AleAnna, Inc.

FOR THE QUARTER ENDED MARCH 31, 2025

NOTE 1 – NATURE OF OPERATIONS AND RECENT EVENTS

AleAnna, Inc. (together with its subsidiaries, the “Company” or “AleAnna”), a Delaware corporation, was formed on December 13, 2024, in connection with the Business Combination (defined below). AleAnna Energy, LLC (“AleAnna Energy”), a Delaware Limited Liability Company, was formed on July 13, 2007. AleAnna Energy is comprised of wholly owned subsidiaries AleAnna Resources, LLC, AleAnna Italia S.p.A. and AleAnna Renewable Energy S.r.L. (“AleAnna Renewable”). AleAnna Renewable is comprised of various subsidiaries that hold its renewable natural gas assets (the “RNG Subsidiaries”).

Conventional Natural Gas

AleAnna is a natural gas resource developer focused on delivering critical natural gas supplies to Europe through both onshore conventional natural gas exploration and renewable natural gas development in Italy. The Company has several conventional natural gas discoveries including the Longanesi field, located in the Po Valley in Northern Italy, which is one of Italy’s largest modern gas discoveries. AleAnna retains a 33.5% working interest in the Longanesi field with its working interest partner, and operator, Societa Padana Energia (“Padana”). AleAnna acquired its working interest in the Longanesi field through a 2016 transaction with Enel. The Company also retains wholly owned concessions, permits, and pending applications on other exploration and development prospects across Italy which are supported by proprietary modern 3D seismic reservoir imaging.

On October 29, 2024, the Company entered into a gas sale agreement (“GSA”) with Shell Energy Europe Limited (“SEEL”), whereby SEEL became the exclusive buyer of AleAnna’s share of the natural gas produced from the Longanesi field net of (i) any consumption and/or losses incurred in the transport, treatment and compression of gas before delivery; (ii) any volume to be allocated for regulated royalties auctions, if applicable; and (iii) any other volume contractually allocated to other parties before August 31, 2022. Future sales under the GSA are contingent upon the commencement of gas production.

As of March 31, 2025, the Company had not recognized revenue from its conventional natural gas activities. While the tie-in of the Longanesi development wells and the installation of a temporary processing facility were complete as of March 31, 2025, production activities remained on hold due to a plant testing and stabilization program and were not yet at a stage to result in recognized revenue for the quarter. Sales began in May 2025.

Renewable Natural Gas (“RNG”)

In 2021, AleAnna launched a renewable natural gas (“RNG”) development business focused on bringing to market carbon negative renewable natural gas derived from animal and agricultural waste.

Between March 2024 and July 2024, the Company successfully completed three separate strategic acquisitions of renewable natural gas (“RNG”) assets in Italy for an aggregate of approximately $9.7 million. The plant assets are fully permitted and are in various stages of the development lifecycle, withone greenfield plant asset that is a new development (Campagnatico) andtwo brownfield plant assets (Casalino and Campopiano) that are currently generating bio-electricity. The Company plans to develop and upgrade these assets for biomethane production in the future.

Campagnatico Asset Acquisition

On March 20, 2024, the Company closed the acquisition of the Campagnatico Greenfield (“Campagnatico”) natural gas asset in Tuscany, Italy for approximately $2.1 million. The greenfield site is fully permitted for future construction of an RNG plant asset.

Casalino and Campopiano Asset Acquisitions

On July 8, 2024, the Company closed the acquisition of the Societa Agricola Fattoria delle Jersey S.S. plant asset (“Casalino”) for approximately $3.6 million. On July 29, 2024, the Company closed the acquisition of a 90% interest in the Società Agricola Campopiano Società in nome collettivo di Vasellini Amedeo (“Campapiano”) plant asset for approximately $3.8 million. The plant assets are fully permitted and operational for production of electricity through conversion of crop and animal waste bio feedstocks. The plant assets currently create raw biogas, which is burned to create electricity for sale to the state-owned electrical utility (Gestore dei Servizi Energetici SpA or “GSE”). Revenues are based on actual output and a non-company specific predetermined price for small renewable energy producers of €280/MWh, established under Ministerial Decree (D.M.) 18 December 2008, which sets tariff rates for small renewable energy producers in Italy. Energy generation revenue is recognized as the electricity generated by the Casalino and Campopiano assets is delivered to GSE.

The Company plans to begin upgrading the sites to refine biogas into biomethane through upgrading units. Following the upgrade process, the Company expects to sell renewable natural gas to customer(s) by trucking or via connection to the interstate pipeline system (SNAM).

The Company has a 90% direct controlling interest in the Campopiano asset, while unaffiliated owners retain a 10% economic interest in the asset. The unaffiliated outside ownership in Campopiano is shown as noncontrolling interests (“NCI”) in stockholders’ equity in the Company’s consolidated financial statements.

