NET Power Inc.

Item 1. Financial Statements

Condensed Consolidated Balance Sheets (Unaudited)

In thousands, except par value

Condensed Consolidated Balance Sheets (Unaudited) (Continued)

In thousands, except par value

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

In thousands, except per share data

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

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

Condensed Consolidated Statements of Cash Flows (Unaudited)

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

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1 — Nature of Business and Basis of Presentation

Nature of Business

NET Power Inc. (“Net Power” or the “Company”) is an energy technology company focused on delivering low-carbon gas power solutions. Historically, the Company’s sole business has been the development of a novel oxy-combustion power generation system (which we refer to as the “Net Power Cycle”) designed to produce reliable and affordable electricity from natural gas while capturing virtually all atmospheric emissions. The Net Power Cycle is designed to inherently capture CO 2 while producing virtually no air pollutants such as SOX, NOX, and other particulates. Recently, the Company broadened the scope of its business to potentially include the development of low-carbon gas power solutions using more standard natural gas turbines paired with post-combustion carbon capture technology.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information; however, certain information or footnote disclosures normally included in complete financial statements prepared in accordance with US GAAP may have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In management’s opinion, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements for the year ended December 31, 2024 and include all adjustments, which consist of only normal and recurring adjustments, necessary for fair statement. Certain prior period financial information has been reclassified to conform to current period presentation.

The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of the results to be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the annual financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 10, 2025 (the “2024 Annual Report”).

NOTE 2 — Significant Accounting Policies

The Company’s significant accounting policies used to prepare these condensed consolidated financial statements, unless otherwise noted below, are consistent with those used for the fiscal year ended December 31, 2024. Accordingly, refer to Note 2 to the consolidated financial statements in the 2024 Annual Report for the Company’s significant accounting policies.

Use of Estimates

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

Segment Reporting

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

Accounting Standards Not Yet Adopted

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

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

NOTE 3 — Impairment and other charges

Long-lived asset impairment

In March 2025, due to higher-than expected indicative cost estimates for its first utility-scale project, the Company identified a triggering event for evaluation of impairment of its long-term assets. As the Company is in the development stage, focusing on developing and commercializing its technology, the Company assessed its definite-lived intangible assets, the Demonstration Plant, and other corporate assets for impairment as an asset group (the “Developed Technology Asset Group”). In March 2025, management performed a probability-weighted undiscounted cash flow analysis, incorporating estimated cash flows from the deployment of its technology and the value of the underlying intellectual property, and the results indicated thatno impairment was required. Additionally, in response to these higher-than expected indicative cost estimates, the Company initiated a value engineering process to assess Project Permian’s economic feasibility and to optimize its design to reduce costs. The Company temporarily paused further long lead equipment releases and engaged a management consulting firm to conduct a techno-economic analysis of clean, firm power alternatives and to assess the market potential of the Net Power Cycle product.

In the second quarter of 2025, the Company progressed its value engineering process to improve and validate commercialization pathways for the Net Power Cycle and introduced its integrated product offering, combining the Net Power Cycle with gas turbines with the goal of improving the cost-competitiveness of the Company’s technology and time to market for potential customers. Additionally, in July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which enhanced the Section 45Q Tax Credit for Carbon Sequestration for enhanced oil recovery. The Company received initial results of the techno-economic analysis for the Net Power Cycle product, and the Company responded to a prospective customer’s Request for Proposal for Environmental Attribute Credits generated from carbon capture and sequestration at North American power plants. Based on these developments, the Company didnot identify a triggering event that the Developed Technology Asset Group may be impaired as of June 30, 2025.

In late August 2025, the Company completed its assessment of the techno-economic analysis which identified slower than anticipated acceptance and deployment of the Company’s technology from previous expectations; the value engineering process identified significant cost reductions, but not to a level that is currently economic in the marketplace; and the engagement with potential customers identified time to market and cost as a significant factor to deployment of power solutions, both of which currently represent challenges for the Company’s Net Power Cycle product. The Company determined these factors would result in fewer deployments of the Company’s Net Power Cycle product than previously estimated and therefore, updated its long-range forecasts.

