{"url_path":"/sec/nklr/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 MANAGEMENT’S DISCUSSION AND","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-16","source_url":"https://www.sec.gov/Archives/edgar/data/2067627/0001213900-26-068933-index.html","accession_number":"0001213900-26-068933","cik":"0002067627","ticker":"NKLR","issuer_name":"Terra Innovatum Global N.V.","edgar_url":"https://www.sec.gov/Archives/edgar/data/2067627/0001213900-26-068933-index.html","primary_entity_key":"0002067627","primary_entity_name":"Terra Innovatum Global N.V."},"word_count":7733,"has_tables":true,"body_markdown":"**ITEM 7. MANAGEMENT’S DISCUSSION AND\nANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.**\n\n \n\n*The following discussion\nand analysis provides information that Terra Innovatum Global N.V. management believes is relevant to an assessment and understanding\nof Terra Innovatum Global N.V.’s results of operations and financial condition. This discussion should be read together with Terra\nInnovatum Global N.V’s audited consolidated financial statements as of and for the year ended December 31, 2025 and 2024, and the\nrelated notes included elsewhere in this Form 10-K.*\n\n \n\n*This discussion may contain\nforward-looking statements based upon current expectations that involve risks and uncertainties. Terra Innovatum Global N.V.’s\nactual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including\nthose set forth under “Risk Factors” or in other parts of this Form 10-K.*\n\n \n\n**Presentation of Financial Information** \n\n* *\n\nBeginning with the quarterly\nreport on Form 10-Q for the three and nine months ended September 30, 2025, we have elected to present all dollar amounts rounded to\nthe nearest thousand dollars, unless otherwise indicated. In prior periods, including those presented in the Form S-4 Amendment No. 5\nfiled on September 11, 2025, financial information was presented in whole dollars. This change has been made to enhance the readability\nand consistency of financial disclosures. As a result, certain prior period amounts may not be directly comparable due to rounding differences.\n\n* *\n\n**Company Overview**\n\n \n\nWe are a pioneering nuclear energy technology\ncompany developing the SOLOTM Micro-Modular Nuclear Reactor (**“SOLO”**), a breakthrough solution designed to\naddress critical challenges in affordable clean decentralized energy production. Our reactor represents a significant technological and\nengineering advancement, offering a compact, safe, and economically compelling alternative to traditional energy generation and supply\nsolutions. The SOLO reactor’s core innovation lies in its ability to generate 1 MWe of electricity baseload with a continuous operational\ncycle of up to 15 years, extendable to 45 years through refueling, with a fixed and competitive projected levelized cost of\nenergy. Our strategic roadmap targets commercial deployment by 2028, with a clear focus on delivering a scalable, modular nuclear solution\nthat can be deployed across diverse geographies and markets — from industrial and infrastructure to remote and off-grid\napplications. Key differentiators include a gas-cooled design, multiple safety shutdown mechanisms, safeguard-by-design, small footprint,\nand the ability to use commercially available Low Enriched Uranium (**“LEU”**), which significantly reduces regulatory\nand technological barriers typical in nuclear energy development. We have made substantial progress in de-risking its First-of-a-Kind\n(**“FOAK”**) reactor, including initiating regulatory engagement with the U.S. Nuclear Regulatory Commission (**“NRC”**),\nand establishing a robust supply chain strategy. We have completed the reactor design, validated key technological components, and are\ntargeting licensing and commercial deployment of the FOAK reactor by 2028.\n\n \n\n**Recent Developments**\n\n** **\n\n**Business Combination and Public Listing**\n\n \n\nOn October 9, 2025, we completed our Business\nCombination with GSR III Acquisition Corp. (**“GSR III”**), pursuant to a Business Combination Agreement executed in April\n2025. In connection with the transaction, Terra Innovatum Srl. completed a reorganization, including the formation of Terra Innovatum\nGlobal Srl., the contribution of all Terra Innovatum Srl. quotas, and a cross-border conversion into Terra Innovatum Global N.V. (**“Terra”**).\nAt Closing, all GSR III securities converted into Terra ordinary shares on a one-for-one basis (net of redemptions), and Private Investment\nin Public Equity (**“PIPE”**) investors purchased securities at $10.00 per share. Net proceeds from the Business Combination\nand PIPE financing totaled approximately $106,713. The transaction was accounted for as a recapitalization, with Terra as the accounting\nacquirer.\n\n \n\n42\n\n \n\n**Conversion of Bridge Loans**\n\n** **\n\nBetween May and September 2025, we issued $5,690\nof unsecured bridge loans (the **“Bridge Loans”**) bearing 15% payment in kind (**“PIK”**) interest. Upon\nClosing of the Business Combination, all outstanding notes converted into 851,483 ordinary shares at a conversion price of $7.00 per share,\nand we issued warrants to purchase up to 851,483 ordinary shares at exercise prices of $11.50 and $15.00 each with a 36-month term. No\nBridge Loan financing remained outstanding after conversion.\n\n \n\n**Preferred Share Conversion**\n\n \n\nAt the Closing of the Business Combination, we\nissued 8,040 Convertible Preferred Shares, which are contingently convertible into ordinary shares based on milestone achievement. On\nOctober 16, 2025, certain milestones were met, and on November 13, 2025, our Board of Directors issued a confirmation statement in connection\nwith the conversion of 4,020 preferred shares into 40,200,000 ordinary shares. Following the conversion, 4,020 preferred shares remained\noutstanding.\n\n \n\n**Related Party Agreements**\n\n** **\n\n*Massimo Morichi*\n\n* *\n\nOn April 18, 2025, we entered into a consulting\nagreement with Massimo Morici, our Chief Strategy Officer and a member of the Board of Directors, which was amended on December 23, 2025\nand extended to December 31, 2025, pursuant to which Mr. Morici provided strategic and consulting services to us. During the year ended\nDecember 31, 2025, we awarded Mr. Morici an extraordinary bonus of $119 in connection with the completion of the business combination\nand related listing, $79 for reimbursable expenses under the agreement (treated as compensation for services) and $198 to Mr. Morici for\nhis consultancy services. This consultancy expired on December 31, 2025.\n\n \n\n*Guillaume Moyen*\n\n \n\nOn April 4, 2025, we entered into a consulting\nagreement with Guillaume Moyen, our former Chief Financial Officer and member of the Board of Directors, which was amended on September\n30, 2025, pursuant to which Mr. Moyen provided business support and advisory services to us. During the year ended December 31, 2025,\nwe awarded Mr. Moyen an extraordinary bonus of $100 in connection with the completion of the business combination and related listing\nand $167 to Mr. Moyen for his consultancy services. This consultancy expired on December 31, 2025.