DEEP FISSION, INC.

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes and other financial information included in this Quarterly Report. Certain statements contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are forward-looking statements that involve risks and uncertainties as described under the heading “Cautionary Note on Forward-Looking Statements” and Part I, Item 1A, “Risk Factors” in the Annual Report. The forward-looking statements are not historical facts, but rather are based on management’s current expectations, estimates, forecasts, projections, beliefs and assumptions and on information available to us as of the date of this Quarterly Report about our industry and business. Our actual results could differ materially from the results contemplated by these forward-looking statements.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations together with our interim unaudited condensed consolidated financial statements and the related notes and other financial information included in this Quarterly Report. Certain statements contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are forward-looking statements that involve risks and uncertainties as described under the heading “Cautionary Note on Forward-Looking Statements” and Part I, Item 1A, “Risk Factors” in the Annual Report on Form 10-K. The forward-looking statements are not historical facts, but rather are based on management’s current expectations, estimates, forecasts, projections, beliefs and assumptions and on information available to us as of the date of this Quarterly Report about our industry and business. Our actual results could differ materially from the results contemplated by these forward-looking statements.

Previous wording

Each Gravity Reactor is targeted to produce up to 15 megawatts of electric power output (“MWe”). Individual reactors may be deployed as standalone installations or grouped in clusters of boreholes at a single site, which may enable longer refueling cycles through coordinated fuel management, staggered refueling schedules and more efficient utilization of shared infrastructure, and support larger installations capable of supplying hundreds and potentially thousands of MWe of generation capacity.

Current wording

Each 3x3 Gravity Reactor is targeted to produce up to 15 megawatts of electric power output (“MWe”). Individual reactors may be deployed as standalone installations or grouped in clusters of boreholes at a single site, which may enable longer refueling cycles through coordinated fuel management, staggered refueling schedules and more efficient utilization of shared infrastructure, and support larger installations capable of supplying hundreds and potentially thousands of MWe of generation capacity.

Previous wording

The Company’s commercialization strategy is based on a phased deployment plan designed to move toward commercialization in the next three years. Given that reactor criticality using established PWR technology is well understood, the Company is prioritizing validation of the hardest and most differentiated parts of our system, to reduce risk earlier and move more directly toward a commercialization outcome. Specifically, the tests that we want to focus on are drilling to depth at commercial scale, installing and integrating a nuclear system a mile underground, and operating as part of a complete energy ecosystem. We also want to prove that we can do this in time to meet the AI-driven surge in demand for energy. The Company is currently participating in the DOE Reactor Pilot Program, and we expect to demonstrate our system as part of the DOE Reactor Pilot Program.

Current wording

Our commercialization strategy is based on a phased deployment plan designed to move toward commercialization in the next three years. Given that reactor criticality using established PWR technology is well understood, we are prioritizing validation of the hardest and most differentiated parts of our system, to reduce risk earlier and move more directly toward a commercialization outcome. Our key demonstration objectives include drilling to depth at commercial scale, installing and integrating a nuclear system a mile underground, and operating as part of a complete energy ecosystem. Critically, we aim to prove that each of these milestones can be achieved on a timeline sufficient to meet the AI-driven surge in demand for energy. We are currently participating in the U.S. Department of Energy (“DOE”) Reactor Pilot Program and expect to demonstrate our system as part of that program.

Previous wording

The first phase of the Company’s phased deployment plan involves engineering validation and proof of concept wells. The Company has a long-term lease for approximately 100 acres located within the Kansas Site and has commenced initial field development activities at the site. As part of this, the Company already drilled its first data acquisition well to gather real-world data up to 6,000 feet deep. Next, the Company will demonstrate its ability to drill a commercial-scale borehole and safely deploy a prototype reactor. The Company continues to advance its reactor design in parallel with these activities, including planning additional drilling activities and conducting related engineering and emplacement work, and is targeting completion of these activities in the coming months. The balance of this year and into early 2027 will be focused on delivery of key components for full-system installation, including well casing, our reactor canister, and heat exchanger, as well as LEU fabrication and loading.

