netpower(NPWR) - 2025 Q2 - Quarterly Report

Certain Defined Terms This section references the Annual Report on Form 10-K for definitions of terms used in this Quarterly Report - This section references the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, for definitions of certain terms used in this Quarterly Report on Form 10-Q[9] Cautionary Note Regarding Forward-Looking Statements The report contains forward-looking statements related to the Company's technology development, market demand, plant deployment timing, business strategies, capital requirements, and future performance, which are subject to known and unknown risks and uncertainties - The report contains forward-looking statements regarding technology development, market demand, plant deployment, business strategies, capital requirements, and future performance, all subject to known and unknown risks and uncertainties[11] - Key risks encompass uncertainty of projected financial information, ability to utilize net operating losses, capital-intensive business model requiring additional funding, technology deployment barriers, supply chain issues, and intellectual property protection[12] - Readers are cautioned against undue reliance on forward-looking statements, as actual results may materially differ, and the Company undertakes no obligation to update them except as legally required[13][14] PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents NET Power Inc.'s unaudited condensed consolidated financial statements and related notes for the periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in millions) | ASSETS | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :------------------ | | Cash and cash equivalents | $284.0 | $329.2 | | Short-term investments | — | $100.0 | | Total current assets | $408.5 | $513.0 | | Total assets | $1,789.5 | $2,294.1 | | LIABILITIES | June 30, 2025 | December 31, 2024 | | :------------------------- | :------------ | :------------------ | | Total current liabilities | $41.8 | $17.9 | | Warrant liability | $7.6 | $81.3 | | Total liabilities | $59.0 | $131.9 | | EQUITY | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :------------------ | | Total shareholders' equity | $616.2 | $655.6 | | Redeemable non-controlling interests | $1,114.3 | $1,506.6 | - Total assets decreased from $2.294 billion to $1.789 billion, primarily due to a decrease in goodwill and property, plant, and equipment[16] - Total liabilities decreased from $131.9 million to $59.0 million, largely driven by a significant reduction in warrant liability and Tax Receivable Agreement liability[16][17] Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Operations and Comprehensive Loss (in millions, except per share data) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $— | $0.2 | $— | $0.2 | | Gross profit | $— | $0.2 | $— | $0.2 | | Total operating expenses | $90.6 | $45.1 | $565.1 | $83.8 | | Operating loss | $(90.6) | $(44.9) | $(565.1) | $(83.6) | | Net loss attributable to NET Power Inc. | $(28.1) | $(4.3) | $(147.5) | $(15.7) | | Loss per share of Class A Common Stock, basic and diluted | $(0.36) | $(0.06) | $(1.91) | $(0.22) | - The Company reported no revenue for the three and six months ended June 30, 2025, compared to $0.2 million in the prior year periods, indicating a halt in revenue-generating activities[19] - Total operating expenses significantly increased to $565.1 million for the six months ended June 30, 2025, from $83.8 million in the prior year, primarily due to a $415.9 million goodwill impairment and other charges[19] - Net loss attributable to NET Power Inc. widened substantially to $(147.5) million for the six months ended June 30, 2025, from $(15.7) million in the same period of 2024, reflecting increased operating expenses and impairment charges[19] Condensed Consolidated Statements of Mezzanine Shareholders' Equity and Shareholders' Equity Condensed Consolidated Statements of Mezzanine Shareholders' Equity and Shareholders' Equity (in millions) | | Balance at Dec 31, 2024 | Balance at June 30, 2025 | | :------------- | :---------------------- | :----------------------- | | Class A Common Stock (Shares) | 76,760 | 77,879 | | Class B Common Stock (Shares) | 139,691 | 141,340 | | Additional Paid-in Capital | $771.6 | $879.7 | | Accumulated Deficit | $(116.0) | $(263.5) | | Total Shareholders' Equity | $655.6 | $616.2 | | Redeemable Non-controlling Interests | $1,506.6 | $1,114.3 | - Total shareholders' equity decreased from $655.6 million to $616.2 million, primarily due to the net loss incurred during the period[20] - Redeemable non-controlling interests in subsidiary decreased from $1.507 billion to $1.114 billion, reflecting adjustments to book value and attribution of net loss[20][60] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in millions) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(45.0) | $(10.8) | | Net cash used in investing activities | $(0.1) | $(118.6) | | Net cash (used in) provided by financing activities | $(0.1) | $0.1 | | Net decrease in cash, cash equivalents, and restricted cash | $(45.2) | $(129.4) | | Cash, cash equivalents, and restricted cash, end of period | $286.5 | $407.6 | - Cash used in operating activities significantly increased to $45.0 million for the six months ended June 30, 2025, from $10.8 million in the prior year, driven by higher R&D and project development costs[22][135] - Net cash used in investing activities decreased to $0.1 million for the six months ended June 30, 2025, from $118.6 million in the prior year, primarily due to the maturity and reinvestment of a certificate of deposit into available-for-sale securities[22][136] NOTE 1 — Nature of Business and Basis of Presentation This note describes NET Power Inc.'s clean energy technology and the basis for preparing its unaudited condensed consolidated financial statements - NET Power Inc. is a clean energy technology company developing the proprietary 'Net Power Cycle' for electricity generation with carbon capture and reuse, sale, or sequestration[26] - The unaudited condensed consolidated financial statements conform to US GAAP for interim financial information, with certain disclosures condensed or omitted per SEC regulations, and should be read with the 2024 Annual Report[27][28] NOTE 2 — Significant Accounting Policies This note outlines the Company's significant accounting policies, management estimates, operating segment, and evaluation of new accounting standards - The Company's significant accounting policies remain consistent with those detailed in the 2024 Annual Report for the fiscal year ended December 31, 2024[29] - Management applies estimates, judgments, and assumptions for items such as depreciation, amortization, asset valuations, and share-based compensation, which may impact reported financial amounts[30] - The Company operates as a single operating and reportable segment, with the CEO focusing on consolidated operating income (loss), R&D, G&A expenses, and interest income[31] - The Company is evaluating the impact of new FASB ASUs 2023-09 (Income Tax Disclosures) and 2024-03 (Expense Disaggregation Disclosures) on its financial statements, effective after December 15, 2025, and December 15, 2026, respectively[32][33] NOTE 3 — Investments This note details the Company's available-for-sale securities and their fair values, including the maturity of a $100 million certificate of deposit - As of June 30, 2025, the Company is solely invested in available-for-sale securities, following the maturity and collection of a $100 million certificate of deposit in June 2025[34] Available-for-sale Investments (in millions) | | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :-------------------------------------------- | :----------------------- | :--------------------------- | | Current assets: Corporate bonds | $18.5 | $11.0 | | Current assets: Commercial paper | $28.2 | $8.6 | | Current assets: U.S. treasuries | $72.8 | $58.7 | | Long-term assets: Corporate bonds | $31.8 | — | | Long-term assets: U.S. treasuries | $37.1 | $22.6 | | Total | $188.3 | $101.0 | - The Company's long-term available-for-sale investments mature through June 2027, with no securities sold or credit losses recognized during the three and six months ended June 30, 2025 and 2024[34] NOTE 4 — Fair Value Measurements This note provides fair value measurements for assets and liabilities, categorizing them into Level 1, 2, or 3, and detailing key inputs for Level 3 valuations Fair Value Measurements (in millions) | | Level | June 30, 2025 | December 31, 2024 | | :------------------------------------- | :---- | :------------ | :---------------- | | Assets: Available-for-sale investments | 1 | $188.3 | $101.0 | | Assets: Short-term investments | 2 | — | $100.0 | | Liabilities: Public Warrants | 1 | $2.8 | $31.0 | | Liabilities: Private Placement Warrants | 3 | $4.8 | $50.2 | | Liabilities: Earnout Shares | 3 | $0.021 | $2.0 | - Available-for-sale investments are classified as Level 1, short-term investments as Level 2, Public Warrants as Level 1, and Private Placement Warrants and Earnout Shares as Level 3[37][38][39][42][44] - Level 3 liabilities (Earnout Shares and Private Placement Warrants) decreased significantly from $52.2 million to $4.8 million, primarily due