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

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere in this quarterly report on Form 10-Q. This quarterly report on Form 10-Q includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission filings.

The discussion and analysis of our financial condition and results of operations are based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Overview

Historically, KiNRG has been an early-stage company developing plans to design, permit, finance and construct our HydroThermal Reactor ("HTR") projects. Following the acquisition of TRINITY on April 1, 2026, the Company's primary operation consists of commercial construction and infrastructure services conducted through TRINITY.

On April 1, 2026, the Company acquired 100% of the shares of TRINITY Group Construction, Inc. ("TRINITY") from Millard L. Wallen, CEO and sole owner of TRINITY. Mr. Wallen is also President of KINRG, Inc. and has served in that capacity for over three years. TRINITY, among other construction projects, has previously constructed or construction managed over 2.5 million square feet of data centers and is currently constructing or construction managing over 500,000 square feet of data centers in three states and Egypt.

TRINITY has been hosting the Company in its headquarters for over four years. The Company and TRINITY have been sharing their skills and expertise to modify and adapt the Company's large HTR to a much smaller HTR specifically designed to service markets similar to the data center market that must rely on a constant base load of energy supply 24-7-365. The large HTR was designed to produce that maximum amount of energy year around without regard to any minimum baseload. The Company and TRINITY together redesigned the large HTR to a smaller HTR that the Company and TRINITY both believe will be well suited for the data center market. There can be no assurance that the data center market will adopt this solution.

The acquisition by the Company of TRINITY is the result of four years of collaboration between the companies. The combined business plan is to deliver data centers to data center developers as well as the energy to service the tenants of the data centers, independent of the grid. TRINITY will construct both the data centers and the HTRs in-house.

TRINITY plans to continue to construct data centers for the foreseeable future while the combined companies pursue joint data center/HTR projects in furtherance of the overall KiNRG's long term business plan.

Plan of Operation

Our Company's core objective is to develop and build data centers while commercializing our HTR concept, which is designed to generate electricity without combusting fossil fuels and to support applications that value reliable power.

RESULTS OF OPERATIONS

Comparisons between the current and prior periods are not meaningful due to the TRINITY Acquisition.

THREE MONTHS ENDED JUNE 30, 2026

Revenue

Revenue for the three months ended June 30, 2026 was $369,170,248.

Contract Costs

Contract costs for the three months ended June 30, 2026 were $347,054,830.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses ("SG&A") were $4,978,788 for the three months ended June 30, 2026, and consisted primarily of payroll and related costs of $3,730,919, professional fees of $410,959, travel and auto costs of $235,127; insurance of $121,437; consulting fees of $145,753, rent and facilities costs of $87,449, and director compensation of $25,000.

Interest Income

Interest income was $268,216 during the three months ended June 30, 2026.

Interest Expense

Interest expense was $3,637,941 during the three months ended June 30, 2026.

Income Tax Benefit

The company realized a tax benefit in the amount of $2,504,851 during the three months ended June 30, 2026.

Net Income (loss) from Continuing Operations

Net income from continuing operations was $16,271,756 for the three months ended June 30, 2026.

Net Income (loss) from Discontinued Operations

There was no income (loss) from discontinued operations during the period.

Net Income (loss)

For the reasons above, the Company had net income of $16,271,756 for the three months ended June 30, 2026.

SIX MONTHS ENDED JUNE 30, 2026

Revenue

Revenue for the six months ended June 30, 2026 was $369,170,248.

Contract Costs

Contract costs for the six months ended June 30, 2026 were $347,054,830.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses ("SG&A") were $5,311,176 for the six months ended June 30, 2026, and consisted primarily of payroll and related costs of $3,852,963; professional fees of $417,959, travel and auto costs of $243,372; insurance of $210,177; consulting expenses of $162,759, rent and facilities costs of $91,199; and director compensation of $50,000.

Interest Income

Interest income was $268,216 during the six months ended June 30, 2026.