AleAnna Energy Member Contributions

During 2024, AleAnna Energy received $62.1 million in capital contributions from its members, resulting in the issuance of 62,100 Class 1 Preferred Units, which have since been converted to Class A common stock and Class C common stock as a result of the Business Combination (see Note 2 below). These funds have been and continue to be used to fund the Longanesi tie-in and permanent gas plant construction obligations, to develop and upgrade existing RNG assets, to acquire new RNG assets (at the discretion of management), as well as to fund general and administrative expenses of AleAnna and its subsidiaries.

NOTE 2 – REVERSE RECAPITALIZATION TRANSACTION

On December 13, 2024 (the “Closing Date”), the previously announced business combination was consummated pursuant to that certain Agreement and Plan of Merger (as amended by that certain First Amendment to the Merger Agreement, dated as of October 8, 2024, the “Merger Agreement”), dated June 4, 2024, by and among Swiftmerge Acquisition Corp., a Cayman Islands exempted company (“Swiftmerge”), Swiftmerge HoldCo LLC, a Delaware limited liability company and wholly-owned subsidiary of Swiftmerge (“HoldCo”), Swiftmerge Merger Sub LLC, a Delaware limited liability company and wholly-owned subsidiary of HoldCo (“Merger Sub”) and AleAnna Energy (the “Merger”). The transactions contemplated by the Merger Agreement are collectively referred to herein as the “Business Combination.”

The Business Combination included, among other things:

The Business Combination was accounted for as a common control transaction with respect to AleAnna Energy, which is akin to a reverse recapitalization. Nautilus Resources LLC (“Nautilus”), the majority owner of AleAnna Energy, had a controlling financial interest in AleAnna Energy prior to the Business Combination and has a controlling financial interest in the Company, as AleAnna Energy is a subsidiary of HoldCo, in which AleAnna, Inc. holds a majority economic interest. The net assets of Swiftmerge are stated at their historical carrying amounts with no goodwill or intangible assets recognized in accordance with U.S. GAAP. The Business Combination with respect to AleAnna Energy was not treated as a change in control primarily due to Nautilus receiving the controlling voting stake in the Company and the ability of Nautilus to nominate the full board of directors and management of the Company.

In accounting for the Business Combination, Swiftmerge was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of AleAnna Energy issuing stock for the net assets of Swiftmerge, accompanied by a recapitalization.

The Class A common stock, par value $0.0001 per share, of AleAnna, Inc. (the “Class A Common Stock”) and the original 11,250,000 warrants issued as part of units in the initial public offering of Swiftmerge (the “Public Warrants”) commenced trading on Nasdaq under the symbols “ANNA” and “ANNAW,” respectively, on December 16, 2024. Each share of Class C Common Stock has voting rights equal to a share of Class A Common Stock but have no entitlement to earnings or distributions of AleAnna. Each share of Class C Common Stock is exchangeable, subject to certain conditions, for one share of Class A Common Stock. The exchange feature does not allow for cash settlement. AleAnna is organized in an “Up-C” structure effective with the Business Combination, and the only direct assets of AleAnna consist of equity interests in HoldCo, whose only direct assets consist of equity interests in AleAnna Energy. The Company’s business is conducted through AleAnna Energy and its subsidiaries.

Total proceeds raised from the Business Combination were $0.6 million, representing the proceeds from the Swiftmerge operating account after Swiftmerge public shareholder redemptions. These proceeds were offset by $9.5 million of transaction expenses. Approximately $0.6 million of the transaction expenses were recorded as a reduction to additional paid-in capital (up to the amount of cash proceeds from the Business Combination). Approximately $0.5 million represented prepaid directors and officers insurance premiums and were recorded to prepaid expenses and other assets. The remaining $8.4 million of costs incurred were expensed.

As of March 31, 2025, no shares of Class C Common Stock had been exchanged for shares of Class A Common Stock.

NOTE 3 – BASIS OF PRESENTATION

Basis of Presentation — The accompanying unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”), and in conformity with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, these financial statements contain all adjustments necessary for a fair statement of the results of the interim periods presented. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (“2024 Form 10-K”). Results for interim periods are not necessarily indicative of results to be expected for a full year or any future period.

Immaterial Restatement of Prior Period Financial Statements — In the fourth quarter of 2024, we identified an error in the classification of the contingent consideration liability and an error in the computation of foreign currency translation adjustments as of and for the three months ended March 31, 2024. Refer to Note 16 for quantification of the prior period restatement impacts. Additionally, comparative prior period amounts in the applicable notes to the condensed consolidated financial statements have been restated.

Principles of Consolidation— The Company’s policy is to consolidate all entities that the Company controls by ownership interest or other contractual rights giving the Company control over the most significant activities of an investee. The condensed consolidated financial statements include the accounts of AleAnna and its wholly-owned subsidiaries HoldCo, AleAnna Energy, AleAnna Resources, LLC, AleAnna Italia S.p.A., AleAnna Renewable and the RNG Subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

**Use of Estimates **— The preparation of condensed consolidated financial statements in conformity with accounting principles U.S GAAP requires management to make estimates and assumptions that affect the reported amounts of expenses, assets, and liabilities and disclosure of contingent assets and liabilities. The Company regularly assesses these estimates; however, actual amounts could differ from those estimates. The most significant items involving management’s estimates include estimates of contingencies including contingent consideration and estimates of the timing and amount of asset retirement obligations. The impact of changes in estimates is recorded in the period in which they become known.

