Net Power Inc.
For the period ended Sep 30, 2026. Filed Nov 12, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 12, 2026
NPWR$0.76-8.7%Stored close · as of Nov 12, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-13.
0001845437-26-000033
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-12.
0001845437-26-000040
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 95 previous paragraphs and 106 current paragraphs.
46 unchanged; 37 reworded; 23 added; 11 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
We are an energy technology and project development company focused on the rapid deployment of natural gas power generation behind the meter to serve co-located data centers and other large-load customers. To meet growing demand for reliable power on accelerated timelines, we have repositioned our business from its historical focus on developing an oxy-combustion power generation system with integrated carbon capture. Under our current strategy, our projects are expected to generate revenue principally from the sale of electricity and related services under long-term energy services or power offtake agreements.
Current report
Our current projects do not include carbon capture, and our current business plan does not depend on carbon capture or related tax credits. Our Initial Project is not being designed to accommodate the later addition of carbon capture, a change from our earlier descriptions of equipment designed to accommodate it in later phases. We continue to evaluate carbon capture for later phases or projects where customer requirements, commercial arrangements and financing support it, but we have not committed capital or adopted a timetable for its deployment. See Part II, Item 1A “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.”
Current report
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, those associated with: our ability to negotiate and enter into binding energy services or power offtake agreements at prices and on terms sufficient to support project financing and an FID; our ability to agree on the relocation of, and to resume work under, the EPC Agreement and to fund the related payments; the timing and outcome of permitting, including the pause in the issuance of permits for data center projects directed by the Governor of Texas on September 21, 2026, and the policies of the administration taking office in January 2027; our ability to obtain site rights for our projects; the decisions of our prospective customer and of the third-party developer of the site regarding the timing and location of the data center that our Initial Project would serve; and our access to the capital needed to finance the development of our projects. These and other factors are described in “Cautionary Note Regarding Forward-Looking Statements” and Part II, Item 1A “Risk Factors.”
Current report
We are developing our initial natural gas power generation project to supply power behind the meter, without a connection to the ERCOT grid, to a co-located data center at a site in Texas that we have not yet secured and that is separate from our Project Permian site (the “Initial Project”). In August 2026, we acquired the owner’s position under the EPC Agreement with Saulsbury for ten reciprocating engine generating sets with aggregate nominal capacity of approximately 123 MW, and we intend to use those units in our Initial Project, subject to a change order relocating the work under the EPC Agreement that has not been executed. The configuration we are evaluating for the Initial Project would also require additional generating capacity that we have not secured. We are negotiating an energy services agreement for the Initial Project with a leading developer of frontier artificial intelligence models, the prospective customer that is party to the Cost Reimbursement Agreement, but neither party is obligated to enter into it. We have not obtained site rights, permits, or financing for the Initial Project, and we have not entered into a binding energy services or power offtake agreement for its output.
Current report
We previously described the approximately 123 MW reciprocating-engine facility, and the two gas turbine generator sets for which we have contracted, as intended for deployment in the first phase of Project Permian. We now intend to deploy the reciprocating engine equipment at the proposed site described above for our Initial Project, subject to obtaining the necessary site rights, contractual amendments, permits, customer commitments, and financing, and we have not determined the project at which the gas turbine generator sets will be used.
Current report
We continue to develop Project Permian in West Texas on a longer timeline than our Initial Project. We lease a portion of the Project Permian site from a subsidiary of Occidental Petroleum, which is a significant stockholder and a related party of the Company. Developing Project Permian beyond the capacity our existing leasehold supports would require additional land rights, which we have not obtained and which are the subject of ongoing negotiations. In addition, future phases may require interconnection to the ERCOT grid, which would be subject to the processes described in Part II, Item 1A. The configuration, carbon capture scope, and timing of any phase of Project Permian will depend on customer requirements, commercial arrangements, the availability of post-combustion carbon capture technology on acceptable terms, permits, equipment availability, and financing.
