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RNS Number : 7219Y Fermi Inc. 31 March 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________
FORM 10-K
___________________________________________
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2025
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
December 31, 2025
Commission file number 001-42888
___________________________________________
Fermi Inc.
(Exact name of registrant as specified in its charter)
___________________________________________
Texas 33-3560468
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
620 S. Taylor St., Suite 301 79101
Amarillo, TX
(Address of Principal Executive Offices) (Zip Code)
(214) 894-7855
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.001 par value FRMI The Nasdaq Stock Market LLC
Common Stock, $0.001 par value FRMI The London Stock Exchange
Securities registered pursuant to section 12(g) of the Act:
Common Shares
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes o No x
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes o No x
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 filer o Accelerated filer o
Non-accelerated filer x Smaller reporting company o
Emerging growth company x
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.
x
Indicate by check mark whether the registrant has filed a report on and
attestation to its management's assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the
Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report.
o
If securities are registered pursuant to Section 12(b) of the Act, indicate by
check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial
statements.
o
Indicate by check mark whether any of those error corrections are restatements
that required a recovery analysis of incentive-based compensation received by
any of the registrant's executive officers during the relevant recovery period
pursuant to §240.10D-1(b).
o
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act).
Yes o No x
As of March 23, 2026, there were 629,839,790 shares of common stock, par value
of $0.001 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive Proxy Statement for the 2026 Annual
Meeting of Stockholders to be filed subsequently with the SEC are incorporated
by reference into Part III of this Annual Report. Except with respect to
information specifically incorporated by reference in this Annual Report, the
Proxy Statement shall not be deemed to be filed as part hereof.
Table of Contents
Page
PART I (#Section3)
Item 1. (#Section5) Business (#Section5) 3
Item 1A. (#Section6) Risk Factors (#Section6) 24
Item 1B. (#Section7) Unresolved Staff Comments (#Section7) 67
Item 1C. (#Section8) Cybersecurity (#Section8) 67
Item 2. (#Section9) Properties (#Section9) 68
Item 3. (#Section10) Legal Proceedings (#Section10) 68
Item 4. (#Section11) Mine Safety Disclosures (#Section11) 69
PART II (#Section12)
Item 5. (#Section13) Market for Registrant's Common Equity, Related Stockholder Matters and Issuer 70
Purchases of Equity Securities (#Section13)
Item 6. (#Section14) Reserved (#Section14) 71
Item 7. (#Section15) Management's Discussion and Analysis of Financial Condition and Results of 71
Operations (#Section15)
Item 7A. (#Section27) Quantitative and Qualitative Disclosures About Market Risk (#Section27) 86
Item 8. (#Section28) Financial Statements and Supplementary Data (#Section28) 87
Item 9. (#Section47) Changes in and Disagreements With Accountants on Accounting and Financial 119
Disclosure (#Section47)
Item 9A. (#Section48) Controls and Procedures (#Section48) 119
Item 9B. (#Section49) Other Information (#Section49) 120
Item 9C. (#Section50) Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 120
(#Section50)
PART III (#Section51)
Item 10. (#Section52) Directors, Executive Officers and Corporate Governance (#Section52) 121
Item 11. (#Section53) Executive Compensation (#Section53) 121
Item 12. (#Section54) Security Ownership of Certain Beneficial Owners and Management and Related 121
Stockholder Matters (#Section54)
Item 13. (#Section55) Certain Relationships and Related Transactions, and Director Independence 121
(#Section55)
Item 14. (#Section56) Principal Accountant Fees and Services (#Section56) 121
PART IV (#Section57)
Item 15. (#Section46) Exhibits and Financial Statement Schedules (#Section58) 122
Item 16. (#Section59) Form 10-K Summary (#Section59) 124
Signatures (#Section60) 125
PART I
Special Note Regarding Forward-Looking Statements
Certain statements in this Annual Report on Form 10-K, other than purely
historical information, including estimates, projections, statements relating
to our business plans, objectives and expected operating results, and the
assumptions upon which those statements are based, are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements generally
are identified by the words "believes," "project," "expects," "anticipates,"
"estimates," "intends," "strategy," "plan," "may," "will," "would," "will be,"
"will continue," "will likely result," "strive," "endeavor," "mission,"
"goal," and similar expressions. Forward-looking statements are based on
current expectations and assumptions that are subject to risks and
uncertainties which may cause actual results to differ materially from the
forward-looking statements.
Some of the risks and uncertainties that may cause our actual results,
performance or achievements to differ materially from those expressed or
implied by forward-looking statements include, among others, the following:
• our business model is highly dependent on the successful
construction, development, leasing, and continued maintenance of Project
Matador (as defined herein);
• our limited operating history in developing and operating power
and AI infrastructure, which may make it difficult to evaluate our business
prospects and the risks and challenges we may encounter;
• our ability to access adequate project financing, commercial
borrowings and debt and equity capital markets to fund our significant
anticipated capital expenditures;
• our ability to construct, operate and maintain power generation
facilities on schedule and at anticipated costs, either of which may be
impacted by supply chain disruptions, including the impact on labor
availability, raw materials and input commodity costs and availability, and
manufacturing and transportation;
• the market for generating nuclear power is not yet established
and may not achieve the growth potential we expect or may grow more slowly
than expected;
• general business and economic conditions, including inflation,
recession, geopolitical instability, and capital markets volatility, that
could affect customer demand, financing availability, and our overall
financial performance;
• environmental history, remediation, and associated risks,
including potential liability exposure arising from environmental
contamination, emissions, or other operational impacts;
• our ability to obtain and renew leases with our tenants on terms
favorable to us, and manage our growth, business, financial results and
results of operations;
• our ability to respond to price fluctuations and rapidly
changing technology, including but not limited to uncertainty regarding the
continued growth in demand for AI computing infrastructure, including the
possibility that advances in AI model efficiency, changes in AI investment
trends, or shifts in the competitive landscape could reduce demand for the
power-intensive datacenter capacity we are designed to support;
• the impact of tariffs and global trade disruptions on us and our
tenants;
• changes in political conditions, geopolitical turmoil, political
instability, civil disturbances, and restrictive governmental actions;
• we and our customers operate in a politically sensitive
environment, and the public perception of nuclear energy, gas-fired power
generation, artificial intelligence, and powered shell development can affect
our customers and us;
• influential 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;
• the degree and nature of our competition;
• our failure to generate sufficient cash flows to service
indebtedness;
• material negative changes in the creditworthiness and the
ability of our tenants to meet their contractual obligations;
• increases and volatility in interest rates;
• increased power, labor, equipment procurement, shipping,
refurbishment or construction costs;
• labor shortages or our inability to attract and retain talent;
• changes in, or the failure or inability to comply with,
government regulation, including regulation of our facilities' environmental
footprint and the project's electric generation and storage assets;
• a failure of our information technology systems, systems
conversions and integrations, cybersecurity attacks or a breach of our
information security systems, networks or processes;
• our risks related to intellectual property, including our
ability to protect proprietary technology and processes, and the possibility
that third parties may assert infringement claims against us;
• our inability to obtain and/or maintain necessary government or
other required consents or permits,
• risks associated with the concentration of our operations in a
limited number of geographic locations, which exposes us to region-specific
regulatory, environmental, political, and natural disaster risks;
• our exposure to fluctuations in fuel prices, including natural
gas and other generation feedstocks, and our ability to pass through or hedge
against such cost increases;
• our failure to qualify as a REIT and maintain our REIT
qualification for U.S. federal income tax purposes;
• our ability to secure and maintain access to water resources
sufficient for cooling operations and the potential for regulatory
restrictions on water usage;
• changes in, or the failure or inability to comply with, local,
state, federal and applicable international laws and regulations, including
related to taxation, real estate and zoning laws, and increases in real
property tax rates; and
• the impact of any financial, accounting, legal or regulatory
issues or litigation that may affect us.
The risks and uncertainties set forth above are not exhaustive. Other sections
of this Annual Report on Form 10-K, including Part I, Item 1A. "Risk Factors"
and Part II, Item 7. "Management's Discussion and Analysis of Financial
Condition and Results of Operations," discuss these and other risks and
uncertainties that could cause actual results and events to differ materially
from such forward-looking statements.
Except as required by law, we undertake no obligation to update or revise
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
Item 1. Business
Overview
Fermi Inc. ("Fermi," "we," "us," or "our") exists to power the artificial
intelligence needs of tomorrow. We are building a private power campus for
AI-centric customers-developing and leasing large-scale, grid-independent
energy generation and high-performance computing facilities purpose-built for
the hyperscale era. Our mission is to deliver up to 11 GW of low-carbon,
highly reliable and redundant, and on-demand power directly to the world's
most compute-intensive businesses, with the potential to expand the campus to
up to approximately 17 GW of total generation capacity, subject to the closing
of additional land acquisitions and receipt of incremental permits. See
"-Strategic Land Expansion" and "-Air Permitting and Regulatory Milestones"
below for additional detail. We have entered into a long-term lease on a site
large enough to simultaneously house the next three largest AI infrastructure
campuses by square footage currently in existence. In a world in which power
is considered a key currency for AI innovation, we believe that Fermi is
uniquely positioned with numerous strategic advantages that will help propel
America's AI economy forward.
Our strategy is anchored by Project Matador, a hyperscale power and AI
infrastructure campus in the Texas Panhandle region secured by our 99-year
ground lease with the Texas Tech University System. Project Matador is
designed as a multi-phased development intended to deliver up to 11 GW, with
the potential to expand to up to approximately 17 GW, of private power
generation capacity and support up to approximately 15 million square feet of
AI-ready hyperscale compute infrastructure over a multi-decade buildout
timeline. Our objective is to provide hyperscale and other compute-intensive
tenants with reliable, cost-effective, low-latency power and dedicated powered
shell infrastructure, all of which is sustainably insulated from the physical
and political constraints and headwinds associated with full reliance on
limited and increasingly expensive grid-based power supplies.
We plan to develop and lease powered shell campus space supported by an
integrated, grid-independent energy and site infrastructure platform,
including on-site natural gas-fired generation, supplemental grid-supplied
power, battery energy storage systems, solar generation for energy
displacement, and longer-term nuclear baseload supply, all in furtherance of
our objective to support large, long-duration hyperscale deployments. Project
Matador is designed as an energy-first campus that places power at the center
of the tenant offering, with tenant rent and capacity allocation expected to
be based on reserved power capacity expressed in kilowatts per month, together
with mutually designed and agreed upon reliability characteristics. We may
also offer long-term ground leases to tenants that elect to construct their
own powered shell facilities on our land.
The Project Matador campus benefits from a combination of strategic site
characteristics that we believe would be difficult to replicate at comparable
scale. The campus is located in proximity to some of the nation's most
productive natural gas-producing regions, supporting efficient and
cost-effective gas transmission directly to the site. Two major fiber optic
transmission corridors connect at the southern boundary of the campus,
enabling co-located tenants to achieve low-latency connectivity to primary
digital backbone networks. Additionally, the site overlies the Ogallala
Aquifer, one of the largest freshwater aquifers in the world. The site is also
located in proximity to the U.S. government's Pantex facility, which we
believe provides favorable conditions for security infrastructure and may
support future nuclear development considerations, subject to applicable
regulatory approvals.
We intend to elect to qualify as a REIT for U.S. federal income tax purposes
commencing with our short taxable year ended December 31, 2025. We believe
that many of the assets and income streams associated with our powered campus
model are compatible with REIT requirements, although certain development,
generation, and service activities may be conducted through taxable REIT
subsidiaries ("TRSs") or other structures to preserve REIT qualification. We
believe the REIT structure is well suited to long-duration
infrastructure-oriented real estate and may provide investors tax-efficient
exposure to AI infrastructure growth and long-duration real estate assets,
subject to the risks and uncertainties described in this Annual Report.
We were formed in January 2025 and, as a development-stage company, have not
generated revenue to date. As of December 31, 2025, we have made significant
progress advancing the project, including securing site control and
groundwater rights, completing key early-stage engineering and site
development work, progressing permitting activities, advancing grid
interconnection and fuel supply arrangements, procuring certain long-lead
power generation equipment, negotiating tenant arrangements, and structuring
financing. We do not expect to generate operating revenues until we have
executed definitive lease agreements with tenants and commenced delivery of
powered shells and associated on-site power capacity at Project Matador. Until
then, we may generate limited non-operating income in the form of interest
income on cash and cash equivalents held in reserve. Our ability to execute
our plan depends on satisfying conditions precedent under our ground lease,
converting tenant discussions into binding agreements, obtaining required
permits and regulatory approvals, and raising strategic capital.
Market Opportunity
Growing AI and Hyperscale Power Demand
Total AI power demand is projected to grow from 55 GW in 2023 to up to 219 GW
by 2030 according to McKinsey & Company, with AI workloads forecasted to
increase by a factor of 3.5 over the same period, necessitating an estimated
$5.2 trillion in related infrastructure investment. The global generative AI
market is expected to grow from $64 billion in 2023 to $457 billion by 2027
according to Bloomberg Intelligence. In 2024, capital expenditure on
AI-focused data center development reached $210 billion, with only $39 billion
allocated to ongoing operating costs, indicating significant emphasis on
upfront infrastructure buildout.
U.S. data center demand by 2030 is expected to land between 1,000
terawatt-hours and over 1,534 terawatt-hours per year across a range of
industry sources. Key growth in demand is driven by AI, where demand for AI
capacity is expected to grow at a compound annual growth rate of 33%. This is
especially true for data center-dense markets such as those serviced by PJM
Interconnection LLC and the Electric Reliability Council of Texas, Inc.
("ERCOT"), where grid demand forecasts have moved up materially, putting
pressure on reserve margins. ERCOT is facing a shrinking supply cushion as
electricity demand-driven by rapid industrial growth and data centers-outpaces
the addition of new, dispatchable power generation. Projections indicate that
power reserves could fall below safe levels within a few years, with
worst-case scenarios showing demand potentially exceeding supply by 2028. In
addition, ERCOT is being impacted by supply chain constraints with new
turbines for projects not expected until 2028 or later. We believe AI
hyperscalers and enterprise AI compute operators are among the most
financially capable drivers of this demand, with an urgent need for power that
is abundant, consistent, and delivered at high levels of baseload
availability.