**Emerging Growth Company **— The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s condensed consolidated financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult because of the potential differences in accounting standards used.

Risks and Uncertainties — The Company is currently in the development stage and has not yet commenced principal operations or generated revenue from its conventional natural gas business. The development of the Company’s projects is subject to a number of risks and uncertainties including, but not limited to, the receipt of the necessary permits and regulatory approvals, commodity price risk impacting the decision to go forward with the projects, and the availability and ability to obtain the necessary financing for the development of projects.

The Company’s ability to develop and operate commercial production facilities, as well as expand production at future commercial production facilities, is subject to many risks beyond its control, including regulatory developments, construction risks, and global and regional macroeconomic developments.

Significant Accounting Policies— There have been no material changes to the Company’s significant accounting policies as described in the audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2024.

NOTE 4 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In November 2024, the FASB issued ASU 2024-03 to improve the disclosures about a public business entity’s expenses. The update requires more detailed information on expense components, such as inventory purchases, employee compensation, depreciation, amortization, and depletion, within commonly reporting categories like cost of sales, SG&A, and research and development. These amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated statements and disclosures.

In December 2023, the FASB issued ASU 2023-09 to improve disclosures and presentation requirements to the transparency of the income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The amendments are effective in annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated financial statements and disclosures.

NOTE 5 – LEASES, RIGHT-OF-USE ASSETS AND RELATED LIABILITIES

Leases to explore for or use minerals, oil, natural gas, and similar nonregenerative resources (see ASC 930,Extractive Activities — Mining, and ASC 932,Extractive Activities — Oil and Gas) are excluded from the scope of ASC 842,Leases. The Company has surface and use agreements for Longanesi, Gradizza, Trava, and Armonia in Italy. These agreements are directly related to accessing the subsurface minerals and are assessed as part of the oil and gas properties. As of December 31, 2023, all leases in AleAnna’s portfolio, in addition to its lease of office space, are short-term leases (12 months or less) and did not require recognition on the balance sheet.

In July 2024, in conjunction with the Casalino acquisition, AleAnna entered into a lease of the land that holds the biomethane processing and conversion asset utilized to produce electricity. The lease term is from July 1, 2024 through December 31, 2032, with anoption to extend the lease until December 31, 2041. The annual rent is €278,200 and must be paid in advance in four installments by the end of each calendar quarter. The total rent for the lease term until December 31, 2032 is €2,364,700. As of March 31, 2025, the Company’s operating lease right of use assets totaled $1.8 million, short term lease liabilities totaled $0.2 million, and long-term lease liabilities totaled $1.6 million. The Company recognized $0.1 million of operating lease expense during the three months ended March 31, 2025 which was included in cost of revenues as the land being leased is directly related to the production and sale of electricity at Casalino. As of December 31, 2024, the Company’s operating lease right of use assets totaled $1.8 million, short term lease liabilities totaled $0.2 million, and long-term lease liabilities totaled $1.7 million.

The Company does not have any borrowings; therefore, it does not have a readily determinable incremental borrowing rate, and there was no incremental borrowing rate implicit in the Casalino land lease. As such, the company utilized a discount rate of 7.709% to measure its lease liability. This represents the Company’s estimated incremental borrowing rate, determined using the 3-month EURIBOR rate of 3.709% as of July 2024, plus an estimated spread of 400 basis points (4.000%), to reflect the Company’s credit risk profile. This reflects the best estimate of the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term.

NOTE 6 – CONTINGENT CONSIDERATION LIABILITY

On July 13, 2016, AleAnna Europa S.r.L., a former subsidiary of AleAnna Resources LLC (which was subsequently merged into AleAnna Italia S.p.A. in December 2022), purchased a 33.5% working interest in the Longanesi field. Consideration paid included €7 million cash and up to €24 million of deferred consideration payable upon production of the Longanesi field. The deferred consideration is payable based on a formulaic calculation which is predominantly dependent on sales volumes and spot natural gas prices during the first 12 years of production (the “Earn-Out Period”). There will be no deferred consideration due if Longanesi is not developed and no deferred consideration due if average annual gas prices are less than €3.65/Mcf over the Earn-Out Period.

In connection with the achievement of first production and related revenue generation at Longanesi, AleAnna will be required to reserve $3.1 million related to the contingent consideration liability due to Enel. These funds will be classified as restricted cash in future balance sheets and may be used to satisfy the contingent consideration liability as payments become due. Payments become due 14 months after the first day of the month following the date of first production.

The Company recognized a liability for the contingent consideration in accounting for the asset acquisition in accordance with ASC 450,Contingencies(the “contingent consideration liability”).

As of March 31, 2025 and December 31, 2024, the contingent consideration liability was recorded at $26.0 million and $25.0 million, respectively, with the entire balance classified as long-term since all payments are due more than one year after the respective balance sheet dates. The estimate of the contingent consideration liability was determined based on inputs including the following as of March 31, 2025 and December 31, 2024: futures prices for European natural gas, Euro to USD exchange rates of 1.08 and 1.04, respectively, and management’s future expected annual Longanesi production. AleAnna is required to make formulaic deferred consideration payments effectively equating to 20% to 50% of revenue based on certain European natural gas threshold prices. The calculation and timing of such payments are primarily driven by future expected Longanesi production, as modeled by DeGolyer and MacNaughton, as well as forward European natural gas prices.

Changes in the contingent consideration liability attributable to factors other than foreign currency exchange rates are recognized in the condensed consolidated statement of operations. Changes in the contingent consideration liability attributable to foreign currency translation are recognized in other comprehensive loss within the condensed consolidated statement of operations and comprehensive loss. The change in the contingent consideration liability for all periods presented is attributable to changes in foreign exchange rates.

NOTE 7 – DERIVATIVE LIABILITY

As of December 31, 2023, the Company recorded a $0.2 million derivative liability related to an embedded 3.5x redemption feature within the Class 1 Preferred Units issued prior to the Business Combination. This feature was bifurcated and recorded at fair value pursuant to ASC 815. During the three months ended March 31, 2024, the liability was reduced tozero, with the resulting gain recognized in the condensed consolidated statement of operations and comprehensive loss. The derivative liability was derecognized in conjunction with the closing of the Business Combination as the related Class 1 Preferred Units were exchanged for AleAnna common stock.

NOTE 8 – NATURAL GAS PROPERTIES

Conventional Natural Gas Properties

A summary of conventional natural gas properties is as follows:

The Company uses the successful efforts method of accounting for conventional natural gas-producing activities. Under this method, the cost of productive wells and related equipment, development dry holes, and any permits related to productive acreage are capitalized, and depleted using the unit-of-production method. These costs include other internal costs directly attributable to production activities. Although initial production activities commenced in March 2025, the Company has not yet placed its Longanesi field assets into service for accounting purposes, and thereforeno depletion expense has been recorded as of March 31, 2025. Costs for exploratory dry holes, exploratory geological and geophysical activities, and delay rentals as well as other property carrying costs are charged to exploration expense.

There were no exploratory wells drilled and there were no capitalized exploratory well costs incurred during the three months ended March 31, 2025 or March 31, 2024. Asset additions during the three months ended March 31, 2025 primarily related to the construction of the Longanesi processing facility. Asset additions during the three months ended March 31, 2024 primarily related to the drilling and testing of three incremental Longanesi development wells. The company recordedno impairment of natural gas properties during the three months ended March 31, 2025 or the year ended December 31, 2024.

First Production at Longanesi

On March 13, 2025, AleAnna achieved a key milestone with the first production from its five wells in the Longanesi field. However, as of March 31, 2025, the Company had not recognized revenue from its conventional natural gas activities. While the tie-in of the Longanesi development wells and the installation of a temporary processing facility were complete as of March 31, 2025, production activities remained on hold due to a plant testing and stabilization program, and were not yet at a stage to result in recognized revenue for the quarter. Sales began in May 2025. In connection with Longanesi start-up, AleAnna will be required to reserve $3.1 million related to the contingent consideration liability due to Enel via a bank guarantee. Any cash deposits required to secure this bank guarantee will be classified as restricted cash in future balance sheets and may be used to satisfy the contingent consideration liability as payments become due.

Renewable Natural Gas Properties

As of March 31, 2025, renewable natural gas properties include $9.4 million of land, improvements and other assets related to the purchase of three renewable natural gas plant assets across Italy between March 2024 and July 2024. The estimated fair values of these assets at the date of acquisition are considered Level 3 assets in the fair value hierarchy. The brownfield renewable natural gas plant assets (Casalino and Campopiano) have average estimated useful lives of 20 years. All depreciation expense included in the Condensed Consolidated Statements of Operations relate to the Company’s renewable natural gas plant assets.

During the three months ended March 31, 2025, all revenue was derived from a single source (sales of electricity) and a single customer (the local state-owned electrical utility). As of March 31, 2025, the Company had $0.4 million of revenue receivable related to electricity sales. As of December 31, 2024, the Company had $1.2 million of revenue receivable related to electricity sales.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Participation Agreements

In conjunction with the closing of the Enel acquisition, AleAnna became a participant in the Longanesi Unitization Agreement (“UA”) with Societa Padana Energia (“Padana”). The UA governs the combination of Padana’s San Potito Concession and AleAnna’s San Marco Concession into a production unit. At the same time, AleAnna became a participant in the Unified Operating Agreement (“UOA”), which governs the bylaws by which Padana and AleAnna agree to develop the unit and fund future operations.

