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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number 001-40503
NET Power Inc.
(Exact name of registrant as specified in its charter)
Delaware
98-1580612
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
320 Roney St.
Suite 200
Durham, North Carolina
27701
(Address of Principal Executive Offices)(Zip Code)
(919) 287-4750
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock
NPWR
The New York Stock Exchange
Warrants, each exercisable for one share of
Class A Common Stock at a price of $11.50
NPWR-WT
The New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated fileroAccelerated filero
Non-accelerated filerxSmaller reporting companyx
Emerging growth companyx
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The registrant had outstanding 75,248,435 shares of Class A Common Stock and 140,170,864 shares of Class B Common Stock as of November 8, 2024.



TABLE OF CONTENTS
Page
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Operations and Comprehensive Loss
Condensed Consolidated Statements of Shareholders' Equity and Non-Controlling Interest
Condensed Consolidated Statements of Members' Equity
Condensed Consolidated Statements of Cash Flows
Notes to Condensed Consolidated Financial Statements



Table of Contents
Certain Defined Terms
For the definitions of certain defined terms used throughout this Quarterly Report on Form 10-Q (this “Report”), please refer to the section entitled “Certain Defined Terms” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Annual Report”).
1

Table of Contents
Cautionary Note Regarding Forward-Looking Statements
This Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that do not relate strictly to historical or current facts are forward-looking and usually identified by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “future,” “intend,” “may,” “opportunity,” “plan,” “project,” “seek,” “should,” “strategy,” “will,” “will likely result,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements may relate to the development of the Company's technology, the anticipated demand for the Company's technology and the markets in which the Company operates, the timing of the deployment of plant deliveries, and the Company's business strategies, capital requirements, potential growth opportunities and expectations for future performance (financial or otherwise). Forward-looking statements are based on current expectations, estimates, projections, targets, opinions and/or beliefs of the Company, and such statements involve known and unknown risks, uncertainties and other factors.

The risks and uncertainties that could cause those actual results to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to: (i) risks relating to the uncertainty of the projected financial information with respect to the Company and risks related to the Company's ability to meet its projections; (ii) the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, the ability of the Company to grow and manage growth profitably, and the ability of the Company retain its management and key employees; (iii) the Company's ability to utilize its net operating loss and tax credit carryforwards effectively; (iv) the capital-intensive nature of the Company's business model, which will likely require the Company to raise additional capital in the future; (v) barriers the Company may face in its attempts to deploy and commercialize its technology; (vi) the complexity of the machinery the Company relies on for its operations and development; (vii) potential changes and/or delays in site selection and construction that result from regulatory, logistical, and financing challenges; (viii) the Company's ability to establish and maintain supply relationships; (ix) risks related to the Company's arrangements with third parties for the development, commercialization and deployment of technology associated with the Company's technology; (x) risks related to the Company's other strategic investors and partners; (xi) the Company's ability to successfully commercialize its operations; (xii) the availability and cost of raw materials; (xiii) the ability of the Company's supply base to scale to meet the Company's anticipated growth; (xiv) the Company's ability to expand internationally; (xv) the Company's ability to update the design, construction and operations of its technology; (xvi) the impact of potential delays in discovering manufacturing and construction issues; (xvii) the possibility of damage to the Company's Texas facilities as a result of natural disasters; (xviii) the ability of commercial plants using the Company's technology to efficiently provide net power output; (xix) the Company's ability to obtain and retain licenses; (xx) the Company's ability to establish an initial commercial scale plant; (xxi) the Company's ability to license to large customers; (xxii) the Company's ability to accurately estimate future commercial demand; (xxiii) the Company's ability to adapt to the rapidly evolving and competitive natural and renewable power industry; (xxiv) the Company's ability to comply with all applicable laws and regulations; (xxv) the impact of public perception of fossil fuel-derived energy on the Company's business; (xxvi) any political or other disruptions in gas producing nations; (xxvii) the Company's ability to protect its intellectual property and the intellectual property it licenses; (xxviii) risks relating to data privacy and cybersecurity, including the potential for cyberattacks or security incidents that could disrupt our or our service providers' operations; (xxix) potential litigation that may be instituted against the Company; and (xxx) other risks and uncertainties indicated in Part I, Item 1A of the Annual Report and other documents subsequently filed with the SEC by the Company.

