Prairie Operating Co. (PROP)

CIK: 0001162896. SIC: 1311 Crude Petroleum & Natural Gas. Latest 10-K as of: 2026-03-31.

SIC breadcrumb: Mining > SIC Major Group 13 > SIC 1311 Crude Petroleum & Natural Gas

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1162896. Latest filing source: 0001140361-26-012036.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-31. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001162896.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-14. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001162896.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001140361-26-021301.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-14. Report date: 2026-03-31.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations for the three months ended March 31, 2026 and 2025 should be read in conjunction with our condensed
consolidated financial statements and related notes to those financial statements that are included elsewhere in this report, as well as our audited consolidated financial statements and related notes and the related “Management’s Discussion and
Analysis of Financial Condition and Results or Operations” in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Additionally, refer to “Cautionary Statement Regarding Forward-looking Statements” at the beginning
of this Quarterly Report on Form 10-Q. Except as otherwise indicated or required by the context, references to the “Company,” “we,” “us,” “our” or similar terms refer to Prairie Operating Co.

Overview

We are an independent oil and gas company focused on the acquisition and development of crude oil, natural gas, and NGLs. Our assets and operations are strategically located in the oil region of rural Weld County,
Colorado, within the DJ Basin. We believe that the DJ Basin is one of the premier resource plays in the U.S., as Weld County boasts some of the lowest break-even prices in the U.S., and has a long production history which has proven and consistent
results. The productivity of this resource is demonstrated by the integral role that Weld County holds in Colorado’s energy economy, having produced approximately 85% of Colorado’s oil production to date.

As of March 31, 2026, our assets included approximately 68,700 net leasehold acres in, on and under approximately 99,500 gross acres. In addition to growing production through our drilling operations, we intend to
continue growing its business through accretive acquisitions, focusing on assets with the following criteria: (i) producing reserves, with opportunities to add accretive, undeveloped bolt–on acreage; (ii) ample, high rate–of–return inventory of
drilling locations that can be developed with cash flow reinvestment; (iii) strong well–level economics; (iv) liquids–rich assets; and (v) accretive valuation.

Recent Developments

Drilling and Completion Activities

In December 2025, we moved our drilling rig to our Blehm pad and then our Schneider pad, both of which are in Weld County and consist of five wells each. Completion activities at the Blehm and Schneider pads were in
the final stages as of March 31, 2026 and the wells came online early in April 2026.

We then moved the drilling rig to our Elder East and West pad, which consists of nine wells. Drilling at the Elder East and West pad was completed during the first quarter of 2026 and completion activities are ongoing,
with first production expected towards the end of May 2026.

The drilling rig is currently at our Opal Coalbank pad, which consists of eight wells. Drilling activities at the Opal Coalbank pad completed early in April 2026 and completion activities are expected to continue
throughout the second quarter of 2026, with first production expected towards the beginning of the third quarter of 2026.

Series F Preferred Stock and the Series F Securities Purchase Agreement Amendments

On March 25, 2026, we and the Series F Preferred Stockholder entered into the First Series F Preferred Stock Warrant Amendment, which, among other things, extended the issuance date of Series F Preferred Stock Warrants
from March 26 to April 7, 2026 (which was subsequently further extended to July 8, 2026).

On April 6, 2026, we and the Series F Preferred Stockholder entered into the Second Series F Preferred Stock Warrant Amendment. Among other things, the Second Series F Preferred Stock Warrant Amendment amended and
restated the First Series F Preferred Stock Warrant Amendment to extend the issuance date of the Series F Preferred Stock Warrants from April 7 to April 9, 2026.

On April 8, 2026, we and the Series F Preferred Stockholder entered into the Series F Letter Agreement, pursuant to which, among other things, that we repurchased 13,727 shares of Series F Preferred Stock from the
Series F Preferred Stockholder on April 8, 2026 for an aggregate purchase price of $19.0 million payable in cash, plus all accrued but unpaid dividends on such shares of Series F Preferred Stock through and including the date upon which such shares
of Series F Preferred Stock were repurchased (which accrued and unpaid dividends were paid in the form of our Common Stock issued to the Series F Preferred Stockholder in an amount equal to all such accrued but unpaid dividends, divided by the Market
Stock Payment Price (as defined in the Series F Certificate of Designation as of the date of the Series F Letter Agreement, rounded up to the next whole share).

Additionally, pursuant to the Series F Letter Agreement, we issued the Series F First Penny Warrants to the Series F Preferred Stockholder, and if on July 8, 2026, for any reason, the Series F Preferred Stock Warrants
have not been issued to the Series F Preferred Stockholder, we will issue the Series F Second Penny Warrants. Further, per the Series F Letter Agreement, upon the Series F Preferred Stockholders receipt of the Series F Preferred Repurchase Price
and the issuance of the Series F First Penny Warrants, the Series F Preferred Stockholder waived our obligation to pay the previously announced $3.0 million extension fee.

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Table of Contents

Factors Affecting the Comparability of Financial Results

Commodity Prices

Since oil, natural gas, and NGL prices are the most significant factors impacting our results of operations, continued price variations can have a material impact on our financial results and capital expenditures. In
an effort to reduce the impact of price volatility, and in compliance with requirements under our Credit Facility, we enter into derivative contracts to economically hedge a portion of our estimated production from our proved, developed, producing
oil and natural gas properties against adverse fluctuations in commodity prices. By doing so, we believe we can mitigate, but not eliminate, the potential negative effects of decreases in oil, natural gas, and NGL prices on our cash flows from
operations. However, our hedging activity could reduce our ability to benefit from increases in oil, natural gas, and NGL prices. Further, we could sustain losses to the extent our oil, natural gas, and NGL derivative contract prices are lower than
market prices and, conversely, we could recognize gains to the extent our oil, natural gas, and NGL derivative contract prices are higher than market prices. Refer to Results of Operations - Other expenses
below for a discussion of our recognized gains or losses on derivative contracts.

As of March 31, 2026, we had the following outstanding crude oil, natural gas, and NGL derivative contracts in place, which settle monthly and are indexed to NYMEX West Texas Intermediate, NYMEX Henry Hub, and Mount
Belvieu OPIS, respectively:

Settling

April 1, 2026

through

December 31,

2026

Settling

January 1,

2027

through

December 31,

2027

Settling

January 1,

2028

through

December 31,

2028

Settling

January 1,

2029

through

December 31,

2029

Crude Oil Swaps:

Notional volume (Bbls)

3,775,808

4,662,503

2,862,307

210,000

Weighted average price ($/Bbl)

$

62.86

$

62.51

$

62.17

$

61.57

Natural Gas Swaps:

Notional volume (MMBtus)

10,957,305

14,082,126

5,606,357

400,000

Weighted average price ($/MMBtu)

$

4.07

$

4.08

$

4.02

$

4.11

Ethane Swaps:

Notional volume (Bbls)

309,747

400,675

220,109

—

Weighted average price ($/Bbl)

$

11.25

$

10.70

$

9.96

$

—

Propane Swaps:

Notional volume (Bbls)

436,790

522,684

199,160

—

Weighted average price ($/Bbl)

$

28.64

$

26.85

$

25.93

$

—

Iso Butane Swaps:

Notional volume (Bbls)

60,157

74,572

35,088

—

Weighted average price ($/Bbl)

$

35.19

$

31.77

$

30.77

$

—

Normal Butane Swaps:

Notional volume (Bbls)

153,300

184,140

74,903

—

Weighted average price ($/Bbl)

$

35.71

$

31.95

$

30.36

$

—

Pentane Plus Swaps:

Notional volume (Bbls)

126,531

160,242

78,806

—

Weighted average price ($/Bbl)

$

54.79

$

53.31

$

52.81

$

—

2025 Acquisitions

We closed the Bayswater Acquisition on March 26, 2025, for total cash consideration $482.5 million, $15.0 million of which was deposited in escrow pending the completion of the Additional Working Interest Acquisition,
which Bayswater acquired and assigned to us on April 11, 2025, and we issued the Equity Consideration to Bayswater. We completed the final settlement with Bayswater on October 15, 2025, which resulted in total consideration of $475.6 million.

In July 2025, we entered into an agreement to acquire certain assets from Edge Energy for a total purchase price of $12.5 million payable in cash, subject to certain closing price adjustments. We closed the Edge
Acquisition on July 3, 2025, which included 13 operated wells on approximately 11,300 net acres and funded the transaction by borrowing under our Credit Facility.

In August 2025, we completed the Third Exok Acquisition, acquiring approximately 5,000 net acres for $1.6 million.

In October 2025, we acquired certain assets from Summit and Crown for a total purchase price of $2.3 million, subject to certain closing adjustments, payable in cash. The Summit and Crown Acquisitions included the
acquisition of five operated wells on approximately 3,400 net acres.

