NPWR 10-K & 10-Q changes, risk factors and insider trading
Net Power Inc. (also NPWR-WT) · NYSE · Electrical Industrial Apparatus · CIK 1845437 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We recently broadened the scope of our business, and we may not be able to successfully execute on our broadened business strategy in a cost-effective manner. If we fail to execute on our broadened business strategy, for whatever reason, it could materially and adversely affect our business and results of operations.”
New heading “The commercial viability of our power plants is dependent upon the willingness of our customers to pay a premium for clean energy as compared to the price paid for unabated natural gas-fueled power.”
New heading “We intend to license from Entropy its PCC technology to integrate into our power plants to reduce CO2 emissions. To the extent we are unable to finalize agreements with Entropy for the licensing of such PCC technology, our business and results of operation will be adversely impacted.”
New heading “We have incurred and may in the future incur losses due to an impairment in the carrying value of our long-lived assets.”
New heading “The commercial viability of our power plants is dependent upon the willingness of our customers to pay a premium for clean energy as compared to the price paid for unabated natural gas-fueled power.”
New heading “The market for power plants implementing PCC technology is not yet established, and there is limited infrastructure to efficiently transport and store carbon dioxide. If the market for power plants implementing PCC technology does not achieve the growth potential we expect or if it grows more slowly than expected, it could materially and adversely affect our business.”
Removed heading “We face significant barriers in our attempts to deploy our technology and may not be able to successfully develop our technology. If we cannot successfully overcome those barriers, it could adversely impact our business and operations.”
Removed heading “Our deployment plans rely on the development and supply of turbomachinery and process equipment by NPI pursuant to a joint development agreement. We and NPI may not be able to commercialize technology developed under our joint development relationship. If NPI fails to commercialize such equipment, or such equipment fails to perform as expected, our ability to develop, market and license our technology could be harmed.”
Removed heading “Our partners have not yet completed development of, and finalized schedules for, delivery of key process equipment to customers, and any setbacks we may experience leading up to our first commercial delivery and other demonstration and commercial missions could have material adverse effects on our business, financial condition and results of operations and could harm our reputation.”
Removed heading “Suppliers of key equipment to our future customers may not be able to scale to the production levels necessary to meet the anticipated growth in demand for our technology, and such inability could negatively impact our business and financial plan.”
Removed heading “Our Demonstration Plant has not yet overcome all power loads to provide net positive power delivery to the commercial grid during its operation. If initial commercial plants using the Net Power Cycle are unable to efficiently provide a net power output to the commercial grid, it will negatively impact our business.”
Removed heading “We may encounter difficulty in attracting licensees prior to the deployment of an initial full-scale commercial plant. If we cannot successfully overcome the barriers to deploying a first full-scale plant, our business will be negatively impacted and could fail.”
Removed heading “We expect a consortium led by Net Power to undertake the development of our first commercial project in order to prove the commerciality of our technology. Such a deployment will require significant capital expenditures, and, depending on availability of capital, including government assistance in the form of loans or grants, could require substantial capital investment from us and our partners. If we cannot secure sufficient finding to construct our first commercial-scale plant, our business could fail.”
Removed heading “Our future growth and success depend on our ability to license to customers and their ability to secure suitable sites. We have not yet entered into a binding contract with a customer to license the Net Power Cycle, and we may not be able to do so.”
Removed heading “An impairment in the carrying value of our goodwill or long-lived assets, principally other intangible assets and property, plant and equipment, could negatively impact our consolidated results of operations and financial condition.”
Removed heading “Increased scrutiny and changing stakeholder expectations with respect to ESG matters may impact our business and expose us to additional risks.”
Removed heading “The market for power plants implementing the Net Power Cycle is not yet established, and there is limited infrastructure to efficiently transport and store carbon dioxide. If the market for power plants implementing the Net Power Cycle does not achieve the growth potential we expect or if it grows more slowly than expected, it could materially and adversely affect our business.”
Removed heading “The cost of electricity generated from the Net Power Cycle may not be cost competitive with other electricity generation sources in some markets, and such lack of competitiveness could materially and adversely affect our business.”
Removed heading “Unfavorable changes in laws, regulations and policies in foreign countries in which we seek to license our technology, failures to secure timely government authorizations under laws and regulations or our failure to comply with such laws and regulations could have a material adverse effect on our business, financial condition, and results of operations.”
Removed heading “The ability to license and deploy natural gas power plants may be limited due to conflict, war or other political disagreements between gas-producing nations and potential customers, and such disagreements may adversely impact our business plan.”
Removed heading “We may lose our rights to some or all of the core intellectual property that is in-licensed by way of either the licensor not paying renewal fees or maintenance fees, or by way of third parties challenging the validity of the intellectual property, thereby resulting in competitors easily entering into the same market and decreasing the revenue that we may receive from our customers, and this may adversely affect our ability to develop, market, and license our technology.”
Removed heading “If disputes over licensed intellectual property prevent or impair our ability to maintain the licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize our technology, or the dispute may have an adverse effect on our results of operation.”
Removed heading “We, our partners or our licensees may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, and such failure to identify or correctly interpret the patent may adversely affect our ability to develop, market, and license our technology.”
Removed heading “Risks Relating to the Tax Receivable Agreement”
Removed heading “Pursuant to the Tax Receivable Agreement, Net Power Inc. is required to pay to certain OpCo Unitholders 75% of the tax savings that Net Power Inc. realizes as a result of increases in tax basis in OpCo’s assets resulting from the exchange of OpCo Units for shares of Class A Common Stock (or cash) pursuant to the OpCo LLC Agreement as well as certain other tax benefits, including tax benefits attributable to payments under the Tax Receivable Agreement, and those payments may be substantial.”
Removed heading “In certain cases, payments under the Tax Receivable Agreement may exceed the actual tax benefits Net Power Inc. realizes or may be accelerated.”
Removed heading “There may be a material negative effect on our liquidity if the payments under the Tax Receivable Agreement exceed the actual income or franchise tax savings that we realize.”
Largest changes
“An impairment in the carrying value of our goodwill or long-lived assets, principally other intangible assets and property, plant and equipment, could negatively impact our consolidated results of operations and financial condition.”see in full comparison
“In late February 2022, Russian military forces commenced a military operation and invasion against Ukraine. The U.S., other countries and certain international organizations have imposed broad economic sanctions on Russia and certain Russian individuals, banking entities and corporations as a response and additional sanctions may be imposed in the future. The length, impact and outcome of the ongoing war between Russia and Ukraine is highly unpredictable, and such unpredictability has created uncertainty for financial and commodity markets. …”see in full comparison
“As of December 31, 2024, we had $360 million of goodwill, $1.2 billion of other intangible assets, and $151 million of property, plant and equipment. We periodically assess these assets to determine if they are impaired. Goodwill represents the excess of amounts paid for acquired businesses over the fair value of the net assets acquired. Goodwill is not amortized but is tested for impairment annually on October 1st or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. …”see in full comparison
“Compliance with laws and regulations applicable to our international operations increases our cost of doing business in foreign jurisdictions. We may be unable to keep current with changes in foreign government requirements and laws as they change from time to time. Failure to comply with these laws and regulations could have adverse effects on our business. In many foreign countries, it is common for others to engage in business practices that are prohibited by our internal policies and procedures or by U.S. regulations applicable to us. …”see in full comparison
“There may be a material negative effect on our liquidity if the payments under the Tax Receivable Agreement exceed the actual income or franchise tax savings that we realize.”see in full comparison
“Unfavorable changes in laws, regulations and policies in foreign countries in which we seek to license our technology, failures to secure timely government authorizations under laws and regulations or our failure to comply with such laws and regulations could have a material adverse effect on our business, financial condition, and results of operations.”see in full comparison
Full comparison: every changed paragraph (137)
Net Power has historically incurred significant losses and experienced negative cash flows since inception, including net losses of $578.6 million for the year ended December 31, 2025 and $49.2 million for the year ended December 31, 2024, $43.1 million for the period from June 8, 2023 through December 31, 2023 (Successor), and $34.2 million for the period from January 1, 2023 through June 7, 2023 (Predecessor).2024. We have not generated any material revenue, but we have substantial overhead expenses. We do not expect to generate meaningful revenue unless and until we are able to complete our first commercial plant deployment and begin licensing the Net Power Cycle,deployment, and we may not be able to accomplish eitherthis of these milestonesmilestone on our anticipated timetable, if at all. We have not yet commercialized theour Net Power Cycleproducts and may never do so successfully, and, as a result, it is difficult for us to predict our future operating results. Our losses may be larger than anticipated, and we may not achieve profitability according to our expected timeline or at all; even if we do, we may not be able to maintain or increase profitability.
WeAlthough we expect our operating expenses to continue to increasedecrease over the next several years as we begincompared to commercializeprior years as a result of the Netsuspension Powerof Cycle,testing continueefforts at our La Porte Demonstration Facility and the change in the focus of our business to refinePCC, andwe streamlinestill expect our technology,operating make technical improvements, hire additional employees and continue research and development efforts relatingexpenses to newsignificantly productsoutpace andour technologies. These efforts may be more costly than we expect and may not resultrevenue in increasedthe revenue,short profits or growth in our business.term. Any failure to increase our revenue sufficiently over time to keep pace with our expenses could prevent us from achieving or maintaining profitability or positive cash flow. Furthermore, if our future growth and operating performance fail to meet investor or analyst expectations, or if we have future negative cash flows or losses resulting from our investment in acquiring customers or expanding our operations, this could have a material adverse effect on our business and financial condition.
We recently broadened the scope of our business, and we may not be able to successfully execute on our broadened business strategy in a cost-effective manner. If we fail to execute on our broadened business strategy, for whatever reason, it could materially and adversely affect our business and results of operations.
In response to recent adverse events that ultimately resulted in the Company recognizing an impairment loss, we broadened the scope of our business to also include the generation of power using more standard simple cycle and combined cycle natural gas turbines in combination with PCC technology as a means of capturing the CO2 generated by those turbines. If we are unable to successfully execute on our broadened business strategy, which includes, among other things, developing additional technologies and generating customer interest in any resulting products, our business and results of operations could be adversely affected.
The commercial viability of our power plants is dependent upon the willingness of our customers to pay a premium for clean energy as compared to the price paid for unabated natural gas-fueled power.
Our business is focused on the development and construction of natural gas-fueled power plants coupled with carbon capture technology. In order to justify the cost of including carbon capture technology in our projects, our customers must be willing to pay a premium for clean power as compared to the prevailing price of unabated natural gas-fueled power in the same market.
The Department of Energy has recently removed groups focused on energy efficiency, renewable energy, and reducing carbon emissions from its organizational structure, which is consistent with the overall de-emphasis of clean energy production by the Trump administration. Reduced federal regulatory support for clean energy may result in reduced demand, which will impact the prices at which customers are willing to pay for clean energy. To the extent that customers are unwilling to pay a premium for clean energy, the cost to include carbon capture technology in our power plants may not be justified, which could adversely affect our business and results of operations.
We intend to license from Entropy its PCC technology to integrate into our power plants to reduce CO2 emissions. To the extent we are unable to finalize agreements with Entropy for the licensing of such PCC technology, our business and results of operation will be adversely impacted.
We have entered into a letter of intent with Entropy to license its PCC technology and jointly develop and commercialize our Clean Gas Product. To the extent that we are unable to successfully negotiate and enter into definitive agreements that provide for such license and joint development arrangements, we will not be able to integrate Entropy’s PCC technology into our proposed Clean Gas Product and our plants that we currently expect to include such technology. Additionally, even if we enter into definitive agreements with Entropy, there is no guarantee that we will be able to successfully commercialize the Clean Gas Product. Any such failure will adversely affect our business and our results of operations.
We, our licenseesWe and our partners may be unable to adequately control or accurately predict the costs associated with SN1 and the development and deployment of our technology.projects.
We will require significant capital to develop and grow our business, and we expect to incur significant expenses, including those relating to SN1,Project Permian, the development and commercialization of theadditional Net Power Cycle,projects, research and development, production, sales, maintenance and service, and building the Net Power brand. Our largest costs prior to project deployment are expected to be equipment and construction costs. Our current estimates of the costs associated with development and commercialization could prove inaccurate, and that could impact the cost of our technology,projects, our ability to obtain adequate funding at terms acceptable to us (or at all), and our business overall. If we are unable to efficiently design, develop, commercialize, license, market, and deploy our technologyprojects in a cost-effective manner, our margins, profitability and prospects would be materially and adversely affected.
If our operations grow as planned, we may need to expand our sales and marketing, research and development, and supply and manufacturing functions, and there is no guarantee that we will be able to scale the business and the sale of licenses as planned. We have relied heavily on key partnerships to date, and there is no guarantee that we will be able to maintain these relationships or find additional suitable partners in the future. As such, we may have difficulty commercializing our technology or broadening our internal capabilities.
Any failure to effectively incorporate updates to the design, construction and operations of power plants using the Net Power Cycle to ensure cost competitiveness could reduce the marketability of thethese Net Power Cycleplants and has the potential to impact deployment schedules. Updating the design, construction and operations of such power plants will be necessary to ensure their competitiveness and attractiveness in the market, particularly in the U.S., where the price of power is generally lower than in other countries. If we are not able to achieve and maintain cost competitiveness in the U.S. or elsewhere, our business could be materially and adversely affected.
We face significant barriers in our attempts to deploy our technology and may not be able to successfully develop our technology. If we cannot successfully overcome those barriers, it could adversely impact our business and operations.
The technology behind the Net Power Cycle is very complex, and, while we successfully achieved grid synchronization with our test facility, we have yet not fully validated our technology nor have we built any commercial facilities and we may face significant barriers in continuing to operate our test facility, developing and commercializing our first utility-scale plant, and developing and commercializing subsequent facilities. The Net Power Cycle has yet to be integrated with a combustion system and turbine operating coincidentally at target temperature and pressure. We are reliant on NPI to successfully deliver a turbo expander that can meet these conditions to support commercial initiatives. Furthermore, project execution risks associated with deployment of a nascent technology include supply chain management, schedule compliance, general EPC competence, commissioning, and startup tuning. If we are unable to successfully develop our technology, this would materially adversely affect our business and we may be forced to cease operations.
The technologyprojects we are developing will rely on complex machinery for itstheir operation, and deployment involves a significant degree of risk and uncertainty in terms of operational performance and costs.
TheOur Netpower Powerplant Cycleprojects, reliesincluding the PCC technology that we intend to license from Entropy, will rely heavily on complex machinery and involves a significant degree of uncertainty and risk in terms of operational performance and costs. Our test facility consists of, and our future Net Power plants are expected to consist of, large-scale machinery combining many components. These manufacturing plant components are likely to suffer unexpected malfunctions from time to time and will depend on repairs and spare parts to resume operations, and such repairs and spare parts may not be available when needed. If there are delays in the development and manufacturing of ourplant technologycomponents by our partners or third-party suppliers, it may adversely impact our business and financial condition.