Current report
Texas Regulatory Developments
Current report
On August 3, 2026, the Governor of Texas directed a verification and audit of data centers advancing through ERCOT’s interconnection process. On September 21, 2026, the Governor directed the Texas Commission on Environmental Quality (“TCEQ”) to pause the issuance of all permits related to data center projects until ERCOT completes its review. ERCOT has stated that it intends to publish its report on or before December 10, 2026, but no date has been set for the pause to end. The directive contemplates that TCEQ will then use information from the audits to review proposed permits, so the completion of ERCOT’s review will not by itself determine when permits for data centers will be issued. On October 19, 2026, TCEQ informed the Governor that it had paused the issuance of all permits related to the construction or development of infrastructure directly supporting data centers, that it was screening pending applications and had paused those subject to the directive, and that it was suspending, where possible, authorizations for data center activities claimed without an affirmatively issued permit. We expect the pause to apply to the air permits our Initial Project requires. On October 21, 2026, TCEQ announced that it had temporarily shut down its electronic permitting system to modify it to allow staff review before authorizations are issued. On November 9, 2026, TCEQ confirmed that electronic submissions were available for applications under its Construction, Multi-Sector and Concrete Production General Permits. Those applications require staff review to determine whether they relate to data centers and no longer receive automatic approval or provisional coverage. The restoration of electronic submissions does not lift the permitting pause for data center projects or establish when applications for our Initial Project will be processed or authorizations issued. On November 3, 2026, Texas voters elected a new Governor, who will take office in January 2027 and who called during the campaign for a moratorium on new data center approvals until the Texas legislature adopts statewide rules governing them and has reaffirmed that position since the election. The Texas legislature convenes in regular session in January 2027. Whether a moratorium or other restrictions will be adopted, and their scope and timing, are uncertain. We cannot predict when or whether TCEQ will resume issuing permits for data center projects, whether we will obtain the authorizations our Initial Project requires, or whether any authorization we obtain will be affected by later action. If these actions delay or prevent the permitting of our projects or commitments by prospective customers, our final investment decisions could be further delayed or may not occur, and the timing of our capital requirements and project-level financing would be affected. See Part II, Item 1A “Risk Factors.”
Current report
During the third quarter of 2026, the Company recognized an impairment loss of $0.8 million related to additional construction-in-progress expenditures during the quarter related to the La Porte Demonstration Facility that is part of the Developed Technology Asset Group, which was fully impaired during the second quarter of 2026. The factors leading to the full impairment during the second quarter of 2026 remained throughout the third quarter of 2026.
Current report
During 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 feedback from potential customers, the estimated cost reductions achieved through the SN1 value engineering process, which, although significant, did not reduce costs to an economic level, 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 Oxy-Combustion Cycle technology.
Current report
Income tax benefit
Current report
Company’s Oxy-Combustion Cycle technology.
Current report
As of September 30, 2026, ouravailable-for-sale securities consisted of U.S. Treasury securities. Additionally, our current liabilities were$24.6 million as of September 30, 2026.
Current report
Our contractual cash requirements for the 12 months following September 30, 2026, other than operating expenditures, include approximately $38.9 million of installments under our gas turbine equipment purchase commitments and the $0.9 million reservation deposit under the November 2026 change order described below; approximately $7.6 million of cash reimbursements payable to Baker Hughes, together with the BHES JDA Make-Whole Payment on the equity-settled portion described in Note 12 to our condensed consolidated financial statements; the suspension, standby, preservation and storage charges under the EPC Agreement; the $3.5 million termination payment, which becomes payable on demand if the Post-closing Change Order and a limited notice to proceed are not both executed, and the relevant payments made, on or before November 20, 2026, and otherwise if we do not issue the full notice to proceed by March 31, 2027; approximately $1.1 million of operating lease payments; and the cost of decommissioning the La Porte Demonstration Facility, for which we have recorded an asset retirement obligation of $4.6 million. If we issue the full notice to proceed under the EPC Agreement, our payments under that agreement during that period would be approximately $88.2 million, including the mobilization payment.
Current report
Our forecast of cash requirements for the one-year period following issuance of these financial statements assumes that we will not issue the full notice to proceed under the EPC Agreement, provide credit support under an energy services agreement, or enter into additional commitments beyond the limited notice to proceed that we are negotiating with Saulsbury unless we first obtain committed funding sufficient for the resulting obligations. On that basis, we believe our existing cash and available-for-sale securities will be sufficient to meet our obligations during that period. The forecast includes our expected operating expenditures, existing equipment purchase commitments, the payments we would make under that limited notice to proceed, remaining Baker Hughes payment obligations, lease payments, expected La Porte decommissioning expenditures, equipment milestone payments that may become due under the EPC Agreement before the full notice to proceed, and the suspension, storage, and termination payments that would arise if we do not proceed under the EPC Agreement. It excludes any reimbursement under the Cost Reimbursement Agreement described below and any financing that has not been committed. We believe it is reasonably likely that we will seek that funding and, if we obtain it, issue the full notice to proceed and enter into additional commitments during the next 12 months. If we issued the full notice to proceed, provided that credit support or entered into those commitments without first obtaining committed funding, our existing cash and available-for-sale securities would not be sufficient to fund our obligations for the 12 months following the issuance of these financial statements: payments under the EPC Agreement alone would then be approximately $88.2 million during the 12 months following September 30, 2026, and funding our Initial Project through commercial operation would require project-level financing, equipment financing, additional equity, partner capital or other financing sources in amounts that substantially exceed our existing liquidity. We are pursuing equipment and project-level financing and partner capital. As of the date of this Report, none of these sources has been committed, and the Cost Reimbursement Agreement does not provide committed funding. Beyond the next 12 months, our capital requirements will depend primarily on the pace and configuration of our projects, which we expect to fund through project-level financing, additional equity or equity-linked capital, partner capital, and cash on hand. See Part II, Item 1A “Risk Factors.”