to changes in their fair value[36] Key Inputs for Level 3 Valuations | | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Private Placement Warrants: Term (years) | 2.94 | 3.44 | | Private Placement Warrants: Volatility | 79.0% | 59.3% | | Private Placement Warrants: Risk-free rate | 3.6% | 4.2% | | Earnout Shares: Term (years) | 0.94 | 1.43 | | Earnout Shares: Volatility | 85.0% | 59.7% | | Earnout Shares: Risk-free rate | 3.9% | 4.1% | NOTE 5 — Goodwill and Intangible Assets This note details the full impairment of goodwill and the net amounts and amortization of definite-lived intangible assets - Goodwill, representing future economic benefits, was fully impaired by $359.8 million during the six months ended June 30, 2025, due to a business plan change and sustained decrease in market capitalization[46][47] Goodwill (in millions) | | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Balance at beginning of period | $359.8 | $423.9 | | Impairment | $(359.8) | — | | Measurement adjustments | — | $(64.1) | | Balance at end of period | $— | $359.8 | Definite-Lived Intangible Assets (in millions) | | June 30, 2025 Net Amount | December 31, 2024 Net Amount | | :---------------------------------------------- | :----------------------- | :--------------------------- | | Developed technology | $1,206.4 | $1,240.0 | | Software | $1.9 | $1.3 | | Total definite-lived intangible assets | $1,208.3 | $1,241.3 | - Amortization expense for definite-lived intangible assets was $33.8 million for the six months ended June 30, 2025, an increase from $33.6 million in the prior year[51] - Despite higher-than-expected cost estimates for its first utility-scale project, an impairment test in March 2025 indicated no impairment was required for definite-lived intangible assets, the Demonstration Plant, and other corporate assets[50] NOTE 6 — Property, Plant, and Equipment This note presents the net book value of property, plant, and equipment, including the Demonstration Plant and construction-in-progress, and details related expenses Property, Plant, and Equipment (in millions) | | June 30, 2025 | December 31, 2024 | | :-------------------------------------------- | :------------ | :---------------- | | Demonstration Plant | $122.4 | $122.8 | | Construction-in-progress | $3.3 | $48.4 | | Total property, plant, and equipment, net | $96.6 | $151.5 | - During Q1 2025, $56.1 million of Project Permian costs, previously capitalized as Construction-in-progress, were expensed due to a value engineering process and temporary pause in equipment releases[55] - Depreciation expense increased to $9.3 million for the six months ended June 30, 2025, from $6.4 million in the prior year, primarily due to new additions to the Demonstration Plant[56] NOTE 7 — Accrued Liabilities This note details the Company's accrued liabilities, including incentive compensation, capital expenditures, project expenses, and professional fees Accrued Liabilities (in millions) | | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Incentive compensation | $1.6 | $2.9 | | Capital expenditures | $0.7 | $2.3 | | Accrued project expenses | $4.7 | — | | Professional fees | $1.8 | $1.1 | | Other accrued liabilities | $1.2 | $1.1 | | Total accrued liabilities | $10.1 | $7.4 | - Total accrued liabilities increased to $10.1 million at June 30, 2025, from $7.4 million at December 31, 2024, primarily due to the recognition of $4.7 million in accrued project expenses[57] NOTE 8 — Leases This note describes a new building lease agreement for a warehouse in La Porte, Texas, including its initial term and future minimum lease payments - The Company entered a new building lease for a warehouse in La Porte, Texas, in March 2025, with a 62-month initial term and a five-year renewal option, incurring approximately $2.1 million in future minimum lease payments[58] NOTE 9 — Redeemable Non-Controlling Interests in Subsidiary This note outlines the ownership percentages of non-controlling interests, their measurement basis, and the attribution of OpCo's net loss Ownership Percentage | | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Non-controlling holders | 64.4% | 64.4% | | NET Power Inc. | 35.6% | 35.6% | - Redeemable non-controlling interests (NCI) are measured quarterly at the higher of book value or redemption value, with NCI measured at book value as of June 30, 2025, and at redemption value as of December 31, 2024[60] - OpCo's net loss before income tax was attributed to redeemable NCI holders at 64.4% for the three and six months ended June 30, 2025, a slight decrease from 66.2% in the prior year periods[61] NOTE 10 — Share-Based Compensation