Current wording

The first phase of our phased deployment plan involves engineering validation and proof of concept wells. We have a long-term lease for approximately 100 acres located within the Great Plains Industrial Park in Parsons, Kansas (the “Kansas Site”) and have commenced initial field development activities at the site. As part of this phase, we have completed our data acquisition well to gather real-world data up to 6,000 feet deep. We are currently advancing our second, near full-scale proof-of-concept well, which is intended to further validate our drilling and emplacement approach. We continue to advance our reactor design in parallel with these activities, including planning additional drilling activities and conducting related engineering and safety analysis, and we are targeting completion of these activities by the end of the year. The balance of this year and into 2027 will be focused on the delivery of key components for full-system installation, including well casing, our reactor canister, and heat exchanger, as well as design completion.

Previous wording

The second phase of the Company’s phased deployment plan involves DOE authorization and one or more commercial pilot wells. Specifically, subject to DOE authorization, the Company intends to demonstrate the Gravity Reactor, and to apply for a commercial license with the NRC in the first half of 2027, converting the same pilot reactor to commercial operation. We are working closely with both the DOE and the NRC to align demonstration and licensing, as we are aiming to move these efforts forward together rather than advancing them in sequence.

Current wording

The second phase of our phased deployment plan involves DOE authorization and one or more commercial pilot wells. Subsequent to quarter end, the DOE conditionally approved our Nuclear Safety Design Agreement for the Gravity Reactor, allowing us to advance to the next phase of the DOE review process, including submission of a Preliminary Documented Safety Analysis. Subject to further DOE authorization, we intend to demonstrate the Gravity Reactor, and apply for a commercial license with the U.S. Nuclear Regulatory Commission (“NRC”) in 2027, converting the same pilot reactor to commercial operation. We are working closely with both the DOE and the NRC to align demonstration and licensing, as we are aiming to move these efforts forward together rather than advancing them in sequence.

Previous wording

The third and final phase of the Company’s phased deployment plan involves the construction of surface facilities and seeking high-volume commercial licensing for deployment of multiple reactors at a single site through clustered boreholes, and subsequently, at multiple sites. We are targeting as early as 2027 to seek such high-volume commercial licensing with the NRC.

Current wording

The third and final phase of our phased deployment plan involves the construction of surface facilities and seeking high-volume commercial licensing for deployment of multiple reactors at a single site through clustered boreholes, and subsequently, at multiple sites. We are targeting as early as 2027 to seek such high-volume commercial licensing with the NRC, and anticipate at least a one-year lag between the start of construction and revenue recognition.

Previous wording

The Company’s approach to subsurface reactor deployment is supported by its intellectual property portfolio, which includes issued patents and pending patent applications relating to reactor configuration, deep subsurface emplacement, drilling and casing techniques, thermal-hydraulic performance, instrumentation and monitoring, and other technologies supporting the deployment of underground nuclear reactors. The Company believes that its intellectual property, together with its engineering expertise and ongoing development activities, supports its competitive position.

Current wording

Our approach to subsurface reactor deployment is supported by our intellectual property portfolio, which includes issued patents and pending patent applications relating to reactor configuration, deep subsurface emplacement, drilling and casing techniques, thermal-hydraulic performance, instrumentation and monitoring, and other technologies supporting the deployment of underground nuclear reactors. We believe that our intellectual property, together with our engineering expertise and ongoing development activities, supports our competitive position.

Previous wording

Legacy Deep Fission was incorporated in July 2023 and remains in the development stage. The Gravity Reactor remains in conceptual and early engineering stages, and the Company has not constructed or operated a commercial reactor or generated revenue. Current activities include reactor development, geological evaluation, large-diameter borehole drilling research and development, geothermal testing, safety analysis, regulatory engagement, site development, and commercialization planning.