Under the UOA, AleAnna and Padana have agreed to jointly develop Longanesi per a plan approved by the Italian Ministry of the Environment (“MISE”). AleAnna and Padana entered the UOA with initial participating shares in the Longanesi field equal to 33.5% for AleAnna and 66.5% for Padana, with Padana appointed as operator. Padana is obliged to maintain the accounting records concerning the operations under the UOA in compliance with the laws and generally accepted accounting practices followed in the Italian oil and gas industry.

AleAnna and Padana fund their respective working interest shares of the capital required for Longanesi development and will receive their respective shares of the production output from the unitized field. However, such working interest percentages may be subsequently amended as more certainty is obtained over the Gas Originally in Place (“GOIP”) through redetermination procedures prescribed by the UOA. The redetermination process evaluates the results of the development drilling program (well logs, production tests, etc.) and other data that may be gathered prior to or during the drilling process (such as 3D seismic imaging) to determine if new data gathered changed the respective working interest percentages. If a redetermination process suggests GOIP changes, but AleAnna and Padana do not agree on revised working interest percentages, an independent third party will opine and set the revised working interest allocations. Adjustments to future production entitlements and capital contributions may be made accordingly. Cash payments may be made between the participants where there is insufficient production to true up contributions to date. If a true up of historical capital contributions is required as a result of redetermination, such capital true-up amounts will include an interest charge based on the nine-month Euro interbank offered rate (“Euribor”) and the date of the original capital contribution.

On October 26, 2023, Padana formally called for the First Redetermination process, as defined in the UOA, to begin. However, the outcome of this or any future redetermination, which may impact working interest percentages and require a capital contribution rebalancing, is highly uncertain and such amounts are not estimable at this time. Accordingly, AleAnna has not recorded any receivable from or payable to Padana related to the redetermination process.

Contingencies and Legal Proceedings

The Company is subject to loss contingencies related to litigation, claims, investigations and legal and administrative cases and proceedings arising in the ordinary course of business. The Company evaluates these contingencies on a regular basis and accrues a liability for such matters when the Company believes that a loss is probable, and the amount of the loss can be reasonably estimated. Any such accruals are adjusted thereafter as appropriate to reflect changed circumstances. In the event the Company determines that (i) a loss to the Company is probable, but the amount of the loss cannot be reasonably estimated, or (ii) a loss to the Company is less likely than probable but is reasonably possible, then the Company is required to disclose the matter herein, although the Company is not required to accrue such loss.

When able, the Company determines an estimate of reasonably possible losses or ranges of reasonably possible losses, whether in excess of any related accrued liability or where there is no accrued liability, for legal proceedings.

In instances where such estimates can be made, any such estimates are based on the Company’s analysis of currently available information and are subject to significant judgment and a variety of assumptions and uncertainties and may change as new information is obtained.

The ultimate outcome of the matters described below, such as whether the likelihood of loss is remote, reasonably possible, or probable, or if and when the range of loss is reasonably estimable, is inherently uncertain.

Furthermore, due to the inherent subjectivity of the assessments and unpredictability of outcomes of legal proceedings, any amounts accrued or estimated as possible losses may not represent the ultimate loss to the Company from the legal proceedings in question and the Company’s exposure and ultimate losses may be higher, and possibly significantly so, than the amounts accrued or estimated.

As described in Note 1, AleAnna acquired a 33.5% working interest in the Longanesi field. As part of the purchase, a legacy owner, Blugas Infrastructure S.r.L. (“Blugas”), retained an interest akin to an overriding royalty interest (“ORRI”), whereby Blugas is entitled to physical delivery of 20% of the first 350 million standard cubic meters (“SCM”) produced from the Longanesi field. In accounting for the acquisition of the 33.5% working interest, the Company did not recognize an asset or liability in the condensed consolidated financial statements related to the Blugas ORRI. Further, in December 31, 2023, the Company’s SEC Case reserves estimates contemplated the contractual arrangement and physical gas delivery to Blugas, such that the net cash flows related to the gas reserves attributable to the Company’s 33.5% working interest were reduced.

On May 28, 2024, the Company reached a settlement agreement (the “Blugas Settlement Agreement”) with Blugas regarding the Blugas ORRI. Under the terms of the Blugas Settlement Agreement, the Company paid Blugas approximately €5 million, plus an additional €1.1 million in applicable VAT, or approximately $6.6 million. In exchange, the Company was released from any future liability related to the Blugas ORRI. As a result of the transactions contemplated by the Blugas Settlement Agreement, the Company’s 33.5% working interest (net revenue interest) in the Longanesi field, as established under the terms of the Unified Operating Agreement arrangement originally signed between ENI and Grove and dated September 26, 2009, is now unencumbered except for normal government royalties (10%).