\n\n** **\n\n*Related Party Loan*\n\n \n\nDuring 2024 and 2025, we entered into two interest-free\nloan agreements with Terra Innovatum Srl. legacy quotaholders (related parties) consisting of (i) an agreement executed in 2024 for approximately\n$216 (the **“2024 Loan Agreement”**), which was fully funded by March 31, 2025, and (ii) an agreement executed on March\n21, 2025 for $74 (the **“2025 Loan Agreement”**), which was funded through April 10, 2025. Both loans were unsecured and\nscheduled to mature on December 31, 2040, with automatic annual extensions permitted through December 31, 2045, unless earlier repayment\nwas requested by the legacy Terra Innovatum Srl. quotaholders. The loans were issued at par with no fees or discounts and do not include\nany rights or preferences that would affect the economics of the arrangement; accordingly, the terms were negotiated directly with related\nparties and were not intended to reflect market-based pricing.\n\n \n\nBecause the lenders were related\nparties, we applied the Accounting Standards Codification (“ASC’) 835-30 related-party exception and did not impute interest.\nThe loans were repaid in full upon the Closing of the Business Combination, and no amounts were outstanding as of December 31, 2025.\n\n \n\n*Lease Agreement*\n\n \n\nOn April 1, 2025, we entered into a lease\nagreement with Nine Nuclear and Industrial Engineering S.R.L. (**“Nine”**), a related party, to sublease three office rooms\nfrom a property unit located in Lucca, Sorbano del Giudice, Via della Chiesa XXXII n. 759. The three office rooms will be used exclusively\nfor professional office purposes and related activities. The term of the lease agreement is 24 months starting from April 1,\n2025 and ending on March 31, 2027. Each party may withdraw from the lease agreement at any time before the expiration date of the\ncontract without any penalty. The rent is $12 (€11) per annum, $1 (€1) and an immaterial monthly fee as a flat-rate reimbursement\nfor utilities and cleaning costs (the **“Lease Fee”**), with the total monthly amount to be paid no later than the 10th\nof each month. The Lease Fee will be updated annually by 75% of the variation in the official consumer price indices for worker and employee\nfamilies as determined by the Italian Statistics Day (**“ISTAT”**) in the previous year and subsequently year by year,\nwith the first update taking effect on April 1, 2026. During the year ended December 31, 2025 we paid $10 in rent.\n\n \n\n*Engineering Services Agreements*\n\n \n\nIn July 2025, we entered into an engineering services\nagreement with Nine, a related party, to support the design of the SOLO project. Per the terms of the agreement, Nine committed to deliver\ncertain technical services to us with a total value of $215 (€184) plus value added tax (**“VAT”**). We expensed the\ncosts associated with these services during the year ended December 31, 2025. Any unpaid amounts as of year-end are included in accrued\nexpenses and other current liabilities.\n\n \n\nIn July 2025, we entered into an engineering services\nagreement with FPoliSolutions LLC (**“FPoli Solutions”**), a related party. As per the terms of the agreement, FPoliSolutions\nwill provide support for the development of the SOLO Micro Modular Reactor including technical assistance in safety analysis, hazard modeling,\nradiological consequence evaluation, risk-informed safety assessments, and techno-economic analysis for $90 with work completed during\nSeptember 2025.\n\n \n\n43\n\n \n\nIn October 2025, we entered into an amendment\nto our existing engineering services agreement with FPoliSolutions. The amendment extends the scope of work through December 31, 2025,\nand adds one full-time engineer on a fixed-price basis of $107.\n\n \n\n**SPAC Financial Advisory Services** \n\n \n\nOn December 18, 2024, we entered into an engagement\nletter with a financial advisory services provider (the **“SPAC Financial Advisor”**) to assist with the negotiation, structuring,\nand execution of our business combination with a special purpose acquisition company (**“SPAC”**) (the **“SPAC Financial\nAdvisory Services Agreement”**). Under the agreement, the SPAC Financial Advisor also supported the preparation of marketing materials\nand efforts to secure potential backstop financing.\n\n \n\nIn connection with the Closing on October 9,\n2025, we issued 223,000 ordinary shares to the SPAC Financial Advisor and also issued 40 Convertible Preferred Shares, which were\ncontingently convertible into our ordinary shares at a ratio of 10,000 ordinary shares per Convertible Preferred Share, subject to\nmilestone-based tranche conversion conditions pursuant to the Business Combination Agreement and the SPAC Financial Advisory\nServices Agreement. On October 16, 2025, certain conversion milestones were achieved, and on November 13, 2025, our Board of\nDirectors issued a confirmation statement in connection with the conversion of 20 preferred shares resulting in the issuance of\n200,000 ordinary shares to the SPAC Financial Advisor.\n\n \n\nDuring the year ended December 31, 2025, we paid\nthe cash success fee of $2,500 and the milestone fee of $225. During the year ended December 31, 2024, we paid the retainer fee of $50\nand the LOI signature fee of $25. As of December 31, 2025, we had no non-cancelable remaining cash commitments under the SPAC Financial\nAdvisory Services Agreement, as all remaining obligations are either contingent on future events or relate to reimbursable costs recognized\nwhen incurred.\n\n \n\n**Investor Relations and Advisory Services\nAgreements**\n\n** **\n\nIn October 2025, we entered into an investor relations\nand advisory services agreement (the **“October 27, 2025 Investor Relations and Advisory Services Agreement”**) with the\nsame vendor, effective November 1, 2025. The initial term extends through April 30, 2026, with automatic annual renewals unless terminated\nby either party with 60 days’ notice.\n\n \n\nThe agreement provides for a fixed monthly fee\nof $25, covering up to 84 hours of services allocated as follows: (i) 50 hours of investor relations, public relations, media, capital\nmarkets, and market-intelligence support for $17; (ii) 14 hours of social-media and communications services for $4; and (iii) 20 hours\nof business-development support for $5. We are also required to pay a 3% monthly service fee related to access to market-intelligence\nplatforms. Additional services, including support for special situations such as M&A or crisis management, are billed at the vendor’s\nstandard hourly rates, which may reach up to $1 per hour depending on personnel level.