Current wording

Legacy Deep Fission was incorporated in July 2023 and remains in the development stage. The Gravity Reactor remains in conceptual and early engineering stages, and we have not constructed or operated a commercial reactor or generated revenue. Current activities include reactor development, geological evaluation, large-diameter borehole drilling research and development, geothermal testing, safety analysis, regulatory engagement, site development, and commercialization planning.

Previous wording

On February 5, 2026, the Company issued and sold 5,333,333 shares of common stock at a purchase price of $15.00 per share, to certain accredited and institutional investors pursuant to the subscription agreement for an aggregate purchase price of $80 million. The Company incurred offering costs of $4,850,668 in connection with this offering, which are recorded as a reduction of gross proceeds and recognized as a reduction to additional paid-in capital within stockholders’ equity.

Current wording

On February 5, 2026, the Company issued and sold 5,333,333 shares of common stock at a purchase price of $15.00 per share, to certain accredited and institutional investors pursuant to the subscription agreement for an aggregate purchase price of $80.0 million (the “February 2026 Private Placement”). The Company incurred offering costs of $4.9 million in connection with this offering, which are recorded as a reduction of gross proceeds and recognized as a reduction to additional paid-in capital within stockholders’ equity.

Previous wording

Concurrently with this offering, the Company also issued warrants to purchase an aggregate 129,418 shares of its common stock, subject to customary anti-dilution adjustments for stock splits, stock dividends, and similar events, at an exercise price of $15.00 per share (the “February 2026 Warrants”). The February 2026 Warrants expire on the earlier of (i) five years after the Merger closing after the Merger Closing Date and (ii) three years after the Company’s shares of common stock are listed on a national securities exchange (as defined in the February 2026 Warrants agreement).

Current wording

Concurrently with this offering, the Company also issued warrants to purchase an aggregate 129,418 shares of its common stock, subject to customary anti-dilution adjustments for stock splits, stock dividends, and similar events, at an exercise price of $15.00 per share (the “February 2026 Warrants”). The February 2026 Warrants expire on the earlier of (i) five years after the Merger closingand (ii) three years after the Company’s shares of common stock are listed on a national securities exchange (as defined in the February 2026 Warrants agreement).

Previous wording

The unaudited condensed consolidated financial statements and related footnotes included in this Quarterly Report include descriptions of Legacy Deep Fission’s previously outstanding common stock; however, in connection with the Merger, all shares of Legacy Deep Fission common stock were converted into the right to receive shares of our common stock. See “The Merger” and “The September 2025 Private Placement” above for detailed information regarding the transactions and the related conversion of the shares of Legacy Deep Fission’s common stock.

Current wording

The interim unaudited condensed consolidated financial statements and related footnotes included in this Quarterly Report include descriptions of Legacy Deep Fission’s previously outstanding common stock; however, in connection with the Merger, all shares of Legacy Deep Fission common stock were converted into the right to receive shares of our common stock. See “The Merger” and “The September 2025 Private Placement” above for detailed information regarding the Transactions and the related conversion of the shares of Legacy Deep Fission’s common stock.

Previous wording

considered our historical financial results under applicable accounting principles. Accordingly, the unaudited condensed consolidated financial statements included in this Quarterly Report and discussed in this section, for all periods prior to the Merger, are those of Legacy Deep Fission and not Surfside.

Current wording

For financial reporting purposes, the Merger was treated as a recapitalization and reverse acquisition. Legacy Deep Fission is considered the acquirer for accounting purposes, meaning that the historical financial results of Legacy Deep Fission prior to the Merger are considered our historical financial results under applicable accounting principles. Accordingly, the interim unaudited condensed consolidated financial statements included in this Quarterly Report and discussed in this section, for all periods prior to the Merger, are those of Legacy Deep Fission and not Surfside.