The Company determined that a triggering event had occurred requiring an impairment assessment of its Developed Technology Asset Group as a result of the feedback from potential customers to the Company’s technology and integrated product offering, the estimated cost reductions achieved through the value engineering process, and the resulting revisions to the Company’s forecasted future unit deployments and related cash flows based upon the perceived marketability and commercial viability of the Company’s technology. As a result, management updated its probability-weighted undiscounted cash flow analysis and determined that the carrying value of the Developed Technology Asset Group was not recoverable.

The fair value of the Developed Technology Asset Group was determined using the income and market approaches. The income approach used a probability-weighted discounted cash flow method based upon management’s projections of future revenues and operating expenses from future deployments of the Company’s technology discounted based an estimate of the Company’s cost of equity, which uses Level 3 inputs. As the Company has not generated revenue from its first-of-a-kind technology, the market approach was determined through an implied value approach by applying a control premium to the Company’s market capitalization, less working capital, investments in securities, and other assets not part of the asset group to estimate the fair value of the Developed Technology Asset Group, which uses Level 3 inputs. The application of these valuation methodologies resulted in an indicated fair value of the Developed Technology Asset Group of $200.0 million, resulting in the recognition of an impairment loss of $1,095.8 million for the three months ended September 30, 2025. The impairment was allocated to the long-lived assets within the asset group on a pro-rata basis, according to their relative carrying amounts. The impairment loss is included in Impairment and other charges on the condensed consolidated statements of operations and comprehensive loss.

The following table details the recognition of long-lived asset impairment as of the measurement date:

The Company considered whether the estimated useful lives of theindividual long-lived assets in the Developed Technology Asset Group required revision and concluded no changes were necessary.

Goodwill impairment

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

Other charges

During the first quarter of 2025, as a result of the management’s assessment of the probability of the construction of Project Permian due to the factors discussed above, $56.1 million of costs previously included in Construction-in-progress were expensed. This amount is included in Impairment and other charges in the condensed consolidated statements of operations and comprehensive loss.

NOTE 4 — Investments

The Company is currently invested inavailable-for-sale securities. The $100 million certificate of deposit previously held by the Company matured and the interest receivable on the certificate of deposit was collected in June 2025.

The following tables present the Company’s available-for-sale investments included in the condensed consolidated balance sheets:

The cost of securities sold, if any, is based on the specific-identification method. During the three and nine months ended September 30, 2025 and 2024, there were no securities sold. There were no credit losses recognized during the three and nine months ended September 30, 2025 and 2024. The Company established no allowances for credit losses as of September 30, 2025 and December 31, 2024. The Company’s long-term avai lable-for-sale investments mature through June 2027.

NOTE 5 — Fair Value Measurements

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

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

Short-term Investments

Short-term investments are valued at cost, which approximates fair value. The fair value of the short-term investments is considered a Level 2 fair value measurement because cost basis is observable, but not in an active market.

Available-for-sale Securities

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

Warrants

The Public Warrants are exercisable for 8,624,974 shares of Class A Common Stock at a price of $11.50 per share. The Company may redeem the Public Warrants for $0.01 if the last reported trading price of the Company’s Class A Common Stock price equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period. Additionally, the Public Warrants may be redeemed if the last reported trading price of the Company’s Class A Common Stock equals or exceeds $10.00 and is below $18.00 by paying a make-whole premium. The Public Warrants expire June 8, 2028. The Public Warrants are valued using their quoted and publicly-available market prices. Since their fair value is predicated on quoted prices in an active market for identical instruments, the fair value of the Public Warrants is considered a Level 1 fair value measurement.

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

The Company uses a Black-Scholes Merton Model to value the Private Placement Warrants. Key inputs into the Black-Scholes Merton Model include the last Class A Common Stock closing price of $3.01 as of September 30, 2025 with a strike price of $11.50 per share. The volatility assumption is based on a blended average of equity volatility of publicly traded companies within the Company’s peer group, the Company's own historical volatility, and the implied volatility of the Public Warrants. The fair value of the Private Placement Warrants is considered a Level 3 fair value measurement.

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

Earnout Shares

The fair value of the Earnout Shares (as defined in Note 6 to the consolidated financial statements included in the 2024 Annual Report) is estimated using a Monte Carlo simulation. The Monte Carlo simulation considers daily simulated stock prices as a proxy for the Company’s daily volume-weighted average share price. Historically, the volatility assumption is based on a blended average of equity volatility of publicly traded companies within the Company’s peer group, the historical volatility of the Company’s Class A common stock, and the implied volatility of the Public Warrants. For the valuation as of September 30, 2025, the volatility assumption is based on the Company’s own historical volatility, implied volatility on the Company’s own common stock options, and the implied volatility of the Public Warrants.

