Net Power Inc.

Item 1. Financial Statements

Condensed Consolidated Balance Sheets (Unaudited)

In thousands, except par value

Condensed Consolidated Balance Sheets (Unaudited) (Continued)

In thousands, except par value

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

In thousands, except per share data

Condensed Consolidated Statements of Shareholders’ Equity and Mezzanine Shareholders’ Equity (Unaudited)

Condensed Consolidated Statements of Shareholders’ Equity and Mezzanine Shareholders’ Equity (Unaudited) (Continued)

Condensed Consolidated Statements of Cash Flows (Unaudited)

Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1 — Nature of Business and Basis of Presentation

Nature of Business

NET Power Inc. (“Net Power” or the “Company”) is an energy technology and project development company focused on the development of natural gas power generation projects to meet growing demand for reliable power. The Company’s near-term development activities are focused on delivering natural gas power generation behind the meter to data centers and other large-load customers.

The Company is developing its initial natural gas power generation project to supply power behind the meter, without a connection to the grid of the Electric Reliability Council of Texas (“ERCOT”), to a co-located data center at a site in Texas that the Company has not yet secured and that is separate from the Project Permian site described below (the “Initial Project”). For the Initial Project, the Company intends to use theten reciprocating engine generating units being supplied under an engineering, procurement and construction agreement (the “EPC Agreement”) under which the Company assumed the owner’s rights and obligations in August 2026, as described in Note 6 — Property, Plant, and Equipment, together with additional generating capacity that the Company has not secured. The Company has not made a final investment decision (“FID”) for the Initial Project and has not obtained the site rights, permits, binding energy services or power offtake agreement, or the financing that FID would require. The Company also continues to develop its Project Permian site in West Texas (“Project Permian”) on a longer timeline. Project Permian is located within a ranch owned by affiliates of Occidental Petroleum, and the Company’s existing lease covers a portion of the site; development beyond the capacity that leasehold supports would require additional land rights that the Company has not obtained. The Company previously developed a reference design for a modular, standardized natural gas power plant product intended to accommodate PCC technology (the “Gas Power Product”, previously referred to as the “Clean Gas Product”). The Company does not currently expect the Initial Project to include carbon capture and is not designing it to accommodate the later addition of carbon capture. The configuration, generation capacity, carbon capture scope and timeline of each of the Company’s projects will depend on customer requirements, commercial arrangements, site rights, permits, equipment availability and financing.

Net Power’s technology portfolio also includes the Oxy-Combustion Cycle (also known as the Allam-Fetvedt cycle), a patented oxy-combustion and supercritical CO 2 power generation system that was designed to produce reliable and affordable electricity from natural gas while capturing virtually all atmospheric emissions. As discussed in Note 12 — Related Party Transactions, development of the Oxy-Combustion Cycle has been indefinitely suspended and the Company has no current plans to resume development. The Company retains the related intellectual property, subject to licenses held by affiliates of Baker Hughes, and its interests in the La Porte Demonstration Facility, which were fully impaired during the second quarter of 2026 and are carried at no value. Any future recovery of value would depend on a royalty under those licenses or on a sale, license or other disposition of all or part of those assets, as to which there can be no assurance. See Note 5 — Goodwill and Intangible Assets.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information; however, certain information or footnote disclosures normally included in complete financial statements prepared in accordance with US GAAP may have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In management’s opinion, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements for the year ended December 31, 2025 and include all adjustments, which consist of only normal and recurring adjustments, necessary for a fair presentation. Certain prior period financial information has been reclassified to conform to current period presentation.

The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of the results to be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the annual financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 9, 2026 (the “2025 Annual Report”).

NOTE 2 — Significant Accounting Policies

The Company’s significant accounting policies used to prepare these condensed consolidated financial statements, unless otherwise noted below, are consistent with those used for the fiscal year ended December 31, 2025. Accordingly, refer to Note 2 to the consolidated financial statements in the 2025 Annual Report for the Company’s significant accounting policies.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make certain estimates, judgments, and assumptions. The estimates, judgments and assumptions made by the Company when accounting for items and matters such as, but not limited to, depreciation, amortization, asset valuations, long-lived asset impairment, warrants, and share-based compensation, were reasonable based on information available at the time they were made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements, as well as amounts reported on the condensed consolidated statements of operations and comprehensive loss during the periods presented. To the extent there are differences between these estimates and actual results, the Company’s condensed consolidated financial statements may be materially affected.

Segment Reporting

In accordance with ASC Topic 280, Segment Reporting (“ASC 280”), the Company has determined that it hasone operating segment andone reportable segment, which includes all of the Company’s consolidated accounts. The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer. The CODM focuses on consolidated operating income (loss), with a focus on research and development, general and administrative expenses, and project development expenses, along with interest income to assess the Company’s performance and allocate resources. Segment expenses and other segment items are provided to the CODM on the same basis as disclosed in the condensed consolidated financial statements. The measure of segment assets is reported on the Company’s condensed consolidated balance sheet as total assets.

Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires companies to provide annually a tabular reconciliation of the reported income tax expense (or benefit) from continuing operations to the product of the income (or loss) from continuing operations before income taxes and the applicable statutory federal income tax rate using specified categories and to disclose separately reconciling items within certain categories with absolute values equal to or greater than five percent of the product of the income (or loss) from continuing operations before tax and the applicable statutory tax rate. Additionally, ASU 2023-09 requires a public business entity to disclose the annual income taxes paid, net of refunds received, to federal, state, and foreign jurisdictions. If a payment to a single federal, state or foreign jurisdiction equals or exceeds five percent of total income taxes paid, ASU 2023-09 requires separate disclosure of that payment. Finally, ASU 2023-09 requires a public business entity to disclose income (or loss) from continuing operations before income tax expense (or benefit), disaggregated between domestic and foreign jurisdictions, and to disclose income tax expense (or benefit) from continuing operations, disaggregated between federal, state, and foreign jurisdictions. ASU 2023-09 removes the requirement to disclose the nature and estimate of the range of reasonably possible increases or decreases in the unrecognized tax benefits balance in the next 12 months, or to make a statement that an estimate of the range cannot be made. ASU 2023-09 is effective for the Company for calendar years beginning after December 15, 2025. Early adoption is permitted. The Company is required to apply ASU 2023-09 to its income tax disclosures in its consolidated financial statements for the year ending December 31, 2026. The Company has evaluated the impact of adoption of ASU 2023-09 and does not expect any material impacts on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses(“ASU 2024-03”), which requires new tabular disclosures in the notes to consolidated financial statements, disaggregating certain cost and expense categories within relevant captions on the consolidated statements of operations. The prescribed cost and expense categories requiring disaggregated disclosures include purchases of inventory, employee compensation, depreciation, and intangible asset amortization, along with certain other expense disclosures already required by US GAAP that would need to be integrated within the new tabular disaggregated expense disclosures. Additionally, the amendments also require the disclosure of total selling expenses and an entity’s definition of those expenses. The amendments in ASU 2024-03 are effective for annual periods beginning after December 15, 2026 and for interim periods beginning after December 15, 2027. Early adoption is permitted, and the amendments should be applied on a prospective basis, although retrospective application is permitted. The Company is evaluating the impact of adopting ASU 2024-03 on its expense disclosures.

NOTE 3 — Investments

The Company is currently invested inavailable-for-sale securities. The following tables present the Company’s available-for-sale investments included in the condensed consolidated balance sheets:

The cost of securities sold, if any, is based on the specific-identification method. During the three and nine months ended September 30, 2026, the Company sold $29.8 million of available-for-sale securities and recognized a nominal amount of realized losses related to the sale. The realized losses are included in other income (expense) on the condensed consolidated statements of operations and comprehensive loss. During the three and nine months ended September 30, 2025, there wereno securities sold.

There wereno credit losses recognized during the three and nine months ended September 30, 2026 and 2025. The Company hadno allowances for credit losses as of September 30, 2026 and December 31, 2025.

NOTE 4 — Fair Value Measurements

The following table presents the assets and liabilities that the Company measures at fair value on a recurring basis included in the condensed consolidated balance sheets and indicates the level of the valuation inputs the

Company utilized to determine the fair value:

The following table contains a reconciliation of the beginning and ending balances of recurring Level 3 fair value measurements included in the condensed consolidated statements of operations and comprehensive loss:

Available-for-sale Securities

The fair value of the available-for-sale investments is classified as a Level 1 fair value measurement, because the investments are valued using the most recent quoted prices for identical assets in active markets.

Warrants

The Public Warrants are exercisable for 8,620,535 shares of Class A Common Stock at a price of $11.50 per share. The Company may redeem the Public Warrants for $0.01 if the last reported trading price of the Company’s Class A Common Stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading-day period. Additionally, the Public Warrants may be redeemed if the last reported trading price of the Company’s Class A Common Stock equals or exceeds $10.00 and is below $18.00 by paying a make-whole premium. The Public Warrants expire June 8, 2028. The Public Warrants are valued using their quoted and publicly available market prices. Since their fair value is predicated on quoted prices in an active market for identical instruments, the fair value of the Public Warrants is considered a Level 1 fair value measurement.

The Private Placement Warrants are exercisable for 10,900,000 shares of Class A Common Stock at a price of $11.50 per share. The Private Placement Warrants expire on June 8, 2028. The Private Placement Warrants are exercisable on a cashless basis and are non-redeemable as long as they are held by the initial purchasers or their permitted transferees. The Private Placement Warrants and Class A Common Stock issuable upon exercise of the Private Placement Warrants are entitled to registration rights.

The Company uses a Black-Scholes-Merton Model to value the Private Placement Warrants. Key inputs into the Black-Scholes-Merton Model include the last Class A Common Stock closing priceof $1.49 as of September 30, 2026 and the strike price of $11.50 per share. The volatility assumption is based on the

Company’s own historical volatility and the implied volatility of the Public Warrants. For the valuation as of December 31, 2025, the volatility assumption was based on a blended average of equity volatility of publicly traded companies within the Company’s peer group, the Company’s own historical volatility, and the implied volatility of the Public Warrants. The fair value of the Private Placement Warrants is considered a Level 3 fair value measurement.