Previous wording

General and administrative expenses increased by $12.9 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase in general and administrative expenses was primarily attributable to a $10.4 million increase in non-cash stock-based compensation expense, as well as increased legal costs, salary and benefit costs due to an increase in the number of employees year over year, and marketing costs.

Current wording

General and administrative expenses increased by $12.1 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase in general and administrative expenses was primarily attributable to a $5.8 million increase in non-cash stock-based compensation expense, as well as increased legal and compliance costs, marketing costs, and salary and benefit costs due to an increase in the number of employees year over year.

Previous wording

Research and development expenses increased by $7.2 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase was primarily attributable to the advancement of the Company’s operating plans and progression of first phase of the Company’s phased deployment plan, as well as higher salary, non-cash stock-based compensation expense, and benefit costs associated with increased headcount, and increased consulting fees supporting research and development activities.

Current wording

Research and development expenses increased by $17.4 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was primarily attributable to the advancement of the Company’s operating plans and progression of first phase of the Company’s phased deployment plan, as well as higher salary, non-cash stock-based compensation expense, and benefit costs associated with increased headcount, and increased consulting fees supporting research and development activities.

Previous wording

Other non-operating income increased by $1.9 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. This increase was primarily driven by the absence of a loss from the change in fair value of SAFE Notes in the current period, as all SAFE Notes were converted into common stock in connection with the Merger prior to March 31, 2026. Interest income for the three months ended March 31, 2026 consisted primarily of interest earned on the February 2026 Private Placement funds.

Current wording

Other non-operating income increased by $2.3 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This increase was primarily driven by the absence of a loss from the change in fair value of SAFE Notes in the current period, as all SAFE Notes were converted into common stock in connection with the Merger prior to June 30, 2026. Interest income for the three months ended June 30, 2026 consisted primarily of interest earned on the February 2026 Private Placement funds.

Previous wording

Since our inception, we have financed our operations primarily through the issuance and sale of our equity securities. Our primary requirements for liquidity and capital are to finance working capital and capital expenditures associated with operating and managing the Company, as well as for general corporate purposes. As of March 31, 2026, our principal source of liquidity was our cash and cash equivalents of $84.8 million. On February 5, 2026, the Company issued and sold 5,333,333 shares of common stock at a purchase price of $15.00 per share, to certain accredited and institutional investors pursuant to the subscription agreements for an aggregate purchase price of $80.0 million. The aggregate net proceeds to the Company from the offering was approximately $75.1 million, after deducting fees to the placement agents and expenses payable by the Company. We anticipate that future sources of liquidity will principally come from sales of common stock and other equity instruments. Since our inception, we have generated significant operating losses as reflected in our accumulated deficit of $88.1 million as of March 31, 2026. We generated a positive cash flow of $61.0 million for the period ended March 31, 2026 due to financing activities.

Current wording

Since our inception, we have financed our operations primarily through the issuance and sale of our equity securities. Our primary requirements for liquidity and capital are to finance working capital and capital expenditures associated with operating and managing the Company, as well as for general corporate purposes. As of June 30, 2026, our principal source of liquidity was our cash and cash equivalents of $93.0 million.

Previous wording

We expect to use our proceeds from the February 2026 Private Placement for general working capital and corporate purposes, including towards the engineering, research and development of our first pilot nuclear reactor and related technologies. A portion of the net proceeds from the February 2026 Private Placement will also be used to cover management, overhead, legal and accounting fees and expenses relating to the Merger and the February 2026 Private Placement and could include potential acquisitions of complementary businesses or assets (though none is currently contemplated). Based on our expectation of continued operating losses for at least the near term, we anticipate our existing cash and cash equivalents, together with net proceeds from the February 2026 Private Placement, will not be sufficient to operate our business for the next twelve months. Accordingly, we determined that there is substantial doubt about our ability to continue as a going concern. In order to continue to operate our business beyond that time, we will need to raise substantial additional capital.

