X-Energy, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — ORGANIZATION AND NATURE OF BUSINESS

Company Overview

X-Energy, Inc. (“X-energy” or the “Company”) is a developer of advanced small modular nuclear reactors and fuel technology for clean energy generation. The Company was formed as a Delaware corporation on September 18, 2025, and is headquartered in Rockville, Maryland.

On April 27, 2026, X-energy successfully closed an initial public offering (“IPO”) of its Class A common stock in which it issued and sold 50,892,857 shares of its Class A Common Stock (as defined in Note 10 —Stockholders' Equity and Mezzanine Equity) at a public offering price of $23.00 per share for proceeds aggregating approximately $1.1 billion, net of underwriting discounts and issuance costs of $67.3 million and $13.5 million, respectively, that were incurred by the Company. Pursuant to certain transactions completed in connection with the IPO, X-energy is a holding company, and its principal asset is a controlling equity interest in X-Energy Reactor Company, LLC (“XERC”). As the sole managing member of XERC, X-energy operates and controls all of the business and affairs of XERC and its subsidiaries.

Completion of IPO

In connection with the IPO, the Company and XERC completed a series of organizational transactions (collectively, the “Reorganization Transactions”), which resulted in a combined company organized in an umbrella partnership-C corporation (“Up-C”) structure, in which substantially all of the assets are held by XERC. The Reorganization Transactions included the following transactions:

•

XERC amended and restated its existing limited liability company agreement to, among other things, (i) effect a recapitalization in which all existing ownership interests in XERC were converted into one class of common units of membership interest in XERC (“Common Units”) and (ii) appoint X-energy as the sole managing member of XERC.

•

X-energy amended and restated its certificate of incorporation to, among other things, authorize Class A and Class B common stock, with each share of either class entitling its holder to one vote per share on all matters presented to stockholders.

•

X-energy acquired Common Units of XERC held by the Blocker Companies (as defined below) pursuant to the Blocker Mergers (as defined below), in which the Blocker Companies merged with and into X-energy, with X-energy as the surviving entity. Pursuant to such mergers, shareholders of the Blocker Companies received shares of Class A common stock as consideration. “Blocker Companies” are entities that were owners of Common Units in XERC prior to the Reorganization Transactions and are taxable as corporations for U.S. federal income tax purposes. Meanwhile, the “Blocker Mergers” represent the merger of each of the Blocker Companies with X-energy as part of the Reorganization Transactions, pursuant to which the shareholders of the Blocker Companies, which represent the owners of the Blocker Companies prior to the Reorganization Transactions, received shares of Class A common stock as consideration in the applicable Blocker Merger.

•

X-energy acquired (i) all of the Common Units of XERC held by the former equity owners (“Former Equity Owners”), which refers to those Original Equity Owners (as defined below) other than the Blocker Companies and the Continuing Equity Owners (as defined below) except for X-Energy Management LLC, a Delaware limited liability company (“Management LLC”), which is addressed below, and (ii) a portion of the Common Units held by the Continuing Equity Owners, in each case in exchange for an equal number of shares of Class A common stock. “Original Equity Owners” are those direct and certain indirect owners of XERC, collectively, prior to the Reorganization Transactions, excluding Management LLC. “Continuing Equity Owners” collectively refer to those Original Equity Owners that own Common Units in XERC and the Company’s Class B common stock after the Reorganization Transactions and who may, subject to the terms of the related agreement and applicable lock-up restrictions, redeem their Common Units for either shares of X-energy’s Class A common stock or cash at X-energy’s election.

•

Management LLC amended and restated its limited liability company agreement to, among other things, effect a recapitalization in which all existing ownership interests in Management LLC were converted into one class of Common Units. Subsequently, Management LLC contributed all of its Common Units of XERC to X-energy in exchange for an equal number of shares of Class A common stock, which shares remain subject to the same vesting conditions applicable to the corresponding Common Units immediately prior to such contribution.

•

X-energy issued to the Continuing Equity Owners shares of Class B common stock equal to the number of Common Units of XERC held by the Continuing Equity Owners in exchange for nominal cash consideration from the Continuing Equity Owners.

•

X-energy entered into a Tax Receivable Agreement (“TRA”) with XERC and certain equity owners of XERC prior to the IPO (“TRA Holders”) that provides for the payment by X-energy to the TRA Holders of 85% of the amount of cash tax savings, if any, that X-energy actually realizes, or in some circumstances is deemed to realize (calculated using certain assumptions), as a result of certain tax basis adjustments.

Following the Reorganization Transactions, XERC became a Variable Interest Entity (“VIE”) with X-energy considered to be the primary beneficiary under Accounting Standards Codification (“ASC”) 810, Consolidation, since as the sole managing member of XERC, X-energy operates and controls all the business and affairs of XERC and its subsidiaries. Additionally, the Company may not be removed or replaced by the non-managing members.

Since XERC is the predecessor of X-energy for accounting and reporting purposes, the condensed consolidated financial statements for periods prior to the IPO reflect the historical operations of XERC.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

Basis of Presentation

The accompanying condensed consolidated financial statements for X-energy include the accounts of the Company’s wholly owned and consolidated subsidiaries. The condensed consolidated financial statements are unaudited and have been prepared pursuant to the accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the condensed consolidated financial statements reflect all normal recurring adjustments the Company considers necessary for the fair presentation of its results of operations and cash flows for the interim periods covered, and of the financial position of the Company at the date of the interim condensed consolidated balance sheet. The interim results reported herein are not necessarily indicative of results for a full year. Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported net loss, total assets, total liabilities, mezzanine equity, stockholders’ equity, members’ deficit, or cash flows. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2025 included in the Company’s prospectus dated April 23, 2026, filed with the SEC on April 27, 2026.

Non-controlling Interest

As the primary beneficiary of XERC, the Company consolidates the results of XERC and its subsidiaries, and the condensed consolidated financial statements include a non-controlling interest representing the Common Units of XERC held by the Continuing Equity Owners. As of June 30, 2026, the non-controlling interest was 29.8%.

The non-controlling interest was initially recorded based on the Continuing Equity Owners’ interest in the net assets of XERC prior to the IPO. The non-controlling interest is subsequently adjusted for its share of additional contributions, distributions, and net earnings or losses based on the ownership percentages of XERC held by the Continuing Equity Owners.

Certain Significant Risks and Uncertainties

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, accounts receivable, and short and long-term investments. By their nature, all such financial instruments involve risks, including the credit risk of nonperformance by counterparties. The Company generally does not require collateral to support the obligations of the counterparties and cash levels held at banks may be in excess of federally insured limits. The Company limits its exposure to credit loss by maintaining its cash and cash equivalents and investments at highly rated financial institutions and investing in U.S. Government securities and high credit quality issuers. Further, the Company’s revenue and credit relationships are primarily concentrated within the U.S. Government which represents a concentration risk but a low credit risk.

For the three months ended June 30, 2026 and 2025, two customers, the U.S. Government and Dow Chemical Company (“Dow”), accounted for 90.3% and 4.4%, and 80.4% and 13.3%, of total revenue and grant income, respectively. For the six months ended June 30, 2026 and 2025, they accounted for 90.9% and 4.4%, and 81.4% and 11.9%, respectively, of the Company’s total revenue and grant income. Refer to Note 3 —Revenue and Grant Income Recognition for further disaggregation of revenue and grant income by customer type for the three and six months ended June 30, 2026 and 2025 and to Note 14 —Related Party Transactions for further information on receivable balances with Dow.

The Company’s receivable balances related to services revenue and government grants with the U.S. Department of Energy (“DOE”) and U.S. Department of War are as follows (in thousands):

Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents consist primarily of cash deposits, cash held in financial institutions, and short-term investments purchased with an original maturity of three months or less. The carrying value of cash equivalents approximates fair value because of the short-term nature of these investments. The Company maintains its cash in bank deposit accounts with high credit quality financial institutions which, at times, may exceed the federally insured limit. The Company does not believe it is exposed to any significant credit risk regarding these deposits.

Restricted cash consists of refundable security deposits held under certain of the Company’s lease agreements.

The components of cash, cash equivalents, and restricted cash are as follows (in thousands):

Prepaid Costs and Other Current and Long-Term Assets

Amounts included in Prepaid costs and other current assets, and in Other long-term assets, relate primarily to deposits for long-lead materials, prepaid costs, and deferred transaction costs.

Deposits for Long-Lead Materials

The Company makes deposits to vendors for long-lead materials. The Company had$50.4 million and$17.0 million as of June 30, 2026 and December 31, 2025, respectively, in deposits related to long-lead materials. Of the balance as of June 30, 2026,$41.6 million is included in Other long-term assets and$8.8 million is included in Prepaid and other current assets on the condensed consolidated balance sheets. As of December 31, 2025, the entirety of the balance is included in Other long-term assets.

Prepaid Costs

Prepaid costs, primarily consisting of prepaid service fees, software, and other general prepayments, amounted to$22.5 million and$7.5 million as of June 30, 2026 and December 31, 2025, respectively, and are presented within Prepaid and other current assets and Other long-term assets based on the expected timing of recognition.

Transaction Costs

The Company records transaction costs incurred in conjunction with the issuance of preferred units as a reduction of Mezzanine equity on the condensed consolidated balance sheets. For the three months ended June 30, 2026 and 2025, the Company didnot incur issuance costs associated with the issuance of the Preferred Units. For thesix months ended June 30, 2026 and 2025, the Company incurred zero and$2.2 million in issuance costs associated with the issuance of the Series C-1 Preferred Units, respectively.

The Company capitalized qualified legal, accounting, and other direct and incremental costs related to the public offering transaction. These costs were$3.9 million as of December 31, 2025, and were included in Prepaid and other current assets on the condensed consolidated balance sheet. Upon completion of the IPO, these transaction costs were charged to Additional paid-in capital.

Other Income (Expense), Net

Other income (expense), net consists of the following (in thousands):

(1)

Refer to Note 7—Debt

(2)

Refer to Note 13 —Fair Value Measurements

Other Comprehensive Income (Loss)

Other comprehensive income (loss) refers to revenues, expenses, gains, and losses that under U.S. GAAP are included in comprehensive income but excluded from net income. The components of the Company’s Other comprehensive income (loss) consist of foreign currency translation adjustments and the change in fair value of financial liabilities accounted for pursuant to the fair value option attributable to changes in instrument-specific credit risk.

The components of accumulated other comprehensive income (loss) for thethree and six months ended June 30, 2026 and 2025 are as follows (in thousands):

Accounting Standards Recently Adopted

In March 2024, the FASB issued ASU No. 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards (“ASU 2024-01”), which clarifies the scope application for profits interest awards and similar awards and provides illustrative examples intended to reduce diversity in practice in determining whether such awards should be accounted for under Topic 718. For public business entities, ASU 2024-01 is effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2024; for all other entities, the ASU is effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2025; early adoption is permitted for all entities. The company adopted ASU 2024-01 on January 1, 2026, and it did not have an impact on the condensed consolidated financial statements and related disclosures.

In May 2025, the FASB issued ASU No. 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (“ASU 2025-03”), which amends the ASC 805, Business Combinations, framework for identifying the accounting acquirer in business combinations when the legal acquiree is a VIE by requiring entities to consider the general accounting acquirer factors in ASC 805 when the transaction is primarily effected by the exchange of equity interests. The ASU is applied prospectively to all business combinations with acquisition dates occurring on or after the initial application date. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an interim or annual reporting period. Management has elected to early adopt ASU 2025-03 as of April 1, 2026 on a prospective basis. Adoption did not affect previously reported amounts.

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which provides an optional practical expedient for estimating expected credit losses on certain current accounts receivable and contract assets arising from revenue transactions accounted for under Topic 606. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual periods. The Company adopted ASU 2025-05 on January 1, 2026 and elected the practical expedient. The adoption did not have an impact on the condensed consolidated financial statements and related disclosures.

Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 for public business entities on a prospective basis and early adoption is permitted. For entities other than public business entities, the standard is effective for annual periods beginning after December 15, 2025. The Company will adopt for the annual period beginning January 1, 2026 as an emerging growth company. While the Company is still evaluating the standard, it does not anticipate a significant impact on its annual disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the effective date of ASU 2024-03. ASU 2024-03 requires public business entities to provide enhanced disclosures about certain categories of expenses in the notes to the financial statements. The guidance is intended to improve the transparency and decision usefulness of expense information provided to financial statement users. The ASU 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 is currently evaluating the impact of this standard on its disclosures.

In May 2025, the FASB issued ASU No. 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer (“ASU 2025-04”). ASU 2025-04 refines key aspects of the guidance, including the definition of performance condition as well as the measurement requirements and the treatment of forfeitures. ASU 2025-04 is effective for annual periods beginning after December 15, 2026 on either a modified retrospective or a retrospective basis and early adoption is permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which modernizes the accounting for internal-use software costs to better align the recognition guidance with current software development practices, including iterative and agile methodologies. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, including interim reporting periods within those annual reporting periods, on either a prospective, modified, or retrospective transition approach, and early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”), which establishes comprehensive guidance for the recognition, measurement, and disclosure of government grants received by business entities. The ASU addresses both monetary and certain nonmonetary government grants and introduces new annual disclosure requirements regarding the nature, terms, and accounting policies related to such grants. For public business entities, ASU 2025-10 is effective for annual periods beginning after December 15, 2028 on either a modified prospective approach, modified retrospective approach, or retrospective approach and early adoption is permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements and related disclosures.

NOTE 3 — REVENUE AND GRANT INCOME RECOGNITION

The Company recognizes revenue under contracts with customers to provide nuclear reactor and fuel design engineering services in the areas of research and development, systems engineering, and technology development. The Company’s revenues are generally derived from contract services predominantly performed for the U.S. Government and commercial entities. All revenues for the three and six months ended June 30, 2026 and 2025 were recognized over time.

There are three main types of contracts: cost-based contracts, cost-plus fixed fee contracts, and time and materials. Under cost-based and cost-plus fixed fee contracts, the total consideration in the Company’s contracts is paid in the form of incremental incurred cost reimbursements over time upon submission of invoices. Under time-and-materials contracts, the total consideration is based on contractually agreed upon labor rates for hours worked, plus reimbursement of materials and other costs incurred.

The allowability of certain costs under government contracts is subject to audit by the government. Certain indirect costs are charged to contracts using provisional or estimated indirect rates, which are subject to later revision based on actual costs incurred and subject to government audits of those costs. Refer to Note 15 —Commitments and Contingencies for further discussion of these cost audits.

Advanced Reactor Demonstration Program (“ARDP”)

During the year ended December 31, 2021, the Company was named an awardee under the Department of Energy’s ARDP. The objective of the ARDP is to accelerate the development and demonstration of advanced nuclear reactor technologies, pursuant to which the DOE will fund a portion of the direct and indirect costs incurred for the research and development costs to develop the intellectual property and the costs of developing and constructing both the TRISO-X fuel facility (“TX-1”) and Xe-100 commercial demonstration plant in Seadrift, Texas. Dow has been named a sub-awardee under the ARDP in connection with their involvement with the development and construction of the demonstrator reactor. The Company is constructing and will own TX-1.

Under the Company’s separate agreement with Dow, certain costs incurred by Dow related to the demonstrator reactor are funded by the Company using funds obtained through the ARDP. The Company has recognized the funds received from the DOE and the costs incurred by Dow on a gross basis as grant income and direct costs, respectively. The Company has recognized$2.0 million and$1.3 million as grant income and$1.8 million and$1.3 million as direct costs during the three months ended June 30, 2026 and 2025, respectively, related to costs incurred by Dow for the demonstration plant. The Company has recognized$5.2 million and$2.6 million as grant income and$4.5 million and$2.4 million as direct costs during the six months ended June 30, 2026 and 2025, respectively. The Company also earns revenue from Dow as a customer for certain site specific engineering, permitting, and other services related to the development of the Xe-100 plant. Refer to Note 14 —Related Party Transactionsfor additional information on transactions with Dow and other related parties.

Disaggregated Revenues and Grant Income

A summary of revenues and grant income by customer type is as follows (in thousands):

A summary of revenues and grant income by contract type is as follows (in thousands):

Revenues and Grant Income by Geographic Location

The Company has revenues and grant income in the following geographic locations (in thousands):

Contract Balances

The timing of revenue recognition, billings, and cash collections results in billed accounts receivable, unbilled receivables (amounts billable where the right to consideration is unconditional), contract assets (for which certain conditions must be satisfied before the right to bill is obtained), and contract liabilities (customer advances and deposits) on the condensed consolidated balance sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in unbilled receivables. However, the Company sometimes receives advances or deposits from its customers, or bills customers where it has an unconditional right to consideration before revenue is recognized, resulting in contract liabilities. These liabilities are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period.

Contract liabilities as of June 30, 2026 and December 31, 2025 include deferred revenue. The following balances were recorded within deferred revenue (in thousands):

(1)

During thethree and six months ended June 30, 2026, no revenue was recognized that had previously been deferred. During thethree and six months ended June 30, 2025, zero and$1.1 million, respectively, of revenue was recognized that had previously been deferred.

Contract assets represent revenue recognized that exceeds the amount billed to the customer and excludes amounts billable where the right to consideration is solely subject to the passage of time. The following balances were recorded within unbilled receivables and contract assets (in thousands):

(1)

As of June 30, 2026, and December 31, 2025, the contract assets were not associated with related parties.

NOTE 4 — PROPERTY AND EQUIPMENT, NET

Property and equipment, net consists of the following (in thousands):

(1)

Net of reimbursement from the U.S. Government.

All of the Company’s property and equipment is located within the U.S.

NOTE 5 — GOVERNMENT GRANTS FOR PROPERTY AND EQUIPMENT

During the three and six months ended June 30, 2026 and 2025, the Company received reimbursements from the DOE under the ARDP related to construction of its nuclear fuel fabrication and reactor testing facilities. The Company recognizes the grant from the DOE at the time in which the costs are incurred in compliance with the conditions of the grant, which were$35.3 million and$16.4 million for the three months ended June 30, 2026 and 2025, respectively, and$68.4 million and$25.8 million for the six months ended June 30, 2026 and 2025, respectively.

NOTE 6 — ACCRUED LIABILITIES

The following table sets forth the components of accrued liabilities (in thousands):

NOTE 7 — DEBT

The Company hasno debt outstanding as of June 30, 2026 and December 31, 2025.

Live Oak Credit Facility

On June 14, 2021, the Company and one of its subsidiaries entered into a revolving credit facility with Live Oak Bank (the “Live Oak Credit Facility”) with maximum borrowings up to $15.0 million, subject to an asset-based borrowing base based on eligible accounts receivable, net of lender reserves. The Company did not have any borrowings, payments, or interest payments on the Live Oak Credit Facility during thethree and six months ended June 30, 2025. The facility matured on December 1, 2025 withno outstanding borrowings.

C-2 Convertible Notes

In 2022 and 2023, the Company issued convertible notes payable in an aggregate principal amount of $113.0 million (“C-2 Notes”), of which $70.0 million was issued to related parties. The C-2 Notes were due on September 30, 2025 and accrued 10.0% of payable-in-kind interest annually. The C-2 Notes provided holders with conversion rights into equity securities under certain conditions, including upon an IPO or at the holder’s election after August 4, 2023.

The Series C-2 Convertible Notes contained embedded derivatives which, absent the election of the fair value option, would have been bifurcated and accounted for at fair value. Accordingly, the fair value option was elected. The Company classified the C-2 Notes as a liability at fair value and remeasured the C-2 Notes to their fair value at each reporting period, with the portion of the change in fair value attributable to instrument-specific credit risk recorded within other comprehensive income (loss), and the remaining change in fair value recorded within Other income (expense), net. As the fair value option was elected, issuance costs associated with the C-2 Notes were expensed in the period incurred. Refer to Note 13 —Fair Value Measurements for further information on the remeasurement of the C-2 Notes.

On October 11, 2024, certain of the C-2 Notes with an aggregate principal balance of $98.0 million converted into approximately 17.0 million Series C Preferred Units, which was accounted for as a debt extinguishment.

On September 30, 2025, the remaining outstanding principal and unpaid accrued interest on the C-2 Notes were converted into approximately 2.9 million Series C Preferred Units, which was accounted for as a debt extinguishment.

NOTE 8 — PROFIT SHARING PLAN

The Company maintains a defined contribution profit sharing plan (the “Plan”), which includes a salary deferral arrangement, under the provisions of Section 401(k) of the Internal Revenue Code. Employees are eligible to participate in the Plan on the date of employment. The Company matches 100% of employees’ contributions up to 5% of annual compensation. The Company contributed$2.3 million and$1.2 million to the Plan during the three months ended June 30, 2026 and 2025, respectively, and$3.7 million and$1.9 million to the Plan during the six months ended June 30, 2026 and 2025, respectively.

NOTE 9 — INCOME TAX

The Company is a taxable C-Corporation and is subject to U.S. federal and state income taxes primarily related to the Company’s allocable share of any taxable income or loss of its investment in XERC, an affiliate of the Company, as well as any standalone income or loss that the Company generates. XERC is treated as a partnership for U.S. income tax purposes, and for most applicable state and local income tax purposes, and generally does not pay income taxes in most jurisdictions. Instead, XERC’s taxable income or loss is passed through to its members, including X-energy.

The effective income tax rate was 0% for thethree and six months ended June 30, 2026. The Company did not record any income taxes for the three and six months ended June 30, 2025 as the Company was a pass through entity for income tax purposes. The effective income tax rate in 2026 differs from the U.S. federal statutory rate primarily due to having a full valuation allowance against all deferred tax assets because of a history of losses.

NOTE 10 — STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY

Stockholders’ Equity

X-energy amended and restated its certificate of incorporation effective April 23, 2026 to authorize (i)1,868.0 million shares of Class A common stock, par value $0.0001 per share (“Class A Common Stock”), (ii)132.0 million shares of Class B common stock, par value $0.0001 per share (“Class B Common Stock”), and (iii)10.0 million shares of preferred stock, par value $0.0001 per share (“Preferred Stock”). Holders of both Class A Common Stock and Class B Common Stock are entitled to one vote per share held and shall vote together as a single class on all matters on which stockholders are generally entitled to vote. Holders of Class B Common Stock also hold and have rights to redeem XERC Common Units (defined below) for shares of Class A Common Stock. Each holder of Class B Common Stock holds an equal number of XERC Common Units. Subject to the terms of XERC’s Eighth Amended and Restated Limited Liability Company Agreement, such holders have the right to have XERC redeem their XERC Common Units for shares of Class A Common Stock on a one-for-one basis. Upon any such redemption of XERC Common Units, the corresponding shares of Class B Common Stock held by such holders are required to be surrendered and immediately canceled.

No Preferred Stock has been issued or is outstanding as of June 30, 2026.

XERC’s Mezzanine Equity

Prior to the Reorganization Transactions, XERC had more than one class of units - Class A and Class B common units (collectively, the “XERC Common Units”) and Preferred Units (as defined below) - which were classified within Mezzanine equity. In connection with the IPO and Reorganization Transactions completed in April 2026, XERC recapitalized all existing ownership interests in the entity into a single class of Common Units, which were partially acquired by X-energy in exchange for shares of X-energy’s Class A Common Stock, with shares of Class B Common Stock separately issued to the Continuing Equity Owners for nominal consideration. Refer to Note 1 —Organization and Nature of Business for additional information regarding the IPO and related changes to XERC’s capital structure and Unit holder rights. As a result of this recapitalization, there isno Mezzanine equity remaining on the condensed consolidated balance sheets as of June 30, 2026.

The following table sets forth the number of XERC Common Units and Preferred Units outstanding by unit class and the carrying value of these units at December 31, 2025 (in thousands except units):

The following are the relevant terms related to XERC’s Preferred Units (as defined below) and XERC Common Units:

XERC’s Class A and Class B Common Units

The holders of Class A common units were entitled to one vote for each unit of Class A common units held at all meetings of unitholders. The Class B common units generally had the same rights and preferences as the Class A common units; provided, however, the Class B common units did not have voting rights and were profits interests subject to a participation threshold and a grant agreement under the XERC’s unit-based compensation plan.

In connection with the IPO and Reorganization Transactions, XERC recapitalized and converted the XERC Common Units and Preferred Units (defined below) into a single class of Common Units. Refer to Note 1 —Organization and Nature of Business for additional information regarding conversion of Common Units.

XERC’s Preferred Units

The Series A Preferred Units, the Series A-1 Preferred Units, the Series B Preferred Units, the Series C Preferred Units, the Series C-1 Preferred Units, and the Series D Preferred Units (collectively, “Preferred Units”) were issued in one or more series, each of such series consisting of such number of units and to have such terms, rights, powers and preferences, and the qualifications and limitation with respect thereto, as stated or expressed in the original or amended limited liability company agreement of XERC.

The holders of Preferred Units, except for Series A-1 Preferred Units, were entitled to vote for members of the board of directors in whatever manner necessary to ensure that the size of the board of directors of the Company was set and remained at nine directors who served as the managers of XERC. Holders of Series A-1 Preferred Units did not vote on the board of directors.

In connection with the IPO and Reorganization Transactions, the Preferred Units were recapitalized into a single class of Common Units. Refer to Note 1 —Organization and Nature of Business for additional information regarding conversion of Common Units.

Cumulative Preferred Return

The Preferred Units had an annual 3% cumulative preferred return on the original issuance price, beginning on the date such Preferred Units were issued. In connection with the IPO and Reorganization Transactions, all outstanding Preferred Units and XERC Common Units were recapitalized into a single class of Common Units of XERC. Certain of these Common Units of XERC were ultimately acquired by X-energyin exchange for shares of Class A Common Stock. The Preferred Unit holders’ cumulative preferred return was satisfied through these transactions. As of December 31, 2025, the cumulative preferred return not reflected in the condensed consolidated balance sheet for Series A, A-1, B, C, C-1, and D Preferred Units was$7.0 million,$4.2 million,$14.1 million,$14.2 million,$24.4 million, and$2.3 million, respectively. In the event of a deemed liquidation, the cumulative preferred return was payable solely for the Series B Preferred Units and therefore has been incorporated into the Series B Preferred Units liquidation preference amount disclosed above. The cumulative preferred return on the remaining units was subject to the discretion of the board of directors.

Classification

Under ASC 480, a redeemable equity security is to be classified as temporary or mezzanine equity if it is conditionally redeemable upon the occurrence of an event that is not solely within the control of the issuer.

The XERC Common and Preferred Units of XERC were redeemable for cash upon the occurrence of a deemed liquidation event. As of December 31, 2025, a deemed liquidation event was not considered probable, and the occurrence of such an event was considered to be outside of XERC’s control. Accordingly, XERC’s Preferred Units and XERC Common Units were considered conditionally redeemable upon the occurrence of an event that is not solely within the control of the issuer and, therefore, XERC classified the Preferred Units and XERC Common Units as Mezzanine equity in the condensed consolidated balance sheets as of December 31, 2025. The Mezzanine equity amount related to XERC Common Units issued as unit-based compensation is the grant date redemption value, or the modification date redemption value, as applicable. The difference between the grant date fair value and the redemption value for vested awards is presented in permanent equity. As of December 31, 2025,$74.9 million was presented within Mezzanine equity. The excess of grant date redemption value over grant date fair value for vested awards has been recorded within Additional paid-in capital as of December 31, 2025.

NOTE 11 — EQUITY-BASED COMPENSATION

2026 Equity Incentive Plan

In connection with the IPO, the Company adopted the 2026 Equity Incentive Plan (“2026 Plan”) to facilitate the grant of equity incentives to directors, employees, and consultants of the Company and employees and consultants of certain of its affiliates and to enable X-energy and its subsidiaries to obtain and retain services of these individuals, which is essential to its long-term success.

As of June 30, 2026, there were 37.5 million shares of the Company’s Class A Common Stock available for award issuance under the 2026 Plan. The number of shares available for issuance under the 2026 Plan will automatically increase on the first day of each calendar year, beginning on and including January 1, 2027 through January 1, 2036, in an amount equal to the lesser of (a) a number of shares equal to 5% of the aggregate number of shares of Class A Common Stock and Class B Common Stock outstanding on the last day of the immediately preceding calendar year, or (b) such smaller number of shares as determined by the board of directors.

Profits Interest Units Conversion and IPO Options (defined below) Awards

In connection with the IPO, X-energy’s board of directors approved the conversion of existing Profits Interest Units (“PIUs”) into a combination of shares of Class A Common Stock for vested PIUs and Restricted Stock Awards (“RSAs”) for unvested PIUs (the “PIU Conversion”). The conversion ratio of PIUs into shares of Class A Common Stock and RSAs was determined based on the IPO price of $23.00 per share and the participation threshold for each PIU.

Certain PIU holders who were active employees, including the Chief Executive Officer, Chief Financial Officer, and Chief of Global Operations (collectively, the “Named Executive Officers”), or directors, as of the closing of the Reorganization Transactions, were also granted stock options (“IPO Options”) with an exercise price equal to $23.00 per share in an amount equal to the difference between the original number of PIUs and the aggregate number of shares of Class A Common Stock and/or RSAs they received pursuant to the PIU Conversion. The RSAs and IPO Options are subject to the same vesting schedule that applied to the underlying or related PIUs, as applicable.

The effect of the PIU Conversion and IPO Options grant was accounted for as a Type I modification under ASC 718, Stock Compensation, and the incremental compensation cost for vested IPO Options totaled$20.2 million, which was recognized as a one-time charge immediately upon modification on April 24, 2026. The Company will recognize$103.8 million of incremental compensation cost over the remaining service period for the unvested IPO Options.

The IPO Options granted to the Named Executive Officers were comprised of stock options that cover approximately 3.5 million shares of X-energy’s Class A Common Stock based on the initial public offering price of $23.00 per share. In addition, certain of X-energy’s directors were also granted IPO Options, which cover an aggregate of approximately 0.1 million shares of Class A Common Stock based on the initial public offering price of $23.00 per share of Class A Common Stock.

Equity-Based and Unit-Based Compensation

The Company recognizes the grant date fair value of all equity-based and unit-based awards as compensation expense using the accelerated attribution method over the requisite service period of each vesting tranche. The Company has made a policy election to account for forfeitures as they occur.

The table below summarizes equity-based and unit-based compensation expense that is reflected in the condensed consolidated statements of operations and comprehensive loss and condensed consolidated balance sheets (in thousands):

Stock Options

For options granted under the 2026 Plan, the per-share exercise price must at least equal the fair value of the Company’s Class A Common Stock on the date of grant and generally have four-year ratable vesting schedules beginning on the grant date or, with respect to the IPO Options, the grant date of the underlying PIU, and their term may not exceed ten years. The following table summarizes the Company’s options and changes during thesix months ended June 30, 2026:

As of June 30, 2026,$95.7 million of unrecognized compensation cost related to unvested options granted is expected to be recognized over a weighted average period of approximately 1.9 years.

In addition to the IPO Options, stock options were also granted to certain employees during the three months ended June 30, 2026. The fair value of the options was determined using the Black-Scholes option-pricing model based on the fair value of the underlying stock price and exercise price at the grant date and the significant inputs and assumptions summarized below:

(1)

As the IPO Options are subject to the same provisions with respect to vesting as the related PIUs, the inputs for all such options were determined using the respective grant date of the related PIUs.

(2)

Derived from an option pricing method based on the average asset volatility of peer companies and the Company’s leverage ratio.

(3)

Based on the U.S. constant maturity treasury rate with a term matching the expected time to the end of the performance measurement period.

Restricted Stock Awards

RSAs generally have four-year ratable vesting schedules beginning on the grant date, with restrictions on transferring shares prior to the final scheduled vesting date for each award. The fair value of the RSAs granted is derived from the fair value of the Company’s Class A Common Stock on the date of grant. The following table summarizes the Company’s RSAs and changes during thesix months ended June 30, 2026:

As of June 30, 2026,$23.1 million of unrecognized compensation cost related to unvested RSAs granted is expected to be recognized over a weighted average period of approximately 2.0 years.

Restricted Stock Units

RSU grants to employees generally have a three to four-year ratable vesting schedule beginning on the grant date and RSU grants to non-employee directors generally vest on the earlier of the first anniversary of the grant date or the first annual meeting of stockholders following the grant date, with restrictions on transferring shares prior to the scheduled vesting date for each tranche. The shares of Class A Common Stock underlying the RSUs are not issued until the RSUs vest. The fair value of the RSUs granted is derived from the fair value of the Company’s Class A Common Stock on the date of grant.

The following table summarizes the Company’s RSUs and changes during thesix months ended June 30, 2026:

As of June 30, 2026,$9.8 million of unrecognized compensation cost related to unvested RSUs granted is expected to be recognized over a weighted average period of approximately 1.9 years.

NOTE 12 — NET LOSS PER SHARE

As of June 30, 2026, the Company has two classes of common stock outstanding, Class A Common Stock and Class B Common Stock. Basic net loss per share of Class A Common Stock is computed by dividing net loss attributable to X-energy by the weighted-average number of shares of Class A Common Stock outstanding during the period. Diluted net loss per share of Class A Common Stock is computed by dividing net loss attributable to X-energy by the weighted-average number of shares of Class A Common Stock outstanding adjusted to give effect to potentially dilutive elements. Shares of Class B Common Stock do not share in the earnings or losses of X-energy and are therefore not participating securities. As such, shares of Class B Common Stock are not included in the computation of net loss per share.

Diluted net loss per share for all periods for which loss per share is presented is the same as basic net loss per share as the inclusion of potentially issuable shares would be antidilutive. The potentially dilutive securities that were excluded consist of 118.9 million shares of Class B Common Stock, 14.1 million shares related to warrants that are exercisable contingent upon future events or performance conditions, 7.6 million outstanding stock options, and 7.5 million outstanding RSAs and RSUs. For additional details, see Note 10 — Stockholders’ Equity and Mezzanine Equity for Class B common stock; Note 14 — Related Party Transactions for warrants; and Note 11 — Equity-Based Compensation, for options, RSAs, and RSUs.

Prior to the IPO, XERC’s limited liability company structure included several different types of interests including ownership interests and profits interests and did not present earnings per share. Due to the IPO and Reorganization Transactions, the capital structure before and after the IPO is not comparable and would not be meaningful to the users of these condensed consolidated financial statements. As a result, only loss per share for periods subsequent to the IPO are presented. Therefore, the basic and diluted net loss per share for the three and six months ended June 30, 2026 represents only the period from the date of the Reorganization Transactions through June 30, 2026.

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share of Class A Common Stock is as follows (in thousands, except share and per share data):

NOTE 13 — FAIR VALUE MEASUREMENTS

The liabilities recorded at fair value and measured on a recurring basis are all Level 3 measurements as of June 30, 2026 and December 31, 2025.

Rollforward of Level 3 Measurements

A rollforward of the Level 3 measurements is as follows (in thousands):

(1)

As the fair value option was elected for the C-2 Notes, the change in fair value attributable to instrument-specific credit risk associated with each instrument is recorded within Other comprehensive income (loss), and the remaining change in fair value is recorded within Other income (expense), net on the condensed consolidated statements of operations and comprehensive loss. The change in instrument specific credit risk is estimated based on the option adjusted spread of comparable companies and the option adjusted spread of the U.S. high yield index for companies with similar credit ratings.

Valuation Techniques and Significant Unobservable Inputs

A significant increase or decrease in any of the significant unobservable inputs used in the fair value measurement of the warrant liabilities or C-2 Notes could result in a significantly higher or lower fair value measurement. The quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of June 30, 2026 and 2025 are summarized below:

2024 Warrants

The fair value of the 2024 Warrants is based on an option pricing method of allocation. The 2024 Warrants were exercised on March 18, 2026. The significant inputs, including significant unobservable inputs, used in the recurring Level 3 fair value measurements of the 2024 Warrants are as follows:

June 2022 Warrants

In conjunction with a guarantee to the Bank of New York Credit Facility, the Company issued $10.0 million of warrants (the “June 2022 Warrants”) to Ghaffarian Enterprises, a related party, on June 30, 2022. On April 23, 2026, Ghaffarian Enterprises exercised the June 2022 Warrants, which were converted into 1.0 million units of Series C preferred units. As noted in Note 1 —Organization and Nature of Business, all preferred units were converted into Common Units, a portion of which were acquired by X-energy in exchange for shares of Class A Common Stock. Given proximity of the exercise date to the Reorganization Transactions, the fair value of the June 2022 Warrants of $23.5 million at the exercise date is based on the intrinsic value of Class A Common Stock as of that date.

Historically, the fair value of the June 2022 Warrants was based on an option pricing method of allocation. The significant inputs, including significant unobservable inputs, used in the recurring Level 3 fair value measurements of the June 2022 Warrants are as follows:

December 2022 Warrants

On December 5, 2022, the Company issued 444,444 warrants (the “December 2022 Warrants”) to purchase common units of the Company. The December 2022 Warrants had an exercise price of $0.01 per unit, were not exercisable until 36 months following the issuance of the C-2 Notes, subject to the achievement of certain business requirements, and were liability classified. As of December 31, 2025, the December 2022 Warrants expired as business requirements of the holder were not met.

The fair value was determined based on an option pricing method of allocation using the contractual strike price per the warrant agreement, and an estimate of the per unit value of the warrants. The significant inputs, including significant unobservable inputs, used in the recurring Level 3 fair value measurements of the December 2022 Warrants were as follows:

C-2 Notes

As of December 31, 2025, all C-2 Notes had converted into Series C Preferred Units. Refer to Note 7—Debt for further information.

The fair value of the C-2 Notes was based on the binomial lattice model, which is considered to be a Level 3 fair value measurement. The significant inputs, including significant unobservable inputs, used in the recurring Level 3 fair value measurements of the C-2 Notes were as follows:

Held-to-Maturity Securities—Amortized Cost and Fair Value

The estimated fair values of the Company’s financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows (in thousands):

The following table summarizes the carrying values and fair values of the Company’s financial instruments that were not carried at fair value on the condensed consolidated balance sheets (in thousands):

The amortized cost and estimated fair value of held-to-maturity securities by contractual maturity are shown below (in thousands):

The Company does not intend to sell its held-to-maturity investments, and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis. Expected maturities may differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

NOTE 14 — RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Company enters into transactions with various related parties.

Related Party Warrants

On October 3, 2025, agreements with a related party customer were modified through the issuance of the 2025 Warrant and the Company accounted for such modification in accordance with ASC 606, Revenue from Contracts with Customers. The 2025 Warrant may be exercised by the holder when all of the Xe-100 units associated with the customer agreements are considered fully operational (the “Vesting Event”) and entitles the holderto purchase up to 14.1 million Series C-1 Preferred Units at an exercise price of $6.4870 per unit. The exercise period ends at the earlier of (i)one year from the Vesting Event, (ii) event of non-compliance and (iii) a consummation of a change of control or a listing event of the Company, to the extent it occurs after vesting. The Vesting Event is considered a performance condition in accordance with ASC 718, as the Vesting Event is a performance target defined solely by reference to the Company’s own operations. As the 2025 Warrant was issued to a customer and not in exchange for a distinct good or service that the customer transfers to the Company, the Company accounts for the 2025 Warrant as consideration payable to a customer under ASC 606, and will recognize the Warrant as a decrease to the transaction price, measured based on the grant date fair value when the performance condition is deemed probable. The grant date fair value was determined to be $162.7 million.

Moreover, the Company determined that the 2025 Warrant will be classified as an equity award based on the criteria of ASC 718. When the performance condition is deemed probable, the Company will recognize the 2025 Warrant as a temporary equity classified instrument on the condensed consolidated balance sheet measured based on its grant date redemption value. Upon the performance condition becoming probable of occurring, any difference between the 2025 Warrant’s grant date fair value and its grant date redemption value shall be presented in permanent equity.

As of June 30, 2026, and December 31, 2025, the 2025 Warrant was not deemed probable of vesting, and thus, the Company did not recognize any amount related to the 2025 Warrant. The Company will assess whether it is probable that the 2025 Warrant will vest at the end of every reporting period.

In connection with the issuance of the Series C-1 Preferred Units, one investor and potential future customer was issued the 2024 Warrant for no additional consideration. The 2024 Warrant was required to be classified as a liability and measured at fair value on an ongoing basis pursuant to ASC 480 since the underlying Series C-1 Preferred Units are redeemable for cash upon the occurrence of certain events that are considered outside of the Company’s control. The 2024 Warrant could be exercised by the holder at any time from the issuance date until the 18-month anniversary of the issuance date and entitled the holder to purchase up to 40.2 million Series C-1 Preferred Units at an exercise price of approximately $7.46 per unit. As the 2024 Warrant was issued for no additional consideration, and did not meet the criteria for capitalization of a contract asset, the issuance date fair value of the 2024 Warrant of $55.3 million was expensed upon its issuance. Additionally, in March 2026, the Company amended the 2024 Warrant to permit the holder to elect a cashless exercise of the 2024 Warrant at an earlier date than provided by the 2024 Warrant’s original terms. The warrant holder exercised the 2024 Warrant on March 18, 2026 as a cashless exercise and received 19.6 million Series C-1 Preferred Units.

Related Party Revenue

Dow is a stockholder and warrant holder of X-energy. During the year ended December 31, 2025, the Company entered into the Master Project Development Agreement (“MPDA”) with Dow, which is a continuation of the project under the previously existing joint development agreement with Dow entered into during the year ended December 31, 2023, whereby the MPDA and joint development agreement together are considered the “Dow Agreements.”

The table below summarizes related party revenues that are reflected within Services revenue in the condensed consolidated statements of operations and comprehensive loss (in thousands):

Related Party Expenses

The Company enters into various arrangements with related party vendors. These arrangements primarily include subcontracting services with a related party investor, and general and administrative services with an affiliate of the Chairman of the Company’s board of directors.

The subcontracting services primarily pertain to support services related to ARDP, and the general and administrative services include rent for office space, consulting services, and other general and administrative services. The table below summarizes the expenses with related parties that are reflected in the condensed consolidated statements of operations and comprehensive loss (in thousands):

(1)

Expenses relating to subcontracting services are reflected within Direct costs in the condensed consolidated statements of operations and comprehensive loss.

(2)

Expenses related to general and administrative services are reflected within Selling, general, and administrative expenses in the condensed consolidated statements of operations and comprehensive loss.

Due to/from Related Parties and Long-Term Deferred Revenue

The following balances were recorded within Due from and Due to related parties and Long-term deferred revenue with related parties (in thousands):

(1)

These balances are related to Dow. Of the Due from related parties balances,$20.5 million and$0.7 million as of June 30, 2026 and December 31, 2025, respectively, are unbilled.

Upon closing of Series D Preferred Units and resulting change in capital ownership, the Company reevaluated its related parties. Accordingly, certain entities that were previously considered related party entities because the Company has historically conducted business with are no longer considered related parties as defined in ASC 850, Related Party Disclosures, beginning on November 21, 2025. The Company has disclosed transactions occurring prior to November 21, 2025 with these entities as related party transactions.

NOTE 15 — COMMITMENTS AND CONTINGENCIES

Incurred Cost Audits

The Company’s costs incurred on contracts with the DOE are subject to final incurred cost audits prior to the close out of the award as specified in such contracts. Billings under these contracts are based on provisional rates that permit recovery of allowable overhead, and general and administrative expenses not exceeding certain limits. These rates are subject to review by the government on an annual basis. When final determination and approval of the allowable rates have been made, billings may be adjusted.

The periods beginning January 1, 2020 onward are currently subject to audit. As of June 30, 2026 and December 31, 2025, the Company has$1.1 million in contract-related reserves for its estimate of potential refunds to customers recorded in Accrued liabilities on the condensed consolidated balance sheets.

Investigations and Litigation

From time to time the Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. The Company is not, to the best of its knowledge, presently a party to any legal proceedings that, if determined adverse to the Company, would individually or taken together have a material adverse effect on its business, operating results, financial condition, or cash flows.

Unconditional Purchase Obligations

The Company has entered into certain agreements in which the Company is committed to purchase goods or services, primarily related to supply agreements for graphite components. Those commitments are as follows (in thousands):

NOTE 16 — SUPPLEMENTAL CASH FLOW INFORMATION

Non-cash investing and financing activities are as follows (in thousands):

NOTE 17 — SEGMENTS

Under the guidelines of ASC 280, Segment Reporting, which require companies to present financial information about their operating segments, products and services, geographic regions, and significant customers, the Company’s Chief Executive Officer serves as the chief operating decision maker (“CODM”). The CODM evaluates financial performance, allocates resources, and makes strategic decisions based on the consolidated results of the Company, rather than evaluating discrete lines of business. Accordingly, management has determined that the Company comprises asingle reportable segment.

In making resource allocation decisions and assessing operational outcomes, the CODM relies on overall net income (loss) as the primary metric both during the annual planning process and for evaluating results on a quarterly basis. The primary expenses presented to the CODM and incorporated in segment performance are related to operating expenses and non-operating expenses. Operating expenses consist of Direct costs; Selling, general and administrative costs; and Research and development costs. Non-operating expenses consist of Interest expense, Interest income, and Other income (expense). The condensed consolidated statements of operations for thethree and six months ended June 30, 2026 and 2025 present these significant segment expenses for the Company’ssingle operating segment. The condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025 likewise display the assets and liabilities attributable to this single segment.