Interest Expense

Interest expense was $3,640,941 during the six months ended June 30, 2026.

Income Tax Benefit

The company realized a tax benefit in the amount of $2,504,851 during the six months ended June 30, 2026.

Net Income (loss) from Continuing Operations

Net income (loss) from continuing operations was $15,936,368 for the six months ended June 30, 2026.

Net Income (loss) from Discontinued Operations

There was no income (loss) from discontinued operations during the period.

Net Income (loss)

For the reasons above, the Company had net income of $15,936,368 for the six months ended June 30, 2026.

Cash Flows from Operating Activities

Cash flow provided by operating activities was $107,682,405 during the six months ended June 30, 2026.

Cash flows from operating activities are generated by our construction management activities and are affected by our changes in working capital associated with such activities. Working capital levels vary from period to period and are primarily affected by the life cycle and stage of completion of our projects. A typical project will have higher cash balances during the initial phases which then diminish as the project nears completion. As a result, our cash position is reduced as customer advances are utilized, unless they are replaced by advances on other projects.

Cash Flows from Investing Activities

For the six months ended June 30, 2026, cash flows provided by investing activities was $17,680,560. Cash flows from investing activities consisted primarily of $13,439,400 cash received in acquisition of TRINITY and collections on note receivable from affiliate of $5,267,276, reduced by $1,000,000 for the cash portion of the cost of the TRINITY acquisition. We also paid cash in the amount of $26,116 for the purchase of fixed assets.

Cash Flows (Used in) Provided by Financing Activities

For the six months ended June 30, 2026, cash used in financing activities was $9,606,290, consisting of payments made under future receivables obligation in the amount of $12,462,502 and principal payments on notes payable in the amount of $7,538, partially offset by proceeds from the sale of common stock in the amount $2,863,750.

Backlog

Backlog consists of projects for which the Company has an executed contract and reflects the expected revenue from the contract, generally the contract amount less earned revenue. There is no guarantee that the revenue projected in our backlog will be realized or profitable or will not be subject to delay or suspension. Project cancellations and scope adjustments or deferrals may occur with respect to contracts reflected in our backlog and could reduce the value of our backlog and the revenue and profits that we actually earn.

The following backlog represents unearned revenue under existing contracts, as of June 30, 2026:

Backlog, April 1, 2026		$	1,137,419,241
New contracts and contract adjustments			14,512,032
Less: contract revenue earned, 3 months ended June 30, 2026			(369,170,248	)
Backlog, June 30, 2026		$	782,761,025

Liquidity and Capital Resources

In April 2026, KiNRG completed the acquisition of TRINITY, an operating business with existing personnel, customer relationships and construction-related operations. The Company believes that TRINITY's cash flow is sufficient to fund working capital needs for the next twelve months.

Our intention is to raise additional funds in order to fund the development of our HTR system and related technologies. On August 7, 2026, the Company filed Form S-1 with the Securities Exchange Commission for the potential sale and registration of approximately 3,750,000 shares of the Company's common stock.

As of August 11, 2026, the Company had cash on hand of $45,431,409. Management believes this amount is sufficient to meet our operating and working capital needs for the next 12 months. This analysis does not include the operational needs of KiNRG's HydroThermal Reactors. As of June 30, 2026, TRINITY had a backlog of $782,761,025.

On August 14, 2026, the Company made a payment in the amount of $2,000,000 to Millard L. Wallen, its President, under his $3,000,000 related party note payable. See Note 22.

The Company incurred additional obligations in connection with the Acquisition, including a $3.0 million Promissory Note, that matures on the earlier of the closing of the Company's public offering or December 31, 2026, as extended on July 27, 2026 (See Note 22). KiNRG expects that a portion of the proceeds from the Company's public offering, if completed, may be used for working capital purposes, repayment of acquisition-related obligations, integration costs and general corporate purposes. In addition, the Company recorded additional liabilities of TRINITY upon consolidation (balances as of June 30, 2026):

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Accrued liability to a related party in the amount of $6,314,423 representing a payment to Mr. Wallen, the Company's President and seller of TRINITY, for an income tax liability incurred prior to the Acquisition when TRINITY was an S-Corporation). $500,000 of this amount was paid in April 2026 and an additional $300,000 was paid in June 2026.