Should one or more of these risks or uncertainties materialize, or should any of the assumptions made by our management prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements contained in this Report. Accordingly, you should not place undue reliance on these forward-looking statements in deciding whether to invest in our securities.

Forward-looking statements speak only as of the date they are made. Except to the extent required by applicable law or regulation, we undertake no obligation to update the forward-looking statements contained herein to reflect events or circumstances after the date of this Report or to reflect the occurrence of unanticipated events. The Company gives no assurance that it will achieve its expectations.

2

Table of Contents
Part I - Financial Information
Item 1. Financial Statements
NET Power Inc.
Condensed Consolidated Balance Sheets (Unaudited)
In thousands, except share and unit amounts
September 30, 2024 (Successor)December 31, 2023 (Successor)
ASSETS
Current assets
Cash and cash equivalents$386,257 $536,927 
Short-term investments100,000 100,000 
Investments in securities, available-for-sale72,868  
Accounts receivable, net 58 
Interest receivable2,358 1,942 
Prepaid expenses2,407 1,777 
Other current assets184 93 
Total current assets564,074 640,797 
Long-term assets
Restricted cash2,432  
Investments in securities, available-for-sale18,411  
Intangible assets, net1,257,589 1,307,265 
Goodwill359,847 423,920 
Property, plant and equipment, net130,849 96,856 
Operating lease right-of-use assets2,763 2,212 
Other long-term assets583  
Total assets$2,336,548 $2,471,050 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable$3,642 $617 
Accrued liabilities18,061 10,915 
Due to related parties404 142 
Operating lease liabilities, current portion491 347 
Finance lease liabilities, current portion187  
Tax-related partnership distribution liability4,130  
Total current liabilities26,915 12,021 
Long-term liabilities
Earnout Shares liability460 1,671 
Warrant liability27,768 55,920 
Asset retirement obligation2,191 2,060 
Noncurrent operating lease liabilities2,324 1,808 
Noncurrent finance lease liabilities166  
Tax Receivable Agreement liability14,661 8,937 
Deferred taxes16,352 57,719 
Total liabilities90,837 140,136 
Commitments and contingencies (Note 15)
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Table of Contents
NET Power Inc.
Condensed Consolidated Balance Sheets (continued)
In thousands, except share and unit amounts
September 30, 2024 (Successor)December 31, 2023 (Successor)
Mezzanine shareholders' equity
Redeemable non-controlling interests in subsidiary1,478,236 1,545,905 
Shareholders' equity
Preferred Stock, $.0001 par value; 1,000,000 shares authorized; no shares issued or outstanding as of September 30, 2024 (Successor) and December 31, 2023 (Successor)
  
Class A Common Stock, $.0001 par value; 520,000,000 shares authorized; 75,244,708 shares issued and outstanding as of September 30, 2024 (Successor) and 71,277,906 shares issued and outstanding as of December 31, 2023 (Successor)
7 7 
Class B Common Stock, $.0001 par value; 310,000,000 shares authorized; 140,170,864 shares issued and outstanding as of September 30, 2024 (Successor) and 141,787,429 shares issued and outstanding as of December 31, 2023 (Successor)
14 14 
Additional paid-in capital849,066 851,841 
Accumulated other comprehensive loss112  
Accumulated deficit(81,724)(66,853)
Total shareholders' equity767,475 785,009 