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Table of Contents

Results of Operations

Revenue, Production, and Average Realized Price

The following table presents the components of our revenue, production, and average realized price for the periods indicated:

Three Months Ended

March 31,

2026

2025

Revenues (in thousands)

Crude oil sales

$

67,838

$

10,788

Natural gas sales

8,956

1,223

NGL sales

6,623

1,579

Total revenues

$

83,417

$

13,590

Production:

Oil (MBbls)

999

161

Natural gas (MMcf)

3,538

437

NGL (MBbls)

497

61

Total production (MBoe) (1)

2,086

295

Average sales volumes per day (Boe/d)

23,182

3,278

Average realized price (excluding effects of derivatives):

Oil (per MBbl)

$

67.91

$

67.01

Natural gas (per MMcf)

$

2.53

$

2.80

NGL (per MBbl)

$

13.33

$

25.80

Average price (per MBoe)

$

39.99

$

46.07

Average realized price (including effects of derivatives):

Oil (per MBbl)

$

56.49

$

63.78

Natural gas (per MMcf)

$

1.82

$

2.20

NGL (per MBbl)

$

12.76

$

25.80

Average price (per MBoe)

$

33.19

$

43.42

(1)

MBoe is calculated using six MMcf of natural gas equivalent to one MBbl of oil.

For the three months ended March 31, 2026, total revenue increased $69.8 million and total production increased 1,791 MBoe compared to the three months ended March 31, 2025. The majority of the increase was
attributable to the Bayswater Acquisition, which closed on March 26, 2025. Additionally, approximately 30% of the increase was attributable to new wells coming online as development activities were completed throughout the second half of 2025 and the
first quarter of 2026.

Operating expenses

The following table presents the components of our operating expenses for the periods indicated:

Three Months Ended

March 31,

2026

2025

(In thousands, except per Boe amounts)

Lease operating expenses

$

14,841

$

2,012

Transportation and processing

2,496

907

Ad valorem and production taxes

6,792

957

Depreciation, depletion, and amortization

15,844

2,123

Exploration expenses

298

287

Abandonment and impairment of unproved properties

412

—

General and administrative expenses

16,886

5,551

Total operating expenses

$

57,569

$

11,837

Operating expenses per Boe:

Lease operating expenses

$

7.11

$

6.82

Transportation and processing

1.20

3.07

Ad valorem and production taxes

3.26

3.24

Depreciation, depl

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization. Confidence: high. Filing date: 2026-03-31. Report date: 2025-12-31.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations for the year ended December 31, 2025 and 2024 should be read in conjunction with our consolidated
financial statements and related notes to those financial statements and other financial information appearing in this Annual Report.

Our discussion includes forward–looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and
intentions. Actual results and the timing of events could differ materially from those anticipated in these forward–looking statements as a result of a number of factors, including those described under the headings “Risk Factors” and
“Cautionary Statement Regarding Forward–Looking Statements” appearing elsewhere in the Annual Report. Except as otherwise indicated or required by the context, references to the “Company,” “we,” “us,” “our” or similar terms refer to Prairie
Operating Co.

Overview

We are an independent oil and gas company focused on the acquisition and development of crude oil, natural gas, and NGLs. Our assets and operations are strategically located in the oil region of rural Weld County,
Colorado, within the DJ Basin. We believe the DJ Basin to be one of the premier resource plays in the U.S., as Weld County boasts some of the lowest break–even prices in the U.S., and has a long production history which has proven and
consistent results. The productivity of this resource is demonstrated by the integral role that Weld County holds in Colorado’s energy economy, having produced approximately 83% of Colorado’s oil production to date.

As of December 31, 2025, our assets included approximately 68,000 net leasehold acres in, on and under approximately 98,200 gross acres. We strive to deliver energy in an environmentally efficient manner by
deploying next–generation technology and techniques. In addition to growing production through our drilling operations, we intend to continue growing our business through accretive acquisitions, such as the NRO Acquisition, which closed in
October 2024, the Bayswater Acquisition, which closed in March 2025, the Edge Acquisition, which closed in July 2025, and the Summit and Crown acquisitions, which closed in October 2025, focusing on assets with the following criteria: (i)
producing reserves, with opportunities to add accretive, undeveloped bolt–on acreage; (ii) ample, high rate–of–return inventory of drilling locations that can be developed with cash flow reinvestment; (iii) strong well–level economics; (iv)
liquids–rich assets; and (v) accretive valuation.

Recent Developments

Recent Acquisitions

In July 2025, we entered into an agreement to acquire certain assets from Edge Energy for a total purchase price of $12.5 million, payable in cash subject to certain closing price adjustments. We closed the
Edge Acquisition on July 3, 2025, which included 13 operated wells on approximately 11,300 net acres. We funded the transaction by borrowing under our Credit Facility with Citi. Additionally, the assets we acquired in the Edge Acquisition
include the fully permitted Simpson pad, which we began developing in August 2025, as well as seven other fully permitted locations.

In August 2025, we completed the Third Exok Acquisition, acquiring approximately 5,000 net acres from Exok for $1.6 million.

In October 2025, we entered into agreements to acquire certain assets from Summit and Crown for a total purchase price of $2.3 million payable in cash, subject to certain closing adjustments. The Summit and
Crown Acquisitions included the acquisition of five operated wells on approximately 3,400 net acres.

Bayswater Acquisition and Funding Transactions

On February 6, 2025, we and certain of our subsidiaries entered into a purchase and sale agreement with Bayswater, pursuant to which we and certain of our subsidiaries agreed to acquire the Bayswater Assets from
Bayswater for a purchase price of $602.8 million, subject to certain closing price adjustments.

On March 26, 2025, we entered into our Credit Facility, which amended and restated our existing reserve–based credit agreement with Citi. The Credit Facility provides for a maximum credit commitment of $1.0
billion and is scheduled to mature on March 26, 2029. Further, on March 26, 2025, we issued Common Stock in a public offering, resulting in proceeds of $41.4 million, net of $2.4 million of underwriting discounts and commissions and $3.7
million in issuance fees. Concurrently with the public offering, we issued the Series F Preferred Stock, resulting in approximately $136.1 million of net proceeds, after deducting the advisor fees and offering expenses.

At the closing of the Bayswater Acquisition on March 26, 2025, we (i) paid approximately $482.5 million in cash to Bayswater, $15.0 million of which was deposited in escrow pending the Additional Working Interest
Acquisition, which Bayswater acquired and assigned to us on April 11, 2025, and (ii) issued 3,656,099 shares of our Common Stock to Bayswater. We funded the cash portion of the purchase price for the Bayswater Acquisition with cash on hand,
the proceeds from the issuance of Common Stock and the issuance of the Series F Preferred Stock, and borrowings under our Credit Facility. We completed the final settlement with Bayswater on October 15, 2025, resulting in a final
consideration of $475.6 million. Refer to Liquidity and Capital Resources – Significant Sources of Liquidity below for a further discussion of issuance of the Series F Preferred Stock and Credit
Facility.

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Table of Contents

Drilling and Completion Activities

On April 1, 2025, we launched the development program at our Rusch pad development in Weld County, which consists of 11 two–mile lateral wells. The Rusch wells came online late in September 2025 with initial
production measured before any deductions for fuel, flare, or vented volumes (“Two–stream”) gross production per well of 475 Boe/d.

On April 28, 2025, we announced our plan to begin completions on nine previously drilled but uncompleted wells acquired in the Bayswater Acquisition. Completion activities at the Opal/Coalbank
pad began in May 2025, and the wells came online mid–July 2025 with initial average Two–stream gross production per well of 725 Boe/d.

On June 1, 2025, we moved the drilling rig to our Noble pad development in Weld County, which consists of seven wells. The Noble wells came online in November 2025 with initial average Two–stream gross production
per well of 550 Boe/d.

In September 2025, we moved the drilling rig to our then–recently acquired Simpson pad development in Weld County, which consists of six wells. Three of the Simpson pad wells came online in December 2025 and the
remainder came online in January 2026 with initial average Two–stream gross production per well of 500 Boe/d.

In December 2025, we moved the drilling rig to our Blehm pad and then our Schneider pad, both of which are in Weld County and consist of five wells each. Completion activities at the Blehm and Schneider pads are
ongoing and first production is expected early in the second quarter of 2026. At the end of 2025, we moved the drilling rig to our Elder East and West pad, which consists of nine wells. Drilling at the Elder East and West pad is expected to
be completed early in the second quarter of 2026.

At–the–Market Offering

On June 20, 2025, we entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Citigroup Global Markets Inc. and Truist Securities, Inc., as managers (together, the “Managers”).
Pursuant to the agreement, we have the option to sell shares of Common Stock up to an aggregate offering price of $75.0 million through the Managers (the “ATM Offering”). The Common Stock sold under the ATM Offering, if any, will be made
under our Registration Statement on Form S–3, which was declared effective on May 2, 2025, and the prospectus supplement dated June 20, 2025 relating to the ATM Offering filed with the SEC, in each case, as may be amended or supplemented
from time to time.