Power Density and Infrastructure Constraints
The rise of generative AI is fundamentally changing computing infrastructure
requirements, particularly with respect to compute intensity and associated
power demands. Traditional data centers were designed to support rack-level
power densities of 3-10 kW per rack, while recent deployments are averaging
10-20 kW per rack, with certain next-generation AI deployments targeting
50-100 kW per rack and, in some cases, up to 240 kW per rack. This
unprecedented rise in power density is a fundamental contributor to the acute
constraints on available utility power across the United States, as existing
transmission infrastructure and utility frameworks have not kept pace with
growth in power demand.
With computing facilities also growing in size, largely due to hyperscaler
demand, new deployments are ranging from 100 MW to 1,000 MW, requiring
significantly more power. As a result, demand for private power solutions that
are not reliant on grid expansion has increased significantly. Co-locating
dedicated generation adjacent to tenant compute facilities is also expected to
reduce long-distance power transmission losses, improving overall energy
efficiency. Additionally, latency is not a primary constraint for many
large-scale AI workloads, particularly AI model training, and hyperscalers are
increasingly prioritizing access to power and speed-to-market over proximity
to traditional Tier 1 data center markets. This trend reflects a broader
decentralization of compute infrastructure in the AI era, where access to
grid-independent, scalable, large-quantity power is driving hyperscalers'
decisions.
Low-Carbon Energy Supply
Due to intermittency limitations, renewable sources alone are insufficient to
meet continuous AI compute requirements, reinforcing the role of technologies
that supply firm capacity-such as natural gas-fired combined cycle units and
nuclear generation-along with battery energy storage systems for load
modulation, management of intra-second AI demand volatility, reliability
optimization, and ride-through capability during forced outages and ground
fault events. While battery storage technology continues to advance, we
believe that current commercially available storage solutions are highly
valuable in supporting the reliability and power optimization functionality of
Project Matador, but in and of themselves are not yet sufficient to support
baseload AI compute requirements at the scale and continuous availability
levels demanded by hyperscale operators, and that solar and wind generation
introduce variability that has not yet been fully addressed by available
storage technology. We believe this market shift supports demand for an
integrated energy and data infrastructure platform at scale, such as Project
Matador, that is designed to meet the demands of the high-density AI workloads
of the future.
Our Business Model
We are developing a powered campus model in which we control a 5,236-acre site
in Carson County, Texas under a 99-year ground lease (the "Lease") with the
Texas Tech University System. Together with additional acreage acquired or
under contract adjacent to the leased property, the expanded campus is
expected to encompass approximately 7,570 acres. We believe this model
provides long-term site control and supports a coordinated development
framework with a public university partner. We are developing a private energy
and site infrastructure platform across the campus to support multiple powered
shell buildings and a diversified, integrated power supply, including private
power generation and delivery infrastructure, substations, internal
distribution networks, water and cooling systems, and other essential
infrastructure. In addition to powered shell facilities, we may offer
long-term ground leases to tenants that elect to construct their own powered
shell facilities on our land, with or without integrated power delivery.
We intend to provide electricity and related on-site power and infrastructure
services solely to on-site tenants and primarily as an incident of tenancy
under our lease arrangements, and as such our business model does not
anticipate nor rely upon any material marketing of or revenues from the sale
of power to the grid or to interconnected electric utilities. We expect many
tenant arrangements, including powered shell leases, to be structured around
contracted power capacity (megawatts) and service levels, reflecting the
economics of high-density AI workloads and power-constrained data center
markets. Certain activities may be conducted through TRSs or other structures
in order to preserve our intended REIT qualification.
We seek to align the long-term needs of hyperscale and other large compute
users-speed to power, resiliency, scalability, connectivity, and cost
predictability-with a real estate and infrastructure platform designed for
multi-decade operations. Our model is intended to address constraints in
traditional utility power delivery, including limited grid capacity,
interconnection queue delays, and transmission congestion, by co-locating
dedicated generation and distribution infrastructure adjacent to tenant
compute facilities.
We anticipate generating substantially all of our revenue from long-term
tenant lease arrangements at Project Matador. Tenant payments are expected to
include fixed and variable components and are intended to be structured as
rents from real property for U.S. federal income tax purposes, subject to
applicable REIT requirements. Leases of powered shell space and related campus
improvements are expected to be structured on a triple-net or similar basis.
Tenant payments are expected to include:
• Fixed monthly rent based on reserved power capacity. A
capacity-based rent component expected to be expressed on a dollars per
kilowatt per month basis. This component reflects the tenant's right, as an
incident of tenancy, to occupy the premises and access dedicated,
grid-independent power capacity and associated on-site electrical and related
infrastructure.
• Fixed monthly rent based on invested capital in real property
improvements. A separate fixed rent component designed to provide a
contractual return on capital invested in the premises and related
improvements, including powered shell structures and specified infrastructure
elements.
• Pass-through reimbursements structured as additional rent.
Tenant reimbursements of certain costs allocable to the premises and shared
campus systems, structured as additional rent on a pass-through basis. These
amounts may include energy-related input costs and other consumption-based
expenses, insurance, property taxes, and agreed operating and maintenance
costs, subject to applicable budgets.
• Incident of tenancy framework. Power and related infrastructure
services are intended to be provided solely to on-site tenants as an incident
of tenancy under the lease. The foregoing rent and reimbursement components
are intended to be payable as rent or additional rent under the lease and not
as consideration for standalone sales of electricity.
• Development and administrative fees. For certain deployments,
tenants may pay fee components tied to development management or
administrative oversight of campus systems. To the extent necessary to
preserve REIT qualification, service-related activities may be performed
through, or structured in coordination with, TRSs.
For tenants that elect to develop their own facilities on our land, tenant
payments are expected to include:
• Ground lease rent. We expect to earn market-based ground lease
rent under long-duration lease structures.
• Power capacity and infrastructure made available under the
ground lease. Where reserved power capacity and related infrastructure are
made available in connection with such ground leases, associated payments are
expected to be structured as rent or additional rent under the lease and
provided solely as an incident of tenancy.
We may incorporate tenant prepayments, security deposits, and contributions in
aid of construction as part of our commercial model, particularly for large,
long-duration deployments where tenants are willing to fund a portion of data
center development, shared infrastructure and energy systems upfront in
exchange for contracted capacity and tailored infrastructure rights. For
tenants that are not investment-grade, we may seek to mitigate counterparty
risk through larger prepayments, third-party credit enhancements, guarantees,
insurance or other risk-transfer structures.
To finance our infrastructure, we intend to rely on a combination of equity
capital, tenant-funded amounts, and non-recourse or limited-recourse equipment
and project-level debt raised through special purpose entities ("SPEs") whose
collateral may consist of specific power generation, energy infrastructure, or
other campus assets and the associated tenant payment streams under applicable
lease arrangements. We may also pursue monetization of eligible tax credits
and other incentives, strategic equity partnerships, and government-sponsored
programs such as potential loans from the U.S. Department of Energy's ("DOE")
Office of Energy Dominance Financing.
Our target customers are hyperscale and other large-scale compute users,
including cloud service providers, AI infrastructure operators, chipmakers,
and other enterprises or governmental and quasi-governmental entities
requiring long-duration access to high-density compute capacity supported by
reliable power. We expect that tenant lease agreements will generally be
long-term in nature and structured to support large, phased deployments over
time. Prior to stabilization, we expect that a limited number of tenants may
represent a significant portion of our contracted revenue, and we may
experience customer concentration until additional leases are executed.
Because Project Matador is in development, the timing of tenant lease
execution, energization of power assets, and commissioning of infrastructure
will materially affect our results and may result in variability prior to
stabilization.
Development Strategy and Plan of Operations
Project Matador is structured as a phased campus buildout intended to
integrate site control, infrastructure readiness, power sequencing, and tenant
delivery into a coordinated development program extending through 2038. The
campus is being designed as an integrated, private power, energy-first
platform intended to deliver reliable power directly to on-site tenant
facilities, with grid connectivity utilized primarily for redundancy,
balancing, and optionality rather than as the primary power source.
We do not expect to generate operating revenues until we have executed
definitive lease agreements with tenants and commenced delivery of
infrastructure services, including power and data center capacity, at Project
Matador. Until then, we may generate limited non-operating income in the form
of interest income on cash and cash equivalents held in reserve. We expect our
results of operations to vary significantly from period to period as we
progress through multi-year phases of development, including substantial
capital expenditures for civil works, equipment procurement, licensing, and
construction.
Having substantially completed Phase 0 site enablement and infrastructure
readiness activities, our near-term operational focus has shifted to Phase 1,
which is centered on achieving initial commercial energization of the campus
and supporting first tenant commissioning. Phase 1 priorities include
progressing gas turbine deployments and installation, advancing grid
interconnection to full contracted capacity, deploying initial battery energy
storage and power quality infrastructure, executing definitive tenant lease
agreements, and securing project-level financing to support the next stage of
campus buildout.
While phases may overlap and sequencing may adjust based on tenant commitments
and market conditions, our current development plan is organized into five
major phases intended to stage capital deployment and capacity additions over
more than a decade. Our current framework consists of the following stages:
Phase 0 - Site Enablement and Infrastructure Readiness
Phase 0 established the physical and contractual foundation necessary for
construction and early operations at Project Matador. This phase was designed
to position the campus for initial power delivery and powered shell deployment
by advancing civil works and external infrastructure (including roads,
fencing, and water systems), installing initial private power and site
infrastructure systems, aligning permitting and regulatory milestones, and
satisfying ground lease commencement conditions.
Activities included:
• Satisfaction of conditions precedent to commence the 99-year
ground lease with the Texas Tech University System covering approximately
5,236 acres in Carson County, Texas.
• Execution of contracts to acquire additional acreage adjacent to
the leased property, expanding the expected campus footprint to approximately
7,570 acres.
• Finalization and partial activation of grid-supplied power under
our Electric Service Agreement ("ESA") with Southwestern Public Service
Company ("SPS"), a subsidiary of Xcel Energy Inc., including 86 MW of capacity
expected to be energized in the second half of 2026, along with progress on an
additional 114 MW of interconnection capacity targeted for accelerated
energization by year-end 2026. The timing for this incremental 114 MW may
extend into 2027, depending on regulatory approvals, SPS interconnection work
schedules, generation planning metrics, and alignment with tenant deployment
timelines and power delivery requirements. The ESA contractually provides for
supply of this incremental 114 MW by October 1, 2027.
• Procurement of long lead-time generation and electrical
infrastructure equipment, including seven GE TM2500 mobile units, six Siemens
SGT-800 turbines, three Siemens SGT6-5000F heavy-duty gas turbines, three GE
6B frame-class gas turbines, and certain substations, switchgear,
transformers, and related balance-of-plant components.
• Advancement of dual gas interconnections and firm supply
arrangements, including installation of approximately 4.6 miles of natural gas
lines.
• Installation of approximately 7.2 miles of water lines, a 2
million gallon water tank, and approximately 5 miles of on-site power lines to
establish the initial private power, water, and site infrastructure systems.
• Development of internal roads, pad sites, equipment laydown
areas, and security infrastructure, including clearing approximately 11.4
million square feet (approximately 261 acres) of land, drilling 100
geotechnical borings, pouring structural footings, preparing approximately
9,200 square feet of pad sites, and installing approximately 11.3 miles of
perimeter fencing. We also began establishing laydown and staging areas and
foundational groundwork intended to support installation of our initial
generation assets, substations, and early powered shell capacity.
• Early-stage engineering for generation, cooling systems,
substations, and campus power distribution and power management
infrastructure.
• Mobilization of approximately 500 engineers and construction
personnel to execute Phase 0 scope within the first nine months of principal
construction activity.
Since commencement of principal construction activities less than nine months
ago, we have substantially completed the core Phase 0 enablement scope.
In early February 2026, after substantially completing Phase 0 infrastructure
activities, we strategically paused incremental development to align the next
stage of capital deployment with receipt of our air permit from the Texas
Commission on Environmental Quality ("TCEQ"). On February 25, 2026, we
received final approval from TCEQ for our approximately 6 GW natural gas-fired
air permit, which we believe represents one of the largest such permits ever
issued in the Western Hemisphere.
On March 27, 2026, we filed an additional application with the TCEQ for an
incremental 5 GW air permit, which, if approved, would authorize the site for
up to approximately 11 GW of total natural gas-fired generation capacity. We
believe receipt of the initial permit materially advances the project's
readiness for binding tenant contracting and project-level financing for the
initial tenant campus at Project Matador.
Phase 0 was designed to bring cash flow forward and de-risk subsequent capital
deployment by aligning site readiness, private power and infrastructure system
installation, and permitting milestones with initial power delivery and tenant
contracting.
Phase 1 - Initial Energization and Campus Activation
Phase 1 is designed to achieve initial commercial energization of the Project
Matador campus and support first tenant commissioning through deployment of
our initial grid and on-site generation blocks. This phase represents the
transition from site enablement activities into operating infrastructure, with
initial power delivery expected to support powered shell commissioning and
early tenant fit-out activities.
Based on our current secured and contracted equipment portfolio and grid
arrangements, Phase 1 is expected to include:
• Initial energization of up to 200 MW of grid-supplied capacity
under our ESA with SPS, including 86 MW expected to be energized in the second
half of 2026 and an incremental 114 MW targeted for accelerated energization
by year-end 2026. The timing for this incremental 114 MW may extend into 2027,
depending on regulatory approvals, SPS interconnection work schedules,
generation planning metrics, and alignment with tenant deployment timelines
and power delivery requirements.
• Deployment of seven leased GE TM2500 mobile generation units
rated at approximately 132 MW at our site elevation, intended to support early
energization, redundancy, reserve power reliability, and commissioning
flexibility.
• Deployment of our initial on-site generation assets, comprising
three refurbished GE 6B turbines providing approximately 114 MW, six Siemens
SGT-800 turbines contributing approximately 300 MW, and three Siemens F-class
turbines under contract, each expected to provide approximately 240 MW, each
initially deployed in simple cycle configuration, with near-term upgrading to
combined cycle mode contemplated in each of these asset classes.
• Initial deployment of battery energy storage systems and other
power quality infrastructure intended to support modulation and management of
customer-facing intra-second load volatility, commissioning flexibility, load
shaping, and ride-through capability, and evaluation of solar generation
arrangements intended to displace a portion of natural gas consumption over
time.
• Construction and delivery of initial powered shell facilities,
including structural buildout, electrical backbone infrastructure, and cooling
systems designed to support tenant mechanical, electrical, and plumbing
("MEP") installation and high-density compute deployment.
• Construction of campus operations and control center facilities
to support centralized monitoring, dispatch, and management of on-site
generation assets and imported grid power supplies, electrical distribution
systems, and campus security infrastructure.
Phase 1 is also expected to include deployment of substations, campus
distribution networks, cooling systems, and other private power and site
infrastructure required to support early tenant operations. Phase 1 is
expected to be substantially completed upon initial tenant energization and
commissioning readiness, which we currently expect could occur during the
first half of 2027, subject to execution of definitive lease agreements and
the time required for tenants to complete their MEP buildout and prepare for
deployment at the site.
Phase 2 - Scaled Natural Gas Buildout and Combined Cycle Expansion
Phase 2 represents the scale-up phase of Project Matador and is designed to
transition the campus from initial energization into sustained, multi-gigawatt
operations. This phase is expected to be driven by the execution of binding
tenant lease agreements and the availability of project-level financing to
support large-scale construction and commissioning.
Phase 2 is expected to include:
• Construction and commissioning of heat recovery steam generation
("HRSG"), steam turbine and generators, and related balance-of-plant
infrastructure to convert initial simple cycle assets into combined cycle
operation, increasing efficiency and net output while materially improving
emissions efficiencies.
• Deployment of additional Siemens SGT-800 units, including units
under order with expected deliveries in 2028, to increase firm on-site
generation and redundancy.
• Expansion of campus substations, transmission and distribution
infrastructure, incremental interconnections with the SPS grid, and private
power and site infrastructure systems required to support incremental tenant
load.
• Incremental deployment of battery energy storage systems and
solar generation intended to support power quality, load shaping, and zero
carbon, low-cost energy displacement.
Based on our secured and contracted equipment portfolio and execution of our
combined cycle conversion strategy, we expect Phase 2 to enable the campus to
reach approximately 2.5 GW of gas-fired power capacity as soon as the end of
2028, subject to completion of installation, commissioning, fuel supply
infrastructure, financing, and required regulatory approvals. This target
reflects both equipment currently under executed agreements and additional
capacity expected from combined cycle conversions of simple cycle turbines
already under contract.
Phase 3 - Construction of the First Nuclear Reactor and Continued Buildout of
Gas Generation Capabilities
Phase 3 contemplates the development and construction of nuclear baseload
generation capacity at Project Matador, beginning with the initial 1 GW
Westinghouse Reactor. We believe our strategy to secure long lead-time items
positions us favorably in the nation's expected nuclear power renaissance. We
plan to pursue dual-track development of additional tenant-contracted powered
shell capacity, served by a combination of new on-site, owned combined cycle
natural gas-fired generation and the construction of the initial reactor.
Construction of the first 1 GW Westinghouse Reactor is expected to begin
promptly following receipt of U.S. Nuclear Regulatory Commission ("NRC")
approval for our initial combined license ("COL") application and the
placement of orders for major long lead-time equipment. Fermi estimates a
five-year construction cycle once those milestones have been achieved and is
actively working on sourcing and procuring long lead-time components to
maintain schedule certainty and to create a competitive advantage over other
hyperscale infrastructure developers considering nuclear power. To promote
uninterrupted power delivery, we plan to retain the flexibility to supplement
or temporarily replace planned nuclear output with gas-fired peaking
generation, which can serve as an initial or backup power source during
planned, refueling, and forced outage conditions. We believe the Project
Matador Site is one of the most extensively studied, secure, and characterized
nuclear sites in the United States for near-term Westinghouse Reactor
deployment, and is well-positioned for accelerated nuclear development of
multiple units given the site's characteristics and the recently filed COL
application.
We have continued to advance regulatory and development activities in support
of this phase. On June 17, 2025, we filed a combined license application with
the NRC for four Westinghouse AP1000 reactors, and the NRC accepted the
application for review on September 5, 2025. We have entered into a front-end
engineering design ("FEED") agreement with Hyundai Engineering &
Construction Co., Ltd. to advance site layout, constructability planning,
cooling-system strategy, civil design, cost estimates, and scheduling for the
planned deployment of AP1000 units at Project Matador. We have also executed a
forging material readiness agreement with Doosan Enerbility Co., Ltd. intended
to support long-lead nuclear forgings and production readiness for reactor
components, subject to contractual milestones. We intend to continue
progressing through the NRC review process and related licensing, safety, and
environmental workstreams. We believe these efforts position Project Matador
to pursue early-mover advantages in large-scale nuclear development in
response to growing energy demand and evolving federal policy priorities
supporting expansion of U.S. nuclear infrastructure and advanced nuclear
technologies, including small modular reactors.
Phase 3 is expected to include:
• Continued advancement of the NRC combined license review process
and satisfaction of associated regulatory and environmental requirements,
including safety, environmental, and site-specific licensing workstreams.
• Finalization of engineering, procurement, and construction
execution planning for the initial 1 GW Westinghouse Reactor, including
long-lead component procurement, forging readiness, and site preparation
activities.
• Commencement of construction of the first nuclear reactor unit,
subject to receipt of required NRC approvals, placement of orders for major
long lead-time equipment, and securing of nuclear-specific project financing.
• Integration planning to ensure operational and physical
separation between nuclear safety systems and campus operations, including
establishment of the reactor SPE structure and associated sub-lease
arrangements.
Each nuclear reactor is expected to require approximately 60 months of
construction following receipt of required approvals. Phase 3 is intended to
introduce long-duration, lower-carbon baseload capacity to complement the
campus's flexible natural gas generation fleet.
In the event that the anticipated expansion of domestic nuclear energy demand
does not materialize at the pace or scale currently projected, the Project
Matador campus has been designed to accommodate, as an alternative,
approximately 5.0 GW of additional natural gas-fired generation capacity,
subject to the closing of additional land acquisitions and receipt of
incremental permits, which would bring total planned site capacity to
approximately 11 GW of natural gas-fired generation. See "-Strategic Land
Expansion" and "-Air Permitting and Regulatory Milestones" below for
additional detail.
Phase 4 - Expansion of Infrastructure and Construction of Additional Nuclear
Reactors
Phase 4 represents the long-term expansion of Project Matador into a fully
scaled, multi-tenant powered campus with diversified generation resources and
long-duration infrastructure. This phase is designed to include expansion of
tenant infrastructure, grid-scale interconnection capacity, and supplemental
powered shell square footage accompanied by the buildout of additional energy
redundancy systems to support long-term operational resilience. We expect this
infrastructure growth to coincide with the staged construction of Westinghouse
Reactors-Units 2 through 4-following completion of the first unit. Each
incremental nuclear unit will require, for power quality and reliability
purposes, installation of a roughly equivalent megawatt-based amount of
additional BESS resources. We also expect to supplement our Westinghouse
Reactors with SMRs as they become commercially available.
Upon full buildout, the energy campus is currently designed to include
approximately 6.0 GW of nuclear capacity across two nuclear islands and up to
approximately 6 GW of natural gas-fired generation-the full amount authorized
under our TCEQ air quality permit approved in February 2026-for a total of
approximately 11 GW of generation capacity. On March 27, 2026, we filed an
application with the TCEQ for an incremental 5 GW permit, which, if approved,
would authorize the site for up to approximately 11 GW of total gas-fired
generation capacity-providing the flexibility to achieve the full buildout
entirely through natural gas-fired generation independent of the nuclear
development timeline. With the acquisition of additional acreage currently
under contract and subject to receipt of the additional TCEQ permit, the
campus would have the potential to support up to 17 GW of total generation
capacity.
In addition to the power produced by the nuclear and natural gas assets, we
expect to contract for solar energy infrastructure used to offset or displace
natural gas-fired generation when and as the solar power input is available,
together with BESS assets utilized to provide intra-second and intra-day power
quality, firming, shaping and related reliability-focused services. The campus
design is expected to feature integrated water treatment systems,
infrastructure purpose-built for AI training, extensive cybersecurity systems,
and non-energy amenities, forming a secure, high-performance platform
purpose-built to support mission-critical, AI-driven digital workloads across
the United States.
Phase 4 is expected to include:
• Construction and commissioning of Westinghouse Reactors-Units 2
through 4-for up to approximately 4.0 GW of additional large light-water
reactor capacity, and, if commercially available, supplemental small modular
reactor capacity over time, for total nuclear capacity of up to approximately
6.0 GW across two nuclear islands, subject to regulatory approvals, financing,
and execution.
• Continued expansion of natural gas-fired combined cycle
generation to support incremental tenant load and maintain operational
redundancy, with total gas-fired capacity of up to approximately 11 GW upon
full buildout.
• Full buildout of powered shell capacity and supporting
infrastructure, including expanded campus distribution, substations, water
treatment and cooling systems, cybersecurity infrastructure, and fiber
connectivity.
• Deployment of solar energy infrastructure to physically and
environmentally offset or displace natural gas-fired generation, together with
BESS assets utilized for intra-second and intra-day power quality, firming,
shaping, and related reliability-focused services as the campus scales.
Phase 4 is intended to establish Project Matador as a long-duration,
multi-technology energy and digital infrastructure platform capable of
supporting hyperscale tenants with scalable and resilient power supply over
multiple decades, together with expanded grid-scale interconnection, campus
utilities, and other site-level infrastructure and amenities as the campus
matures.
Near Term Power Ramp Strategy and Secured Capacity
A core element of our development strategy is to deliver a staged and
executable power ramp that prioritizes (i) the highest quality, utility-grade
generation fleet platformed off of efficient, highly reliable dominantly
industrial frame class gas turbines designed for long-term configuration in
combined cycle mode, (ii) speed to initial energization, (iii) control of
critical generation equipment, and (iv) scalability through modular expansion.
Our approach is designed to provide initial power availability in the second
half of 2026, expand to approximately 1.5 GW of simple cycle capacity under
our direct control-with staged energization and commercial operation expected
to begin in the first half of 2027-and then convert early-stage simple cycle
assets into combined cycle configurations to increase efficiency and net
output as the campus scales. Our reserves will, over time, be provided through
a robust, utility-oriented reserve margin being maintained for both operating
reserves and planning reserves, with high quality utility-grade aeroderivative
units in simple cycle mode being a material component of our reserve fleet
over time.
The pace of our power generation deployment is driven by the convergence of
several interdependent workstreams, including the time required for
prospective tenants to complete their MEP buildout and achieve deployment
readiness, the development and delivery of powered shell facilities, and the
installation, commissioning, and energization of our on-site generation
assets. We intend to sequence these workstreams in parallel to the extent
practicable, with the objective of aligning generation availability with
tenant readiness to accept power. As a result, the timing of our generation
ramp is not solely a function of equipment delivery and construction, but is
also dependent on the pace at which our tenants are prepared to commence
operations at the campus.
Secured Initial Power (200 MW) - 2026 Energization
We have secured up to 200 MW of grid-supplied capacity pursuant to our ESA
with SPS. We plan on developing multiple interconnection points at different
high voltage levels with SPS to support redundancy, voltage regulation
support, and other system attributes required to deliver highly reliable power
to tenants, and we have begun constructing certain interconnection facilities,
including a connection to the 230-kV and 115-kV systems serving the site.
The first 86 MW of this capacity is expected to be energized in the second
half of 2026. We are working to accelerate energization of the remaining 114
MW by year-end 2026. The timing for this incremental 114 MW may extend into
2027, depending on regulatory approvals, SPS interconnection work schedules,
regulatory approvals, and alignment with tenant deployment timelines and power
delivery requirements. Once fully energized, the 200 MW power block is
expected to support early-phase campus operations and initial tenant
commissioning activities.
Secured Equipment to Support Expansion to 1.5 GW of Simple Cycle Capacity
In addition to our initial 200 MW of grid-supplied capacity, we have secured
additional generation equipment that we expect will expand total
Fermi-controlled simple cycle capacity to approximately 1.5 GW.
• Mobile generation (GE TM2500) - 132 MW. We have entered into a
long-term lease arrangement for seven GE TM2500 mobile aeroderivative
generation units rated at approximately 132 MW in aggregate. These units are
intended to support early energization, commissioning, and operational
redundancy while permanent combined cycle facilities are constructed. Compared
to frame-class turbines, mobile aeroderivative units typically have lower
efficiency and higher heat rates, but they are rapidly deployable and can
provide fast-start backup power during early campus operations. We may
evaluate options to rent, purchase, or deploy additional mobile generation
capacity depending on tenant requirements and construction sequencing.
• GE 6B turbines - incremental 114 MW. We have acquired three GE
6B frame-class gas turbines, which are currently undergoing refurbishment in
Houston, Texas to restore the turbines to original equipment manufacturer
("OEM") factory standards, effectively resetting their operational life-cycle
counter close to zero. Upon completion of refurbishment, delivery, and
installation, these units are expected to provide an incremental 114 MW of
simple cycle capacity. We expect to initially operate these turbines in simple
cycle mode to support early energization and then convert them to combined
cycle operation through the addition of HRSG and related balance-of-plant
infrastructure as the campus scales. Along with the three gas turbines, we
have also acquired a back-end steam turbine and generator, which will complete
the combined cycle configuration.