Total liabilities, mezzanine shareholders' equity and shareholders' equity$2,336,548 $2,471,050 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Table of Contents
NET Power Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
In thousands, except share and unit amounts
Period fromPeriod from
July 1 - September 30, 2024 (Successor)July 1 - September 30, 2023 (Successor)January 1 - September 30, 2024 (Successor)June 8 – September 30, 2023 (Successor)January 1 – June 7, 2023 (Predecessor)
Revenue$12 $ $250 $ $175 
Cost of revenue1  31  3 
Gross profit11  219  172 
Operating expenses
General and administrative8,418 8,351 22,561 32,836 12,684 
General and administrative – related party30 38 82 51 177 
Sales and marketing1,032 931 2,660 1,087 869 
Research and development17,173 8,686 43,058 14,437 2,068 
Research and development – related party160 346 1,025 433 12,243 
Project development233 289 1,426 219 479 
Option settlement – related party   79,054  
Depreciation, amortization and accretion20,210 20,027 60,289 24,945 5,802 
Total operating expenses47,256 38,668 131,101 153,062 34,322 
Operating loss(47,245)(38,668)(130,882)(153,062)(34,150)
Other income (expense)
Interest income (expense)7,992 8,675 24,712 10,800 (30)
Change in Earnout Shares liability and Warrant liability27,690 (61,984)29,361 (60,975) 
Other income3 1 10 5 4 
Net other income (expense)35,685 (53,308)54,083 (50,170)(26)
Net loss before income tax(11,560)(91,976)(76,799)(203,232)(34,176)
Income tax benefit4,746 10 11,137 681  
Net loss after income tax(6,814)(91,966)(65,662)(202,551)(34,176)
Net loss attributable to non-controlling interests(7,632)(61,402)(50,791)(136,987) 
Net income (loss) attributable to NET Power Inc.818 (30,564)(14,871)(65,564)(34,176)
Other comprehensive income (loss)
Unrealized gain on investments528  461   
Foreign currency translation gain 1    
Total other comprehensive income528 1 461   
Comprehensive loss(6,286)(91,965)(65,201)(202,551)(34,176)
Comprehensive loss attributable to non-controlling interests(7,284)(61,402)(50,487)(136,987) 
Comprehensive income (loss) attributable to NET Power Inc.$998 $(30,563)$(14,714)$(65,564)$(34,176)
Earnings (loss) per share of Class A Common Stock (Successor) or per membership interest (Predecessor), basic and diluted$0.01 $(0.44)$(0.21)$(0.96)$(9.07)
Weighted average shares of Class A Common Stock or membership interests, basic and diluted73,536,69768,966,97272,540,87868,644,0323,766,871
The accompanying notes are an integral part of these condensed consolidated financial statements.
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NET Power Inc.
Condensed Consolidated Statements of Shareholders' Equity and Non-Controlling Interest (Unaudited)
In thousands, except share and unit amounts
Class A Common StockClass B Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Shareholders' EquityNon-controlling Interests - Mezzanine Equity
SharesAmountSharesAmount
Balance at December 31, 2023 (Successor)71,277,906 $7 141,787,429 $14 $851,841 $ $(66,853)$785,009 $1,545,905 
Redemption of Class B Common Stock679,559 — (679,559)— 74 — — 74 (74)
Issuance of Class A Common Stock12,587 — — — 4,032 — — 4,032 (4,005)
Tax Receivable Agreement, net of deferred taxes— — — — (567)— — (567)— 
Unrealized gain on investments— — — — — 224 — 224 438 
Amortization of share-based payments— — 693,941 — 647 — — 647 5,622 
Adjustment of redeemable non-controlling interest to redemption value, net of deferred taxes— — — — (118,225)— — (118,225)118,225 