The following table contains the key inputs used in the valuations of the Private Placement Warrants:

NOTE 5 — Goodwill and Intangible Assets

Goodwill

Goodwill represented the future economic benefits derived from the Company’s unique market position, the growth attributable to the Oxy-Combustion Cycle technology, and the Company’s assembled workforce, none of which are individually and separately recognized as intangible assets. Goodwill was allocated to the Company’s sole reportable segment and reporting unit.

As of September 30, 2026 and December 31, 2025, the Company hadno goodwill. In March 2025, the Company assessed its goodwill for impairment. Due to a change in the Company’s business plans in the first quarter of 2025 and the related sustained decrease in the Company’s market capitalization, the Company concluded that it was more likely than not that the fair value of its goodwill was less than its carrying amount as of March 31, 2025. As a result, the Company fully impaired its goodwill and recognized an impairment of $359.8 million during thenine months ended September 30, 2025, included in impairment and other charges on the condensed consolidated statements of operations and comprehensive loss.

Definite-Lived Intangible Assets

The following table summarizes the Company’s definite-lived intangible assets included in the condensed consolidated balance sheets:

The following table presents the Company’s amortization expense for the following periods:

The Company does not own or control any intangible assets with indefinite useful lives. The following table presents estimated amortization expense for the next five years and thereafter (in thousands):

The Company regularly evaluates whether events or changes in circumstances warrant a revision to the remaining estimated useful lives of its long-lived assets.

During the second quarter of 2026, the Company identified indicators of impairment for its definite-lived intangible assets, the La Porte Demonstration Facility, and certain other assets (the “Developed Technology Asset Group”).

During the first half of 2026, the Company and Baker Hughes agreed to temporarily suspend development activities under the BHES JDA (as discussed in Note 12 — Related Party Transactions) while Baker Hughes evaluated the development and commercialization of the industrial-scale Oxy-Combustion Cycle technology. During the suspension period, the Company and Baker Hughes engaged in negotiations related to the future development and commercialization of the industrial-scale Oxy-Combustion Cycle technology. As of June 30, 2026, the terms of the indefinite suspension of the BHES JDA were substantially negotiated, giving rise to the impairment and other effects described in Note 6 — Property, Plant, and Equipment, Note 12 — Related Party Transactions, and Note 14 — Commitments and Contingencies.

The Company determined that triggering events had occurred requiring an impairment assessment of its Developed Technology Asset Group as a result of (i) the Company’s determination during the second quarter of 2026 that development of the Oxy-Combustion Cycle under the BHES JDA would not resume, and (ii) the fact that the Company had no current plans as of June 30, 2026, and has no current plans, to continue development of the Oxy-Combustion Cycle technology. Accordingly, any recovery of the carrying value would be contingent upon a sale, license or other disposition of all or part of the Oxy-Combustion Cycle intellectual property and the Company’s improvements, equipment and lease interests at the La Porte Demonstration Facility. There can be no assurance that any transaction will be agreed or consummated, or as to its terms or timing.

Management determined that no value should be ascribed to the Developed Technology Asset Group based on the following factors: (i) the indefinite suspension of further development of the Oxy-Combustion Cycle technology under the BHES JDA, (ii) there are no current plans to resume development of the Company’s Oxy-Combustion Cycle technology, and (iii) uncertainty as to whether any disposal transaction to sell all or part of the Developed Technology Asset Group will be consummated. Accordingly, the Company recognized a full impairment of the Developed Technology Asset Group of $193.7 million during the second quarter of 2026. During the three months ended September 30, 2026, the Company recognized additional impairment losses of $0.8 million related to construction-in-progress expenditures related to the La Porte Demonstration Facility. The factors leading to the full impairment during the second quarter of 2026 remained throughout the third quarter of 2026. The impairment loss is included in impairment and other charges on the condensed consolidated statements of operations and comprehensive loss.

As discussed in Note 12 — Related Party Transactions, on September 8, 2026, the Company and affiliates of Baker Hughes entered into definitive agreements to, among other things, indefinitely suspend development and commercialization of the utility-scale Oxy-Combustion Cycle technology and amend the related license agreement.

During the three and nine months ended September 30, 2025, the Company recognized an impairment loss of $1,095.8 million related to the Developed Technology Asset Group, which is included in impairment and other charges on the condensed consolidated statements of operations and comprehensive loss. In late August 2025, the Company completed a techno-economic analysis that identified slower than anticipated acceptance and deployment of the Oxy-Combustion Cycle technology. Based on that analysis, feedback from potential customers, and the estimated cost reductions achieved through a value engineering process for the first utility-scale plant incorporating the Oxy-Combustion Cycle technology (“SN1”), the Company revised its long-range forecasts of future unit deployments and related cash flows and determined that a triggering event had occurred requiring an impairment assessment of the Developed Technology Asset Group. The Company determined that the carrying value of the asset group was not recoverable and estimated its fair value at $200.0 million using the income and market approaches, both of which used Level 3 inputs. The income approach used a probability-weighted discounted cash flow method based on management’s projections of future revenues and operating expenses from future deployments of the Oxy-Combustion Cycle technology. The market approach used an implied value approach, applying a control premium to the Company’s market capitalization, less working capital, investments in securities, and other assets not part of the Developed Technology Asset Group. See Note 5 to the consolidated financial statements included in the Company’s 2025 Annual Report for additional information.