This note details share-based compensation expense, unrecognized compensation, and new awards of PSUs, stock options, and RSUs during the period Share-Based Compensation Expense (in millions) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Share-based compensation expense | $13.9 | $8.5 | $24.1 | $14.8 | - Unrecognized share-based compensation expense as of June 30, 2025, includes $1.1 million for PSUs, $4.5 million for stock options, and $7.4 million for RSUs, expected to be recognized over weighted average periods of up to three years[63][66][67] - During Q2 2025, 524,000 PSUs were awarded to executives, 4,076,000 stock options to employees, and 2,114,000 RSUs were granted, with vesting periods generally up to three years based on market conditions and continued employment[64][65][66][68][69] NOTE 11 — Loss per Share This note presents the net loss attributable to NET Power Inc. and the basic and diluted loss per share, along with anti-dilutive instruments excluded from calculations Loss per Share Data (in millions, except per share data) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to NET Power Inc. | $(28.1) | $(4.3) | $(147.5) | $(15.7) | | Weighted-average shares outstanding, basic and diluted | 77,699 | 72,177 | 77,350 | 72,036 | | Loss per share, basic and diluted | $(0.36) | $(0.06) | $(1.91) | $(0.22) | - The Company excluded 174.6 million anti-dilutive instruments (including warrants, Earnout Shares, and unvested equity awards) from the computation of diluted loss per share as of June 30, 2025[72] NOTE 12 — Income Taxes This note discusses the Company's estimated effective tax rate, the impact of new tax legislation, and the reduction and termination of the Tax Receivable Agreement liability - As of June 30, 2025, the Company estimated an annual effective tax rate of 1.96% and recorded a deferred income tax benefit of $1.6 million for the three months and $1.2 million for the six months ended June 30, 2025[73] - The 'One Big Beautiful Bill Act' (OBBBA), enacted July 4, 2025, extends 45Q tax credits and increases credit value for carbon emissions used in enhanced oil recovery, with the Company assessing its impact but not expecting a material effect on current financial statements[74][96] - In March 2025, the Company reduced its Tax Receivable Agreement (TRA) liability to zero (a $21.3 million reduction) as payments were no longer probable due to the Project Permian pause, with the TRA formally terminated on June 12, 2025[75][76][127] NOTE 13 — Related Party Transactions This note details transactions with related parties, including administrative and Demonstration Plant costs under master services agreements, BHES JDA expenses, and LNTP costs Related Party Transactions (in millions) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Master services agreement administrative costs | $0.042 | $0.027 | $0.069 | $0.052 | | Master services agreement costs for Demonstration Plant | $0.668 | $0.395 | $1.254 | $0.662 | | BHES JDA | $20.178 | $11.819 | $38.005 | $20.165 | | BHES Limited Notice to Proceed | $19.533 | — | $19.533 | — | - Current liabilities payable to related parties increased to $29.5 million at June 30, 2025, from $6.5 million at December 31, 2024[77] - Under the BHES JDA, the Company incurred $38.0 million in R&D expenses for the six months ended June 30, 2025, an increase from $20.2 million in the prior year, including $3.9 million for BHES JDA Make-Whole Payments[80][81][82][120] - The Company incurred $19.5 million under the BHES Limited Notice to Proceed (LNTP) for long-lead materials for its first utility-scale power plant (SN1) during the three and six months ended June 30, 2025[77][84][108][121] NOTE 14 — Commitments and Contingencies This note outlines legal proceedings, asset retirement obligations, and remaining purchase obligations related to the BHES JDA and industrial components - The Company is a defendant in a putative class action and a derivative suit, both alleging materially false and misleading statements regarding Project Permian's timing and costs, and intends to vigorously defend against these claims[86][87][88] Asset Retirement Obligation (in millions) | | June 30, 2025 | December 31, 2024 | | :----------------------------------------- | :------------ | :---------------- | | Asset retirement obligation, beginning of period | $3.3 | $2.1 | | Accretion expense | $0.162 | $0.209 | | Asset retirement obligation, end of period | $3.4 | $3.3 | - As of June 30, 2025, the Company has $46.4 million in remaining purchase obligations through February 2027 related to the BHES JDA (50% cash, 50% common stock) and an additional $70.4 million