NET Power Inc.

Table of Contents

Notes to Consolidated Financial Statements

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 (referred to as the “Oxy-Combustion Cycle”) designed to produce reliable and affordable electricity from natural gas while capturing virtually all atmospheric emissions.

During the third quarter of 2025, the Company completed a market analysis of the Oxy-Combustion Cycle, identifying slower than anticipated acceptance and deployment of the technology from previous expectations coupled with costs not currently economic in the marketplace. In response to unprecedented demand growth for low-cost, firm power generation solutions with viable pathways to decarbonize, the Company broadened the scope of our business to include the generation of power using natural gas turbines paired with PCC technology that we intend to license from Entropy. In order to preserve capital for this new business opportunity, the Company paused all development work and related expenditures for its first utility-scale power plant utilizing the Oxy-Combustion Cycle (“SN1”). In December 2025, we suspended testing efforts at our La Porte Demonstration Facility.

Risks and Uncertainties

The Company is subject to a number of risks, including, but not limited to, reliance on relationships with strategic investors and partners for successful deployments of power plants, the requirement for additional capital to fund development and construction of our projects, the commercial viability of the proprietary technology and related projects we intend to deploy, competition from other power generation technologies, permitting and construction delays, supply chain constraints, protection of proprietary technology, and changes in the governmental and regulatory environment.

Basis of Presentation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The functional and reporting currency of the Company and its subsidiaries is the U.S. dollar.

Reclassification of Prior Period Amounts

Certain prior period financial information has been reclassified to conform to current period presentation.

NOTE 2 — 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, and share-based compensation were 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 consolidated financial statements, as well as amounts reported on the consolidated statements of operations and comprehensive loss during the periods presented. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash consists of liquid deposits at banking institutions. The Company considers highly liquid investments with original maturities of three months or less as cash equivalents. The Company has exposure to credit risk to the extent cash balances exceed amounts covered by the Federal Deposit Insurance Corporation (“FDIC”). FDIC guidelines guarantee $250,000 per depositor, per insured bank. As of December 31, 2025 and 2024, the Company held cash in excess of FDIC limits equal to $198.4 million and$328.2 million, respectively.

The carrying value of cash and cash equivalents equals its fair value.

Investments

The Company’s investments are classified as available-for-sale (“AFS”) and are recorded in the Company’s consolidated balance sheets. AFS are investments available to be sold in the future as needed and are recorded at fair value, with unrealized gains and losses recognized in other comprehensive income on the Company’s consolidated statements of operations and comprehensive loss and consolidated statement of shareholders' equity and mezzanine shareholders' equity.

Investments with maturities greater than three months but less than one year are classified as short-term investments and investments with maturities greater than one year are classified as long-term investments. Interest income earned and amortization or accretion of discounts and premiums on investments is included in Interest income, net on the Company’s consolidated statements of operations and comprehensive loss. Interest accrued on investments is recorded as interest receivable on the consolidated balance sheets.

Revenue Recognition, Trade Receivables and Allowance for Doubtful Accounts

The Company recognizes revenue when its performance obligations with its customers have been satisfied. To determine revenue recognition for contracts within the scope of Accounting Standards Codification (“ASC”) 606, the Company (i) identifies the contract(s) with a customer; (ii) identifies the performance obligations in the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations; and (v) recognizes revenue when (or as) the entity satisfies the performance obligation.

The Company accounts for a customer contract when both parties have approved the contract and are committed to perform their respective contractual obligations, each party’s rights can be identified, payment terms can be identified, the contract has commercial substance and it is probable that the Company will collect the consideration to which it is entitled.

Collectability is assessed based on a number of factors including collection history and customer creditworthiness. If collectability of substantially all consideration to which the Company is entitled under the contract is determined to be not probable, revenue is not recorded until collectability becomes probable. Revenue is recorded based on the transaction price excluding amounts collected on behalf of third parties, such as sales taxes collected and remitted to governmental authorities.

Trade receivables are recorded at the invoiced amount and do not bear interest. The Company calculates an allowance for doubtful accounts based on a risk assessment performed when trade receivables are recognized. The allowance is calculated in accordance with ASC Topic 326, Current Expected Credit Losses. Write-offs are recorded at the time when trade receivables are deemed uncollectible.

Restricted Cash

Restricted cash includes cash held to secure a letter of credit. As of December 31, 2025 and 2024, the Company had restricted cashof $2.4 million incl uded in the consolidated balance sheets.