• Siemens SGT-800 turbines - incremental 300 MW. In February 2026,
our first six Siemens Energy SGT-800 turbines arrived at the Port of Houston.
Upon installation and commissioning, these units are expected to provide an
incremental 300 MW of simple cycle capacity. These turbines are new, in-crate
assets and are expected to be installed as part of our staged combined cycle
buildout, supporting firm, dispatchable generation and operational redundancy.
At approximately 50 MW per turbine at our site elevation, these are units of
scale that contribute to a highly reliable power generation portfolio. We
intend to operate the Siemens system in a 6x1 combined cycle configuration
pursuant to the back-end construction of the HRSG and steam turbine/generator,
which have also been acquired and are being prepared for delivery to the site.
• Siemens SGT6-5000F turbines - incremental 720 MW. We have
entered into an equipment supply agreement with Siemens Energy for three
SGT6-5000F heavy-duty gas turbines. Each turbine is expected to provide
approximately 240 MW of simple cycle capacity at our site elevation,
representing an additional 720 MW of contracted nameplate capacity when fully
deployed, subject to delivery schedules, installation, and commissioning. The
turbine cores are expected to begin shipping in the second quarter of 2026,
with additional equipment expected to follow in the second half of 2026.
When combined with the initial 200 MW of grid-supplied power through SPS,
these secured generation assets represent approximately 1.5 GW of cumulative
simple cycle capacity under our control, subject to completion of delivery,
refurbishment, installation, commissioning, and permitting. We expect to begin
staged energization and commercial operation of this capacity beginning in the
first half of 2027 as part of our planned power ramp to support tenant
delivery requirements.
Planned Conversion from Simple Cycle to Combined Cycle
Our near-term power ramp is structured to prioritize speed of deployment by
initially operating certain generation equipment in simple cycle mode. As the
campus scales and balance-of-plant infrastructure is completed, we plan to
convert these assets to combined cycle operation through the addition of HRSG
and related equipment. We expect combined cycle conversion to increase overall
efficiency and materially increase net output relative to simple cycle
operation.
This conversion strategy is intended to provide near-term speed to power while
positioning the campus for long-term, high-efficiency combined cycle
operations that are expected to reduce delivered cost of energy and emissions
per kW over time.
Solar and Battery Energy Storage Strategy
We intend to incorporate solar generation and battery energy storage systems
("BESS") at Project Matador to provide multiple reliability, cost reduction,
and environmental benefits, including reduced fuel consumption, enhanced
system reliability and redundancy, and the provision of additional system-wide
capacity to meet tenant sustainability and reliability requirements. Because
solar generation is intermittent and not dispatchable, we do not expect solar
to serve as a primary source of power for mission-critical data center
operations. Instead, we expect solar resources to be used as an as-available,
supplemental source of energy to displace a portion of our on-site natural
gas-fired generation when available. For reliability purposes, we do not
intend to take any base-loaded gas-fired assets completely offline, but rather
to reduce generation at our gas-fired plants to levels between minimum stable
generation and full load as solar displacement energy becomes available.
Because solar generation will not be mission-critical to the Project Matador
campus from a customer reliability perspective, but instead will provide
displacement energy when available, we currently expect to procure solar
supply primarily through long-term power purchase agreements with third-party
developers and owner-operators, rather than constructing solar generation
assets directly, subject to commercial terms and project availability.
We expect BESS to play an important role in campus power quality and
reliability. The battery systems that we have specified and configured are
designed to respond in nanoseconds to manage volatile AI training and agentic
load swings and power supply transients associated with AI workloads, and can
also, as a secondary feature, provide ride-through capability and immediate
backup power in the event of generation plant or grid interruptions. As the
campus scales, we expect to deploy BESS and associated controls to support
intra-second load volatility management, load shaping, reserve capacity, and
other reliability attributes across our private power distribution network.
Expected Multi-Gigawatt Natural Gas Ramp by End of 2027
Based on our secured and contracted equipment portfolio and our planned
conversion of initial generation blocks to combined cycle configurations, we
expect that our gas-fired generation portfolio could be capable of producing
nearly 2.0 GW of power by the end of 2027 (inclusive of the previously
identified 1.5 GW in simple cycle mode and roughly 500 MW of added combined
cycle back-end generation capability), subject to securing project financing,
completion of construction, commissioning, fuel supply infrastructure, and
other customary conditions.
Recent Developments
We have continued to advance Project Matador through a series of commercial,
permitting, procurement, and financing milestones intended to support initial
energization and phased campus activation. The following summarizes selected
recent developments, which are qualified in their entirety by the more
detailed discussion elsewhere in this Item 1.
Tenant Contracting and Commercial Activity
We have continued to advance tenant contracting efforts for Project Matador,
including negotiations with our prospective First Tenant (as defined below)
and expanded commercial engagement with additional hyperscale and AI-focused
counterparties following expiration of exclusivity provisions in our First
Tenant LOI (as defined below).
First Tenant Letter of Intent and Advance in Aid of Construction Agreement
In September 2025, we entered into a non-binding letter of intent (the "First
Tenant LOI") with an investment grade-rated prospective tenant (the "First
Tenant") pursuant to which the First Tenant expressed interest in leasing a
portion of the Project Matador Site, subject to negotiation and execution of a
definitive lease agreement.
In November 2025, we entered into an Advance in Aid of Construction Agreement,
dated as of November 3, 2025 (the "AIAC"), pursuant to which the First Tenant
agreed, subject to satisfaction of certain conditions, to advance up to
$150.0 million to fund certain construction costs associated with early-stage
development activity. No funds were drawn under the AIAC.
The First Tenant LOI contemplated a phased deployment structure and included
an exclusivity period that expired at midnight on December 9, 2025. Following
the expiration of the exclusivity period, on December 11, 2025, the First
Tenant notified us that it was terminating the AIAC. Despite the termination
of the AIAC, we have continued to engage with the First Tenant regarding the
negotiation of a definitive lease agreement pursuant to the First Tenant LOI.
We believe the First Tenant LOI continues to provide a commercial framework
for negotiations, although it remains non-binding and there can be no
assurance that a definitive lease will be executed.
Expansion of Tenant Discussions Following Expiration of Exclusivity
Following expiration of the First Tenant LOI exclusivity period, we expanded
our commercial outreach and initiated discussions with several additional
potential tenants regarding power delivery and powered shell deployment at
Project Matador. These discussions include a mix of large-scale hyperscale
cloud service providers, AI-focused compute and infrastructure operators, chip
manufacturers, and other technology and enterprise counterparties seeking
near-term private power availability, including counterparties evaluating
multi-gigawatt commitments and, in some cases, priority rights for future
campus capacity.
As of the date of this Annual Report, we are in active discussions with
multiple prospective tenants across various stages of negotiation, including
counterparties that have exchanged draft lease documentation, counterparties
evaluating term sheet structures, and counterparties pursuing confirmatory
site diligence and technical feasibility assessments. We are evaluating
alternative commercial structures across these discussions, including powered
shell lease structures, turnkey delivery arrangements, and modified gross or
triple-net lease structures, with varying approaches to credit support,
deposits, and third-party guarantees depending on the counterparty and
delivery timeline.
Continued Commercial Focus
We believe demand for private power for AI and high-density compute
infrastructure remains robust. We have broadened our commercial strategy to
pursue additional tenant opportunities and to maintain flexibility in
structuring lease terms, delivery sequencing, and financing arrangements. Our
near-term commercial objective remains to convert one or more of these
discussions into binding tenant agreements that can support project-level
financing and enable the next stage of campus buildout at Project Matador.
Update to Development Timeline and Power Ramp Expectations
As disclosed in our registration statement on Form S-11 (File No. 333-290089),
as amended (the "Registration Statement"), our initial development plan
contemplated achieving approximately 1.1 GW of power capacity online by the
end of 2026 through a combination of grid-supplied power, mobile generation,
battery storage systems, and owned natural gas-fired combined cycle assets.
That plan assumed execution of a binding tenant lease agreement, the
corresponding ability to secure project-level financing, issuance of a federal
clean air permit, and the commencement of sustained vertical construction and
commissioning activity on the original schedule.
Since the filing of our Registration Statement, our development sequencing has
evolved primarily due to the fact that we have not yet entered into a
definitive tenant lease agreement and our air permit was issued on February
25, 2026, which we expect to be a key prerequisite to obtaining project-level
financing for the initial tenant powered shell campus. Because Project Matador
is a multi-gigawatt infrastructure project, the timing of large-scale
construction and commissioning activities is highly dependent on tenant
contracting milestones, the time required for tenants to complete their
mechanical, electrical, and plumbing ("MEP") buildout and achieve deployment
readiness, and the availability of non-recourse or limited-recourse financing.
As a result, while we have secured and contracted for substantial generation
equipment and grid capacity intended to support our planned power ramp, we do
not currently expect to have 1.1 GW of power online by the end of 2026, as
previously contemplated in our Registration Statement. Instead, our near-term
focus is to align the timing of construction and commissioning activity with
tenant MEP readiness, execution of definitive tenant agreements, and related
project financing.
Importantly, although our timeline has shifted, we continue to maintain
control over and expand a secured portfolio of grid-derived and on-site owned
and controlled generation capacity. Based on our secured equipment position
and contracted procurement arrangements, we continue to expect to achieve our
longer-term objective of reaching approximately 2.0 GW of gas-fired and
grid-supplied power online by the end of 2027, subject to completion of
installation, commissioning, securing project financing, and tenant readiness
milestones.
We believe this revised sequencing reflects a disciplined approach to capital
deployment that prioritizes contractual tenant commitments and financing
readiness before accelerating large-scale construction activity.
Strategic Land Expansion
We have continued to expand our land position adjacent to the Project Matador
campus through a series of strategic acquisitions intended to support future
campus phases, utility corridor development, and water infrastructure
requirements. As of the date of this Annual Report, we have acquired or are
under contract for approximately 2,000 additional acres of land located to the
west and south of our primary campus.
The primary campus, encompassing 5,236 acres under our 99-year ground lease
with the Texas Tech University System, is designed to support up to
approximately 11 GW of total generation capacity. Together with additional
acreage acquired or under contract adjacent to the leased property, the
expanded campus is expected to encompass approximately 7,570 acres and,
subject to receipt of additional permits, is expected to have the potential to
support up to approximately 17 GW of total generation capacity.
Our land assembly strategy is designed to secure contiguous acreage necessary
to support this expanded buildout, including parcels acquired to support the
routing of transmission line and pipeline infrastructure into the campus,
parcels that provide access to groundwater rights, and water line easements
intended to supplement our existing water supply arrangements. We believe this
expanded land position strengthens our long-term development optionality and
supports utility corridor routing and phased campus expansion across both
gas-fired and nuclear generation zones.
Natural Gas Supply and Fuel Infrastructure
On October 9, 2025, we announced that we secured firm natural gas supply
arrangements with Energy Transfer intended to support Phase 1 operations. This
arrangement is intended to provide a long-term, committed gas supply for
Project Matador's on-site generation portfolio, including contractual
provisions that contemplate scalable delivered volumes of up to approximately
300,000 MMBtu per day over time, subject to customary conditions, ramping
contract quantities, required interconnection and pipeline infrastructure, and
satisfaction of contractual milestones and credit support requirements. In
addition to this arrangement, we continue to pursue additional gas supply and
pipeline infrastructure intended to support the longer-term multi-gigawatt
natural gas generation buildout at Project Matador.
Water Supply and Local Partnerships
On October 29, 2025, we announced partnerships with the City of Amarillo and
Carson County intended to support early campus services, establish local tax
structures, and secure water resources to support early phases of Project
Matador. The City of Amarillo approved a water-supply arrangement allowing the
sale of up to 2.5 million gallons per day ("MGD") to Project Matador, with a
non-binding framework to scale up to 10 MGD as campus development progresses.
We expect to fund required water infrastructure and to implement water
stewardship standards and operational practices designed to manage water
intensity as the campus scales.
Separately, during the first quarter of 2026, we entered into a 30-year
groundwater lease with local landowners covering approximately 2,542 acres in
Carson County, Texas, which we believe provides long-term water supply
optionality independent of municipal infrastructure.
In December 2025, we announced a hybrid cooling technology agreement with MVM
EGI intended to reduce water consumption through a hybrid dry-wet cooling
approach, which we believe may reduce water intensity relative to conventional
wet cooling configurations, subject to design, engineering, and operating
conditions.
In October 2025, Carson County approved a reinvestment zone and related
incentives, including a 10-year property tax abatement framework on a
per-phase basis, subject to the terms and conditions of the applicable
agreements. We have also pursued additional local initiatives intended to
enhance project economics and logistics, including local school district
approvals.
In March 2026, the City of Amarillo, as grantee of Foreign-Trade Zone 252,
filed an application with the U.S. Foreign-Trade Zones Board seeking subzone
designation for our Project Matador campus (Docket No. S-133-2026). If
approved, subzone status would permit certain imported equipment and
materials-including power generation turbines and related infrastructure-to
receive favorable customs treatment, and duty deferral on key capital
equipment. The application is subject to review and approval under the
Foreign-Trade Zones Act, as amended (19 U.S.C. 81a-81u), and the regulations
of the FTZ Board (15 CFR Part 400). There can be no assurance that the
application will be approved or that the anticipated benefits will be
realized.
Mobile Generation for Early Power Delivery (TM2500)
On October 30, 2025, we announced that we secured an agreement with Mobile
Power Solutions for mobile aeroderivative generation, consisting of GE TM2500
units, including seven units under lease rated at approximately 132 MW in
aggregate (up to 157.5 MW of nameplate capacity depending on configuration).
We expect these units to support early energization, commissioning
flexibility, operational redundancy, and power delivery while permanent
combined cycle infrastructure is constructed and commissioned. These mobile
units are intended to be rapidly deployable and to provide fast-start
capability during early campus operations.
