activities associated with its Texatron™ Fusion Engine™ development program. The registration authorizes research and development activities only and does not constitute certification of the Company’s technology or commercial performance. Following receipt of the registration, the Company commenced preparations for research testing activities at its authorized testing location.
Results of Operations
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
The following table sets forth the unaudited results of our operations for the three months ended June 30:
| 2026 | 2025 | |||||||
| Revenue | $ | 58,000 | $ | — | ||||
| Cost of revenue | 50,000 | — | ||||||
| Gross margin | 8,000 | — | ||||||
| Operating expenses | 1,253,180 | — | ||||||
| Loss from operations | (1,245,180 | ) | — | |||||
| Other expense | (30,028 | ) | (55,319 | ) | ||||
| Net loss | $ | (1,275,208 | ) | $ | (55,319 | ) | ||
| 17 |
Our sales totaled $58,000 for the three months ended June 30,2026 and $0 for the three months ended June 30, 2025. The increase is primarily related to a sale to a new customer. The cost related to this sale totaled $50,000, resulting in a gross margin of $8,000. Our cost of sales consists of the cost of materials and distribution expenses.
The following table sets forth the operating expenses for the three months ended June 30:
| 2026 | 2025 | Change | ||||||||||
| Consulting fees | $ | 543,232 | $ | — | $ | 543,232 | ||||||
| Professional fees | 217,268 | — | 217,268 | |||||||||
| Corporate communications and marketing | 226,089 | — | 226,089 | |||||||||
| Research and development | 131,342 | — | 131,342 | |||||||||
| Other operating expenses | 135,249 | — | 135,249 | |||||||||
| $ | 1,253,180 | $ | — | $ | 1,253,180 | |||||||
The following table sets forth the stock-based compensation
expense included in the above operating expenses for the three months ended June 30:
| 2026 | 2025 | Change | ||||||||||
| Consulting fees | $ | 369,233 | $ | — | $ | 369,233 | ||||||
| Professional fees | 99,096 | — | 99,096 | |||||||||
| Corporate communications and marketing | 78,800 | — | 78,800 | |||||||||
| Research and development | 95,342 | — | 95,342 | |||||||||
| $ | 642,471 | — | $ | 642,471 | ||||||||
Consulting fees totaling $543,232, consist of advisory services agreements entered into for key management positions and which are primarily stock compensation based. Professional fees totaling $217,268 are comprised primarily of legal and accounting fees reflecting costs associated with the reverse recapitalization and additional public company filings. Corporate communications and marketing costs reflect increased activity related to investor relations, product awareness and trade shows. The increase in research and development costs relates to acceleration of engineering efforts towards development of the Company’s prototypes. Included in other operating expenses totaling $135,249, are public company expenses totaling $47,488, travel and entertainment expenses totaling $53,525 and costs related to various outside service providers.
| 18 |
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
The following table sets forth the unaudited results of our operations for the six months ended June 30:
| 2026 | 2025 | |||||||
| Revenue | $ | 58,000 | $ | — | ||||
| Cost of revenue | 50,000 | — | ||||||
| Gross margin | 8,000 | — | ||||||
| Operating expenses | 1,885,763 | 100,000 | ||||||
| Loss from operations | (1,877,763 | ) | (100,000 | ) | ||||
| Other expense | (67,195 | ) | (55,319 | ) | ||||
| Net loss | $ | (1,944,958 | ) | $ | (155,319 | ) | ||
Our sales totaled $58,000 for the six months ended June 30, 2026 and $0 for the six months ended June 30, 2025. The increase is primarily related to a sale to a new customer. The cost related to this sale totaled $50,000, resulting in a gross margin of $8,000. Our cost of sales consists of the cost of materials and distribution expenses.
The following table sets forth the operating expenses for the six months ended June 30:
| 2026 | 2025 | Change | ||||||||||
| Consulting fees | $ | 573,233 | $ | 100,000 | $ | 473,233 | ||||||
| Professional fees | 423,938 | — | 423,938 | |||||||||
| Corporate communications and marketing | 598,748 | — | 598,748 | |||||||||
| Research and development | 131,342 | — | 131,342 | |||||||||
| Other operating expenses | 158,502 | — | 158,502 | |||||||||
| $ | 1,885,763 | $ | 100,000 | $ | 1,785,763 | |||||||
The following table sets forth the stock-based compensation expense included in the above operating expenses for the six months ended June 30:
| 2026 | 2025 | Change | ||||||||||
| Consulting fees | $ | 369,233 | $ | — | $ | 369,233 | ||||||
| Professional fees | 170,150 | — | 170,150 | |||||||||
| Corporate communications and marketing | 246,800 | — | 246,800 | |||||||||
| Research and development | 95,342 | — | 95,342 | |||||||||
| $ | 881,526 | $ | — | $ | 881,526 | |||||||
Consulting fees totaling $573,233 consist of advisory services agreements entered into for key management positions and which are primarily stock compensation based. Professional fees totaling $423,938 are comprised primarily of legal and accounting fees reflecting costs associated with the reverse recapitalization and additional public Company filings. Professional fees in the 2026 period include $170,150 related to stock-based compensation agreements with legal counsel. Corporate communications and marketing costs reflect increased activity related to investor relations, product awareness and trade shows. Corporate communications and marketing costs in the 2026 period include $246,800 related to stock-based compensation agreements with various third-party providers. The increase in research and development costs relates to acceleration of engineering efforts towards development of the Company’s prototype. Included in other operating expenses totaling $158,502 are public company expenses totaling $51,844, travel and entertainment expenses totaling $63,786 and costs related to various outside service providers.
| 19 |
Liquidity and Capital Resources
During the six months ended June 30, 2026 our cash and cash equivalents increased by $76,816 reflecting cash used in operating activities of $1,042,712 and cash used in investing activities of $48,472, offset by cash provided from financing activities of $1,168,000. At June 30, 2026, the Company had a working capital deficit of $1,708,451 and cash on hand of $79,341. During the six months ended June 30, 2025 there was no change in our cash and cash equivalents due to minimal operational and financing activity.