Unexpected malfunctions of the plant components may significantly affect our intended operational efficiency. Operational performance and costs can be difficult to predict and are often influenced by factors outside of our control, such as,including, but not limited to, scarcity of natural resources, supply chain issues, environmental hazards and remediation, costs associated with decommissioning of machines, labor disputes and strikes, difficulty or delays in obtaining governmental permits, damages or defects in electronic systems, industrial accidents, pandemics, war, fire, seismic activity and natural disasters. Should operational risks materialize, it may result in the personal injury to or death of workers, the loss of production equipment, damage to manufacturing facilities, monetary losses, delays, and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs, and potential legal liabilities, all which could have a material and adverse effect on our business, results of operations, cash flows, financial condition, or prospects.
If we, our partners or our third-party suppliers experience any delays in the development and manufacturing of turbo expanders, heat exchangers, air separation units, and other key components,components of our power plants, our business and financial condition may be adversely impacted.
We have previously experienced, and it is possible that we may experience in the future, delays and other complications from our partners and third-party suppliers in the development and manufacturing of turbokey expanders, heat exchangers, air separation units and other implementing technology required for deploying the Net Power Cycle. We have in the past faced a numbercomponents of delays relating to the Net Power Cycle; for example, we had to obtain a redesigned rotor following synchronization, our recuperativepower heat exchanger train underwent modifications to meet welding specifications necessary for improved strength associated with nickel material portions, and we changed sealing materials compatible with the plant process chemistry for the remaining balance of the plant associated with compressors and pumps.plants. Any disruption or delay in the development or supply of such components and technology could result in the delay or other complication in the design, manufacture, production, and delivery of our technology that could prevent us from commercializing the Net Power Cycle according to our planned timeline and scale.projects. If delays like this recur, if our remediation measures and process changes do not continue to be successful or if we experience issues with planned manufacturing activities, supply of components from third parties or design and safety, we could experience issues or delays in commencing or sustaining our commercial operations.
If we encounter difficulties in scaling our production and delivery capabilities, if we fail to develop and successfully commercialize our technologies, if we fail to develop such technologies before our competitors,capabilities or if suchour technologiespower plants fail to perform as expected, are inferior to those of our competitors or are perceived as less safe than those of our competitors, our business, reputation, and financial condition could be materially and adversely impacted.
We, our licensees,We and our partners may not be able to establish supply relationships for necessary components or may be required to pay costs for components that are higher than anticipated, and such inability or increased costs could delay the deployment of our technologypower plants and negatively impact our business.
We, our licensees,We and our partners rely on third-party suppliers for components and materials used to develop,develop andour eventuallypower commercialize, the Net Power Cycle.plants. Any disruption or delay in the supply of components or materials by our key third-party suppliers or pricing volatility of such components or materials could temporarily disrupt production of our components or materials until an alternative supplier is able to supply the required material. In such circumstances, we may experience prolonged delays, which may materially and adversely affect our results of operations, financial condition, and prospects.
We may not be able to control fluctuation in the prices for these materials or negotiate agreements with suppliers on terms that are beneficial to us. Our business depends on the continued supply to us and to our licensees of certain proprietary materials. We are exposed to multiple risks relating to the availability and pricing of such materials and components. Substantial increases in the prices for our raw materials or components would increase our operating costs and the operating costs of our licensees, either ofcosts, which could materially impact our financial condition.
Currency fluctuations, inflation, trade barriers, extreme weather (which may be influenced by climate change), war, tariffs, pandemics, or shortages and other general economic or political conditions may limit our ability or our licensees’ ability to obtain key components or significantly increase freight charges, raw material costs and other expenses associated with our business and our licensees’ business, and such increased costs could materially and adversely affect our results of operations, financial condition and prospects.
Our deployment plans rely on the development and supply of turbomachinery and process equipment by NPI pursuant to a joint development agreement. We and NPI may not be able to commercialize technology developed under our joint development relationship. If NPI fails to commercialize such equipment, or such equipment fails to perform as expected, our ability to develop, market and license our technology could be harmed.
NPI is developing sCO2 turbo expanders for use in facilities implementing the Net Power Cycle pursuant to the Amended and Restated JDA. These turbo expanders are intended to be compatible with our existing technology, and as such, they are highly specialized and difficult to design. We expect these turbo expanders, as well as other critical technology such as our heat exchangers and air separation units, to be vital to the success of our first utility-scale plant, other future commercial-scale facilities and our licensing operations, and as such, any delay in their development or manufacture would likely adversely impact our business and financial condition.
There can be no assurance that we will be able to maintain or further our relationship with NPI and/or that NPI will be successful in developing a turbo expander that successfully integrates with our other technology. Our relationship with NPI is subject to various risks that could adversely affect the value of our investments and our results of operations. These risks include the following:
•our interests may diverge from those of NPI, or we may not be able to agree with them on ongoing development, manufacturing and operational activities, or on the amount, timing or nature of further investments in our joint development;
•our control over NPI’s operations is limited;
•the terms of the Amended and Restated JDA may turn out to be unfavorable to us;
•provisions of the Amended and Restated JDA could give rise to disputes regarding the rights and obligations of the parties, potentially leading to termination of the agreement, delays in development or commercialization of the turbo expander, or litigation or arbitration; or
•changes in tax, legal or regulatory requirements may necessitate changes to our arrangement under the Amended and Restated JDA.
If our strategic relationship with NPI is ultimately unsuccessful or less successful than anticipated, our business, results of operations or financial condition may be materially adversely affected. Any such lack of success could also reduce our ability to secure collaboration agreements in the future or impair our relationships with other existing collaborators.
Our commercialization strategy relies heavily on our relationship with Baker Hughes, OXY, Constellation, and othercertain strategic investors and partners, who may have interests that diverge from ours and who may not be easily replaced if our relationships terminate, and any such divergent interests or inability to replace could adversely impact our business and financial condition.
We are, and for a period of time will be, substantially reliant on our relationship with BakerOXY. Hughes, OXY, Constellation,Entropy and other strategic investors and strategic partners to develop and commercialize the Net Power Cycle. We are also reliant on our licensepower agreementplants. withOXY, 8Entropy Riversand for the in-license of the core technology of the Net Power Cycle. Ourother strategic partners may have interests that diverge from our interests, and that may hinder our ability to licensesuccessfully develop and commercialize our technologypower to customers.plants. If we lose our agreements with strategic partners, we may need to find new contractors who may have less experience designing and building power plants and complex machinery. WeThe mayloss alsoof needany such relationships, if not adequately replaced, could substantially hinder or prevent our ability to locate alternative sources of intellectual property rights enabling us to carry outcommercialize our operationstechnology and toadversely avoidaffect infringingour previouslybusiness, licensedfinancial intellectual property,condition and wefuture may be unsuccessful in securing such new licenses or unsuccessful in finding suitable alternatives that would not infringe previously licensed intellectual property.prospects.
We have entered into the Amended and Restated JDA with NPI in connection with the joint development arrangement for the design and development of a turbo expander for use in the Net Power Cycle. Pursuant to the Amended and Restated JDA, NPI may terminate the arrangement, among other things, in the event of a change of control, and there is no guarantee that a change of control will not occur in the future.
The loss of any such relationships, if not adequately replaced, could substantially hinder or prevent our ability to commercialize our technology and adversely affect our business, financial condition and future prospects.
Our partners have not yet completed development of, and finalized schedules for, delivery of key process equipment to customers, and any setbacks we may experience leading up to our first commercial delivery and other demonstration and commercial missions could have material adverse effects on our business, financial condition and results of operations and could harm our reputation.
The success of our business will depend on our ability to successfully license our technology to customers on-time and on-budget at guaranteed performance levels, and such success would tend to establish greater confidence in our subsequent customers. Our partners have not yet completed development of and finalized schedules for delivery to customers of key process equipment, including turbo expanders, sCO2 combustors, primary recuperative heat exchangers, and air separation units. There is no guarantee that our planned commercialization efforts will be successful. There can be no assurance that we will not experience operational or process failures and other problems during our first commercial deployments. Any failures or setbacks, particularly on our first commercial ventures, could harm our reputation and have a material adverse effect on our business and financial condition.
Any actual or perceived safety or reliability issues may result in significant reputational harm to our business, in addition to tort liability and other costs that may arise. Such issues could result in delaying or canceling planned licenses, increased regulation or other systemic consequences. Our inability to meet our safety standards or adverse publicity affecting our reputation as a result of accidents or mechanical failures could have a material adverse effect on our business and financial condition.
Lack of availability or increased costs of component raw materials may affect manufacturing processes for plant equipment and increase our overall costs or those of our licensees.costs.
Recent global supply chain disruptions have increasingly affected both the availability and cost of raw materials, component manufacturing and deliveries. These disruptions have resulted in, and may continue to result in, delays in equipment deliveries and cost escalations that adversely impact our ability to develop and commercialize our Clean Gas Product and, to the Netextent Powerwe Cycle.continue to advance it, the Oxy-Combustion Cycle technology.
Our processesproposed arepower plants will be reliant on certain supply, including natural gas, and the profitability of our processespower plants will be dependent on the price of such supply. The increased cost of natural gas and other raw materials, in isolation or relative to other energy sources, may adversely affect the potential profitability and cost effectiveness of our processes.power plants.
We intend to licenseuse natural gas as the Netfuel Power Cyclesource for the generation of electricalour power using natural gas.plants. Accordingly, the prices we eventually receivecharge to customers for our licensespower will likely be tied to the prevailing market prices of natural gas. Historically, the price of natural gas has been volatile, and this volatility may continue to increase in the future. Factors that may cause volatility in the prices of natural gas include, among others, (i) changes in supply and availability of natural gas; (ii) governmental regulations; (iii) inventory levels; (iv) consumer demand; (v) price and availability of alternatives; (vi) weather conditions; (vii) negative publicity about natural gas; (viii) production or transportation techniques and methods; (ix) macro-economic environmental and political conditions; (x) transportation costs; and (xi) the price of foreign imports, including volatility due to tariffs and other trade-related disputes. We expect that natural gas prices will remain volatile for the near future because of these and other factors. High natural gas prices in isolation or relative to other energy sources are likely to adversely affect the demand for theour Netpower Power Cycleplants and our potential profitability and cost effectiveness. The prices we receive for our licensespower depend on numerous factors beyond our control, including, but not limited to, the following:
•social unrest, political instability or armed conflict in major natural gas producing regions outside the U.S., such as the conflictconflicts between Ukraine and Russia,Russia and in the Middle East, and acts of terrorism or sabotage;
Our customers and the projects they develop will be reliant on equipment supplied by a core group of key global suppliers, generally including, but not limited to, air separation units, heat exchangers, control systems, piping, valves, fabricated modules and rotating turbomachinery.suppliers. Global supply chain disruptions have affected, and may continue to affect, both the availability and cost of raw materials, component manufacturing and deliveries. These disruptions may result in delays in equipment deliveries and cost escalations that could adversely affect our business. While we expect to take steps to minimize the impact of these increased costs by working closely with our suppliers and customers, global supply chain disruption may deteriorate and such disruption compounded by increasing inflation could adversely affect our business, financial condition, results of operations and cash flows. Moreover, any material disruption in the supply chain could delay our commercialization efforts, potentially causing us to delay the launchconstruction of our first utility-scale plant and of subsequent commercial plants later than expected or to begin licensing our technology later than expected.
Suppliers of key equipment to our future customers may not be able to scale to the production levels necessary to meet the anticipated growth in demand for our technology, and such inability could negatively impact our business and financial plan.
We do not have manufacturing assets and our future licensees may not have manufacturing assets, and thus we rely, and our future licensees may rely, on third-party manufacturers to build licensed power plants and associated equipment. Moreover, we and our licensees are dependent on future supplier capability to meet production demands attendant to our forecasts. If suppliers of key equipment to our customers cannot meet the level of supply and schedule demands of such customers after we achieve commercialization, our revenues could be materially impacted, which would impact our operations and profitability.
The Netdesign Powerof Cycleour designpower plants is actively managed through design reviews, prototyping, involvement of external partners and application of industry lessons, but we could still fail to identify latent manufacturing and construction issues early enough to avoid negative effects on production, fabrication, construction or ultimate performance of our technology, licensestechnology or plants. Where these issues arise at such later stages of deployment, plant deployment could be subject to greater costs or be significantly delayed, and such delay could materially and adversely affect our business.
Our Demonstration Plant and future facilities and operations could be damaged or otherwise adversely affected as a result of natural disasters and other catastrophic events, and such adverse effects would negatively impact our ability to develop key process equipment and technologies within our anticipated timeline and budget.
In addition, our test facility is located in La Porte, Texas, which is prone to natural disasters, such as severe weather, making our business particularly susceptible to natural disasters and other catastrophic events in those areas. Our test facility and future facilities could be harmed or rendered inoperable, or our other assets could be damaged or destroyed, by natural or man made disasters, including severe weather, flooding, power outages, earthquakes, and contamination, and such damage or destruction may render it difficult or impossible for us to operate our business for some period of time. The inability to operate our test facility — for even a short period of time — may harm our reputation and result in a delay in our commercialization schedule, and such reputational harm or delay would have a material adverse effect on our financial condition and operating results.
Our Demonstration Plant has not yet overcome all power loads to provide net positive power delivery to the commercial grid during its operation. If initial commercial plants using the Net Power Cycle are unable to efficiently provide a net power output to the commercial grid, it will negatively impact our business.
Our Demonstration Plant successfully generated electric power while synchronized to the grid, but it has not yet overcome all facility auxiliary power loads (pumps, compressors, etc.) to provide net positive power delivery to the commercial grid during its operation. If initial commercial power plants are unable to efficiently provide net power output to the commercial grid using the Net Power Cycle, this could harm our business, results of operation, and reputation.
We may encounter difficulty in attracting licensees prior to the deployment of an initial full-scale commercial plant. If we cannot successfully overcome the barriers to deploying a first full-scale plant, our business will be negatively impacted and could fail.
Until we have completed the deployment of our first utility-scale plant and, potentially, until we have completed deployment of one or more additional commercial plants, we may encounter difficulty attracting licensees. We expect revenues from licensing the Net Power Cycle to be vital to reaching and sustaining profitability, but until potential customers have seen a plant successfully implement the Net Power Cycle, they may decide to wait to purchase a license or forgo purchasing a license altogether. There is no guarantee that we will be able to attract any licensees in our desired price range, or at all prior to our initial deployment or that our initial deployment efforts will be timely or successful enough to attract licensees. If we cannot attract licensees and earn licensing revenue, we may experience delays in our commercial plant deployments and may otherwise suffer harm to our business, results of operations, and reputation.
We expect a consortium led by Net Power to undertake the development of our first commercial project in order to prove the commerciality of our technology. Such a deployment will require significant capital expenditures, and, depending on availability of capital, including government assistance in the form of loans or grants, could require substantial capital investment from us and our partners. If we cannot secure sufficient finding to construct our first commercial-scale plant, our business could fail.