Current report
Cost Reimbursement Agreement
Current report
In August 2026, Net Power, LLC, a subsidiary of the Company, entered into the Cost Reimbursement Agreement with a prospective customer in connection with negotiations for an energy services agreement for our Initial Project. The agreement is an interim arrangement pending an energy services agreement, which neither party is obligated to enter into and which, if executed, would terminate it. If an energy services agreement is not executed by February 14, 2027, if the customer earlier gives notice terminating the Cost Reimbursement Agreement, or if financing secured by covered equipment that we obtain with the customer’s approval is not repaid or refinanced by that date, the customer will, at its election, either take assignment of the covered equipment and contracts and pay us our nonrefundable costs for approved expense items, or decline assignment, in which case, unless we elect to retain the covered equipment, it will pay our nonrefundable costs for those items and any losses we realize on their resale. The customer’s aggregate payment obligations are subject to a cap of approximately $180.0 million, which does not represent committed financing or an unconditional payment obligation. Approved expense items include approximately $59.0 million we paid to EMPower, including the premium; financing costs of up to approximately $7.7 million; and the approximately $58.6 million milestone payment made to Saulsbury at closing. Other costs under the EPC Agreement become approved expense items upon the customer’s approval following execution of the Post-closing Change Order, and other expenditures require the customer’s advance approval, except to the extent expressly covered by the agreement. No amount has become payable to us under the Cost Reimbursement Agreement, and we have not recognized any receivable under it. Reimbursement excludes specified costs, and the customer’s payment obligations are suspended while we are in material breach of specified obligations. Until the Cost Reimbursement Agreement expires, we may not solicit or negotiate with third parties for the sale of the covered equipment or for an energy services or power purchase agreement that uses it, and if we fail to fund covered items on schedule, the customer may step in, at our cost, to direct or make payments for them.
Current report
EPC Agreement
Current report
In connection with the Assignment Agreement discussed in Note 6 to our condensed consolidated financial statements, we assumed the owner’s payment obligations under the EPC Agreement. As of September 30, 2026, remaining payments under the EPC Agreement, including the mobilization payment of approximately $10.2 million, totaled approximately $119.1 million, of which approximately $88.2 million would become payable during the 12 months following September 30, 2026 if we issue the full notice to proceed on our current schedule. Before that notice is issued, we remain responsible for applicable suspension, standby, preservation and storage charges and any amounts arising under a limited notice to proceed or termination. If we do not issue the full notice to proceed by March 31, 2027 (pursuant to the extension agreed to in October 2026), either party may terminate the EPC Agreement under the applicable contractual provisions. Upon termination, we would owe Saulsbury a termination payment of $3.5 million, which may become payable earlier if the applicable execution and payment conditions are not satisfied, as described in Note 14 — Commitments and Contingencies to our condensed consolidated financial statements, and we could take assignment of the related equipment supply contract, subject to specified conditions, by assuming its remaining payment obligations of approximately $23.3 million. We currently expect to issue the full notice to proceed in connection with obtaining financing for the Initial Project.
Current report
Equipment Purchase Commitments
Current report
In November 2026, we entered into a change order to the contract for these equipment packages. The change order requires us to pay a reservation deposit of $0.9 million and gives us an option, for 30 days after the supplier receives the deposit, to add emissions control and monitoring equipment for $12.5 million, including the deposit. If we exercise the option, our gross commitments under the contract will increase to $90.2 million, and the remaining $11.6 million of the option price will be payable in installments aligned to contractual milestones through final completion, with deliveries scheduled for January and February 2028. If we do not exercise the option, the supplier will retain the deposit.
Current report
Additional Equipment Commitments
Current report
We expect to enter into additional commitments for power generation equipment, engineering and related long-lead items for our Initial Project before executing a binding energy services agreement and reaching FID, including under a limited notice to proceed under the EPC Agreement that we are negotiating with Saulsbury. Under the Cost Reimbursement Agreement, new commitments are covered only if the customer approves them in advance, subject to the aggregate cap. We do not have committed customer funding, partner capital, or financing for additional commitments, and if we enter into such commitments and our Initial Project does not reach FID, we may be unable to recover all of our costs through reimbursement, resale, or redeployment of the equipment.
Removed paragraphs (11)
Previous 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.”
Previous report
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: 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 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; and development of competing energy technologies sooner or at a lesser cost than our 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, tariffs, and other trade barriers, measures or conflicts may significantly increase freight char…
Excerpt shortened here; the source contains the full paragraph.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
Income tax (expense) benefit
Previous report
Theavailable-for-sale securities are comprised of investment grade, fixed income securities. Additionally, our current liabilities were$17.6 million at June 30, 2026.
Previous report
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.
Previous report
Purchase Commitments
Previous report
Equipment Commitments Under Consideration
Previous report
We are also evaluating whether to enter into additional commitments for power generation equipment and related long-lead items in advance of executing a binding power offtake agreement and reaching FID. We have not entered into any such commitment as of the date of this Report, and we do not have committed customer deposits, partner capital or financing for any such commitment. Based on prospective customer requirements in our offtake process, we believe it is reasonably likely that we will seek to enter into one or more such commitments during the next 12 months, a portion of which would become payable during the next 12 months. If we enter into such commitments and Project Permian Phase I does not reach FID, we may be unable to recover all of our cost through resale or redeployment of the equipment.
Reworded paragraphs (37)
Previous wording
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.
Current wording
If carbon capture is deployed at any later phase or project, captured CO₂ and associated environmental attributes could also generate revenue, but we have not entered into any agreement for the sale, transportation, or sequestration of CO₂, and there can be no assurance that we will do so on acceptable terms or at all.
Previous wording
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).
Current wording
We do not have any plans to resume development of the Oxy-Combustion Cycle. In September 2026, we entered into agreements with affiliates of Baker Hughes that indefinitely suspend the BHES JDA and the related commercial agreement and amend the related license agreement (see Note 12 to our condensed consolidated financial statements); 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).
Previous wording
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.
Current wording
We have not made a final investment decision for any project. There can be no assurance that we will enter into a binding energy services or power offtake agreement, project-level financing agreement, or definitive site or land-use arrangement for our Initial Project or for any phase of Project Permian beyond our existing lease, that our projects will be developed in the configuration at the sites or on the timelines described, or that carbon capture will be deployed at any project. We do not expect to make an FID for any project during 2026 or before a binding energy services or power offtake arrangement is executed, and the timing of any FID and of the commencement of commercial operations remains uncertain. Any FID will depend on, among other things, execution of one or more binding energy services or 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. To meet prospective customer requirements for first power, we have committed, and expect to continue to commit, capital to power generation equipment and engineering before executing a binding energy services or power offtake agreement and reaching FID, as described under “Commitments and Contractual Obligations” below.
Previous wording
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.
Current wording
We are a pre-revenue 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, indefinite suspension of the BHES JDA, workforce reductions and changes in project development activities materially affect comparability between periods.
Previous wording
General and administrative expenses consist primarily of personnel-related expenses associated with our general and administrative organiz ation and professional fees for legal, accounting, information technology, and other consulting services. General and administrative expenses decreased by $7.2 million, or 53%, for the three months ended June 30, 2026, as compared to the same period in 2025. This decrease was primarily related to lower overall compensation expense due to headcount reduction during the first quarter of 2026. Additionally, during the second quarter of 2025, the Company terminated certain members of its executive management team, resulting in $3.1 million of severance costs and $1.1 million of accelerated share-based compensation. In addition, there were lower professional fees of $1.4 million primarily related to decreased engineering consulting and legal costs.
Current wording
General and administrative expenses consist primarily of personnel-related expenses associated with our general and administrative organiz ation and professional fees for legal, accounting, information technology, and other consulting services. General and administrative expenses decreased by $2.0 million, or 22%, for the three months ended September 30, 2026, as compared to the same period in 2025. This decrease was related to lower stock-based compensation expense primarily because certain awards became fully vested in the second quarter of 2026 and no longer generate expense, as well as lower overall compensation expense due to headcount reduction during the first quarter of 2026. In addition, there were lower professional fees primarily related to decreased engineering consulting, partially offset by increased legal and severance costs.
Previous wording
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 decreased by $0.5 million, or 32%, for the three months ended June 30, 2026, as compared to the same period in 2025. This decrease was primarily related to lower compensation costs due to employee terminations during 2026.
Current wording
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 decreased by $0.7 million, or 49%, for the three months ended September 30, 2026, as compared to the same period in 2025. This decrease was primarily related to lower professional fees and compensation costs due to employee terminations during 2026.
Previous wording
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-year period primarily reflected work on and testing of specific aspects of our technology at the La Porte Demonstration Facility. R&D expenses decreased by $22.4 million, or 84%, for the three months ended June 30, 2026, as compared to the same period in 2025. This decrease was primarily due to the Company suspending development activities under the BHES JDA in December 2025 resulting in a decrease of $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 $0.8 million, primarily related to the development of the Gas Power Product. 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.