The following table details the total amount of long-lived asset impairment losses recognized for the Developed Technology Asset Group:

NOTE 6 — Property, Plant, and Equipment

Power Generation Equipment Contractual Rights Acquisition

On August 31, 2026, the Company acquired, under an Assignment and Assumption Agreement (the “Assignment Agreement”) with EMPower USA, LLC (“EMPower”), EMPower’s position as owner under the EPC Agreement with Saulsbury Industries, Inc. (“Saulsbury”) for an approximately 123-megawatt reciprocating engine natural gas power generation facility, together with specified related rights and benefits under Saulsbury’s equipment supply agreement with Wärtsilä North America, Inc. (“Wärtsilä”) forten engine-generator sets (the “EEQ Agreement”). The aggregate acquisition cost of approximately $117.6 million consisted of (i) approximately $59.0 million paid to EMPower, comprising a $40.0 million premium, $20.0 million of which was paid as deposits under a deposit and exclusivity agreement entered into on August 13, 2026, and approximately $18.9 million in reimbursement of amounts EMPower previously paid under the EPC Agreement, and (ii) a milestone payment of approximately $58.6 million to Saulsbury for equipment supplied under the EEQ Agreement, which was due and paid at closing under the EPC Agreement. The assignment transferred contractual rights and did not transfer title to the engine-generator sets. Title passes under the applicable contractual delivery and payment provisions. Amounts funded before title passes are supported by a contractual security interest in the equipment and identifiable proceeds, subject to the applicable lender arrangements.

Saulsbury consented to the assignment and to the relocation of the project from its original site to a replacement site at Project Permian, and the Company and Saulsbury agreed to negotiate a change order documenting the relocation, the resumption and sequencing of the work and a revised project schedule (the “Post-closing Change Order”). The Company now intends to relocate the project instead to the site of the Initial Project described in Note 1 — Nature of Business and Basis of Presentation, which the Post-closing Change Order would document. Wärtsilä acknowledged the owner substitution and consented to a subsequent assignment of the EEQ Agreement to the Company; Saulsbury remained the buyer under that agreement. Wärtsilä reserved its position on the relocation. Work under the EPC Agreement has been suspended since July 1, 2026. Resumption of the full scope of work requires a full notice to proceed from the Company, payment of the approximately $10.2 million mobilization payment and any other amounts then due, and satisfaction of other conditions, including Saulsbury’s and Wärtsilä’s review of the project financing. The Company is not obligated to issue the full notice to proceed. The Post-closing Change Order was not executed within 30 days after closing and, as of the date of this Report, has not been executed, and the Company is negotiating with Saulsbury a limited notice to proceed that would authorize specified engineering and procurement activities before the full notice to proceed. Because the Post-closing Change Order was not executed within 30 days after closing, the Company had the right, exercisable by notice during the followingten days, to elect either to continue the work pending execution of the change order or to terminate the EPC Agreement. The Company did not elect to terminate the EPC Agreement, which remains in effect pending execution of the Post-closing Change Order. In October 2026, the date by which the Company may issue the full notice to proceed under the EPC Agreement was extended to March 31, 2027. If the Company does not issue the full notice to proceed by that date, either party may terminate the EPC Agreement, whereupon Saulsbury would be entitled to a termination payment of $3.5 million, which may become payable earlier if the applicable execution and payment conditions are not satisfied, as described in Note 14 — Commitments and Contingencies. Upon termination, the Company may take assignment of the EEQ Agreement, subject to specified conditions, by assuming the remaining payment obligations under it, which totaled approximately $23.3 million as of September 30, 2026. Until the Company delivers a full or limited notice to proceed, it bears specified suspension, standby, preservation, and storage charges, subject to negotiated caps.

The transaction does not qualify as a business combination under ASC Topic 805, Business Combinations (“ASC 805”) and has therefore been accounted for as an asset acquisition. The Company concluded that the acquired contractual rights and equipment-related expenditures constitute a single construction asset as the contractual rights relate specifically to, and are expected to be realized through, the acquisition of identified power generation equipment. Accordingly, the Company recognized the acquisition cost in construction-in-progress.

The following table summarizes the key classifications of property, plant, and equipment included in the condensed consolidated balance sheets:

As of September 30, 2026, construction-in-progress consisted of$117.6 million related to the contractual rights and equipment-related payments acquired under the Assignment Agreement discussed above and $23.3 million related to deposits on natural gas turbine equipment packages for use in a future natural gas power generation project.

Of the impairment recognized in 2026 and 2025, $18.2 million and $80.2 million, respectively, were allocated to property, plant, and equipment of the Developed Technology Asset Group. Refer to Note 5 — Goodwill and Intangible Assetsfor discussion of the impairment of the Developed Technology Asset Group recognized during 2026.