Our ability to find third parties willing to partner with us to launch our first utility-scale plant is vital to our future success. This deployment is expected to be very expensive, require significant capital, and be time consuming. If we cannot find suitable third parties to partner with us, we may not be able to launch our first utility-scale plant. We may seek DOE LPO Title XVII project funding. In furtherance of this possibility, we have submitted a Title XVII Part I LPO application in support of such funding, and we have been invited to submit a Part II application. However, the DOE advises that an invitation to submit a Part II application is not an assurance that DOE will invite the Company into the due diligence and term sheet negotiation process, that DOE will offer a term sheet to the Company or that the terms and conditions of a loan guarantee will be consistent with terms proposed by the Company. The foregoing matters are wholly dependent on the results of the DOE’s review and evaluation of the Part II application, and determination whether to proceed. If we are unable to bring our first utility-scale plant to market, or launch other commercial plant deployments, our ability to create stockholder value will be limited, and our business could fail.
Our future growth and success depend on our ability to license to customers and their ability to secure suitable sites. We have not yet entered into a binding contract with a customer to license the Net Power Cycle, and we may not be able to do so.
The future growth of our business depends on our ability to license the Net Power Cycle and to expand our sales geographically. The Net Power Cycle has never been utilized on a full-scale commercial basis. All tests conducted to date with respect to the technology have been performed at our Demonstration Plant, and the same or similar results may not be obtainable at competitive costs on a large-scale commercial basis. It will be difficult to demonstrate the value in our technology to licensees until we have deployed a successful full-scale commercial plant, as discussed under “— We may encounter difficulty in attracting licensees prior to the deployment of an initial full-scale commercial plant. If we cannot successfully overcome the barriers to deploying a first full-scale plant, our business will be negatively impacted and could fail.” We have not yet entered into a binding contract with a customer to license the Net Power Cycle, and we may not be able to do so on acceptable terms or at all. Even if we do enter into agreements with licensees, such licensees might be unable to find suitable sites for building their own power plants. If we are unable to successfully enter into agreements with a sufficient number of licensees, it may adversely impact our business and results of operations.
Management's Discussion & Analysis (MD&A)
New heading “Impairment and other charges”
New heading “Change in Tax Receivable Agreement liability”
New heading “Net loss attributable to non-controlling interests”
New heading “Impairment of Long-Lived Assets”
New heading “Private Placement Warrants”
Removed heading “The Business Combination”
Removed heading “Option settlement - related party”
Removed heading “Business Combinations”
Removed heading “Earnout Shares and Public Warrants”
Removed heading “Equity-Based Compensation and Fair Value of Shares”
Removed heading “Predecessor Period”
Removed heading “Successor Period”
Largest changes
“We recognize goodwill in accordance with ASC Topic 350, Goodwill and Other Intangible Assets. Goodwill represents the excess cost of an acquired entity over the fair value amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is not amortized, but rather tested for impairment annually on October 1 or whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. …”see in full comparison
“During the first quarter of 2025, the Company assessed its goodwill for impairment due to a change in the Company’s business plan and related sustained decrease in the Company’s market capitalization. As a result, the Company fully impaired goodwill for an impairment loss of $359.8 million. Also in the first quarter of 2025, the Company expensed $56.1 million of costs associated with the construction of SN1 as management initiated a value engineering process to assess the project’s feasibility and optimize its design and temporarily paused further long lead equipment releases. …”see in full comparison
We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including, but not limited to,see in full comparisoncostourover-runsabilityintothelicensetestingPCCandtechnologyoperationfromof the Demonstration Plant and future utility-scale plants, technical problems with the Net Power Cycle, that could impact performance,Entropy, potential supply chain issues, changes in tax policies and other incentives supporting carbon capture, our access to the capital needed to finance the development of our projects, and development of competingclean-energyenergytechnologytechnologies sooner or at a lesser cost thantheourNet Power Cycle.products. Supply chain issues related to the manufacturing and transportation of keyequipmentequipment, including as a result of tariffs imposed by the U.S. or other countries or other trade barriers, measures, or conflicts, may lead to a delay in our commercialization efforts, which could impact our results ofoperations.operations, financial condition and prospects. Also, currency fluctuations, inflation, and tariffs and other trade barriers, measures or conflicts may significantly increase freight charges, raw material costs and other expenses associated with our business, and such increased costs could materially and adversely affect our results of operations, financial condition and prospects.
“We believe evaluating the recoverability of goodwill is a critical accounting estimate because it requires management to make judgments and assumptions regarding future trends and events. As a result, both the precision and reliability of our estimates are subject to uncertainty. Among the factors that we consider in our qualitative assessment are general economic conditions and the competition present within our business environment; actual and projected reporting unit financial performance; forward-looking business measurements; and external market assessments. …”see in full comparison
Full comparison: every changed paragraph (91)
We are a cleanan energy technology and project development company thatfocused on delivering low-carbon gas power solutions. Historically, our sole business has developedbeen the development of a uniquenovel oxy-combustion power generation system (thedesigned “Net Power Cycle”) that canto produce clean, reliable,reliable and affordable electricity from natural gas while capturing virtually all atmospheric emissions.emissions The(the Net Power“Oxy-Combustion Cycle”). isRecently, designedwe have broadened the scope of our business to inherentlyinclude capturethe CO2generation andof eliminatepower airusing pollutantsnatural suchgas asturbines SOX,paired NOX,with andPCC particulates.technology that we intend to license from Entropy.
The Business Combination
On December 13, 2022, Net Power, LLC entered into the Business Combination Agreement with RONI, RONI OpCo, Buyer, and Merger Sub. Pursuant to the Business Combination Agreement, Merger Sub merged with and into Net Power, LLC with Net Power, LLC surviving the merger as a wholly owned subsidiary of Buyer. Upon the consummation of the Business Combination on June 8, 2023, RONI was renamed Net Power Inc. Following the Closing, Net Power Inc. is considered an umbrella partnership, C corporation or “Up-C” structure, whereby all of the equity interests in Net Power, LLC are held by OpCo, and Net Power Inc.’s only assets are its equity interests in OpCo.
OpCo is considered a variable interest entity with Net Power Inc. serving as its primary beneficiary. Net Power Inc. was determined to be the primary beneficiary of Net Power, LLC because it is the sole managing member of OpCo with the power to control the most significant activities of Net Power, LLC, while also having an economic interest that provides it with the ability to participate significantly in Net Power, LLC’s benefits and losses. As a result, Net Power, LLC was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination represents an acquisition of a business and Net Power, LLC’s identifiable assets acquired, liabilities assumed, and any non-controlling interests were measured at their estimated fair value on the acquisition date.
As a result of the Business Combination, the Company’s financial statement presentation distinguishes Net Power, LLC as the “Predecessor” through June 7, 2023 (the “Predecessor Period”) and Net Power Inc. as the “Successor” for periods after the Closing Date (the “Successor Period”). Revenue and earnings after the date of the Business Combination are shown in the Successor Period on the consolidated statements of operations and comprehensive loss. As a result of the application of the acquisition method of accounting in the Successor Period, the consolidated financial statements for the Successor Period are presented on a full step-up basis; therefore, Successor Period consolidated financial statements are not comparable to the consolidated financial statements of the Predecessor Period, which are not presented on the same full step-up basis.
We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including, but not limited to, costour over-runsability into thelicense testingPCC andtechnology operationfrom of the Demonstration Plant and future utility-scale plants, technical problems with the Net Power Cycle, that could impact performance,Entropy, potential supply chain issues, changes in tax policies and other incentives supporting carbon capture, our access to the capital needed to finance the development of our projects, and development of competing clean-energyenergy technologytechnologies sooner or at a lesser cost than theour Net Power Cycle.products. Supply chain issues related to the manufacturing and transportation of key equipmentequipment, including as a result of tariffs imposed by the U.S. or other countries or other trade barriers, measures, or conflicts, may lead to a delay in our commercialization efforts, which could impact our results of operations.operations, financial condition and prospects. Also, currency fluctuations, inflation, and tariffs and other trade barriers, measures or conflicts may significantly increase freight charges, raw material costs and other expenses associated with our business, and such increased costs could materially and adversely affect our results of operations, financial condition and prospects.
Net Power is progressing its first clean firm power hub at the Project Permian site in West Texas. The project is being sized to accommodate up to one gigawatt of clean firm power generation capacity. We intend for Phase I of the project to utilize readily available gas turbines paired with Entropy’s PCC technology. On November 12, 2025, we entered into an agreement to purchase two modular gas turbine generator sets with nominal gross power of approximately 30 megawatts each for use at Project Permian. Final investment decision (“FID”) for Phase I is expected in the third quarter of 2026 with targeted commercial operations by early 2029, which would make it the first commercial clean gas power project in the United States.
Over the next several years, Net Power plans to conduct additional research and equipment validation testing campaigns at its Demonstration Plant. Additionally, Net Power began purchasing initial long-lead materials for SN1 in 2024 with the intention of locating SN1 in the Permian Basin of West Texas (“Project Permian”). However, after completing the FEED process in December 2024, the initial cost estimates were higher than originally anticipated, In response, during the first quarter of 2025, Net Power commenced a post-FEED optimization and value engineering process. In March 2025, the Company suspended further long lead equipment releases but value engineering and certain development work remains in progress. Provided we are successful in our value engineering process, the project would come online no earlier than 2029. We are focused on delivering a project that will catalyze future adoption for utility-scale customers.
Major remaining development activities relating to completing construction of our first utility-scale plant are similar to the activities we previously undertook to design, build, and commission the Demonstration Plant. These activities include: finalizing all permitting, supply and off-take contracts, and obtaining the financing required to achieve FID, initiating the EPC process, and constructing and commissioning the facility.
We are a development stage company and our historical results may not be indicative of our future results.results, particularly considering the recent shift in the anticipated timing of our technology development of the Oxy-Combustion Cycle and the introduction of the Clean Gas Product. Accordingly, the drivers of our future financial results, as well as the components of such results, may not be comparable to our historical or future results of operationsoperations.
Comparison of the Year Ended December 31, 2024 (Successor)2025 to the PeriodsYear From January 1, 2023 Through June 7, 2023 (Predecessor) and June 8, 2023 ThroughEnded December 31, 2023 (Successor)2024
The following table sets forth our condensedconsolidated results of operations data for the periods presented:
Revenue
We have generated small amounts of revenue through various contracts with potential future license customers for access to testing results, other data and feasibility studies. We have also generated revenue for conducting syngas testing at our Demonstration Plant. Revenue increased by $75 thousand, or 43%, for the year ended December 31, 2024 (Successor), as compared to amounts for the combined periods from January 1, 2023 through June 7, 2023 (Predecessor) and June 8, 2023 through December 31, 2023 (Successor).
General and administrative expenses increased by $10.1 million, or 33%, for the year ended December 31, 2025, as compared to amounts for the year ended December 31, 2024. During the second quarter of 2025, we terminated the employment of our former Chief Operating Officer, our former Chief Financial Officer, our former Chief Accounting Officer, and certain other employees. Such terminations resulted in $3.1 million in severance payments to these employees, as well as $1.1 million of stock-based compensation for related vesting accelerations. There also was an overall increase of $2.8 million in compensation expense due to growth in employee headcount and stock-based compensation awards granted during 2025. Additionally, we incurred a $3.0 million increase in professional fees, primarily for engineering, tax, and legal services.
General and administrative expenses decreased by $23.9 million, or 44%, for the year ended December 31, 2024 (Successor), as compared to amounts for the combined periods from January 1, 2023 through June 7, 2023 (Predecessor) and June 8, 2023 through December 31, 2023 (Successor). This decrease was primarily due to $16.6 million in costs related to the Business Combination along with additional one-time professional service fees as a result of becoming a public company as these costs did not recur in 2024. This decrease was partially offset by an increase in corporate headcount.
Sales and marketing expenses consist primarily of personnel-related costs, consultantscosts and information technologyconsultants costs directly associated with our sales and marketing activities, which include general publicity efforts for the Company. Sales and marketing expenses increased by $1.2$1.0 million, or 45%,27%, for the year ended December 31, 2024 (Successor),2025, as compared to amounts for the combinedyear periods from January 1, 2023 through June 7, 2023 (Predecessor) and June 8, 2023 throughended December 31, 2023 (Successor).2024. This increase was primarily attributable to increasedhigher employee headcount as well as severance costs and engagementrelated ofaccelerated externalstock-based consultantscompensation, topartially supportoffset increasedby marketinglower activities.professional fees.
R&D expenses consist primarily of labor expenses and fees paid to third parties working on and testing specific aspects of the Oxy-Combustion Cycle technology, including testing at our La Porte Demonstration Facility and development activities under the BHES JDA. R&D expenses increased by $35.7 million, or 56%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. This increase was primarily due to $27.9 million associated with development activities under the BHES JDA which includes $7.4 million for the BHES JDA Make-Whole Payments. During the fourth quarter of 2025, the Company reversed $3.3 million in previously recognized share-based compensation expense subsequent to the Business Combination related to the BHES Bonus Shares as the milestone targets were no longer probable. The Company also recorded $1.3 million in accelerated share-based compensation expense related to shares issued in connection with signing of the BHES JDA. Additionally, plant and utility expenses increased $6.2 million due to the validation testing campaigns at the La Porte Demonstration Facility that began in the fourth quarter of 2024 and was suspended during the fourth quarter of 2025. The Company also incurred higher engineering consulting fees of $2.0 million and $1.5 million in costs related to expansion of its engineering headcount to support the Oxy-Combustion Cycle technology development efforts.
Research and development (“R&D”) expenses consist primarily of labor expenses and fees paid to third parties working on and testing specific aspects of our technology, including testing at our Demonstration Plant and development activities under the BHES JDA. R&D expenses increased by $23.8 million, or 60%, for the year ended December 31, 2024 (Successor), as compared to amounts for the combined periods from January 1, 2023 through June 7, 2023 (Predecessor) and June 8, 2023 through December 31, 2023 (Successor). This increase was primarily due to the timing of development activities under the BHES JDA and increased activity at the Demonstration Plant due to the commencement of testing campaign in the fourth quarter of 2024.
Project development expenses consist of labor expenses and fees paid to third parties developing commercial scale projects. Project development expenses increased by $70.4 million, or 3,646%, for the year ended December 31, 2025, as compared the year ended December 31, 2024. In March 2025, the Company suspended further long-lead equipment releases for the Oxy-Combustion Cycle technology project. Accordingly, the Company began expensing costs associated with the project as management assessed the Oxy-Combustion Cycle technology project’s feasibility throughout 2025. These costs were capitalized during the year ended December 31, 2024. For the year ended December 31, 2025, the Company incurred $24.8 million of costs related to Project Permian Oxy-Combustion Cycle technology project. Additionally, in the second quarter of 2025, the Company incurred $19.5 million in milestones payments for the purchase of long lead materials with BHES under the Letter of Limited Notice to Proceed (“BHES LNTP”). In the fourth quarter of 2025, the Company notified Baker Hughes of its intent to terminate the BHES LNTP in connection with the Company’s suspension of the Amended and Restated JDA, which resulted in $26.1 million of contract termination fees recognized in 2025.