in asset purchase obligations through 2026[91] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on NET Power Inc.'s financial condition, results of operations, liquidity, capital resources, cash flow, and contractual obligations for the periods ended June 30, 2025, and 2024 Overview This overview introduces NET Power as a clean energy technology company developing the 'Net Power Cycle' for carbon-capture electricity generation - NET Power is a clean energy technology company developing the 'Net Power Cycle,' a novel power generation system designed to produce electricity from natural gas while capturing virtually all CO2 emissions and producing almost no air pollutants[95] Key Factors Affecting Our Prospects and Future Results This section discusses key factors influencing the Company's future, including cost management, tax policies, capital access, and regulatory changes - Future success depends on managing cost overruns, technical problems, supply chain issues, changes in tax policies (e.g., 45Q credits), access to capital, and competition from other energy technologies[95] - The 'One Big Beautiful Bill Act' (OBBBA), signed July 4, 2025, preserved 45Q tax credits and increased credit value for carbon emissions to $85/ton, expected to materially improve project economics, especially in the Permian Basin[96] - Potential repeal of EPA regulations requiring 90% carbon capture for new gas turbines by 2032 is uncertain but not expected to materially impact the market for Net Power's technology[97] Commencing Commercial Operations This section outlines plans for R&D, challenges with the first utility-scale plant (SN1), and a new techno-economic study for integrating combustion gas turbines - Net Power plans additional R&D and equipment validation testing at its Demonstration Plant, while its first utility-scale plant (SN1), Project Permian, faced higher-than-anticipated cost estimates after the December 2024 FEED process[98] - In Q1 2025, the Company initiated a post-FEED optimization and value engineering process for Project Permian, suspending long-lead equipment releases, with project online no earlier than 2029 if successful[98] - In Q2 2025, a techno-economic study was initiated to assess integrating combustion gas turbines into Net Power projects, aiming to enhance economics and accelerate market deployment[99] Key Components of Results of Operations This section notes that historical results of operations for this development-stage company may not be indicative of future performance - As a development stage company, historical results may not indicate future performance, and future financial drivers may not be comparable to historical or future results[101] Results of Operations This section provides a detailed comparison of the Company's financial performance for the three and six months ended June 30, 2025, versus 2024 Comparison of the Three Months Ended June 30, 2025 to the Three Months Ended June 30, 2024 This section compares the Company's financial performance for the three months ended June 30, 2025, against the same period in 2024 Financial Performance (Three Months Ended June 30, in millions) | | 2025 | 2024 | $ Change | % Change | | :------------- | :--- | :--- | :------- | :------- | | Revenue | $— | $0.2 | $(0.2) | (100)% | | General and administrative | $13.6 | $7.8 | $5.8 | 74% | | Sales and marketing | $1.5 | $0.9 | $0.6 | 70% | | Research and development | $26.6 | $15.5 | $11.1 | 72% | | Project development | $27.2 | $0.9 | $26.3 | 3,030% | | Interest income | $5.5 | $9.0 | $(3.6) | (39)% | | Change in Earnout Shares liability and Warrant liability | $1.4 | $16.2 | $(14.8) | (91)% | | Net loss attributable to NET Power Inc. | $(28.1) | $(4.3) | N/A | N/A | - General and administrative expenses increased by $5.8 million (74%), driven by $3.1 million in severance costs, $1.1 million in accelerated share-based compensation, and higher professional fees[103] - Project development expenses surged by $26.3 million (3,030%), as the Company began expensing Project Permian costs ($19.5 million under BHES LNTP and $7.3 million for other costs) after pausing long-lead equipment releases for value engineering[108] - Interest income decreased by $3.6 million (39%), attributed to lower interest-bearing cash and investment balances, declining interest rates, and reduced investment accretion[110] Comparison of the Six Months Ended June 30, 2025 to the Six Months Ended June 30, 2024 This section compares the Company's financial performance for the six months ended June 30, 2025, against the same period in 2024 Financial Performance (Six Months Ended June 30, in millions) | | 