Hadron Energy, Inc.

The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read together with our unaudited condensed consolidated financial statements and the related notes thereto as of June 30, 2026 and for the three and six months ended June 30, 2026 and 2025 included in this Quarterly Report on Form 10-Q (“Quarterly Report”) and our audited financial statements and the related notes thereto as of and for the year ended December 31, 2025 included in the Company's prospectus filed with the SEC pursuant to Rule 424(b)(3) on June 25, 2026. Unless the context otherwise requires, references in this section to "the Company", "us", "our", "we" or "HDRN" refer to Hadron Energy, Inc. and references to our “management” or our “management team” refer to our officers and directors.

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to Part II - Item 1A included in this Quarterly Report on Form 10-Q, as well as the Risk Factors section of our final prospectus filed with the SEC on June 25, 2026, and in other documents we may file from time to time with the SEC. Our securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Company Overview

We are a Delaware corporation that was incorporated in May 2024 and completed our business combination with Hadron Energy, Inc. ("Private Hadron") in May 2026, with Private Hadron becoming a wholly-owned subsidiary renamed Hadron Energy Operating Company, Inc. We are a pioneer in Micro Modular Nuclear Reactor (MMR) technology, developing the Hadron Halo, a 10 megawatt-electric (MWe), 35 megawatt-thermal (MWth) pressurized water reactor designed to deliver reliable, carbon-free power. The Hadron Halo's transportable, factory-fabricated design enables deployment in shipping containers and is deployable on a compact footprint, making it suitable for data centers, industrial hubs, remote communities, and defense installations.

Product and Technical Specifications

Designed to be built using proven pressurized water reactor ("PWR") technology used in commercial nuclear plants worldwide, the Hadron Halo features a single integrated pressure vessel containing the reactor core, pumps, and steam generator, minimizing external piping and virtually eliminating large-break coolant accident risk. The reactor will operate continuously with multi-year refueling cycles and has a projected useful life of sixty years. It is fueled by Low-Enriched Uranium (LEU), supported by a domestic fuel supply chain partnership with ConverDyn for uranium conversion services.

Regulatory and Strategic Developments

We have pursued proactive pre-application engagements with the U.S. Nuclear Regulatory Commission ("NRC"). In April 2025, we submitted our Letter of Intent and Regulatory Engagement Plan. The NRC issued a final safety evaluation in May 2026 approving Revision 3 of our Quality Assurance Program Description Topical Report for referencing in future licensing applications under 10 CFR Part 52. We have also submitted our Principal Design Criteria White Paper and received favorable NRC feedback on our proposed regulatory approach in December 2025. We are targeting a Manufacturing License and Combined Operating License submission by 2028, with the goal of achieving licensing in approximately 3-4 years, significantly faster than the historical 8-10 years for large reactors.

Key Partnerships and Strategic Alliances

We have established partnerships with leading technology and infrastructure providers. In March 2026, we entered into a Memorandum of Understanding ("MOU") with Paragon Energy Solutions (a Mirion Technologies company) for collaboration on the

Hadron Halo's Instrumentation and Control architecture. We also selected GSE Performance Solutions as the supplier for a full-scope, high-fidelity training simulator. A Uranium Conversion Services Agreement with ConverDyn, the exclusive marketing agent for the only operating commercial uranium hexafluoride (UF₆) conversion facility in the United States, secured our domestic fuel supply pathway. Additionally, under a non-binding MOU with Smartland Energy, LLC, the parties agreed to collaborate on potential deployment of the Hadron Halo across up to five qualified projects, representing approximately 1.8 gigawatts of aggregate capacity demand by 2035. In connection with this MOU, Smartland made a strategic investment in us.

Capital Markets and Government Relations

In June 2026, we engaged DLA Piper LLP (US) to lead our government affairs and federal policy strategy. The engagement includes a senior, bipartisan team led by Former U.S. Senator Richard Burr (former Chairman of the Senate Select Committee on Intelligence), along with Oliver Wright from DLA Piper's Energy and Natural Resources practice and one of our directors, former U.S. Ambassador to Romania Adrian Zuckerman. In July 2026, we engaged CORE IR, a leading investor relations and capital markets communications firm, to lead shareholder engagement and investor communications strategy as we advance licensing, secure strategic partnerships, and position the Hadron Halo MMR toward commercial deployment.