During the first quarter of 2025, as a result of management’s assessment of the probability of the construction of the first utility-scale plant incorporating the Oxy-Combustion Cycle technology, or SN1,$56.1 millionof costs previously included in construction-in-progress were expensed. This amount is included in impairment and other charges in thecondensed consolidated statements of operations and comprehensive loss for thenine months ended September 30, 2025.

The following table presents the Company’s depreciation and amortization expense for the following periods:

The Company regularly evaluates whether events or changes in circumstances warrant a revision to the remaining estimated useful lives of its long-lived assets.

NOTE 7 — Accrued Liabilities

Accrued liabilities in the condensed consolidated balance sheets consist of the following:

NOTE 8 — Redeemable Non-Controlling Interests in Subsidiary

The following table presents the Company’s and non-controlling interest holders’ (“NCI”) ownership percentages in OpCo as of the following dates:

The Company measures redeemable NCI each quarter at the higher of its book value or its redemption value. As of September 30, 2026, the Company measured redeemable NCI at redemption value. As of December 31, 2025, the Company measured redeemable NCI at book value. The adjustment to record redeemable NCI at book or redemption value is recorded through additional paid-in capital on the condensed consolidated statements of shareholders’ equity and mezzanine shareholders’ equity.

OpCo’s net loss before income tax was attributed to redeemable NCI holders at 60.6% and 61.0% for thethree and nine months ended September 30, 2026. OpCo’s net loss before income tax was attributed to redeemable NCI holders at 64.5% and 64.5% for thethree and nine months ended September 30, 2025.

NOTE 9 — Share-Based Compensation

The 2023 Omnibus Incentive Plan reserved 20,468,545 shares of Class A Common Stock for issuance as equity awards. The quantity of shares of Class A Common Stock reserved for grants under the 2023 Omnibus Incentive Plan will be subject to an annual increase on the first day of each calendar year beginning January 1, 2024, and ending and including January 1, 2033, equal to the lesser of (i)5% of the aggregate number of shares outstanding on December 31 of the immediately preceding calendar year and (ii) any such smaller number of shares as is determined by the Board.

The following table presents the aggregate share-based compensation expense, net of forfeitures, for the following periods:

During 2026, in connection with employee terminations, the Company modified certain unvested restricted stock units and unvested stock options to accelerate vesting of awards that would otherwise have been forfeited upon separation (refer to Note 13 — One-time Employee Termination Costs). The Company determined the acceleration of the unvested awards constituted a Type III modification, as defined in ASC Topic 718, Compensation-Stock Compensation (“ASC 718”), as the expectation of the awards’ vesting changed from improbable to probable, resulting in a new measurement of compensation expense. During the nine months ended September 30, 2026, the Company recognized additional share-based compensation expense of $1.4 million related to the accelerated vesting of awards as a result of employee terminations.

Restricted Stock Units

As of September 30, 2026, there was $4.7 million of unrecognized share-based compensation expense related to unvested restricted stock units (“RSUs”), which the Company expects to recognize over a weighted-average period of 2.1 years.

The following table presents a summary of RSU activity during the nine months ended September 30, 2026:

Performance Stock Units

As of September 30, 2026, there was $1.1 million of unrecognized share-based compensation expense related to unvested performance stock units (“PSUs”), which the Company expects to be recognized over a weighted-average period of 2.4 years.

The following table presents a summary of PSU activity as of September 30, 2026 and the changes during the nine months ended September 30, 2026:

A portion of payments for services under the BHES JDA is settled in equity; refer to Note 12 — Related Party Transactions for additional information.

NOTE 10 — Loss per Share

Basic loss per share attributable to shareholders is calculated by dividing net loss attributable to shareholders by the weighted-average number of shares outstanding during the period. Diluted loss per share attributable to shareholders includes the effect of potentially dilutive common shares outstanding.

The following table sets forth the computation of the Company’s basic and diluted loss per share for the following periods:

Only shares of Class A Common Stock participate in the Company’s undistributed earnings. As such, the Company’s undistributed earnings are allocated entirely to the Class A Common Stock based on the weighted-average number of shares of Class A Common Stock outstanding for the three and nine months ended September 30, 2026 and 2025.

Based on the amounts outstanding at September 30, 2026 and 2025, the Company excluded the following financial instruments from the computation of diluted loss per share because their inclusion would be anti-dilutive:

NOTE 11 — Income Taxes

The Company recognizedno income tax expense or benefit for the three months ended September 30, 2026 and income tax expense of less than $0.1 million for the nine months ended September 30, 2026, resulting in an effective tax rate (“ETR”) of 0%, compared to deferred income tax benefits of $1.2 million and $2.4 million based on an estimated annual ETR of 1.9% for the three and nine months ended September 30, 2025.

The 0% ETR for the current quarter reflects the fact that the portion of the Company’s loss attributable to non-controlling interest is taxable to those partners and not the Company, as well as the valuation allowance established by the Company on the remainder of the loss. A full valuation allowance has been established against deferred tax assets, as the Company has determined it is more likely than not that such assets will not be realized. Accordingly, no tax benefit has been recognized on current-period losses.