\n\n \n\n**Capital Markets Advisory Agreements**\n\n** **\n\n*September 22, 2025 Capital Markets Advisory Agreement*\n\n* *\n\nIn September 2025, we entered into a agreement\n(the **“September 22, 2025 Capital Markets Advisory Agreement”**) for a 12-month engagement period commencing August 19,\n2025. Under the agreement, the vendor provides strategic capital markets advisory services, including support through the Closing and\npost-close public company advisory. As consideration for these services, a cash fee of $150 is payable upon close of the business combination,\nwith additional cash fees of $125 90 days after close and $125 180 days after close. The agreement includes standard indemnification provisions\nand may be terminated upon 10 days’ written notice.\n\n* *\n\n44\n\n* *\n\n*October 14, 2025 Capital Markets Advisory\nAgreement*\n\n* *\n\nIn October 2025, we entered into a agreement (the\n**“October 14, 2025 Capital Markets Advisory Agreement”**) with a vendor for a term of 24 months. Under the agreement,\nthe vendor will provide advisory services including assistance with research coverage, investor meetings, non-deal roadshows, and participation\nin the vendor hosted investor conferences. As compensation for these services, a total of $600 is due, structured as follows: $300 in\ncash, payable 12 months from the agreement date and $300 in cash, payable 24 months from the agreement date. These fees are subject to\nreduction by any fees paid to the vendor for other transactions during the term, up to a maximum offset of $600. In the event of a change\nof control during the term, the full advisory fee becomes immediately due and payable. The agreement contains standard indemnification\nclauses and may be terminated earlier only in the event of breach or for cause.\n\n \n\n*October 23, 2025 Capital Markets Advisory\nAgreement*\n\n* *\n\nIn October 2025, we entered into an agreement\n(the **“October 23, 2025 Capital Markets Advisory Agreement”**) with a vendor to serve as our financial and capital markets\nadvisor for a one-year term. Under the agreement, the vendor will provide advisory services including investor positioning, coordination\nof investor meetings, and participation in investor conferences, among other mutually agreed services. As consideration for these services,\nan advisory fee of $700 is due, payable in three installments, $233 which was paid upon execution of the agreement in October 2025, $233\non March 15, 2026, and $233 upon the end of the term of the agreement, October 23, 2026. The agreement contains standard indemnification\nclauses and may be terminated earlier only in the event of breach or for cause.\n\n \n\n*October 27, 2025 Capital Markets Advisory\nAgreement*\n\n* *\n\nIn October 2025, we entered into an agreement\n(the **“October 27, 2025 Capital Markets Advisory Agreement”**) with a vendor for a 12-month engagement period beginning\nJanuary 1, 2026. Under the October 27, 2025 Capital Markets Advisory Agreement, the vendor will provide strategic capital markets advisory\nservices, including development of capital market strategy, institutional investor relationship development, participation in conferences\nand investor meetings and non-deal roadshows and related support. As compensation for these services, an advisory fee of $350 is due,\nstructured as follows: $105 which was paid upon execution of the agreement on October 27, 2025 and $245 payable on January 1, 2026. The\nOctober 27, 2025 Capital Markets Advisory Agreement includes standard indemnification clauses and may be terminated with 90 days’\nwritten notice.\n\n** **\n\n**Engineering Services Agreement**\n\n* *\n\nIn December 2025, we entered into a agreement\n(the **“December 1, 2025 Engineering Services Agreement”**) for vendor-provided engineering services in support of SOLO\nlicensing activities. The agreement specifies total consideration of €433 (plus applicable VAT), payable in four monthly installments\nof €108.25 each, with payment due within 10 days of invoice. The agreement includes customary confidentiality, intellectual property,\nand governing-law provisions. The agreement contains standard indemnification clauses and may be terminated only for material breach,\nin which case we are obligated to pay only for services rendered through termination date.\n\n \n\n**Feasibility and Industrialization Study Agreement**\n\n** **\n\nIn November 2025, we entered into an agreement\nwith a vendor to conduct a feasibility and industrialization study (the **“Feasibility and Industrialization Study Agreement”**)\nfor the SOLO Micro Modular Nuclear Reactor project. The Feasibility and Industrialization Study Agreement outlines a comprehensive scope\nof engineering, fabrication planning, cost analysis, and regulatory support activities to be performed by the vendor. Under the Feasibility\nand Industrialization Study Agreement, total consideration based on estimated man-hours and hourly rates as defined in the agreement is\ndue with a payment structure including 10% of the total price payable within 7 days of execution, and the remaining balance payable monthly\nbased on progress milestones and time sheets.\n\n \n\n45\n\n \n\nThe Feasibility and Industrialization\nStudy Agreement allows for price adjustments if actual man-hours exceed estimates by more than 5%, or if additional activities are agreed\nupon. Any such adjustments will be subject to separate written agreement. The term of the Feasibility and industrialization Study Agreement\nis a minimum of 6 months and up to 24 months, effective upon receipt of the advance payment. Either party may terminate the agreement\nunder specified conditions, including non-payment or breach.\n\n** **\n\n**Senior Advisor Agreement**\n\n* *\n\nOn August 21, 2025, we entered into an agreement\n(the **“Senior Advisor Agreement”**) with an independent contractor to serve as a strategic advisor and promoter for us,\nparticularly in connection with the Business Combination. The term of the Senior Advisor Agreement is 36 months and outlines the independent\ncontractor’s responsibilities, including strategic advisory, business development, investor introductions, and support for commercial\nagreements related to SOLO. Compensation includes a one-time grant of 180,000 restricted shares in the post-combination public entity\n(vesting over 36 months) and 1% commission on qualifying new business the independent contractor originates. As of December 31, 2025,\nthese restricted shares have not been granted.\n\n \n\n**Financial Performance**\n\n \n\nFor the years ended December 31, 2025 and 2024,\nwe reported a net income of $539,524 and net loss of $34, respectively. Net cash used by operating activities was $10,297 for the year\nended December 31, 2025 compared to net cash used of $42 for the year ended December 31, 2024.