Intellectual Property

In May 2026, the United States Patent and Trademark Office published our first patent application, "Micro Integral Nuclear Reactor" (Publication No. US 2026/0128185 A1), which was filed on October 31, 2025. The application represents the foundational technical disclosure behind the Hadron Halo and the first entry in our growing intellectual property portfolio. The application names Founder and Chief Executive Officer Samuel Gibson and Chief Nuclear Officer Ross Ridenoure among its inventors.

Market Position and Competitive Advantages

Our modular, factory-built design is intended to enable mass manufacturing with standardized units, reducing costs and deployment times significantly compared to conventional nuclear power plants. This is anticipated to make revenue generation as soon as 12-18 months from groundbreaking, as opposed to the decade-long construction periods for traditional nuclear plants. Our early engagement with regulatory agencies, experienced leadership team (including former NRC regulators and former Chief Nuclear Officers), a customer pipeline spanning data center operators, industrial firms, and government entities, and a secured domestic fuel supply strategy position us advantageously in the advanced nuclear sector. We have received substantial market interest in the Hadron Halo and believe its focus on small, transportable MMRs combined with concurrent engagement with regulators, suppliers, partners, and customers will enable first-mover advantage.

The Business Combination

On September 27, 2025, GigCapital7 entered into a BCA with Private Hadron and Merger Sub. On May 8, 2026, GigCapital7 completed its domestication from the Cayman Islands to Delaware. On May 22, 2026, the merger subsidiary merged with and into Private Hadron, with Private Hadron surviving as a wholly-owned subsidiary of GigCapital7. In connection with the Closing, the combined company was renamed Hadron Energy, Inc.

Pursuant to the BCA, each share of Private Hadron common stock outstanding immediately prior to the Effective Time (including shares issued upon conversion of Private Hadron's outstanding SAFEs) was converted into the right to receive shares of our common stock based on an exchange ratio of 49.99. Outstanding Private Hadron options and restricted stock awards were assumed and converted into equivalent awards of us on the same exchange ratio. All share and per share amounts for periods prior to the Closing have been retroactively adjusted to reflect the exchange ratio.

We received cash proceeds of approximately $22,944 in connection with the Business Combination, after giving effect to proceeds released from the trust account, amounts paid under a forward purchase agreement, redemptions of public shares, and transaction costs incurred by GigCapital7 and Private Hadron. Total transaction costs of $2,484 were recorded as a reduction to additional paid-in capital, of which $275 remained unpaid as of June 30, 2026.

The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, GigCapital7 was treated as the acquired company and Private Hadron was treated as the accounting acquirer for financial reporting purposes, notwithstanding that GigCapital7 is the legal acquirer. Accordingly, the Business Combination was treated as the equivalent of Private Hadron issuing stock for the net assets of GigCapital7, accompanied by a recapitalization. The net assets of GigCapital7 were stated at historical cost, with no goodwill or other intangible assets recorded, and the historical financial statements of Private Hadron became the historical financial statements of us. Operations prior to the Business Combination are those of Private Hadron.

Key Factors Affecting Our Prospects and Future Results

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including competition from carbon-based and other non-carbon-based energy generators, the risk of perceived safety issues and their consequences for our reputation and the other factors discussed under the section titled "Risk Factors"

in Part II - Item 1A included in this Quarterly Report on Form 10-Q, as well in our final prospectus filed with the U.S. SEC on June 25, 2026. We believe that the following factors are key to our success: commencing and expanding commercial launch operations, funding our operations, maintaining and protecting our intellectual property portfolio, obtaining regulatory approvals, and adding operational and financial personnel to support our development efforts and planned future commercialization.

Impact of Macroeconomic Conditions

Our business is subject to various trends, events or uncertainties that are reasonably likely to cause our reported financial information not to be necessarily indicative of future operating results or of future financial condition. The macroeconomic environment both in the United States and globally has the potential to impact our business and financial performance. More specifically, factors such as trade agreements, tariffs, interest rates, inflation, tax law, labor trends, supply chain disruptions, fiscal policy and recession risks could impact the cost to construct and operate our factory, and even impact the future profitability of our operations.

Supply chain vulnerabilities represent a critical area of macro-economic risk for our business. Global disruptions, whether from geopolitical tensions, natural disasters, or public health crises, can severely impact the availability and cost of essential components for energy infrastructure. These disruptions can lead to extended lead times for specialized equipment, shortages of critical materials, and unexpected cost escalations that complicate project planning and execution. Our reliance on supply networks for turbine components, electrical systems, and construction materials creates exposure to these global supply chain risks.