Operating Activities
Cash flows used in operating activities totaled $1,042,712 for the six months ended June 30, 2026 as compared to cash flows used of $0 or the six months ended June 30, 2025. Cash flows used in operating activities primarily reflect the net loss of $1,944,958 partially offset by stock-based compensation of $881,526.
Investing Activities
Cash flows used in investing activities of $48,472 reflect costs associated with the filing of new patents and website development. There were no investing activities in the 2025 period.
Financing Activities
Cash flows provided by financing activities increased as a result of prepaid warrant funding totaling $943,000 and the sale of equity units totaling $225,000. In May 2026, the Company entered in Securities Purchase Agreements with third party investors for the sale of equity units (“Units”). Each unit consists of one share of restricted common stock, $0.001 par value, and one warrant to purchase one share of common stock at an exercise price of $0.50 per share. There were no financing activities in the 2025 period. Historically, we have funded our operations through equity issuances and related-party loans. We continue to incur significant losses and negative cash flows from operations.
We expect to require substantial additional capital to fund our research and development activities, prototype testing, intellectual property filings, and preparation for commercial deployment. Management is actively pursuing financing opportunities, including the previously announced $50 million capital raise.
| 20 |
Going Concern
The Company’s consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As of June 30, 2026, the Company has an accumulated deficit of approximately $10.9 million and has incurred recurring losses from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management believes that the completion of the Kepler business merger and planned capital-raising activities will provide the resources necessary to fund ongoing operations; however, no assurance can be given that these plans will be successful.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates from those disclosed in our Registration Statement on Form 10.
Forward-Looking Statements
The discussion in this Item 2 contains forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this Quarterly Report for important information regarding such statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item.
We do not currently have any material exposure to market risk, including interest rate risk, foreign currency exchange rate risk, commodity price risk, or equity price risk. As we advance our research and development activities and begin to generate revenue or hold financial instruments in the future, we may become subject to such risks.
| 21 |
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer (who serves as our principal executive officer and principal financial officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2026. Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports 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 and that such information is accumulated and communicated to our management, including our principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2026, our disclosure controls and procedures were effective at the reasonable assurance level.
Management’s Report on Internal Control over Financial Reporting
This Quarterly Report on Form 10-Q does not include a report of management’s assessment of the effectiveness of our internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies. As a non-accelerated filer and smaller reporting company, we are not currently required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.
Changes in Internal Control over Financial Reporting
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 quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 22 |
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no material changes to the legal proceedings previously disclosed in Item 3 of our Registration Statement on Form 10 filed with the Securities and Exchange Commission on March 12, 2026 except for that disclosed below
In April, 2026, the Company obtained an amended default judgment in the Superior Court of Washington, King County, rescinding certain legacy asset purchase agreements and declaring void ab initio the prior issuance of an aggregate 1,683,000,000 shares of the Company’s common stock. Pursuant to the order, the Company’s transfer agent was authorized and directed to cancel such shares and correct the Company’s stock ledger accordingly.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in our Registration Statement on Form 10 filed with the Securities
and Exchange Commission on March 12, 2026.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the Company’s second quarter, no director
or officer
On July 17, 2026, following the end of the fiscal quarter, the Company received Certificate of Registration No. R54726 from the Texas Department of State Health Services authorizing the Company’s registered industrial radiation machines for research and development activities at its authorized testing location in Lubbock, Texas, subject to the terms and conditions of the registration and applicable Texas radiation control regulations. The registration covers twelve registered Texatron™ Fusion Engine™ research model classes, designates the Company’s Radiation Safety Officer, and remains effective through February 28, 2034.
Management believes receipt of the registration represents a significant operational milestone in the continued development and testing of the Company’s Texatron™ Fusion Engine™ platform. The registration authorizes research and development activities only and should not be interpreted as certification of the Company’s technology or commercial performance.
| 23 |
Item 6. Exhibits
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(Note: In accordance with Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 are deemed not filed for purposes of Sections 11 or 12 of the Securities Act, are deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise are not subject to liability under those sections.)
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| 24 |
SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AMERICAN FUSION, INC. | ||
| Date: August 11, 2026 | By: | /s/ Richard Hawkins |
| Richard Hawkins | ||
| Chief Executive Officer | ||
| (Principal Executive Officer and Principal Financial Officer) | ||
| 25 |
Exhibit 31.1
Certification Pursuant to Rule 13a-14(a)
I, Richard Hawkins, hereby certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of American Fusion, Inc. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s second fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 11, 2026 | /s/ Richard Hawkins |
| Richard Hawkins | |
| Chief Executive Officer |
Exhibit 31.2
Certification Pursuant to Rule 13a-14(a)
I, Richard Hawkins, hereby certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of American Fusion, Inc. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s second fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 11, 2026 | /s/ Richard Hawkins |
| Richard Hawkins | |
| Chief Financial Officer |
Exhibit 32.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of American Fusion, Inc., a Texas corporation (the “Company”) for the quarterly period ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard Hawkins, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.
| Date: August 11, 2026 | /s/ Richard Hawkins |
| Richard Hawkins | |
| Chief Executive Officer |
This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Securities Exchange Act.
Exhibit 32.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of American Fusion, Inc., a Texas corporation (the “Company”) for the quarterly period ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard Hawkins, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.
| Date: August 11, 2026 | /s/ Richard Hawkins |
| Richard Hawkins | |
| Chief Financial Officer |
This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Securities Exchange Act.