Impairment and other charges
During the first quarter of 2025, the Company assessed its goodwill for impairment due to a change in the Company’s business plan and related sustained decrease in the Company’s market capitalization. As a result, the Company fully impaired goodwill for an impairment loss of $359.8 million. Also in the first quarter of 2025, the Company expensed $56.1 million of costs associated with the construction of SN1 as management initiated a value engineering process to assess the project’s feasibility and optimize its design and temporarily paused further long lead equipment releases. In the third quarter of 2025, the Company recognized an impairment loss of $1,095.8 million related to its long-lived assets as a result of the responsiveness from potential customers to the Company’s technology and integrated product offering, the estimated cost reductions achieved in Project Permian, and the resulting revisions to the Company’s forecasted future unit deployments and related cash flows based upon the perceived marketability and commercial viability of the Company’s technology.
Project development expenses consist of labor expenses and fees paid to third parties developing commercial scale projects. Project development expenses increased by $0.8 million, or 75%, for the year ended December 31, 2024 (Successor), as compared to amounts for the combined periods from January 1, 2023 through June 7, 2023 (Predecessor) and June 8, 2023 through December 31, 2023 (Successor). This increase was due to increased headcount related to the development of a utility-scale facility and costs related to future projects.
Option settlement - related party
Option settlement expense of $79.1 million for the period from June 8, 2023 through December 31, 2023 (Successor) was related to a one-time cost for settlement of an option agreement in connection with the close of the Business Combination.
Our depreciation, amortization, and accretion expenses consist primarily of depreciation on our La Porte Demonstration PlantFacility and amortization of intangible assets. Depreciation, amortization, and accretion expense increaseddecreased by $30.8$19.2 million, or 61%,24%, for the year ended December 31, 2024 (Successor),2025, as compared to amounts for the combinedsame periodsperiod fromin January2024, 1,primarily 2023due throughto Junelower 7, 2023 (Predecessor)depreciation and Juneamortization 8,rates 2023 through December 31, 2023 (Successor). Asas a result of the Businesslong-lived Combination,asset weimpairment adjustedduring the valuethird quarter of acquired assets to fair value, which resulted in a significant increase in intangible assets for internally developed technology and the Demonstration Plant. These increases resulted in an increase in related amortization and depreciation expense in the Successor Period.2025.
Interest income (expense)
Interest income decreased by $11.1 million, or 35%, for the year ended December 31, 2025, as compared to amounts for the same period in 2024. This decrease was due to lower interest-bearing cash and investment balances, declines in interest rates, and lower investment accretion.
Interest income (expense) increased by $11.9 million, or 61%, for the year ended December 31, 2024 (Successor), as compared to amounts for the combined periods from January 1, 2023 through June 7, 2023 (Predecessor) and June 8, 2023 through December 31, 2023 (Successor). Interest income increased due to a higher average cash balance in the Successor Period as a result of the Business Combination which was deployed into fixed income securities and interest-bearing short-term investments. The higher cash and investment balances were outstanding for a longer period during the year ended December 31, 2024 (Successor) as compared to prior periods.
The Change in Earnout Shares liability and Warrant liability relates to movements in fair value of earnout shares and warrants which have been classified as liability instruments. The changes are primarily due to fluctuations in the market price of our Class A Common Stock and related volatility.
Change in Tax Receivable Agreement liability
In March 2025, the Company reduced the Tax Receivable Agreement (“TRA”) liability of $21.3 million to zero as payments related to the TRA were not considered probable. In May 2025, pursuant to its rights under the TRA, the Company delivered to the agent of the TRA holders notice of the Company’s intent to terminate the TRA (the “Early Termination Notice”). No early termination payment was payable to any TRA holder. The Early Termination Notice became final and binding on June 12, 2025.
The change in Earnout Shares liability and Warrant liability was $52.2 million, for the year ended December 31, 2024 (Successor), as compared to the period from June 8, 2023 through December 31, 2023 (Successor). This decrease is primarily due to the change in the fair value of the Private Placement Warrants and Public Warrants, which was driven by changes in our stock price. Our stock price decreased from $13.12 per share at June 8, 2023 to $10.10 per share at December 31, 2023, and then increased to $10.59 per share at December 31, 2024. The valuations were also impacted by increasing volatility assumptions. These changes were partially offset by fewer Earnout Shares outstanding during 2024 as the first two tranches were earned in 2023.
Our income tax benefit decreased by $6.3 million for the year ended December 31, 2025, as compared to amounts for the year ended December 31, 2024. This change was due to an increase in the Company’s valuation allowance, partially offset by a favorable permanent difference related to the change in the value of the Warrant liability as compared to the same period in 2024.
Net loss attributable to non-controlling interests
Net loss attributable to non-controlling interest was 64.0% of net loss before income tax for the year ended December 31, 2025, as compared to 64.4% of net loss for the year ended December 31, 2024. The change in the non-controlling interests was due to exchanges by OpCo members of Class A OpCo units for Class A PubCo shares, partially offset by the additional issuance of Class A OpCo units under the BHES JDA.
Our income tax benefit increased by $4.9 million for the year ended December 31, 2024 (Successor), as compared to amounts for the period from June 8, 2023 through December 31, 2023 (Successor). The increase in the income tax benefit is due to a higher net loss, a higher research and development tax credit in 2024 and finalizing deferred taxes as of the Closing Date of the Business Combination during the year ended December 31, 2024 (Successor). There was no tax provision for the period from January 1, 2023 through June 7, 2023 (Predecessor) as the entity was considered a pass-through entity for tax purposes.
Our principal sources of liquidity are cashcash, short-term investments, and investments on hand, which are short-term in duration and highly liquid.liquid available-for-sale securities. Historically, our sources of liquidity have also included raising additional capital through the sale of ownership interests. We willmay need to raiseissue additional capital to fund our first utility-scale project, which may include project-level debt and equity securities asin wellthe as corporate-level equity securities.future. We measure liquidity in terms of our ability to fund the cash requirements of our R&D activitiesactivities, project development, and our near-term business operations, including our contractual obligations and other commitments. Our current liquidity needs primarily involve R&D activities for the ongoing development of our technology, general and administrative costs,costs and expenditurescosts to purchase long-lead items related todevelop our firstprojects commercialand scaleprocure facility.the equipment necessary for such projects.
As of December 31, 2024, we hadThe short-term investments totaling $100 million, which waswere comprised of a single three-month12-month certificate of depositdeposit, custodiedheld bywith a domestic banking institution.institution, which matured in June 2025. Additionally, our current liabilities were $17.9$47.5 million and $12.0$17.9 million at December 31, 20242025 and December 31, 2023,2024, respectively. The decrease in our liquidity position is primarily a result of cash used to prepare the Demonstration Facility for the testingdevelopment campaign that commenced inof the fourthOxy-Combustion quarterCycle 2024,under progressthe onBHES ourJDA, firstpayments commercial-scalerelated facilityto aslong-lead we continued FEEDequipment and releasedengineering long-leadfor items,SN1, R&Dtesting expenses,campaigns and capital expenditures at the La Porte Demonstration Facility, and general corporate expenses.
We believe we have the ability to manage our operating costs, including R&D expenses,costs such that our existing cash, cash equivalents and short-term investmentsliquidity will be sufficient to fund our obligations for the next 12 months following the filing of this Annual Report on Form 10-K. We believe that our current sources of liquidity on hand should be sufficient to fund our general corporate operating expenses as we work to commercializedevelop our technology,products and projects, but certain costs are not reasonably estimable at this time and willwe likelymay require additional funding. More specifically,Specifically, we will likelymay require additional funding in order to successfully constructfund ourthe firstprojects utility-scalewe plant andintend to originate additional Net Power plant opportunities.develop.
Cash used in operating activities decreasedincreased by $17.4$89.1 million for the year ended December 31, 20242025 compared to the combinedyear periods from January 1, 2023 through June 7, 2023 (Predecessor) and June 8, 2023 throughended December 31, 2023 (Successor).2024. Our net cash used in operating activities to date have been primarily comprised of payroll, material and supplies, facilities expense, and professional services related to R&DD, including the BHES JDA, and general and administrative activities. InThis 2023,change wewas experienced an increase in costs associated with achieving and maintaining our public company status. Excluding the one-time costs associated with becoming a public company, our operating expenses have been increasing over timeprimarily due to growinghigher headcountproject development costs, R&D costs, including costs incurred under the BHES JDA and advancingvalidation testing campaigns at our technologyLa towardsPorte commercialization.Demonstration As we continue to add employeesFacility, and furtherthe advanceexpansion ourof technologythe towardsCompany’s commercialization,corporate weinfrastructure throughout 2024 and into 2025. We expect our cash used in operating and investing activities to continueincrease to increasesignificantly before we start to generate any material cash inflows from our operations.
During the year ended December 31, 2025, net cash used in investing activities increased by $159.9 million compared to the year ended December 31, 2024. Our cash used in investing activities for the year ended December 31, 2025 primarily reflects the maturity of the Company’s certificate of deposit and the reinvestment of those funds into available-for-sale securities, along with capital expenditures related to the La Porte Demonstration Facility and SN1 during the period in which costs were capitalized. Cash used in investing activities for the year ended December 31, 2024 primarily reflects the initial investments in available-for-sale securities as well as capital expenditures related to Project Permian and the La Porte Demonstration Facility during that period.
During the year ended December 31, 2024, net cash used in investing activities decreased by $65.0 million compared to the combined periods from January 1, 2023 through June 7, 2023 (Predecessor) and June 8, 2023 through December 31, 2023 (Successor). Our cash used in investing activities for the year ended December 31, 2024 primarily reflects the investment of a portion of the proceeds received from the PIPE financing in investment grade fixed income securities and capital expenditures related to our Demonstration Plant and long-lead items for our first utility scale plant.
Our cash from financing activities decreased by $5 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. Cash used in financing activities for the year ended December 31, 2024 consists of finance lease obligation payments, income tax payments on vested share-based compensation awards, and issuance of Class A Common Stock under share-based compensation plans.
Our cash from financing activities decreased by $340 million for the year ended December 31, 2024 compared to the combined periods from January 1, 2023 through June 7, 2023 (Predecessor) and June 8, 2023 through December 31, 2023 (Successor). The decrease was driven by proceeds from the PIPE Financing, less transaction expenses and shareholder redemptions during 2023. In addition, during the fourth quarter of 2024, the Company made a tax-related partnership distribution of $4.8 million.
We hold a lease for the approximately 218,900 square feet of land under the La Porte Demonstration PlantFacility from Air Liquide at a rate of one dollar per year. In addition, we have an oxygen supply agreement with the lessor to supply oxygen to the La Porte Demonstration Plant.Facility. The lease expires on the earlier of (i) January 1, 2031 and (ii) the termination of our oxygen supply agreement with the lessor. The term of the oxygen supply agreement expires on January 1, 2030 with automatic 12-month renewal terms. The oxygen supply agreement may be terminated by us or by the lessor upon 24 months’ written notice prior to the expiration date of its current term. The underlying lease requires the removal of all equipment and the obligation to restore the land to post-clearing grade level, which has resulted in the recognition of an asset retirement obligation liability of $3.3$3.6 million and $2.1$3.3 million as of December 31, 20242025 and 2023,2024, respectively. During the year ended December 31, 2024, the Company made a $996 thousand revision to the estimate related to this asset retirement obligation.
The Company leases corporate office space in Durham, North Carolina, and Houston, Texas. The lease for the Company’s corporate office space in Houston, Texas commenced July 11, 2024. The Company also executed aleases land leasein agreementWest withTexas for Project Permian from a subsidiary of Occidental Petroleum,Petroleum. Additionally, the Company leases two office trailers at the La Porte Demonstration Facility, as well as a related party, on March 8, 2024 for landwarehouse, in WestLa Porte, Texas. The land lease commenced on December 1, 2024.
As of December 31, 2025, future minimum lease payments attributable to our operating and finance lease arrangements are expected to equal $4.4 million and $0.1 million, respectively.
On June 26, 2024, the Company entered into a lease agreement for two office trailers at the Demonstration Plant in La Porte, Texas, with an effective date of September 1, 2024. The lease has a term of 24 months and contains a purchase option whereby the Company may purchase the trailers at the end of the lease term; therefore, the Company classified the lease as a finance lease.
During August 2023, we agreed with our landlord to terminate our prior office space agreement in Durham, North Carolina ahead of its scheduled term and enter into a lease for a new office space, also located in Durham, North Carolina. The lessors of both office spaces have common ownership and are considered related parties to each other; therefore, the simultaneous termination of the old lease and execution of the new lease represent a single transaction accounted for as a modification of the original office lease, which resulted in the re-measurement of the original lease over its amended term. On October 6, 2023, the Company formally relocated to the office space governed by the new lease arrangement. As of December 31, 2024, future minimum lease payments attributable to our operating and finance lease arrangements are expected to equal $3.4 million and $331 thousand, respectively.
WeUnder havethe BHES JDA, we committed to funding a portion of the remaining development costs incurred under the BHES JDA through a combination of cash and equity. The BHES JDA’s total contract value iswas $140 million.million as of December 31, 2025. As of December 31, 2024,2025, we recognized approximately $31.9$62.0 million of inception-to-date cash expenses and approximately $31.9$62.0 million of inception-to-date share-based expenses related to the BHES JDA. The share-based expense excludes $8.0 million of realized loss on share issuance. In addition, the Company may be required to make additional cash payments to BHES during periods when the volume-weighted average price of our Class A Common Stock is less than $4.00 per share in the 10 trading days preceding applicable quarterly share issuances under the terms of the BHES JDA. As of December 31, 2025, the Company had $2.8 million in current liabilities payable to related parties on the consolidated balance sheet related to the BHES JDA Make-Whole Payment. For the year ended December 31, 2025, the Company incurred expenses of $7.4 million related to the BHES JDA Make-Whole Payments.
In January 2026, we agreed to suspend the BHES JDA from an until March 31, 2026 (subject to further extension upon agreement from both parties) while Baker Hughes evaluates the proposed development and commercialization of industrial-scale plants utilizing Oxy-Combustion Cycle technology. Under the terms of the suspension, we are obligated to pay any invoiced costs incurred in the fourth quarter of 2025 and any costs resulting or arising from the suspension, up to a $3.0 million cap.
As of December 31, 2024,2025, we have grosscommitted to purchase commitments of $134 million related to certain components of industrial machinery for use at our La Porte Demonstration PlantFacility and at our first utility-scaleclean plant.firm Wepower recognizehub portionsat the Project Permian site in West Texas. The total gross commitments totaled $79.6 million. As of December 31, 2025, there was $63.6 million remaining related to these commitments on our balance sheet as portions become payable per contract milestones.commitments.