Inflation remains a significant concern, particularly as it affects construction materials, specialized equipment, and labor costs throughout our project development cycle. These inflationary pressures can erode project margins and complicate long-term capital planning efforts. Economic growth and recession cycles directly correlate with energy demand across industrial, commercial, and residential sectors. During economic downturns, we will experience reduced consumption patterns, while periods of growth drive increased energy needs, affecting our revenue projections and expansion strategies.

Demand for energy in the United States is currently being driven by the explosive growth in the data center industry, particularly as artificial intelligence (AI) deployment, cloud computing adoption, digital transformation initiatives accelerate across sectors, and industrialization. Should power demand growth in the market slow, customer demand for our baseload low-carbon power could be negatively impacted.

Key Components of Our Results of Operations

General and administrative ("G&A") expenses consist primarily of personnel-related expenses for executives, human resources, finance and other G&A employees, including salary, professional services costs and facility and overhead costs. We anticipate that our G&A expenses will increase in the future in connection with one-time costs of becoming a public company as well as ongoing costs of operating as a public company, including expanding headcount and increased fees for directors and outside advisors. We expect to incur significant costs to comply with corporate governance, internal controls, and similar requirements applicable to public companies. Additionally, we expect to incur increased costs associated with establishing sales, marketing and commercialization functions prior to any potential future regulatory approvals or commercialization of our technology. G&A also includes adjustments to our estimated liability for an expected legal settlement, including any subsequent reversals of previously accrued amounts.

Research and development ("R&D") expenses consist primarily of internal and external R&D expenses. We focus our R&D activities on technology development and regulatory support for the development of the factory light-water micro modular reactor. Our R&D expenses consist of: employee-related expenses, including salaries, benefits, payroll taxes, travel, for personnel in R&D functions; expenses related to technology development; and facilities, overhead, and other expenses. We expect our R&D expenses to increase in the future as we continue to develop our technology. Our R&D activities are a critical component of achieving commercialization of any of our technology development and realizing our business strategy. We remain focused on using our resources to further develop our existing pipeline.

Stock-based compensation expense is measured using a fair value-based method for all equity-based awards, with the cost of awarded equity instruments recognized over the period during which the award vests. Stock-based compensation expense relates primarily to the vesting and cancellation of restricted shares granted to employees pursuant to the Hadron Energy Equity Incentive Plan (the "Former Plan").

In connection with the Business Combination consummated on May 22, 2026, the Hadron Energy, Inc. Equity Incentive Plan (the "Plan") went into effect. The Plan has an initial share reserve of 10,021,784 shares and includes an evergreen provision under which the share reserve automatically increases on the first day of each calendar year, beginning with the first full calendar year following the Closing, by 5% of the total number of shares outstanding on a fully diluted basis. Following the Closing, new equity-based awards are expected to be granted under the Plan rather than the Former Plan.

Change in fair value of legal settlement liability represents the periodic remeasurement of a previously accrued estimated legal settlement liability that was originally recorded during the year ended December 31, 2025. Changes in the estimated liability, including subsequent reversals of previously accrued amounts, are recognized within operating expenses in the period in which the estimate is revised.

The change in fair value of Simple Agreements for Future Equity ("SAFEs") represents the periodic remeasurement of the fair value related to the SAFEs. We determined that the SAFEs should be accounted for at fair value as a liability under ASC 480, Distinguishing Liabilities from Equity, as they are potentially settled in a variable number of shares based on future valuation, lack substantive equity characteristics, and are potentially redeemable in cash or other assets under certain conditions. Because they are classified as liabilities, the SAFEs are adjusted to fair value at each reporting date, with changes in fair value recorded in the statement of operations. Upon the Closing of the Business Combination on May 22, 2026, all of Private Hadron's outstanding SAFEs converted into shares of our common stock in accordance with their respective terms.

Change in fair value of warrant liabilities represents the periodic remeasurement of the Private Placement Warrants and the Hadron Private Warrants that were originally recorded as part of the Business Combination consummated on May 22, 2026. Changes in the estimated liability are recognized within other income (loss) in the period in which the estimate is revised.

We are subject to U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities and changes in tax laws. Provision for income taxes primarily relates to changes in deferred taxes, fully offset by valuation allowances.