Current wording

We expect to use our proceeds from the 2026 Private Placement and IPO for general working capital and corporate purposes, including towards the engineering, research and development of our first pilot nuclear reactor and related technologies. A portion of the net proceeds from the 2026 Private Placement and IPO will also be used to cover management, overhead, legal and accounting fees and expenses and could include potential acquisitions of complementary businesses or assets (though none is currently contemplated). Based on our expectation of continued operating losses for at least the near term and our current operating plan, we anticipate our existing cash and cash equivalents, together with net proceeds from the 2026 Private Placement and IPO, will not be sufficient to fund our operations for the next twelve months, absent additional financing or material changes to our operating plan. Accordingly, we determined that there is substantial doubt about our ability to continue as a going concern for the twelve-month period following the issuance of these financial statements. In order to continue to operate our business beyond that time, we will need to raise substantial additional capital in the near term.

Previous wording

In addition to our cash and cash equivalents currently available to support these activities, we estimate that we will require $200 million of additional capital to complete development of, and license and commercially deploy, our first commercial reactor, but we expect we can complete the development and begin operation of an initial test reactor with approximately half that amount of additional capital. We are actively evaluating potential financing sources, including equity issuances, debt financing, strategic partnerships, and other capital raising transactions. The Company has historically been able to raise capital through equity and equity-linked instruments, such as SAFE Notes and private placement equity issuances, and believes that it has a reasonable basis for its expectation that it will be able to raise additional funds. However, there can be no assurance that such financing will be available on acceptable terms, on a timely basis, or at all. To the extent that we raise additional capital through the issuance of equity or convertible securities, the ownership interests of our existing stockholders will be diluted. Moreover, the terms of such securities or any other financing may include preferences or other rights that adversely affect the value of, or rights of holders of, our common stock. Debt financing, if available, could result in additional debt service obligations, and debt financings or other financings may involve covenants that restrict our operations or financial flexibility. However, our management team will have broad discretion in making strategic decisions to execute our growth plans, and there can be no assurance that management’s decisions will result in successful achievement of our business objectives. In addition, our estimate as to the sufficiency of our current cash, cash equivalents and short-term investments and our current

Current wording

In addition to our cash and cash equivalents currently available to support these activities, we estimate that we will require substantial additional capital to complete development of, and license and commercially deploy, our first commercial reactor. We are actively evaluating potential financing sources, including equity issuances, debt financing, strategic partnerships, and other capital raising transactions. The Company has historically been able to raise capital through equity and equity-linked instruments, such as SAFE Notes and private placement equity issuances, and believes that it has a reasonable basis for its expectation that it will be able to raise additional funds. However, there can be no assurance that such financing will be available on acceptable terms, on a timely basis, or at all. To the extent that we raise additional capital through the issuance of equity or convertible securities, the ownership interests of our existing stockholders will be diluted. Moreover, the terms of such securities or any other financing may include preferences or other rights that adversely affect the value of, or rights of holders of, our common stock. Debt financing, if available, could result in additional debt service obligations, and debt financings or other financings may involve covenants that restrict our operations or financial flexibility. However, our management team will have broad discretion in making strategic decisions to execute our growth plans, and there can be no assurance that management’s decisions will result in successful achievement of our business objectives. In addition, our estimate as to the sufficiency of our current cash, cash equivalents and short-term investments and our current operating plan as discussed above are based on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we currently anticipate.

Previous wording

As of March 31, 2026, our cash and cash equivalents were $84.8 million. The following table shows a summary of our cash flows for the periods presented:

Current wording

As of June 30, 2026, our cash and cash equivalents were $93.0 million. The following table shows a summary of our cash flows for the periods presented:

Previous wording

Net cash used in operating activities increased by $12.4 million, to $14.0 million for the three months ended March 31, 2026, compared to the net cash used in operating activities of $1.6 million for the months ended March 31, 2025. The increase in net cash used in operating activities was primarily attributable to increased net losses, changes in working capital, including prepaids and accounts payable, and other current liabilities.