Impairment of Long-Lived Assets
We believe evaluating the recoverability of long-lived assets is a critical accounting estimate because it requires management to make judgments and assumptions regarding future trends and events. When events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable, the Company prepares projections of the undiscounted future cash flows expected to be generated from the underlying asset group. If the projections indicate that the underlying asset grouping is not expected to be recoverable, the estimated fair value of the asset group is determined. An impairment loss is recognized based on the difference between the carrying value of the asset group and its estimated fair value. The loss is allocated to the long-lived assets of the group on a pro-rata basis using the relative carrying amounts of those assets. During the year ended December 31, 2025, we recognized impairment losses of $1,095.8 million related to our long-lived assets. We did not recognize any impairment losses on long-lived assets during the year ended December 31, 2024.
In January 2026, we agreed to suspend the BHES JDA until March 31, 2026 (subject to further extension upon agreement from both parties) while Baker Hughes evaluates the proposed development and commercialization of industrial-scale plants utilizing Oxy-Combustion Cycle technology. During the suspension period, the Company and Baker Hughes will engage in negotiations regarding potential amendments to the BHES JDA. The outcome of these negotiations related to the future development and commercialization of the industrial-scale Oxy-Combustion Cycle technology may adversely impact the recoverability of the carrying value of the asset group associated with the Company’s Oxy-Combustion Cycle technology.
Private Placement Warrants
Business Combinations
We account for business acquisitions in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. We measure the cost of an acquisition as the aggregate of the acquisition date fair values of the assets acquired and liabilities assumed and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. We record goodwill for the excess of (i) the total costs of acquisition, fair value of any non-controlling interests and acquisition date fair value of any previously held equity interest in the acquired business over (ii) the fair value of the identifiable net assets of the acquired business.
We believe accounting for business combinations is a critical accounting estimate because the acquisition method of accounting requires management to exercise significant judgment and make estimates and assumptions based on available information regarding the fair values of the elements of a business combination as of the date of acquisition, including the fair values of identifiable intangible assets. We refine these estimates over a one-year measurement period, to reflect any new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. If we are required to retroactively adjust provisional amounts that we have recorded for the fair value of assets and liabilities in connection with an acquisition, these adjustments could materially impact our results of operations and financial position in the period the amounts are finalized.
What changed in the latest 10-Q
Risk Factors
New heading “We may be unable to negotiate and enter into binding power offtake agreements on acceptable terms, on our anticipated timeline, or at all, which would adversely affect our ability to reach a final investment decision and obtain project financing for Project Permian Phase I.”
New heading “Demand for the power we intend to sell is concentrated in a limited category of large-load customers whose electricity requirements depend on capital investment cycles that may not continue at current levels.”
New heading “Our business strategy has changed substantially, and our project configurations may include natural gas generation deployed in advance of, or without, carbon capture.”
New heading “We may be unable to realize any value from our Oxy-Combustion Cycle intellectual property and the La Porte Demonstration Facility, which have been fully impaired.”
New heading “Our pursuit of co-located large-load projects exposes us to execution risks that are new to us and to governmental intervention in Texas, any of which may delay, restrict, or prevent our projects.”
New heading “Grid interconnection and related regulatory processes, including ERCOT’s recently adopted batch framework for interconnecting large loads, may delay or restrict our projects.”
New heading “We depend on the availability, cost and delivery timing of power generation equipment and related long-lead equipment.”
New heading “We do not have a binding agreement for the post-combustion carbon capture technology, which is an important pillar of our long-term strategy.”
New heading “Our project economics depend in part on carbon capture tax credits, which are subject to availability, transferability, monetization and other restrictions.”
New heading “Customers may not attribute value to carbon capture, and regulatory developments may reduce requirements that would otherwise support demand for lower-carbon generation.”
New heading “We compete for customers, equipment and capital with substantially larger and better-capitalized participants, including participants pursuing gas generation with carbon capture.”
New heading “We may be unable to obtain the capital required to develop our projects, and our share price, public float, and changed asset base may limit our access to capital, result in substantial dilution, and affect the continued listing of our securities.”
New heading “We are subject to the risk of becoming an investment company.”
New heading “We are subject to a pending securities class action and a related stockholder derivative action, and may become subject to additional litigation or regulatory proceedings, any of which could result in substantial costs and divert management’s attention.”
Largest changes
“We are subject to a pending securities class action and a related stockholder derivative action, and may become subject to additional litigation or regulatory proceedings, any of which could result in substantial costs and divert management’s attention.”see in full comparison
“Our Class A Common Stock and warrants are listed on the New York Stock Exchange and are subject to its continued listing standards, including a requirement that the average closing price of a listed security not fall below $1.00 over a consecutive 30 trading-day period. The market price of our Class A Common Stock has been volatile. …”see in full comparison
“We are an energy technology and project development company. We are not primarily engaged in the business of investing, reinvesting or trading in securities, and we do not hold ourselves out as being engaged in those activities; our historical development, our public representations and the activities of our officers and directors support the conclusion that we are an operating company. …”see in full comparison
“We are pursuing the development of power generation projects for co-located large-load facilities such as data centers. Activities of this type are new to us and may expose us to risks we have not previously borne including land acquisition and site-control risk, construction and counterparty risk, contractual performance risk, regulatory risk, and additional capital requirements at a time when we do not have sufficient committed capital to fund Project Permian Phase I through commercial operation. …”see in full comparison
“Litigation of this type is expensive, may continue for years, and diverts the attention of management and other personnel from our business, regardless of outcome. An unfavorable ruling or a settlement could require us to pay substantial amounts, and our insurance may be insufficient, subject to significant retentions, or unavailable for some or all of these matters. We also have indemnification and expense-advancement obligations to our current and former officers and directors. …”see in full comparison
“We intend to conduct our business so that we are not deemed an investment company, but there can be no assurance that we will succeed. If we were deemed an investment company, we would be required to register under the ICA, obtain exemptive relief, or modify our business and organizational structure to fall outside the definition. …”see in full comparison
Full comparison: every changed paragraph (38)
As a smaller reporting company, we are not required to provide the information called for by this Item. We are nonetheless providing the risk factors set forth below, which reflect risks associated with recent developments in our business and strategy. These risk factors supplement and, to the extent inconsistent, supersede the risk factors disclosed in Part I, Item 1A of our Annual Report, which you should also carefully consider. The risk factors below are not a complete statement of the risks we face.
We may be unable to negotiate and enter into binding power offtake agreements on acceptable terms, on our anticipated timeline, or at all, which would adversely affect our ability to reach a final investment decision and obtain project financing for Project Permian Phase I.
We are engaged in a process intended to result in one or more power offtake agreements for Project Permian Phase I. Discussions, indications of interest, requests for proposals, term sheets, memoranda of understanding and similar instruments do not constitute binding commitments unless and until definitive agreements are executed. If we are unable to execute binding power offtake agreements at prices and on terms sufficient to support project economics and financing, our final investment decision, construction commencement, and commercial operation dates could be delayed or may not occur, and our liquidity and capital requirements would be adversely affected. We also expect that any power offtake agreement we enter into would require us to provide substantial reciprocal credit support, in the form of cash, letters of credit or guarantees, scaled to the capacity committed and maintained through development, construction and operations, which would further reduce the liquidity available to us for other purposes.
Demand for the power we intend to sell is concentrated in a limited category of large-load customers whose electricity requirements depend on capital investment cycles that may not continue at current levels.
Our offtake process for Project Permian Phase I is directed primarily at data center developers, computing infrastructure providers and other large-load customers whose electricity requirements reflect sustained capital investment in computing capacity. That investment is concentrated among a limited number of counterparties and is discretionary. A reduction, deferral or geographic reallocation of capital spending by these counterparties (whether resulting from changes in expected returns on computing investment, financing conditions, technological developments that reduce power intensity per unit of computing output, siting, permitting or community opposition constraints, regulatory or governmental restrictions on the development or interconnection of data centers, including in ERCOT, or general economic conditions) could reduce the number of potential offtakers, extend negotiation timelines, or reduce the pricing, contract tenor or capacity commitments available to us. Because we expect to rely on long-term offtake agreements to support project-level financing, the concentration, contract tenor and creditworthiness of our counterparties will also affect our ability to obtain financing on acceptable terms. We may be unable to identify alternative customers for capacity developed in reliance on this demand.
Our business strategy has changed substantially, and our project configurations may include natural gas generation deployed in advance of, or without, carbon capture.
We have repositioned our business to focus on natural gas power generation for co-located large-load customers, initially without carbon capture, and we have indefinitely suspended development of the Oxy-Combustion Cycle. We do not currently expect the initial phase of Project Permian to include carbon capture, and any later deployment of carbon capture would depend on definitive technology, customer and financing arrangements. This repositioning reflects, among other things, current market conditions in which many prospective customers prioritize the speed and quantity of reliable power over carbon abatement and may be unwilling to pay a premium for lower-carbon power in the near term. The configuration, capacity and carbon capture scope of each phase of our projects, including Project Permian Phase I, will depend on our ability to in-license any necessary post-combustion carbon capture technology, customer requirements, commercial arrangements, equipment availability and financing, and may include natural gas generation deployed in advance of, or without, carbon capture. Our ability to deploy carbon capture technology at our projects is dependent on our ability to negotiate and enter into definitive commercial arrangements to license post-combustion carbon capture technology from Entropy or another provider. If we are unable to reach such definitive agreements, we may be unable to offer carbon capture at our projects, which would materially and adversely affect our business prospects.
We may be unable to realize any value from our Oxy-Combustion Cycle intellectual property and the La Porte Demonstration Facility, which have been fully impaired.
During the second quarter of 2026, we recognized a full impairment of the Developed Technology Asset Group, and those assets are carried at no value. We have no current plans to resume development of the Oxy- Combustion Cycle, and any recovery of value would depend on a sale or other disposition of all or part of the Oxy-Combustion Cycle intellectual property and our improvements, equipment, and lease interests at the La Porte Demonstration Facility. We have not entered into any binding agreement for such a transaction, Baker Hughes' exclusive rights with respect to the La Porte Demonstration Facility remain in effect and may limit the terms or universe of potential counterparties, and there can be no assurance that any transaction will be agreed or consummated, or as to its terms or timing. In addition, we have revised the expected decommissioning timing for the La Porte Demonstration Facility to June 2027, and the actual timing and cost of decommissioning, or the treatment of those obligations in any disposition, may differ from our current estimates.
Our pursuit of co-located large-load projects exposes us to execution risks that are new to us and to governmental intervention in Texas, any of which may delay, restrict, or prevent our projects.
We are pursuing the development of power generation projects for co-located large-load facilities such as data centers. Activities of this type are new to us and may expose us to risks we have not previously borne including land acquisition and site-control risk, construction and counterparty risk, contractual performance risk, regulatory risk, and additional capital requirements at a time when we do not have sufficient committed capital to fund Project Permian Phase I through commercial operation. If a co-located facility requires grid-supplied power, whether as a supplement or as backup, we or our customer would be subject to large-load interconnection processes and to competition for available capacity, either of which could delay the project. We may also face competition for sites, interconnection positions, and end users from parties with substantially greater resources and relevant experience. We currently hold only a portion of the land rights required for the contemplated co-located configuration and broader build-out at Project Permian, and we have not obtained the additional land or development rights that configuration would require. If we do not obtain those rights on acceptable terms, Project Permian may be limited in size, delayed, reconfigured or not developed. To preserve schedule, we may also commit material capital to power generation equipment and related engineering before binding offtake, land, partner and project-financing arrangements are in place, and if a project does not proceed, a portion of those expenditures may not be recoverable. If these activities are unsuccessful, we could incur costs without corresponding benefit, and our results of operations, liquidity, and project timelines could be materially and adversely affected.
These processes are also subject to intervention by Texas state officials. On August 3, 2026, the Governor of Texas directed the Public Utility Commission of Texas and ERCOT to conduct a comprehensive verification and audit of all data center projects advancing through ERCOT’s interconnection process before any additional data center projects are approved to move forward, and directed that any project failing to comply with applicable requirements be denied connection to the Texas grid. The directive requires the collection of information from each data center project regarding public financial assistance received or expected, projected electricity consumption and any on-site generation, projected water consumption and cooling technology, measures to mitigate impacts on neighboring communities, and project ownership and control. The Governor has also indicated that he intends to work with the Texas legislature to address concerns regarding data centers.
We cannot predict the scope, duration, or outcome of this process, the requirements the Public Utility Commission of Texas or ERCOT may adopt in response, or any resulting legislation. The process may delay or prevent the interconnection of data centers and other large loads that we expect to serve, extend the timelines on which prospective customers are prepared to commit to power offtake, alter the criteria on which customers select sites, or reduce the number of prospective customers able to proceed in ERCOT. Any of these outcomes could delay or prevent our reaching a final investment decision for Project Permian Phase I, delay or prevent project-level financing, and adversely affect our business, financial condition, results of operations, and prospects.
Grid interconnection and related regulatory processes, including ERCOT’s recently adopted batch framework for interconnecting large loads, may delay or restrict our projects.
Our projects may require timely interconnection to the ERCOT grid and, for behind-the-meter configurations, may depend on the large-load interconnection processes applicable to co-located loads, whether those loads are developed, owned, or contracted for by our customers, our partners, or us. These processes are new, evolving, and subject to eligibility criteria, timelines, financial-security requirements, and allocation decisions outside of our control. Delays or adverse outcomes could delay project development, increase project costs, reduce the attractiveness of our projects to customers, and adversely affect our results.
We depend on the availability, cost and delivery timing of power generation equipment and related long-lead equipment.
Manufacturer backlogs for power generation equipment, including gas turbines, and related equipment currently extend multiple years. Although we have contracted for certain turbine equipment for Project Permian Phase I, changes in delivery schedules, cost escalation, supplier performance or the loss of reserved manufacturing slots could delay our projects and increase their cost, and replacement equipment may not be available on acceptable terms or timelines, or at all. Prevailing market prices for equipment comparable to the units we have contracted have increased materially since we contracted for them, and any additional equipment we procure is likely to cost more than the equipment we hold.
We do not have a binding agreement for the post-combustion carbon capture technology, which is an important pillar of our long-term strategy.
Our prior letter of intent with Entropy has expired by its terms and has not been replaced, and our discussions with Entropy are continuing on a non-binding basis. Either party may discontinue negotiations at any time, and any framework we agree is not expected to provide for exclusivity or an equity investment by us in Entropy. We have not agreed on the structure, scope, economics or timing of any definitive arrangement, and any definitive arrangement may require capital commitments, licensing fees or other payments in amounts and on timing that have not been determined. If we are unable to enter into definitive agreements on commercially acceptable terms, we would need to identify and qualify an alternative technology provider, which would require additional time and expense, may not be available on terms or timelines supporting our project schedules, and could prevent or delay carbon capture in later phases.
Our project economics depend in part on carbon capture tax credits, which are subject to availability, transferability, monetization and other restrictions.