We anticipate the net proceeds from the ATM Offering will be used for general corporate purposes, which may include, among other things, advancing our development and drilling program, repayment of existing
indebtedness, or financing potential acquisition opportunities. Additionally, per the Series F Certificate of Designation, the Series F Preferred Stockholder can require us to use a portion of the net proceeds from sales of the ATM Offering
to redeem a number of shares of the Series F Preferred Stock. As of December 31, 2025, we have not issued any shares under the ATM Offering.

Series F Preferred Stock Warrants

On March 25, 2026, we and the Series F Preferred Stockholder entered into the Series F Preferred Stock Warrant Amendment, which, among other things, changes the issuance of the Series F
Preferred Stock Warrants from the first anniversary of the issuance date of the Series F Preferred Stock to April 7, 2026. Additionally, the Series F Preferred Stock Warrant Amendment provides that we will pay the Series F Preferred
Stockholder an aggregate amount equal to $3.0 million on April 6, 2026, unless the obligation to pay such fee has been waived by the Series F Preferred Stockholder in their sole discretion.

Factors Affecting the Comparability of Financial Results

Commodity Prices

Since oil, natural gas, and NGL prices are the most significant factors impacting our results of operations, continued price variations can have a material impact on our financial results and capital
expenditures. In an effort to reduce the impact of price volatility, and in compliance with requirements under our Credit Facility, we enter into derivative contracts to economically hedge a portion of our estimated production from our
proved, developed, producing oil and natural gas properties against adverse fluctuations in commodity prices. By doing so, we believe we can mitigate, but not eliminate, the potential negative effects of decreases in oil, natural gas, and
NGL prices on our cash flows from operations. However, our hedging activity could reduce our ability to benefit from increases in oil, natural gas, and NGL prices. Further, we could sustain hedge losses to the extent our oil, natural gas,
and NGL derivative contract prices are lower than market prices and, conversely, we could recognize gains to the extent our oil, natural gas, and NGL derivative contract prices are higher than market prices. Refer to Results of Operations – Other income and expenses below for a discussion of our recognized gains or losses on derivative contracts.

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Table of Contents

As of December 31, 2025, we had the following outstanding crude oil, natural gas, and NGL derivative contracts in place, which settle monthly and are indexed to NYMEX West Texas Intermediate, NYMEX Henry Hub,
and Mount Belvieu OPIS, respectively:

Settling

January 1, 2026

through

December 31,

2026

Settling

January 1, 2027

through

December 31,

2027

Settling

January 1, 2028

through

December 31,

2028

Crude Oil Swaps:

Notional volume (Bbls)

4,230,866

3,306,753

1,515,007

Weighted average price ($/Bbl)

$

62.36

$

62.03

$

61.60

Natural Gas Swaps:

Notional volume (MMBtus)

13,420,634

11,882,126

4,406,357

Weighted average price ($/MMBtu)

$

4.08

$

4.07

$

4.00

Ethane Swaps:

Notional volume (Bbls)

288,956

232,375

51,809

Weighted average price ($/Bbl)

$

11.54

$

11.05

$

11.28

Propane Swaps:

Notional volume (Bbls)

509,724

417,744

94,220

Weighted average price ($/Bbl)

$

26.36

$

26.51

$

26.00

Iso Butane Swaps:

Notional volume (Bbls)

63,185

50,812

11,328

Weighted average price ($/Bbl)

$

33.92

$

30.22

$

29.63

Normal Butane Swaps:

Notional volume (Bbls)

174,809

140,580

31,343

Weighted average price ($/Bbl)

$

35.24

$

31.37

$

30.37

Pentane Plus Swaps:

Notional volume (Bbls)

130,321

104,802

23,366

Weighted average price ($/Bbl)

$

53.05

$

52.40

$

52.49

Recent Acquisitions

In July 2025, we entered into an agreement to acquire certain assets from Edge Energy for a total purchase price of $12.5 million payable in cash, subject to certain closing price adjustments. We closed the
Edge Acquisition on July 3, 2025, which included 13 operated wells on approximately 11,300 net acres and funded the transaction by borrowing under our Credit Facility.

In August 2025, we completed the Third Exok Acquisition, acquiring approximately 5,000 net acres for $1.6 million.

In October 2025, we entered into agreements to acquire certain assets from Summit and Crown for a total purchase price of $2.3 million, subject to certain closing adjustments, payable in cash. The Summit and
Crown Acquisitions included the acquisition of five operated wells on approximately 3,400 net acres.

Bayswater Acquisition

As discussed above, we closed the Bayswater Acquisition on March 26, 2025, for total cash consideration $482.5 million, $15.0 million of which was deposited in escrow pending the completion of the Additional
Working Interest Acquisition, which Bayswater acquired and assigned to us on April 11, 2025, and we issued the Equity Consideration to Bayswater. We completed the final settlement with Bayswater on October 15, 2025, which resulted in total
consideration of $475.6 million.

NRO Acquisition

On January 11, 2024, we and one of our subsidiaries entered into the NRO Agreement to acquire the assets of NRO. On October 1, 2024, we closed the NRO Acquisition and paid $49.6 million to NRO in cash, using
cash on hand, the proceeds from the issuance of Common Stock, and a portion of the proceeds from the issuance of a $15.0 million convertible promissory note (the “Senior Convertible Note”) to YA II PN, LTD., a Cayman Islands exempt limited
company (“Yorkville”).

Crypto Sale

We acquired cryptocurrency mining operations in May 2023. On January 23, 2024, we sold all of our cryptocurrency miners for consideration consisting of (i) $1.0 million in cash and (ii) $1.0 million in deferred
cash payments (the “Deferred Purchase Price”), to be paid out of (a) 20% of the monthly net revenues received by the buyer associated with or otherwise attributable to the cryptocurrency miners until the aggregate amount of such payments
equals $250,000 and (b) thereafter, 50% of the monthly net revenues received by the buyer associated with or otherwise attributable to the cryptocurrency miners until the aggregate amount of such payments equals the Deferred Purchase Price,
plus accrued interest (collectively, the “Crypto Sale”). In July 2025, we received $0.4 million to satisfy the remaining Deferred Purchase Price note receivable.

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Results of Operations

Revenue, Production, and Average Realized Price

The following table presents the components of our revenue, production, and average realized sales price for the years indicated:

Year Ended December 31,

2025 (1)

2024

Revenues (in thousands)

Crude oil sales

$

204,040

$

6,595

Natural gas sales

9,472

551

NGL sales

28,136

793

Total revenues

$

241,648

$

7,939

Production:

Oil (MBbls)

3,406

96

Natural gas (MMcf)

10,753

245

NGL (MBbls)

1,550

33

Total production (MBoe) (2)

6,748

170

Average sales volumes per day (Boe/d)

18,487

464

Average sales price (excluding effects of derivatives):

Oil (per MBbls)

$

59.91

$

68.60

Natural gas (per MMcf)

$

0.88

$

2.25

NGL (per MBbls)

$

18.16

$

24.03

Average price (per MBoe)

$

35.81

$

46.70

Average sales price (including effects of derivatives):

Oil (per MBbls)

$

63.87

$

68.60

Natural gas (per MMcf)

$

1.65

$

2.25

NGL (per MBbls)

$

17.93

$

24.03

Average price (per MBoe)

$

38.98

$

46.70

(1)

Total revenues and production for the year ended December 31, 2025, include revenue and production volumes from the assets acquired from Bayswater beginning on March 26, 2025, the closing date of the acquisition, through December
31, 2025.

(2)

MBoe is calculated using six MMcf of natural gas equivalent to one MBbl of oil.

Revenue and Production. For the year ended December 31, 2025, the majority of our total production volumes and revenues were attributable to properties acquired in the Bayswater Acquisition, which
closed on March 26, 2025. As such, our production and revenues for the year ended December 31, 2025 includes the production and resulting revenue from the Bayswater Acquisition from March 26, 2025 through December 31, 2025. All of our
production volumes and revenues for the year ended December 31, 2024 were derived from the assets acquired in the NRO Acquisition, which closed on October 1, 2024. We did not have any oil revenue prior to the NRO Acquisition.