The decrease in the ETR compared to the prior year period reflects the reversal during 2025 of the Company’s net deferred tax liability at December 31, 2024. Impairments recognized during 2025 reduced the book basis of the Company’s investment in OpCo below its tax basis and moved the Company into a net deferred tax asset position, against which it has recorded a full valuation allowance.

Tax Receivable Agreement

In March 2025, due to the Company’s decision to pause new purchase commitments for SN1’s long-lead equipment and commencement of a value engineering exercise to determine project cost reductions and better understand SN1’s expected economic feasibility, the Company determined it was not more likely than not that its deferred tax assets subject to the Tax Receivable Agreement (“TRA”) would be realized and therefore reduced the TRA liability tozero as payments under the TRA were not considered probable. Accordingly, in March 2025, the Company recognized a $21.3 million reduction in the Tax Receivable Agreement liability, which is recorded in Change in Tax Receivable Agreement liability in the condensed consolidated statements of operations for thenine months ended September 30, 2025.

On May 12, 2025, pursuant to its rights under the TRA, the Company delivered to the agent of the TRA holders notice of the Company’s intent to terminate the TRA (the “Early Termination Notice”). No early termination payment was payable to any TRA holder. The Early Termination Notice became final and binding on June 12, 2025.

NOTE 12 — Related Party Transactions

The following table summarizes the related party transactions included in the condensed consolidated statements of operations and comprehensive loss:

The Company had $10.6 million and $37.3 million in current liabilities payable to related parties as of September 30, 2026 and December 31, 2025, respectively, on the condensed consolidated balance sheets related to the following services. These related party payables are unsecured and are due on demand.

Master Services Agreements

A significant shareholder provides the Company with patent administration services related to the development of the Oxy-Combustion Cycle technology. Costs incurred under this agreement are included in general and administrative on the condensed consolidated statements of operations and comprehensive loss.

Another shareholder supports the Company with regard to general business oversight and with the operation of the La Porte Demonstration Facility. On June 30, 2026, this shareholder notified the Company that it is terminating all outstanding work orders under the related master services agreement, effective December 26, 2026. Costs incurred under this agreement are reflected in research and development on the condensed consolidated statements of operations and comprehensive loss.

BHES JDA

On February 3, 2022, the Company and BHES entered into the Original JDA, which was subsequently amended and restated on June 30, 2022, and December 13, 2022 with BHES to invest in, develop, and deploy the Oxy-Combustion Cycle technology in collaboration with the Company (as amended and restated, the “BHES JDA”). The BHES JDA is settled in cash and issuances of equity in exchange for services related to the development and commercialization of the Oxy-Combustion Cycle technology. The Company recorded the expense for services provided by BHES within research and development on the condensed consolidated statements of operations and comprehensive loss.

By a letter agreement dated January 22, 2026, the Company agreed to temporarily suspend development activities under the BHES JDA, which covered joint development of turboexpander equipment for utility-scale application of the Oxy-Combustion Cycle, from the December 31, 2025 effective date through March 31, 2026 (the “BHES JDA Suspension Letter”), which was subsequently extended through June 30, 2026 pursuant to the BHES JDA Variation Agreement No. 1, dated March 31, 2026, and BHES JDA Variation Agreement No. 2, dated June 4, 2026. The Company is obligated to reimburse BHES for costs incurred to terminate certain third-party supplier and subcontractor purchase orders and, subject to a $3.0 million cap, for certain other costs resulting or arising from the suspension.

During the first quarter of 2026, the Company incurred $9.6 million related to reimbursement of costs incurred by BHES to terminate certain third-party supplier and subcontractor purchase orders entered into by BHES in furtherance of the BHES JDA scope. During the three months ended September 30, 2026, the Company incurred an additional $3.4 million, bringing the total incurred to $13.0 million for the nine months ended September 30, 2026. The additional amount consists of $2.2 million of the other suspension costs, which are subject to the $3.0 million cap, and a $1.2 million increase in BHES’s estimate of the purchase order termination costs, which are not subject to the cap. These amounts are based on preliminary estimates provided by BHES and may change when BHES issues its invoices. As of September 30, 2026, the amounts due to BHES related to these reimbursements remained outstanding and are expected to be settled in the fourth quarter of 2026. Of this amount, $7.6 million will be settled in cash and is included in current liabilities payable to related parties, and $5.4 million will be settled with issuance of equity as discussed below.

On September 8, 2026, the Company entered into agreements with affiliates of Baker Hughes that suspend indefinitely, but do not terminate, the BHES JDA retroactive to January 1, 2026, and the related commercial agreement, and that amend the related license agreement. The suspension of the BHES JDA will end only if the parties agree in writing to reinstate or terminate it. Under these agreements, Baker Hughes’ rights of access to, and exclusivity over, the La Porte Demonstration Facility ended, and each party released the other parties and their affiliates from claims arising before September 8, 2026, other than specified excluded matters, including the Company’s payment and wind-down obligations under the BHES JDA Suspension Letter and the limited notice to proceed for long-lead equipment dated December 28, 2023 (the “BHES LNTP”), and amounts accrued or invoiced but unpaid. These agreements formalized the indefinite suspension of the BHES JDA that was substantially negotiated as of June 30, 2026, which gave rise to the impairment and other effects described in

Note 5 — Goodwill and Intangible Assets, Note 6 — Property, Plant, and Equipment, and Note 14 — Commitments and Contingencies.