The economics of projects incorporating carbon capture depend in part on federal tax credits, including the credit under Section 45Q of the Internal Revenue Code, the value, transferability and monetization of which are subject to statutory and regulatory requirements, including restrictions relating to foreign entities of concern. The credit value available with respect to any project will depend on, among other things, when the applicable facility or equipment is placed in service, whether prevailing wage and apprenticeship requirements are satisfied, and the manner in which captured CO₂ is stored, used, or otherwise disposed of, and legislation enacted in 2025 that increased certain credit values, including for CO₂ used in enhanced oil recovery, may be amended or repealed. If such credits are unavailable, reduced, restricted or cannot be efficiently monetized, our project economics and offtake pricing could be adversely affected.
Customers may not attribute value to carbon capture, and regulatory developments may reduce requirements that would otherwise support demand for lower-carbon generation.
Our long-term strategy contemplates that some customers may eventually value, and pay for, power generated with carbon capture. Our near-term strategy does not assume that customers will pay a premium for lower-carbon power, and the initial phase of Project Permian is not currently expected to include carbon capture. Recent development activity in our target markets has emphasized speed to power, available capacity and price, and certain large purchasers of electricity have modified or extended timelines associated with previously announced emissions commitments. In addition, federal greenhouse gas emission standards applicable to fossil fuel-fired electric generating units, and related greenhouse gas reporting requirements, are subject to pending regulatory action. If applicable emissions requirements are reduced or eliminated and customers do not independently attribute value to carbon capture, pricing available for lower-carbon power may not exceed pricing for conventional generation by an amount sufficient to recover the incremental capital and operating costs of carbon capture. In that event, we may deploy generation without carbon capture, defer carbon capture investment, or realize returns below those we currently anticipate.
We compete for customers, equipment and capital with substantially larger and better-capitalized participants, including participants pursuing gas generation with carbon capture.
Following the repositioning of our business, we compete directly with integrated energy companies, independent power producers, equipment manufacturers and developers pursuing natural gas generation for large-load customers, including projects incorporating carbon capture. Many of these participants have greater financial resources, lower costs of capital, established customer relationships, existing carbon dioxide transportation and sequestration infrastructure, priority access to constrained equipment manufacturing capacity, and the ability to commit capital in advance of securing offtake. We may be unable to compete successfully on schedule, price or credit terms.
We may be unable to obtain the capital required to develop our projects, and our share price, public float, and changed asset base may limit our access to capital, result in substantial dilution, and affect the continued listing of our securities.
Following the impairment of the Developed Technology Asset Group, our assets consist primarily of cash, cash equivalents and investments, and deposits on gas turbine equipment for Project Permian Phase I. We have no revenue, no binding power offtake agreement, and have not made a final investment decision for Project Permian Phase I, and we do not have sufficient committed capital to fund the project through commercial operation.
Our ability to raise equity capital depends on the market price of our Class A Common Stock and on the aggregate market value of our common equity held by non-affiliates. If and for so long as that value is below $75 million as of the applicable measurement dates under the instructions to Form S-3, the amount of securities we may sell in primary offerings under an effective shelf registration statement during any 12-month period is limited to a portion of that value. A decline in the market price of our Class A Common Stock would further reduce the capital available to us through such offerings, increase the dilution to existing stockholders resulting from any equity issuance, and could make equity financing unavailable on acceptable terms or at all. In addition, share-settled payments under the BHES JDA made when the ten-day volume-weighted average price of our Class A Common Stock is below $4.00 per share require incremental cash payments, as described in Note 12.
Our Class A Common Stock and warrants are listed on the New York Stock Exchange and are subject to its continued listing standards, including a requirement that the average closing price of a listed security not fall below $1.00 over a consecutive 30 trading-day period. The market price of our Class A Common Stock has been volatile. If we fail to satisfy applicable continued listing standards and do not cure the deficiency within the applicable period, our securities could be suspended from trading and delisted, which would further impair our access to capital and reduce the liquidity of our securities.
We are subject to the risk of becoming an investment company.
We are an energy technology and project development company. We are not primarily engaged in the business of investing, reinvesting or trading in securities, and we do not hold ourselves out as being engaged in those activities; our historical development, our public representations and the activities of our officers and directors support the conclusion that we are an operating company. Under the Investment Company Act of 1940, as amended (the “ICA”), however, a company may be deemed an investment company if the value of its investment securities exceeds 40% of its total assets (excluding government securities and cash items) and no exception or safe harbor applies. Pending its use in our primary business, we invest cash, including cash obtained in connection with our 2023 merger, in highly liquid available-for-sale securities, including corporate bonds, to conserve capital and liquidity, and as a result of recently recognized impairment losses those securities constitute a larger portion of our total assets than previously. To maintain compliance with the ICA, we monitor the value of our investments, and we may need to divest securities, make investments that are less advantageous than if we did not have ICA concerns, or forgo otherwise desirable investments or transactions.
Rule 3a-2 under the ICA provides a one-year grace period for a transient investment company that has a bona fide intent to be engaged primarily in a non-investment business, but the grace period is available no more than once every three years and may not be available when we seek to rely on it, and reliance on it could require us to dispose of securities or limit our investments, joint ventures or other activities.
We intend to conduct our business so that we are not deemed an investment company, but there can be no assurance that we will succeed. If we were deemed an investment company, we would be required to register under the ICA, obtain exemptive relief, or modify our business and organizational structure to fall outside the definition. Registration would subject us to substantial regulation concerning management, operations, transactions with affiliates and portfolio composition, which would significantly affect our ability to operate as contemplated and could have a material adverse effect on our business, financial condition and results of operations. If we failed to register when required, we could be subject to monetary penalties or injunctive relief in an action brought by the SEC, and we could be unable to enforce contracts with third parties.
We are subject to a pending securities class action and a related stockholder derivative action, and may become subject to additional litigation or regulatory proceedings, any of which could result in substantial costs and divert management’s attention.
We are a defendant in a putative federal securities class action and a related stockholder derivative action, in each case arising from alleged misstatements concerning the timing and costs of developing Project Permian. These matters are described in Part II, Item 1, “Legal Proceedings,” and in Note 14 to our condensed consolidated financial statements. We intend to defend these matters vigorously, but we cannot predict their outcome, and we are unable to estimate a reasonably possible loss or range of loss.
Litigation of this type is expensive, may continue for years, and diverts the attention of management and other personnel from our business, regardless of outcome. An unfavorable ruling or a settlement could require us to pay substantial amounts, and our insurance may be insufficient, subject to significant retentions, or unavailable for some or all of these matters. We also have indemnification and expense-advancement obligations to our current and former officers and directors. The underlying events, these actions, or our disclosures regarding them could give rise to additional litigation or to inquiries or investigations by regulatory authorities.
Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also materially and adversely affect our business, financial condition, results of operations, and prospects.
As a smaller reporting company, we are not required to provide the information called for by this Item. However, for a discussion of the material risks, uncertainties and other factors that could have a material effect on us, please refer to Part I, Item 1A. “Risk Factors” in our Annual Report.
Management's Discussion & Analysis (MD&A)
New heading “Results of Operations”
New heading “Comparison of the Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025”
New heading “General and administrative”
New heading “Sales and marketing”
New heading “Research and development”
New heading “Project development”
New heading “Impairment and other charges”
New heading “Depreciation, amortization, and accretion”
New heading “Interest income, net”
New heading “Change in Earnout Shares liability and Warrant liability”
New heading “Change in Tax Receivable Agreement liability”
New heading “Income tax (expense) benefit”
New heading “Net loss attributable to non-controlling interests”
New heading “Equipment Commitments Under Consideration”
Removed heading “Joint Development Agreement”
Largest changes
We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including, but not limitedsee in full comparisonto,to: our ability to negotiate and enter into binding power offtake agreements at prices and on terms sufficient to support project financing and a FID; the timing and outcome of grid interconnection processes, including ERCOT’s recently adopted batch framework for large-load interconnection and the verification and audit of data center projects directed by the Governor of Texas on August 3, 2026; the timing and outcome of air permitting for the generation configuration we ultimately select, the basis for which has not been confirmed and which may change if that configuration changes; the availability, cost, and delivery timing of gas turbines and related long-lead equipment, for which manufacturer backlogs currently extend multiple years; our ability to license PCC technology fromEntropy,Entropy or other providers; our ability to identify, acquire, or develop co-located load resources, including through land, interconnection queue positions, options, or co-development arrangements, and to obtain the related regulatory and interconnection approvals; potential supply chain issues, including as a result of tariffs or cost escalation; changes in tax policies and other incentives supporting carbon capture, including the federal tax credit available under Section 45Q of the Internal Revenue Code, as enhanced by the Inflation Reduction Act of 2022 and further amended by the One Big Beautiful Bill Act of 2025 (which, for facilities or equipment placed in service after July 4, 2025, provides credit values of up to $85 per metric ton for qualified carbon oxide used as a tertiary injectant in enhanced oil or natural gas recovery or otherwise utilized, in parity with secure geological storage), the value, transferability, and monetization of which are subject to evolving statutory and regulatory requirements; our access to the capital needed to finance the development of ourprojects,projects; and development of competing energy technologies sooner or at a lesser cost than ourproducts.products, including natural gas combined-cycle plants without carbon capture, renewable generation paired with battery energy storage systems and small modular nuclear reactors, many of which are being pursued by developers with greater financial resources and established customer relationships. Supply chain issues related to the manufacturing and transportation of key equipment, including as a result of tariffs imposed by the U.S. or other countries or other trade barriers, measures, or conflicts, including the ongoing conflicts in the Middle East, may lead to a delay in our commercialization efforts, which could impact our results of operations, financial condition and prospects. Also, currency fluctuations, inflation,and tariffstariffs, and other trade barriers, measures or conflicts may significantly increase freight charges, raw material costs and other expenses associated with our business, and such increased costs could materially and adversely affect our results of operations, financial condition and prospects.
“During the first quarter of 2025, the Company assessed its goodwill for impairment due to a change in the Company’s business plan and related sustained decrease in the Company’s market capitalization. As a result, the Company fully impaired goodwill for a loss of $359.8 million. Also in the first quarter of 2025, the Company expensed $56.1 million of costs associated with the construction of SN1 as management initiated a value engineering process to assess the project’s feasibility and optimize its design and temporarily paused further long-lead equipment releases.”see in full comparison
“The Company fully impaired goodwill and recognized an impairment of $359.8 million during the three months ended March 31, 2025 due to a change in the Company’s business plan and related sustained decrease in the Company’s market capitalization. Additionally, the Company expensed costs of $56.1 million associated with the construction of SN1 as management initiated a value engineering process to assess the project’s feasibility and optimize its design and temporarily paused further long lead equipment releases.”see in full comparison
“We are a pre-revenue, development-stage company. Because our historical spending was primarily directed toward the Oxy-Combustion Cycle, the La Porte Demonstration Facility and SN1, none of which we are actively developing today, our historical results may not be indicative of future results. The impairment of the Developed Technology Asset Group, suspension of the BHES JDA, workforce reductions and changes in project development activities materially affect comparability between periods.”see in full comparison
“Comparison of the Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025”see in full comparison
Full comparison: every changed paragraph (74)
The following management’s discussion and analysis (“MD&A”) provides information that management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition and includes forward-looking statements that involve risks, uncertainties and assumptions, including those described in “Cautionary Note Regarding Forward-Looking Statements” included in the forepart of this Quarterly Report on Form 10-Q (our “Quarterly Report”), in Part II, Item 1A Risk Factors in this Quarterly Report, and included in Part I, Item 1A Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025 (our “Annual Report”), as filed with the SEC on March 9, 2026.
The following MD&A should be read in conjunction with our condensed consolidated financial statements and related notes included in Part 1,I, Item 1 in this Quarterly Report and our audited consolidated financial statements and related notes included in our Annual Report.
We are an energy technology and project development company focused on the development of natural gas power generation projects. Historically, our sole business has been the development of a novel oxy-combustion power generation system designed to produce reliable and affordable electricity from natural gas while capturing virtually all atmospheric emissions. As part of our strategic shift to meet growing market demand for reliable power on accelerated timelines, we have broadened our development activities to include traditional gas power generation equipment and PCC solutions. Our near-term commercial strategy prioritizes the rapid deployment of natural gas power generation to serve large-load customers, initially without carbon capture. We are engaged in ongoing negotiations with Entropy regarding one or more potential commercial arrangements relating to the deployment of its PCC Technology for projects we develop. The parties’ prior letter of intent has expired by its terms and has not been replaced, no definitive agreement has been executed, and either party may discontinue negotiations at any time. There can be no assurance that definitive agreements with Entropy will be executed on any particular terms, within any particular timeframe, or at all. We are not contractually committed to any single technology provider, and we continue to evaluate technology, partnership and project structures that support that strategy. We undertake no obligation to provide updates regarding the status of these negotiations except as required by applicable law. See Part II, Item 1A “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.”
Under our current strategy, our projects are expected to generate revenue from the sale of the products and attributes they produce, principally electricity and, where carbon capture is deployed, captured CO₂ and associated environmental attributes. If and to the extent carbon capture is deployed at Project Permian Phase I or any subsequent phase, captured CO₂ is intended to be sold or delivered for sequestration in connection with enhanced oil recovery operations in the Permian Basin or for other geologic storage. We have not entered into any definitive agreement for the sale, transportation, or sequestration of CO₂, and there can be no assurance that we will enter into any such agreement on acceptable terms or at all.
Beginning in the fourth quarter of 2025 and continuing through 2026, we repositioned our business around the commercial deployment of natural gas power generation equipment designed to accommodate post-combustion carbon capture technology in later phases. Currently, we do not have any plans to resume development of the Oxy-Combustion Cycle, nor do we expect the initial phase of Project Permian Phase I to include carbon capture. Consistent with these current plans, we have suspended development activities under the BHES JDA, we have adjusted our workforce in areas affected by these changes, and we have recognized a full impairment of the related developed technology assets (see Note 5 to our condensed consolidated financial statements).
We are an energy technology and project development company focused on delivering low-carbon gas power solutions. Historically, our sole business has been the development of a novel oxy-combustion power generation system designed to produce reliable and affordable electricity from natural gas while capturing virtually all atmospheric emissions (the “Oxy-Combustion Cycle”). Recently, we have broadened the scope of our business to include the generation of power using natural gas turbines paired with post-combustion carbon capture (“PCC”) technology that we intend to license from Entropy, Inc. (“Entropy”).