The following table contains the key inputs used in the valuations of the Earnout Shares:

NOTE 6 — Goodwill and Intangible Assets

Goodwill

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

The following table presents the changes to goodwill included in the condensed consolidated balance sheets:

During the second quarter of 2024, the Company completed its estimate of deferred taxes as of the Closing Date and finalized its purchase price allocation, which resulted in a measurement adjustment that reduced goodwill by$64.1 million.

Refer to Note 3 — Impairment and other chargesfor discussion of impairment.

Definite-Lived Intangible Assets

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

(1) Software includes$0.1 million and $0.6 million related to software work-in-progress asof September 30, 2025 and December 31, 2024.

Refer to Note 3 — Impairment and other chargesfor discussion of impairments.

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

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

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

NOTE 7 — Property, Plant, and Equipment

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

(1) As of September 30, 2025 and December 31, 2024, $1 thousand and $18 thousand, respectively, of accumulated depreciation and amortization is related to amortization of the finance lease right-of-use assets.

Refer to Note 3 — Impairment and other chargesfor discussion of impairments.

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

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

NOTE 8 — Accrued Liabilities

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

NOTE 9 — Leases

On March 7, 2025, the Company entered into a building lease agreement for a warehouse in La Porte, Texas that commenced in April 2025. The lease has an initial term of 62 months and contains a renewal option offive years. The future minimum lease payments associated with this lease are approximately$2.0 million.

Refer to Note 3 — Impairment and other chargesfor discussion of impairment.

NOTE 10 — Redeemable Non-Controlling Interests in Subsidiary

The following table presents the Company and the non-controlling interest (“NCI”) ownership percentage of the membership interests in OpCo as of the following periods:

The Company measures redeemable NCI each quarter at the higher of its book value or its redemption value. As of September 30, 2025 and December 31, 2024, the Company measured redeemable NCI atredemption value. The adjustment to record redeemable NCI at book or redemption value is recorded through Additional paid-in capital on the condensed consolidated statement of mezzanine shareholders' equity and shareholders' equity.

OpCo’s net loss before income tax was attributed to redeemable NCI holders at 64.5% for thethree and nine months ended September 30, 2025. OpCo’s net loss before income tax was attributed to redeemable NCI holders at 66.0% for thethree and nine months ended September 30, 2024.

NOTE 11 — Share-Based Compensation

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

Performance Stock Units

As of September 30, 2025, there was$0.9 million of unrecognized share-based compensation expense related to unvested performance stock units (“PSUs”).

During 2025, there have been 524,000 PSUs awarded to certain executives for which the vesting occurs upon the achievement of specific market-based conditions related to the Company’s financial performance over athree-year period, modified based on the Company’s Relative Total Shareholder Return (“TSR”) and subject to final vesting based on the participant’s continued employment through the end of the requisite service period. The amount of awards that will ultimately vest for the PSU can range from 0% to 200% based on the TSR calculated over athree-year period. The fair value of the PSUs was determined using the Monte Carlo Simulation model and is being expensed over thethree-year vesting period. The assumptions used to calculate the fair value of these awards were:

The following table presents a summary of PSU activity as of September 30, 2025 and the changes during the nine months ended September 30, 2025:

Stock Options

As of September 30, 2025, there was $3.3 million of unrecognized share-based compensation expense related to stock options.

The stock options granted to employees during 2025 veston theone-year anniversary of the date of grant. The Company will recognize compensation expense from the grant date through the expected vesting date. The fair value of the Company’s stock option grants was estimated utilizing the following range of assumptions using the Black-Scholes Merton model:

The following table presents a summary of stock option activity during the nine months ended September 30, 2025:

Restricted Stock Units

As of September 30, 2025, there was $6.1 million of unrecognized share-based compensation expense related to unvested restricted stock units (“RSUs”), which the Company expects to recognize over a weighted average period ofthree years.