Current wording
Research and development (“R&D”) expenses in the current period primarily reflect engineering costs for post-combustion carbon capture, including the Gas Power Product, and for the Oxy-Combustion Cycle, which continued to be incurred for a period after our decision to suspend development of the Oxy-Combustion Cycle and to develop our Initial Project without carbon capture, whereas the prior-year period primarily reflected work on and testing of specific aspects of our technology at the La Porte Demonstration Facility. R&D expenses decreased by $15.4 million, or 63%, for the three months ended September 30, 2026, as compared to the same period in 2025. This decrease was primarily due to the Company suspending development activities under the BHES JDA in December 2025, resulting in a decrease of $13.1 million. Additionally, plant expenses were lower by $2.9 million due to the suspension of R&D at the La Porte Demonstration Facility in December 2025. This decrease was partially offset by $1.6 million that we accrued for costs Entropy has claimed under the reimbursement provision of our letter of intent with Entropy regarding post-combustion carbon capture technology, which survives the letter’s expiration in July 2026, and by higher engineering consulting costs of $0.3 million.
Previous wording
Project development expenses consist of labor expenses and fees paid to third parties developing commercial scale projects. Project development expenses decreased by $26.1 million, or 96%, for the three months ended June 30, 2026, as compared to the same period in 2025. Thedecrease was due to the Company ceasing development work and related expenditures for our first utility-scale power plant utilizing the Oxy-Combustion Cycle (“SN1”), during the fourth quarter of 2025, while 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 $19.5 million under the BHESLimited Notice to Proceed (“LNTP”) related to certain milestones and $7.3 million of costs related to the development of SN1.
Current wording
Project development expenses consist of labor expenses and fees paid to third parties developing commercial-scale projects. Project development expenses decreased by $7.4 million, or 74%, for the three months ended September 30, 2026, as compared to the same period in 2025. Thedecrease was due to the Company ceasing development work and related expenditures for SN1 during the fourth quarter of 2025. This decrease was partially offset by current-period expenses related to our natural gas power generation projects.
Previous wording
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 $18.2 million, or 84%, for the three months ended June 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.
Current wording
Depreciation, amortization, and accretion expenses consist primarily of accretion on the asset retirement obligation and amortization of capitalized software. In the prior-year period, they primarily consisted of depreciationon our La Porte Demonstration Facility and amortization of intangible assets. Depreciation, amortization, and accretion expense decreased by $15.4 million, or 99%, for the three months ended September 30, 2026, as compared to the same period in 2025, primarily due to the reduction in depreciable and amortizable carrying amounts following the third-quarter 2025 impairment and the full impairment of the Developed Technology Asset Group in the second quarter of 2026.
Previous wording
Interest income decreased by $2.5 million, or 46%, for the three months ended June 30, 2026, as compared to the same period in 2025. Interest income decreased due to lower interest-bearing cash and investment balances, partially offsetby higher investment accretion.
Current wording
Interest income decreased by $2.4 million, or 49%, for the three months ended September 30, 2026, as compared to the same period in 2025. Interest income decreased due to lower interest-bearing cash and investment balances, partially offsetby higher investment accretion.
Previous wording
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.
Current wording
The change in Earnout Shares liability and Warrant liability relates to movements in the 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.
Previous wording
The Company recognized income tax expense of less than $0.1 million for the three months ended June 30, 2026, compared to an income tax benefit of$1.6 million for the same period in 2025. During the first quarter 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 thethree months ended June 30, 2026, the Company has maintained the deferred tax asset position which was fully offset by a valuation allowance.
Current wording
The Company recognized no income tax expense or benefitfor the three months ended September 30, 2026, compared to an income tax benefit of$1.2 million for the same period in 2025. During 2025, the Company moved out of a deferred tax liability and into an overall deferred tax asset position as impairments reduced the book basis of its investment in OpCo below its tax basis. This deferred tax asset was offset by a valuation allowance. For thethree months ended September 30, 2026, the Company has maintained the deferred tax asset position, which was fully offset by a valuation allowance.
Previous wording
Net loss attributable to non-controlling interestwas 60.6% of net loss before income tax for the three months ended June 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 Units for shares of Class A Common Stock, partially offset by the effect of Class A OpCo Units previously issued under the BHES JDA.
Current wording
Net loss attributable to non-controlling interestswas 60.6% of OpCo’s net loss before income tax for the three months ended September 30, 2026, as compared to 64.5% of OpCo’s net loss for the same period in 2025. The allocation reflects the non-controlling holders’ weighted-average participation in OpCo’s pretax results, as described in Note 8 to our condensed consolidated financial statements. 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 effect of Class A OpCo Units previously issued under the BHES JDA.
Previous wording
Comparison of the Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025
Current wording
Comparison of the Nine Months Ended September 30, 2026 to the Nine Months Ended September 30, 2025
Previous wording
General and administrative expenses decreased by $7.0 million, or 31%, for the six months ended June 30, 2026, as compared to amounts for thesix 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.