Results of Operations

Comparison of the three months ended June 30, 2026 and the three months ended June 30, 2025

The following table summarizes our results of operations:

G&A expenses were $1,983 for the three months ended June 30, 2026 compared to $373 for the three months ended June 30, 2025, an increase of $1,610 over the corresponding prior-year period due primarily to the expansion of personnel-related costs and third-party advisory services.

R&D expenses were $1,154 for the three months ended June 30, 2026 compared to $24 for the three months ended June 30, 2025. R&D expenses relate to employee-related expenses, including salaries, benefits, payroll taxes, and travel, for personnel in R&D functions; expenses related to technology development; and other expenses. The increase reflects the continued ramp-up of our R&D function, including the addition of personnel performing R&D activities and increased technology development expenditures supporting the design of our pressurized light-water micro modular reactor.

Stock-based compensation expense was $7,900 for the three months ended June 30, 2026 compared to $595 for the three months ended June 30, 2025. The increase of $7,305 was primarily driven by the recognition of expense related to restricted share grants under the Former Plan. Stock-based compensation is measured at the estimated fair value of the shares on the grant date and recognized over the requisite service period.

Depreciation

Depreciation expense was $5 for the three months ended June 30, 2026 compared to $1 for the three months ended June 30, 2025. The increase reflects depreciation of property and equipment, principally furniture, fixtures and computer equipment, that has been placed in service since inception. There were no purchases of property and equipment during the three months ended June 30, 2026.

Change in fair value of SAFEs was a gain of $18,427 for the three months ended June 30, 2026 compared to a loss of $5,769 for the three months ended June 30, 2025, in each case representing the remeasurement of the fair value of the SAFEs at the end of the reporting period.

Change in fair value of legal settlement liability was a gain of $4,911 for the three months ended June 30, 2026 due to the finalization of the actual settlement amount.

Change in fair value of warrant liabilities was a gain of $5,262 for the three months ended June 30, 2026 due to the remeasurement of the warrant liabilities.

Provision for income taxes was $0 for the three months ended June 30, 2026 and $0 for the three months ended June 30, 2025, in each case primarily due to changes in deferred tax balances offset by valuation allowances against our deferred tax assets.

Comparison of the six months ended June 30, 2026 and the six months ended June 30, 2025

The following table summarizes our results of operations:

G&A expenses were $3,546 for the six months ended June 30, 2026 compared to $522 for the six months ended June 30, 2025, an increase of $3,024 over the corresponding prior-year period due primarily to the expansion of personnel-related costs and third-party advisory services.

R&D expenses were $1,597 for the six months ended June 30, 2026 compared to $30 for the six months ended June 30, 2025. R&D expenses relate to employee-related expenses, including salaries, benefits, payroll taxes, and travel, for personnel in R&D functions; expenses related to technology development; and other expenses. The increase reflects the continued ramp-up of our R&D function, including the addition of personnel performing R&D activities and increased technology development expenditures supporting the design of our pressurized light-water micro modular reactor.

Stock-based compensation expense was $10,634 for the six months ended June 30, 2026 compared to $604 for the six months ended June 30, 2025. The increase of $10,030 was primarily driven by the recognition of expense related to restricted share grants under the Former Plan, including the modification and commencement of vesting of new grants of 1,674,966 restricted shares to employees and advisors during the six months ended June 30, 2026. Stock-based compensation is measured at the estimated fair value of the shares on the grant date, equal to $14.05 per share, and recognized over the requisite service period.

Depreciation

Depreciation expense was $6 for the six months ended June 30, 2026 compared to $1 for the six months ended June 30, 2025. The increase reflects depreciation of property and equipment, principally furniture, fixtures and computer equipment, that has been placed in service since inception. There were no purchases of property and equipment during the six months ended June 30, 2026.

Change in fair value of SAFEs was a gain of $31,846 for the six months ended June 30, 2026 compared to a loss of $5,825 for the six months ended June 30, 2025, in each case representing the remeasurement of the fair value of the SAFEs at the end of the reporting period.

Change in fair value of legal settlement liability was a gain of $9,601 for the six months ended June 30, 2026 due to the finalization of the actual settlement amount.

Change in fair value of warrant liabilities was a gain of $5,262 for the six months ended June 30, 2026 due to the remeasurement of the warrant liabilities.