Nuclear Development and Strategic Partner Progress
On October 27, 2025, we announced agreements intended to support long-lead
procurement planning and development readiness for Westinghouse AP1000 nuclear
power units at Project Matador. These agreements include FEED support and
long-lead material readiness planning, including arrangements intended to
secure nuclear forgings and other long-lead components, subject to
milestone-based payments, applicable approvals, and other conditions.
On February 11, 2026, we announced continued progress in our strategic
partnership with Hyundai Engineering & Construction Co., Ltd., including
ongoing FEED work supporting four AP1000 units planned for the Project Matador
Site. This work includes development of site layout and constructability
planning, cooling-system strategy, civil design, and refinement of cost and
schedule estimates, intended to support a staged nuclear buildout subject to
licensing and financing.
On March 20, 2026, the NRC published a Notice of Intent in the Federal
Register to conduct a scoping process and prepare an environmental impact
statement ("EIS") in connection with our COL application for four Westinghouse
AP1000 reactors at Project Matador, initiating a 30-day public scoping period.
Fermi America was selected as the first private company to participate in the
NRC's transformative pilot program for applicant-prepared environmental impact
statements under the National Environmental Policy Act ("NEPA"). This
pilot-enabled by recent amendments to NEPA-is expected to reduce in-house NRC
review time and deliver resource savings, while maintaining full regulatory
compliance. We believe our participation in this program reflects the progress
we are making on Project Matador and positions us as a leader in
next-generation nuclear licensing.
Air Permitting and Regulatory Milestones
On November 4, 2025, we announced that the TCEQ granted preliminary approval
for air permitting associated with the first approximately 6 GW of a
multi-gigawatt natural gas-fired generation facility planned for Project
Matador. This milestone supported continued engineering and procurement
sequencing for our initial natural gas generation buildout.
On February 25, 2026, we received final approval from TCEQ for our
approximately 6 GW air permit, which we believe represents one of the largest
natural gas-fired air permits issued in the Western Hemisphere. We believe
this approval materially advances Project Matador's development readiness and
strengthens our ability to convert tenant discussions into binding lease
agreements and to pursue project-level financing for the initial tenant
campus.
On March 27, 2026, we filed an additional application with the TCEQ for an
incremental 5 GW air permit. If approved, this permit would authorize the site
for up to approximately 11 GW of total natural gas-fired generation capacity,
providing the flexibility to achieve the full 11 GW campus buildout entirely
through gas-fired generation independent of the nuclear development timeline.
Grid-Supplied Power Agreement
On December 5, 2025, we announced that we executed a definitive ESA with SPS,
to provide up to 200 MW of electrical capacity to Project Matador. Under the
agreement and applicable tariffs, the first 86 MW of electrical capacity is
expected to be energized in the second half of 2026, with an additional 114 MW
targeted, but as of yet not fully committed, for accelerated energization by
year-end 2026. The timing for this incremental 114 MW may extend into 2027,
depending on regulatory approvals, SPS interconnection work schedules and
alignment with tenant deployment timelines and power delivery requirements.
The electricity is expected to be delivered through SPS's 230-kV and/or 115-kV
transmission system.
Generation Equipment Procurement and Delivery Milestones
On February 9, 2026, we announced the arrival at the Port of Houston of the
first six Siemens Energy SGT-800 natural gas turbines and accompanying
generators intended for Project Matador. Upon installation and commissioning,
these turbines are expected to support deployment of the initial gigawatt of
on-site power at the campus as part of our phased buildout strategy.
Financing and Long-Lead Turbine Procurement
In October 2025, we entered into an equipment supply agreement with Siemens
Energy for an additional six SGT-800 industrial gas turbines, with delivery
expected in 2028. These units are expected to support future phases of Project
Matador and, upon installation and commissioning, are expected to provide
approximately 300 MW of incremental simple cycle capacity. In March 2026, we
entered into a $165.0 million equipment financing facility with CSG
Investments, an affiliate of Beal Bank USA, structured as a senior secured
limited-recourse facility, to fund the acquisition of these turbines. See Part
II, Item 7. "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Liquidity and Capital Resources" for additional
information.
In February 2026, we entered into a $500.0 million financing arrangement with
MUFG Bank, Ltd., structured as a non-recourse turbine warehouse facility. This
facility is intended to support long-lead turbine procurement and execution
certainty for near-term phases of Project Matador, including the acquisition
of three Siemens Energy SGT6-5000F (F-class) gas turbines. See Part II, Item
7. "Management's Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources" for additional information.
We utilize project-level SPEs to own and finance discrete power generation,
energy infrastructure, and other campus assets and to raise non-recourse or
limited-recourse debt secured by those assets and associated tenant payment
streams. As of December 31, 2025, we had certain wholly owned subsidiaries,
which we use to hold certain equipment and lease interests and to facilitate
our financing and development activities.
High Voltage Equipment Warehouse Financing
In February 2026, we entered into a $120.0 million high-voltage equipment
warehouse financing facility with Keystone National Group, LLC, which may be
increased by up to an additional $100.0 million subject to the terms and
conditions of the financing agreement. The facility is intended to support the
procurement of long-lead electrical infrastructure required for Project
Matador, including substations, transformers, breakers, and related
high-voltage switchgear and balance-of-plant equipment. This facility is
intended to enhance execution certainty by enabling advance procurement and
staged delivery of critical non-spinning equipment necessary to support campus
energization and phased power delivery. See Part II, Item 7. "Management's
Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources" for additional information.
Yorkville Promissory Note
In March 2026, we entered into a senior unsecured promissory note (the
"Yorkville Note") with YA II PN, Ltd. ("YA II PN"), an investment fund managed
by Yorkville Advisors Global, LP ("Yorkville"), with a committed principal
amount of $156.3 million. Proceeds are intended to be used for general
corporate purposes. See Part II, Item 7. "Management's Discussion and Analysis
of Financial Condition and Results of Operations-Liquidity and Capital
Resources" for additional information.
Our Competitive Strengths
We believe our ability to execute Project Matador and scale our powered campus
model is supported by the following competitive strengths:
• Large-Scale Site Control and Campus Configuration
Project Matador is located on approximately 5,236 acres in Carson County,
Texas and is secured pursuant to a 99-year ground lease with the Texas Tech
University System. Together with additional acreage acquired or under contract
adjacent to the leased property, the expanded site is expected to encompass
approximately 7,570 acres. We believe the scale and long-duration site control
provide a competitive advantage relative to land-constrained AI infrastructure
markets that require fragmented parcel acquisition or rely on third-party
easements. The campus is designed to support a multi-phased development plan
capable of accommodating hyperscale powered shell deployment and
multi-gigawatt private power generation over a multi-decade horizon, with
long-term planning parameters of up to approximately 11 GW of generation
capacity and up to approximately 15 million square feet of AI-ready compute
infrastructure as the project is built out. Generation capacity could
potentially be expanded up to approximately 17 GW, subject to the closing of
additional land acquisitions and receipt of incremental TCEQ air permits. The
site is currently permitted for up to approximately 6 GW of natural gas-fired
generation capacity following TCEQ approval of our air quality permit in
February 2026, and on March 27, 2026, we filed an additional application with
the TCEQ for an incremental 5 GW air permit.
The site is located in proximity to significant natural gas infrastructure,
including major pipeline systems operated by Transwestern and ONEOK, and we
intend to develop a dedicated Waha pipeline interconnect to support long-term,
scalable fuel delivery. We believe this infrastructure positioning enhances
execution certainty for large-scale natural gas-fired generation and supports
redundancy in fuel supply pathways.
Project Matador also benefits from diversified water resources, including
municipal supply arrangements and groundwater rights associated with the
Ogallala Aquifer, which we believe support scalable cooling and power
generation requirements.
The campus is positioned near multiple fiber corridors and carriers, including
FiberLight, AT&T fiber, and Optimum fiber, which we believe supports
redundant connectivity, scalable bandwidth, and low-latency connectivity
required for hyperscale and AI workloads.
In addition, the site includes rail access intended to support delivery of
heavy industrial equipment and long-lead components, including generation and
substation infrastructure.
The site is situated on the caprock plateau of the Texas Panhandle, which
provides a geotechnically stable and highly consolidated foundation for
large-scale infrastructure development.
The site is located near the Pantex Plant, the primary U.S. nuclear weapons
assembly and maintenance facility, which provides access to a locally
concentrated workforce of approximately 4,600 with experience in nuclear
safety and security culture, deep research and development capabilities, and
enhanced site security. Combined with a seasoned Permian Basin energy labor
pool and three nearby college campuses, the Project Matador Site offers access
to skilled talent suitable for high-security and mission-critical compute
deployments. Many of our targeted tenants contract with the federal government
and may benefit from the critical national security infrastructure already in
place adjacent to the project site.
Collectively, we believe Project Matador's combination of long-term site
control, large contiguous acreage, diversified natural gas infrastructure,
scalable water resources, redundant fiber connectivity, and logistics access
provides a differentiated platform for large-scale AI-focused powered shell
development.
• Integrated Powered Campus Model and Speed-to-Power Positioning
We are developing a vertically integrated powered campus platform designed to
co-locate data center shells with dedicated on-site and grid-supplied energy
generation. We believe this integrated approach provides a competitive
advantage as hyperscale tenants increasingly prioritize speed-to-power,
redundancy, and scalability. Our strategy is intended to reduce dependence on
lengthy interconnection queue timelines and mitigate risks associated with
increasing regulatory and public policy headwinds by combining a modest but
increasing baseline of grid-supplied interruptible power with a staged on-site
generation buildout, and by delivering private power directly adjacent to
tenant compute facilities. To support this strategy, we have secured and
contracted for long-lead generation assets totaling more than 2.5 GW of
combined cycle capacity.
• Secured Generation Equipment Portfolio and Multi-Stage Power
Ramp Capability
We have secured and contracted for industrial frame class gas turbines sourced
from high quality Siemens Energy and GE Vernova assets, HRSGs and steam
turbines for back-end combined cycle equipment, and key transformer, breaker,
and power control equipment, intended to support a staged ramp of highly
reliable, firm power availability, including grid-supplied capacity, mobile
generation, owned gas turbine assets that can initially operate in simple
cycle mode and later be upgraded to combined cycle, and planned deployments of
BESS and solar resources. We believe our ability to deploy capacity in a
staged and tightly managed sequence, and to convert installed simple cycle gas
turbine assets into higher-efficiency combined cycle configurations, improves
execution flexibility and enhances the ability to align commissioning
schedules with tenant demand.
• Progress on Permitting and Development Readiness
We have made substantial progress advancing permitting and site development
activities necessary to support early energization and construction
sequencing, including receipt and approval of our approximately 6 GW TCEQ air
permit. We believe our ability to advance large-scale permitting processes
supports development certainty and reduces execution risk relative to projects
that have not advanced regulatory approvals. Accordingly, on March 27, 2026,
we filed an additional application with the TCEQ for an incremental 5 GW air
permit.
• Multi-Source Infrastructure Platform Supporting Hyperscale
Requirements
Project Matador is being designed as a private power infrastructure platform
that integrates power generation, substations, distribution, water systems,
fiber pathways, and site security. We believe hyperscale customers
increasingly require integrated solutions that provide redundancy,
scalability, and power quality characteristics suitable for high-density AI
compute loads. Our platform is designed to support phased expansion without
requiring each incremental building to replicate standalone power
infrastructure, and we expect BESS and associated controls to support power
quality and reliability across the campus.
• Positioned for Accelerated Nuclear Development
We view nuclear generation as a long-term component of our strategy to deliver
scalable, reliable, lower-carbon baseload energy at Project Matador. We
believe that advancing regulatory and development planning early - including
progress on our NRC combined license application for four AP1000 reactors, our
FEED agreement with Hyundai Engineering & Construction, our forging
readiness agreement with Doosan Enerbility, and related early engineering and
long-lead procurement planning - may provide long-term differentiation as
demand for firm power continues to increase and as energy policy evolves to
support expansion of domestic nuclear infrastructure.
• REIT Structure and Real Estate-Oriented Monetization Strategy
We intend to elect to qualify as a REIT beginning with our short taxable year
ended December 31, 2025. We believe the REIT structure is well suited to the
ownership and leasing of powered shell assets and other long-duration
infrastructure-oriented real estate and may provide access to a broader
investor base seeking stable, long-term real estate cash flows. We believe our
ability to structure power access and related site and infrastructure services
as an incident of tenancy, together with our long-duration ground leases and
powered shell leases, provides a differentiated approach to monetizing real
estate and supporting infrastructure.
• Hyperscaler Alignment and Power-Centric Rent Structure
We intend to structure tenant relationships primarily through long-duration
triple-net ground leases and powered shell leases under which tenants contract
for dedicated, private power infrastructure and pay rent and service charges
aligned with contracted power capacity and reliability attributes. We believe
a power-centric rent structure, combined with escalation mechanisms and
options to expand power allocations over time, can better reflect the
economics of high-density AI compute than traditional square-footage metrics.
For certain tenant types, we may seek meaningful prepayments, advances in aid
of construction, or other credit support to align incentives and support
financing.
• Disciplined Capital Strategy and Project Finance Flexibility
We intend to finance the campus through a combination of equity capital,
tenant-funded amounts, and project-level non-recourse or limited-recourse debt
raised through SPEs, together with potential monetization of eligible tax
credits and other incentives and strategic equity partnerships. We believe
this approach can support phased development while maintaining balance sheet
flexibility and aligning capital deployment with tenant commitments.
Our Challenges
We are an early-stage development company and face challenges in executing a
multi-gigawatt powered campus strategy. Our ability to achieve our development
objectives depends on securing tenant commitments, obtaining permits and
approvals, financing long-lead infrastructure, and executing large-scale
construction activities across multiple phases.
Key challenges include, but are not limited to, the following:
• Tenant Contracting and Financing Execution
Our ability to advance Project Matador beyond early-stage infrastructure
development depends on entering into definitive tenant lease agreements that
support project-level financing, which may include tenant prepayments,
contributions in aid of construction, or other forms of tenant-funded capital.
Large-scale powered shell and generation development requires substantial
capital investment, and delays in tenant contracting, changes in tenant
requirements, customer concentration, or tenant credit considerations could
materially impact project sequencing, timing, and economics. For tenants that
are not investment-grade, we may require larger prepayments, guarantees, or
other credit support, and the inability to obtain acceptable credit
protections could limit our ability to pursue certain tenant opportunities or
financing structures.
• Construction and Development Execution Risk
Project Matador requires coordinated execution across civil works,
substations, power generation installation and commissioning, cooling
infrastructure, and campus electric transformation, transmission and
distribution systems. We face risks related to contractor performance, labor
availability, supply chain disruptions, fire and weather events, inflation in
materials and equipment costs, and the complexity of sequencing multiple
interdependent workstreams.
• Permitting and Regulatory Complexity
The development of natural gas-fired generation assets requires environmental
and air permitting approvals, and our longer-term nuclear development strategy
is subject to extensive NRC licensing and regulatory review. Regulatory
timelines are uncertain, and changes in permitting standards, stakeholder
intervention, or litigation could delay development or increase costs.
• Long-Lead Equipment and Key Supplier Concentration
The project requires procurement of long-lead equipment, including turbines,
transformers, breakers, substations, and related high-voltage infrastructure.
Industry-wide constraints on manufacturing capacity and delivery lead times
may delay energization schedules or increase project costs.
Our development strategy relies on third-party counterparties for critical
equipment, engineering, construction, commissioning, and ongoing operations.
In particular, we depend on a limited number of turbine and high-voltage
equipment manufacturers, utilities, fuel suppliers, and specialized
contractors to execute Project Matador. Disruptions in supplier performance,
manufacturing capacity constraints, contractor availability, or delays in
delivery schedules could materially impact project timing and costs.
• Fuel Supply and Interconnection Dependencies
Although we believe Project Matador benefits from strong natural gas
infrastructure access, our ability to operate large-scale on-site generation
depends on successful completion of interconnections, pipeline infrastructure,
and long-term fuel supply arrangements. In addition, our grid-supplied
capacity depends on utility execution and transmission availability.
• Market and Competitive Dynamics
The compute infrastructure market is rapidly evolving, and hyperscale tenants
may pursue alternative sites, self-development strategies, or competing
private power solutions. A slowdown in AI-related capital spending or changes
in technology deployment patterns could reduce demand or delay tenant
decision-making.
• Nuclear Development Uncertainty
While we view nuclear generation as a long-term strategic opportunity, nuclear
projects require extended regulatory review, specialized engineering and
construction execution, and significant capital investment. There can be no
assurance that we will obtain required approvals, secure financing, or achieve
commercial operation on expected timelines.
Competition
The markets in which we operate are highly competitive and are characterized
by rapid growth in demand for power and compute infrastructure, significant
capital requirements, long development timelines, and extensive permitting and
regulatory processes. We compete with a broad range of market participants for
tenant commitments, development sites, grid capacity, power generation
equipment, construction resources, and financing capital.
Our competitors include data center developers, cloud service providers,
colocation operators, energy infrastructure developers, vertically integrated
power developers, utilities, independent power producers, and large technology
companies that may develop and operate their own powered campuses or procure
dedicated power supply directly. Many of these competitors are significantly
larger than we are and may have greater financial, technical, and operational
resources, longer operating histories, established customer relationships, and
existing portfolios of stabilized assets.
Competition is primarily based on the ability to deliver large-scale power
capacity on accelerated timelines, secure permits and regulatory approvals,
obtain long-lead equipment, access utility infrastructure, provide reliable
and redundant power solutions, and offer commercially attractive lease and
power pricing structures.
Data Center Developers and Powered Campus Platforms
We compete with developers of hyperscale data center campuses, powered shell
providers, and colocation operators seeking to meet increasing AI-driven
demand for large-scale compute infrastructure. Certain competitors have
established operating portfolios, long-standing customer relationships, and
access to lower-cost capital, which may provide advantages in securing tenant
commitments.
Utility-Dependent Power and Grid Interconnection Competitors
Many competing projects rely either exclusively or primarily on
utility-delivered grid power. In most North American power markets,
competition for grid-supplied capacity is increasing due to transmission
constraints, interconnection queue delays, and limited near-term availability
of incremental megawatts. These factors may limit the ability of certain
competitors to deliver power within tenant-required timeframes.
Private Power and On-Site Generation Developers
We also compete with developers pursuing private power or on-site generation
strategies, including natural gas-fired generation, mobile generation, and
hybrid power solutions. These competitors may attempt to accelerate
time-to-power by reducing reliance on traditional grid infrastructure, but
such strategies can involve substantial permitting requirements, long-lead
equipment constraints, and fuel supply and interconnection dependencies.
Alternative Energy and Advanced Power Solutions
We compete indirectly with alternative solutions for meeting hyperscale power
demand, including renewable energy projects, battery storage systems, fuel
cell based systems, long-duration storage technologies, and nuclear generation
developers. While certain of these technologies may provide lower-carbon power
solutions, they may face intermittency limitations, cost constraints, supply
chain challenges, or regulatory barriers that impact near-term scalability.
Government Regulation
Our development of Project Matador subjects us to extensive federal, state,
regional, local, and independent system operator-wide regulation. Because the
campus integrates data center infrastructure, on-site natural gas-fired
generation, grid interconnection, and contemplated nuclear development, we are
regulated across multiple environmental, utility, energy, safety, and nuclear
frameworks, as well as laws and standards relating to construction, worker
health and safety, land disturbance, and critical infrastructure security.
Regulatory approvals and compliance requirements may materially affect project
timing, cost, and operations. In addition, our intended REIT status subjects
us to specific federal income tax rules and distribution requirements, and we
must structure our operations and subsidiaries accordingly to maintain REIT
qualification.
Environmental and Air Permitting
Our natural gas-fired generation assets are subject to regulation under the
Clean Air Act and applicable TCEQ requirements. Construction and operation of
large-scale gas-fired facilities require air permits addressing emissions and
related environmental impacts.
On February 25, 2026, TCEQ approved our air permit associated with up to
approximately 6 GW of natural gas-fired generation at Project Matador. On
March 27, 2026, we filed an additional application with the TCEQ for an
incremental 5 GW air permit, which, if approved, would authorize the site for
up to approximately 11 GW of total natural gas-fired generation capacity.
Ongoing operations remain subject to monitoring, reporting, and compliance
obligations. Expansion or modification of permitted facilities would require
additional approvals.
Our operations are also subject to federal and state water regulations,
including groundwater district oversight and potential discharge permitting
requirements.
Environmental assessments and approvals under the NEPA and other federal and
state statutes may be required for portions of our development, particularly
where federal funding, federal permits, or federal rights-of-way are involved.
These processes can be time-consuming and may involve public comment, agency
coordination, and potential litigation or administrative challenge.
Electric Service and Utility Regulation
Project Matador is located within the certificated service territory of SPS,
and within the Southwest Power Pool region. Our ESA with SPS is subject to
applicable tariffs and regulatory oversight.
Texas law generally limits retail electric service within a certificated
territory to the incumbent utility, subject to exceptions. We intend to
provide private power to tenants as an incident of tenancy under lease
arrangements. Regulatory treatment of large co-located load and on-demand
power generation continues to evolve and may be subject to state or federal
review, including Federal Energy Regulatory Commission oversight where
transmission facilities are implicated.
Transmission interconnections, substations, and high-voltage infrastructure
require coordination with utilities and compliance with applicable regulatory
requirements.
Natural Gas Infrastructure Regulation
Our fuel supply and interconnection arrangements are subject to federal and
state pipeline safety and transportation regulations. Interstate pipeline
operators are regulated by the Federal Energy Regulatory Commission, and new
pipeline interconnections or related facilities may require additional
federal, state, or local approvals.
Nuclear Regulation
Our contemplated nuclear development activities are subject to comprehensive
regulation by the NRC. On June 17, 2025, we filed a combined license
application under 10 CFR Part 52 for four Westinghouse AP1000 reactors, and
the NRC accepted the application for review on September 5, 2025.
The NRC licensing process includes detailed safety and environmental review
and may involve hearings or intervention. Nuclear construction cannot commence
without issuance of the required licenses and satisfaction of regulatory
conditions. Nuclear facilities are also subject to ongoing operational
oversight, security requirements, emergency preparedness obligations, and
nuclear liability frameworks, including the Price-Anderson Act.
Local Permitting and Other Regulatory Matters
Development of Project Matador requires compliance with local land use
controls, building permits, roadway permits, groundwater district regulations,
and related approvals. Rail access and heavy equipment logistics are subject
to applicable transportation regulations.
Certain aspects of our nuclear and energy infrastructure activities are
subject to U.S. export control regulations, including Department of Commerce
and DOE requirements governing nuclear technology.
Our business operates within evolving regulatory environments, including
policies affecting energy generation, emissions, grid reliability, nuclear
development, cybersecurity, and critical infrastructure security. Changes in
energy policy, permitting standards, AI-related regulation, or security
requirements could increase costs, delay development timelines, or limit
operational flexibility. Additional information regarding regulatory risks is
included in Part I, Item 1A. "Risk Factors."
Environmental and Sustainability Considerations
Our development activities are subject to environmental and sustainability
considerations, including air emissions, water usage, and compliance with
permitting requirements applicable to large-scale power generation and compute
infrastructure. We intend to utilize a diversified power strategy that is
expected to include natural gas-fired generation, grid-supplied power, solar
generation for energy displacement, battery energy storage systems, and, over
the longer term, nuclear baseload supply. Because renewable generation such as
solar is intermittent and variable, we expect renewable resources to
complement-not replace-firm capacity needed for continuous compute operations.
We also continue to evaluate cooling technologies and water management
strategies intended to reduce water intensity, including hybrid dry-wet
cooling approaches. As we convert our generation assets to combined cycle
operation over time, we expect to maximize the energy output of every molecule
of gas consumed, contributing to our sustainability goals.
Climate-Related Financial Disclosures (UK Listing Rules)
By virtue of our secondary listing on the London Stock Exchange, we are now
subject to certain disclosure requirements under the UK Listing Rules (the
"UKLR") established by the UK Financial Conduct Authority (the "FCA"). Under
UKLR 14.3.27R, we are required to include a statement in our annual financial
report setting out whether we have included climate-related financial
disclosures consistent with the recommendations and recommended disclosures of
the Task Force on Climate-related Financial Disclosures ("TCFD"), or to
explain why we have not done so and describe any steps we are taking to make
such disclosures in the future.
We have not included climate-related financial disclosures consistent with the
TCFD recommendations in this Annual Report. This is our first annual financial
report following our initial public offering. During the period from January
10, 2025 (Inception) through December 31, 2025, we were a development-stage
company with no revenue-generating operations, no completed power generation
or compute facilities, and limited operating history. In light of these
circumstances, we determined that we did not have sufficient operational
activity or data to support meaningful disclosure against the TCFD framework
for the period covered by this report. This statement is provided in
accordance with UKLR 14.3.24R.
We intend to develop our climate-related disclosures over time as our
operations mature. We currently expect to provide disclosures more fully
consistent with the TCFD recommendations, or any successor framework required
under applicable UK Listing Rules, once our operational activities support
meaningful disclosure. Certain climate-related risks are described in Part I,
Item 1A. "Risk Factors," of this Annual Report.
Human Capital Resources
As of December 31, 2025, we had 35 full-time employees. Our personnel are
primarily engaged in engineering, licensing and regulatory affairs, project
development and operations, and corporate functions including finance, legal,
and administration. We are building a specialized team with expertise in
nuclear engineering, power project development, large-scale construction, data
center design, regulatory affairs, and finance, and we rely on a network of
engineering, procurement and construction partners, equipment suppliers, and
technical service providers with significant global track records in power and
nuclear development. Our ability to execute our strategy depends in part on
attracting, developing, and retaining qualified personnel with specialized
technical, regulatory, and project execution experience, and on maintaining a
culture of accountability, safety, and disciplined execution.
We seek to recruit and retain employees through competitive compensation and
benefits and opportunities for professional development. We emphasize
workforce safety and compliance practices that are customary for large-scale
infrastructure and energy development, and we seek to maintain strong
relationships with employees, contractors, community stakeholders, and
regulators. None of our employees are represented by a labor union or covered
by a collective bargaining agreement, and we have not experienced any
labor-related disruptions.
By virtue of our secondary listing on the London Stock Exchange, Fermi is
subject to certain board composition disclosure requirements under the UKLR
established by the FCA. The information below is required under UKLR 14.3.30R.
The required disclosure below is set out as of December 31, 2025 and the data
provided in relation to the Board and executive officers has been collected
through a confidential self-reporting questionnaire.
UKLR Reporting Standards Result Further notes
At least 40% of the Board are women. Not met 0% of the Board were women.
At least one member of the Board is from an ethnic minority. Met There was one ethnic minority man on the Board.
At least one of the senior Board positions (Chair, CEO, Senior Independent Not met The senior Board positions of Chairman, CEO, and CFO are currently held by
Director (SID) or CFO) is a woman. men. Until the individuals in those positions retire or otherwise leave, the
Company will not meet the Standards.
In accordance with UKLR 14.3.31R, numerical data on the ethnic background and
sex of the individuals on the Company's Board and in its executive management
as of December 31, 2025 is set out below:
Number of Board Members Percentage of the Board (1) Number of senior positions on the Board (CEO, CFO, SID and Chair) (2) Number in executive management (3) Percentage of executive management
Men 4 100% 3 (4) 7 87%
Women - 0% (5) - 1 13%
Not specified/prefer not to say - -% - - -%
White British or other White (including minority white groups) 3 75% 3 6 75%
Mixed/Multiple ethnic groups - -% - - -%
Asian/Asian British - -% - - -%
Black/African/Caribbean/Black British 1 25% - 2 25%
Other ethnic group including Arab - -% - - -%
Not specified/prefer not to say - -% - - -%
(1) Information presented in this column reflects only our non-employee
directors and does not include our CEO.
(2) The Company is reporting on the positions of CEO, CFO, and Chairman of the
Board. The Company does not currently have a designated Senior Independent
Director (Lead Director equivalent).
(3) Executive management is defined, in accordance with the UKLR, as the
Company's executive leadership team, which includes the CEO, CFO, Chief
Operating Officer, Chief Nuclear Construction Officer, Chief Site Development
Officer, Chief Marketing Officer, Head of Power, and General Counsel.
(4) Toby Neugebauer holds the position of CEO. Miles Everson holds the
position of CFO. The position of CFO is not held by a member of the Board.
(5) The Board was constituted in September 2025 in connection with the
Company's initial public offering. As part of its succession planning, the
Board intends to consider highly qualified women candidates whose skills,
experience and perspectives align with the Company's long-term strategy.
Intellectual Property and Trademarks
Our business depends primarily on control of physical assets, long-term
contractual rights, engineering know-how, and execution capabilities rather
than on an extensive patent portfolio. We rely on proprietary processes, trade
secrets, project designs, integration methodologies, and contractual
protections to maintain our competitive position.
We use and seek to protect certain trademarks and service marks, including
"Fermi America," "HyperRedundant," and "HyperGrid," as well as related logos,
domain names, and branding. We protect confidential information and
proprietary materials through non-disclosure agreements, employment
agreements, and other contractual arrangements with employees, consultants,
contractors, vendors, and counterparties.
We also rely on third-party intellectual property and proprietary equipment,
including gas turbine, high-voltage infrastructure, and nuclear reactor
technologies supplied by vendors. Our business model does not depend on
ownership of reactor design intellectual property, and we expect that certain
generation and nuclear technologies will remain subject to third-party
licensing and contractual rights.
Additional information regarding risks related to intellectual property is
included in Part I, Item 1A. "Risk Factors."
Cybersecurity
Cybersecurity is an important consideration for our corporate systems and, as
Project Matador becomes operational, for systems supporting the monitoring and
control of power generation assets, battery systems, and related campus
infrastructure, including industrial control systems and networked operational
technology. We maintain policies and controls intended to manage cybersecurity
risks, including risks associated with third-party vendors and services
providers, and we expect to continue enhancing these controls as our
operations scale. A cybersecurity incident could result in disruption of
operations, loss of confidential information, reputational harm, and potential
regulatory scrutiny. Additional information regarding our cybersecurity
strategy and governance is included in Part I, Item 1C. "Cybersecurity."
Insurance
We expect to maintain insurance coverage customary for companies engaged in
real estate and power infrastructure development, including property, general
liability, workers' compensation, builder's risk during construction,
transportation and storage, and other specialty coverages. Insurance
availability and cost may be volatile for large infrastructure projects and
may involve significant premiums, deductibles, or limitations.
Seasonality
We do not expect our long-term revenue model, once operational and leased, to
be materially affected by seasonality. However, development activities may be
affected by weather, construction seasonality, supply chain dynamics, and
seasonal variations in fuel (i.e., natural gas) prices, and, to a lesser
extent, grid-secured power prices and grid conditions.
Available Information
We were formed as a Texas limited liability company on January 10, 2025, and
subsequently converted into a Texas corporation in connection with our initial
public offering and related corporate reorganization. Our common stock is
listed on the Nasdaq Global Select Market under the symbol "FRMI," and we are
dual listed on the London Stock Exchange. Our principal executive offices are
located at 620 S. Taylor St., Suite 301, Amarillo, Texas 79101, and our
telephone number is (214) 894-7855.
We file our registration statements, proxy statements, annual reports on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
amendments and exhibits to those filings with the SEC. You may obtain copies
of these documents and other required information by accessing the SEC's
website at www.sec.gov. We also make available on our website at
www.fermiamerica.com, free of charge, copies of these reports and other
information as soon as reasonably practicable after we electronically file
such material with, or furnish it to, the SEC.
We use our website, press releases, public conference calls and public
webcasts as means of disclosing material non-public information and for
complying with our disclosure obligations under Regulation FD. The information
disclosed by the foregoing channels could be deemed to be material
information. As such, we encourage investors, the media, and others to follow
the channels listed above and to review the information disclosed through such
channels. The contents of the websites referred to above are not intended to
be incorporated by reference into this Annual Report.
Item 1A. Risk Factors
Summary of Risk Factors
An investment in our securities involves a high degree of risk. The occurrence
of one or more of the events or circumstances described in the section titled
"Risk Factors," alone or in combination with other events or circumstances,
may materially adversely affect our business, financial condition and
operating results. In that event, the trading price of our securities could
decline, and you could lose all or part of your investment. Such risks
include, but are not limited to:
• We are a development-stage company with no operating history or
historical revenue, and we face execution risk across all major components of
our business.
• We have not yet constructed our facilities or entered into any
binding contract with any tenants, and there is no guarantee that we will be
able to do so in the future. Our limited commercial operating history makes it
difficult to evaluate our prospects, the risks and challenges we may encounter
and our total potential addressable market. Any delays or setbacks we may
experience could have a material adverse effect on our business, financial
condition and results of operations, and could harm our reputation.
• We will be 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.
• We 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.
• We 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.
• If members of our board of directors or senior management team
are unable to align on strategic direction, capital allocation, operational
priorities, or other significant matters, such differences in perspective
could result in delays in decision-making, the departure of key personnel,
disruption to our operations, or an inability to execute on our business
strategy.
• Technological advances or disruptive innovations, specifically
advancements in artificial intelligence or the ability of new generations of
chips to produce useful output in the form of tokenized results using
substantially less energy input, may outpace our development cycle, and we are
exposed to technology obsolescence across all major asset classes.
• We may not achieve tenant adoption at the pace or pricing levels
required for financial viability.
• We depend on third-party vendors, contractors, and consultants
to support our business.
• Wars, threats of war, terrorist attacks, cyberattacks and
threats may compromise the security, operability or integrity of our power
generation and transmission and distribution infrastructure and could have a
material adverse effect on our business, financial condition, and results of
operations.
• Our use of technologies and systems that use AI or large-scale
language models ("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.
• Project Matador is an unprecedented, large-scale, multi-phase
development effort that presents significant planning, execution, and
coordination risks.
• Our ability to develop and retain site control depends on
maintaining our leasehold interest with the Texas Tech University System.
• The scale of infrastructure planned at Project Matador will
require extensive permitting, interconnection, and third-party coordination.
• High demand for, constraints on the supply of, and increasing
costs for industrial scale gas-fired turbines could lead to significant delays
or significant increases in capital costs associated with 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.
• Westinghouse Reactors and SMRs can be costly and time consuming
to construct and commercialize. Delays and cost overruns arising from issues
with our procurement, licensing and other regulatory approvals, construction
and commercialization of nuclear reactors may materially adversely affect our
business.
• Our construction, delivery timeline estimates, and costs for our
facilities and other equipment may increase due to a number of factors,
including the degree of pre-fabrication, standardization, on-site
construction, long-lead procurement, contractor performance, facility
pre-operational and startup testing, demand for repairs and other
site-specific considerations.
• Our business operations rely heavily on securing agreements with
suppliers for essential materials, equipment, and components which will be
used to construct Project Matador facilities.
• If 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.
• We are subject to complex, evolving, and potentially burdensome
regulatory requirements.
• Accidents involving third party owned and operated nuclear power
facilities, including but not limited to events similar to the Three Mile
Island or Fukushima Daiichi nuclear accidents, or other high profile events
involving radioactive materials, could materially and adversely affect the
public perception of the safety of nuclear energy, our customers and the
markets in which we operate and potentially decrease demand for nuclear energy
or facilities, increase regulatory requirements and costs or result in
liabilities or claims that could materially and adversely affect our business.
• We are subject to federal environmental review processes,
including the NEPA, that may materially delay or restrict project development.
• Commodity 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.
• Our near-term revenue may be heavily concentrated among a small
number of anchor tenants.
• Failure of any major tenant to perform under its lease could
result in material financial losses.
• We intend to elect to be classified as a REIT for U.S. federal
income tax purposes. Our failure to qualify or maintain our qualification as a
REIT for U.S. federal income tax purposes would reduce the amount of funds we
have available for distribution and limit our ability to make distributions to
our shareholders.
• Adverse macroeconomic conditions could impair our ability to
raise capital or complete development phases.
• Influential 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.
• As a result of becoming a public company, we will be obligated
to develop and maintain proper and effective internal controls over financial
reporting in order to comply with Section 404 of the Sarbanes-Oxley Act. We
may not complete our analysis of our internal controls over financial
reporting in a timely manner, or these internal controls may not be determined
to be effective, which may adversely affect investor confidence in us and, as
a result, the value of our common stock.
• We have identified a material weakness in our internal control
over financial reporting. If our remediation of the material weakness is not
effective, or if we experience additional material weaknesses in the future or
otherwise fail to develop and maintain effective internal control over
financial reporting, our ability to produce timely and accurate financial
statements or comply with applicable laws and regulations could be impaired.
• The JOBS Act will allow us to postpone the date by which we must
comply with certain laws and regulations intended to protect investors and to
reduce the amount of information we provide in our reports filed with the SEC.
We cannot be certain if this reduced disclosure will make our common stock
less attractive to investors.
• Risks related to the volatility of our common stock, and
provisions in our Charter and Bylaws.
• A significant portion of our total outstanding shares of common
stock were restricted from immediate resale but may be sold into the market in
the near future. The sale of such shares could cause the market price of our
common stock to drop significantly.
Risk Factors
Risks Related to Our Business and Industry
We are a development-stage company with no operating history or historical
revenue, and we face execution risk across all major components of our
business.
Fermi was recently formed and is currently in the early stages of developing
Project Matador. We have not generated any revenue to date and do not expect
to do so until the first subleases of our powered shells and the delivery of
on-demand energy commence, which we expect will not occur until the first half
of 2027, subject to execution of definitive lease agreements and the time
required for tenants to complete final buildout activities. Given our early
stage of development, it is difficult to predict what results we might
ultimately achieve. Our ability to actually achieve our expected results and
our business model depends on, among other things, our ability to construct,
permit, finance, and operate large-scale infrastructure projects in the
nuclear, natural gas, solar, and data center verticals-simultaneously. If we
fail to timely deliver and make Project Matador operational on budget, on time
or at all, our business may prove unsuccessful.
We have not yet constructed our facilities or entered into any binding
contracts with any tenants, and there is no guarantee that we will be able to
do so in the future. Our limited commercial operating history makes it
difficult to evaluate our prospects, the risks and challenges we may encounter
and our total potential addressable market. Any delays or setbacks we may
experience could have a material adverse effect on our business, financial
condition and results of operations, and could harm our reputation.
Our business plan to construct and operate Project Matador depends on, among
other things, our ability to negotiate and enter into binding agreements with
potential tenants to lease our facilities. If no potential near-term tenant
enters into such binding agreement with us, our planned construction and
operation of Project Matador could be significantly delayed. Such delays would
result in delays in revenue and could hinder our ability to gain market
traction with other potential tenants and/or trigger an early termination
right of the landlord under the Lease. Additionally, there are conditions to
the commencement of construction of tenant facilities, including obtaining
financing for the Phase 1 buildout, and the execution and delivery of a
sublease agreement for our first tenant, that must occur before the end of
2026. See "-Risks Related to Project Matador-Our ability to develop and retain
site control depends on maintaining our leasehold interest with the Texas Tech
University System."
As a result of our limited commercial operating history and ongoing changes in
our new and evolving industry, including evolving demand for the types of
products and services we offer and the potential development of technologies
that may prove more efficient or effective for our intended use cases, our
ability to forecast our future results of operations and plan for and model
future growth is limited and subject to a number of uncertainties. Therefore,
our internal estimates relating to the size of our total addressable market
may not be correct. In addition, our expectations with respect to our total
potential addressable market may differ from those of third parties, including
investors or securities analysts.
We may experience operational or process failures and other problems during
the construction or operation of Project Matador. Any failures or setbacks,
particularly in the initial phases of Project Matador, could harm our
reputation, our ability to attract tenants, and have a material adverse effect
on our business and financial condition.
We are a development stage company with a history of financial losses (e.g.,
negative cash flows), and we expect to incur significant expenses and
continuing financial losses at least until Project Matador becomes
commercially viable, which may never occur. We will require substantial
additional future funding to support our operations and implementation of our
growth plans.
We expect our operating expenses to increase over the next several years and
to continue to incur operating losses for the foreseeable future as we expand
and develop, and we will need substantial additional capital from external
sources over an extended period to fund such development. If we are unable to
raise additional capital, we may need to make significant adjustments to our
business plan or significantly delay or scale back Project Matador, any of
which could have a material adverse effect on our results of operations,
financial condition and cash available for distribution. If we are unable to
raise additional funding, we may be forced to liquidate our assets and the
values we receive for our assets in liquidation or dissolution could be
significantly lower than the values reflected in our financial statements.
We do not expect to generate meaningful revenue unless and until we are able
to finalize development of and commercialize Project Matador, and we may not
be able to do so on our anticipated timetable, if at all. We expect our
expenses and capital expenditures to increase in connection with our ongoing
activities, including developing and advancing Project Matador. In addition,
we expect to incur additional costs associated with operating as a public
company. Historically, our primary source of funding to support our operations
has been from capital raises and equipment financings.
Adequate additional funding may not be available to us on acceptable terms or
at all. Our failure to raise capital as and when needed could have a negative
impact on our financial condition and our ability to pursue our business
strategies. If we raise additional funds by issuing equity securities, our
shareholders will experience dilution. If we raise additional capital through
debt financing, we may be subject to covenants that restrict our operations,
including limitations on our ability to incur liens or additional debt, pay
dividends, repurchase our securities, make certain investments, and engage in
certain merger, consolidation, or asset sale transactions. Any debt financing
or additional equity that we raise may contain terms that are not favorable to
us or our shareholders. If the needed financing is not available, or if the
terms of financing are less desirable than we expect, we may be required to
delay, scale back or terminate some or all of projects within Project Matador
and we may not be able to raise the necessary capital or obtain financing on
favorable terms, if at all.