\n\n \n\n**Key Factors and Trends Affecting Our Business\nand Results of Operations**\n\n \n\nWe believe the following\nfactors and trends may cause previously reported financial information not to be necessarily indicative of future operating results or\nfuture financial conditions: \n\n \n\n \n●\n**Product Development Plan**\n\n \n\nThe commercial rollout of\nany advanced nuclear reactors depends on securing regulatory approvals for its design, construction, and operation. Our regulatory engagement\nplan was submitted to the NRC, and the NRC is currently reviewing a number of safety related topics related to SOLO. Although our\nteam has significant prior experience working with the NRC, we cannot control NRC’s review process and review periods may take\nlonger than anticipated.\n\n \n\n \n●\n**Funding and Investment**\n\n \n\nWe have limited financial\nresources. There can be no assurance that sufficient funding will be available to us to fund our operating expenses and to further develop\nour business. We anticipate that we will likely need to raise additional capital to fund our operations while we implement and execute\nour business plan. Our continued solvency is dependent upon our ability to obtain additional working capital to complete our reactor\ndevelopment, to successfully market our reactors and to achieve commerciality for our reactors. We have encountered and expect to continue\nto encounter risks and uncertainties frequently experienced by companies in rapidly evolving industries. Accordingly, we may be unable\nto prepare accurate internal financial forecasts or replace anticipated revenue that we do not receive as a result of delays, changed\ncircumstances, or changed market conditions arising from these factors, and our results of operations in future reporting periods may\nbe below the expectations of investors or analysts.\n\n \n\n46\n\n \n\n \n●\n**Macroeconomic Conditions and Global Market Dynamics**\n\n \n\nOur business operates in\na complex global environment with multiple interconnected economic factors that can significantly impact our technological development,\nregulatory trajectory, and potential market penetration. As a nuclear technology company with an international human capital strategy\nand multinational supply chain, we are sensitive to macroeconomic trends and risks.\n\n \n\n \n●\n**Global Supply Chain Dynamics**\n\n \n\nWe utilize a strategic outsourced\nmanufacturing approach for the SOLO project, leveraging international human resources and implementing an international manufacturing\nmodel for our FOAK reactor. This strategy exposes us to global supply chain vulnerabilities, including potential impacts from geopolitical\ntensions, trade agreements, tariffs, and manufacturing disruptions. Our current assembly preparation in Europe for reactor deployment\nin the U.S. introduces additional complexity in navigating international trade regulations, currency exchange risks, and logistical\nchallenges.  \n\n \n\nBy partnering with specialized\nsuppliers certified in nuclear engineering and precision manufacturing, we aim to avoid significant capital investments in manufacturing\nfacilities and concentrate our resources on core competencies such as reactor design, technological innovation, and regulatory compliance.\nOur procurement strategy involves direct engagement with multiple suppliers for critical components, ensuring supply chain reliability\nand maintaining the flexibility to adapt our technology to evolving market and regulatory requirements.\n\n \n\n \n●\n**Inflation and Cost Pressures**\n\n \n\nInflationary trends represent\na risk to our development trajectory. Escalating costs in specialized manufacturing, regulatory compliance, technical talent acquisition,\nand raw material procurement could potentially erode our projected economic advantages.\n\n \n\n \n●\n**Energy Market Evolution**\n\n \n\nThe global energy transition, driven by decarbonization\nefforts and increasing demand for reliable low-carbon baseload power, creates both opportunities and challenges. The explosive growth\nin data center energy requirements, particularly with artificial intelligence (**“AI”**) and computational infrastructure\nexpansion, presents a promising market segment. However, economic growth cycles, shifts in energy policy, and potential slowdowns in technological\nadoption could materially affect our market positioning and revenue projections.\n\n \n\nTo mitigate the AI driven\nmarket concentration risks, we have strategically designed SOLO with multi-sector versatility, targeting a diverse range of energy-intensive\nindustries including industrial manufacturing (cement, steel, mining, paper production), critical infrastructure services (airports,\nports, logistics hubs), agricultural and food processing applications (greenhouses, vertical farming, food processing plants), energy\nstorage (ammonia production, pink hydrogen) and essential utility services like desalination and water treatment. This intentional market\ndiversification allows us to create resilience against sector-specific economic fluctuations, leveraging SOLO’s ability to provide\nboth electricity and thermal energy across multiple high-demand sectors, including emerging opportunities in medical radioisotope production.\n\n \n\n \n●\n**Regulatory and Geopolitical Landscape**\n\n \n\nOur multinational operational\nmodel requires navigating complex regulatory environments across different jurisdictions. Changes in nuclear energy policies and geopolitical\ntensions could significantly impact our potential market access. The evolving global stance on nuclear energy, particularly small modular\nreactors, introduces both strategic opportunities and potential regulatory constraints.\n\n \n\n \n●\n**Technological and Labor Market Dynamics**\n\n \n\nThe specialized nature of\nour technology demands access to a global pool of highly skilled technical talent. Potential labor market shifts, competition for specialized\nnuclear engineering expertise, and varying international education and training standards could influence our human resource strategy\nand technology development velocity.\n\n \n\n47\n\n \n\n \n●\n**Economic Uncertainty Factors**\n\n \n\nMacroeconomic uncertainties,\nincluding potential recessionary periods, fluctuations in investment trends in energy related technology, and broader economic growth\npatterns, could affect our funding capabilities, customer acquisition strategies, and overall business development trajectory.\n\n** **\n\n**Emerging Growth Company and Smaller Reporting\nCompany Status**\n\n \n\nSection 102(b)(1) of the Jumpstart Our\nBusiness Startups Act (**“JOBS Act”**) exempts emerging growth companies from being required to comply with new or revised\nfinancial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared\neffective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required\nto comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended\ntransition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.\nUntil we are considered to be an emerging growth company, we have elected not to opt out of such extended transition period which means\nthat when an accounting standard is issued or revised and it has different application dates for public or private companies, as an emerging\ngrowth company we can adopt the new or revised standard at the time private companies adopt the new or revised standard.