Provision for income taxes was $0 for the six months ended June 30, 2026 and $0 for the six months ended June 30, 2025, in each case primarily due to changes in deferred tax balances offset by valuation allowances against our deferred tax assets.

Liquidity and Capital Resources

Funding Requirements

During the six months ended June 30, 2026, we raised significant capital through the Business Combination with GigCapital7, which was consummated on May 22, 2026 and resulted in proceeds of approximately $22,944 released from the trust account previously held by GigCapital7, after paying all de-SPAC expenses, which has alleviated the substantial doubt about our ability to continue as a going concern. As of June 30, 2026, we have no debt. We believe that our existing cash will be sufficient to support operations for at least one year from the issuance date of these unaudited condensed consolidated financial statements.

Cash Flows

The following is a summary of cash flows for the six months ended June 30, 2026 and 2025:

Net cash used in operating activities

Net cash used in operating activities of $4,382 for the six months ended June 30, 2026 was primarily attributable to a change in fair value of SAFEs of $31,846, a change in fair value of the warrant liabilities of $5,262, and a $9,601 change in fair value of legal settlement liability, partially offset by net income of $30,926, changes in operating assets and liabilities of $680, $10,634 of stock-based compensation, $6 of depreciation and $81 of noncash operating lease expense.

Net cash used in operating activities of $644 for the six months ended June 30, 2025 was primarily attributable to a net loss of $6,982 and changes in operating assets and liabilities of $(92), partially offset by a change in fair value of SAFEs of $5,825, stock-based compensation of $604 and $1 of depreciation.

Net cash used in investing activities

There was no cash used in investing activities during the six months ended June 30, 2026, as we made no purchases of property and equipment during the period.

There was no material cash used in investing activities during the six months ended June 30, 2025.

Net cash provided by financing activities

Net cash provided by financing activities of $24,842 for the six months ended June 30, 2026 was primarily attributable to proceeds from the issuance of SAFEs and net proceeds received from the Business Combination.

Net cash provided by financing activities of $1,227 for the six months ended June 30, 2025 was attributable to proceeds from the issuance of SAFEs.

Contractual Obligations and Commitments

We did not have any material commitments or contractual obligations as of June 30, 2026.

Off-Balance Sheet Arrangements

As of June 30, 2026, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

Critical Accounting Policies

Our financial statements have been prepared in accordance with GAAP. In the preparation of these financial statements, we are required to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported expenses incurred during the reporting periods. There have been no significant changes to our critical accounting policies in the preparation of our condensed consolidated financial statements during the six months ended June 30, 2026 compared to those disclosed in our audited financial statements for the year ended December 31, 2025, included in the prospectus dated as of, and filed with the SEC pursuant to Rule 424(b)(3) on June 25, 2026.

Critical Accounting Estimates

There have been no significant changes to our critical accounting estimates in the preparation of our condensed consolidated financial statements during the six months ended June 30, 2026 compared to those disclosed in our audited financial statements for the year ended December 31, 2025, included in the prospectus dated as of, and filed with the SEC pursuant to Rule 424(b)(3) on June 25, 2026.

Recently Issued and Adopted Accounting Pronouncements

We considered the applicability and impact of all accounting standards updates ("ASUs") issued by the Financial Accounting Standards Board ("FASB"). We reviewed all recently issued accounting pronouncements, and based on our preliminary assessment, we have determined that these will not have a material impact on our unaudited condensed consolidated financial statements or related disclosures, or do not apply to us.

Emerging Growth Company Status

We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act ("JOBS Act"). The JOBS Act provides emerging growth companies with certain exemptions from public company reporting requirements for up to five fiscal years while a company remains an emerging growth company. As part of these exemptions, we have reduced disclosure obligations such as for executive compensation, and it is not required to comply with auditor attestation requirements from Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, regarding its internal control over financial reporting. Additionally, the JOBS Act has allowed the Company the option to delay adoption of new or revised financial accounting standards until private companies are required to comply with new or revised financial accounting standards.

We also qualify as a "smaller reporting company," as such term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended. As a smaller reporting company, we may continue to rely on certain reduced disclosure requirements available to smaller reporting companies.

Quantitative and Qualitative Disclosure About Market Risk

As a "smaller reporting company" as defined by Rule 12b-2 of the Exchange Act, and pursuant to Item 305 of Regulation S-K, we are not required to disclose information under this section.