Current wording

Net cash used in operating activities increased by $38.8 million, to $42.5 million for the six months ended June 30, 2026, compared to the net cash used in operating activities of $3.6 million for the six months ended June 30, 2025. The increase in net cash used in operating activities was primarily attributable to increased net losses, changes in working capital, including prepaids and accounts payable, and other current liabilities.

Previous wording

Net cash used in investing activities increased by $38.3 thousand, to $53.4 thousand for the months ended March 31, 2026, compared to the net cash used in investing activities of $15.2 thousand for the three months ended March 31, 2025. The increase was driven by additions by the Company to property and equipment.

Current wording

Net cash used in investing activities increased by $49.0 thousand, to $78.0 thousand for the six months ended June 30, 2026, compared to the net cash used in investing activities of $29.0 thousand for the six months ended June 30, 2025. The increase was immaterial and driven by additions to property and equipment.

Previous wording

Net cash provided by financing activities increased by $74.3 million, to $75.1 million for the three months ended March 31, 2026, compared to the net cash provided by financing activities of $860.8 thousand for the three months ended March 31, 2025. The increase in net cash provided by financing activities was primarily attributable to proceeds from the February 2026 Private Placement.

Current wording

Net cash provided by financing activities increased by $110.1 million, to $111.8 million for the six months ended June 30, 2026, compared to the net cash provided by financing activities of $1.7 million for the six months ended June 30, 2025. The increase in net cash provided by financing activities was primarily attributable to proceeds from the 2026 Private Placement and the IPO, net of offering and underwriting costs.

Previous wording

During the three months ended March 31, 2026, the Company entered into an uncancelable commitment with a supplier to purchase low-enriched uranium fuel at a cost of approximately $9.2 million.

Current wording

During the six months ended June 30, 2026, the Company entered into a noncancelable commitment with a supplier to purchase low-enriched uranium fuel at a cost of approximately $9.2 million and made the required payment inaccordance with the terms of the agreement.

Previous wording

by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. We believe that the accounting policies described below involve a greater degree of judgment and complexity. Accordingly, these are the estimates we believe are most critical to aid in fully understanding and evaluating our financial condition, results of operations and future performance. We have described our significant accounting policies within Note 2 to our unaudited condensed consolidated financial statements included herein.

Current wording

Our unaudited condensed consolidated financial statements and the related notes thereto included in this Quarterly Report are prepared in accordance with United States generally accepted accounting principles. The preparation of unaudited condensed consolidated financial statements also requires us to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. These estimates are developed based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. We believe that the accounting policies described below involve a greater degree of judgment and complexity. Accordingly, these are the estimates we believe are most critical to aid in fully understanding and evaluating our financial condition, results of operations and future performance. We have described our significant accounting policies within Note 2 to our unaudited condensed consolidated financial statements included herein.

Previous wording

In 2025, the Company issued SAFE Notes in exchange for cash financing. The SAFE Notes converted into our common stock in connection with the Merger in September 2025. The Company accounted for its SAFE Notes as derivatives under the FASB ASC 815,Derivatives and Hedging, and presented them as long-term liabilities in the accompanying consolidated balance sheets. The determination of fair value for the Company’s SAFE Notes required significant judgment and the use of estimates. We have described the valuation of the SAFE Notes in Note 5 to our unaudited condensed consolidated financial statements included in this Quarterly Report.

Current wording

In 2025, the Company issued SAFE Notes in exchange for cash financing. The SAFE Notes converted into our common stock in connection with the Merger in September 2025. The Company accounted for its SAFE Notes as derivatives under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815, “Derivatives and Hedging”, and presented them as long-term liabilities in the accompanying consolidated balance sheets. The determination of fair value for the Company’s SAFE Notes required significant judgment and the use of estimates. We have described the valuation of the SAFE Notes in Note 4 to our unaudited condensed consolidated financial statements included in this Quarterly Report.