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A liability payable to finance companies in the amount of $3,650,726 for the balance due on loans made to Ox Hill Realty, a land development firm in which Mr. Wallen has a 22.5% interest and Mr. Chughtai has a 12.5% interest.

The Company also has a related party receivable from Ox Hill Realty in the aggregate amount of $29,917,458 representing the amount due to the Company from Ox Hill for payments made to the financing companies and for loans made directly to Ox Hill by the Company. This amount was fully reserved as of June 30, 2026. TRINITY has a security agreement with Ox Hill whereby Ox Hill has committed to paying TRINITY the amount of $29,088,485 before December 31, 2026 or $9,088,485 by December 31, 2026 with a note for the balance convertible to up to 19.9% of the equity of Ox Hill depending upon the appraised value of the Ox Hill properties. There can be no assurance that this amount will be received.

TRINITY has a current project with a contract value of approximately $1.25 billion to construct a data center in Ward County, Texas. TRINITY's business volume is expected to continue to remain strong, with additional projects in Virginia, Maryland and in Cairo, Egypt. None of these projects can be guaranteed to continue; if the demand for data center construction were to diminish, TRINITY's growth would be at risk.

Capital Expenditures

TRINITY's historical capital expenditures have also not been material, as subcontractors are utilized perform the construction activity and TRINITY does not own any substantial heavy equipment. We expect to continue to utilize that business model in the future.

Historically, KiNRG's capital expenditures have not been material, as KiNRG's activities primarily consisted of corporate development activities, technology development efforts, project planning and operational expansion initiatives. The Company expects that capital expenditures may increase in future periods as the Company pursues infrastructure and energy-related project opportunities, expands operations, integrates the TRINITY business and advances development activities relating to HTR systems and related technologies. The timing and amount of future capital expenditures will depend on numerous factors, including financing availability, permitting activities, project development progress, strategic relationships and market conditions.

Contractual Obligations

KiNRG's contractual obligations primarily consisted of operating lease obligations, notes payable, related party obligations and other accrued liabilities reflected in KiNRG's consolidated financial statements. In addition, in connection with the acquisition of TRINITY completed in April 2026, KiNRG issued a $3.0 million Promissory Note bearing interest at 6.0% per annum that matures on the earlier of the closing of the Company's public offering or December 31, 2026, as extended on July 27, 2026 (See Note 22). KiNRG may also enter into additional contractual commitments and obligations in the future in connection with financing activities, project development efforts, infrastructure expansion activities and strategic business initiatives.

TRINITY has contractual obligations primarily consisting of operating lease obligations, notes payable, related party obligations and other accrued liabilities reflected in TRINITY's consolidated financial statements. This includes an obligation under a receivables financing agreement of $3.6 million as of June 30, 2026.

Inflation

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. However, inflation may have a significant impact on the future cost of HTR's. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could adversely affect our business, financial condition and results of operations.

Off-Balance Sheet Arrangements

KiNRG does not maintain off-balance sheet arrangements, nor does KiNRG participate in any non-exchange traded contracts requiring fair value accounting treatment other than the operating leases as disclosed in Notes to Consolidated Financial Statements

TRINITY leases its corporate headquarters from a lessor entity, TG Legacy, LLC, which is a related party through common ownership. Due to the common control of the entities and the fact that TRINITY does not have alternative facilities readily available, TRINITY has an economic incentive to provide financial support to the lessor entity should the lessor entity default on its obligations. The amount and key terms of the obligations recorded in the lessor entity's financial statements that could require TRINITY to provide financial support to the lessor entity consist of a note payable to a financial institution with an outstanding balance of $2,414,399 and $2,468,600 at June 30, 2026 and December 31, 2025, respectively. The note bears interest at 4.04% through maturity on March 7, 2032 and is payable in monthly installments of principal and interest totaling $17,360. A balloon payment is also due at maturity. The note is collateralized by substantially all assets of TRINITY and the corporate headquarters leased to TRINITY by the lessor entity. The note is secured by the real estate and personally guaranteed by TRINITY's stockholder. As of June 30, 2026, TRINITY does not believe it is exposed to any significant risk related to the lessor's note payable.