2025 | 2024 | $ Change | % Change | | :------------- | :--- | :--- | :------- | :------- | | Revenue | $— | $0.2 | $(0.2) | (100)% | | General and administrative | $22.3 | $14.1 | $8.2 | 58% | | Research and development | $49.2 | $26.8 | $22.5 | 84% | | Project development | $31.7 | $1.3 | $30.4 | 2,354% | | Goodwill impairment and other charges | $415.9 | $— | $415.9 | n/m | | Interest income | $11.3 | $16.7 | $(5.4) | (32)% | | Change in Earnout Shares liability and Warrant liability | $75.6 | $1.7 | $73.9 | 4,423% | | Change in Tax Receivable Agreement liability | $21.3 | $— | $21.3 | n/a | | Net loss attributable to Net Power Inc. | $(147.5) | $(15.7) | N/A | N/A | - Goodwill impairment and other charges of $415.9 million were recognized, including $359.8 million for goodwill impairment due to business plan changes and market capitalization decrease, and $56.1 million for expensed Project Permian construction-in-progress costs[122] - Research and development expenses increased by $22.5 million (84%), driven by higher BHES JDA activity, ongoing Demonstration Plant validation testing, engineering headcount growth, and $3.9 million in BHES JDA Make-Whole Payments[120] - The change in Earnout Shares liability and Warrant liability increased by $73.9 million (4,423%), primarily due to a significant decrease in the Company's stock price ($8.12 per share) during the six months ended June 30, 2025[125][126] Liquidity and Capital Resources This section details the Company's liquidity position, including cash, investments, and future funding requirements for operations and plant construction Liquidity Position (in millions) | | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $284.0 | $329.2 | | Short-term investments | — | $100.0 | | Available-for-sale securities | $188.3 | $101.0 | | Total liquidity | $472.3 | $530.2 | - Total liquidity decreased from $530.2 million to $472.3 million at June 30, 2025[131] - The Company believes existing liquidity is sufficient for the next 12 months for operating costs and R&D, but additional funding will be required to construct its first utility-scale plant and originate new plant opportunities[132][133] Cash Flow Summary This section summarizes the Company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 Cash Flows (in millions) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(45.0) | $(10.8) | | Net cash used in investing activities | $(0.1) | $(118.6) | | Net cash (used in) provided by financing activities | $(0.1) | $0.1 | - Cash used in operating activities increased by $34.1 million, primarily due to higher R&D costs (including BHES JDA), project development costs, and corporate infrastructure expansion[135] - Cash used in investing activities decreased by $118.5 million, mainly reflecting the maturity of a certificate of deposit and reinvestment into available-for-sale securities, along with capital expenditures for the Demonstration Plant and Project Permian[136] Commitments and Contractual Obligations This section details the Company's asset retirement obligation, future minimum lease payments, BHES JDA funding commitments, and industrial component purchase commitments - The asset retirement obligation for the Demonstration Plant lease is $3.4 million as of June 30, 2025, requiring equipment removal and land restoration by January 1, 2031[138] - Future minimum lease payments for operating and finance leases are approximately $5.0 million and $0.2 million, respectively, as of June 30, 2025[139] - The Company committed to funding a portion of the remaining $140 million BHES JDA development costs through cash and equity, with $46.8 million each recognized for cash and share-based expenses inception-to-date[140] - As of June 30, 2025, total gross purchase commitments for industrial machinery components for the Demonstration Plant and SN1 were $146.7 million, with $70.4 million remaining[142] Off-Balance Sheet Arrangements This section confirms that the Company has not engaged in any off-balance sheet arrangements as of June 30, 2025, and December 31, 2024 - As of June 30, 2025, and December 31, 2024, the Company has not engaged in any off-balance sheet arrangements[141] Purchase Commitments This section details the Company's commitments to purchase industrial components for its Demonstration Plant and first commercial power plant (SN1) - The Company has committed to purchase industrial components for its Demonstration Plant and first commercial power plant (SN1), with $70.4 million of remaining obligations as of June 30, 2025[142] Critical Accounting Policies and Estimates This section states that there have been no material changes