Operating expenses

The following table presents the components of our operating expenses for the years indicated:

Year Ended December 31,

2025 (1)

2024

(In thousands, except per Boe amounts)

Lease operating expenses

$

41,411

$

1,265

Transportation and processing

8,910

864

Ad valorem and production taxes

21,231

591

Depreciation, depletion, and amortization

48,916

427

Accretion of asset retirement obligation

247

6

Exploration expenses

1,332

734

Abandonment and impairment of unproved properties

3,409

—

General and administrative expenses (2)

50,614

30,565

Total operating expenses

$

176,070

$

34,452

Operating expenses per Boe:

Lease operating expenses

$

6.14

$

7.44

Transportation and processing

1.32

5.08

Ad valorem and production taxes

3.15

3.48

Depreciation, depletion, and amortization

7.25

2.51

Accretion of asset retirement obligation

0.04

0.04

Exploration expenses

0.20

4.31

Abandonment and impairment of unproved properties

0.51

—

General and administrative expenses (2)

7.50

179.80

Total operating expenses

$

26.11

$

202.66

(1)

Total operating expenses for the year ended December 31, 2025, include operating expenses for the assets acquired from Bayswater beginning on March 26, 2025, the closing date of the acquisition,
through December 31, 2025. Operating expenses per Boe for the year ended December 31, 2025 are calculated over production volumes which include volumes from the assets acquired from Bayswater beginning on March 26, 2025, the
closing date of the acquisition, through December 31, 2025.

(2)

General and administrative expenses for the years ended December 31, 2025 and 2024 include non–cash long–term incentive compensation expenses of $14.8 million and $8.4 million, respectively.

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Lease operating expenses. For the year ended December 31, 2025, lease operating expenses (“LOE”) increased $40.1 million compared to the year ended December 31, 2024.
The increase in LOE was primarily driven by increased production as a result of the Bayswater Acquisition, which closed on March 26, 2025. We did not incur any LOE prior to the closing of the NRO Acquisition on October 1, 2024.

Transportation and processing expenses. For the year ended December 31, 2025, transportation and processing expenses increased $8.0 million compared to the year ended
December 31, 2024. This increase was primarily attributable to increased production driven by the Bayswater Acquisition, which closed on March 26, 2025. We did not incur any transportation and processing expenses prior to the closing of the
NRO Acquisition on October 1, 2024.

Ad valorem and production taxes. For the year ended December 31, 2025, ad valorem and production taxes increased $20.6 million compared to the year ended December 31,
2024. The increase in ad valorem and production taxes was primarily driven by increased production as a result of the Bayswater Acquisition, which closed on March 26, 2025. We did not incur any ad valorem and production taxes prior to the
closing of the NRO Acquisition on October 1, 2024.

Depreciation, depletion, and amortization. For the year ended December 31, 2025, depreciation, depletion, and amortization (“DD&A”) expenses increased $48.5 million,
compared to the year ended December 31, 2024. The increase in DD&A was largely attributable to increased production as a result of the Bayswater Acquisition, which closed on March 26, 2025, and our new drills which came online in the
second half of 2025. We did not recognize any DD&A related to oil and natural gas properties prior to the closing of the NRO Acquisition on October 1, 2024.

Abandonment and impairment of unproved properties. For the year ended December 31, 2025, we recorded $3.4 million of abandonment and impairment related to unproved
properties, which reflects unproved locations that we have deemed non–core and allowed to expire. We did not record any abandonment and impairment related to unproved properties for the year ended December 31, 2024.

General and administrative expenses. For the year ended December 31, 2025, general and administrative expenses increased $20.0 million compared to the year ended
December 31, 2024. This increase was partially attributable to incremental payroll expenses of $8.2 million and non–cash stock–based compensation expenses of $6.3 million, driven by increased headcount following the Bayswater
Acquisition. Additionally, insurance, rent, and vehicle expense increased by $2.3 million following the Bayswater Acquisition and we incurred $1.6 million of transition service agreement costs for the 6–month period following the close
of the Bayswater Acquisition.

Other expenses

The following table presents the components of our other expenses for the years indicated:

Year Ended December 31,

2025

2024

(In thousands)

Interest expense

$

(28,521

)

$

(1,142

)

Gain (loss) on derivatives, net

79,230

(4,395

)

Loss on adjustment to fair value – embedded derivatives, debt, and warrants

(63,341

)

(5,358

)

Loss on issuance of debt

—

(3,039

)

Interest income and other

759

580

Other expenses

$

(11,873

)

$

(13,354

)

Interest expense. For the year ended December 31, 2025, interest expense increased $27.4 million compared to the year ended December 31, 2024, primarily driven by interest
on the Credit Facility, the outstanding borrowing of which increased to fund the Bayswater Acquisition in March 2025. Refer to Liquidity and Capital Resources – Significant Sources of Liquidity below

for a further discussion of the Credit Facility.

Gain (loss) on derivatives, net. For the year ended December 31, 2025, gain on derivatives, net was $79.2 million compared to a loss on derivatives, net of $4.4 million
for the year ended December 31, 2024. The change in gain (loss) on derivatives, net was primarily due to a $62.2 million increase in unrealized gain on derivatives driven by favourable changes in the fair value of our open derivative
contracts as of December 31, 2025. Additionally, our realized gain on derivatives increased by $21.4 million for the year ended December 31, 2025 due to favourable changes in cash settlements during the period compared to the year ended
December 31, 2024. Refer to Factors Affecting the Comparability of Financial Results – Commodity Prices above for a further discussion of our derivative contracts.

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Table of Contents

Loss on adjustment to fair value – embedded derivatives, debt, and warrants. We have several financial instruments that are or were previously valued at fair value on a
recurring basis; therefore, we recognize the changes in fair value at each remeasurement period as a loss on adjustment to fair value – embedded derivatives, debt, and warrants on our consolidated statements of operations for the period.
For the year ended December 31, 2025, the loss on adjustment to fair value – embedded derivatives, debt, and warrants reflects losses on fair value of $68.0 million for the Series F Preferred Stock Warrants, $5.5 million for the Senior
Convertible Note, and $0.1 million for the subordinated promissory note (the “Subordinated Note”) held by First Idea Ventures LLC and The Hideaway Entertainment LLC (together, the “Noteholders”), which were partially offset by gains on fair
value of $9.6 million for the Series F Preferred embedded derivatives, $3.9 million for the warrants issued by the Company to the Noteholders (the “Subordinated Note Warrants”), and $0.8 million for the Standby Equity Purchase Agreement
(the “SEPA”) recognized during the period. For the year ended December 31, 2024, the loss on adjustment to fair value – debt and warrants reflects the fair value adjustments of $0.8 million for the SEPA, $2.1 million for the Senior
Convertible Note, $1.1 million for the Subordinated Note, and $1.4 million for the Subordinated Note Warrants recognized during the period. Refer to Liquidity and Capital Resources – Significant Sources of
Liquidity below for a further discussion of the SEPA, the Senior Convertible Note, the Subordinated Note, the Series F Preferred Stock embedded derivatives, and the Series F Preferred Stock Warrants.

Loss on debt issuance. At the time of issuance, we elected the fair value option to account for both the Subordinated Note and the Subordinated Note Warrants and engaged a
third–party valuation expert to assist in preparing the fair value of both instruments at issuance. As of December 31, 2024, the total fair value of the Subordinated Note and the Subordinated Note Warrants exceeded the proceeds of $5.0
million, as a result, we have recognized a loss on debt issuance of $3.0 million on our consolidated statements of operations for the year ended December 31, 2024. We did not recognize a loss on debt issuance during the year ended December
31, 2025.

Interest income and other. For the year ended December 31, 2025, interest income and other increased $0.2 million compared to the year ended December 31, 2024, primarily
driven by higher average cash balances in the current period.

Income tax expense

For the year ended December 31, 2025, we recognized deferred income tax expense of $21.7 million, resulting in an effective tax rate of 40.3%. We did not recognize any income tax expense for the year ended
December 31, 2024. The overall change in our effective tax rate for the year ended December 31, 2025 compared to the year ended December 31, 2024 is primarily driven by the removal of a previously recorded valuation allowance resulting
from cumulative income and positive evidence that these tax attributes are now more–likely–than–not realized.

Discontinued operations

The following table presents the components of our net loss from discontinued operations for the years indicated:

Year Ended December 31,

2025

2024

(In thousands)

Cryptocurrency mining revenue

$

—

$

193

Cryptocurrency mining costs

—

(55

)

Depreciation and amortization

—

(102

)

Impairment of cryptocurrency mining equipment

—

—

Loss from sale of cryptocurrency mining equipment

—

(1,081

)

Loss from discontinued operations before income taxes

—

(1,045

)

Income tax expense

—

—

Net loss from discontinued operations

$

—

$

(1,045

)

For the year ended December 31, 2025, the net loss from discontinued operations decreased $1.0 million compared to the year ended December 31, 2024. As discussed above, we completed the Crypto Sale in January
2024; therefore, we only had cryptocurrency mining revenue or related expenses during a portion of the year ended December 31, 2024. However, we recognized a $1.1 million loss on the sale of cryptocurrency mining equipment. Refer to Factors Affecting the Comparability of Financial Results – Crypto Sale above for a further discussion of the Crypto Sale.

Non–GAAP Financial Measures

Adjusted EBITDA and PV–10 are financial measures not calculated or presented in accordance with generally accepted accounting principles (“GAAP”). These supplemental non–GAAP financial measures are used by
management and external users of our financial statements, such as investors, lenders, and rating agencies and may not be comparable to similarly titled measures reported by other companies.