Critical Accounting Policies and Estimates

Financial Reporting Release No. 60, published by the SEC, recommends that all companies include a discussion of critical accounting policies used in the preparation of their financial statements. While all these significant accounting policies impact our consolidated financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our consolidated financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates.

We believe that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

General

The Company's Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles, which require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue, if any, and expenses, and the disclosure of contingent assets and liabilities.

Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Board of Directors. Management believes that the accounting estimates employed and the resulting balances are reasonable; however, actual results may differ from these estimates under different assumptions or conditions. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the consolidated financial statements. Management believes the following critical accounting policies reflect the significant estimates and assumptions used in the preparation of the Consolidated Financial Statements.

Basic and Diluted Net Income (Loss) Per Share

The Company utilizes ASC 260, "Earnings Per Share" for calculating the basic and diluted loss per share. In accordance with ASC 260, the basic and diluted income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding. Diluted net income (loss per) share is computed similar to basic net income (loss) per share except that the denominator is adjusted for the potential dilution that could occur if stock options, warrants, and other convertible securities were exercised or converted into common stock. Potentially dilutive securities were not included in the calculation of the diluted net loss per share as their effect would be anti-dilutive.

Income Taxes

The Company utilizes ASC 740 "Income Taxes" which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Temporary difference between taxable income reported for financial reporting purposes primarily relate to the recognition of debt costs and stock based compensation expenses. The adoption of ASC 740 "Income Taxes" did not have a material impact on the Company's consolidated results of operations or financial condition.

Business Combinations

The Company utilizes ASC 805 "Business Combinations", which accounts for business combinations using the acquisition method of accounting. Under this method, the identifiable assets acquired, liabilities assumed, and any non-controlling interest in the acquired company are recorded at their estimated fair values as of the acquisition date.

The excess of the purchase price over the estimated fair value of net identifiable assets acquired is recorded as goodwill. Acquisition-related costs, such as legal, accounting, and advisory fees, are expensed as incurred and reported in operating expenses.

Revenue Recognition

The Company's policy that revenue is recognized pursuant to the guidance of ASC 606 Revenue from Contracts with Customers ("ASC 606). ASC 606 establishes a comprehensive principle-based approach for determining revenue recognition. The core principle of the guidance is that an entity must recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for providing those goods or services. ASC 606 sets forth a five-step revenue recognition model to be applied consistently to all contracts with customers, except those that are within the scope of other topics in the ASC: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The update also provides guidance regarding the recognition of costs related to obtaining and fulfilling customer contracts. This update also requires quantitative and qualitative disclosures sufficient to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including disclosures on significant judgments made when applying the guidance. The FASB subsequently amended ASC 606 on multiple occasions to, among other things, delay its effective date and clarify certain implementation guidance.

Contract Receivables and Retainage

Contract receivables represent unconditional rights to consideration from project owners for billed performance obligations. Retainage receivables represents amounts which have not been billed to customers pursuant to retainage provisions in the construction contracts, which generally become payable upon contract completion and acceptance by the customer. Amounts are generally collected within one year of the completion of the project.

Contract assets include cost and estimated earnings in excess of billings on uncompleted contracts. The Company anticipates that substantially all incurred costs associated with contract assets as of June 30, 2026 will be billed and collected within one year. Contract assets may include amounts the Company seeks to collect from customers or others for (i) errors, (ii) changes in contract specifications or design, (iii) contract change orders in dispute, unapproved as to scope and price, or (iv) other customer-related causes of unanticipated additional contract costs (such as claims). The Company did not recognize any material amounts associated with claims and unapproved change orders during the six months ended June 30, 2026. Contract liabilities include billings in excess of costs and estimated earnings on uncompleted contracts. The Company anticipates that substantially all such amounts will be earned within one year.