The Blugas Settlement Agreement was accounted for as an acquisition of the Blugas ORRI claim with a corresponding increase to the estimated future cash flows from our reserves. As such, the cost of the acquisition is included in natural gas and other properties, with the VAT portion included in value-added tax refund receivable in the consolidated balance sheet as of March 31, 2025 and December 31, 2024. The Company’s year-end December 31, 2023 reserve quantities included the 20% of 350 million standard cubic meters (approximately 2,472 106 ft 3) allocable to the Blugas ORRI in the Company’s proved gas reserves. However, the required payments to Blugas associated with the sale of such quantities were reflected as cash outflows (costs) in the Company’s year-end December 31, 2023 reserve report as if such amounts were paid to Blugas. Following settlement, the Company’s year-end December 31, 2024 reserve quantities continue to include the 20% of 350 million standard cubic meters (approximately 2,472 106 ft 3); however, the previously required payments to Blugas associated with the sale of such quantities were no longer reflected as cash outflows (costs) given the acquisition of the Blugas ORRI. As the cash outflows (costs) were no longer reflected as if paid to Blugas, such amounts were reflected in the Company’s December 31, 2024 reserve report as allocable to the Company’s unencumbered 33.5% working interest.

NOTE 10 – EQUITY

AleAnna Common Stock and Noncontrolling Interests– As of March 31, 2025, the Company had 40,584,455 shares of Class A Common Stock outstanding and 25,994,400 shares of Class C Common Stock outstanding. See Note 2,Business Combination, for more details of the Company’s Class A Common Stock and Class C Common Stock.

Following the Business Combination, holders of Class A Common Stock own a direct controlling economic interest in the results of the combined entity. Holders of Class C HoldCo Units and Class C Common Stock own an economic interest in the Company, shown as noncontrolling interests (“NCI”) in stockholders’ equity in the Company’s condensed consolidated financial statements. Holders of Class C Common Stock have voting rights equal to holders of Class A Common Stock but no entitlement to earnings or distributions. The ownership interests of the Class A Common Stockholders and the NCI were 60.94% and 39.06%, respectively. The NCI may decrease as holders of Class C HoldCo Units (which represent an economic interest in HoldCo) and their corresponding shares of Class C Common Stock (which provide voting rights in AleAnna, Inc.) exchange both securities together for shares of Class A Common Stock. Each share of Class C Common Stock must be surrendered along with a corresponding Class C HoldCo Unit in order to receive one share of Class A Common Stock. As of March 31, 2025 and December 31, 2024, no such exchanges had occurred.

The financial statements also reflect NCI related to the 10% economic interest held in the Campopiano RNG asset by an unaffiliated third party, as discussed in Note 1.

Warrants – There were 11,225,969 and 11,250,000 Public Warrants outstanding as of March 31, 2025 and December 31, 2024, respectively. Each warrant entitles the registered holder to purchaseone share of Class A common stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing 30 days after the completion of our Business Combination.

The Company may call the Public Warrants for redemption:

In the event that the Company elects to redeem all of the redeemable Public Warrants, it will fix a date for the redemption. Pursuant to the terms of the warrant agreement, notice of redemption will be mailed by first class mail, postage prepaid, by not less than 30 days prior to the redemption date to the registered holders of the redeemable Public Warrants to be redeemed at their last addresses as they appear on the registration books. Any notice mailed in the manner provided in the warrant agreement will be conclusively presumed to have been duly given whether or not the registered holder received such notice.

The Company has established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the Public Warrant exercise price. If the foregoing conditions are satisfied and the Company issues a notice of redemption of the Public Warrants, each Public Warrant holder will be entitled to exercise his, her or its Public Warrant prior to the scheduled redemption date. However, the price of the Class A Common Stock may fall below the $18.00 redemption trigger price (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) as well as the $11.50 Public Warrant exercise price after the redemption notice is issued.

In January and February 2025, holders exercised an aggregate 24,022 Public Warrants, resulting in the issuance of 24,022 shares of Class A Common Stock at an exercise price of $11.50 per share. These exercises generated approximately $0.3 million in cash proceeds.

AleAnna Energy Members’ Equity (pre-Business Combination) – Prior to the Business Combination the Company had Common Units and Class 1 Preferred Units issued and outstanding. Due to the redemption features of the Class 1 Preferred Units, they were recorded at redemption value and classified as temporary equity in the consolidated balance sheets. The difference between the book value of Class 1 Preferred Units issued and the redemption value, less the amount attributable to the derivative liability discussed in Note 7, was recorded as a deemed dividend in periods prior to the Business Combination. AleAnna Energy’s Class 1 Preferred Units and Common Units were exchanged for AleAnna common stock in connection with the Business Combination (see Note 2).

NOTE 11 – EXECUTIVE COMPENSATION

On September 1, 2022, the Company entered into an employment agreement with the CEO. Within this employment agreement, there is a Medium/Long Term Incentive Plan (“M/LTIP” or the “Plan”) outlined, which includes cash bonus amounts to be paid based on the completion of certain milestones within the established thresholds. Such payments could result in total payments ranging from €375,000 to €1,125,000. Threshold dates for such payments range from May 31, 2024, through December 31, 2026.