Net loss— — — — — — (11,421)(11,421)(30,211)
Balance at March 31, 2024 (Successor)71,970,052 $7 141,801,811 $14 $737,802 $224 $(78,274)$659,773 $1,635,900 
Redemption of Class B Common Stock611,455 — (611,455)— 708 — — 708 (708)
Issuance of Class A Common Stock2,129 — — — 29 — — 29 (3)
Exercise of Warrants700 — — — 10 — — 10 — 
Tax Receivable Agreement, net of deferred taxes— — — — 674 — — 674 — 
Unrealized loss on investments— — — — — (291)— (291)(568)
Amortization of share-based payments— — 650,248 — 1,114 — — 1,114 7,417 
Adjustment of redeemable non-controlling interest to book value, net of deferred taxes— — — — 72,746 — — 72,746 (118,225)
Net loss— — — — — — (4,268)(4,268)(12,949)
Balance at June 30, 2024 (Successor)72,584,336 $7 141,840,604 $14 $813,083 $(67)$(82,542)$730,495 $1,510,864 
Redemption of Class B Common Stock2,611,917 — (2,611,917)— 28,447 — — 28,447 (28,447)
Issuance of Class A Common Stock48,455 — — — 425 — — 425 (529)
Tax Receivable Agreement, net of deferred taxes— — — — 5,803 — — 5,803 — 
Tax-related partnership distribution payable— — — — — — — — (4,130)
Unrealized gain on investments— — — — — 179 — 179 349 
Amortization of share-based payments— — 942,177 — 1,308 — — 1,308 7,761 
Net income (loss)— — — — — — 818 818 (7,632)
Balance at September 30, 2024 (Successor)75,244,708 $7 140,170,864 $14 $849,066 $112 $(81,724)$767,475 $1,478,236 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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NET Power Inc.
Condensed Consolidated Statements of Shareholders' Equity and Non-Controlling Interest (Continued) (Unaudited)
In thousands, except share and unit amounts
Class A Common StockClass B Common StockClass A Ordinary SharesClass B Ordinary SharesAdditional Paid-in CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Shareholders' EquityNon-controlling Interests - Mezzanine EquityClass A Ordinary Shares Total Mezzanine Equity
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
Balance at June 8, 2023 (Successor) $  $ 2,500 $ 8,625,000 $1 $ $ $(98,966)$(98,965)$ 34,500,000 $356,318 $356,318 
 Sponsor forfeiture of RONI Class B ordinary shares and reservation of Earnout shares— — — — — — (1,986,775)— — — — — — — — — 
Redemption of Class A ordinary shares by RONI public shareholders— — — — — — — — — — — — — (21,195,224)(218,983)(218,983)
 Conversion of RONI Class A and Class B ordinary shares into NET Power, Inc. Class A and Class B Common Stock, respectively 13,307,276 1 6,638,225 1 (2,500)— (6,638,225)(1)60,045 — — 60,046 87,094 (13,304,776)(137,335)(50,241)
Issuance of RONI Class A Common Stock to PIPE Investors54,044,995 6 — — — — — — 540,445 — — 540,451 — — — — 
Equity awards vested due to Business Combination— — 8,356,635 1 — — — — 542 — (542)1 109,639 — — 109,639 
Issuance of RONI Class B Common Stock to Former NET Power, LLC Unitholders— — 127,716,730 12 — — — — (12)— 75,711 75,711 1,676,618 — — 1,676,618 
Foreign currency translation gain— — — — — — — — — 1 — 1 — — — — 
Amortization of share-based payments— — — — — — — — — — — — 752 — — 752 
Carrying value adjustment of redeemable non-controlling interest— — — — — — — — (86,801)— — (86,801)86,801 — — 86,801 
Net loss— — — — — — — — — — (35,001)(35,001)(75,585)— — (75,585)
Balance at June 30, 2023 (Successor)67,352,271 $7 142,711,590 $14  $  $ $514,219 $1 $(58,798)$455,443 $1,885,319  $ $1,885,319 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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NET Power Inc.