Fair Value

Certain assets and liabilities are carried at fair value in accordance with ASC Topic 820, Fair Value Measurement. Fair value is defined as the price that would be received for an asset or paid to transfer a liability (i.e., the exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

•Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities;

•Level 2—Significant other observable inputs other than Level 1 prices, such as quoted prices for similar, but not identical, assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data; and

•Level 3—Significant unobservable inputs in which there is little or no market data available and requires the Company to develop its own assumptions that market participants would use in pricing an asset or liability.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of any input that is significant to the fair value measurement. The Company’s estimates of fair values are based upon assumptions believed to be reasonable, but which are uncertain and involve significant managerial judgments made by considering factors specific to the asset or liability. The determination of fair value requires more judgment to the extent the valuation is based on models or inputs that are less observable or unobservable in the market. Accordingly, the degree of judgment exercised by the Company in determining the fair value is greatest for instruments categorized as Level 3.

The Company’s recurring fair value measurements include the Private Placement Warrants, the Public Warrants, the Earnout Shares (as defined in Note 4), and investments in available-for-sale securities (Note 3 and Note 4).

Warrants

The Company accounts for the Public Warrants (the “Public Warrants”) and Private Placement Warrants(the “Private Placement Warrants,” and collectively with the Public Warrants, the “Warrants”) as liability-classified instruments based on an assessment of the Warrants’ specific terms and applicable authoritative guidance outlined in ASC Topic 480, Distinguishing Liabilities from Equity(“ASC 480”), ASC Topic 815, Derivatives and Hedging (“ASC 815”) and relevant SEC reporting rules. When making this assessment, the Company determined the Warrants are not considered to be indexed to the Company’s stock price. Therefore, in accordance with ASC 815, the Company accounts for the outstanding Warrants as a liability at fair value on the consolidated balance sheets. The Warrants are subject to remeasurement at each reporting date with any change in the fair value recognized in Change in Earnout Shares liability and Warrant liability on the Company’s consolidated statements of operations and comprehensive loss.

Earnout Shares and Restricted Shares

Unvested Earnout Shares (as defined in Note 9) are reported as liabilities on the Company’s consolidated balance sheets. The liability classification reflects the interpretation that the Earnout Share settlement provision contingent on a change in control event does not represent an input into a fixed-for-fixed option pricing model. The usage of a model other than a fixed-for-fixed option model results in liability classification pursuant to the guidance in ASC Topic 815, Derivatives and Hedging.

The Price-Based Lockup Shares (as defined in Note 9) are included as equity within the Company’s consolidated balance sheets.

Intangible Assets

The Company’s intangible assets are comprised of developed technology and software. Developed technology is related to the Oxy-Combustion Cycle technology and is amortized over a 20-year useful life. Software is amortized over a 5-year useful life. The Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

Goodwill

The Company recognizes goodwill as the excess costs of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination. The Company’s goodwill is not tax deductible. Goodwill is not amortized but is tested annually on October 1st for impairment or more frequently whenever events or changes in circumstances indicate that the carrying amount of a reporting unit exceeds its fair value. Refer to Note 5 — Goodwill and Intangible Assetsfor impairments recognized during year ended December 31, 2025. There wereno impairment charges recorded during the year ended December 31, 2024.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets placed in service is measured by comparing the carrying amount of an asset or asset group to the future undiscounted cash flows expected to be generated by the asset or asset group. If such assets are considered to be impaired, the impairment equals the amount by which the carrying amount of the assets exceeds the fair value of the assets. Refer to Note 5 — Goodwill and Intangible Assetsfor impairments recognized during year ended December 31, 2025. There were no impairment charges recorded during the year ended December 31, 2024.

Property, Plant, and Equipment

Property, plant, and equipment are recorded at cost except for (i) certain assets acquired in a business combination which are recorded at fair value on their respective acquisition date and (ii) impaired assets which are recorded at fair value as of the last impairment evaluation date for which an adjustment was required.

Depreciation is recognized using the straight-line method over the estimated useful lives of the respective assets. Amounts capitalized to construction in progress are not depreciated until the underlying asset is ready for its intended use. The following table summarizes the estimated useful lives used to depreciate property, plant, and equipment and assets:

The Company reviews the estimated useful lives of its property, plant, and equipment on an ongoing basis for any changes in estimates.

Property, plant, and equipment is presented at cost less accumulated depreciation on the consolidated balance sheets.

The Company recognizes liabilities for future obligations associated with the retirement of assets. The fair values of legal obligations to retire and remove long-lived assets are recorded in the period in which the obligation is incurred. When an asset retirement obligation arises, the liabilities and corresponding assets are recorded at their present values using a discounted cash flow approach and the liabilities are accreted using the interest method. The asset retirement obligations that have been recorded to-date relate to the Company’s obligation to restore the property underneath the La Porte Demonstration Facility at the end of the La Porte Demonstration Facility’s estimated useful life as required by the lease terms. The accretion expense generated by the Company’s asset retirement obligation liability is recognized over the La Porte Demonstration Facility’s expected seven-year useful life.

Leases

Lease agreements may fall within two categories according to ASC Topic 842, Leases (“ASC 842”), operating leases or financing leases. Both operating and finance leases result in the recognition of lease liabilities and associated right-of-use assets that are valued at the net present value of the lease payments and recognized. The Company has elected the short-term lease exception and therefore only recognizes right-of-use assets and lease liabilities for leases with a term greater than one year. The lease term includes the committed lease term identified in the contract, taking into account renewal and termination options that management is reasonably certain to exercise. The Company also elected to not separate lease components and non-lease components when allocating contract consideration to leases of commercial office space. The discount rate used in the measurement of a right-of-use asset and lease liability is the rate implicit in the lease whenever that rate is readily determinable. If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate as a proxy for the discount rate based on the term of the lease.

Research and Development Costs

The Company expenses costs related to operations and testing at the La Porte Demonstration Facility, as well as engineering and design costs related to development of the Oxy-Combustion Cycle technology and Clean Gas Product as incurred. These costs are included in Research and development expense on the consolidated statements of operations and comprehensive loss.

Non-Controlling Interest

Non-controlling interests (“NCI”) represents Class A OpCo Units (Note 9) held by parties other than NET Power Inc., including sponsors, certain strategic partners, and legacy owners of NET Power, LLC. After evaluating Class A OpCo Unit redemption rights under ASC 480, the Company determined that Class A OpCo Units are subject to potential cash redemption that rests outside the Company’s control. The Company has classified NCI as a component of mezzanine equity in consideration of this cash redemption feature and in accordance with the guidance in ASC 810. The Company measures redeemable NCI each reporting period at the higher of its book value or its redemption value, which equals the closing price of the Company’s Class A Common Stock on the measurement date. The change in measurement is shown as the carrying value adjustment of redeemable non-controlling interest in the Company’s consolidated statement of shareholders' equity and mezzanine shareholders' equity.

The Company’s net loss before income tax and the non-tax components of comprehensive loss are reduced by the portion of net loss before income tax and the non-tax components of comprehensive loss attributable to non-controlling interests.

Share-Based Compensation

The Company applies ASC Topic 718, Share-Based Payments (“ASC 718”) to account for its equity awards. In accordance with ASC 718, the Company recognizes expense related to equity awards for which vesting is considered probable. Forfeitures are recognized as they occur. For service-based awards issued to employees, compensation cost is measured at fair value on the grant date and expensed ratably over the vesting term. For grants issued to employees that contain a performance-based vesting condition, the fair value is measured on the grant date and recognized as compensation expense over the vesting period when the Company determines it is probable the vesting conditions will be met.

For awards that include a market-based vesting condition, the Company uses the Monte Carlo Simulation to determine the grant date fair value, which is expensed ratably over the service period. For all other awards, the Company uses the publicly quoted price on the grant date to estimate the fair value of the award. Compensation expense from share-based awards is recorded in the same line item as the related employee’s other compensation in the consolidated statements of operations and comprehensive loss, and is subject to capitalization.

Vested equity awards are generally net settled by withholding shares of common stock to satisfy employees’ minimum income tax withholding obligations due upon vesting. The Company may sell shares on the open market to cover the tax withholding obligation. Cash payments made by the Company to satisfy employees’ tax withholding obligations are classified as financing activities in the consolidated statements of cash flows.

Net Loss per Share

The Company computed basic net loss attributable to shareholders per share by dividing net loss attributable to Net Power Inc. by the weighted average number of shares of Class A Common Stock outstanding. Diluted net loss attributable to shareholders per share is computed based on the weighted average number of common shares outstanding, increased by the number of any additional shares that would have been outstanding had any potentially dilutive common shares been issued. Such additional shares are excluded if their effect is anti-dilutive.

Income Taxes

The Company applies the guidance set forth in ASC Topic 740, Income Taxes (“ASC 740”) to evaluate its tax positions. The Company evaluates the realizability of deferred tax assets on a quarterly basis and establishes a valuation allowance when it is more-likely-than-not that all or a portion of a deferred tax asset may not be realized. In making such a determination, the Company considers all positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and recent results of operations.

Net Power Inc. consolidates the financial results of OpCo in its consolidated financial statements. OpCo represents a pass-through entity for U.S. federal and most applicable state and local income tax purposes. As a pass-through entity for tax purposes, OpCo is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by OpCo is passed through to its members, including Net Power Inc., which is taxed as a corporation that pays corporate federal, state and local taxes with respect to income allocated from OpCo based on its economic interest in OpCo.

The Company evaluates the tax positions taken on income tax returns that remain open and positions expected to be taken on the current year tax returns to identify uncertain tax positions. Unrecognized tax benefits on uncertain tax positions are recorded on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more likely-than-not recognition threshold, the largest amount of tax benefit that is more than 50% likely to be realized is recognized. The Company has elected to recognize interest and penalties related to income taxes within income tax benefit in the accompanying consolidated statements of operations and comprehensive loss.

Tax Receivable Agreement Liability

Pursuant to the Tax Receivable Agreement (“TRA”) with certain OpCo unitholders., the Company was required to pay approximately 75% of the calculated tax savings based on the portion of basis adjustments on exchanges of OpCo units and other carryforward attributes that are anticipated to be able to be utilized in future years. Such tax attributes included the existing tax basis of certain assets of OpCo and its consolidated subsidiaries, tax basis adjustments resulting from taxable exchanges of Class A OpCo Units, certain tax benefits realized by Net Power Inc. and tax deductions in respect of portions of certain TRA payments. All such payments made under the terms of the TRA were the obligations of Net Power Inc. and not of OpCo. The TRA was terminated and of no further force or effect as of June 12, 2025.

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 consolidated financial statements. The measure of segment assets is reported on the Company’s 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 has evaluated the impact of adoption and does not expect any material impacts to our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses(“ASU 2024-03”), which requires new tabular disclosures in the notes to consolidated financial statements, disaggregating certain cost and expense categories within relevant captions on the consolidated statements of operations. The prescribed cost and expense categories requiring disaggregated disclosures include purchases of inventory, employee compensation, depreciation, and intangible asset amortization, along with certain other expense disclosures already required by 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 — 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 consolidated balance sheets:

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

NOTE 4 — Fair Value Measurements

The following table presents the assets and liabilities that the Company measures at fair value on a recurring basis included in the 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 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 8,620,535 shares of Class A Common Stock at a price of $11.50 per share. The Company may redeem the Public Warrants for $0.01 if the last reported trading price of the Company’s Class A Common Stock 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 $2.28 as of December 31, 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 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 December 31, 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 5 — Goodwill and Intangible Assets

Goodwill

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

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

In March 2025, the Company assessed its goodwill for impairment. Due to a change in the Company’s business plan, as discussed below, 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 consolidated statements of operations and comprehensive loss.

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

Definite-Lived Intangible Assets

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

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

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 La Porte Demonstration Facility, 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 Oxy-Combustion Cycle technology product.

In the second quarter of 2025, the Company progressed its value engineering process to improve and validate commercialization pathways for the Oxy-Combustion Cycle technology and introduced its integrated product offering, combining the Oxy-Combustion Cycle technology 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 Oxy-Combustion Cycle technology 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 Oxy-Combustion Cycle technology product. The Company determined these factors would result in fewer deployments of the Company’s Oxy-Combustion Cycle technology 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 animpairment loss of $1,095.8 million for theyear ended December 31, 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 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.

In connection with the Company’s decision in the fourth quarter of 2025 to broaden its product strategy to include generation of power using natural gas turbines paired with PCC technology, the Company considered whether there any indicators of impairment of the Developed Technology Asset Group and did not identify any such indicators. As discussed in Note 13 — Related Party Transactions, Baker Hughes continues to evaluate the proposed development and commercialization of industrial-scale Oxy-Combustion Cycle technology and engage in negotiations regarding potential amendments to the BHES JDA. The outcome of these negotiations related to the future development and commercialization of the industrial-scale Oxy-Combustion Cycle technology may adversely impact the recoverability of the carrying value of the Developed Technology Asset Group.

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 6 — Property, Plant, and Equipment

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

(1) As of December 31, 2025 and December 31, 2024, $3 thousand and $18 thousand, respectively, of accumulated depreciation and amortization is related to amortization of the finance lease right-of-use assets.

During the first quarter of 2025, as a result of the management’s assessment of the probability of the construction of SN1 due to the factors discussed above,$56.1 millionof costs previously included in Construction-in-progress were expensed. This amount is included in impairment and other charges in the consolidated statements of operations and comprehensive loss.

Refer to Note 5 — Goodwill and Intangible Assetsfor discussion of impairments of the Developed Technology Asset Group recognized during the year ended December 31, 2025.

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

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

NOTE 7 — Accrued Liabilities

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

NOTE 8 — Leases

The following is a summary of leases on the consolidated balance sheets:

The following table presents the Company’s lease costs by period presented and the classificationon the consolidated statements of operations and comprehensive loss:

The following is a summary of the weighted-average lease term and discount rate:

The following table presents the future minimum lease payments that the Company expects to make under its operating and finance leases as of December 31, 2025:

Refer to Note 5 — Goodwill and Intangible Assetsfor discussion of impairments related to the Developed Technology Asset Group recognized during the year ended December 31, 2025.

Office Space and Building Leases

On June 6, 2022, the Company entered into an office space lease agreement for commercial office space in Durham, North Carolina (the “Measurement Building Lease”), which became effective on November 1, 2022 and had an original lease term of 60 months from the signing date. On August 11, 2023, the Company agreed to terminate the Measurement Building Lease effective October 6, 2023 and entered into a new office lease agreement (the “Roney St. Lease”). The Roney St. Lease commenced on October 6, 2023 and has an original lease term of 62 months from the commencement date. The lessors of the Measurement Building Lease and the Roney St. Lease have common ownership and are considered related parties to each other; therefore, the simultaneous termination of the Measurement Building Lease and execution of the Roney St. Lease represent a single transaction accounted for as a modification of the Measurement Building Lease. As such, the Company remeasured the lease liabilities and right-of-use asset associated with the Measurement Building Lease and recognized those balances over the amended, remaining lease term. In addition, the Roney St. Lease includes an early termination option that enables the Company to end the lease on or after its 50 th month.

On February 28, 2024, the Company entered into an office space lease agreement for commercial office space in Houston, Texas (the “Atlas Tower Lease”), which became effective in July 2024. The Atlas Tower Lease has an original lease term of 68 months from the commencement date and includes an early termination option that enables the Company to end the lease at the end of its 44 th month. The Company measured the lease liabilities and right-of-use asset associated with the Atlas Tower Lease upon commencement of the lease and recognized those balances over the lease term. As of December 31, 2025, the Company determined that it is unlikely to exercise the termination option associated with the Atlas Tower Lease; therefore, the above minimum lease paymentsdo not consider the effects of the termination option on the lease term.

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.

Land Leases

On March 8, 2024, the Company entered into a land lease with a subsidiary of Occidental Petroleum, a related party, which became effective on December 1, 2024. The lease has an initial term of 60 months from the commencement date and may be extended for up tothree consecutive periods often years. Additionally, the lease contains an option to purchase the land during the lease term. As of December 31, 2025, the Company has determined it is not probable that the purchase option or the lease extensions will be exercised and, therefore, these cash flows were excluded from the initial measurement of the lease obligation.

The Company leases the land under the La Porte Demonstration Facility. During the second quarter of 2024, the Company entered into a lease amendment extending the lease term. The amended lease expires on the earlier of (i) January 1, 2031 or (ii) the termination of the Company’s oxygen supply agreement with the lessor. Lease payments for the land equalone dollar per year.

Refer to Note 14 — Commitments and Contingencies for discussion on the Company’s asset retirement obligations related to the La Porte Demonstration Facility.

Office Trailer Leases

On June 26, 2024, the Company entered into a lease agreement fortwo office trailers at the La Porte Demonstration Facility with an effective date of September 1, 2024. The lease has a term of 24 months and contains a purchase option where the Company may purchase the trailers at the end of the lease term. Therefore, the Company classified the lease as a finance lease and recorded the right-of lease asset within Property, plant, and equipment, netin the consolidated balance sheets.

NOTE 9 — Shareholders' Equity

Class A Common Stock

Class A Common Stock is entitled toone vote for each share on all matters submitted to a vote of the stockholders and does not have cumulative voting rights. Class A Common Stock is entitled to receive dividends (payable in cash, stock or otherwise), if any, as may be declared from time to time by the Company’s Board of Directors (the “Board”). In the event of liquidation, dissolution, distribution of assets or other winding up, Class A Common Stock is entitled to receive ratably the assets available for distribution to the stockholders after payment of liabilities and the liquidation preference of any outstanding shares of Preferred Stock.

Class B Common Stock

Class B Common Stock is not transferable except in connection with a permitted transfer of a corresponding number of OpCo Units. Class B Common Stock is entitled toone vote per share on all matters to be voted upon by the holders of Common Stock. Holders of shares of Class A Common Stock and Class B Common Stock vote together as a single class on all matters presented to stockholders subject to certain exceptions. Class B Common Stock does not have the right to receive dividends, unless the dividend consists of shares of Class B Common Stock or of rights, options, warrants or other securities convertible or exercisable into or redeemable for shares of Class B Common Stock paid proportionally with respect to each outstanding share of Class B Common Stock and a dividend consisting of shares of Class A Common Stock or of rights, options, warrants or other securities convertible or exercisable into or redeemable for shares of Class A Common Stock on the same terms is simultaneously paid to the holders of Class A Common Stock. Class B Common Stock does not have any right to receive a distribution upon a liquidation or winding up of the Company.

In the event that a holder of Class B Common Stock elects to redeem Class B Common Stock and the corresponding Class A OpCo Units, the Company can exchange such Class B Common Stock for Class A Common Stock or cash at the sole discretion of the Company.

Earnout Shares and Restricted Shares

Certain Class A OpCo Units and corresponding shares of Class B Common Stock are subject to vesting and transfer restrictions.

Of the total shares subject to vesting and transfer restrictions,986,775 Class A OpCo Units, all of which were formerly Class B OpCo Units, and a corresponding number of shares of Class B Common Stock vest inthree equal tranches if the closing share price of the Class A Common Stock on the NYSE is greater than or equal to $12.00, $14.00, and $16.00 for any 20 trading days within a consecutive 30-trading-day period beginning on or after June 23, 2023 and ending on the three-year period beginning June 8, 2023 or the occurrence of a change in control event (the “Earnout Shares”).

Of the OpCo Units subject to transfer restrictions,44,544,551 Class A OpCo Units (the “Price-Based Lock-up Shares”) may not be transferred until after thethree-year period beginning June 8, 2023; provided, however, that if the last sale price of the Class A Common Stock on the NYSE, for any 20 trading days within any 30 consecutive trading-day period commencing on or after June 23, 2023 exceeds (or, in the case of the 1,575,045 Class A OpCo Units that were formerly Class B OpCo Units, equals) (i) $12.00 per share, then one-third of the Price-Based Lock-up Shares will no longer be subject to such lock-up restrictions, (ii) $14.00 per share, then an additional one-third of the Price-Based Lock-up Shares will no longer be subject to such lock-up restrictions, and (iii) $16.00 per share, then all of the Price-Based Lock-up Shares will no longer be subject to such lock-up restrictions.

As of December 31, 2025,328,925 Class A OpCo units and a corresponding number of shares of Class B Common Stock included in the Earnout Shares remain unvested. As of December 31, 2025,14,848,184 Price-Based Lockup Shares remain restricted.

Redeemable Non-controlling Interest

The following table presents the Company and the non-controlling interest 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 December 31, 2025, the Company measured redeemable NCI at book value. As of December 31, 2024, the Company measured redeemable NCI at redemption value. The adjustment to redeemable NCI is recorded through Additional paid-in capital on the consolidated statement of shareholders' equity and mezzanine shareholders' equity.

The table below sets forth the calculation of net loss before income tax attributable to redeemable NCI holders for the following periods:

Tax-related Partnership Distribution

Under the Second Amended and Restated Limited Liability Company Agreement of OpCo, OpCo is required, when certain conditions are met, to make tax-related distributions to the Class A OpCo Unit holders. These conditions were met in 2024 and, as a result, during the fourth quarter of 2024, the Company made a tax-related partnership distribution of $4.8 million. The partnership distributions are recorded as a reduction of Redeemable non-controlling interest in subsidiary on the consolidated balance sheets. The Third Amended and Restated Limited Liability Company Agreement of OpCo was effective January 17, 2025. Under the amended agreement, future partnership distributions will not be required unless OpCo is in a taxable income position.

NOTE 10 — Share-Based Compensation

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

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

OpCo Unit Awards

The following table summarizes the activity of employee equity awards granted under previous programs comprised of Class A OpCo Units and the corresponding quantity of shares of Class B Common Stock for the year ended December 31, 2025:

Performance Stock Units

As of December 31, 2025, there was$0.8 million of unrecognized share-based compensation expense related to unvested performance stock units (“PSUs”), which the Company expects to be recognized over a weighted-average period of 1.9 years.

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 were determined using the Monte Carlo Simulation model and are being expensed over thethree-year vesting period.

The assumptions used to calculate the fair value of the PSUs awards were:

The following table presents a summary of PSU activity as of December 31, 2025 and the changes during the year ended December 31, 2025:

Stock Options

As of December 31, 2025, there was $2.1 million of unrecognized share-based compensation expense related to stock options, which the Company expects to be recognized over a weighted-average period of 0.4 years.

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 stock options granted to the Chief Executive Officer during 2024 vest upon the satisfaction of the following performance and market conditions: (i) commercial operations achieved by the Company’s first utility-scale power plant utilizing Oxy-Combustion Cycle technology, (ii) a fully-executed license agreement and final investment decision achieved for another utility-scale power plant utilizing Oxy-Combustion Cycle technology, and (iii) a closing share price above $30 per share for 60 consecutive trading days (or the equivalent when adjusted for any stock splits, reverse stock splits, and cumulative dividends paid per share until the vesting date). The Company will recognize compensation expense from the date the performance conditions become probable through the expected vesting date. As of December 31, 2025, the performance conditions are not considered probable; therefore, no expensehas been recognized related to these stock options.

The fair value of the Company’s stock option grants were estimated utilizing the following assumptions and range of assumptions using the Black-Scholes Merton model for the years below:

The following table presents a summary of stock option activity during the year ended December 31, 2025:

The aggregate intrinsic value and weighted average remaining contractual term for stock options outstanding at December 31, 2025 was $0.6 million and 5.88 years. There wereno stock options exercisable at December 31, 2025.

Restricted Stock Units

As of December 31, 2025, there was $4.9 million of unrecognized share-based compensation expense related to unvested restricted stock units (“RSUs”), which the Company expects to recognize over a weighted-average period of 1.6 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.

Certain RSUs awarded to certain legacy employees as permitted by the Business Combination Agreement (the “Make-Whole Awards”) vest upon: (i) commercial operations achieved by the Company’s first utility-scale power plant utilizing Oxy-Combustion Cycle technology, and (ii) a fully-executed license agreement and final investment decision achieved for another utility-scale power plant utilizing Oxy-Combustion Cycle technology. The awards expireten years from the grant date. The Company will record compensation expense related to the Make-Whole Awards from the date the performance conditions are considered probable through the expected vesting dates. As of December 31, 2025, there were 1,257,467 shares unvested and outstanding. The performance conditions are not considered probable as of December 31, 2025, therefore, no compensation cost has been recognized related to the Make-Whole Awards.

The following table presents a summary of RSU activity during the year ended December 31, 2025:

The total fair value of RSUs vested during the year ended December 31, 2025 was $3.1 million.

Refer to Note 13 — Related Party Transactions for information related to the BHES JDA.

NOTE 11 — Loss per Share

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

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

Only shares of Class A Common Stock participate in the Company’s undistributed earnings. As such, the Company’s undistributed earnings are allocated entirely to the Class A Common Stock based on the weighted-average number of shares of Class A Common Stock outstanding for the year ended December 31, 2025 and 2024.

Based on the amounts outstanding at December 31, 2025 and 2024, the Company excluded the following financial instruments from the computation of diluted loss per share because their inclusion would be anti-dilutive:

NOTE 12 — Income Taxes

The following table presents the components of the Company’s net loss before income tax:

The following table presents the components of the Company’s current and deferred income taxes:

The following table presents the Company’s effective income tax rate:

The following table presents the effects of temporary differences arising from deferred income taxes:

As of December 31, 2025, the Company recorded a deferred tax asset of $125.5 million, which was offset by a valuation allowance of $125.5 million. The change in the valuation allowance of $114.2 million for the year ended December 31, 2025 is primarily due to the change in the balance of the deferred tax asset attributable to Net Power Inc.’s investment in OpCo. The Company considered sources of income and determined that the deferred tax assets in the amount of $125.5 million and $11.3 million were not more-likely-than-not to be realized as of December 31, 2025 and 2024 and therefore established a valuation allowance as of the respective dates.

As of December 31, 2025, the Company has federal, state, and foreign income tax net operating loss carryforwards of $61.4 million, $53.0 million, and $0.2 million. The Company recorded a $12.9 million deferred tax asset for the federal net operating loss, a $1.3 million deferred tax asset for state net operating loss, and a $0.1 million deferred tax asset for foreign net operating loss, which were all offset by a valuation allowance based on the determination that these losses are not more-likely-than-not to be realized. Federal net operating losses are carried forward indefinitely and state and foreign net operating loss carryforwards will begin to expire in 2043. The Company also recognized $2.0 million of R&D credit carryforward which will begin to expire in 2043 and is offset by a valuation allowance.

As of December 31, 2025, the Company recordedno unrecognized tax benefits that, if recognized, would decrease the Company’s effective tax rate. The measurement of unrecognized tax benefits is not expected to significantly change during the twelve months following the date of the consolidated balance sheets. Management evaluated the Company’s tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to comply with applicable accounting guidance.

The Company and its subsidiaries file U.S. federal income tax returns as well as tax returns in various state jurisdictions. OpCo files U.S. federal and state tax returns. Generally, tax years between 2020 and 2023 remain open to examination by the tax authorities in these jurisdictions.

Although the outcomes of tax examination are uncertain, management believes that adequate provisions for income taxes have been made. If outcomes differ materially from management’s estimates, those outcomes could have a material impact on the Company’s financial condition and results of operations. Differences between actual results and assumptions or changes in assumptions in future periods are recorded in the period they become known. To the extent additional information becomes available prior to resolution, such accruals are adjusted to reflect probable outcomes.