Allowance for Credit Losses

The Company recognizes an allowance for credit losses for financial assets carried at amortized cost, to present the net amount expected to be collected as of the balance sheet date. Such allowance is based on the credit losses expected to arise over the contractual term of the financial asset (or group thereof), which includes consideration of prepayments, and is based on the Company's expectations as of the balance sheet date. The Company evaluates certain criteria, including aging and historical write-offs, the current economic condition of specific customers, and expected future economic conditions to determine the appropriate allowance for credit losses on financial assets carried at amortized cost. Such financial assets are written off when the Company determines that they are uncollectible or based on regulatory requirements, whichever is earlier. Write-offs are recognized as a deduction from the allowance for credit losses. Expected recoveries of amounts previously written off, not to exceed the aggregate of the amount previously written off, are included in measuring an allowance for credit losses as of the balance sheet date. At the time of the TRINITY acquisition, the Company recorded a partial reserve in the amount of $29,917,458 on related party receivables. See Note 2. There was no allowance for credit losses deemed necessary as of December 31, 2025.

Leases

The Company accounts for leases in accordance with Financial Accounting Standards Board ("FASB") ASC 842, Leases. The Company determines if an arrangement is a lease at inception. Operating and Finance lease right-of-use ("ROU") assets and current and noncurrent lease liabilities are included on the face of the consolidated balance sheet.

ROU assets represent the right of use to an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. For finance leases, the Company recognizes the amortization of the ROU asset over the shorter of the lease term or useful life of the underlying asset. Interest accretion on the finance lease liabilities is recorded as interest expense. As most of the Company's leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are accounted for as a single lease component. For lease agreements with terms less than 12 months, the Company has elected the short-term lease measurement and recognition exemption, and it recognizes such lease payments on a straight-line basis over the lease term.

Fair Value of Financial Instruments

The Company adopted the provisions under FASB for Fair Value Measurements, which define fair value for accounting purposes, establishes a framework for measuring fair value and expands disclosure requirements regarding fair value measurements. The Company's adoption of these provisions did not have a material impact on its consolidated financial statements. Fair value is defined as an exit price, which is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The degree of judgment utilized in measuring the fair value of assets and liabilities generally correlates to the level of pricing observability. Financial assets and liabilities with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in active markets generally have more pricing observability and require less judgment in measuring fair value. Conversely, financial assets and liabilities that are rarely traded or not quoted have less price observability and are generally measured at fair value using valuation models that require more judgment. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency of the asset, liability or market and the nature of the asset or liability. The Company has categorized its financial assets and liabilities measured at fair value into a three-level hierarchy in accordance with these provisions.

In January 2010 the FASB issued Update No. 2010-05 "Compensation-Stock Compensation-Escrowed Share Arrangements and Presumption of Compensation" ("2010-05"). 2010-05 re-asserts that the Staff of the Securities Exchange Commission (the "SEC Staff") has stated the presumption that for certain shareholders escrowed share represent a compensatory arrangement. 2010-05 further clarifies the criteria required to be met to establish a position different from the SEC Staff's position. The Company does not believe this pronouncement to have any material impact on its financial position, results of operations or cash flows.

New Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses (DISE)" which requires disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company does not believe the adoption of this guidance will have a material effect on its Consolidated Financial Statements and segment disclosures.

In July 2025, the FASB issued ASU 2025-05, which provides a practical expedient for estimating expected credit losses on short term receivables and contract assets from revenue transactions. The guidance permits a simplified loss rate approach based on historical write-off experience and current conditions. The Company adopted ASU 2025-05 effective January 1, 2026, on a prospective basis. The adoption of this accounting standard did not have a material impact on the Company's financial condition, results of operations, or cash flows.