Condensed Consolidated Statements of Shareholders' Equity and Non-Controlling Interest (Continued) (Unaudited)
In thousands, except share and unit amounts


Class A Common StockClass B Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Shareholders' EquityNon-controlling Interests - Mezzanine Equity
SharesAmountSharesAmount
Balance at July 1, 2023 (Successor)67,352,271 $7 142,711,590 $14 $514,219 $1 $(58,798)$455,443 $1,885,319 
Exercise of Warrants2,739 — — — 47 — — 47 — 
Issuance of Class A Common Stock52,523 — — — — — — — — 
Issuance of RONI Class B Common Stock to former NET Power, LLC unitholders— — 2,105,973 — (928)— — (928)928 
Redemption of Class A Common Stock3,606,657 — (3,606,657)— 50,526 — — 50,526 (50,526)
Distributions to members— — — — — — — — (181)
Tax Receivable Agreement, net of deferred taxes— — — — (2,207)— — (2,207)— 
Vesting of Earnout Shares— — — — — — — — 9,055 
Amortization of share-based payments— — 318,607 — 261 — — 261 5,560 
Adjustment of redeemable non-controlling interest to redemption value— — — — (368,557)— — (368,557)368,557 
Net loss— — — — — — (30,564)(30,564)(61,402)
Balance at September 30, 2023 (Successor)71,014,190 $7 141,529,513 $14 $193,361 $1 $(89,362)$104,021 $2,157,310 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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NET Power Inc.
Condensed Consolidated Statements of Members' Equity (Unaudited)
In thousands, except unit amounts

Membership InterestsAdditional Paid-in CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Members' Equity
UnitsAmount
Balance at December 31, 2022 (Predecessor)3,722,355 $262,622 $26,288 $17 $(224,525)$64,402 
Issuance of shares to:
Occidental Petroleum5,824 1,859 — — — 1,859 
Constellation28,764 9,181 — — — 9,181 
BHES (Bonus shares)— — 2,688 — — 2,688 
BHES (In-kind shares)6,281 1,325 618 — — 1,943 
Vesting of profits interests— — 1,747 — — 1,747 
Comprehensive loss— — — — (17,067)(17,067)
Balance at March 31, 2023 (Predecessor)3,763,224 $274,987 $31,341 $17 $(241,592)$64,753 
Issuance of shares to:
Occidental Petroleum31,328 10,000 — — — 10,000 
BHES (Bonus shares)— — 2,001 — — 2,001 
BHES (In-kind shares)9,210 1,943 16 — — 1,959 
Vesting of profits interests— — 1,119 — — 1,119 
Comprehensive loss— — — — (17,109)(17,109)
Balance at June 7, 2023 (Predecessor)3,803,762 $286,930 $34,477 $17 $(258,701)$62,723 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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NET Power Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Period from
January 1 - September 30, 2024 (Successor)June 8 – September 30, 2023 (Successor)January 1 – June 7, 2023 (Predecessor)
Cash flows from operating activities:
Net loss after income tax$(65,662)$(202,551)$(34,176)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization, and accretion60,289 24,945 5,802 
Non-cash interest (income) expense(2,164) 30 
Non-cash lease expense118 31 13 
Conversion of equity awards 86,585  
Allowance for doubtful accounts  352 
Deferred taxes(11,137)(681) 
Change in fair value of Earnout Shares liability(1,211)1,497  
Change in fair value of Warrant liability(28,150)58,344  
Vesting of profits interests  2,864 
Vesting of Earnout Shares 1,118  
Share-based payments23,795 6,572 8,593 
Changes in operating assets and liabilities:
Accounts receivable, net58   
Interest receivable113 (2,903) 
Prepaid expenses(630)(2,026)(453)
Other current assets(91)91 1,765 
Other long-term assets(583)  
Accounts payable3,024 (887)1,768 
Accrued liabilities3,289 (5,796)(384)
Due to related parties262 288 3,203 
Net cash used in operating activities(18,680)(35,373)(10,623)
Cash flows from investing activities:
Cash acquired as part of Business Combination  7,947  
Purchase of short-term investments (100,000) 
Purchases of available-for-sale securities(131,564)  
Maturities of available-for-sale securities42,250   
Capitalized software(592)  
Purchase of property, plant and equipment(39,561)(3,875)(2,431)
Net cash used in investing activities(129,467)(95,928)(2,431)
The accompanying notes are an integral part of these condensed consolidated financial statements
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NET Power Inc.