Under the amended license agreement, Baker Hughes holds a perpetual, irrevocable, royalty-free license, exclusive subject to rights retained by the Company, to manufacture and sell industrial-scale products incorporating the Oxy-Combustion Cycle technology, and a license to install and operate industrial plants incorporating those products, for which a royalty is payable to the Company. The royalty must be commercially reasonable and agreed in writing, under a commercial model that supports the customer’s value proposition, allows a competitive cost of electricity and provides commercially reasonable compensation to the Company. If the parties do not agree within 180 days after either party proposes terms for a plant, either party may refer the determination to an independent expert, whose determination, applying those standards, is binding absent manifest error. Baker Hughes may continue to exercise the license pending the determination, and the royalty applies from the first commercial operation of the plant. No royalty amount has been agreed, no royalty is assured, and Baker Hughes is not obligated to deploy any plant. Baker Hughes’ exclusive license to manufacture and sell utility-scale equipment packages remains in effect, and the provision under which that exclusivity could be lost is suspended. The Company retains ownership of the licensed intellectual property.

The portion of BHES JDA costs that the Company paid with Class A OpCo Units and shares of Class B Common Stock was recorded within additional paid-in capital on the condensed consolidated balance sheets and the condensed consolidated statements of shareholders’ equity and mezzanine shareholders’ equity. The following table displays the expense recognized in the condensed consolidated statements of operations and comprehensive loss for shares distributed as payment for services rendered under the terms of the BHES JDA during the periods described below:

Shares issued as payment under the terms of the BHES JDA were issued at a discount that resulted in inception-to-date losses to the Company of $16.3 million. Following the suspension arrangements, the Company does not expect to make additional equity issuances under the BHES JDA other than in respect of final billings and other surviving obligations under those arrangements. For thethree and nine months ended September 30, 2026, the Company incurred losses of $0.1 million and $1.3 million, respectively.

If the volume-weighted average price of the Company’s stock forten consecutive trading days (“10-Day VWAP”) immediately preceding the payment date for services under the BHES JDA is less than $4.00 per share (the “Floor Price”), an incremental cash payment is required for the difference between the 10-Day VWAP and the Floor Price (the “BHES JDA Make-Whole Payment”). As of September 30, 2026 and December 31, 2025, the Company had $2.9 million and $2.8 million in current liabilities payable to related parties on the condensed consolidated balance sheets related to the BHES JDA Make-Whole Payment. During the three and nine months ended September 30, 2026, the Company incurred expenses of$0.8 million and$2.9 million, respectively, related to the BHES JDA Make-Whole Payment. During the three and nine months ended September 30, 2025, the Company incurred expenses of$1.0 million and $4.9 million, respectively, related to the BHES JDA Make-Whole Payment.

NOTE 13 — One-time Employee Termination Costs

During the three and nine months ended September 30, 2026, the Company recognized $0.4 million and $5.2 million of employee termination costs related to workforce reductions, the nine-month amount consisting of $3.8 million of severance costs and $1.4 million of accelerated share-based compensation expense. For the three months ended September 30, 2026, these costs are included in general and administrative in the condensed consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2026, these costs are included in general and administrative, research and development, and sales and marketing expenses in the condensed consolidated statements of operations and comprehensive loss, totaling $3.5 million, $1.2 million, and $0.5 million, respectively.

In April 2025, the Company terminated certain members of its management team. As a result of these terminations, the Company recognized $3.1 million in severance costs and approximately$1.1 million of costs related to the accelerated vesting of stock-based compensation during the nine months ended September 30, 2025.

NOTE 14 — Commitments and Contingencies

Litigation

From time to time, the Company is party to certain legal actions and claims. Other than any ordinary routine litigation incidental to the business and except as described below, the Company is not currently a party to, nor is its property currently subject to, any material legal proceedings, and the Company is not aware of any such proceedings contemplated by governmental authorities.

On April 18, 2025, an alleged stockholder filed a putative class action complaint in the United States District Court for the Middle District of North Carolina against the Company, its Chief Executive Officer, its former Chief Financial Officer and its former President and Chief Operating Officer, on behalf of a putative class of persons and entities other than the defendants that acquired the Company’s securities between June 9, 2023 and March 7, 2025, asserting violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5. On April 23, 2026, the Court appointed a lead plaintiff, who filed an amended complaint on June 22, 2026 (the “Amended Complaint”). The Amended Complaint alleges, among other things, that the defendants made materially false and misleading statements about the Company’s business, operations, and prospects, including the timing and costs of developing SN1, which the Company then referred to as Project Permian. The lead plaintiff seeks, among other things, class certification, unspecified compensatory damages, interest, and costs and expenses, including attorneys’ and expert fees. On August 6, 2026, the Company moved to dismiss the Amended Complaint, and briefing on the motion was completed on October 21, 2026. As of the date of this Report, the Court has not decided the motion. The Company intends to defend vigorously against the claims.