We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including, but not limited to,to: our ability to negotiate and enter into binding power offtake agreements at prices and on terms sufficient to support project financing and a FID; the timing and outcome of grid interconnection processes, including ERCOT’s recently adopted batch framework for large-load interconnection and the verification and audit of data center projects directed by the Governor of Texas on August 3, 2026; the timing and outcome of air permitting for the generation configuration we ultimately select, the basis for which has not been confirmed and which may change if that configuration changes; the availability, cost, and delivery timing of gas turbines and related long-lead equipment, for which manufacturer backlogs currently extend multiple years; our ability to license PCC technology from Entropy,Entropy or other providers; our ability to identify, acquire, or develop co-located load resources, including through land, interconnection queue positions, options, or co-development arrangements, and to obtain the related regulatory and interconnection approvals; potential supply chain issues, including as a result of tariffs or cost escalation; changes in tax policies and other incentives supporting carbon capture, including the federal tax credit available under Section 45Q of the Internal Revenue Code, as enhanced by the Inflation Reduction Act of 2022 and further amended by the One Big Beautiful Bill Act of 2025 (which, for facilities or equipment placed in service after July 4, 2025, provides credit values of up to $85 per metric ton for qualified carbon oxide used as a tertiary injectant in enhanced oil or natural gas recovery or otherwise utilized, in parity with secure geological storage), the value, transferability, and monetization of which are subject to evolving statutory and regulatory requirements; our access to the capital needed to finance the development of our projects,projects; and development of competing energy technologies sooner or at a lesser cost than our products.products, including natural gas combined-cycle plants without carbon capture, renewable generation paired with battery energy storage systems and small modular nuclear reactors, many of which are being pursued by developers with greater financial resources and established customer relationships. Supply chain issues related to the manufacturing and transportation of key equipment, including as a result of tariffs imposed by the U.S. or other countries or other trade barriers, measures, or conflicts, including the ongoing conflicts in the Middle East, may lead to a delay in our commercialization efforts, which could impact our results of operations, financial condition and prospects. Also, currency fluctuations, inflation, and tariffstariffs, and other trade barriers, measures or conflicts may significantly increase freight charges, raw material costs and other expenses associated with our business, and such increased costs could materially and adversely affect our results of operations, financial condition and prospects.
We are developing our first commercial power generation project at the Project Permian site in West Texas. The project is being sized to accommodate up to approximately one gigawatt of power generation capacity, to be developed in phases, with the configuration, carbon capture scope and ancillary solutions for each phase dependent on customer requirements, commercial arrangements, equipment availability, and financing, and potentially including natural gas generation deployed in advance of, or without, carbon capture. Based on current market demand and the commercial feedback we have received, we do not expect to deploy post-combustion carbon capture in the initial phase of Project Permian. Development of the contemplated capacity would also require additional land and development rights beyond those we currently hold. We intend for the first phase of Project Permian to utilize gas-driven power generation equipment, including gas turbines; the carbon capture configuration of the project, including the scope and timing of any PCC deployment, will be determined in connection with definitive commercial arrangements and financing. On November 12, 2025, we entered into an agreement to purchase two modular gas turbine generator sets with nominal gross power of approximately 30 megawatts each for use in Project Permian Phase I.
We lease the Project Permian Phase I site from a subsidiary of Occidental Petroleum, which is a significant stockholder and a related party of the Company, under a lease that became effective December 1, 2024 and has a 60-month initial term, and that includes an option to purchase the leased premises.Our leasehold provides the acreage required to site the power generation equipment we have contracted to purchase and to support the initial phase of the project as currently configured, and the site is located within a larger ranch owned by affiliates of Occidental Petroleum. Developing the project beyond the initial phase would require additional land rights from those affiliates, which we have not obtained and which would be subject to negotiation and to their consent, and a co-located configuration would require additional or different site and land-use arrangements that we have not obtained. The Project Permian site is being designed with flexibility to meet potential customers’ needs. The project is being evaluated for the potential addition of carbon capture in later phases, which if deployed may be installed either concurrent with or subsequent to the installation of the accompanying gas power generation equipment. The engineering and cost of that capability have not been finalized. Carbon capture would be deployed subject to customer requirements, the availability of post-combustion carbon capture technology on acceptable terms, the availability of arrangements for the transportation, utilization or sequestration of captured carbon dioxide, none of which we have entered into, permitting, and financing. We may also seek to interconnect the project’s power generation facilities to the ERCOT grid, subject to the interconnection processes described in Part II, Item 1A.
We have not entered into a binding power offtake agreement, project-level financing agreement, or definitive site or land-use arrangement specific to a co-located configuration, and we have not made a final investment decision for Project Permian Phase I. There can be no assurance that we will enter into any such agreement, that Project Permian Phase I will be developed in the configuration or on the timeline described, or that carbon capture will be deployed at any phase of the project. Our development planning previously targeted a final investment decision as early as the second half of 2026. We no longer expect an FID to occur during 2026, and we have not established a new target date for FID or the commencement of commercial operations. Any FID will depend on, among other things, execution of one or more binding power offtake arrangements at pricing and other terms supportive of the project’s economics, and on obtaining the necessary site rights, financing, equipment, permits and other approvals. We do not expect to make an FID before such arrangements are executed. In order to meet prospective customer requirements for first power or more power than our current contracted equipment can deliver, we are evaluating whether to enter into additional commitments for power generation equipment and related long-lead items prior to FID and before execution of a binding power offtake agreement, as described under “Commitments and Contractual Obligations — Equipment Commitments Under Consideration” below. There can be no assurance as to the timing or outcome of the customer selection process, the FID process, or the product configuration, including its scope, cost or timing of project operations.
On August 3, 2026, the Governor of Texas directed the Public Utility Commission of Texas and ERCOT to conduct a comprehensive verification and audit of data center projects advancing through ERCOT’s interconnection process before additional data center projects are approved to move forward, and directed that projects failing to comply with applicable requirements be denied connection to the Texas grid. Our offtake process for Project Permian Phase I is directed primarily at data center developers and other large-load customers. That process, any requirements the Public Utility Commission of Texas or ERCOT may adopt in response, and any resulting legislation could extend the timelines on which prospective customers are able or willing to commit to binding power offtake arrangements, or could reduce the number of prospective customers able to proceed in ERCOT. We cannot predict the scope, duration, or outcome of that process. If it delays or prevents commitments by prospective customers, our final investment decision for Project Permian Phase I could be delayed could be further delayed or may not occur, and the timing of our capital requirements and project-level financing would be affected.
Net Power is progressing its first clean firm power hub at the Project Permian site in West Texas. The project is being sized to accommodate up to one gigawatt of clean firm power generation capacity. We intend for Phase I of the project to utilize readily available gas turbines paired with Entropy’s PCC technology. On November 12, 2025, we entered into an agreement to purchase two modular gas turbine generator sets with nominal gross power of approximately 30 megawatts each for use at Project Permian. Final investment decision (“FID”) for Phase I is expected in the second half of 2026 with targeted commercial operations by early 2029, which would make it the first commercial clean gas power project in the United States.
We are a pre-revenue, development-stage company. Because our historical spending was primarily directed toward the Oxy-Combustion Cycle, the La Porte Demonstration Facility and SN1, none of which we are actively developing today, our historical results may not be indicative of future results. The impairment of the Developed Technology Asset Group, suspension of the BHES JDA, workforce reductions and changes in project development activities materially affect comparability between periods.
We are a development stage company and our historical results may not be indicative of our future results, particularly considering the recent shift in the anticipated timing of our technology development of the Oxy-Combustion Cycle and the introduction of the clean gas power plant product incorporating Entropy’s post-combustion carbon capture technology (the “Clean Gas Product”). Accordingly, the drivers of our future financial results, as well as the components of such results, may not be comparable to our historical or future results of operations.
Comparison of the Three Months Ended MarchJune 31,30, 2026 to the Three Months Ended MarchJune 31,30, 2025
General and administrative expenses consist primarily of personnel-related expenses associated with our general and administrative organization and professional fees for legal, accounting, information technology, and other consulting services. General and administrative expenses increaseddecreased by $0.2$7.2 million, or 2%,53%, for the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. DuringThis decrease was primarily related to lower overall compensation expense due to headcount reduction during the first quarter of 2026,2026. Additionally, during the second quarter of 2025, the Company terminated certain employeesmembers of its executive management team, resulting in $3.1 million of severance costs ofand $2.2$1.1 million andof accelerated stock-basedshare-based compensation of $0.7 million.compensation. In addition, there were lower professional fees of $1.4 million primarily related to legaldecreased costsengineering consulting and engineering consulting, partially offset by higher independent audit fees and recruitinglegal costs.
Sales and marketing expenses consist primarily of personnel-related and consultant costs directly associated with our sales and marketing activities, which include general publicity efforts for the Company. Sales and marketing expenses weredecreased generallyby consistent$0.5 million, or 32%, for the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. During the first quarter of 2026, the Company recognized $0.4 million in employee termination costs, partially offset by a $0.3 millionThis decrease inwas salaryprimarily andrelated wagesto lower compensation costs due to aemployee reductionterminations induring headcount.2026.
Research and development (“R&D”) expenses consistin the current period primarily ofreflect labor expensesengineering and feesdevelopment paidof tothe thirdGas partiesPower workingProduct and Project Permian Phase I, whereas the prior-year period primarily reflected work on and testing of specific aspects of our technology, including testingtechnology at ourthe La Porte Demonstration Facility and development activities under the BHES JDA.Facility. R&D expenses decreased by $2.9$22.4 million, or 13%,84%, for the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. This decrease was primarily due to the Company suspending the development activities under the BHES JDA in December 2025 resulting in a decrease of $4.8$20.3 million. Additionally, plant expenses were lower by $3.0 million due to the suspension of R&D at the La Porte Demonstration Facility in December 2025. This decrease was offset by higher engineering consulting costs of $2.2$0.8 million, primarily related to the development of the Clean Gas Product,Power andProduct. employeeIn terminationJune costs2026, ofa $1.2shareholder million.that operates the La Porte Demonstration Facility notified us that it is terminating all outstanding work orders under its services agreement with us, effective December 26, 2026.
Project development expenses consist of labor expenses and fees paid to third parties developing commercial scale projects. Project development expenses decreased by $3.5$26.1 million, or 78%,96%, for the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. The decrease was due to the Company pausing allceasing development work and related expenditures for our first utility-scale power plant utilizing the Oxy-Combustion Cycle (“SN1”), during the fourth quarter of 2025.2025, Thewhile continuing development of Project Permian Phase I. This decrease was partially offset by current-period costs related to Project Permian Phase I under the Gas Power Product strategy. For the three months ended June 30, 2025, the Company incurred $3.8$19.5 million under the BHESLimited Notice to Proceed (“LNTP”) related to certain milestones and $7.3 million of costs related to SN1 for the threedevelopment monthsof ended March 31, 2025.SN1.
During the second quarter of 2026, the Company determined that triggering events had occurred requiring an impairment assessment of its Developed Technology Asset Group as a result of the indefinite suspension of activities under the BHES JDA and related agreements between the Company and Baker Hughes, together with the Company’s plans to not continue development of the Oxy-Combustion Cycle technology. As previously disclosed in our Form 10-Q for the quarter ended March 31, 2026, the outcome of the negotiations with Baker Hughes could adversely affect the recoverability of the carrying value of the Developed Technology Asset Group. Additionally, the Company does not have any plans to continue development of the Oxy-Combustion Cycle technology; accordingly, any recovery of the carrying value would be contingent upon a sale of all or part of the Oxy-Combustion Cycle intellectual property and the Company’s improvements, equipment and lease interests at the La Porte Demonstration Facility. As a result, the Company recognized an impairment of $193.7 million for the three months ended June 30, 2026.
The Company fully impaired goodwill and recognized an impairment of $359.8 million during the three months ended March 31, 2025 due to a change in the Company’s business plan and related sustained decrease in the Company’s market capitalization. Additionally, the Company expensed costs of $56.1 million associated with the construction of SN1 as management initiated a value engineering process to assess the project’s feasibility and optimize its design and temporarily paused further long lead equipment releases.
Depreciation, amortization and accretion expenses consist primarily of depreciation on our La Porte Demonstration Facility and amortization of intangible assets. Depreciation, amortization and accretion expense decreased by $18.3$18.2 million, or 84%, for the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, primarily due to lower depreciation and amortization rates as a result of the long-lived assets impairment recognized during the third quarter of 2025.
Interest incomeincome, net
Interest income decreased by $2.5 million, or 43%,46%, for the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. Interest income decreased due to lower interest-bearing cash and investment balancesbalances, andpartially declinesoffset inby interesthigher rates.investment accretion.
The Change in Earnout Shares liability and Warrant liability relates to movements in fair value of earnout shares and warrants. The changes are primarily due to fluctuations in the market price of our Class A Common Stock and related volatility. Additionally, restrictions on transferability of the Earnout Shares expired during the second quarter of 2026.
Income tax (expense) benefit
The Company did not recognize anyrecognized income tax expense orof benefitless than $0.1 million for the three months ended MarchJune 31,30, 2026, compared to an income tax expensebenefit of $0.4$1.6 million for the same period in 2025. During the periodfirst endedquarter March 31,of 2025, the Company moved out of a deferred tax liability and into an overall deferred tax asset position due to non-deductible book impairments. This deferred tax asset was offset by a valuation allowance. For the periodthree months ended MarchJune 31,30, 2026, the Company has maintained the deferred tax asset position which was fully offset by a valuation allowance.
Net loss attributable to non-controlling interest was 61.8%60.6% of net loss before income tax for the three months ended MarchJune 31,30, 2026, as compared to 64.4% of net loss for the same period in 2025. The change in the non-controlling interests was due to exchanges by OpCo members of Class A OpCo unitsUnits for shares of Class A PubCoCommon shares,Stock, partially offset by the additional issuanceeffect of Class A OpCo unitsUnits previously issued under the BHES JDA.
Results of Operations
Comparison of the Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025
The following table sets forth our condensed consolidated results of operations data for the periods presented:
General and administrative
General and administrative expenses decreased by $7.0 million, or 31%, for the six months ended June 30, 2026, as compared to amounts for the six months ended June 30, 2025. This decrease was primarily related to lower overall compensation expense due to a reduction in employee headcount. During the six months ended June 30, 2026, the Company terminated certain employees resulting in severance costs of $2.2 million and accelerated stock-based compensation of $0.9 million. During the second quarter of 2025, the Company terminated certain executive management resulting in $3.1 million in severance payments to these employees, as well as $1.1 million of stock-based compensation for related vesting accelerations. Additionally, professional fees decreased by $2.2 million, primarily for engineering consulting costs and legal services.
Sales and marketing
Sales and marketing expenses consist primarily of personnel-related costs and consultant costs directly associated with our sales and marketing activities, which include general publicity efforts for the Company. Sales and marketing expenses decreased by $0.5 million, or 18%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. This decrease was primarily attributable to lower employee headcount and professional fees.
Research and development
R&D expenses in the current period primarily reflect engineering and development of the Gas Power Product and Project Permian Phase I, whereas the prior period primarily reflected work and testing of specific aspects of our technology at the La Porte Demonstration Facility. R&D expenses decreased by $25.3 million, or 51%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. This decrease was primarily due to the Company suspending the development activities under the BHES JDA in December 2025 resulting in a decrease of $25.1 million. Additionally, plant expenses were lower by $5.0 million due to the suspension of R&D at the La Porte Demonstration Facility in December 2025. This decrease was offset by higher engineering consulting costs of $3.0 million, primarily related to the development of the Gas Power Product, as well as employee termination costs including $0.9 million of severance costs and $0.3 million of accelerated stock-based compensation. In June 2026, a shareholder that operates the La Porte Demonstration Facility notified us that it is terminating all outstanding work orders under its services agreement with us, effective December 26, 2026.