Condensed Consolidated Statements of Cash Flows (continued)
(In thousands)
Period from
January 1 - September 30, 2024 (Successor)June 8 – September 30, 2023 (Successor)January 1 – June 7, 2023 (Predecessor)
Cash flows from financing activities:
Repurchase of redeemed Class A Ordinary Shares$ $(218,983)$ 
Issuance of Class A Common Stock, including exercise of Warrants8 47  
Payment of income taxes on vested share-based payment awards(99)  
Distributions to members (181) 
Proceeds from PIPE financing, net of issuance costs 540,451  
Issuance of equity under JDA as a result of Business Combination  9,917  
Payment of transaction expenses  (11,722) 
Proceeds from share issuances  15,836 
Net cash (used in) provided by financing activities(91)319,529 15,836 
Net (decrease) increase in cash, cash equivalents, and restricted cash(148,238)188,228 2,782 
Effect of foreign currency exchange rate changes on cash 1  
Cash, cash equivalents, and restricted cash, beginning of period536,927 357,019 5,164 
Cash, cash equivalents, and restricted cash, end of period388,689 545,248 7,946 
Supplemental non-cash investing and financing activities:
Change in accruals for capital expenditures$3,826 $ $ 
Remeasurement of lease liabilities and right-of-use assets due to lease modification (672) 
Operating lease right-of use asset acquired897   
Finance lease right-of-use asset acquired349   
Tax-related partnership distribution4,130   
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheet:
Cash and cash equivalents386,257 545,248 7,946 
Restricted cash2,432   
Total cash, cash equivalents, and restricted cash$388,689 $545,248 $7,946 
The accompanying notes are an integral part of these condensed consolidated financial statements
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NET Power Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share, per share and unit amounts, unless otherwise noted)
NOTE 1 — Nature of Business and Basis of Presentation
Nature of Business
NET Power Inc. (“Net Power” or the “Company”) is a clean energy technology company that has developed a proprietary process for producing electricity using a predominantly carbon dioxide working fluid that involves the capture and reuse, sale and sequestration of carbon dioxide (the “Net Power Cycle”). The Net Power Cycle is the subject of U.S. and foreign patents, as well as additional applications and provisional applications on file with the United States Patent and Trademark Office and international patent authorities.
Business Combination
On December 13, 2022, NET Power, LLC entered into a Business Combination Agreement with Rice Acquisition Corp. II (“RONI”), Rice Acquisition Holdings II LLC (“RONI OpCo”), Topo Buyer Co, LLC (“Buyer”) and Topo Merger Sub, LLC (“Merger Sub”). On June 8, 2023 (the “Closing Date”), Merger Sub merged with and into NET Power, LLC, with NET Power, LLC continuing as the surviving entity, resulting in it becoming a majority-owned, direct subsidiary of Buyer. RONI OpCo, a subsidiary of RONI, renamed itself NET Power Operations LLC (“OpCo”) and RONI renamed itself NET Power Inc. upon completion of the merger (the “Business Combination”). The Business Combination resulted in an umbrella partnership, C corporation or “Up-C” structure.
OpCo is a variable interest entity (“VIE”) in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”); therefore, RONI represented the accounting acquirer within the Business Combination structure. The Company elected push-down accounting for the Business Combination and recorded the push-down entries at OpCo. ASC 810 requires that a reporting entity that possesses a controlling financial interest in a VIE consolidate that VIE. A controlling financial interest will have both of the following characteristics: (a) the power to direct the activities that most significantly impact the VIE's economic performance; and (b) the obligation to absorb the VIE's losses and the right to receive benefits that are significant to the VIE. The Company determined that OpCo continued to meet the definition of a VIE after the Business Combination and that the Company became the primary beneficiary of OpCo beginning on the Closing Date of the Business Combination; therefore, the Company has consolidated OpCo from the date of the Business Combination.
