NET Power Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended March 31, 2024

OR

For the transition period from ______ to ______

Commission File Number 001-40503

(Exact name of registrant as specified in its charter)

(919) 287-4750

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

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 Noo

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 and post such files). Yes x Noo

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.

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 Act). Yeso Nox

The registrant had outstanding 72,162,898 shares of Class A Common Stock and 141,608,678 shares of Class B Common Stock as of May 8, 2024.

TABLE OF CONTENTS

Certain Defined Terms

Unless otherwise expressly stated or, unless the context otherwise requires, references in this Annual Report on Form 10-K (this "Report") to:

•"Amended and Restated JDA" means the Amended and Restated Joint Development Agreement, dated December 13, 2022, by and among Old NET Power, RONI, RONI OpCo, NPI and NPT, as amended, supplemented or otherwise modified from time to time in accordance with its terms;

•"Baker Hughes" or "BH" means Baker Hughes Company, a Delaware corporation;

•"BHES" means Baker Hughes Energy Services LLC, a Delaware limited liability company and affiliate of Baker Hughes;

•"BHES JDA" means collectively, the Original JDA and the Amended and Restated JDA

•"Board" or "Board of Directors" means the board of directors of the Company;

•"Business Combination Agreement" means the Business Combination Agreement, dated as of December 13, 2022, by and among RONI, RONI OpCo, Buyer, Merger Sub and Old NET Power, as amended by the First Amendment to the Business Combination Agreement, dated as of April 23, 2023, by and between Buyer and Old NET Power;

•"Business Combination" means the Domestications, the Merger and other transactions contemplated by the Business Combination Agreement, collectively, including the PIPE Financing;

•"Buyer" means Topo Buyer Co, LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of OpCo (following the Domestications) or of RONI OpCo (prior to the Domestications);

•"Class A Common Stock" means the Class A common stock, par value $0.0001 per share, of NET Power;

•"Class B Common Stock" means the Class B common stock, par value $0.0001 per share, of NET Power;

•"Clean," in relation to the energy generated through the Net Power Cycle, refers to the NET Power Cycle’s capability to significantly reduce direct CO 2 emissions and emissions of other air pollutants in comparison to energy generated with conventional gas-fired technology;

•"Closing" means the consummation of the Business Combination contemplated by the Business Combination Agreement;

•"Closing Date" means June 8, 2023, the date on which the Closing occurred;

•"Common Stock" means the Class A Common Stock and Class B Common Stock;

•"Company," "our," "we" or "us" means, prior to the Business Combination, RONI or Old NET Power, as the context suggests, and, following the Business Combination, NET Power Inc., in each case, with its consolidated subsidiaries;

•"Constellation" means Constellation Energy Generation, LLC, a Pennsylvania limited liability company formerly known as Exelon Generation Company, LLC;

•"Demonstration Plant" means the facility located in La Porte, Texas used to demonstrate the viability of the NET Power;

•"Domestication" means the change of RONI’s jurisdiction of registration by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation registered under the laws of the State of Delaware, upon which RONI changed its name to NET Power Inc.;

•"Domestications" means the Domestication and the OpCo Domestication;

•“Earnout Shares” means the OpCo Units and corresponding shares of Class B Common Stock that, pursuant to an agreement with Sponsor and certain of its affiliates, are or were subject to forfeiture, with vesting occurring in three tranches based on the trading share price of the Class A Common Stock on the NYSE;

•"Exchange Act" means the Securities Exchange Act of 1934, as amended;

•"IPO" means RONI’s initial public offering, which was consummated on June 18, 2021;

•"Legacy NET Power Holders" means the holders of equity securities of Old NET Power prior to the consummation of the Merger;

•"Merger" means the merger of Merger Sub with and into Old NET Power pursuant to the Business Combination Agreement, in which Old NET Power survived and became a direct, wholly owned subsidiary of Buyer;

•"Merger Sub" means Topo Merger Sub, LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of Buyer;

•"NET Power" means NET Power Inc., a Delaware corporation (f/k/a Rice Acquisition Corp. II), with its consolidated subsidiaries (unless the context otherwise indicates), upon and after the Domestication;

•"NPI" means Nuovo Pignone International, S.r.l., an Italian limited liability company and affiliate of Baker Hughes;

•"NPT" means Nuovo Pignone Tecnologie S.r.l., an Italian limited liability company and affiliate of Baker Hughes;

•"NYSE" means the New York Stock Exchange;

•"Old NET Power" means, prior to the consummation of the Merger, NET Power, LLC, a Delaware limited liability company;

•"OpCo" means NET Power Operations LLC, a Delaware limited liability company (f/k/a Rice Acquisition Holdings II LLC), upon and after the OpCo Domestication;

•"OpCo Domestication" means the change of RONI OpCo’s jurisdiction of registration by deregistering as a Cayman Islands exempted company and continuing and domesticating as a limited liability company registered under the laws of the State of Delaware, upon which RONI OpCo changed its name to NET Power Operations LLC;