Project development
Project development expenses consist of labor expenses and fees paid to third parties developing commercial scale projects. Project development expenses decreased by $29.6 million, or 93%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. This decrease was due to the Company ceasing development work and related expenditures for SN1 during the fourth quarter of 2025, partially offset by current-period costs related to Project Permian Phase I under the Gas Power Product strategy. For the six months ended June 30, 2026, the Company incurred $0.4 million of costs related to Project Permian Phase I. For the six months ended June 30, 2025, the Company incurred $19.5 million under the BHES LNTP related to certain milestones and $11.1 million of costs related to SN1.
Impairment and other charges
During the second quarter of 2026, the Company determined that triggering events had occurred requiring an impairment assessment of its Developed Technology Asset Group as a result of the indefinite suspension of activities under the BHES JDA and related agreements between the Company and Baker Hughes, together with the Company’s plans to not continue development of the Oxy-Combustion Cycle technology. As previously disclosed in our Form 10-Q for the quarter ended March 31, 2026, the outcome of the negotiations with Baker Hughes could adversely affect the recoverability of the carrying value of the Developed Technology Asset Group. Additionally, the Company does not have any plans to continue development of the Oxy-Combustion Cycle technology; accordingly, any recovery of the carrying value would be contingent upon a sale of all or part of the Oxy-Combustion Cycle intellectual property and the La Porte Demonstration Facility. As a result, the Company recognized an impairment of $193.7 million for the six months ended June 30, 2026.
During the first quarter of 2025, the Company assessed its goodwill for impairment due to a change in the Company’s business plan and related sustained decrease in the Company’s market capitalization. As a result, the Company fully impaired goodwill for a loss of $359.8 million. Also in the first quarter of 2025, the Company expensed $56.1 million of costs associated with the construction of SN1 as management initiated a value engineering process to assess the project’s feasibility and optimize its design and temporarily paused further long-lead equipment releases.
Depreciation, amortization, and accretion
Our depreciation, amortization, and accretion expenses consist primarily of depreciation on our La Porte Demonstration Facility and amortization of intangible assets. Depreciation, amortization, and accretion expense decreased by $36.5 million, or 84%, for the six months ended June 30, 2026, as compared to amounts for the same period in 2025, primarily due to lower depreciation and amortization rates as a result of the long-lived asset impairment during the third quarter of 2025.
Interest income, net
Interest income decreased by $5.0 million, or 44%, for the six months ended June 30, 2026, as compared to amounts for the same period in 2025. This decrease was due to lower interest-bearing cash and investment balances, partially offset by higher investment accretion.
Change in Earnout Shares liability and Warrant liability
The Change in Earnout Shares liability and Warrant liability relates to movements in fair value of earnout shares and warrants. The changes are primarily due to fluctuations in the market price of our Class A Common Stock and related volatility. Additionally, restrictions on transferability of the Earnout Shares expired during the second quarter of 2026.
Change in Tax Receivable Agreement liability
In March 2025, the Company reduced the Tax Receivable Agreement (“TRA”) liability of $21.3 million to zero as payments related to the TRA were not considered probable. In May 2025, pursuant to its rights under the TRA, the Company delivered to the agent of the TRA holders notice of the Company’s intent to terminate the TRA (the “Early Termination Notice”). No early termination payment was payable to any TRA holder. The Early Termination Notice became final and binding on June 12, 2025.
Income tax (expense) benefit
The Company recognized income tax expense of less than $0.1 million for the six months ended June 30, 2026, compared to an income tax benefit of $1.2 million for the same period in 2025. During the period ended June 30, 2025, the Company moved out of a deferred tax liability and into an overall deferred tax asset position due to non-deductible book impairments. This deferred tax asset was offset by a valuation allowance. For the period ended June 30, 2026, the Company has maintained the deferred tax asset position which was fully offset by a valuation allowance.
Net loss attributable to non-controlling interests
Net loss attributable to non-controlling interest was 61.2% of net loss before income tax for the six months ended June 30, 2026, as compared to 64.4% of net loss for the six months ended June 30, 2025. The change in the non-controlling interests was due to exchanges by OpCo members of Class A OpCo Units for shares of Class A Common Stock, partially offset by the additional issuance of Class A OpCo Units under the BHES JDA.
Our principal sources of liquidity are cash, short-term investmentscash and investments in highly liquid available-for-sale securities. Historically, our sources of liquidity have also included raising capital through the sale of equity. We may issue additional equity securities in the future.future, although our ability to raise capital through equity issuances on favorable terms is influenced by the market price of our Class A Common Stock, and, for so long as the aggregate market value of our common equity held by non-affiliates is below $75 million as of the applicable measurement dates, by limitations on primary offerings under our shelf registration statement, as described in Part II, Item 1A, and any future equity issuances at or near recent price levels would result in significant dilution to our existing stockholders. We measure liquidity in terms of our ability to fund the cash requirements of our R&D activities and our near-term business operations, including our contractual obligations and other commitments. Our current liquidity needs primarily involve general and administrative costs and costs to develop and procure the equipment necessary for our projects.
The available-for-sale securities are comprised of investment grade, fixed income securities. Additionally, our current liabilities were $13.1$17.6 million at MarchJune 31,30, 2026.
We believe we have the ability to manage our operating costs such that our existing liquidity will be sufficient to fund our obligations for the next 12 months following the filing of this Report. That conclusion is based on our existing obligations and commitments as of the date hereof and assumes that we would not enter into the additional equipment and/or construction commitments that would be necessary in advance of or in connection with a binding power offtake agreement and FID, including the additional pre-FID equipment commitments described under "Commitments and Contractual Obligations — Equipment Commitments Under Consideration, which we believe it is reasonably likely we will seek to enter into during the next 12 months and which would require additional capital during that period. We do not have sufficient committed capital to fund any such obligations or commitments or the additional project-level capital requirements for Project Permian Phase I through commercial operation, and we would need to obtain project-level financing, additional equity, partner capital, or other financing sources. As of the date of this Report, no project-level financing, customer deposit or partner capital for Project Permian Phase I has been committed. There is no assurance that we will be able to obtain such financing on acceptable terms or at all. Beyond the next 12 months, our capital requirements will depend primarily on the pace and configuration of Project Permian Phase I and any subsequent phases, including commitments for gas turbines and other long-lead equipment, and we expect to fund those requirements through a combination of project-level financing, additional equity or equity-linked capital, partner capital, and cash on hand.
We believe we have the ability to manage our operating costs such that our existing liquidity will be sufficient to fund our obligations for the next 12 months following the filing of this Report. We believe that our current sources of liquidity on hand should be sufficient to fund our general corporate operating expenses as we work to develop our products and projects, but certain costs are not reasonably estimable at this time and we may require additional funding. Specifically, we will require additional funding in order to successfully fund the projects we intend to develop.
Cash used in operating activities increased $30.7$15.8 million for the threesix months ended MarchJune 31,30, 2026, as compared to the same period in 2025. Our net cash used in operating activities to date havehas beenhistorically consisted primarily comprised of payroll, materialmaterials and supplies, facilities expense, and professional services related to R&D, including the BHES JDA, and general and administrative activities. This change was primarily due to payment of $26.1 million in contract cancellation costs resulting from the Company terminating the BHES LNTP during the fourth quarter of 2025.2025, which was paid in the first quarter of 2026. In addition, the Company suspended the development activities under the BHES JDA and suspended testing at our La Porte Demonstration Facility. We expect our cash used in operating activities to increase significantly before we start to generate any material cash inflows from our operations.
During the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities increased $7.6$21.7 million as compared to the same period in 2025. Cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 primarily reflects the investments in available-for-sale securities, along with capital expenditures related to Project Permian Phase I. Cash used in investing activities for the threesix months ended MarchJune 31,30, 2025 primarily reflects the initialmaturity investmentsof inthe Company’s certificate of deposit and the reinvestment of those funds into available-for-sale securitiessecurities, asalong well aswith capital expenditures related to SN1 and the La Porte Demonstration Facility and SN1 during thatthe period.period in which costs were capitalized.
NPWR insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 16 filings (3 insiders, 21 trade dates, 5,300,000 shares, about $9.7M). Net open-market shares: -5,300,000 (purchases minus sales); net value about -$9.7M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-09 | 8 Rivers Capital, Llc |
Open-market sale | 150,000 | $1.84 | $276.0K |
| 2026-09-09 | Npeh, Llc |
Open-market sale | 150,000 | $1.84 | $276.0K |
| 2026-09-08 | 8 Rivers Capital, Llc |
Open-market sale | 100,000 | $1.94 | $194.0K |
| 2026-09-08 | Npeh, Llc |
Open-market sale | 100,000 | $1.94 | $194.0K |
| 2026-08-26 | Npeh, Llc |
Open-market sale | 41,350 | $1.91 | $79.0K |
| 2026-08-26 | Beauchamp Damian R. |
Open-market sale | 41,350 | $1.91 | $79.0K |
| 2026-08-25 | Npeh, Llc |
Open-market sale | 201,550 | $1.91 | $385.0K |
| 2026-08-25 | Beauchamp Damian R. |
Open-market sale | 201,550 | $1.91 | $385.0K |
| 2026-08-14 | Npeh, Llc |
Open-market sale | 507,100 | $1.95 | $988.8K |
| 2026-08-14 | 8 Rivers Capital, Llc |
Open-market sale | 507,100 | $1.95 | $988.8K |
| 2026-08-13 | Npeh, Llc |
Open-market sale | 200,000 | $1.62 | $324.0K |
| 2026-08-13 | 8 Rivers Capital, Llc |
Open-market sale | 200,000 | $1.62 | $324.0K |
| 2026-08-12 | Npeh, Llc |
Open-market sale | 50,000 | $1.63 | $81.5K |
| 2026-08-12 | 8 Rivers Capital, Llc |
Open-market sale | 50,000 | $1.63 | $81.5K |
| 2026-08-11 | Npeh, Llc |
Open-market sale | 35,000 | $1.60 | $56.0K |
| 2026-08-11 | Beauchamp Damian R. |
Open-market sale | 35,000 | $1.60 | $56.0K |
| 2026-08-10 | Npeh, Llc |
Open-market sale | 55,400 | $1.55 | $85.9K |
| 2026-08-10 | Beauchamp Damian R. |
Open-market sale | 55,400 | $1.55 | $85.9K |
| 2026-08-07 | Npeh, Llc |
Open-market sale | 60,345 | $1.53 | $92.3K |
| 2026-08-07 | Beauchamp Damian R. |
Open-market sale | 60,345 | $1.53 | $92.3K |
| 2026-08-06 | 8 Rivers Capital, Llc |
Open-market sale | 89,255 | $1.51 | $134.8K |
| 2026-08-06 | Npeh, Llc |
Open-market sale | 89,255 | $1.51 | $134.8K |
| 2026-08-05 | 8 Rivers Capital, Llc |
Open-market sale | 140,000 | $1.51 | $211.4K |
| 2026-08-05 | Npeh, Llc |
Open-market sale | 140,000 | $1.51 | $211.4K |
| 2026-08-04 | 8 Rivers Capital, Llc |
Open-market sale | 120,000 | $1.54 | $184.8K |
| 2026-08-04 | Npeh, Llc |
Open-market sale | 120,000 | $1.54 | $184.8K |
| 2026-07-30 | Npeh, Llc |
Open-market sale | 155,000 | $1.43 | $221.7K |
| 2026-07-30 | Beauchamp Damian R. |
Open-market sale | 155,000 | $1.43 | $221.7K |
| 2026-07-29 | Npeh, Llc |
Open-market sale | 45,000 | $1.41 | $63.5K |
| 2026-07-29 | Beauchamp Damian R. |
Open-market sale | 45,000 | $1.41 | $63.5K |
| 2026-07-28 | Npeh, Llc |
Open-market sale | 55,858 | $1.47 | $82.1K |
| 2026-07-28 | Beauchamp Damian R. |
Open-market sale | 55,858 | $1.47 | $82.1K |
| 2026-07-23 | 8 Rivers Capital, Llc |
Open-market sale | 39,142 | $1.51 | $59.1K |
| 2026-07-23 | Npeh, Llc |
Open-market sale | 39,142 | $1.51 | $59.1K |
| 2026-07-22 | 8 Rivers Capital, Llc |
Open-market sale | 90,000 | $1.53 | $137.7K |
| 2026-07-22 | Npeh, Llc |
Open-market sale | 90,000 | $1.53 | $137.7K |
| 2026-07-21 | 8 Rivers Capital, Llc |
Open-market sale | 80,000 | $1.53 | $122.4K |
| 2026-07-21 | Npeh, Llc |
Open-market sale | 80,000 | $1.53 | $122.4K |
| 2026-06-03 | Veltmann Alejandra |
Grant/award | 71,770 | — | — |
| 2026-06-03 | Peterson Carol R. |
Grant/award | 71,770 | — | — |
| 2026-06-03 | Kelliher Joseph T |
Grant/award | 71,770 | — | — |
| 2026-06-03 | Alexander Ralph |
Grant/award | 71,770 | — | — |
| 2026-05-13 | Npeh, Llc |
Open-market sale | 35,000 | $2.43 | $85.0K |
| 2026-05-13 | Beauchamp Damian R. |
Open-market sale | 35,000 | $2.43 | $85.0K |
| 2026-05-12 | Npeh, Llc |
Open-market sale | 400,000 | $2.44 | $976.0K |
| 2026-05-12 | Beauchamp Damian R. |
Open-market sale | 400,000 | $2.44 | $976.0K |
| 2026-03-06 | Npeh, Llc |
Conversion | 3,000,000 | — | — |
| 2026-03-06 | Npeh, Llc |
Other | 3,000,000 | — | — |
| 2026-03-06 | 8 Rivers Capital, Llc |
Conversion | 3,000,000 | — | — |
| 2026-03-06 | 8 Rivers Capital, Llc |
Other | 3,000,000 | — | — |
Well-known investors holding NPWR (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Two Sigma Investments | 2026-06-30 | 660,570 | $1.1M | 0.0% | Reduced 39% |
| D. E. Shaw & Co. | 2026-06-30 | 412,502 | $688.9K | 0.0% | Added 75% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 385,283 | $643.4K | 0.0% | Added 151% |
| Renaissance Technologies | 2026-06-30 | 354,206 | $591.5K | 0.0% | Reduced 50% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 218,981 | $341.6K | — | Sold out |
| Millennium Management (Israel Englander) | 2026-06-30 | 37,844 | $63.2K | 0.0% | Reduced 94% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 15,340 | $25.6K | 0.0% | Reduced 55% |
| D. E. Shaw & Co. | 2026-06-30 | 15,032 | $4.4K | 0.0% | No change |