Net Power (NPWR) risk factors, FY2024 10-K

Risks Related to Our Business and Our Industry

1. 01We have incurred significant losses since inception, we anticipate that we will continue to incur losses in the future, and we may not be able to achieve or maintain profitability
2. 02We, our licensees and our partners may be unable to adequately control or accurately predict the costs associated with SN1 and the development and deployment of our technology
3. 03We may be unable to manage our future growth effectively, and such inability could make it difficult to execute our business strategy
4. 04We face significant barriers in our attempts to deploy our technology and may not be able to successfully develop our technology. If we cannot successfully overcome those barriers, it could adversely impact our business and operations
5. 05The technology we are developing will rely on complex machinery for its operation, and deployment involves a significant degree of risk and uncertainty in terms of operational performance and costs
6. 06If we, our partners or our third-party suppliers experience any delays in the development and manufacturing of turbo expanders, heat exchangers, air separation units, and other key components, our business and financial condition may be adversely impacted
7. 07We, our licensees, and our partners may not be able to establish supply relationships for necessary components or may be required to pay costs for components that are higher than anticipated, and such inability or increased costs could delay the deployment of our technology and negatively impact our business
8. 08property, and we may be unsuccessful in securing such new licenses or unsuccessful in finding suitable alternatives that would not infringe previously licensed intellectual property
9. 09The loss of any such relationships, if not adequately replaced, could substantially hinder or prevent our ability to commercialize our technology and adversely affect our business, financial condition and future prospects
10. 10We may pursue the development of Net Power plants through joint ventures, which may lead to disagreements with our joint venture partners and adversely affect our interest in the joint ventures
11. 11Lack of availability or increased costs of component raw materials may affect manufacturing processes for plant equipment and increase our overall costs or those of our licensees
12. 12Manufacturing and transportation of key equipment may be dependent on open global supply chains. Supply chain issues could negatively impact deployment schedules
13. 13Suppliers of key equipment to our future customers may not be able to scale to the production levels necessary to meet the anticipated growth in demand for our technology, and such inability could negatively impact our business and financial plan
14. 14Manufacturing and construction issues not identified prior to design finalization, long-lead procurement and/or module fabrication could potentially be realized during production, fabrication or construction and may impact plant deployment cost and schedule, and such impact could adversely impact our business
15. 15Our Demonstration Plant has not yet overcome all power loads to provide net positive power delivery to the commercial grid during its operation. If initial commercial plants using the Net Power Cycle are unable to efficiently provide a net power output to the commercial grid, it will negatively impact our business
16. 16We may encounter difficulty in attracting licensees prior to the deployment of an initial full-scale commercial plant. If we cannot successfully overcome the barriers to deploying a first full-scale plant, our business will be negatively impacted and could fail
17. 17capital investment from us and our partners. If we cannot secure sufficient finding to construct our first commercial-scale plant, our business could fail
18. 18Our future growth and success depend on our ability to license to customers and their ability to secure suitable sites. We have not yet entered into a binding contract with a customer to license the Net Power Cycle, and we may not be able to do so
19. 19Our business requires us to estimate future market demand for electricity and for licenses for our technology. We may be adversely affected to the extent that we overestimate or underestimate such demand
20. 20We are highly dependent on our senior management team, key employees and other highly skilled personnel, and if we are not successful in attracting or retaining highly qualified personnel, we may not be able to successfully implement our business strategy and our ability to compete may be harmed
21. 21Conflicts of interest may arise because several directors on the Board were designated by the Principal Legacy Net Power Holders and Sponsor
22. 22An impairment in the carrying value of our goodwill or long-lived assets, principally other intangible assets and property, plant and equipment, could negatively impact our consolidated results of operations and financial condition
23. 23Increased scrutiny and changing stakeholder expectations with respect to ESG matters may impact our business and expose us to additional risks

Risks Related to Our Market

1. 24future partners and customers. The development and adoption of competing technology could materially and adversely affect our ability to license our technology
2. 25The cost of electricity generated from the Net Power Cycle may not be cost competitive with other electricity generation sources in some markets, and such lack of competitiveness could materially and adversely affect our business

Risks Related to Government Regulation

1. 26with such laws and regulations could have a material adverse effect on our business
2. 27Our customers must obtain regulatory approvals and permits before they construct power plants using our technology, and approvals may be denied or delayed
3. 28Changes in laws and regulations and electric market rules and protocols regarding the requirements for interconnection to the electric transmission grid and the commercial operation of our customers’ power generation projects could affect the cost, timing, and economic results of conducting our operations
4. 29We and our potential licensees may encounter substantial delays in the design, manufacture, regulatory approval and launch of power plants, and that could prevent us and our licensees from commercializing and deploying our technology on a timely basis, if at all
5. 30Our partners and customers are subject to environmental, health, and safety laws and to regulations including, if applicable, remediation matters that could adversely affect our business, results of operation and reputation
6. 31Transition risks related to climate change, including negative shifts in investor, regulator, and broader public sentiment with respect to fossil fuels, could have a material and adverse effects on us
7. 32Restrictions on the ability to procure natural gas, including its production and delivery, and the ability to construct carbon sequestration facilities, could adversely impact our business
8. 33We may be subject to new, stricter measures and/or regulatory requirements for the mitigation or reduction of greenhouse gas emissions that could require radical changes to development models and adversely affect our business, reputation, and operations
9. 34We are exposed to price volatility risks related to incentives
10. 35The ability to license and deploy natural gas power plants may be limited due to conflict, war or other political disagreements between gas-producing nations and potential customers, and such disagreements may adversely impact our business plan
11. 36Any potential changes or reductions in available government incentives promoting projects that reduce greenhouse gas emissions, such as the Inflation Reduction Act of 2022’s financial assistance program funding installation of zero-emission technology, may adversely affect our ability to grow our business
12. 37We may not be able to utilize any future federal income tax credits

Risks Related to Intellectual Property

1. 38These disagreements may harm our relationship with our partners, and such harm could have negative impacts on other aspects of our business
2. 39If disputes over licensed intellectual property prevent or impair our ability to maintain the licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize our technology, or the dispute may have an adverse effect on our results of operation
3. 40Third parties may successfully challenge or invalidate our rights or ability to use in-licensed intellectual property that is core to the Net Power Cycle
4. 41invalid or unenforceable or that the party against whom we have asserted trademark infringement has superior rights to the marks in question. In this case, we could ultimately be forced to cease use of such trademarks
5. 42Despite actively monitoring for potential third-party infringement, misappropriation, dilution or other violations of our intellectual property rights, there could be activities that could diminish the value of our services, brands, or goodwill and that cause a decline in our revenue
6. 43Our patent applications may not result in issued patents and our patent rights may be contested, circumvented, invalidated, or limited in scope, any of which could have a material adverse effect on our ability to prevent others from interfering with commercialization of our technology
7. 44We maintain certain technology as trade secrets and others could independently develop competing or similar technologies, allowing others to develop plants without our license if our other intellectual property rights are insufficient to prevent such unlicensed development and deployment of plants
8. 45A number of foreign countries do not protect intellectual property rights to the same extent as the U.S., and, so, our intellectual property rights may not be as strong or as easily enforced outside of the U.S
9. 46We, our partners or our licensees may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, and such failure to identify or correctly interpret the patent may adversely affect our ability to develop, market, and license our technology

Risks Relating to the Tax Receivable Agreement

1. 47as certain other tax benefits, including tax benefits attributable to payments under the Tax Receivable Agreement, and those payments may be substantial
2. 48In certain cases, payments under the Tax Receivable Agreement may exceed the actual tax benefits Net Power Inc. realizes or may be accelerated
3. 49There may be a material negative effect on our liquidity if the payments under the Tax Receivable Agreement exceed the actual income or franchise tax savings that we realize

Risks Relating to Our Organizational Structure

1. 50The organizational structure of Net Power confers certain benefits upon the holders of shares of Class B Common Stock and OpCo Units (which includes the Legacy Net Power Holders) that will not benefit the holders of shares of Class A Common Stock to the same extent

Risks Related to Governance

1. 51Concentration of ownership among the Principal Legacy Net Power Holders may prevent new investors from influencing significant corporate decisions
2. 52If we fail to maintain effective internal control over financial reporting and effective disclosure controls and procedures, we may not be able to accurately report our financial results in a timely manner or prevent fraud, and such inability may adversely affect investor confidence in our company
3. 53by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company
4. 54Delaware law and our governing documents contain certain provisions, including anti-takeover provisions, that limit the ability of stockholders to take certain actions and that could delay or discourage takeover attempts that stockholders may consider favorable