•"OpCo LLC Agreement" means the Second Amended and Restated Limited Liability Company Agreement of OpCo, dated as of June 8, 2023, which was entered into in connection with the Closing;

•"OpCo Unitholder" means a holder of OpCo Units;

•"OpCo Units" means the units of OpCo;

•"Original JDA" means the Joint Development Agreement, dated February 3, 2022, by and among Old NET Power, NPI and NPT, as amended by the First Amendment to Joint Development Agreement, dated effective June 30, 2022, by and among the same parties;

•"OXY" means OLCV NET Power, LLC, a Delaware limited liability company;

•"PIPE Financing" means the issuance and sale of 54,044,995 shares of Class A Common Stock for aggregate consideration of $540,449,950 in private placements pursuant to subscription agreements that RONI entered into with certain qualified institutional buyers and accredited investors, which was consummated immediately prior to the Merger;

•"PIPE Investors" means the investors who participated in the PIPE Financing;

•"Predecessor Period" means the period presented in the condensed consolidated financial statements contained in this Report or the accompanying footnotes that relates to Predecessor, as defined and described in Note 1 to the condensed consolidated financial statements contained in this Report;

•"Preferred Stock" means shares of NET Power preferred stock, par value $0.0001;

•"Private Placement Warrants" means the 10,900,000 warrants to purchase shares of Class A Common Stock that were issued and sold to Sponsor in a private placement in connection with the IPO;

•"Public Warrants" means the warrants to purchase shares of Class A Common Stock that were issued and sold as part the units of RONI in the IPO;

•"RONI" means Rice Acquisition Corp. II, a Cayman Islands exempted company, prior to the Domestication;

•"RONI OpCo" means Rice Acquisition Holdings II LLC, a Cayman Islands limited liability company and direct subsidiary of RONI, prior to the Domestications;

•"SEC" means the U.S. Securities and Exchange Commission;

•"Securities Act" means the Securities Act of 1933, as amended;

•"Sponsor" means Rice Acquisition Sponsor II LLC, a Delaware limited liability company;

•"Successor Period" means the period presented in the condensed consolidated financial statements contained in this Report or the accompany footnotes that relates to Successor, as defined and described in Note 1 to the condensed consolidated financial statements contained in this Report;

•"Tax Receivable Agreement" or "TRA" means the Tax Receivable Agreement, dated June 8, 2023, entered into by NET Power and OpCo with OpCo Unitholders who received OpCo Units pursuant to the Business Combination Agreement as consideration for equity interests in Old NET Power and the Agent (as defined therein);

•"Up-C" means umbrella partnership, C corporation, which describes a corporate structure in which an ultimate C corporation parent consolidates a partnership or partnership structure treated as a pass-through entity for US state and federal tax purposes;

•"Warrant Agreement" means the Warrant Agreement, dated as of June 15, 2021, by and among RONI, RONI OpCo and Continental Stock Transfer & Trust Company as it may be amended and/or restated from time to time in accordance with its terms; and

•"Warrants" means, collectively, the Public Warrants and Private Placement Warrants.

In addition, the following is a glossary of key industry terms used herein:

•"CO 2" means carbon dioxide;

•"CO 2 e" means the number of metric tons of CO 2 emissions with the same global warming potential as one metric ton of another greenhouse gas

•"MW" means megawatt;

•"MWe" means megawatt electrical, which refers to the electricity output capability of a plant;

•"NOX" means nitrogen oxides; and

•"SOX" means sulfur oxides.

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 may 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) the Company's ability to establish and maintain supply relationships; (viii) risks related to the Company's arrangements with third parties for the development, commercialization and deployment of technology associated with the Company's technology; (ix) risks related to the Company's other strategic investors and partners; (x) the Company's ability to successfully commercialize its operations; (xi) the availability and cost of raw materials; (xii) the ability of the Company's supply base to scale to meet the Company's anticipated growth; (xiii) the Company's ability to expand internationally; (xiv) the Company's ability to update the design, construction and operations of its technology; (xv) the impact of potential delays in discovering manufacturing and construction issues; (xvi) the possibility of damage to the Company's Texas facilities as a result of natural disasters; (xvii) the ability of commercial plants using the Company's technology to efficiently provide net power output; (xviii) the Company's ability to obtain and retain licenses; (xix) the Company's ability to establish an initial commercial scale plant; (xx) the Company's ability to license to large customers; (xxi) the Company's ability to accurately estimate future commercial demand; (xxii) the Company's ability to adapt to the rapidly evolving and competitive natural and renewable power industry; (xxiii) the Company's ability to comply with all applicable laws and regulations; (xxiv) the impact of public perception of fossil fuel-derived energy on the Company's business; (xxv) any political or other disruptions in gas producing nations; (xxvi) the Company's ability to protect its intellectual property and the intellectual property it licenses; (xxvii) risks relating to data privacy and cybersecurity, including the potential for cyberattacks or security incidents that could disrupt our or our service providers' operations; (xxviii) potential litigation that may be instituted against the Company; and (xxix)other risks and uncertainties indicated in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2023 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.