On May 29, 2025, an alleged stockholder filed a derivative suit on behalf of the Company in the same court against certain of the Company’s current and former officers and directors, with the Company named as a nominal defendant, asserting claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets and violations of the federal securities laws (the “First Derivative Action”). On August 28, 2026, another alleged stockholder filed a second derivative suit in the same court against the same defendants, asserting similar claims. The claims in both derivative actions are predicated on the same allegedly false and misleading statements that are the subject of the Amended Complaint. The First Derivative Action has been stayed pending resolution of the Amended Complaint. On October 14, 2026, the parties to both derivative actions filed a motion to consolidate the cases and stay all proceedings in the consolidated action pending resolution of the Amended Complaint. As of the date of this Report, the Court has not decided the motion.

These matters are at an early stage; the motion to dismiss is pending, discovery has not commenced, no class has been certified, the plaintiffs have not specified an amount of alleged damages, and the First Derivative Action is stayed. For these reasons, and given the inherent uncertainty of litigation, the Company is unable to estimate a reasonably possible loss or range of loss, if any, that it may incur to resolve or settle these matters.

EPC Agreement

In connection with the Assignment Agreement discussed in Note 6 — Property, Plant, and Equipment, the Company assumed the owner’s payment obligations under the EPC Agreement. As of September 30, 2026, remaining payments under the EPC Agreement totaled approximately $119.1 million, of which approximately $88.2 million would become payable during the 12 months following September 30, 2026 if the Company issues the full notice to proceed on its current schedule. The timing of the remaining payments depends on the achievement of specified milestones, and the amounts may change as a result of the Post-closing Change Order, including relocation costs, suspension and storage charges and price escalation.

On October 16, 2026, the Company and Saulsbury agreed, effective as of October 15, 2026 (the “Extension Agreement”), to extend to March 31, 2027 the date by which the Company may issue the full notice to proceed under the EPC Agreement and make the mobilization payment. On November 11, 2026, the Company and Saulsbury entered into an amendment to the Extension Agreement, which extended from November 15, 2026 to November 20, 2026 the date by which the Post-closing Change Order and a limited notice to proceed must be executed, and the payments required under the limited notice to proceed made, for the termination payment to remain deferred. In the amendment, Saulsbury confirmed that it had not demanded the $3.5 million contract termination payment, that the termination payment was not payable, and that it remained deferred under the Extension Agreement as amended. If the Post-closing Change Order and a limited notice to proceed are not both executed, or the payments required under the limited notice to proceed are not made, on or before November 20, 2026, for any reason, the Company must pay Saulsbury, withinten days after receiving its written demand and invoice, the termination payment. Otherwise, the termination payment is deferred until March 31, 2027 and becomes payable if the Company does not issue the full notice to proceed and make the mobilization payment by that date. As of the date of this Report, neither the Post-closing Change Order nor a limited notice to proceed has been executed, and their execution is subject to conditions that include the approval of the related expense items by the Company’s prospective customer under the Cost Reimbursement Agreement described below. If they are not executed, or the payments required under the limited notice to proceed are not made, on or before November 20, 2026, the termination payment would become payable. The Company currently expects to issue the full notice to proceed in connection with obtaining financing for the Initial Project.

Cost Reimbursement Agreement

In August 2026, the Company entered into a cost reimbursement agreement (the “Cost Reimbursement Agreement”) with a prospective customer, a leading developer of frontier artificial intelligence models, while the parties negotiate an energy services agreement for the Initial Project. If none has been executed by February 14, 2027, or if certain other events occur, the customer must reimburse the Company’s nonrefundable costs of approved expense items, up to approximately $180.0 million and subject to conditions, unless the Company elects to keep the related equipment. The Company has not recognized any receivable or any gain under the Cost Reimbursement Agreement.

Equipment Purchase Commitments

As of September 30, 2026, the Company has committed to purchase natural gas turbine equipment packages for use in a future natural gas power generation project. The gross commitments totaled $77.7 million, and as of September 30, 2026, there were $54.4 million remaining related to these commitments. These payments are due in installments aligned to contractual milestones through 2028. Of the remaining amounts due under the contract, approximately $38.9 million is due during the 12 months following September 30, 2026, and approximately $15.5 million is due thereafter through 2028. The Company expects to fund these amounts from existing liquidity and, if obtained, from equipment or project-level financing, none of which has been committed.

Asset Retirement Obligation

Under the terms of the lease for the La Porte Demonstration Facility, the Company is required to remove the La Porte Demonstration Facility and restore the land to post-clearing grade level. During the second quarter of 2026, the Company revised its expected decommissioning timing for the La Porte Demonstration Facility from June 2030 to June 2027, based on management’s expectations regarding the Company’s continued ownership and use of the Oxy-Combustion Cycle technology and the La Porte Demonstration Facility, as described in Note 5 — Goodwill and Intangible Assets. As a result, the Company recognized an upward revision to the asset retirement obligation of $0.7 million.

The following table reconciles the beginning and ending balances of the asset retirement obligation as of the dates presented: