X-Energy, Inc.

We assess our liquidity in terms of our ability to generate adequate amounts of cash to meet current and future needs. Our expected primary uses of cash on a short-term and long-term basis are for working capital requirements, capital expenditures, and other general corporate services. Our primary working capital requirements are for project execution activities including purchases of materials, subcontracted services and payroll which fluctuate during the year, driven primarily by the timing and extent of activities required on new and existing projects. Management expects that future operating losses and negative operating cash flows may increase from historical levels because of additional costs and expenses related to the development of our technology, procurement of long lead-time items and engineering activities, and the development of market and strategic relationships with other businesses. Consequently, our ability to execute our long-term business plan is dependent upon our ability to obtain additional capital to support our ongoing operations.

Historically, our primary source of funding to support our operations has been revenue and grant income from the ARDP Agreement, contributions and loans from members, loans from financial institutions as well as capital raises. In April 2026, we completed our IPO, in which we issued and sold 50.9 million shares of our Class A common stock for net proceeds aggregating approximately $1.1 billion. While we have historically been successful in obtaining the capital necessary to support our operations, there is no assurance that we will be able to secure additional capital or other financing in the future.

We have had, and expect that we will continue to have, an ongoing need to raise additional capital from outside sources to fund our operations and expand our business. If we are unable to raise additional capital when desired, or on acceptable terms, our business, financial condition, operating results and future prospects could be harmed, and we may not be able to complete our TX-1 fuel fabrication facility construction and begin production or begin construction on TX-2 or other fuel fabrication facilities, support development of the Xe-100 plant or conduct other research and development or project and fulfill our current business plan, and therefore, we may need to delay, re-evaluate or discontinue these and other projects. A successful transition to attaining profitable operations depends upon achieving a level of revenue and grant income adequate to support us.

In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to the development and commercialization of the Xe-100 and our fuel fabrication facilities. We intend to finance these expenses with further issuances of debt or equity securities. Thereafter, we expect we will need to raise additional capital and generate revenues and grant income to meet long-term operating requirements. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our equity holders could be significantly diluted, and these newly issued securities may have rights, preferences or privileges senior to those of existing equity holders. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operating flexibility and also require us to incur interest expense.

We had the following debt outstanding during the three and six months ended June 30, 2025 which were matured or converted during the year ended December 31, 2025 and were no longer outstanding during the six months ended June 30, 2026:

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Live Oak Credit Facility: On June 14, 2021, we entered into a credit agreement for a revolving credit facility (the “Live Oak Credit Facility”) with Live Oak Bank. The Live Oak Credit Facility was amended various times from the date of entering into the facility until the maturity. In accordance with the Live Oak Credit Facility’s stated terms, we settled the outstanding principal associated with the Live Oak Credit Facility with a payment of $4.1 million in October 2024. On October 31, 2024, with no outstanding borrowings, the facility matured. On May 9, 2025, we reestablished the facility, with an expiration date of December 1, 2025. As there were no draws on the facility during the year ended December 31, 2025, the facility matured on December 1, 2025.

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Series C-2 Convertible Notes: During 2022 and 2023, we issued convertible notes payable in an aggregate principal amount of $113.0 million (“C-2 Notes”), respectively, of which $70.0 million of the C-2 Notes were issued to related parties. The C-2 Notes were scheduled to mature on September 30, 2025 and accrue 10.0% of payable-in-kind interest annually. On October 11, 2024, a portion of the C-2 Notes with an aggregate principal balance of $98.0 million converted into 17.0 million Series C preferred units. On September 30, 2025, the remaining $18.4 million of outstanding principal and unpaid accrued interest on the C-2 Notes were converted into 2.9 million Series C preferred units.

Refer to Item 1 of Part I — “Financial Statements — Note 7 — Debt” for additional information.

In the ordinary course of business, we enter into agreements with suppliers and other third parties that give rise to unconditional purchase obligations. For additional information regarding our unconditional purchase obligations, see Item 1 of Part I — “Financial Statements — Note 15 —Commitments and Contingencies.”

We believe our existing balance of cash and cash equivalents and short-term investments will be sufficient to meet our obligations due or anticipated to be due within one year from the date of this Quarterly Report on Form 10-Q, including operating expenses, working capital, and current commitments for capital expenditures. Our future capital requirements may depend on many factors, including those set forth in the section of this Quarterly Report on Form 10-Q entitled “Risk Factors.” We anticipate that future investments may require significant debt and/or equity financing. The sale of additional equity would result in dilution to our stockholders. The incurrence of debt would result in debt service obligations, and the instruments governing such debt could provide for operational and/or financial covenants that further restrict our operations. There can be no assurances that we will be able to raise additional capital on favorable terms or at all. The inability to raise capital could adversely affect our ability to achieve our business objectives.

Cash Flows Six Months Ended June 30, 2026 and June 30, 2025

Cash flow information is as follows (in thousands):

Operating Activities

For the six months ended June 30, 2026, our operating activities used $164.6 million of net cash compared to $61.8 million for the six months ended June 30, 2025. The increase in cash used in operating activities is primarily driven by an increase in activity on the ARDP Agreement, including deposits to vendors for long-lead materials, as well as increases in corporate headcount and corporate contractors during the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

Investing Activities

For the six months ended June 30, 2026, our investing activities used $239.6 million of net cash compared to $18.7 million for the six months ended June 30, 2025. The increase in net cash used in investing activities was primarily attributable to an increase in purchases of investments of $316.5 million, and a $70.7 million increase in capital expenditures related to the construction of facilities during the six months ended June 30, 2026. These increases in cash outflows were partially offset by an increase in proceeds from investment maturities of $130.9 million and a $35.3 million increase in reimbursements received during the period for capital expenditures qualifying under government grant programs.

Financing Activities

For the six months ended June 30, 2026, financing activities provided $1.1 billion of net cash compared to $50.4 million for the six months ended June 30, 2025. The net cash provided by financing activities during the six months ended June 30, 2026 was primarily due to $1.1 billion of net proceeds from our initial public offering. The net cash provided by financing activities during the six months ended June 30, 2025 was primarily due to the January 2025 issuance of Series C-1 preferred units of $53.4 million, offset by $2.5 million of cash paid for associated issuance costs.

Material Cash Requirements from Known Contractual and Other Obligations

In addition to our contractual obligations and commitments described under “Liquidity and Capital Resources,” we lease real estate for office space. These leases are classified as operating leases with various expiration dates through 2037. See Note 8 —Leasesof the Notes to Consolidated Financial Statements in 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 for more information regarding our lease commitments.

Critical Accounting Policies and Estimates

We believe that the following accounting policies involve a high degree of judgment and complexity.

Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our financial condition and results of our operations. Refer to Item 1 of Part I — “Financial Statements — Note 2 —Summary of Significant Accounting Policies and Recent Accounting Pronouncements” for a description of our other significant accounting policies.

The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the amounts reported in those condensed consolidated financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.

Revenue and Cost Recognition

The Company generated all of its services revenue from contracts with customers, a substantial portion of which was generated from contracts with the U.S. Government. A majority of the Company’s contracts with the U.S. Government are generally subject to the Federal Acquisition Regulation and are priced based on estimated costs of providing the contractual services.

The Company accounts for a contract when the parties have approved the contract and are committed to perform on it, the rights of each party and the payment terms are identified, the contract has commercial substance, and collection of substantially all of the consideration is probable.

The Company evaluates if its contracts are partially in the scope of ASC 606 and partially in the scope of other guidance. For contracts partially in the scope of other guidance, the Company separates and allocates the arrangement consideration to those components in accordance with ASC 606 unless the other guidance provides its own separation and allocation guidance.

The Company generally recognizes revenue over time throughout the performance period as the customer simultaneously receives and consumes the benefits provided on services-type revenue arrangements. The Company satisfies its performance obligation as services are rendered. An input method is used for cost-based contracts, based on the cost of services which correspond directly with the value of the Company’s performance completed to date. For fixed-fee contracts, the Company applies an input method — specifically the cost-to-cost approach — where revenue is recognized in proportion to costs incurred, reflecting progress towards complete satisfaction of the performance obligation.

Contract modifications are reviewed to determine whether they should be accounted for as part of the original performance obligation or as a separate contract. When a contract modification changes the scope or price and the additional performance obligations are at their standalone selling price, the original contract is terminated and the Company accounts for the change prospectively when the new services to be transferred are distinct from those already provided. When the contract modification includes services that are not distinct from those already provided, the Company records a cumulative adjustment to revenue based on a remeasurement of progress towards the complete satisfaction of the not yet fully delivered performance obligation.

The Company utilizes other parties in the performance of some services. Based on the Company’s evaluation using a control model, the Company determined that in all of its performance obligations, it serves as a principal rather than an agent within its revenue arrangements. Revenue and the associated expenses are both reported on a gross basis within the condensed consolidated statements of operations and comprehensive loss.

Financial Instruments and Fair Value Measurements

We estimate fair value based on assumptions that active market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs. Fair value measurements are categorized according to the criteria below based on the lowest level of input that is significant to the overall fair value measurement of the instrument:

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Level 1 inputs: Quotes prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date;

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Level 2 inputs: Inputs other than quoted prices included within Level 1 inputs that are observable for the asset or liability, either directly or indirectly; and

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Level 3 inputs: Unobservable inputs for the asset or liability. These are used to measure fair value to the extent those observable inputs are not available, thereby allowing for situations in which there is minimal, if any, market activity for the asset or liability at the measurement date.

Recent Accounting Pronouncements

Refer to Item 1 of Part I — “Financial Statements — Note 2 —Summary of Significant Accounting Policies and Recent Accounting Pronouncements” of our condensed consolidated financial statements for additional information.

Emerging Growth Company (“EGC”) Status

The Company is an EGC as such term is defined under the JOBS Act. Therefore, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not EGCs. We will remain an emerging growth company until the earliest of (i) December 31, 2031, (ii) the last day of the year in which we have total annual gross revenue of at least $1.235 billion, (iii) the last day of the year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act of 1934, as amended (“Exchange Act”) and (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

The JOBS Act also provides that an emerging growth company may take advantage of the extended transition period provided in the Securities Act of 1933, as amended (“Securities Act”) for complying with new or revised accounting standards. An emerging growth company may therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption.