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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-43246

X-Energy, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	41-3934505
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
530 Gaither Road, Suite 700 Rockville, Maryland	20850
(Address of principal executive offices)	(Zip Code)

(301) 358-5600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

      Title of each class

      Trading
Symbol(s)

      Name of each exchange on which registered

      Class A common stock, par value $0.0001 per share

      XE
 
      The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 2, 2026, the registrant had 287,458,734 shares of Class A common stock, $0.0001 par value per share, and 118,907,374 shares of Class B common stock, $0.0001 par value per share, outstanding.

Table of Contents


		Page
	FORWARD-LOOKING STATEMENTS	1

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets (Unaudited)	3
	Condensed Consolidated Statements Of Operations And Comprehensive Loss (Unaudited)	4
	Condensed Consolidated Statements Of Changes In Members’ Deficit And Mezzanine Equity (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	37

PART II.	OTHER INFORMATION	39

Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	83
Item 3.	Defaults Upon Senior Securities	84
Item 4.	Mine Safety Disclosures	84
Item 5.	Other Information	84
Item 6.	Exhibits	85

	Signatures	86

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Report”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “strive,” “target,” “will,” “would” and negatives of those words and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. All statements contained in this Report other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding our future financial performance; anticipated trends, growth rates, and challenges in our business and in the markets in which we operate; the anticipated timeline for the completion of the Xe-100 design; expected timelines for the commercial delivery of our reactors for each of our customers; our expectations with respect to the construction of our fuel fabrication facilities; future funding and expectations with respect to the Advanced Reactor Demonstration Program (“ARDP”); and our ability to capitalize on our expansion plans and opportunities.

These forward-looking statements are based on information available as of the date of this Report and our management teams’ current expectations, forecasts and assumptions. These forward-looking statements are neither promises nor guarantees, and are subject to a number of important factors that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements, including without limitation:

•

changes to the appropriations or funding available under the ARDP, including any failure by the U.S. government to appropriate additional funding to the ARDP, either to complete the existing award or in light of increased project costs and inflationary pressures;

•

our business with various governmental entities being subject to the policies, priorities, regulations, mandates and funding levels of such governmental entities and being negatively or positively impacted by any change to such policies, priorities, regulations, mandates and funding levels;

•

our reliance on key partners and customers, which exposes us to counterparty and execution risk, and customer contractual terms that may constrain capacity allocation, compress margins or limit strategic flexibility;

•

the impact and potential extended duration of the current supply/demand imbalance in the market for high-assay low-enriched uranium;

•

construction or engineering design delays affecting the initial deployment of the Xe-100 under the ARDP and other customer schedules;

•

the ability to raise sufficient capital to fund our business plan;

•

our and our commercial partners’ ability to obtain regulatory approvals or laws or regulations necessary to deploy small modular reactors in the U.S. and abroad in a timely way, or at all;

•

our and our commercial partners’ ability to deliver cost-competitive electricity from our small modular reactors and to deliver cost-competitive fuel for such reactors;

•

the impact on us and our potential customers from changes in interest rates or inflation and rising costs, including commodity and labor costs;

•

changes in laws, regulations, export controls, sanctions or government policies that could increase costs, delay approvals, limit market access, restrict technology transfers or reduce the value of expected incentives;

•

public perception and political support for nuclear energy, which can shift due to adverse events, activism or changes in policy priorities, potentially slowing licensing and deployment and increasing costs;

•

the inclusion or exclusion of advanced nuclear technologies in regulatory schemes related to climate change and/or reductions in carbon emissions;

•

the ability to accurately assess costs associated with developing the Xe-100 and fuel fabrication facilities;

•

our dependence on key personnel and our ability to hire and retain highly specialized talent, including potential shortages, immigration constraints or turnover that could delay programs and increase costs;

Table of Contents

•

the potential for volatility in the market price of our Class A common stock, the risk of securities litigation, and the possibility that sales of substantial amounts of our stock could cause the price to decline; and

•

other risks and uncertainties indicated in this report, including those set forth under the section of this report entitled “Risk Factors” in Part II, Item 1A of this Report.

Any forward-looking statements made herein speak only as of the date of this Report, and you should not rely on forward-looking statements as predictions of future events. They involve a number of judgments, known and unknown risks and uncertainties and other factors, many of which are outside of our control and the control of our directors, officers and affiliates. Accordingly, forward-looking statements should not be relied upon as representing our management teams’ views as of any subsequent date. We do not undertake any obligation to update, add or to otherwise correct any forward-looking statements contained in this Report to reflect events or circumstances after the date they were made, whether as a result of new information, future events, inaccuracies that become apparent after the date of this Report or otherwise, except as may be required under applicable securities laws. Additionally, certain information we may disclose (either herein or elsewhere) is informed by the expectations of various stakeholders or third-party frameworks and, as such, may not necessarily be material for purposes of our filings under U.S. federal securities laws, even if we use “material” or similar language in discussing such matters.

GENERAL

We may announce material business and financial information to our investors using our investor relations website at investors.x-energy.com. We therefore encourage investors and others interested in X-energy to review the information that we make available on our website, in addition to following our filings with the SEC, webcasts, press releases and conference calls. Information contained on our website is not incorporated into, and does not form a part of this Report.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

X-ENERGY REACTOR COMPANY, LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except units)

(unaudited)


	March 31, 2026			December 31, 2025
ASSETS
Current assets
Cash and cash equivalents	$	224,076		$	458,932
Short-term investments		449,509			304,908
Accounts receivable		21,962			32,940
Unbilled receivables and contract assets		51,159			41,529
Prepaid and other current assets		23,493			11,491
Due from related parties		4,182			4,580
Total current assets		774,381			854,380
Long-term investments		270,438			261,458
Restricted cash		4,210			3,698
Property and equipment, net		73,381			50,105
Operating lease right-of-use assets		23,468			22,696
Other long-term assets		50,134			18,934
Total assets	$	1,196,012		$	1,211,271
LIABILITIES, MEZZANINE EQUITY, AND MEMBERS’ DEFICIT
Current liabilities
Accounts payable	$	10,036		$	3,363
Accrued liabilities		75,013			51,217
Due to related parties		4,299			4,225
Total current liabilities		89,348			58,805
Long-term deferred revenue		18,045			15,153
Long-term operating lease liabilities		24,789			20,887
Warrant liabilities		17,898			274,166
Total liabilities		150,080			369,011
Mezzanine equity
Class A Common Units: 367,055,779 Units authorized, 3,128,026 Units issued and outstanding as of March 31, 2026, and 367,055,779 Units authorized, 3,128,026 Units issued and outstanding as of December 31, 2025		1,800			1,800
Class B Common Units: 41,149,242 Units authorized, 18,820,205 Units issued and outstanding as of March 31, 2026, and 41,149,242 Units authorized, 16,838,205 Units issued and outstanding as of December 31, 2025		93,541			93,353
Series A redeemable convertible preferred Units: 90,625,588 Units authorized, issued and outstanding as of March 31, 2026, and 90,625,588 Units authorized, issued and outstanding as of December 31, 2025; liquidation preference of $52,146 as of March 31, 2026 and $52,146 as of December 31, 2025		218,408			218,408
Series A-1 redeemable convertible preferred Units: 8,808,351 Units authorized, issued and outstanding as of March 31, 2026, and 8,808,351 Units authorized, issued and outstanding as of December 31, 2025; liquidation preference of $67,250 as of March 31, 2026 and $67,250 as of December 31, 2025		21,477			21,477
Series B redeemable convertible preferred Units: 11,643,171 Units authorized, issued and outstanding as of March 31, 2026, and 11,643,171 Units authorized, issued and outstanding as of December 31, 2025; liquidation preference of $121,000 as of March 31, 2026 and $120,214 as of December 31, 2025		101,382			101,382
Series C redeemable convertible preferred Units: 41,418,916 Units authorized, 39,963,592 Units issued and outstanding as of March 31, 2026, and 41,418,916 Units authorized, 39,963,592 Units issued and outstanding as of December 31, 2025; liquidation preference of $305,114 as of March 31, 2026 and $305,114 as of December 31, 2025		265,797			265,797
Series C-1 redeemable convertible preferred Units: 162,246,180 Units authorized, 127,484,336 Units issued and outstanding as of March 31, 2026, and 162,246,180 Units authorized, 107,908,114 Units issued and outstanding as of December 31, 2025; liquidation preference of $1,033,739 as of March 31, 2026 and $874,999 as of December 31, 2025		1,051,881			686,715
Series D redeemable convertible preferred Units: 48,154,955 Units authorized, issued and outstanding as of March 31, 2026, and 48,154,955 Units authorized, issued and outstanding as of December 31, 2025; liquidation preference of $700,000 as of March 31, 2026 and $700,000 as of December 31, 2025		677,623			677,623
Total mezzanine equity		2,431,909			2,066,555
Accumulated deficit		(1,402,562	)		(1,236,345	)
Accumulated other comprehensive income (loss)		26			(117	)
Additional paid-in capital		16,559			12,167
Total members’ deficit		(1,385,977	)		(1,224,295	)
Total liabilities, mezzanine equity, and members’ deficit	$	1,196,012		$	1,211,271

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X-ENERGY REACTOR COMPANY, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2026			2025
Services revenue(1)	$	39,906		$	17,091
Grant income		3,517			3,713
Total revenues and grant income		43,423			20,804
Operating expenses
Direct costs		65,359			28,724
Selling, general and administrative		44,117			17,980
Research and development		55			402
Total operating expenses		109,531			47,106
Operating loss		(66,108	)		(26,302	)
Other income (expense)
Interest expense		—			(124	)
Interest income		8,929			5,477
Other income (expense), net		(109,038	)		10,737
Total other income (expense), net		(100,109	)		16,090
Net loss	$	(166,217	)	$	(10,212	)
Other comprehensive income (loss)
Foreign currency translation adjustment		143			(210	)
Changes in fair value of liabilities under fair value option attributable to changes in instrument-specific credit risk		—			153
Other comprehensive income (loss)		143			(57	)
Comprehensive loss	$	(166,074	)	$	(10,269	)

__________

(1)

Includes related party revenue of $1.9 million and $2.7 million for the three months ended March 31, 2026 and 2025, respectively.

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X-ENERGY REACTOR COMPANY, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ DEFICIT AND MEZZANINE EQUITY

(in thousands, except units)

(unaudited)


	Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Additional Paid-In Capital		Total Members’ Deficit		Class A Common Units			Class B Common Units			Series A Preferred Units			Series A-1 Preferred Units			Series B Preferred Units			Series C Preferred Units			Series C-1 Preferred Units			Series D Preferred Units			Total Mezzanine Equity
									Units		Amount	Units	Amount		Units	Amount		Unit	Amount		Units	Amount		Unit	Amount		Unit	Amount		Units		Amount
Balance, January 1, 2025	$	(846,567)	$	6	$	—	$	(846,561)	3,128,026	$	1,800	13,961,705	$	90,859	90,625,588	$	218,408	8,808,351	$	21,477	11,643,171	$	101,382	37,093,420	$	230,987	99,672,593	$	635,463	—	$	—	$	1,300,376
Unit-based compensation		(225)		—		—		(225)	—		—	—		290	—		—	—		—	—		—	—		—	—		—	—		—		290
Issuance of Series C-1 Preferred Units, net of issuance costs		—		—		—		—	—		—	—		—	—		—	—		—	—		—	—		—	8,235,521		51,252	—		—		51,252
Net Loss		(10,212)		—		—		(10,212)	—		—	—		—	—		—	—		—	—		—	—		—	—		—	—		—		—
Foreign Currency Translation Adjustment		—		(210)		—		(210)	—		—	—		—	—		—	—		—	—		—	—		—	—		—	—		—		—
Changes in fair value of liabilities under fair value option attributable to changes in instrument specific credit risk		—		153		—		153	—		—	—		—	—		—	—		—	—		—	—		—	—		—	—		—		—
Balance, March 31, 2025	$	(857,004)	$	(51)	$	—	$	(857,055)	3,128,026	$	1,800	13,961,705	$	91,149	90,625,588	$	218,408	8,808,351	$	21,477	11,643,171	$	101,382	37,093,420	$	230,987	107,908,114	$	686,715	—	$	—	$	1,351,918


Balance, January 1, 2026	$	(1,236,345)	$	(117)	$	12,167	$	(1,224,295)	3,128,026	$	1,800	16,838,205	$	93,353	90,625,588	$	218,408	8,808,351	$	21,477	11,643,171	$	101,382	39,963,592	$	265,797	107,908,114	$	686,715	48,154,955	$	677,623	$	2,066,555
Unit-based compensation		—		—		4,392		4,392	—		—	1,982,000		188	—		—	—		—	—		—	—		—	—		—	—		—		188
Net Loss		(166,217)		—		—		(166,217)	—		—	—		—	—		—	—		—	—		—	—		—	—		—	—		—		—
Foreign Currency Translation Adjustment		—		143		—		143	—		—	—		—	—		—	—		—	—		—	—		—	—		—	—		—		—
Conversion of 2024 Warrant into Series C-1 Preferred Units		—		—		—		—	—		—	—		—	—		—	—		—	—		—	—		—	19,576,222		365,166	—		—		365,166
Balance, March 31, 2026	$	(1,402,562)	$	26	$	16,559	$	(1,385,977)	3,128,026	$	1,800	18,820,205	$	93,541	90,625,588	$	218,408	8,808,351	$	21,477	11,643,171	$	101,382	39,963,592	$	265,797	127,484,336	$	1,051,881	48,154,955	$	677,623	$	2,431,909

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X-ENERGY REACTOR COMPANY, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2026			2025
Cash flows from operating activities:
Net loss	$	(166,217	)	$	(10,212	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		451			226
Unit-based compensation		4,265			65
Mark-to-market loss (gain) on warrant liabilities		108,899			(10,968	)
Mark-to-market loss on C-2 Notes		—			387
Accretion and amortization on investments		(1,122	)		—
Changes in operating assets and liabilities:
Accounts receivable and unbilled receivables		5,293			(22,071	)
Prepaid and other current assets		(7,118	)		(1,622	)
Due from related parties		399			8,213
Operating lease right-of use assets		2,694			291
Accounts payable and accrued liabilities		13,621			(6,053	)
Long-term deferred revenue		2,892			—
Accrued interest receivable		(653	)		—
Other long-term assets		(31,201	)		—
Due to related parties		72			367
Operating lease liabilities		473			(483	)
Net cash used in operating activities	$	(67,252	)	$	(41,860	)
Cash flows from investing activities:
Capital expenditures		(42,967	)		(11,225	)
Reimbursement of capital expenditures under government grant		28,766			9,514
Purchase of investments		(189,906	)		—
Proceeds from maturities on investments		38,100			—
Net cash used in investing activities	$	(166,007	)	$	(1,711	)
Cash flows from financing activities:
Payments of mezzanine equity issuance costs		—			(2,525	)
Payment of debt issuance costs		—			(16	)
Payment of deferred transaction costs		(1,550	)		—
Proceeds from issuance of Preferred Units		500			53,424
Net cash provided by (used in) financing activities	$	(1,050	)	$	50,883
Net effect of exchange rate		(35	)		30
Net increase (decrease) in cash, cash equivalents, and restricted cash		(234,344	)		7,342
Cash, cash equivalents and restricted cash at beginning of period		462,630			514,600
Cash, cash equivalents, and restricted cash at end of period	$	228,286		$	521,942

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X-ENERGY REACTOR COMPANY, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 — ORGANIZATION AND NATURE OF BUSINESS

Company Overview

X-Energy Reactor Company, LLC (“X-energy” or the “Company”) is a Delaware limited liability company formed on December 14, 2018, and is the successor for financial reporting purposes of X-energy, LLC, a Maryland limited liability company founded in 2009. The Company is headquartered in Rockville, Maryland. The Company is a developer of advanced small modular nuclear reactors and fuel technology for clean energy generation. X-energy is the predecessor for financial reporting purposes of X-Energy, Inc., as further described below.

Initial Public Offering (“IPO”)

On April 27, 2026, subsequent to the period covered by these condensed consolidated financial statements, X-Energy, Inc., a Delaware corporation, successfully closed an IPO of its Class A common stock. In connection with the IPO and related Reorganization Transactions (as defined in Note 18 — Subsequent Events), X-Energy, Inc. became the parent holding company and sole managing member of the Company. Following the IPO and Reorganization Transactions, X-Energy, Inc. controls the business and affairs of the Company and consolidates the Company’s financial results. Refer to Note 18 — Subsequent Events for additional information regarding the IPO and Reorganization Transactions.

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

Basis of Presentation

The condensed consolidated financial statements for X-Energy Reactor Company, LLC as of March 31, 2026 and December 31, 2025 and for the three months ended March 31, 2026 and 2025, include the accounts of the Company’s wholly owned and consolidated subsidiaries. The condensed consolidated financial statements are unaudited and have been prepared pursuant to the accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the condensed consolidated financial statements reflect all normal recurring adjustments the Company considers necessary for the fair presentation of its results of operations and cash flows for the interim periods covered, and of the financial position of the Company at the date of the interim condensed consolidated balance sheet. The interim results reported herein are not necessarily indicative of results for a full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2025 included in the Company’s prospectus dated April 23, 2026, filed with the SEC on April 27, 2026.

Certain Significant Risks and Uncertainties

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

For the three months ended March 31, 2026, two customers, the U.S. Government and the DOW Chemical Company (“Dow”) accounted for 92% and 4%, respectively, of the Company’s total revenue and grant income. For the three months ended March 31, 2025, the United States Government and Dow accounted for 82% and 10%, respectively, of the Company’s total revenue and grant income. Refer to Note 3 — Revenue Recognition for further disaggregation of revenue and grant income by customer for the three months ended March 31, 2026 and 2025.

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


	March 31, 2026		December 31, 2025
Accounts Receivable
DOE	$	20,010	$	23,628
Unbilled Receivables and Contract Assets
DOE	$	51,129	$	39,644
Department of War		1,442		1,091

Refer to Note 14 — Related Party Transactions for further information on receivable balances with Dow.

Cash, Cash Equivalents, and Restricted Cash

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

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

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


	March 31, 2026		December 31, 2025
Cash and cash equivalents	$	224,076	$	458,932
Restricted cash		4,210		3,698
Cash, cash equivalents, and restricted cash as presented in the Statement of Cash Flows	$	228,286	$	462,630

Prepaid Costs and Other Current and Long-Term Assets

Included in Prepaid costs and other current assets and Other long-term assets are amounts primarily related to deposits for long-lead materials, prepaid costs, and deferred transaction costs.

Deposits for Long-Lead Materials

The Company makes deposits to vendors for long-lead materials. The Company had $53.4 million and $17.0 million as of March 31, 2026 and December 31, 2025, respectively, in deposits related to long-lead materials, of which $47.6 million is included in Other long-term assets and $5.8 million is included in Prepaid and other current assets as of March 31, 2026 on the condensed consolidated balance sheets. As of December 31, 2025, the entirety of the balance is included in Other long-term assets.

Prepaid Costs

Prepaid costs, primarily consisting of prepaid service fees, software, and other general prepayments, amounted to $9.1 million and $7.5 million as of March 31, 2026 and December 31, 2025, respectively.

Transaction Costs

The Company records transaction costs incurred in conjunction with the issuance of preferred units as a reduction of Mezzanine equity on the condensed consolidated balance sheets. For the three months ended March 31, 2025, the Company incurred $2.5 million in issuance costs associated with the issuance of the Series C-1 Preferred Units.

The Company capitalizes qualified legal, accounting, and other direct and incremental costs related to the public offering transaction. These costs were $8.5 million and $3.9 million as of March 31, 2026 and December 31, 2025, respectively, and are included in Prepaid and other current assets on the condensed consolidated balance sheets.

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Other Income (Expense), Net

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


	Three Months Ended March 31,
	2026			2025
Foreign currency transaction gain (loss)	$	(119	)	$	161
Mark-to-market loss on C-2 Notes(1)		—			(387	)
Mark-to-market gain (loss) on warrant liabilities(2)		(108,899	)		10,968
Other expense		(20	)		(5	)
Total other income (expense), net	$	(109,038	)	$	10,737

__________

(1)

Refer to Note 7 — Debt

(2)

Refer to Note 13 — Fair Value Measurements

Other Comprehensive Income (Loss)

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

The components of accumulated other comprehensive income (loss) for the three months ended March 31, 2026 and 2025 are as follows (in thousands):


	Changes in fair value of liabilities under fair value option attributable to changes in instrument specific credit risk			Foreign currency translation adjustment			Total
Accumulated other comprehensive income (loss), balance at January 1, 2025	$	(765	)	$	771		$	6
Other comprehensive income (loss)		153			(210	)		(57	)
Accumulated other comprehensive income (loss), balance at March 31, 2025	$	(612	)	$	561		$	(51	)

Accumulated other comprehensive income (loss), balance at January 1, 2026	$	—		$	(117	)	$	(117	)
Other comprehensive income (loss)		—			143			143
Accumulated other comprehensive income (loss), balance at March 31, 2026	$	—		$	26		$	26

Accounting Standards Recently Adopted

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

In July 2025, the FASB issued ASU No. 2025-05, CECL Practical Expedient for Accounts Receivable and Contract Assets (“ASU 2025-05”), which provides an optional practical expedient for estimating expected credit losses on certain current accounts receivable and contract assets arising from revenue transactions accounted for under Topic 606. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual periods. The

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Company adopted ASU 2025-05 on January 1, 2026 and elected the practical expedient. The adoption did not have an impact on the condensed consolidated financial statements and related disclosures.

Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 for public business entities on a prospective basis and early adoption is permitted. For entities other than public business entities, the standard is effective for annual periods beginning after December 15, 2025. The Company will adopt for the annual period beginning January 1, 2026 as an emerging growth company and is currently evaluating the impact of this standard on its disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU No. 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the effective date of ASU 2024-03. ASU 2024-03 requires public business entities to provide enhanced disclosures about certain categories of expenses in the notes to the financial statements. The guidance is intended to improve the transparency and decision usefulness of expense information provided to financial statement users. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its disclosures.

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

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

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

NOTE 3 — REVENUE AND GRANT INCOME RECOGNITION

The Company recognizes revenue under contracts with customers to provide nuclear reactor and fuel design engineering services in the areas of research and development, systems engineering, and technology development. The Company’s revenues are generally derived from contract services predominantly performed for the U.S. Government and commercial entities. All revenues for the three months ended March 31, 2026 and 2025 were recognized over time.

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

The allowability of certain costs under government contracts is subject to audit by the government. Certain indirect costs are charged to contracts using provisional or estimated indirect rates, which are subject to later revision based on actual costs

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incurred and subject to government audits of those costs. Refer to Note 15 — Commitments and Contingencies for further discussion of these cost audits.

Advanced Reactor Demonstration Program (“ARDP”)

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

Under the Company’s separate agreement with Dow, certain costs incurred by Dow related to the demonstrator reactor are funded by the Company using funds obtained through the ARDP. The Company has recognized the funds received from the DOE and the costs incurred by Dow on a gross basis as grant income and direct costs, respectively. The Company has recognized $3.2 million and $1.3 million as grant income and $2.7 million and $1.1 million as direct costs during the three months ended March 31, 2026 and 2025, respectively, related to costs incurred by Dow for the demonstration plant. The Company also earns revenue from Dow as a customer for certain site specific engineering, permitting, and other services related to the development of the Xe-100 plant. Refer to Note 14 — Related Party Transactions for additional information on transactions with Dow and other related parties.

Disaggregated Revenues and Grant Income

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


	Three Months Ended March 31,
	2026		2025
Customer type:
DOE	$	39,008	$	15,201
Services revenue		35,491		11,488
Grant income		3,517		3,713
Department of War		779		1,950
Commercial		3,636		3,653
Total revenues and grant income	$	43,423	$	20,804

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


	Three Months Ended March 31,
	2026		2025
Contract type:
Cost-based	$	40,930	$	17,365
Services revenue		37,413		13,652
Grant income		3,517		3,713
Fixed fee		335		940
Cost plus fixed fee		443		2,108
Time & materials		1,715		391
Total revenues and grant income	$	43,423	$	20,804

Revenues and Grant Income by Geographic Location

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


	Three Months Ended March 31,
	2026		2025
Customer Location:
United States	$	43,423	$	20,440
International		-		364
Total revenues and grant income	$	43,423	$	20,804

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Contract Balances

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

Contract liabilities as of March 31, 2026, and December 31, 2025 include deferred revenue. As of March 31, 2026, the Company has deferred revenue of $21.9 million, of which $18.0 million is recorded in Long-term deferred revenue and $3.9 million is recorded within Accrued liabilities. $2.3 million of the Long-term deferred revenue is attributable to related parties. During the three months ended March 31, 2026, no revenue was recognized that had previously been deferred. As of December 31, 2025, the Company has deferred revenue of $15.3 million, of which $15.2 million is recorded within Long-term deferred revenue and $0.1 million is recorded in Accrued liabilities. $2.4 million of the Long-term deferred revenue is attributable to related parties. During the three months ended March 31, 2025, $1.1 million of revenue was recognized that had previously been deferred.

Contract assets represent revenue recognized that exceeds the amount billed to the customer and excludes amounts billable where the right to consideration is solely subject to the passage of time. As of March 31, 2026, the Company has contract assets of $1.0 million, all of which is recorded within Unbilled receivables and contract assets and is not associated with related parties. As of December 31, 2025, the Company has contract assets of $7.5 million, all of which is recorded within Unbilled receivables and contract assets and is not associated with related parties.

NOTE 4 — PROPERTY AND EQUIPMENT, NET

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


	March 31, 2026			December 31, 2025
Equipment and materials	$	2,335		$	2,335
Computer equipment and software		4,809			3,760
Office furniture and fixtures		355			355
Leasehold improvements		1,879			2,708
Land		1,697			1,697
Construction-in-progress		66,345			42,839
Property and equipment at cost (1)		77,420			53,694
Accumulated depreciation		(4,039	)		(3,589	)
Property and equipment, net	$	73,381		$	50,105

__________

(1)

Net of reimbursement from the United States Government.

All of the Company’s property and equipment is located within the United States.

NOTE 5 — GOVERNMENT GRANTS FOR PROPERTY AND EQUIPMENT

During the three months ended March 31, 2026 and 2025, the Company received reimbursements from the DOE under the ARDP related to construction of its nuclear fuel fabrication and reactor testing facilities. The Company recognizes the grant from the DOE at the time in which the costs are incurred in compliance with the conditions of the grant, which were $33.1 million and $9.4 million for the three months ended March 31, 2026 and 2025, respectively.

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NOTE 6 — ACCRUED LIABILITIES

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


	March 31, 2026		December 31, 2025
Accrued subcontractor costs	$	37,282	$	18,160
Accrued payroll and related expenses		17,876		21,735
Accrued deferred transaction costs		5,985		2,926
Deferred revenue		3,835		132
Accrued professional fees		3,129		3,423
Operating lease liabilities		2,571		2,344
Incurred cost audits reserve (Note 15)		1,068		1,068
Accrued liabilities – other		3,267		1,429
Total accrued liabilities	$	75,013	$	51,217

NOTE 7 — DEBT

The Company has no debt outstanding as of March 31, 2026 and December 31, 2025.

Live Oak Credit Facility

On June 14, 2021, the Company and one of its subsidiaries entered into a revolving credit facility with Live Oak Bank (the “Live Oak Credit Facility”) with maximum borrowings of up to $15.0 million, subject to an asset-based borrowing base based on eligible accounts receivable, net of lender reserves. The Company did not have any borrowings, payments, or interest payments on the Live Oak Credit Facility during the three months ended March 31, 2025. The facility matured on December 1, 2025 with no outstanding borrowings.

C-2 Convertible Notes

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

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

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

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

NOTE 8 — LEASES

The Company leases office spaces, which have initial operating lease terms of three to twelve years. Some leases have options to extend the lease term, ranging from six months to five years. Certain leases have early termination options, which the Company is not reasonably certain to exercise.

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During the three months ended March 31, 2026, the Company entered into a new lease with a 27‑month term and modified certain existing leases, including changes that extended lease terms by approximately two to three months and expanded the leased premises. The Company also early terminated one lease during the three months ended March 31, 2026.

Lease balances are as follows (in thousands):


	March 31, 2026		December 31, 2025
Operating lease right-of-use assets (“ROU”)	$	23,468	$	22,696

Current portion of operating lease liabilities (1)		2,571		2,344
Long-term portion of operating lease liabilities		24,789		20,887
Total operating lease liabilities	$	27,360	$	23,231

__________

(1)

The current portion of operating lease liabilities is reflected within Accrued liabilities on the condensed consolidated balance sheets.

Operating lease costs totaled $2.5 million and $0.9 million for the three months ended March 31, 2026 and 2025, respectively, and were recognized on a straight-line basis over the lease term. Variable lease expenses and short-term lease expenses were immaterial for the three months ended March 31, 2026 and 2025.

Future minimum lease payments under operating leases as of March 31, 2026 are as follows (in thousands):


	Operating Leases
2026	$	4,989
2027		4,919
2028		5,391
2029		6,595
2030		6,701
Thereafter		39,664
Total minimum lease payments		68,259
Less: lease incentives		(14,689	)
Less: amounts representing interest or imputed interest		(26,210	)
Present value of lease obligations	$	27,360

Supplemental cash flow information relating to the Company’s leases is as follows (in thousands):


	Three Months Ended March 31,
	2026		2025
Operating cash flows provided by (used in) operating leases	$	814	$	(1,095	)
Non-cash items:
Change to ROU asset and lease liability due to lease modifications and reassessments		2,740		—
ROU assets recorded under new operating leases		726		—

The weighted average remaining lease term and discount rates for operating leases are as follows:


	Three Months Ended March 31,
	2026			2025
Weighted average remaining lease term	9.1 years			4.8 years
Weighted average discount rate		10.0	%		10.0	%

The Company maintains a defined contribution profit sharing plan (the “Plan”), which includes a salary deferral arrangement, under the provisions of Section 401(k) of the Internal Revenue Code. Employees are eligible to participate in the Plan on the date of employment. Company matches 100% of employees’ contributions up to 5% of annual compensation. The Company contributed $1.4 million and $0.7 million to the Plan during the three months ended March 31, 2026 and 2025, respectively.

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NOTE 10 — INCOME TAX

The Company is a limited liability company which is classified as a partnership for U.S. federal and state income tax purposes. Accordingly, the Company’s U.S. operations are not subject to income taxes in the U.S. The Company’s owners separately account for their pro rata share of the Company’s income, deductions, losses, and credits annually. The Company’s foreign operations are subject to income taxes in the foreign jurisdictions in which they operate. Income tax expense and benefit were immaterial for the three months ended March 31, 2026 and 2025.

NOTE 11 — MEMBER UNITS AND PREFERRED UNITS

The units described below reflect the Company’s capital structure prior to the IPO and Reorganization Transactions completed in April 2026. In connection with the IPO and Reorganization Transactions completed in April 2026, all outstanding Preferred Units and certain Common Units were recapitalized into a single class of Common Units of X-Energy Reactor Company, LLC. Refer to Note 18 — Subsequent Events for additional information regarding the IPO and related changes to the Company’s capital structure and Unit holder rights.

Common Units

The holders of Class A Common Units are entitled to one vote for each unit of Class A Common Units held at all meetings of stockholders. The voting, dividend, and liquidation rights of the holders of Class A Common Units are subject to and qualified by the rights, powers, and privileges of the holders of Preferred Units set forth in the original or amended Certificate of Incorporation. The Class A Common Units have been classified as mezzanine equity as they are redeemable for cash upon the occurrence of certain events that are considered outside of the Company’s control.

The Class B Common Units have the same rights and preferences as the Class A Common Units; provided, however, that the Class B Common Units shall not have voting rights and are subject to a profits interest threshold as may be set forth in grant agreements under the Company’s unit-based compensation plan discussed in Note 12 — Unit-Based Compensation Expense.

The Class B Common Units are classified as Mezzanine equity as they are redeemable for cash upon the occurrence of certain events that are considered outside of the Company’s control.

Series A Preferred Units

The Series A Preferred Units were issued to a related party in 2023 in conjunction with the Series A Preferred financing. The units were recognized at fair market value on the issuance date.

Series A-1 Preferred Units

The Series A-1 Preferred Units were issued in 2023 together with the Series C Preferred Units and certain Series B Common Units in exchange for a cash investment of $50.0 million. The Series A-1 Preferred Units were initially recognized at their relative fair market value.

Series B Preferred Units

The Series B Preferred Units were issued prior to 2023. The Series B Preferred Units were initially recognized at fair market value.

Series C Preferred Units

During 2023, the Company issued 16.3 million Series C Preferred Units through a financing transaction, a related-party investment (resulting in a loss on issuance), and the conversion of C-1 outstanding notes.

During 2024, 20.8 million Series C Preferred Units were issued in connection with the conversion of the C-1 notes, the C-2 Note Conversion, and the exercise of the October 2022 warrants. The Series C Preferred Units issued as a result of these transactions were recognized at fair market value.

On September 30, 2025, the Company’s C-2 Note was converted into 2.9 million Series C Preferred Units. The Series C Preferred Units issued as a result of this transaction were recognized at fair market value.

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Series C-1 Preferred Units

During 2024, the Company completed a financing round of Series C-1 Preferred Units which resulted in the receipt of gross cash proceeds of approximately $626.5 million from various investors. As a result of this financing round, the Company issued 99.7 million Series C-1 Preferred Units. The Series C-1 Preferred Units issued through these transactions were recorded at fair value.

In connection with the issuance of the Series C-1 Preferred Units, one investor and potential future customer was issued a warrant on Series C-1 Preferred Units (the “2024 Warrant”) for no additional consideration. The 2024 Warrant was required to be classified as a liability and measured at fair value on an ongoing basis pursuant to ASC 480 since the underlying Series C-1 Preferred Units are redeemable for cash upon the occurrence of certain events that are considered outside of the Company’s control. The 2024 Warrant could be exercised by the holder at any time from the issuance date until the 18-month anniversary of the issuance date and entitled the holder to purchase up to 40.2 million Series C-1 Preferred Units at an exercise price of approximately $7.46 per unit. As the 2024 Warrant was issued for no additional consideration and did not meet the criteria for capitalization of a contract asset, the issuance date fair value of the 2024 Warrant of $55.3 million was expensed upon its issuance. Additionally, in March 2026, the Company amended the 2024 Warrant to permit the holder to elect a cashless exercise of the 2024 Warrant at an earlier date than provided by the 2024 Warrant’s original terms. The warrant holder exercised the warrant on March 18, 2026 and received 19.6 million Series C-1 Preferred Units, which were recorded at fair value. The Company recognized a mark-to-market loss of $101.8 million in Other income (expense), net during the three months ended March 31, 2026, as a result of remeasuring the warrant liability to fair value prior to exercise.

On January 24, 2025, the Company completed additional financing rounds of Series C-1 Preferred Units, issuing 8.2 million Series C-1 Preferred Units and receiving gross cash proceeds of approximately $53.4 million from various investors. On October 3, 2025, the Company issued a warrant to a related party customer to purchase up to 14.1 million Series C-1 Preferred Units at an exercise price of $6.4870 per unit (the “2025 Warrant”). See Note 14 — Related Party Transactions for details of the 2025 Warrant.

The Series C-1 Preferred Units issued through these transactions were recorded at fair value.

Series D Preferred Units

On November 21, 2025, the Company completed a financing round of Series D Preferred Units, issuing 48.2 million Series D Preferred Units and receiving gross cash proceeds of approximately $700.0 million. The Series D Preferred Units issued through these transactions were recorded at fair market value.

Preferred Units

Together, the Series A Preferred Units, the Series A-1 Preferred Units, the Series B Preferred Units, the Series C Preferred Units, the Series C-1 Preferred Units, and the Series D Preferred Units shall be referred to as the “Preferred Units” for the purpose of this Note. Preferred Units have been issued in one or more series, each of such series consisting of such number of units and to have such terms, rights, powers and preferences, and the qualifications and limitation with respect thereto, as stated or expressed in the original or amended Certificate of Incorporation. Specifics regarding the conversion features and voting rights associated with, and the balance sheet classification of, the Preferred Units outstanding are as follows:

Optional Conversion Feature

Each Preferred Unit is convertible, at the option of the holder thereof, at any time, and without the payment of additional consideration by the holder thereof, into an equal number of Class A Common Units as is determined by dividing the Original Issue Price, for the series of preferred units by the conversion price, initially equal to the applicable original issue price per unit, of such series of Preferred Units in effect at the time of conversion. Conversion may be effected at any time at the sole discretion of the holder. As of March 31, 2026 and December 31, 2025, the outstanding Preferred Units are therefore convertible into the following quantities of Class A Common Units (in thousands, except prices):


	Original Issue Price		March 31, 2026		December 31, 2025
Series A Preferred Units	$	0.5754		90,626		90,626
Series A-1 Preferred Units		7.6348		8,808		8,808
Series B Preferred Units		9.1162		11,643		11,643
Series C Preferred Units		7.6348		39,964		39,964
Series C-1 Preferred Units		6.4870		127,484		107,908
Series D Preferred Units		14.5364		48,155		48,155

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Automatic Conversion Feature

In the event of (i) a Qualified IPO, with the exception of the Series D Preferred Units as discussed below, or (ii) the approval of the requisite holders, the Preferred Units will automatically be converted into an equal number of Class A Common Units at the applicable conversion ratio.

For Series D Preferred Units specifically, if the Company undertakes a Qualified IPO, the conversion price of the Series D Preferred Units will be adjusted, if necessary, to be equal to the lesser of: (a) seventy-five percent (75%) of the price per Class A Common Unit, or the price per the equivalent common share of (i) the Company’s corporate successor following a conversion of the Company to a C corporation or (ii) the Company’s newly formed corporation member, in either scenario offered to the public in such Qualified IPO; or (b) the then-current conversion price of the Series D Preferred Units prior to such adjustment.

Voting Rights

Each of the holders of Class A Common Units, Series A Preferred Units, Series B Preferred Units, Series C Preferred Units, Series C-1 Preferred Units, and Series D Preferred Units are entitled to vote for members of the Board of Directors in whatever manner necessary to ensure that the size of the Board of Directors of the Company is set and remains at nine directors who serve as the managers of the Company. The Series A-1 Preferred Units and Class B Common Units do not vote on the Board of Directors.

Cumulative Preferred Return

The Preferred Units have an annual 3% cumulative preferred return on the original issuance price, beginning on the date such Preferred Units were issued. As of March 31, 2026, the accumulated preferred return not reflected in the condensed consolidated balance sheet for Series A, A-1, B, C, C-1, and D Preferred Units was $7.3 million, $4.7 million, $14.9 million, $16.4 million, $29.7 million, and $7.5 million, respectively. As of December 31, 2025, the accumulated preferred return not reflected in the condensed consolidated balance sheet for Series A, A-1, B, C, C-1, and D Preferred Units was $7.0 million, $4.2 million, $14.1 million, $14.2 million, $24.4 million, and $2.3 million, respectively. In the event of a deemed liquidation, the cumulative preferred return is payable solely for the Series B Preferred Units and therefore has been incorporated into the Series B Preferred Units liquidation preference amount presented on the balance sheet. The cumulative preferred return on the remaining units is subject to the discretion of the Board of Directors.