As a result of the Business Combination, the Company's financial statement presentation distinguishes NET Power, LLC as the “Predecessor” through June 7, 2023 (the “Predecessor Period”) and Net Power as the “Successor” for periods beginning on or after the Closing Date (the “Successor Period”). Revenue and earnings after the date of the Business Combination are shown in the Successor Period on the condensed consolidated statements of operations and comprehensive loss. As a result of the application of the acquisition method of accounting in the Successor Period, the consolidated financial statements for the Successor Period are presented on a full step-up basis; therefore, the Successor Period consolidated financial statements are not comparable to the consolidated financial statements of the Predecessor Period, which are not presented on the same full step-up basis.
The condensed consolidated financial statements include the accounts of subsidiaries that Net Power consolidates in accordance with the guidance in ASC 810. The Company consolidates all wholly-owned subsidiaries and subsidiaries in which it owns a 50% or greater ownership interest and all VIE's to which it is deemed to represent the primary beneficiary, as described above. These condensed consolidated financial statements include the accounts of all wholly-owned subsidiaries and consolidated VIE's. Intercompany balances have been eliminated through the consolidation process.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information; however, certain information or footnote disclosures normally included in complete financial statements prepared in accordance with US GAAP may have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In management's opinion, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements for the year ended December 31, 2023 and include all adjustments, which consist of only normal and recurring adjustments, necessary for fair statement.
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The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of the results to be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the annual financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 11, 2024 (the “2023 Annual Report”).
Reclassification of Prior Period Amounts
Certain prior period financial information has been reclassified to conform to current period presentation.
NOTE 2 — Significant Accounting Policies
In the opinion of the Company’s management, the Company’s significant accounting policies used to prepare these condensed consolidated financial statements, unless otherwise noted below, are consistent with those used for the fiscal year ended December 31, 2023. Accordingly, reference Note 2 to the consolidated financial statements in the 2023 Annual Report for the Company’s significant accounting policies.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make certain estimates, judgments and assumptions. The estimates, judgments and assumptions made by the Company when accounting for items and matters such as, but not limited to, depreciation, amortization, asset valuations and share-based compensation were based on information available at the time they were made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements, as well as amounts reported on the condensed consolidated statements of operations and comprehensive loss during the periods presented. Actual results could differ from those estimates.
Restricted Cash
Restricted cash includes cash held to secure a letter of credit. As of September 30, 2024, the Company had restricted cash of $2,432 included in the condensed consolidated balance sheets. As of December 31, 2023, the Company had no restricted cash.
Investment Securities
We hold investment securities that are classified as available-for-sale securities and are available to be sold in the future as needed.
Accounting Standards Not Yet Adopted
During December 2023, the Financial Accounting Standards Board issued ASU 2023-09, Income Taxes (Topic 740)Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires public business entities to provide annually a tabular reconciliation of the reported income tax expense (or benefit) from continuing operations to the product of the income (or loss) from continuing operations before income taxes and the applicable statutory federal income tax rate using specified categories and to disclose separately reconciling items within certain categories with absolute values equal to or greater than five percent of the product of the income (or loss) from continuing operations before tax and the applicable statutory tax rate. Additionally, ASU 2023-09 requires a public business entity to disclose the year-to-date amount of income taxes paid, net of refunds received, to federal, state and foreign jurisdictions. If a payment to a single federal, state or foreign jurisdiction equals or exceeds five percent of total income taxes paid, ASU 2023-09 requires separate disclosure of that payment. Finally, ASU 2023-09 requires a public business entity to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign jurisdictions and to disclose income tax expense (or benefit) from continuing operations disaggregated between federal, state and foreign jurisdictions. ASU 2023-09 removes the requirement to disclose the nature and estimate of the range of reasonably possible increases or decreases in the unrecognized tax benefits balance in the next 12 months, or to make a statement that an estimate of the range cannot be made. ASU 2023-09 is effective for the Company for calendar years beginning after December 15, 2025. Early adoption is permitted. The Company is evaluating the effect ASU 2023-09 will have on its consolidated financial statements.