\n\n \n\nWe are also a “smaller\nreporting company” as defined in the Securities Exchange Act of 1934. We may continue to be a smaller reporting\ncompany even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available\nto smaller reporting companies until the fiscal year following the determination that our voting and non-voting ordinary shares held\nby non-affiliates is $250,000 or more measured on the last business day of our second fiscal quarter, or our annual revenues\nare less than $100,000 during the most recently completed fiscal year and our voting and non-voting ordinary shares held by non-affiliates\nis $700,000 or more measured on the last business day of our second fiscal quarter.\n\n** **\n\n**Segment Reporting**\n\n \n\nWe are a development-stage nuclear energy technology\ncompany focused on the research, development, and future commercialization of our SOLO micro-modular nuclear reactor. Our chief operating\ndecision maker (**“CODM”**), consisting of our chief executive officer and founding officers acting collectively, reviews\nfinancial information on a consolidated basis for purposes of evaluating performance and allocating resources. The CODM does not review\ndiscrete financial information by product, function, or geographic location. As a result, we have determined that we operate as a single\noperating segment, which is also our sole reportable segment. The measure of segment profit or loss and segment assets is the same as\nthat presented in the consolidated financial statements. The CODM primarily uses consolidated general and administrative expenses and\ndevelopment costs to assess operating performance and liquidity. We have not generated revenue from external customers, as our SOLO product\nremains under development.\n\n \n\n**Results of Operations**\n\n \n\nThe period-to-period comparisons\nof our results of operations have been prepared using the historical periods included in our financial statements. The following discussion\nshould be read in conjunction with the financial statements and related notes included elsewhere in this Form 10-K.\n\n** **\n\n**Key Components of Results of Operations**\n\n** **\n\n**Revenue**\n\n \n\nTo date, we have not generated\nany revenue from product sales and do not expect to generate any revenue from the sale of products for the foreseeable future.** **\n\n** **\n\n48\n\n* *\n\n**Operating Expenses**\n\n* *\n\n*General and administrative*\n\n \n\nOur general and administrative consists primarily\nof advisory fees in connection with the Business Combination, legal fees, audit, accounting and other professional services fees, share-settled\ncontingent liability fees, Board of Directors compensation, insurance fees, transportation costs, fees for food and lodging, advertising\nfees, patent application fees, rental costs, certificates and procedure fees, employee benefits, bank charges, periodic fees, and other\nmiscellaneous expenses.\n\n \n\n*Development costs*\n\n \n\nDevelopment costs represent costs incurred to\ndesign and engineer SOLO. These costs include technical consulting and personnel-related expenses (such as salaries, employee benefits,\nand bonuses), software and computing costs, hardware and experimental supplies, and fees for outside engineering, analytical, and consulting\nservices.\n\n** **\n\n**Other Income (Expenses)**\n\n* *\n\n*Other income — related party*\n\n \n\nOur other income-related\nparty consists of fees from engineering consulting services that we provide to related parties that are unrelated to our core business.\nWe do not expect to earn these fees following the Business Combination.\n\n \n\n*Other expense, net*\n\n \n\nOur other expense, net primarily consists of other\nexpenses associated with the Bridge Loans, foreign currency transaction gains and losses, and interest.\n\n \n\n*Interest expense*\n\n \n\nOur interest expense consists\nof interest recorded for the Bridge Loans.\n\n \n\n*Change in fair value – share settled\ncontingent liability*\n\n* *\n\nThe change in fair value — share\nsettled contingent liability consists of the change in fair value of certain issuances of Convertible Preferred Shares.\n\n \n\n*Change in fair value — warrant\nliabilities*\n\n \n\nThe change in fair value — warrant\nliabilities consists of the change in fair value of certain PIPE and Bridge Loan warrants.\n\n \n\n*Provision for income taxes*\n\n* *\n\nProvision (or benefit) for\nincome taxes consists of the expense or income related to income taxes.\n\n \n\n49\n\n** **\n\n***Results of Operations***\n\n** **\n\n**Year Ended December 31, 2025 Compared to\nYear Ended December 31, 2024**\n\n \n\nThe following table sets\nforth our historical results for the periods indicated and the changes between periods:\n\n \n\n  \nFor the Year Ended December 31, \n\n  \n2025  \n2024  \n$ Variance  \n% Variance \n\nOperating expenses: \n   \n   \n   \n  \n\nGeneral and administrative \n$32,311  \n$78  \n$32,233  \n 41,324%\n\nDevelopment costs \n 1,388  \n 75  \n 1,313  \n 1,751%\n\nTotal operating expenses \n 33,699  \n 153  \n 33,546  \n 21,925%\n\nLoss from operations \n (33,699) \n (153) \n 33,546  \n 21,925%\n\n  \n    \n    \n    \n   \n\nOther income (expenses): \n    \n    \n    \n   \n\nOther income - related party \n -  \n 129  \n (129) \n (100)%\n\nOther expense, net \n (1,906) \n -  \n 1,906  \n NM \n\nInterest expense \n (1,426) \n -  \n 1,426  \n NM \n\nChange in fair value - share settled contingent liability \n 559,967  \n -  \n 559,967  \n NM \n\nChange in fair value - warrant liabilities \n 16,588  \n -  \n 16,588  \n NM \n\nTotal other income, net \n 573,223  \n 129  \n 573,094  \n 444,259%\n\nIncome (loss) before income taxes \n 539,524  \n (24) \n 539,548  \n 2,248,117%\n\n(Provision) benefit for income taxes \n -  \n (10) \n 10  \n 100%\n\nNet income (loss) \n$539,524  \n$(34) \n$539,558  \n 1,586,935%\n\n \n\n**NM – not meaningful**\n\n** **\n\n**Operating Expenses**\n\n* *\n\n*General and administrative*\n\n \n\nGeneral\nand administrative increased by $32,233 for the year ended December 31, 2025 compared to the same period in 2024 primarily due to increases\nof (i) $19,725 related to the share-settled contingent liability, (ii) $7,207 for compensation to third parties, (iii) $2,082 for board\nof director compensation, (iv) $1,774 for professional fees, (v) $594 for insurance, (vi) $250 for transportation, (vii) $211 for food\nand lodging, and (viii) $100 for advertising. The remaining $290 increase is primarily driven by patent application fees, rental costs,\ncertificates and procedures, employee benefits, bank charges, periodic fees, and other miscellaneous expenses.\n\n \n\nWe expect to continue to incur additional general and administrative\nexpenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the\nSecurities Exchange Commission (**“SEC”**) and Nasdaq Stock Market, additional insurance costs, investor relations activities\nand other administrative and professional services. As a result, we expect general and administrative expenses to increase in absolute\ndollars in future periods.