Business context and reporting period
NET Power Inc. is a development-stage clean-energy technology company developing the NET Power Cycle, designed to generate electricity from natural gas while capturing carbon dioxide and limiting other air emissions. It has not begun commercial operations and reported no revenue in the quarter.
This Form 10-Q covers the quarter ended September 30, 2023. The Business Combination closed June 8, 2023, so 2023 financial statements distinguish the post-close “Successor” from the pre-close “Predecessor”; purchase accounting and the change in corporate structure make comparisons imperfect.
Financial results and liquidity
| Metric | Q3 2023 | Q3 2022 |
|---|---|---|
| Revenue | $0 | $141,000 |
| Operating expenses | $38.7 million | $12.3 million |
| Operating loss | $38.7 million | $12.3 million |
| Net loss attributable to NET Power Inc. | $30.6 million | $12.2 million |
| Basic and diluted loss per share/unit | $0.44 | $10.69 |
Q3 2023 consolidated net loss was $92.0 million, of which $61.4 million was attributable to non-controlling interests. Other expense was $62.0 million, primarily reflecting fair-value changes in warrant liabilities; interest income was $8.7 million. Gross loss was $3,000, so a revenue margin is not meaningful.
For the post-close period June 8–September 30, 2023, revenue was zero and net loss was $202.6 million, including a $79.1 million one-time related-party option-settlement expense. The filing does not present a single comparable nine-month 2023 result on the same accounting basis as 2022.
- Cash and liquidity: At September 30, cash was $545.2 million and short-term investments were $100.0 million, a six-month certificate of deposit. Current assets were $650.9 million versus current liabilities of $9.4 million.
- Cash flows: From June 8 through September 30, operating cash use was $35.4 million, investing cash use was $95.9 million, and financing provided $319.5 million. Financing included PIPE proceeds; investing mainly included the $100 million certificate of deposit.
- Debt and other liabilities: The filing reports no outstanding debt borrowings. Total liabilities were $229.5 million, including $140.5 million of warrant liabilities, $9.4 million under the tax receivable agreement, and $63.6 million of deferred taxes. Redeemable non-controlling interests of $2.16 billion are presented as mezzanine equity, not debt.
- Assets and equity: Total assets were $2.49 billion, including $1.32 billion of developed-technology intangibles and $424.0 million of goodwill recognized in the Business Combination. The Company’s reported shareholders’ equity was $104.0 million.
Material changes versus prior periods
- Q3 revenue fell to zero from $141,000; management described prior-period revenue as immaterial and the decrease as normal fluctuation.
- Q3 operating expenses rose to $38.7 million from $12.3 million, driven by higher corporate and public-company costs, research and development, sales and marketing, and purchase-accounting amortization.
- Q3 depreciation, amortization and accretion increased to $20.1 million from $3.3 million, largely due to amortization of developed technology recorded in the Business Combination.
- Cash increased substantially following the Business Combination and PIPE financing, which generated approximately $675 million gross in combined trust and PIPE proceeds. The Company also repurchased shares associated with shareholder redemptions.
Outlook, commentary and risks
Management expects continuing losses and says further capital may be needed, although it believes Business Combination proceeds should be sufficient to reach commercialization; some future costs are not reasonably estimable. The Company expects operating cash use to increase as hiring and engineering work expand. No formal financial guidance was provided.
The Company plans further Demonstration Plant testing and targets purchasing initial long-lead materials for its first utility-scale plant in 2024, with initial power generation targeted between the second half of 2027 and the first half of 2028. The proposed 300 MWe-class project is expected to be at an OXY-hosted Permian Basin site. Management describes a target CO₂ capture rate of at least 97%, approximately 45% net efficiency for early plants and a later target of approximately 50%; these are objectives, not demonstrated commercial results.
- Commercialization depends on further testing, engineering, siting, permitting, supply and offtake contracts, third-party financing, a final investment decision, construction and commissioning.
- Risks include technical or construction problems, cost overruns, supply-chain constraints, competition, uncertain customer demand, and the capital-intensive nature of the business.
- Remaining disclosed commitments totaled approximately $125.1 million, including cash and share-based amounts under the Baker Hughes Energy Services joint development agreement and a machinery purchase commitment. The JDA’s stated total value is $140 million.
- Warrant and earnout liabilities are subject to fair-value remeasurement, which can materially affect reported earnings. The Business Combination purchase-price allocation remains subject to measurement-period adjustments.
- The Company reported effective disclosure controls as of quarter-end and no material change in internal control over financial reporting. Management did not expect ordinary-course legal matters to have a material adverse effect.
Important facts for investors to verify
- Whether the Demonstration Plant completes further testing and validates performance relevant to a commercial-scale plant.
- Progress against the 2024 long-lead procurement and 2027–2028 initial-generation targets, including permitting, contracts, financing and final investment decision.
- Cash burn, committed spending and whether additional financing will be required before commercialization.
- The amount and timing of remaining JDA and equipment commitments, including cash versus equity settlement.
- Future warrant-liability revaluations, tax receivable agreement obligations and potential cash redemptions of OpCo units.
- Final purchase-accounting valuations, including developed-technology amortization, goodwill and any impairment indicators.