On July 4, 2025, the OBBBA was enacted in the U.S, which 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 the 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 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 consolidated statements of operations and comprehensive loss for theyear ended December 31, 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 13 — Related Party Transactions

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

The Company had $37.3 millionand $0.3 million in current liabilities payable to related parties as of December 31, 2025 and December 31, 2024, respectively, on the consolidated balance sheets related to the following services. These related party payables are unsecured and are due on demand.

BHES was not a related party as of and during the year ended December 31, 2024. As a result of the equity issuances under the BHES JDA, BHES’s ownership interest in the Company exceeded 5% in the first quarter of 2025 and therefore, became a related party. For theyear ended December 31, 2024, the Company incurred$47.6 million of expense under the BHES JDA and as of December 31, 2025, the Company had$6.2 milliondue to BHES under the BHES JDA.

Master Services Agreements

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

Another shareholder supports the Company with regard to general business oversight and with the operation of the La Porte Demonstration Facility. These totals are reflected in Research and development on the 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 Oxy-Combustion Cycle technology in collaboration with the Company (as amended and restated, the “BHES JDA”). The BHES JDA is settled in cash and issuances of equity in exchange for services related to the development and commercialization of the Oxy-Combustion Cycle technology. The Company records the expense for services provided by BHES within Research and development on the consolidated statements of operations and comprehensive loss.

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 consolidated balance sheets and the consolidated statement of shareholders' equity and mezzanine shareholders' equity. The following table displays 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 $15.0 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 December 31, 2025, the Company had $2.8 million in current liabilities payable to related parties on the consolidated balance sheets related to the BHES JDA Make-Whole Payment. For the year ended December 31, 2025, the Company incurred $7.4 million related to the BHES JDA Make-Whole Payment. For theyear ended December 31, 2024, the Company hadno such expenses related to the BHES JDA Make-Whole Payment.

In January 2026, the Company agreed to suspend development activities under the BHES JDA from the December 31, 2025 effective date through March 31, 2026 (subject to further extension upon agreement from both parties) (the “BHES JDA Suspension Agreement”) while Baker Hughes evaluates the proposed development and commercialization of industrial-scale Oxy-Combustion Cycle technology. During the suspension period, the Company and Baker Hughes will engage in negotiations regarding potential amendments to the BHES JDA. Under the terms of the BHES JDA Suspension Agreement, the Company is obligated to pay BHES any invoiced costs incurred in the fourth quarter of 2025 and any costs resulting or arising from the suspension, up to a $3.0 million cap.

Under the terms of the BHES JDA, BHES may earn additional shares (“BHES Bonus Shares”) if it meets certain targets related to the development of the Company’s Oxy-Combustion Cycle technology. In the fourth quarter of 2025, due to the Company’s broadened business scope to include power generation using natural gas turbines paired with PCC technology and the BHES JDA Suspension Agreement, the Company determined that it is no longer probable it will issue these shares to BHES. Accordingly, the Company reversed $3.3 million of share-based compensation expense related to the certain milestone share-based payments previously recognized subsequent to the Business Combination. Additionally, the Company recorded $1.3 million of accelerated expense related to the remaining unrecognized share-based compensation expense for shares issued to BHES at signing of the BHES JDA due to suspension of development under the BHES JDA.

BHES Limited Notice to Proceed

Pursuant to the terms of the BHES JDA Suspension Letter, the Company terminated the BHES LNTP and incurred $26.1 million in contract cancellation costs. Through December 31, 2025, the Company has incurred a total of $45.6 million under the BHES LNTP, as amended, related to contract cancellation costs and contractual milestone payments related to the purchase, by BHES, of long-lead materials necessary for the procurement and manufacture of turboexpander and related key process equipment and machinery for SN1.

BHES Equipment Purchases

On August 14, 2025, the Company committed to purchase a lube oil system from BHES for the La Porte Demonstration Facility for $1.6 million. As of December 31, 2025, the Company incurred $0.2 million related to this commitment and pursuant to the terms of the BHES JDA Suspension Letter, the Company terminated the lube oil system purchase from BHES for no additional cost.

NOTE 14 — 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 its property currently subject to, any material legal proceedings, and the Company is not aware of any such proceedings contemplated by governmental authorities.

On April 18, 2025, an alleged stockholder (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 it may incur to resolve or settle these matters.

Under the terms of the lease for the La Porte Demonstration Facility, the Company is required to remove the La Porte Demonstration Facility and restore the land to post-clearing grade level. During 2024, the Company revised the estimate of its asset retirement obligation as a result of additional construction at the La Porte Demonstration Facility. 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 La Porte Demonstration Facility 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 consolidated balance sheets.

As of December 31, 2025, the Company had $16.0 million of remaining purchase obligations 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 $63.6 million of additional remaining asset purchase obligations through 2026. Refer to Note 13 — Related Party Transactions for additional information related to the BHES JDA.