The Company tracks each of the milestones for the executive compensation package based on the current and future business plans. Based on the metrics and performance indicators outlined in the executive compensation package, management has concluded that the likelihood of achieving each of these metrics is not probable as of March 31, 2025. Accordingly, no accrual has been recorded.

NOTE 12 – INCOME TAXES

As of March 31, 2025 and December 31, 2024, AleAnna, Inc. held 60.94% of the economic interest in HoldCo, which is treated as a partnership for U.S. federal income tax purposes. As a partnership, HoldCo generally is not subject to U.S. federal income tax under current U.S. tax laws as its net taxable income (loss) and any related tax credits are passed through to its members and included in their tax returns, even though such net taxable income (loss) or tax credits may not have actually been distributed. AleAnna, Inc. is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to its distributive share of the net taxable income (loss) and any related tax credits of HoldCo.

AleAnna Energy was historically and remains a disregarded subsidiary of a partnership for U.S. Federal income tax purposes with each partner being separately taxed on its share of taxable income or loss. As a direct result of the Business Combination, HoldCo became the sole member of AleAnna Energy. As such, HoldCo’s distributive share of any net taxable income or loss and any related tax credits of AleAnna Energy are then distributed to the Company. For the days and periods prior to the closing of the Business Combination, AleAnna Energy was a disregarded subsidiary of an entity treated as a partnership. As such, its net taxable loss and any related tax credits were allocated to its members.

AleAnna’s Italian subsidiary (AleAnna Italia, S.p.A.) is a joint stock company or S.p.A. and is considered a corporation under the Italian tax code. Therefore, the statutorily determined cumulative taxable loss of AleAnna Italia was tax affected and recognized as a deferred tax asset as of March 31, 2025 and December 31, 2024. The Company has also recorded deferred tax assets for temporary differences between the book and tax basis in the underlying assets and liabilities. Given AleAnna’s history of losses, and because future production remained uncertain as of March 31, 2025 and December 31, 2024, a full valuation allowance was applied against the deferred tax assets.

The Company applies an estimated annual effective rate to interim period pre-tax income to calculate the income tax provision for the quarter in accordance with the principal method prescribed by the accounting guidance established for computing income taxes in interim periods. The company recognized less than $0.1 million in income tax benefit during the three months ended March 31, 2025, primarily related to temporary differences of its Italian subsidiaries. The Company’s effective tax rate was (1.4%) for the three months ended March 31, 2025 and 0.0% for the same period in 2024. The effective tax rates during the three months ended March 31, 2025 and 2024 were lower than the applicable statutory rate primarily due to the taxable losses and the application of a full valuation allowance against the Company’s deferred tax assets as of both March 31, 2025 and March 31, 2024. The applicable U.S. and Italian corporate tax rates were 21% and 24%, respectively, during the three months ended March 31, 2025 and 2024.

The Company has assessed the realizability of the net deferred tax assets, and in that analysis, has considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized. In making such a determination, the Company considered all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and recent results of operations. After consideration of all available evidence, given AleAnna’s history of losses, and because future production remained uncertain as of March 31, 2025 and December 31, 2024, the Company recorded a full valuation allowance against its deferred tax assets as. This valuation allowance will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances. As noted above, the valuation allowances completely offset the deferred tax assets, which resulted in a net zero impact to the Company’s consolidated balance sheets as of March 31, 2025 and December 31, 2024.

The Company recognizes the financial statement effects of uncertain income tax positions when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. To the extent the Company’s assessment of such tax positions changes, the change in estimate will be recorded in the period in which the determination is made. As of March 31, 2025 and December 31, 2024, the Company had not recorded any uncertain tax positions or accrued interest and penalties on the consolidated balance sheets.

The Company’s income tax filings will be subject to audit by various taxing jurisdictions. The Company will monitor the status of U.S. Federal, state and local income tax returns and Italian tax returns that may be subject to audit in future periods. No U.S. Federal, state and local income tax returns or Italian tax returns are currently under examination by the respective taxing authorities.

NOTE 13 – RELATED PARTY TRANSACTIONS

The Company follows FASB ASC subtopic 850-10,Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

Certain executive officers of AleAnna are currently employed by and participate in employee benefit plans sponsored by an affiliate of Nautilus and provide administrative and support services to AleAnna under a master services agreement. As of March 31, 2025, AleAnna had outstanding payables of $0.1 million to the affiliate of Nautilus pursuant to such agreements. Services provided include insurance, risk management, legal, information technology, purchasing, executive management, accounting, finance, human resources, and other administrative services.

NOTE 14 – LOSS PER SHARE

The Business Combination was accounted for as a common control transaction with respect to AleAnna Energy which is akin to a reverse recapitalization. This conclusion was based on Nautilus’s controlling financial interest in AleAnna Energy prior to the Business Combination and its continued control over the combined entity. Following the Business Combination, Nautilus holds Class A Common Stock, representing a direct controlling economic interest, and Class C HoldCo Units and Class C Common Stock, representing a noncontrolling economic interest classified as NCI in stockholders’ equity in the Company’s consolidated financial statements.