Current wording
General and administrative expenses decreased by $9.0 million, or 29%, for the nine months ended September 30, 2026, as compared to thenine months ended September 30, 2025. This decrease was primarily related to lower overall compensation expense due to a reduction in employee headcount. During the nine months ended September 30, 2026, the Company terminated certain employees, resulting in severance costs of $2.6 million and accelerated stock-based compensation of $0.9 million. During the second quarter of 2025, the Company terminated certain members of 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 $2.8 million, primarily for engineering and tax consulting costs. This decrease was partially offset by increased IT costs.
Previous wording
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.
Current wording
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 $1.2 million, or 29%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. This decrease was primarily attributable to lower professional fees and employee headcount.
Previous wording
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 thesix months ended June 30, 2026, as compared to thesix months ended June 30, 2025. This decrease wasprimarily 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.
Current wording
R&D expenses in the current period primarily reflect engineering costs for post-combustion carbon capture, including the Gas Power Product, and for the Oxy-Combustion Cycle, which continued to be incurred for a period after our decision to suspend development of the Oxy-Combustion Cycle and to develop our Initial Project without carbon capture, whereas the prior-year period primarily reflected work on and testing of specific aspects of our technology at the La Porte Demonstration Facility. R&D expenses decreased by $40.7 million, or 55%, for thenine months ended September 30, 2026, as compared to thenine months ended September 30, 2025. This decrease wasprimarily due to the Company suspending the development activities under the BHES JDA in December 2025, resulting in a decrease of $38.1 million. Additionally, plant expenses were lower by $7.9 million due to the suspension of R&D at the La Porte Demonstration Facility in December 2025. Lower headcount reduced recurring compensation expense; those savings were partially offset by employee termination costs, including $0.9 million of severance costs and $0.3 million of accelerated stock-based compensation. This decrease was partially offset by higher engineering consulting costs of $4.0 million, primarily related to the development of the Gas Power Product, and by the $1.6 million of Entropy costs described above.
Previous wording
Project development expenses consist of labor expenses and fees paid to third parties developing commercial scale projects. Project develop ment expe nses decreased by $29.6 million, or 93%, for thesix months ended June 30, 2026, as compared to thesix 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 thesix 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.
Current wording
Project development expenses consist of labor expenses and fees paid to third parties developing commercial-scale projects. Project develop ment expe nses decreased by $37.0 million, or 89%, for the nine months ended September 30, 2026, as compared to the nine months ended September 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 of $2.6 million related to our natural gas power generation projects. Additionally, professional fees increased by $0.6 million related to legal fees. For thenine months ended September 30, 2025, the Company incurred $19.5 million under the BHES LNTP related to certain milestones and $21.0 million in costs related to SN1.
Previous wording
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.
Current wording
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 not to continue development of the Oxy-Combustion Cycle technology. Management determined that no value should be ascribed to the Developed Technology Asset Group. On September 8, 2026, the Company and affiliates of Baker Hughes entered into definitive agreements to, among other things, indefinitely suspend development and commercialization of the utility-scale Oxy-Combustion Cycle technology and amend the related license agreement. Any recovery of the carrying value would be contingent upon a sale, license or other disposition of all or part of the Oxy-Combustion Cycle intellectual property and the La Porte Demonstration Facility. As a result, the Company recognized impairment losses of $194.5 million during the nine months ended September 30, 2026 related to the Developed Technology Asset Group, including $0.8 million incurred in the third quarter of 2026 related to La Porte Demonstration Facility construction-in-progress expenditures.
Previous wording
During the first quarter of 2025, the Company assessed its goodwill for impairmentdueto 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.
Current wording
During the first quarter of 2025, the Company assessed its goodwill for impairmentdueto 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. 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 feedback from potential customers, the estimated cost reductions achieved through the SN1 value engineering process, which, although significant, did not reduce costs to an economic level, 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
Previous wording
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 thesix months ended June 30, 2026, as compared to amounts for thesame 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.
Current wording
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 $51.9 million, or 88%, for thenine months ended September 30, 2026, as compared to thesame period in 2025, primarily due tothe reduction in depreciable and amortizable carrying amounts following the third quarter 2025 impairment and the full impairment of the Developed Technology Asset Group in the second quarter of 2026.
Previous wording
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 offsetby higher investment accretion.
Current wording
Interest income decreased by $7.4 million, or 46%, for the nine months ended September 30, 2026, as compared to the same period in 2025. This decrease was due to lower interest-bearing cash and investment balances, partially offsetby higher investment accretion.
Previous wording
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.
Current wording
The change in Earnout Shares liability and Warrant liability relates to movements in the 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.
Previous wording
The Company recognized income tax expense of less than $0.1 million for thesix 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.