Liquidation Preference

In the event of any liquidation, dissolution, or winding up of the Company, or a deemed liquidation event, including a merger or consolidation, or a sale or other disposition of all or substantially all of the Company’s assets, the holders shall receive distributions in an amount up to their liquidation preference. See the condensed consolidated balance sheet for the liquidation preference amounts. The preference of distributions is first to both Series D Preferred Unit and Series C-1 Preferred Unit holders pari passu, second to Series C Preferred Unit holders, third to Series B Preferred Units holders, fourth to Series A and Series A-1 Preferred Units holders, and fifth to Class B-1 Profits Interest Units, until members have received cumulative distributions equal to approximately $9.5 million. After the payment of the full liquidation preference of the redeemable convertible preferred stock and profits interests, the Company’s remaining assets legally available for distribution, if any, would be distributed ratably to the holders of Class A and Class B Common Units.

Classification

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

The Preferred Units and Common Units are redeemable for cash upon the occurrence of a deemed liquidation event. As of March 31, 2026 and December 31, 2025, a deemed liquidation event is not considered probable, and the occurrence of such an event is considered to be outside of the Company’s control. Accordingly, the Preferred Units and Common Units are considered conditionally redeemable upon the occurrence of an event that is not solely within the control of the issuer and, therefore, the Company has classified the Preferred Units and Common Units as mezzanine equity in the condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025. The mezzanine equity amount related to Common Units issued as unit-based compensation is the grant date redemption value, or the modification date redemption value, as applicable. The difference between the grant date fair value and the redemption value for vested awards is presented in permanent equity. As of March 31, 2026 and December 31, 2025, $75.1 million and $74.9 million, respectively, has been presented within mezzanine equity, and the excess of grant date redemption value over grant date fair value for vested awards has been recorded within Additional paid in capital and Accumulated deficit for those periods, respectively.

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NOTE 12 — UNIT-BASED COMPENSATION EXPENSE

For the three months ended March 31, 2026, unit-based compensation expense related to Class B-1 and Class B-2 Profits Interest Units (“PIUs”) of $2.8 million was classified as Selling, general, and administrative expense, $1.4 million was classified as Direct costs, and $0.3 million was capitalized into Property and equipment as part of the Company’s construction projects. The total fair value of units that vested during the three months ended March 31, 2026 was $4.5 million. As of March 31, 2026, the Company had $27.8 million of unrecognized unit-based compensation that is expected to be recognized over a weighted average period of 2.1 years. For the three months ended March 31, 2025, unit-based compensation expense and the total fair value of PIUs that vested were both immaterial. See Note 18 — Subsequent Events for information regarding equity awards granted in connection with the IPO in April 2026.

NOTE 13 — FAIR VALUE MEASUREMENTS

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

Rollforward of Level 3 Measurements

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


	June 2022 Warrants		2024 Warrants
Beginning balance as of January 1, 2026	$	10,776	$	263,390
Exercises/Settlements		—		(365,166	)
Change in fair value recognized in Other income (expense), net		7,123		101,776
Ending balance as of March 31, 2026	$	17,899	$	—


	June 2022 Warrants			December 2022 Warrants			C-2 Notes			2024 Warrants
Beginning balance as of January 1, 2025	$	3,636		$	1,394		$	18,537		$	45,604
Change in fair value recognized in Other income (expense), net		(543	)		(62	)		387			(10,363	)
Change in fair value attributable to instrument-specific credit risk recognized in Other comprehensive income(1)		—			—			(153	)		—
Ending balance as of March 31, 2025	$	3,093		$	1,332		$	18,771		$	35,241

__________

(1)

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

Valuation Techniques and Significant Unobservable Inputs

A significant increase or decrease in any of the significant unobservable inputs used in the fair value measurement of the warrant liabilities or C-2 Notes could result in a significantly higher or lower fair value measurement. The quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of March 31, 2026 and 2025 are summarized below:

2024 Warrants

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

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Significant Inputs	March 18, 2026			March 31, 2025
Expected term (years)	N/A				1.0
Equity volatility		90.0	%		57.0	%
Risk-free rate		3.7	%		4.0	%

June 2022 Warrants

In conjunction with a guarantee to the Bank of New York Credit Facility, the Company issued $10.0 million of warrants (the “June 2022 Warrants”) to Ghaffarian Enterprises, a related party, on June 30, 2022. The fair value of the June 2022 Warrants is based on an option pricing method of allocation. The significant inputs, including significant unobservable inputs, used in the recurring Level 3 fair value measurements of the June 2022 Warrants are as follows:



Significant Inputs	March 31, 2026			March 31, 2025
Expected term (years)	1.9			2.9
Equity volatility		90.0	%		57.0	%
Risk-free rate		3.8	%		3.8	%

December 2022 Warrants

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

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


Significant Inputs	March 31, 2025
Expected term (years)	2.9
Equity volatility		57.0	%
Discount for lack of marketability		27.0	%
Risk-free rate		3.8	%

C-2 Notes

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

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


Significant Inputs	March 31, 2025
Discount rate		13.2	%
Credit spread		9.0	%
Equity volatility		57.0	%
Risk-free rate		4.2	%

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

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


			Fair Value
	Carrying Value		Level 1		Level 2
March 31, 2026
Cash equivalents
Money market fund	$	89,645	$	89,645	$	—
Total in cash and cash equivalents	$	89,645	$	89,645	$	—
Short-term investments
Corporate bonds	$	271,166	$	—	$	270,705
Government treasury bills		88,944		88,918		—
Commercial paper and certificates of deposit		65,022		—		64,939
Foreign issuer debt securities		24,377

NOTE 9 — PROFIT SHARING PLAN

NOTE 12 — UNIT-BASED COMPENSATION EXPENSE

X-Energy, Inc. 10-Q