Given this change in equity structure and the requirements of ASC 260, Earnings per Share, the Company retrospectively adjusted its calculation of loss per share for the prior-year period to reflect the impact of the new capital structure in accordance with applicable reverse recapitalization guidance. As a result, the weighted average shares outstanding for the year ended December 31, 2023, were calculated by applying the implied conversion ratio from the Business Combination to the pre-merger AleAnna Energy LLC units, ensuring comparability with the post-Business Combination period.

Basic net loss per share has been computed by dividing net loss attributable to holders of Class A Common Stock by the weighted average number of shares of Class A Common Stock outstanding during the respective periods. Diluted earnings per share of Class A Common Stock was computed by dividing net loss attributable to holders of Class A Common Stock by the weighted-average number of shares of Class A Common Stock outstanding adjusted to give effect to potentially dilutive securities.

The Company’s potentially dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of shares of Class A Common Stock outstanding used to calculate both basic and diluted net loss per share is the same. The following table sets forth the computation of net loss used to compute basic and diluted net loss per share of Class A Common Stock for the three months ended March 31, 2025 and 2024:

The AleAnna Energy Class 1 Preferred Units were not considered to be participating based on their contractual rights. However, due to the redemption features of the Class 1 Preferred Units, they were recorded at redemption value and classified as temporary equity in the consolidated balance sheets prior to the Business Combination. The difference between the book value of Class 1 Preferred Units issued and the redemption value, less the amount attributable to the derivative liability discussed in note discussed in Note 7 prior to the Business Combination, was recorded as a deemed dividend. The deemed dividend reduced the net loss attributable to holders of Common Member Units (and subsequently holders of Class A Common Stock) in the calculation of the numerator above.

The 25,994,400 shares of Class C Common Stock and the 11,225,969 Public Warrants outstanding as of March 31, 2025 were not included in the calculation of diluted weighted average shares of Class A Common Stock outstanding as their inclusion would have been anti-dilutive. Shares of Class C Common Stock are not participating securities; thus, the application of the two-class method is not required.

NOTE 15 – SEGMENT REPORTING

The Company’s operations consist ofone operating segment and reportable segment, reflecting the manner in which operations are managed and the criteria used by the chief operating decision maker (“CODM”), the Company’s Executive Chairman and Chief Executive Officer, collectively, to evaluate performance, develop strategy, and allocate resources.

AleAnna’s principal products include conventional natural gas produced from onshore exploration and development and RNG derived from animal and agricultural waste. The Company has not yet recognized revenue from its conventional natural gas activities and has only recently begun deriving revenue from sales of electricity related to its RNG business.

While the Company has recently acquired three RNG assets, these assets are still in the early stages of development which may include expansion and installation of upgrading units to refine biomethane into renewable natural gas (rather than conversion to electricity). These assets have not generated significant revenues or incurred material expenses. As of and for the period ending March 31, 2025, the Company’s CODM was primarily focused on capital investing decisions, strategy, and forward-looking investment economics. While the CODM monitors cash reserves and overall enterprise liquidity, extensive review and analysis of the Company’s performance and loss statements is not performed beyond review of the consolidated financial statements. As such, the CODM continues to assess the financial performance of the Company as a single enterprise on a consolidated basis, without distinguishing between conventional natural gas and RNG operations. Given the Company has not generated significant revenue or profits and is focused on development activities, the CODM does not utilize a specific measure of profit or loss to assess performance. The CODM does not monitor specific expense categories separately. The financial information reviewed by the CODM is consistent with the audited consolidated balance sheets and statements of operations and cash flows included herein.

All of the Company’s primary operating activities and assets remain located in Italy. The Company will continue to assess the need for including multiple reportable segments as the business evolves.

NOTE 16 – IMMATERIAL RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS

Subsequent to the issuance of the Company’s unaudited consolidated financial statements as of and for the three months ended March 31, 2024, errors were identified in the computation of foreign currency translation adjustments.** **As a result, the Company has restated the prior period financial statements to correct the errors. Management evaluated the materiality of the errors and concluded they were not material to the prior period financial statements. The Company will also correct previously reported financial information for such immaterial errors in future filings, as applicable.

The following tables reflect the effects of the correction on all affected line items of the Company’s previously reported March 31, 2024 consolidated financial statements presented in this Form 10-Q:

NOTE 17 – SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to May 15, 2025, the date that the financial statements were issued.

Warrant Exercises

Between April 23, 2025 and May 12, 2025, holders exercised an aggregate 75,426 Public Warrants, resulting in the issuance 75,426 shares of Class A Common Stock at an exercise price of $11.50 per share. These exercises generated approximately $0.9 million in cash proceeds leaving 11,150,543 remaining Public Warrants outstanding as of May 12, 2025.