Current wording
The Company recognized income tax expense of less than $0.1 million for thenine months ended September 30, 2026, compared to an income tax benefit of$2.4 million for the same period in 2025. During 2025, the Company moved out of a deferred tax liability and into an overall deferred tax asset position as impairments reduced the book basis of its investment in OpCo below its tax basis. This deferred tax asset was offset by a valuation allowance. For the period ended September 30, 2026, the Company has maintained the deferred tax asset position, which was fully offset by a valuation allowance.
Previous wording
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.
Current wording
Net loss attributable to non-controlling interestswas 61.0% of OpCo’snet loss before income tax for the nine months ended September 30, 2026, as compared to 64.5% of OpCo’s net loss for the nine months ended September 30, 2025. The allocation reflects the non-controlling holders’ weighted-average participation in OpCo’s pretax results, as described in Note 8 to our condensed consolidated financial statements. 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.
Previous wording
Our principal sources of liquidity are cash 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, 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.
Current wording
Our principal sources of liquidity are cash 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, 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 by any applicable limitations on primary offerings under our shelf registration statement. If we rely on General Instruction I.B.6 of Form 3 while the aggregate market value of our common equity held by non-affiliates is below $75 million, the aggregate value of securities sold under that instruction during the applicable rolling 12-month period generally may not exceed one-third of that market value, calculated under the instruction. Further, any future equity issuances at or near recent trading prices of our Class A Common Stock, which closed at $0.83 per share on November 11, 2026, would result in significant dilution to our existing stockholders. We measure liquidity in terms of our ability to fund the cash requirements of our project development 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.
Previous wording
Cash used in operating activities increased $15.8 millionfor the six months ended June 30, 2026, as compared to the same period in 2025. Our net cash used in operating activities to date has historically consisted primarily of payroll, materials 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, 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.
Current wording
Cash used in operating activities decreased $24.6 million for the nine months ended September 30, 2026, as compared to the same period in 2025. Our net cash used in operating activities to date has historically consisted primarily of payroll, materials and supplies, facilities expense, and professional services related to R&D, including the BHES JDA, and general and administrative activities. This decrease was primarily due to lower spending following the suspension of development activities under the BHES JDA and of testing at our La Porte Demonstration Facility, partially offset by $26.1 million in first-quarter 2026 payments for contract cancellation costs resulting from the termination of the BHES LNTP during the fourth quarter of 2025. We expect our cash used in operating activities to increase significantly before we start to generate any material cash inflows from our operations.
Previous wording
During the six months ended June 30, 2026, net cash used in investing activ ities increased $21.7 million as compared to the same period in 2025. Cash used in investing activities for the six months ended June 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 six months ended June 30, 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.
Current wording
During the nine months ended September 30, 2026, net cash provided by investing activ ities was $10.9 million as compared to net cash used in investing activities of $6.7 million in the same period in 2025. Net cash provided by investing activities in 2026 included $138.6 million of net maturities and sales of available-for-sale securities, offset by $117.6 million paid for the asset acquisition, $9.9 million in property and equipment purchases, and $0.3 million in capitalized software expenditures. Cash used in investing activities for the nine months ended September 30, 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.
Previous wording
Our cash used in financing activ ities was materially consistent forthesix months ended June 30, 2026, as compared to the same period in 2025. Cash used in financing activities consists of finance lease obligation payments, income tax payments on vested share-based compensation awards, and issuance of Class A Common Stock.
Current wording
Our cash used in financing activ ities was materially consistent forthe nine months ended September 30, 2026, as compared to the same period in 2025. Net cash used in financing activities consists of finance lease obligation payments and income tax payments on vested share-based compensation awards, partially offset by proceeds from the issuance of Class A Common Stock under share-based compensation plans.
Previous wording
We hold a lease for approximately 218,900 square feet of land under the La Porte Demonstration Facility. In addition, we have an oxygen supply agreement with the lessor to supply oxygen to the La Porte Demonstration 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 the lessor or by us 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$4.5 million and $3.6 millionas of June 30, 2026 and December 31, 2025, respectively.
Current wording
We hold a lease for approximately 218,900 square feet of land on which the La Porte Demonstration Facility is located. In addition, we have an oxygen supply agreement with the lessor to supply oxygen to the La Porte Demonstration 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 the lessor or by us 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$4.6 million and $3.6 millionas of September 30, 2026 and December 31, 2025, respectively. Depending on the alternative we pursue, decommissioning could occur earlier or later than June 2027, which would change our estimate of the asset retirement obligation, or a buyer could assume the removal obligation.
Previous wording
As discussed in Note 14, during the second quarter of 2026 we revised the expected decommissioning timing for the La Porte Demonstration Facility to June 2027, based on the Company’s expectations regarding the continued ownership of its Oxy-Combustion Cycle technology assets.