\n\n \n\n*Development costs*\n\n \n\nDevelopment costs increased\nby $1,313 for the year ended December 31, 2025 compared to the same period in 2024 primarily due to increases of $1,256 in technical\nconsultancy fees and $25 in salaries and wages. The remaining $32 increase is primarily driven by employee benefits and travel costs.** **\n\n** **\n\n**Other Income (Expense)**\n\n* *\n\n*Other income — related party*\n\n \n\nDuring the year ended December\n31, 2024, we provided $129 of engineering consulting services to an affiliate unrelated to our core business. These services are considered\nother income associated with related parties and were not provided during the year ended December 31, 2025.\n\n \n\n50\n\n \n\n*Other expense, net*\n\n \n\nOther expense, net was $1,906 during the year\nended December 31, 2025 compared to zero during the same period in 2024. This was primarily due to (i) a $1,372 increase driven by non-cash\nlosses recognized upon issuance of bridge loan warrants, as the fair value of the warrants exceeded the associated loan proceeds at initial\nrecognition, and a (ii) net foreign currency loss of $1,028, which is partially offset by (iii) an increase in interest income of $494.\n\n \n\n*Interest expense*\n\n \n\nInterest expense totaled $1,426 for the year ended\nDecember 31, 2025, attributable to the Bridge Loans. There was no interest expense during the same period in 2024.\n\n \n\n*Change in fair value – share settled\ncontingent liability*\n\n* *\n\nThere was a $559,967 unrealized gain in fair value\nattributable to the change in fair value of the share settled contingent liability. There was no share settled contingent liability in\n2024.\n\n \n\n*Change in fair value — warrant\nliabilities*\n\n \n\nThe $16,588 unrealized gain in fair value attributable\nto warrant liabilities consists of the change in fair value of certain PIPE and Bridge Loan warrants. There was no warrant liability in\n2024.\n\n** **\n\n**Provision for income taxes**\n\n** **\n\nThe provision for income\ntaxes decreased from $10 to zero from the year ended December 31, 2024 to December 31, 2025.\n\n** **\n\n**Net income (loss)**\n\n \n\nNet income for the year ended December 31, 2025\nwas $539,524 compared to net loss of $34 for the year ended December 31, 2024. The $539,558 net change was primarily due to the $559,967\nunrealized gain on change in fair value - share settled contingent liability and $16,588 unrealized gain on change in fair value of warrant\nliabilities. These increases were partially offset by increases of $33,546 in operating expenses, $1,906 in other expense, net and $1,426\nin interest expense. The remaining $119 net change is primarily attributable to the decreases in other income from related party\nand provision for income taxes from the year ended December 31, 2024 to December 31, 2025.\n\n** ** \n\n**Liquidity and Capital Resources**\n\n \n\nLiquidity represents our ability to generate sufficient\ncash to support ongoing operations, meet obligations, and fund future growth. Since inception, we have financed our activities primarily\nthrough capital contributions, as we have not yet generated revenue from our core operations. We do not expect to generate meaningful\nrevenue unless and until we complete development, obtain regulatory licenses, and enter the commercialization phase of the SOLO, which\nwe do not anticipate before 2028. Accordingly, we are dependent on our existing cash resources to fund operations while we advance toward\ncommercialization. In the short term, our liquidity is supported by the proceeds received upon closing the Business Combination on October\n9, 2025, which, together with the related PIPE financing, generated net proceeds of approximately $106,713. At Closing, all outstanding\nBridge Loans converted into 851,483 ordinary shares at a price of $7.00 per share, eliminating near-term debt service commitments. We\nexpect to outsource manufacturing activities, which reduces near-term capital expenditure requirements.\n\n \n\nAs of December 31, 2025, we had cash of $102,882\nand an accumulated deficit of approximately $607,276. Net cash used in operating activities was $10,297 for the year ended December 31,\n2025. We have historically incurred recurring operating losses and generated negative cash flows from operations.\n\n** **\n\n51\n\n** **\n\nWe continue to evaluate and pursue potential liquidity-enhancing\nactions, which may include equity or debt financing, strategic transactions, or other funding arrangements; however, no definitive agreements\nare currently in place. Until sufficient funding is obtained or obligations are otherwise satisfied, we may be required to limit discretionary\nspending and defer or scale back certain planned activities.\n\n \n\nOur primary sources of liquidity\nare cash on hand, and our primary uses of liquidity are operating expenses and licensing activities. We continue to actively monitor\nour liquidity position and may seek additional financing, including future equity offerings, strategic arrangements, or other capital-raising\ntransactions, to support our long-term development and commercialization strategy.\n\n \n\n**Contractual Cash Requirements (Cancellable Agreements)** \n\n \n\nAs discussed under “Recent Developments” above, we entered into several advisory and engineering arrangements during 2024\nand 2025 in connection with the Business Combination and our post-combination activities. Although these agreements are cancellable under\ntheir respective terms and therefore do not constitute non-cancelable purchase commitments, we currently expect to incur cash outflows\nassociated with these arrangements under our ongoing operating plan.\n\n** **\n\n**Cash Flows**\n\n \n\nThe following table provides\ndetailed information about our net cash flows for the year ended December 31, 2025 and 2024:\n\n \n\n  \nYear Ended December 31, \n\n  \n2025  \n2024 \n\nNet cash provided by (used in): \n   \n  \n\nOperating activities \n$(10,297) \n$(42)\n\nInvesting activities \n (108) \n - \n\nFinancing activities \n 112,263  \n 112 \n\nNet increase in cash \n$101,858  \n$70 \n\n  \n\n*Operating Activities*\n\n \n\nNet cash used by operating activities for the\nyear ended December 31, 2025 was $10,297. This amount was primarily driven by (i) net income of $539,524, (ii) non-cash adjustments of\n$553,996, (iii) net working capital increases of $4,173, and (iv) an increase in other non-current liabilities of $2.\n\n \n\nNet cash used by operating\nactivities for the year ended December 31, 2024 was $42. This amount was primarily attributable to (i) net loss of $34 and (ii) net\nworking capital decreases of $12, which is partially offset by (iii) an increase in other non-current liabilities of $4.\n\n* *\n\n*Investing Activities*\n\n \n\nNet cash used by investing activities for the\nyear ended December 31, 2025 was $108, which was related to the purchases of equipment. There was no net cash from investing activities\nduring the year ended December 31, 2024.\n\n* *\n\n*Financing Activities*\n\n \n\nNet cash provided by financing activities of $112,263\nfor the year ended December 31, 2025 was primarily driven by (i) $69,878 of proceeds from Business Combinations, net of transaction costs,\n(ii) $36,835 of proceeds from PIPE financing, and (iii) $5,690 of proceeds from Bridge Loans. The proceeds were partially offset by $116\nof payments to related party loans and $24 of debt issuance cost payments related to Bridge Loans.\n\n \n\nNet cash provided by financing\nactivities for the year ended December 31, 2024 consisted of proceeds of $112 from an interest-free loan agreement that we entered into\nwith our shareholders on December 18, 2024. \n\n* *\n\n52\n\n \n\n**Critical Accounting Policies and Estimates**\n\n* *\n\n*Critical Accounting Policy: Bridge Financing and Warrants*\n\n \n\nIn connection with our financing activities, we\nentered into Bridge Loan agreements that include detachable warrants. We also entered into PIPE warrants and advisor warrant agreements.\nThese arrangements require us to evaluate whether certain debt and warrant instruments represent freestanding financial instruments and,\nwhere applicable, determine the appropriate classification under ASC 480-10 and ASC 815-40. In addition, we evaluated whether these instruments\nmet the definition of a derivative under ASC 815-10.\n\n \n\nWe determined that certain instruments, including\nthe Bridge Loan Warrants and PIPE Warrants, meet the definition of a derivative, as they include an underlying (our common shares), require\nno initial net investment, and may be subject to net settlement. In performing this assessment, we considered whether the underlying shares\nassociated with the instruments could be rapidly absorbed into the market, including analysis of trading volume. Other instruments, such\nas advisor warrants, are not within the scope of ASC 480 or ASC 815 and are classified as equity.\n\n \n\nWhile the classification of certain warrants is\nbased on the specific contractual terms and the application of relevant accounting guidance, the accounting for the overall bridge financing\narrangements involves significant judgment and estimation. In particular, we are required to determine the fair value of the detachable\nwarrants at issuance. Certain warrants are contingently issuable upon the occurrence of specified events; however, such warrants are considered\nissued for accounting purposes and are recognized at fair value upon inception.\n\n \n\nAs a result, the initial carrying value of the\nbridge loan may differ significantly from the proceeds received, and in certain cases, a loss may be recognized at inception when the\nfair value of the warrants exceeds the proceeds received.\n\n \n\nWarrants that do not meet all criteria for equity\nclassification are recorded as liabilities at fair value and remeasured at each reporting date, with changes in fair value recognized\nin earnings. Warrants that meet equity classification criteria (including advisor warrants) are recorded at their initial fair value and\nrecognized as a component of additional paid-in capital.\n\n* *\n\n*Critical Accounting Policy: Convertible Preferred\nShares and Complex Equity Instruments*\n\n* *\n\nIn connection with the Business Combination and\nrelated arrangements, we issued Convertible Preferred Shares that are contingently convertible into ordinary shares upon the achievement\nof specified market-based and regulatory milestones; we also issued additional Convertible Preferred Shares to an advisor under similar\nmilestone-based conditions, which are accounted for in accordance with ASC 718, Compensation- Stock Compensation. Determining whether\nthese instruments are classified as equity or as liabilities requires significant judgment, including assessment of (i) whether settlement\nis fixed or may vary, (ii) the nature of the contingent features, and (iii) whether the instruments meet the scope exceptions in ASC 815\nand the equity classification criteria in ASC 480/ASC 815-40. Classification conclusions affect where amounts are presented in the financial\nstatements and whether subsequent remeasurement at fair value is required. Changes in facts and circumstances—such as the resolution\nof milestones—could require reclassification between equity and liabilities, with a corresponding impact on earnings.\n\n* *\n\n*Critical Accounting Policy: Business Combination\nAccounting and Recapitalization*\n\n* *\n\nWe accounted for the\nOctober 9, 2025 de-SPAC transaction as a recapitalization, with Terra Innovatum Global Srl. identified as the accounting acquirer and\nGSR III not meeting the definition of a business under ASC 805. This conclusion required significant judgment and resulted in recognizing\nthe net monetary assets of GSR III at historical carrying amounts with no recognition of goodwill or other intangible assets. Different\njudgments regarding the existence of a business, the accounting acquirer, or the nature of identifiable assets could have resulted in\nmaterially different accounting, including the recognition and measurement of intangible assets and goodwill.\n\n* *\n\n*Critical Accounting Policy: Foreign Currency\nTranslation and Transactions*\n\n \n\nWe operate across multiple\njurisdictions and transact in multiple currencies, including euro-denominated vendor agreements and U.S. dollar reporting. Determining\nfunctional currencies for our entities and measuring remeasurement/translation effects involve judgment and can affect the timing and\nclassification of foreign-currency gains and losses in the statement of operations. We recognize transaction gains and losses arising\nfrom foreign-currency-denominated balances through earnings. Exchange-rate volatility can materially affect reported operating results,\ncash flows, and liquidity trends, particularly for engineering services and feasibility programs that are priced in currencies other\nthan the functional currency.\n\n* *\n\n*Critical Accounting Estimate: Fair Value Measurements\n– Level 3 Instruments*\n\n* *\n\nWe use option pricing model valuation techniques\nthat rely on significant unobservable inputs (**“Level 3”**) to measure certain instruments at fair value or to allocate\nproceeds at initial recognition, including share-settled contingent liabilities and, at issuance, certain equity-linked instruments and\nwarrants. Key inputs include expected volatility, discount rates, equity value, contractual terms, and the probability and timing of milestone\nachievement. Small changes in these inputs can produce material changes in fair value, impacting earnings (for liabilities) or the allocation\nof proceeds within equity (for non-remeasured instruments). We evaluate inputs each period with reference to market data, peer benchmarks,\nand updated operating facts and circumstances.\n\n* *\n\n53\n\n \n\nThe fair value of these\nLevel 3 instruments is most sensitive to assumptions related to expected volatility and the probability and timing of milestone achievement.\nA higher expected volatility or an increase in the probability of achieving performance or regulatory milestones would generally increase\nthe fair value of these instruments, while lower volatility or delayed milestone achievement would reduce fair value. Because certain\nof these instruments are classified as liabilities and remeasured at each reporting date, reasonably possible changes in these assumptions\ncould result in material volatility in our reported earnings.\n\n \n\nFor example, holding other\nassumptions constant, an increase in assumed volatility or milestone probability would have resulted in a higher fair value measurement\nand a corresponding reduction in net income, while the opposite would have resulted in lower fair value and higher reported earnings.\n\n* *\n\n*Critical Accounting Estimate: Fair Value of\nWarrants*\n\n \n\nThe valuation of both equity-classified and liability-classified\nwarrants involves significant estimation uncertainty. We use option pricing models that require us to make assumptions about key inputs,\nincluding expected volatility, risk-free interest rates, term to expiration, and the fair value of the underlying equity. These inputs\nare inherently subjective and difficult to predict, and even small changes in any of them can materially affect the resulting fair value.\nThe estimation process is particularly sensitive to market conditions and company-specific developments. We continuously evaluate these\nassumptions, and changes in inputs or classification could materially affect our financial condition and results of operations.\n\n \n\nThe fair value of our warrants\nis most sensitive to changes in expected volatility and the fair value of our ordinary shares. A higher assumed volatility or increase\nin share price would generally increase the fair value of the warrants, while decreases in these inputs would have the opposite effect.\nBecause liability-classified warrants are remeasured through earnings, reasonably possible changes in these assumptions could materially\naffect our results of operations from period to period.\n\n* *\n\n*Critical Accounting Estimate: Share-settled\nContingent Liability*\n\n* *\n\nWe record share-settled contingent liabilities\nfor arrangements in which a variable number of equity instruments are issued with contingent conversion outcomes based on the achievement\nof specified market-based or regulatory milestones. These instruments are classified as liabilities and measured at fair value because\nthe timing and extent of settlement depend on the occurrence of future events that are not within our control.\n\n \n\nValuation of these instruments\nrequires significant judgment, including assumptions related to expected equity volatility, discount rates, milestone probabilities,\ntiming of achievement, and future share price outcomes. Fair value is generally estimated using a Monte Carlo simulation model, which\nincorporates multiple potential settlement scenarios and probability-weighted outcomes. Changes in these assumptions can materially impact\nfair value and may result in significant period-to-period volatility in earnings.\n\n \n\nBecause these contingent instruments remain outstanding\nuntil the underlying conditions are satisfied or expire, actual outcomes may differ from our estimates, resulting in potential variability\nin future reported results. During 2025, the resolution of certain milestones resulted in a significant reduction in the fair value of\nthis liability, which materially increased net income. If future milestones are achieved earlier or later than expected, or if market\nconditions lead to significant changes in volatility or share price assumptions, the fair value of the remaining contingent instruments\ncould change materially, resulting in corresponding gains or losses recognized in earnings.\n\n* *\n\n*Critical Accounting Estimate: PIPE Financing*\n\n* *\n\nWe account for the PIPE Financing, which consists\nof Class A ordinary shares and accompanying Half-Warrants and Quarter-Warrants, at fair value on the issuance date in accordance with\nASC 820. Because the PIPE units include multiple freestanding financial instruments with different economic characteristics, we allocate\nthe proceeds received by first measuring the warrants at their fair value, with the remaining proceeds allocated to the Class A ordinary\nshares.\n\n \n\nThe accompanying warrants provide holders with\nthe right to purchase Class A ordinary shares at fixed exercise prices of $12.00 per share for the Half-Warrants and $16.00 per share\nfor the Quarter-Warrants, subject to standard anti-dilution adjustments. In addition, the warrants include issuer redemption features\nthat permit us to redeem outstanding warrants for nominal consideration if our share price meets specified trading price thresholds for\na defined period. These contractual terms significantly affect the fair value of the warrants.\n\n \n\nThe fair value of the PIPE warrants is estimated\nusing valuation techniques that require significant judgment, including Monte Carlo simulation models, which incorporate assumptions related\nto expected share price volatility, risk-free interest rates, contractual term, redemption features, and simulated future share price\npaths. These assumptions are classified as Level 3 inputs under the fair value hierarchy.\n\n \n\nChanges in key valuation inputs, particularly\nassumptions related to volatility and modeled share price trajectories, can materially affect the estimated fair value of the warrants\nand the resulting allocation of proceeds between equity and liability-classified instruments. Such changes could have a significant impact\non additional paid-in capital and earnings in the period of issuance or subsequent reporting periods. We evaluate the reasonableness of\nvaluation assumptions each reporting period based on observable market data, comparable company volatility metrics, and prevailing trading\nconditions.\n\n** **\n\n54\n\n** **\n\n**Off-Balance Sheet Arrangements**\n\n \n\nWe do not have any off-balance\nsheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or\nfuture material effect on our financial condition, expenses, results of operations, liquidity, or capital resources.\n\n** **\n\n**Related Party Transactions**\n\n \n\nRefer to Note 4. “Related Party Transactions”\nof the Notes to our Financial Statements included elsewhere in this Form 10-K for a discussion of related party transactions.\n\n** **\n\n**Recent Accounting Standards and Pronouncements**\n\n \n\nRefer to Note 3. “Summary of Significant\nAccounting Policies” of the Notes to our Financial included elsewhere in this Form 10-K for a discussion of recent accounting standards\nand pronouncements."}