Adjusted EBITDA

Adjusted EBITDA is used by management to evaluate the performance of our business, make operational decisions, and assess our ability to generate cashflows. Management believes Adjusted EBITDA provides investors
with helpful information to better understand the underlying performance trends of our business, facilitate period–to–period comparisons, and assess the company’s operating results.

Adjusted EBITDA is derived from net income (loss) from continuing operations and is adjusted for income tax expense, depreciation, depletion, and amortization, accretion of asset retirement obligations,
abandonment and impairment of unproved properties, non–cash stock–based compensation, interest expense, net, non–cash loss on adjustment to fair value – embedded derivatives, debt, and warrants, loss on debt issuance, unrealized gain on
derivatives, and litigation settlement expense, all as applicable. We adjust net income (loss) from continuing operations for the items listed above to arrive at Adjusted EBITDA because these amounts can vary substantially between periods
and companies within our industry depending upon accounting methods, book values of assets, capital structures, and the method by which assets were acquired. Adjusted EBITDA has limitations as an analytical tool, including that it excludes
certain items that affect our reported financial results. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income calculated in accordance with GAAP or as an indicator of our operating performance
or liquidity. Additionally, our calculation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

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Table of Contents

The following table presents the reconciliation of Net income (loss) from continuing operations to Adjusted EBITDA for the years indicated:

Year Ended December 31,

2025 (1)

2024

(In thousands)

Net income (loss) from continuing operations reconciliation to Adjusted EBITDA:

Net income (loss) from continuing operations

$

32,051

$

(39,867

)

Adjustments:

Depreciation, depletion, and amortization

48,916

427

Accretion of asset retirement obligations

247

6

Abandonment and impairment of unproved properties (2)

3,409

—

Non–cash stock–based compensation

14,764

8,377

Interest expense, net

27,471

562

Non–cash loss on adjustment to fair value – embedded derivatives, debt, and warrants (3

63,341

5,358

Non– cash loss on issuance of debt (4)

—

3,039

Unrealized (gain) loss on derivatives

(57,834

)

4,395

Litigation settlement expense

1,516

—

Income tax expense (5)

21,654

—

Adjusted EBITDA

$

155,535

$

(17,703

)

(1)

Net income (loss) from continuing operations for the year ended December 31, 2025 includes revenue and related expenses attributable to the assets acquired from Bayswater beginning on March 26, 2025, the closing date of the
acquisition, through December 31, 2025.

(2)

Reflects the abandonment of unproved locations which we have deemed non–core and allowed to expire.

(3)

Reflects the changes in the fair values of the financial instruments measured at fair value on a recurring basis. Refer to Liquidity and Capital Resources –
Significant Sources of Liquidity below for a further discussion.

(4)

Reflects the loss recognized for the issuance of the Subordinated Note and the Subordinated Note Warrants in the third quarter of 2024. Refer to Liquidity

and Capital Resources – Significant Sources of Liquidity below for a further discussion.

(5)

Reflects deferred income tax expense recognized for the year ended December 31, 2025.

PV–10

PV–10 is a financial measure not presented in accordance with U.S. GAAP. PV–10 is derived from the Standardized Measure, which is the most directly comparable GAAP financial measure for proved reserves. PV–10
is a computation of the Standardized Measure on a pre–tax basis and is equal to the Standardized Measure at the applicable date, before deducting future income taxes discounted at 10%. Neither PV–10 nor Standardized Measure represents
an estimate of the fair market value of the applicable crude oil, natural gas, and NGLs properties.

We believe that the presentation of PV–10 is relevant and useful to our investors as a supplemental disclosure to the Standardized Measure, or after–tax amount, because it presents the discounted future net cash
flows attributable to our reserves before considering future corporate income taxes and our current tax structure. While the standardized measure is dependent on the unique tax situation of each company, PV–10 is based on prices and
discount factors that are consistent for all companies. PV–10 has limitations as a financial measure since it excludes future income taxes and should not be considered as an alternative to, or more meaningful than, Standardized Measure
calculated in accordance with GAAP.

The following table presents the reconciliation of the Standardized Measure to the PV–10 of our estimated proved reserves for the years indicated:

Year Ended December 31,

2025

2024

(In thousands)

Standardized Measure

$

851,702

$

255,142

Present value of future income taxes discounted at 10%

368,112

48,017

PV–10

$

1,219,814

$

303,159

Liquidity and Capital Resources

Overview

Our E&P activities will require us to make significant operating and capital expenditures. In 2024, our primary sources of liquidity were proceeds from the issuances of Common Stock, the Senior Convertible
Note, and the Subordinated Note, which were primarily used to fund the NRO Acquisition in October 2024. Additionally, in December 2024, our Form S–3 registration statement became effective, and we entered into a reserve–based Credit
Facility with Citi. Early in 2025, we amended and restated our existing reserve–based credit agreement with Citi, which now has a maximum credit commitment of $1.0 billion and is scheduled to mature on March 26, 2029. Further, in March
2025, we issued Common Stock in a public offering, resulting in proceeds of $41.4 million, net of $2.4 million of underwriting discounts and commissions and $3.7 million in issuance fees. Concurrently with the public offering, we issued the
Series F Preferred Stock, resulting in approximately $136.1 million of net proceeds, after deducting the advisor fees and offering expenses. We used cash on hand, the proceeds from the Common Stock and Series F Preferred Stock issuances,
and borrowings under the Credit Facility to close the Bayswater Acquisition on March 26, 2025. At the closing of the Bayswater Acquisition, we paid Bayswater approximately $482.5 million in cash, $15.0 million of which was deposited in
escrow pending the Additional Working Interest Acquisition, which Bayswater acquired and assigned to us on April 11, 2025, and issued 3,656,099 shares of Common Stock to Bayswater.

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Additionally, on June 20, 2025, we entered into the ATM Offering, which allows us to sell shares of our Common Stock up to an aggregate offering price of $75.0 million through the Managers. Sales of the shares of
Common Stock sold under the ATM Offering, if any, will be made under our Registration Statement on Form S–3, which was declared effective by the SEC on May 2, 2025, and the prospectus supplement dated June 20, 2025 relating to the ATM
Offering filed with the SEC, in each case, as may be amended or supplemented from time to time. As of December 31, 2025, we have not issued any shares under the ATM Offering.

Management expects that our cash balance, expected revenues from the producing Bayswater wells, and liquidity available under the Credit Facility, proceeds from the ATM Offering, and potential offerings under our
effective Form S–3 registration statement will be sufficient to fund our development program and operations.

Our development program is dependent upon our cash flow from operations generated from our assets and our ability to obtain additional financing through our Credit Facility. Additionally, we could obtain
additional financing through public and private capital markets; however, the availability of additional capital would be subject to numerous factors outside of our control including prices of oil and natural gas and the overall health of the
U.S. and global economic environments. There can be no assurance that we will be able to obtain such additional capital. The amount and allocation of future capital expenditures will depend upon a number of factors, including the amount and
timing of cash flows from operations, investing and financing activities, and the timing and cost of additional capital sources.

We currently plan to be the operator on substantially all of our acreage. As a result, we anticipate that the timing and level of our capital spending will largely be discretionary and within our control. We
could choose to defer a portion of our planned capital expenditures depending on a variety of factors, including, but not limited to, the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and
acquisition costs, the level of participation by other working interest owners, the success of our drilling activities, prevailing and anticipated prices for oil, natural gas, and NGLs, and the availability of necessary equipment,
infrastructure and capital.

Working Capital

We define working capital as current assets less current liabilities. As of December 31, 2025, we had a working capital deficit of $46.1 million and cash and cash equivalents of less than $0.1 million. As of
December 31, 2024, we had a working capital deficit of $44.7 million and cash and cash equivalents of $5.2 million.

Cash Flows from Operating, Investing, and Financing Activities

The following table summarizes our cash flows for the years indicated:

Year Ended December 31,

2025

2024

(In thousands)

Net cash provided by (used in) operating activities

$

153,902

$

(9,348

)

Net cash used in investing activities

(655,916

)

(83,408

)

Net cash provided by financing activities

496,842

84,911

Net decrease in cash and cash equivalents

(5,172

)

(7,845

)

Cash and cash equivalents, beginning of the year

5,192

13,037

Cash and cash equivalents, end of the year

$

20

$

5,192

Operating activities. Net cash provided by operating activities totalled $153.9 million for the year ended December 31, 2025, compared to cash used
in operating activities of $9.3 million for the year ended December 31, 2024. The $163.3 million change in our net cash provided in operating activities was largely due to an increase in revenue recognized during the current period,
partially offset by increased operating costs during the current period.

Investing activities. Net cash used in investing activities totalled $655.9 million and $83.4 million during the years ended December 31, 2025 and 2024, respectively. The $572.5 million increase
in our net cash used in investing activities was largely driven by cash paid for the Bayswater Acquisition of $459.6 million. Additionally, our expenditures for the development of oil and natural gas properties increased $149.2 million
during year ended December 31, 2025 compared to the year ended December 31, 2024.

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Financing activities. Net cash provided by financing activities totalled $496.8 million for the year ended December 31, 2025, driven by $43.8 million from the issuance
of Common Stock, net of related issuance costs of $3.9 million, $148.3 million from the issuance of the Series F Preferred Stock, net of related issuance costs of $12.2 million, $390.0 million from borrowings under the Credit Facility,
net of related issuance costs of $14.1 million, offset with $52.0 million in repayments, and $0.6 million of cash received for option exercises during the period. These increases were partially offset by a $3.2 million repayment of the
Subordinated Note. Net cash provided by financing activities totalled $84.9 million for the year ended December 31, 2024, driven by proceeds of $33.5 million from the exercise of Series D B and Series E B Warrants (as defined herein)
throughout the year, $28.0 million from borrowings under the Credit Facility, net of related issuance costs of $0.3 million, $15.0 million of proceeds from the issuance of Common Stock, net of related issuance costs of $5.0 million,
$14.3 million of proceeds from the issuance of the Senior Convertible Note, partially offset by a repayment of $3.8 million, and $5.0 million of proceeds from the issuance of the Subordinated Note, partially offset by a repayment of
$1.8 million.

Significant Sources of Liquidity

Credit Facility. On December 16, 2024, we, as borrower, entered into a reserve–based credit agreement with Citi, as administrative agent and the financial institution
party. On February 3, 2025, we entered into the first amendment to our reserve–based credit agreement with Citi, which among other things, increased the borrowing base and the aggregate elected commitments to $60.0 million. On March 26,
2025, we entered into the Credit Facility, which amended and restated our existing reserve–based credit agreement with Citi. On June 6, 2025, we entered into the first amendment to our Credit Facility, which added Bank of America N.A.
and West Texas National Bank as lenders under the Credit Facility. The Credit Facility is scheduled to mature on March 26, 2029, and provides for a maximum credit commitment of $1.0 billion. As of December 31, 2025, the Credit Facility
had a borrowing base of $475.0 million and an aggregate elected commitment of $475.0 million. The Credit Facility includes a $47.5 million sublimit for the issuance of letters of credit. The borrowing base is subject to semi–annual
redeterminations based upon the value of our oil and gas properties as determined in a reserve report immediately preceding January 1st and July 1st of each year, subject to certain interim redeterminations. The borrowing base of $475.0
million was reaffirmed with the mid–year 2025 redetermination.

We are subject to certain financial covenants and customary restrictive covenants under the Credit Facility. The financial covenants require us to maintain, for each fiscal quarter commencing with the fiscal
quarter ending March 31, 2025, a Net Leverage Ratio (as defined in the Credit Facility agreement) of no greater than 3.00 to 1.00 and a Current Ratio (as defined in the Credit Facility agreement) of at least 1.00 to 1.00. As of December 31,
2025, we are in compliance with all covenants under the Credit Facility.

As of December 31, 2025 and 2024, we had $366.0 million and $28.0 million, respectively, of revolving borrowings and no letters of credit outstanding under the Credit Facility, resulting in $109.0 million and $7.2
million, respectively, of availability for future borrowings and letters of credit. Additionally, as of December 31, 2025 and 2024, we had $12.6 million and $1.7 million, respectively, of unamortized deferred financing costs associated with
our Credit Facility, which are presented as debt issuance costs, net on the consolidated balance sheets. These costs will be amortized to interest expense on the accompanying consolidated statements of operations on a straight–line basis
over the life of the Credit Facility.

As of December 31, 2025 and 2024, we had $366.0 million and $28.0 million, respectively, of revolving borrowings and no letters of credit outstanding under the Credit Facility, resulting in $109.0 million and $7.2
million, respectively, of availability for future borrowings and letters of credit. Additionally, as of December 31, 2025 and 2024, we had $12.6 million and $1.7 million, respectively, of unamortized deferred financing costs associated with
our Credit Facility, which are presented as debt issuance costs, net on the consolidated balance sheets. These costs will be amortized to interest expense on the accompanying consolidated statements of operations on a straight–line basis
over the life of the Credit Facility.

Standby Equity Purchase Agreement. On September 30, 2024, we entered into the SEPA with Yorkville, whereby, subject to certain conditions, we have the right, but not
the obligation, to sell to Yorkville up to $40.0 million shares of Common Stock, at any time and in an amount as specified in the Company’s request (“Advance Notice”), during the commitment period commencing on September 30, 2024 (the “SEPA
Effective Date”) and terminating on September 30, 2026. Each issuance and sale by us under the SEPA (each, an “Advance”) is subject to a maximum limit equal to 100% of the aggregate volume traded of our Common Stock on the Nasdaq Stock Market
during the five trading days immediately prior to the date of the Advance Notice. The shares will be issued and sold to Yorkville at a per share price equal to 97% of the lowest daily volume weighted average price of Common Stock for three
consecutive trading days commencing on the trading day immediately following Yorkville’s receipt of an Advance Notice. On September 30, 2024, pursuant to the SEPA, we paid Yorkville a structuring fee of $25,000 and a commitment fee of 100,000
shares of Common Stock.

Pursuant to the SEPA, we may issue up to a total of 4,198,343 shares of Common Stock within the cap of 19.99% of our issued and outstanding Common Stock as of the SEPA Effective Date through Advances under the
SEPA, upon conversion of the Senior Convertible Note or through any other issuances of Common Stock thereunder. However, per the Series F Certificate of Designation, we may only request an Advance Notice on the SEPA if the Series F Preferred
Stock is fully converted or redeemed.

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We have determined that the SEPA represents a derivative instrument pursuant to ASC Topic 815, Derivatives and Hedging (“ASC 815”), which should be recorded at fair value
at inception and remeasured at fair value each reporting period with changes in the fair value recognized in earnings. As of December 31, 2024, we had recorded the SEPA at its fair value of $0.8 million and recorded the corresponding $0.8
million change in fair value as a component of loss on adjustment to fair value – embedded derivatives, debt, and warrants on our consolidated statement of operations for the year ended December 31, 2024. Since we cannot request an Advance
Notice on the SEPA while the Series F Preferred Stock is outstanding, we have determined that the fair value of the SEPA as of December 31, 2025 is $0 million, resulting in a gain of $0.8 million, which is presented as part of  loss on
adjustment to fair value – embedded derivatives, debt, and warrants on our consolidated statement of operations for the year ended December 31, 2025.

Senior Convertible Note. On September 30, 2024, Yorkville advanced an initial of $15.0 million (the “Pre–Paid Advance”) to us, and we issued the Senior Convertible Note
to Yorkville, with an interest rate of 8.00% and a maturity date of September 30, 2025. Yorkville had the option to convert the Pre–Paid Advance into shares of Common Stock at any time at the conversion price set forth in the Senior
Convertible Note agreement. We had the option, at any time, to redeem all or a portion of the amounts outstanding under the Senior Convertible Note at 105% of the principal amount thereof, plus accrued and unpaid interest. Additionally,
we had the option to convert the Pre–Paid Advance into shares of Common Stock at any time at the conversion price set forth in the Senior Convertible Note agreement, however, a conversion requested by us would not result in us receiving
cash but instead would be applied towards reducing the outstanding balance of the Senior Convertible Note.

On the issuance date of the Senior Convertible Note, we determined that certain features of the Senior Convertible Note required bifurcation and separate accounting as embedded derivatives and elected the fair
value option to account for the Senior Convertible Note; therefore, in accordance with ASC 815, we recorded the Senior Convertible Note at fair value.

In December 2024, we made a $3.7 million payment on the Senior Convertible Note, resulting in a principal balance of $11.3 million as of December 31, 2024. However, due to the election of the fair value option,
we reported the Senior Convertible Note at its fair value of $12.6 million on our consolidated balance sheet as of December 31, 2024.

During the first quarter of 2025, Yorkville converted the remaining $11.3 million of the Senior Convertible Note in exchange for 2.1 million shares of Common Stock, resulting in a principal balance of $0 as of
December 31, 2025. As a result, we recognized a loss on adjustment to fair value – embedded derivatives, debt, and warrants of $5.5 million on our consolidated statement of operations for the year ended December 31, 2025.

Subordinated Promissory Note and Subordinated Note Warrants. On September 30, 2024, we entered into the Subordinated Note with the Noteholders in a principal amount of
$5.0 million, which has a maturity date of March 17, 2027. The Noteholders are entities controlled by Jonathan H. Gray, who is a director of the Company, therefore the Subordinated Note and Subordinated Note Warrants are presented as
related–party on our consolidated balance sheets as of December 31, 2025 and 2024. The Subordinated Note has an interest rate of 10.00% and the Noteholders are entitled to a minimum return on capital of up to 2.0x upon the repayment,
prepayment or acceleration of the obligations, or the occurrence of certain other triggering events under the Subordinated Note. In December 2024, we made a $1.8 million payment on the Subordinated Note, resulting in a principal balance of
$3.2 million as of December 31, 2024.