Current wording
As discussed in Note 14 to our condensed consolidated financial statements, during the second quarter of 2026 we revised the expected decommissioning timing for the La Porte Demonstration Facility to June 2027, based on the Company’s expectations regarding the continued ownership of its Oxy-Combustion Cycle technology assets. We are evaluating alternatives for the facility, including a sale of all or part of the facility or its equipment, and we have begun discussions with the lessor regarding an early termination of the land lease and related arrangements. Any early termination may require us to pay termination costs and to complete our removal and restoration obligations on an accelerated schedule, and there can be no assurance that we will agree to terms for any of these alternatives.
Previous wording
The Company leases corporate office space in Durham, North Carolina, and Houston, Texas. The Company also leases land in West Texas for Project Permian from a subsidiary of Occidental Petroleum, which is a significant shareholder of the Company. Additionally, the Company leases two office trailers at the La Porte Demonstration Facility, as well as a warehouse, in La Porte, Texas.
Current wording
The Company leases corporate office space in Durham, North Carolina and Houston, Texas. The Company also leases land at its Project Permian site in West Texas from a subsidiary of Occidental Petroleum, which is a significant shareholder of the Company, and continues to hold that lease. Additionally, the Company leases a warehouse in La Porte, Texas.
Previous wording
As of June 30, 2026, future minimum lease payments attributable to the Company’s operating lease arrangements are appr oximately$3.9 million.
Current wording
As of September 30, 2026, future minimum lease payments attributable to the Company’s operating lease arrangements are appr oximately$3.6 million.
Previous wording
As of June 30, 2026, we have committed to purchase certain components of industrial machinery, primarily for use at Project Permian Phase I. The gross commitments totaled $79.6 million. As of June 30, 2026, there was $55.8 million remaining related to these commitments. These payments are due in installments aligned to contractual milestones through 2028. Of the remaining amount related to Project Permian Phase I, approximately $8.9 million is due during the 12 months following June 30, 2026 and approximately $46.6 million is due thereafter through 2028. We expect to fund the amounts due during the next 12 months from existing liquidity. No project-level financing is committed for the later amounts. These amounts exclude any additional pre-FID equipment commitments described in the following paragraph.
Current wording
As of September 30, 2026, we have committed to purchase natural gas turbine equipment packages for use in a future natural gas power generation project. The gross commitments totaled $77.7 million, and as of September 30, 2026, there was $54.4 million remaining related to these commitments. These payments are due in installments aligned to contractual milestones through 2028. Of the remaining amounts due under the contract, approximately $38.9 million is due during the 12 months following September 30, 2026, and approximately $15.5 million is due thereafter through 2028. We expect to fund these amounts from existing liquidity and, if obtained, from equipment or project-level financing, none of which has been committed. We do not expect to use these turbine packages for our Initial Project. The option under the November 2026 change order described below would allow us to add emissions control and monitoring equipment to the packages, which we expect would be required for their permitting and operation at most sites; we have not decided whether to exercise it. These amounts exclude the additional commitments described under “Additional Equipment Commitments” below.
Previous wording
As of June 30, 2026 and December 31, 2025, we had not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Current wording
As of September 30, 2026 and December 31, 2025, we had not engaged in any off-balance sheet arrangements, such as guarantees of third-party obligations, retained interests in transferred assets or variable interests in unconsolidated entities.
Previous wording
Our financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“US GAAP”). Preparation of the financial statements requires our management to make a number of judgments, estimates and assumptions relating to the reported amounts of expenses, assets, and liabilities and the disclosure of contingent assets and liabilities. We consider an accounting judgment, estimate or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates, and assumptions could have a material impact on our financial statements. Our significant accounting policies are described in Note 2 — Significant Accounting Policies in our consolidated financial statements included in Part II, Item 8 in our Annual Report.
Current wording
Our financial statements have been prepared in accordance with US GAAP. Preparation of the financial statements requires our management to make a number of judgments, estimates and assumptions relating to the reported amounts of expenses, assets, and liabilities and the disclosure of contingent assets and liabilities. We consider an accounting judgment, estimate or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates, and assumptions could have a material impact on our financial statements.
Previous wording
Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies (“EGCs”) from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect not to take advantage of the extended transition period and comply with the requirements that apply to non-EGCs, and any such election to not take advantage of the extended transition period is irrevocable. We expect to be an EGC until December 31, 2026, which is the last day of the fiscal year following the fifth anniversary of our initial public offering. As an EGC, we intend to continue to take advantage of the benefits of this extended transition period.
Current wording
Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies (“EGCs”) from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect not to take advantage of the extended transition period and comply with the requirements that apply to non-EGCs, and any such election to not take advantage of the extended transition period is irrevocable. We expect to be an EGC until December 31, 2026, which is the last day of the fiscal year in which the fifth anniversary of our initial public offering occurs. As an EGC, we intend to continue to take advantage of the benefits of this extended transition period. After we cease to be an EGC, we will be required to comply with new or revised accounting standards on the effective dates that apply to public business entities.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.