Generally, RSUs granted to employees and the majority of executives either cliff-vest on thethree-year anniversary of the date of grant or vest ratably on each anniversary of the date of grant over athree-year period. Annual awards granted to independent directors cliff-vest on the first anniversary of each award’s grant date.

The following table presents a summary of RSU activity during the nine months ended September 30, 2025:

Refer to Note 14 — Related Party Transactions for information related to the BHES JDA.

NOTE 12 — Earnings (loss) per Share

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

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

Only shares of Class A Common Stock participate in the Company’s undistributed earnings. As such, the Company’s undistributed earnings are allocated entirely to the Class A Common Stock based on the weighted-average number of shares of Class A Common Stock outstanding for the three and nine months ended September 30, 2025 and 2024.

Based on the amounts outstanding at September 30, 2025 and 2024, the Company excluded the following financial instruments from the computation of diluted earnings (loss) per share because their inclusion would be anti-dilutive:

NOTE 13 — Income Taxes

As of September 30, 2025, the Company estimated its annual effective tax rate to be 1.89%, and recorded a deferred income tax benefit of $1.2 million and $2.4 million for the three and nine months ended September 30, 2025. The annual effective tax rate varies from the statutory federal income tax rate due to amounts allocated to NCI, changes in the Company’s valuation allowance and other permanent items.

On July 4, 2025, the OBBBA was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We have evaluated OBBBA and determined that there were no material impacts to our consolidated financial statements.

Tax Receivable Agreement

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

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

NOTE 14 — Related Party Transactions

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

The Company had $8.2 millionand $6.5 million in current liabilities payable to related parties as of September 30, 2025 and December 31, 2024, respectively, on the condensed consolidated balance sheets related to the following services. These related party payables are unsecured and are due on demand.

Master Services Agreements

A significant shareholder provides the Company with patent administration services related to the development of the Net Power Cycle. These totals are included in General and administrative on the condensed consolidated statements of operations and comprehensive loss.

Another shareholder supports the Company with regard to general business oversight and with the operation of the Demonstration Plant. These totals are reflected in Research and development on the condensed consolidated statements of operations and comprehensive loss.

BHES JDA

On February 3, 2022, the Company entered into the Original JDA, which was subsequently amended and restated on June 30, 2022 and December 13, 2022 with BHES to invest in, develop, and deploy the Net Power Cycle in collaboration with the Company (as amended and restated, the “BHES JDA”). The BHES JDA is settled in cash and issuances of equity in exchange for services related to the development and commercialization of the technology. The Company records the expense for services provided by BHES within Research and development on the condensed consolidated statements of operations and comprehensive loss. As a result of the equity issuances under the BHES JDA, BHES’s ownership interest in the Company exceeds 5%; therefore, it is considered a related party for all periods presented.

The portion of BHES JDA costs that the Company pays with Class A OpCo Units and shares of Class B Common Stock is recorded within Additional paid-in capital on the condensed consolidated balance sheets and the condensed consolidated statement of mezzanine shareholders' equity and shareholders' equity. The following tables display the expense recognized in the consolidated statement of comprehensive income for shares distributed as payment for services rendered under the terms of the BHES JDA during the periods described below:

Shares issued as payment under the terms of the BHES JDA are issued at a discount expected to cause a total loss of approximately$17.5 million to the Company over the term of the agreement. The Company has incurred inception-to-date losses of$13.5 million related to such issuances. Additionally, if the volume-weighted average price of the Company’s stock forten consecutive trading days (“10-Day VWAP”) immediately preceding the payment date for services under the BHES JDA is less than $4.00 per share (the “Floor Price”), an incremental cash payment is required for the difference between the 10-Day VWAP and the Floor Price (the “BHES JDA Make-Whole Payment”). As of September 30, 2025, the Company had$0.5 million incurrent liabilities payable to related parties on the condensed consolidated balance sheets related to the BHES JDA Make-Whole Payment. For the three and nine months ended September 30, 2025, the Company incurred $1.0 million and $4.9 million related to the BHES JDA Make-Whole Payment. For thethree and nine months ended September 30, 2024, the Company hadno such expenses related to the BHES JDA Make-Whole Payment.

BHES may earn additional shares (“BHES Bonus Shares”) if it meets certain targets related to the development of the Company’s technology. The Company determined that it is probable it will issue these shares to BHES; therefore, the Company recognizes the compensation cost associated with these share-based payments ratably over the expected service period. The following table disaggregates the variable share-based compensation payable to BHES should it meet its milestone objectives:

BHES Limited Notice to Proceed

Through September 30, 2025, the Company has incurred$41.5 million under a Letter of Limited Notice to Proceed forthe Purchase of KPEP Long Lead Time Items with BHES, as amended, for the purchase of long-lead materials necessary for the procurement and manufacture of the turboexpander and related key process equipment and machinery for the Company’s first utility-scale power plant, along with related fees and services.

BHES Equipment Purchases

On August 14, 2025, the Company committed to purchase a lube oil system from BHES for the Demonstration Plant for $1.6 million. As of September 30, 2025, the Company incurred $0.2 million related to this commitment.

NOTE 15 — Commitments and Contingencies

Litigation

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

On April 18, 2025, an alleged stockholder of the Company (the “Plaintiff”), individually and on behalf of all others similarly situated, filed a putative class action complaint for violation of federal securities laws against the Company, its Chief Executive Officer, President and Interim Chief Financial Officer, its former Chief Financial Officer and its former President and Chief Operating Officer (collectively, the “Defendants”) in the United States District Court for the Middle District of North Carolina (the “Complaint”). The Complaint purports to bring a federal securities class action on behalf of a class of persons and entities other than the Defendants who acquired the Company’s securities between June 9, 2023 and March 7, 2025 and asserts violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. The Complaint alleges, among other things, that the Defendants made materially false and misleading statements related to the Company’s business, operations and prospects, including the timing and costs of developing Project Permian. The Plaintiff seeks, among other things, certification of a class, an award of unspecified compensatory damages, interest, costs and expenses, including attorneys’ fees and expert fees.

On May 29, 2025, an alleged stockholder of the Company, filed a derivative suit on behalf of the Company against the Company’s Chief Executive Officer, President and Interim Chief Financial Officer, its former Chief Financial Officer, its former President and Chief Operating Officer and its board of directors in the United States District Court for the Middle District of North Carolina, asserting claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and violations of federal securities laws (the “Derivative Complaint”). These claims are predicated on the same allegedly false and misleading statements regarding the time and capital needed to complete Project Permian that are the subject of the Complaint outlined above.

The Company intends to vigorously defend against the claims brought in both matters. In light of the complexity and ongoing and uncertain nature of the outstanding proceedings and inquiries, at this time the Company is unable to estimate a reasonably possible financial loss or range of financial loss, if any, that the Company may incur to resolve or settle these matters.

Asset Retirement Obligation

Under the terms of the lease for the Demonstration Plant, the Company is required to remove the Demonstration Plant and restore the land to post-clearing grade level. During 2024, the Company revised the estimate of its asset retirement obligation as a result of additional construction at the Demonstration Plant. The following table reconciles the beginning and ending balances of the asset retirement obligation as of the dates presented:

Unconditional Purchase Obligations

The Company has committed to purchase industrial components for installation at its Demonstration Plant and its first commercial power plant. The Company pays for these components in installments aligned to contractual milestones. In accordance with ASC Topic 440, Commitments, the Company does not recognize these commitments on the condensed consolidated balance sheets.

As of September 30, 2025, the Company had $32.1 million of remaining purchase obligations through February 2027 related to the BHES JDA, which is expected to be settled 50% in cash and 50% in common stock, plus any incremental cash payments that may be owed for periods where the 10-Day VWAP is less than $4.00 per share in the 10 trading days preceding the date on which shares are to be issued to BHES. In addition, the Company had $66.8 million of additional remaining asset purchase obligations through 2026. Refer to Note 14 — Related Party Transactions for additional information related to the BHES JDA.

NOTE 16 — Subsequent Events

Gas Turbine Purchase Obligation

On November 12,2025, the Company entered into an agreement with a vendor for the purchase oftwo modular gas turbine generator sets for a total purchase obligation of $77.7 million, of which $1.0 million has been paid as of the date of the agreement. Remaining payments under the contract are due at certain milestones through 2028.

Letter of Intent with Entropy, Inc.

On November 7, 2025, the Company signed a letter of intent with Entropy, Inc., to negotiate one or more definitive agreements under which the Company would, among other things, exclusively license and commercialize the post-combustion carbon capture technology of Entropy, Inc. in the United States.