Pursuant to the terms of the Subordinated Note, we issued the Subordinated Note Warrants to purchase up to 1,141,552 shares of Common Stock to the Noteholders, which vest in tranches based on the date of
repayment of the Subordinated Note. As of December 31, 2025 and 2024, Subordinated Note Warrants providing the right to purchase 856,165 shares and 570,778 shares, respectively, of Common Stock had vested and were outstanding.

At the time of issuance, we determined that certain features of the Subordinated Note and the Subordinated Note Warrants required bifurcation and separate accounting as embedded derivatives and elected the fair
value option to account for the Subordinated Note and the Subordinated Note Warrants; therefore, in accordance with ASC 815, we recorded the Subordinated Note and the Subordinated Note Warrants at fair value and remeasured the fair value each
reporting period with changes in fair value recognized in earnings. As of December 31, 2024, the fair value of the Subordinated Note was $4.6 million.

On March 26, 2025, in connection with the closing and financing of the Bayswater Acquisition, we paid $3.2 million of the outstanding balance under the Subordinated Note. Pursuant to the terms of the payoff
letter, we and the Noteholders agreed that the remaining $1.5 million outstanding Subordinated Note balance would be converted to principal, will accrue interest at a rate of 15% of per annum, and all principal and other amounts owed (other
than interest) pursuant to the Subordinated Note will not be redeemable for any reason while any of the Series F Preferred Stock remain outstanding. Therefore, we determined that changes to the Subordinated Note included in the payoff letter
qualify as an extinguishment of debt and elected to forgo the previous fair value option election. As such, we now present the Subordinated Note at its face value of $1.5 million as of December 31, 2025.

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Series F Preferred Stock and Series F Preferred Stock Warrants. On March 24, 2025, we entered into a securities purchase agreement with the Series
F Preferred Stockholder, pursuant to which the Series F Preferred Stockholder agreed to purchase for an aggregate of $148.3 million (i) 148,250 shares of Series F Preferred Stock, with a stated value of $1,000 per share (the “Stated
Value”), convertible into shares of Common Stock and (ii) the Series F Preferred Stock Warrants to purchase shares of Common Stock, subject to the satisfaction of certain conditions. The Series F Preferred Offering closed on March 26,
2025, and we received approximately $136.1 million of net proceeds, after deducting advisor fees and offering expenses. We used the proceeds from the Series F Preferred Offering to fund a portion of the Bayswater Acquisition, which
closed on March 26, 2025. On March 25, 2026, we and the Series F Preferred Stockholder entered into the Series F Preferred Stock Warrant Amendment, which, among other things, changes the issuance
date of the Series F Preferred Stock Warrants from the first anniversary of the issuance date of the Series F Preferred Stock to April 7, 2026.

The Series F Preferred Stockholder is entitled to receive, on a cumulative basis, dividends on each share of Series F Preferred Stock at a rate per annum equal to 12%, payable in cash on March 1, June 1,
September 1 and December 1 of each calendar year, which began on June 1, 2025. Alternatively, according to the Series F Certificate of Designation, we may elect to pay the dividends entirely or partially in shares of Common Stock.
Additionally, the Series F Certificate of Designation states that six months after the anniversary date of the maturity of our Credit Facility the dividend rate will increase to 25%. We elected to pay the June 1, September 1, and December 1,
2025 dividends by issuing the Series F Preferred Stockholder 1,305,000, 1,806,000, and 2,421,000 shares, respectively, of Common Stock.

The Series F Preferred Stockholder may convert all or a portion its shares of Series F Preferred Stock into shares of Common Stock at any time at a standard conversion rate of 202.0202 shares of Common Stock
per share of Series F Preferred Stock, subject to certain adjustments as described in the Series F Certificate of Designation. The Series F Preferred Stockholder also has the option to convert all or a portion of its shares of Series F
Preferred Stock using an Alternative Conversion Rate (as defined in the Series F Certificate of Designation) in lieu of the conversion rate, subject to an Alternative Conversion Cap (as defined in the Series F Certificate of Designation) for
each quarter. During the year ended December 31, 2025, 27,200 shares of Series F Preferred Stock were converted into 13,024,200 shares of Common Stock using the Alternative Conversion Rate.

We have determined that the Series F Preferred Stock should be classified as mezzanine equity because it is currently redeemable at the Series F Preferred Stockholder’s option. Additionally, we determined that
certain features of the Series F Preferred Stock require bifurcation and separate accounting as embedded derivatives and that the Series F Preferred Stock Warrants should be accounted for as liabilities because they are not considered
indexed to our stock since the potential number of common shares to be issued upon the exercise of such warrants will vary based on the amount of Series F Preferred Stock outstanding on April 7, 2026. On the date of issuance, in accordance
with ASC 815, we recorded a liability of $25.5 million for the fair value of the Series F Preferred Stock embedded derivatives and a liability of $22.1 million for the fair value of the Series F Preferred Stock Warrants. As a result, on
March 26, 2025, we recognized the Series F Preferred Stock in mezzanine equity based on its relative fair value of $92.6 million, after allocating $47.6 million of the proceeds to the embedded derivative features and the Series F Preferred
Stock Warrants. Additionally, we recorded issuance costs of $12.2 million as a reduction to the allocated proceeds.

As of December 31, 2025, in accordance with ASC Topic 480, Distinguishing Liabilities from Equity, we adjusted the value of the Series F Preferred Stock to reflect its
maximum redemption amount of $136.1 million, resulting in a remeasurement of Series F Preferred Stock of $80.5 million, which is presented in the remeasurement of Series F Preferred Stock line item on the consolidated statement of
operations for the year ended December 31, 2025. Additionally, at each conversion, we reduce the balance of the Series F Preferred Stock by the carrying value of the converted shares, which, as of December 31, 2025, has resulted in a
decrease of $34.0 million since the issuance date.

At–the–Market Sales Agreement. On June 20, 2025, we entered into the Equity Distribution Agreement with the Managers. Pursuant to the Equity Distribution Agreement, we
have the option to sell shares of our Common Stock up to an aggregate offering price of $75.0 million through the Managers. All Common Stock sold under the Equity Distribution Agreement, if any, will be made under our Registration Statement
on Form S–3, which was declared effective on May 2, 2025, and the prospectus supplement dated June 20, 2025 relating to the ATM Offering filed with the SEC, in each case, as may be amended or supplemented from time to time.

We currently anticipate any net proceeds from the ATM Offering will be used for general corporate purposes, which may include, among other things, advancing our development and drilling program,
repayment of existing indebtedness, or financing potential acquisition opportunities. Additionally, per the Series F Certificate of Designation, the Series F Preferred Stockholder can require us to use a portion of the net proceeds from sales
of the ATM Offering to redeem a number of shares of the Series F Preferred Stock. As of December 31, 2025, we have not issued any shares under the ATM Offering.

Liquidity Analysis

For the year ended December 31, 2025, we had a net loss attributable to Prairie Operating Co.’s common stockholders of $60.9 million. We cannot predict if we will be able to sustain
profitability on a quarterly or annual basis and extended periods of losses and negative cash flow may prevent us from successfully operating and expanding our business. As of December 31, 2025, we had cash and cash equivalents of less
than $0.1 million, a working capital deficit of $46.1 million, and an accumulated deficit of $87.7 million.

The assessment of liquidity requires management to make estimates of future activity and judgments about whether we can meet our obligations, have adequate liquidity to operate, and maintain compliance with the
applicable financial covenants of our Credit Facility, as discussed above. Significant assumptions used in our forecasted model of liquidity in the next 12 months include our current cash position and our ability to manage spending. Based
on an assessment of these factors, management expects that our cash balance, expected revenues from our existing producing wells, and liquidity available under the Credit Facility, proceeds from the ATM Offering, and potential offerings
under our effective Form S–3 registration statement will be sufficient to meet our obligations over the next 12 months and fulfil the financial covenant requirements under our Credit Facility.

As discussed above, following our Form S–3 registration statement becoming effective in December 2024, the entry into our Credit Facility in March 2025, which increased the borrowing base to $475.0 million, and
the launch of the ATM Offering in June 2025, we have the ability to access funds through various sources to meet our working capital needs. Our ability to borrow under our Credit Facility does not require action on the part of management,
other than requesting the borrowing. As of December 31, 2025, we have availability of $109.0 million under the Credit Facility, which is more or equal to our liquidity needs; therefore, substantial doubt about our ability to continue as a
going concern does not exist.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based upon the accompanying consolidated financial statements. These financial statements have been prepared in conformity
with GAAP, which requires management to make estimates and assumptions that affect the amounts reports for assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities. Management believes its estimates
and assumptions to be reasonable under these circumstances. Certain estimates and assumptions are inherently unpredictable and actual results could differ from those estimates. Described below are the most significant policies and the related
estimates and assumptions used by management in the preparation of our financial statements. Refer to Item 8. Financial Statements and Supplementary Data – Note 2 – Summary of Significant Accounting Policies
for a further discussion of our accounting policies.