to the Company's critical accounting estimates from those discussed in its Annual Report - There have been no material changes to the Company's critical accounting estimates from those discussed in its Annual Report[143] Emerging Growth Company Accounting Election This section states the Company expects to remain an Emerging Growth Company (EGC) through 2025 and will utilize the extended transition period for new accounting standards - The Company expects to remain an Emerging Growth Company (EGC) through the end of 2025 and intends to take advantage of the extended transition period for complying with new or revised financial accounting standards[144] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, NET Power Inc. is not required to provide quantitative and qualitative disclosures about market risk in this report, referring to the Annual Report on Form 10-K for relevant information - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk in this Quarterly Report[145] Item 4. Controls and Procedures This section details the evaluation of NET Power Inc.'s disclosure controls and procedures, concluding their effectiveness as of June 30, 2025, with no material changes to internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section reports management's conclusion that the Company's disclosure controls and procedures were effective as of June 30, 2025 - Management, including the principal executive and financial officer, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[146] Changes in Internal Control over Financial Reporting This section confirms no material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025 - No changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[148] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section outlines legal proceedings against NET Power Inc., including a class action and derivative suit alleging false statements regarding Project Permian, which the Company intends to vigorously defend - On April 18, 2025, a putative class action complaint was filed against the Company and certain officers, alleging federal securities law violations due to materially false and misleading statements regarding Project Permian's timing and costs[152] - On May 29, 2025, a derivative suit was filed on behalf of the Company against its officers and board, asserting claims for breach of fiduciary duty, unjust enrichment, and other violations, predicated on the same alleged misstatements about Project Permian[153] - The Company intends to vigorously defend against both matters and is currently unable to estimate a reasonably possible financial loss or range of financial loss[154] Item 1A. Risk Factors As a smaller reporting company, NET Power Inc. is not required to provide detailed risk factors in this quarterly report, referring to its Annual Report on Form 10-K for a comprehensive overview - As a smaller reporting company, the Company is not required to provide risk factors in this item, referring instead to its Annual Report on Form 10-K for a discussion of material risks[155] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports on unregistered sales of equity securities, including Class B Common Stock and OpCo Class A units issued to BHES for JDA costs, exempt from registration under Section 4(a)(2) of the Securities Act - On May 7, 2025, the Company issued 1,247,582 shares of Class B Common Stock and OpCo issued 1,247,582 Class A units to BHES as payment for costs under the Amended and Restated JDA, exempt from registration under Section 4(a)(2) of the Securities Act[156] Item 3. Defaults Upon Senior Securities NET Power Inc. reported no defaults upon senior securities during the period - There were no defaults upon senior securities[157] Item 4. Mine Safety Disclosures This item is not applicable to NET Power Inc. - This item is not applicable to the Company[158] Item 5. Other Information This section confirms that no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[159] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including various agreements, corporate documents, certifications, and XBRL-related documents - The exhibits include the First Amendment to the Business Combination Agreement, Certificate of Incorporation, Bylaws, Certifications of Principal Executive and Financial Officers, and Inline XBRL documents[160] Signatures This section contains the required signatures for the Form 10-Q, certifying its submission on behalf of NET Power Inc. by its Controller, Caleb C. Van Dolah - The report was signed on August 11, 2025, by Caleb C. Van Dolah, Controller and Principal Accounting Officer, on behalf of NET Power Inc[162][163]