Fermi (FRMI) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01We are a development-stage company with no operating history or historical revenue, and we face execution risk across all major components of our business
2. 02Historically, our primary source of funding to support our operations has been from capital raises and equipment financings
3. 03We will require significant additional capital to construct and complete Project Matador, and we may not be able to secure such financing on time with acceptable terms, or at all, which could cause delays in our construction, lead to inadequate liquidity and increase overall costs
4. 04We are dependent on third-party manufacturing and supply chain relationships to develop and lease our facilities. Our reliance on third parties and suppliers involves certain risks that may result in increased costs, delays, and loss of revenue
5. 05We will need to hire additional skilled employees as we grow and scale up Project Matador, and there is no assurance we will be successful in recruiting, hiring, and training the personnel we need
6. 06The data center and energy markets are highly competitive and rapidly evolving
7. 07AI and Large-scale Language Model “LLM” infrastructure requirements are changing faster than conventional infrastructure can be developed
8. 08The AI and hyperscaler market may not adopt our private infrastructure platform at the speed or scale we anticipate
9. 09Technological advances or disruptive innovations, specifically advancements in AI, may outpace our development cycle, and we are exposed to technology obsolescence across all major asset classes
10. 10cooling, zero-carbon dispatchable power, or quantum compute platforms, could make some or all of our infrastructure obsolete or noncompetitive
11. 11We may not achieve tenant adoption at the pace or pricing levels required for financial viability
12. 12We may not enter into a definitive lease with the First Tenant or any other tenant
13. 13We depend on third-party vendors, contractors, and consultants to support our business
14. 14Terrorist attacks, cyberattacks and threats may compromise the integrity of our hybrid grid systems and could have a material adverse effect on our business, financial condition, and results of operations
15. 15As a public company, we are also subject to the cybersecurity disclosure and incident reporting requirements adopted by the SEC, which may increase the cost and complexity of our compliance efforts and expose us to additional scrutiny in the event of a cyber incident
16. 16Our use of technologies and systems that use AI or LLMs, given the dynamic state of such technologies, may cause inadvertent or unexpected impacts that may introduce new operational, legal, and regulatory risks that could adversely affect our business, financial condition, or results of operations

Risks Related to Project Matador

1. 17Project Matador is an unprecedented, large-scale, multi-phase development effort that presents significant planning, execution, and coordination risks
2. 18Our ability to develop and retain site control depends on maintaining our leasehold interest with the Texas Tech University System
3. 19The scale of infrastructure planned at Project Matador will require extensive permitting, interconnection, and third-party coordination
4. 20We may face significant construction delays and global supply chain disruptions that could materially impact project timelines and costs
5. 21High demand for, constraints on the supply of, and increasing costs for industrial scale gas-fired turbines could lead to significant delays in our ability to develop the natural gas-fired power generation infrastructure we will need to achieve our power delivery goals on the schedule we are projecting
6. 22Westinghouse Reactors and SMRs can be costly and time consuming to construct and commercialize. Delays and cost overruns arising from issues with our procurement, regulatory approvals, construction and commercialization of nuclear reactors may materially adversely affect our business
7. 23Our management team includes a limited number of highly experienced senior staff in the nuclear energy sector, which may present challenges in fully addressing the complex technical, regulatory, and operational requirements associated with Westinghouse Reactor and SMR projects
8. 24We may be subject to credit risks
9. 25Any failure of our physical infrastructure, or acts of theft or vandalism to our physical infrastructure, could lead to significant costs and disruptions that could reduce our revenue and harm our business reputation and financial results
10. 26Our business operations rely heavily on securing agreements with suppliers for essential materials, equipment, and components which will be used to construct Project Matador facilities
11. 27The proximity of the Project Matador Site to the Pantex Plant introduces potential federal scrutiny
12. 28We are dependent on early infrastructure milestones to unlock downstream development phases
13. 29Construction risk is amplified by the multi-vertical, high-voltage, high-capacity nature of the Project Matador Site
14. 30We may not maintain eligibility for the full amount of tax abatements granted to us by Carson County

Risks Related to Our Regulatory Environment and Energy Generation

1. 31Nuclear energy development is subject to extensive regulation and uncertainty, which could materially delay or impair our business
2. 32Failure to secure timely approvals, maintain regulatory compliance, or meet critical milestones may delay or prevent the commencement of construction and the operation of our nuclear units
3. 33Changes in regulatory guidance, inspection regimes, or political oversight of nuclear infrastructure could affect the scope, timing, or cost of reactor design, development, construction, interconnection to the grid (if applicable), and operation
4. 34We may not obtain timely or successful regulatory approvals for nuclear development, which would materially impair our business model
5. 35We may not be able to obtain sufficient water resources for our operations, which could materially impair our operations or impact our ability to expand our operations
6. 36Connecting Project Matador with Tier 1 data center markets will require amplification and may introduce other risks associated with long-distance fiber connections
7. 37Our costs to comply with federal, state and local environmental laws and regulations—both existing and new—may be material
8. 38If we cannot obtain required permits, licenses and regulatory clearance or approvals for Project Matador or our operations, or are unable to maintain such permits, licenses or approvals, we may not be able to continue or expand our operations
9. 39We are subject to laws and regulations governing the use, transportation, and disposal of toxic, hazardous and/or radioactive materials. Failure to comply with these laws and regulations could result in substantial fines and/or enforcement actions
10. 40Nuclear project execution depends on specialized vendors, whose failure or delay could materially impact our business
11. 41We face significant risk associated with interconnecting and operating private energy infrastructure at scale
12. 42We will be subject to execution risks with respect to our natural gas, solar and BESS power sources
13. 43We are subject to complex, evolving, and potentially burdensome regulatory requirements
14. 44The NRC may modify, suspend, or revoke licenses, shut down a nuclear facility and impose civil penalties for failure to comply with the Atomic Energy Act, the NRC’s regulations thereunder, or the terms of the licenses for construction and operation of nuclear facilities
15. 45Changes in laws or regulations, or shifts in political or public sentiment against nuclear, AI, or energy development, could materially increase compliance burdens or limit our ability to operate
16. 46We are subject to federal environmental review processes, including NEPA, that may materially delay or restrict project development
17. 47indirect delays if third-party infrastructure (e.g., gas pipelines or transmission upgrades) triggers NEPA reviews beyond our control
18. 48Influential political actors, shifting domestic policy priorities, and organized opposition by politically connected stakeholders could materially adversely affect our ability to develop, finance, and operate Project Matador
19. 49Our operations and infrastructure may be materially adversely affected by geopolitical risks, including cyberattacks and physical disruptions by nation-state actors and other hostile parties
20. 50Regulatory changes or political shifts could materially adversely affect nuclear licensing and financial feasibility
21. 51Commodity prices (particularly for natural gas) could impact the economic viability of our businesses or impair our ability to commence operations if we are not able to adequately pass through the cost of natural gas and other raw materials to our tenants
22. 52Our natural gas supply will be subject to market volatility and pipeline transportation risk
23. 53Solar and battery deployment is subject to permitting, environmental, and production risks
24. 54Our energy generation strategy requires multi-year planning and access to specialized equipment
25. 55We may be subject to opposition from environmental groups, litigation, or reputational campaigns, which could delay permitting or reduce site flexibility
26. 56Furthermore, reputational campaigns in media or political venues—particularly those focused on water usage, emissions from backup gas infrastructure, or perceived AI overreach—may generate public controversy that slows permitting or discourages tenant commitments
27. 57The Project Matador Site’s location near the former Pantex Plant presents certain restrictions on the development of operations

Risks Related to Tenant Concentration and Leasing

1. 58Our near-term revenue may be heavily concentrated among a small number of anchor tenants
2. 59Failure of any major tenant to perform under its lease could result in material financial losses
3. 60Our leases may include operational covenants that create performance liability
4. 61Our ability to scale leasing revenue depends on the timely delivery of powered shells and infrastructure-ready pads
5. 62Tenant consolidation or vertical integration could reduce long-term leasing demand
6. 63We may be required to offer lease concessions or capital subsidies to secure long-term tenants
7. 64Subtenant improvements impact our leaseback model and base rent escalations

Risks Related to REIT Qualification

1. 65Restrictions on ownership of our capital stock may adversely affect our stock price and/our business and we could fail to qualify as a REIT as a result of such restrictions
2. 66Qualification as a REIT involves a highly technical and evolving set of requirements
3. 67Certain energy infrastructure assets may be non-qualifying assets, and certain of energy infrastructure activities may generate non-qualifying income for REIT purposes
4. 68Legislative or other actions affecting REITs could have a negative effect on us, including our ability to qualify as a REIT or the U.S. federal income tax consequences of such qualification
5. 69There are limits on our ownership of TRSs and our transactions with a TRS may cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm's-length terms
6. 70Failure to make required distributions would subject us to U.S. federal corporate income tax
7. 71Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments
8. 72Complying with REIT requirements may limit our ability to hedge our liabilities effectively and may cause us to incur tax liabilities
9. 73The prohibited transactions tax may limit our ability to dispose of assets
10. 74Dividends on our common stock do not qualify for the reduced tax rates available for some dividends
11. 75The board of directors’ revocation of the Company’s REIT status without shareholder approval may decrease the Company’s shareholders’ total return
12. 76In order to preserve our REIT status, our Charter limits the number of shares a person may own, which may discourage a takeover that could result in a premium price for our common stock or otherwise benefit our shareholders
13. 77Our relative lack of experience in operating under the constraints imposed on us as a REIT may hinder the achievement of our investment objectives and/or may cause us to fail to qualify as a REIT

Risks Related to Our Governance and Operating Model

1. 78We rely on a highly concentrated leadership team and may face succession or key personnel risks
2. 79Some members of our management team have limited experience in operating a public company
3. 80Our operating model includes multiple legal entities with interlocking governance structures, which may create oversight or coordination challenges
4. 81Our contractual arrangements with the Texas Tech University System may create alignment or interpretation risks over time
5. 82We may enter into related-party transactions that could pose conflicts of interest or governance scrutiny
6. 83Certain of our executive officers face litigation and are involved in legal proceedings that could cause negative publicity or perception about us and could divert management’s attention

Risks Related to Market Conditions and Macroeconomic Factors

1. 84Adverse macroeconomic conditions could impair our ability to raise capital or complete development phases
2. 85Cost overruns and inflationary pressures could materially increase development and operating costs and impact our capital budget and profitability
3. 86Changes in U.S. trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations
4. 87Interest rate fluctuations may increase our cost of capital and reduce profitability
5. 88Shifts in federal, state, or local policy may affect permitting, taxation, or infrastructure incentives
6. 89Sustainability expectations may evolve in ways that affect project costs or tenant commitments
7. 90Global supply chain disruptions may delay delivery of critical infrastructure components

Risks Related to Our Common Stock

1. 91Since our IPO, our stock price has been volatile, and you may not be able to resell shares of our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result
2. 92In the past, following periods of market volatility, shareholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of management from our business regardless of the outcome of such litigation
3. 93Certain provisions of Texas law and antitakeover provisions in our organizational documents could delay or prevent a change of control
4. 94preferred stock, depending upon the rights, preferences and designations of the preferred stock, may have the effect of delaying, deterring or preventing a change of control, even if that change of control might benefit our shareholders
5. 95Our Charter includes provisions limiting the personal liability of our directors and officers for breaches of fiduciary duties under Texas law
6. 96Texas law and our Charter include provisions which may limit shareholders’ ability to bring a cause of action against our directors or officers for certain acts or omissions in their capacity as directors or officers of the Company
7. 97The TBOC contains provisions restricting our shareholders from inspecting certain corporate books and records unless they have held our shares for six months or own 5% of our standing shares
8. 98Texas law and our Charter include provisions which may limit our shareholders’ ability to submit a proposal on a matter to be acted upon at a meeting of shareholders
9. 99An active, liquid trading market for our common stock may not be sustained, which may limit your ability to sell your shares
10. 100A significant portion of our total outstanding shares of common stock are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly
11. 101We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our common stock, which could depress the price of our common stock
12. 102We are currently, and may continue to be, subject to securities class action litigation
13. 103Dual listing on the Nasdaq and the London Stock Exchange may lead to an inefficient market in the shares of common stock