Oil and Natural Gas Properties

Proved properties. We follow the successful efforts method of accounting for our oil and natural gas properties. Under this method, development drilling and completion
costs are capitalized when incurred and depleted using the unit–of–production (“UOP”) method based on total estimated proved developed oil and natural gas reserves. The costs of acquiring proved properties are also capitalized and depleted,
including leasehold acquisition costs transferred from unproved properties, using the UOP method based on total estimated proved developed and undeveloped reserves. Development drilling and completion costs for wells in–progress are
excluded from depletion until the related project is completed and proved producing reserves are established. Exploration costs such as exploratory geological and geophysical costs, delay rentals, and exploration overhead are expensed as
incurred.

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We assess proved properties for impairment whenever circumstances indicate that the carrying value of proved oil and natural gas properties may not be recoverable. During the assessment, we compare unamortized
capitalized costs to the expected undiscounted pre–tax future cash flows for the associated assets grouped at the lowest level for which identifiable cash flows are independent of cash flows of other assets. If the expected undiscounted
pre–tax future cash flows, based on our estimate of future crude oil and natural gas prices, operating costs, anticipated production from proved reserves and other relevant data, are lower than the unamortized capitalized costs, the
capitalized costs are reduced to fair value. Fair value is generally estimated using the income approach described in ASC Topic 820, Fair Value Measurements. If applicable, we utilize prices and
other relevant information generated by market transactions involving assets and liabilities that are identical or comparable to the item being measured as the basis for determining fair value. The expected future cash flows used for
impairment reviews and related fair value measurements are typically based on judgmental assessments of commodity prices, pricing adjustments for differentials, operating costs, capital investment plans, future production volumes, and
estimated proved reserves, considering all available information at the date of review. These assumptions are applied to develop future cash flow projections that are then discounted to estimated fair value, using a market–based weighted
average cost of capital. Any impairments would be booked in the period they were identified. Additionally, we expense any costs related to the expiration of unproved leasehold. During the year ended December 31, 2025, we recorded $3.4
million related to leases which expired, which is presented as abandonment and impairment of unproved properties expense on its consolidated statement of operations. We did not record any abandonment and impairment of unproved properties
expense for the year ended December 31, 2024.

Crude oil and natural gas reserves. The successful efforts method inherently relies on the estimation of proved crude oil, natural gas and NGL reserves. The process of
estimating and evaluating crude oil and natural gas reserves is subjective and cannot be measured in an exact manner. As such, management has engaged CG&A, an independent Petroleum Reserve Evaluation Firm, to assist and audit our year
end December 31, 2025 reserve estimates in accordance with the rules and regulations of the SEC in Regulation S–X, Rule 4–10. The technologies and economic data used in the estimation of our proved reserves include, but are not limited to,
technical and economic data including well logs, geologic maps, seismic data, well test data, production data, historical price and cost information, and property ownership interests. Significant inputs and engineering assumptions used in
developing the estimates of proved crude oil and natural gas reserves include reserves volumes, future operating and development costs, historical commodity prices, pricing adjustments for differentials, and our ability to convert proved
undeveloped reserves to producing properties within five years of their initial proved booking.

Periodic revisions to the estimated reserves and future cash flows may be necessary as a result of a number of factors, including reservoir performance, new drilling, crude oil, natural gas, and NGL prices,
changes in costs, technological advances, new geological or geophysical data, or other economic factors. Accordingly, reserve estimates may differ significantly from the quantities of crude oil and natural gas ultimately recovered. If our
estimates of proved reserve decline, the rate at which we record depletion expense would increase, which would reduce future net income. Any changes in the depletion rate calculations caused by changes in reserve estimates would be made
prospectively. In addition, a decline in reserve estimates may impact the outcome of our assessment of proved and unproved properties for impairment.

Standardized Measure of Discounted Net Future Cash Flows. The Standardized Measure is the present value, discounted at 10%, of estimated future net cash flows to be
generated from the production of proved reserves calculated by using the 12–month unweighted arithmetic average of the first–day–of–the–month price for each month in the period January through December (with consideration of price changes
only to the extent provided by contractual arrangements). The estimated future net cash flows are reduced by projected future development, production (excluding DD&A and any impairments of oil and natural gas properties), plug and
abandonment costs, and estimated future income tax expenses. The Standardized Measure is calculated per ASC Topic 932, Extractive Activities – Oil and Gas and in accordance with SEC pricing
guidelines.

Although our estimates of total proved reserves, development costs, and production rates are based on the best available information, the development and production of the oil and natural gas reserves may not
occur in the periods assumed. Actual prices realized, costs incurred and production quantities may vary significantly from our estimates. Therefore, the Standardized Measure should not be considered to represent our estimate of expected
revenues or the fair value of our proved oil, natural gas, and NGL reserves.

Asset acquisitions. As part of our business strategy, we seek to complete several asset acquisitions each year. We typically account for these acquisitions under the
acquisition method of accounting. As such, we recognize amounts for identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The amount of goodwill or bargain purchase gain
recognized, if any, is determined based on the consideration transferred compared to the acquisition date amounts of the identifiable net assets acquired. Significant inputs to the valuation of oil and gas properties include estimates
of: (i) reserves, (ii) future operating and development costs, (iii) future commodity prices, (iv) future plugging and abandonment costs, (v) estimated future cash flows, and (vi) a market—based weighted average cost of capital rate.

The estimates used in determining valuation of oil and gas properties are based on assumptions believed to be reasonable but which are inherently uncertain. Accordingly, actual results may differ from the
projected results used to determine assets fair values. As discussed above, estimated fair values assigned to proved and unproved properties are dependent on estimates of reserve quantities, future commodity prices, as well as development
and operating costs. If reserve quantities or future commodity prices are lower than those used as inputs to determine estimates of acquisition–date fair values, the likelihood increases that certain costs may be determined to not be
recoverable and ultimately be impaired.

Series F Preferred Stock Embedded Derivatives and Series F Preferred Stock Warrants at Fair Value

We have several financial instruments which were evaluated for embedded derivatives and bifurcation in accordance with ASC 815 at the time of issuance. Pursuant to ASC 815, we have determined that the Series F
Preferred Stock should be classified as mezzanine equity because it is currently redeemable at the Series F Preferred Stockholder’s option. Additionally, we determined that certain features of the Series F Preferred Stock require
bifurcation and separate accounting as embedded derivatives. We engaged a third–party valuation expert to assist in preparing the fair value of the Series F Preferred Stock embedded derivatives as of December 31, 2025. These estimates were
derived using a Monte Carlo simulation model as of December 31, 2025, assuming a transaction discount of 32.5%, a risk–free rate of 3.5%, and a preferred equity volatility rate of 54.0%. All of the significant inputs used in the Monte Carlo
simulation as of December 31, 2025 are based on either terms in the Series F Preferred Stock Certificate of Designation or management assumptions, which are considered unobservable market data inputs.

Additionally, we have determined that the Series F Preferred Stock Warrants are not considered indexed to our own stock because the potential number of common shares to be issued upon the exercise of such
warrants will vary based on the amount of Series F Preferred Stock outstanding on April 7, 2026. As such, we have determined that the Series F Preferred Stock Warrants should be accounted for as liabilities pursuant to ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”). We engaged a third–party valuation expert to assist in preparing the fair value of the Series F Preferred Stock Warrants as of December 31, 2025.
These estimates were derived using a Monte Carlo simulation model as of December 31, 2025, assuming a risk–free rate of 3.69%, an equity volatility rate of 85.0%, and an assumed future value $0.31 for one Series F Preferred Stock Warrant
share. All of the significant inputs used in the Monte Carlo simulation as of December 31, 2025 are based on either terms in the Series F Preferred Stock Certificate of Designation or management assumptions, which are considered
unobservable market data inputs.

Therefore, in accordance with ASC 815, as of December 31, 2025, we have recorded the embedded derivatives associated with the Series F Preferred Stock and the Series F Preferred Stock Warrants at fair value and
will remeasure the fair value each reporting period with changes in fair value recognized as a component of loss on adjustment to fair value – embedded derivatives, debt, and warrants on our consolidated statements of operations.

Income Taxes

We account for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their respective tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it
is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. On this basis,
as of December 31, 2025, we recorded a valuation allowance of $6.7 million against our net deferred tax liabilities.

Off–Balance Sheet Arrangements

We do not have any off–balance sheet arrangements.

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