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NOTE 3 — Goodwill and Intangible Assets
Goodwill
Goodwill represents the future economic benefits derived from the Company's unique market position, the growth attributable to the Net Power Cycle and the Company's assembled workforce, none of which are individually and separately recognized as intangible assets. Goodwill is allocated to the Company's sole reportable segment and reporting unit.
The following table presents the Company's goodwill included in the condensed consolidated balance sheets:
Goodwill at December 31, 2023 (Successor)$423,920 
Measurement adjustments(64,073)
Goodwill at September 30, 2024 (Successor)$359,847 
During the second quarter of 2024, the Company completed its estimate of deferred taxes as of the Closing Date and finalized its purchase price allocation, which resulted in a measurement adjustment to goodwill.
During the third quarter of 2024, the Company performed a quantitative goodwill impairment assessment due to a sustained decrease in the Company’s market capitalization. The Company applied the income approach to estimate the fair value of this reporting unit using a discounted cash flow model. Key assumptions used in this model included revenue and operating expense projections, a terminal cash flow growth rate of 7.5%, a discount rate of 26%, and a tax rate of 25%. The Company determined the fair value of the reporting unit exceeds its carrying value and no impairment was indicated.
Definite-Lived Intangible Assets
The following tables summarize the Company's definite-lived intangible assets included in the condensed consolidated balance sheets:
September 30, 2024 (Successor)December 31, 2023 (Successor)
Gross AmountAccumulated AmortizationNet AmountGross AmountAccumulated AmortizationNet Amount
Developed technology$1,345,000 $(88,172)$1,256,828 $1,345,000 $(37,735)$1,307,265 
Software740 (40)700    
Software work-in-progress61  61    
Total definite-lived intangible assets$1,345,801 $(88,212)$1,257,589 $1,345,000 $(37,735)$1,307,265 
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The following table presents the Company’s amortization expense for the following periods:
Period fromPeriod from
July 1 - September 30, 2024 (Successor)July 1 - September 30, 2023 (Successor)January 1 - September 30, 2024 (Successor)June 8 – September 30, 2023 (Successor)January 1 – June 7, 2023 (Predecessor)
Amortization expense
$16,837 $16,813 $50,477 $20,922 $ 
The Company does not own or control any intangible assets with indefinite useful lives. The following table presents estimated amortization expense for the next five years and thereafter:
Remainder of 2024$16,854 
202567,414 
202667,414 
202767,414 
202867,414 
202967,312 
2030 and thereafter903,767 
Total$1,257,589 
NOTE 4 — Property, Plant and Equipment
The following table summarizes the key classifications of property, plant and equipment included in the condensed consolidated balance sheets:
September 30, 2024 (Successor)December 31, 2023 (Successor)
Demonstration Plant, gross$97,710 $89,239 
Furniture and equipment, gross996 320 
Assets acquired under finance lease349  
Work-in-progress48,607 14,443 
Total property, plant and equipment, gross147,662 104,002 
Accumulated depreciation and amortization 1
(16,813)(7,146)
Total property, plant and equipment, net$130,849 $96,856 
___________
(1) $5 of accumulated depreciation and amortization is related to amortization of the finance lease right-of-use assets.

The following table presents the Company’s depreciation expense for the following periods:
Period fromPeriod from
July 1 - September 30, 2024 (Successor)July 1 - September 30, 2023 (Successor)January 1 - September 30, 2024 (Successor)June 8 – September 30, 2023 (Successor)January 1 – June 7, 2023 (Predecessor)
Depreciation expense
$3,328 $3,173 $9,681 $3,972 $5,700 
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