We 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.
The capital expenditures we expect to incur as we complete the development of
Project Matador will be significant. We currently estimate that the total
capital expenditures we will incur to complete the development of Phase 0 and
Phase 1 of Project Matador could exceed $3 billion in the aggregate. The
required capital expenditures for the remaining phases are difficult to
estimate, but we expect to require substantial additional capital well in
excess of that required for Phase 0 and Phase 1. In addition, to the extent we
take advantage of the optionality to increase the size of the total power
deployed at this site, our total required capital would increase
proportionately and substantially.
Additional capital may not be available in the amounts required, or on
favorable terms. In addition, if any adverse findings are discovered at any
stage during the course of our development of Project Matador that would
render part of, or all of, the Project Matador Site to be unsuitable or we
discover flaws that may decrease the value of the Project Matador Site as
collateral for purposes of any financing, then we may not be able to obtain
the financing necessary to construct Project Matador on favorable terms, or at
all. Furthermore, any adverse changes in power demand that affect the
competitiveness of Project Matador or any failure on our part to obtain or
comply with necessary permits or approvals may also hinder our ability to
obtain necessary additional capital or financing.
Delays in the construction of Project Matador beyond the estimated development
period could increase the cost of completion beyond the amounts that we
estimate and beyond the then-available proceeds from rent payments from our
tenants we expect to receive, which could require us to obtain additional
sources of financing to fund our operations until Project Matador is fully
completed (which could cause further delays). Moreover, many factors
(including factors beyond our control) could result in a disparity between
liquidity sources and cash needs, including factors such as construction
delays and breaches of agreements.
Our ability to obtain financing that may be needed to provide additional
funding will depend, in part, on factors beyond our control and that funding
may not be available to us on commercial terms or at all. For example, capital
providers or their applicable regulators may elect to cease funding nuclear
projects or certain related businesses. Accordingly, we may not be able to
obtain financing on terms that are acceptable to us, or at all. Even if we are
able to obtain financing, we may have to accept terms that are disadvantageous
to us or that may have an adverse impact on our business plan and the
viability of the relevant project. The failure to obtain any necessary
additional funding could cause any or all of our projects to be delayed or not
be completed. Any delays in construction could prevent us from commencing
operations when we anticipate and could prevent us from realizing anticipated
cash flows, all of which could have a material adverse effect on our business,
contracts, financial condition, operating results, cash flow, financing
requirements, liquidity, prospects and the price of our common stock.
We 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.
We do not have the resources to build our own facilities, and we extensively
rely on third parties for materials for our business. As a result, we are
subject to risks associated with these third parties, including:
• insufficient capacity available to meet our demand on time;
• inability of our suppliers to obtain the equipment or
replacement parts necessary to fully operate our facilities or expand
available manufacturing capacity;
• inadequate manufacturing yields and excessive costs;
• inability of these third parties to obtain an adequate supply of
raw materials;
• extended lead times on supplies used in the building and
operation of our facilities;
• limited warranties on products supplied to us; and
• potential increases in prices (including the cost of freight and
potential or increased tariffs).
Our industry has experienced the effects of manufacturing capacity
constraints. The ongoing war in Ukraine and the Middle East, and related
international sanctions and restrictions have impacted supply chains for
manufacturers. To mitigate this, the U.S. government has taken steps to create
tariff exemptions for nuclear energy projects and data center development,
which we expect to benefit Project Matador. Notwithstanding these mitigating
steps, these supply challenges have impacted, and may continue to impact, our
ability to fully satisfy the necessary supplies, resources and products
required by our business and Project Matador. In addition, the rapid growth in
demand for natural gas-fired combustion turbine generators caused by the
development of new data centers has produced a backlog in orders for new
combustion turbines from highly regarded global manufacturers, such as Siemens
Energy and GE Vernova, which could adversely impact our plans to purchase and
procure additional gas-fired combustion turbines for timely delivery to
Project Matador.
In some cases, our requirements may represent a small portion of the total
production or business of our third-party suppliers. Our external partners may
not devote the necessary resources to our business even when requested by us.
Each of these events could increase our costs, lower our gross margin, delay
the construction and delivery of our projects, and cause us to hold more
inventories, or materially impact our ability to deliver our products on time.
We 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.
Our projects require highly specialized talent across a wide range of
disciplines, including nuclear engineering, radiation safety, reactor
operations, construction management, gas processing and handling, power
generation, electrical and mechanical engineering, environmental compliance,
project controls, procurement, and commissioning. While we believe our
proximity to the Pantex Plant provides us with access to a large pool of
skilled nuclear professionals, there is no assurance that we will be
successful in recruiting, hiring, training, and retaining the personnel we
need. Furthermore, the demand for such talent across the broader nuclear and
energy sectors is intensifying as numerous companies and government
initiatives compete for the same limited workforce. Additionally, prospective
employees may be reluctant to relocate to our area of operations, and we may
face competition from larger, more established companies that are able to
offer more attractive compensation packages, benefits, or career advancement
opportunities. If we are unable to hire the personnel we need in a timely
manner, we may experience delays in project development, increased labor and
training costs, diminished operational performance, and an inability to
achieve our aggressive growth and development milestones, any of which could
materially and adversely affect our business, financial condition, results of
operations, and long-term strategic objectives.
If members of our board of directors or senior management team are unable to
align on strategic direction, capital allocation, operational priorities, or
other significant matters, such differences in perspective could result in
delays in decision-making, the departure of key personnel, disruption to our
operations, or an inability to execute on our business strategy.
The development and execution of Project Matador is a large-scale,
capital-intensive undertaking that requires sustained coordination and
alignment among our leadership on matters including project sequencing,
technology selection, financing strategy, regulatory engagement, and the
allocation of limited financial and human resources across competing
priorities. As we continue to grow, the complexity of these decisions will
increase, and divergent views among board members or senior leaders on the
pace of development, risk tolerance, partnership opportunities, or responses
to unforeseen challenges could slow or impair critical decision-making at
times when timely action is essential. Furthermore, actual or perceived
instability within our leadership team could undermine confidence among our
employees, contractors, joint venture partners, lenders, off-takers, and other
key stakeholders, potentially making it more difficult to attract and retain
talent, negotiate favorable commercial terms, or maintain the strategic
relationships upon which our business depends. In addition, the departure of
one or more members of our senior management team or board of directors as a
result of such differences could deprive us of institutional knowledge, key
relationships, and specialized expertise that may be difficult to replace in a
timely manner, particularly given the highly specialized nature of our
operations and the competitive market for experienced nuclear and energy
industry executives. Any of the foregoing could materially and adversely
affect our business, financial condition, results of operations, and our
ability to achieve our development objectives on the timelines we have
communicated to our stakeholders.
The data center and energy markets are highly competitive and rapidly
evolving.
We compete with a variety of hyperscale data center REITs, cloud providers,
colocation operators, infrastructure funds, and sovereign-backed power
developers. These competitors may have greater access to capital, more
established tenant bases, deeper vendor relationships and fewer regulatory
hurdles. In addition, our focus on the AI infrastructure segment introduces
unique risks due to the high concentration of demand among a small number of
potential hyperscaler tenants, such as X.AI Corp. ("xAI"), OpenAI Group PBC
("OpenAI"), Amazon Web Services, Inc., Meta Platforms, Inc., Microsoft
Corporation, Google LLC, Oracle Corporation, and Anthropic PBC. In addition,
the AI infrastructure segment faces rapid shifts in compute density, chip
cooling technology, and bandwidth requirements. These technological
developments may require significant capital investment and continuous
innovation. We may be unable to meet these evolving demands, resulting in lost
business or underutilized capacity. Additionally, if we fail to anticipate
shifts in chip architectures or cannot source the equipment required by our
tenants, our infrastructure may become obsolete or misaligned with market
needs and our cash flows may be affected.
AI and Large-scale Language Model "LLM" infrastructure requirements are
changing faster than conventional infrastructure can be developed.
The compute requirements for AI training and inference are scaling
exponentially, with current models now requiring tens of megawatts per
training cycle and high-throughput, ultra-low latency interconnects between
GPUs, memory storage, and cooling systems. If our infrastructure
design-particularly with respect to power delivery and cooling
configurations-does not keep pace with the technical standards demanded by
these workloads, our facilities may be underutilized or obsolete before full
occupancy. Furthermore, the Project Matador Site's edge advantage may be
eroded over time if competitors offer modular or prefabricated solutions with
faster time-to-power and we may lose prospective tenants to faster-moving
providers.
The AI and hyperscaler market may not adopt our private infrastructure
platform at the speed or scale we anticipate.
The success of our business model depends on continued rapid growth in demand
for AI-specific data center capacity and hyperscaler willingness to procure
compute co-located with private power generation. While current trends suggest
a "race" among leading U.S. technology firms to secure independent energy
ecosystems, we cannot guarantee that tenants will sign binding leases at the
pace required to fund Project Matador milestones.
Additionally, shifts in global interest rates, capital expenditures by our
future tenant base, adoption of alternative AI chips or edge-compute
technologies, or improvements in utility grid capacity could reduce the
relative attractiveness of our solution. Our model assumes that
grid-constrained growth will drive long-term tenant demand for co-located
energy and compute-a condition that may not persist under alternative
regulatory regimes or as noted in the technological futures. In the event the
AI and hyperscaler market fails to adopt our private infrastructure platform
at the speed or scale we anticipate, our business prospects, financial
condition, results of operations and cash flows would be materially adversely
impacted.
Technological 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.
The AI and compute infrastructure industries are rapidly evolving. We have
been and will continue to be dependent on innovations in technology offerings
by our vendors, as well as the adoption of those innovations by tenants.
Breakthroughs in chip design, immersion cooling, energy storage, or synthetic
power generation could materially reduce the competitive edge of our
offerings. Tenants may delay spending while they evaluate any new technologies
or may choose providers with more current infrastructure. The rapid pace of
innovation in semiconductor design, AI model architecture, power electronics,
and battery storage means that capital investments in one generation of
infrastructure may be made obsolete before full monetization is realized. If
new technologies require materially different site layouts, interconnect
systems, or energy delivery formats, portions of our developed capacity may
become outdated or require costly retrofits.
This risk will be heightened in our nuclear and gas assets, where multi-decade
operating lives must be matched with evolving tenant power profiles. New
technologies, including highly efficient new generations of chips,
next-generation cooling, zero-carbon dispatchable power, or quantum compute
platforms, could make some or all of our infrastructure obsolete or
noncompetitive.
Emerging AI technologies, such as demonstrated by Hangzhou DeepSeek Artificial
Intelligence Basic Technology Research Co., Ltd. (DeepSeek), may allow for
complex AI operations to be executed with significantly less computing power
than is currently required. If AI developers are able to achieve the same or
better performance outcomes with more energy-efficient, cost-effective, or
less resource-intensive technologies, they may adjust their need for
large-scale, high-capacity power solutions. This shift could have an adverse
effect on our business, results of operations, and financial condition. We
continuously monitor industry trends and will invest in innovation to mitigate
these risks. However, we may not be able to anticipate or respond effectively
to such changes, which could have an adverse effect on our business, results
of operations, and financial condition.
We may not achieve tenant adoption at the pace or pricing levels required for
financial viability.
Although we are actively negotiating with prospective tenants, we have entered
into a single letter of intent as of the date of this report and have largely
only received expressions of interest from what we believe are AI ecosystem
leaders and there is no guarantee these entities will execute leases with us
or maintain full occupancy under our pricing assumptions. Additionally,
tenants often have significant bargaining power and may demand capital
support, infrastructure rebates, or operational guarantees that may increase
our costs or reduce our profitability. A failure to achieve tenant adoption at
an adequate pace and at assumed pricing levels may have a material adverse
impact on our business prospects, financial condition, results of operations
and cash flows.
We anticipate that any leases we enter into with tenants will contain certain
milestones and conditions precedent that, if we are unable to meet, could
result in significant liquidated damages or termination of the lease
agreements, which would subject us to significant losses and have a material
adverse effect on our business prospects, financial condition, results of
operations and cash flows.
If we fail to meet certain milestones with dates to be specified in any of our
tenant leases, including delivery of schematic design documents, delivery of
design development documents and construction documents, early access
completion, definitive agreements with SPS, and substantial completion and
final completion of the construction of powered shells by certain specified
deadlines, these tenants will be entitled to substantial liquidated damages
that would have a material adverse effect on our financial position and
liquidity. In addition, if we fail to meet the milestones we set out under
these lease agreements, even by a matter of weeks, the tenants may terminate
their lease agreements and we would be obligated to repay amounts equal to or
in excess of any and all accrued rent credits and other amounts advanced to us
in the form of any prepayments or reimbursements, which amounts would be
significant. Any such termination and required repayments would likely lead to
our insolvency. A termination of a lease with a tenant would cause us to lose
all of the revenue associated with that lease, which could represent
substantially all of our revenue and cause us to have to find alternative
sources of revenue to meet any financing obligations and to prevent a default
under such financings. If a lease with a tenant is terminated, we may also
incur significant losses to make the leased premises ready for another tenant
and experience difficulty or a significant delay in re-leasing the premises.
Our ability to complete the project milestones is subject to substantial
risks, many of which are out of our control. See "-Risks Related to Our
Business and Industry", "-Risks Related to Project Matador" and "-Risks
Related to Our Regulatory Environment and Energy Generation." Similar projects
have frequently experienced time delays and cost overruns in construction and
development as a result of the occurrence of various of these risks, and we
may experience similar events, any of which could have a material adverse
effect on our business prospects, financial condition, results of operations
and cash flows.
We may not enter into a definitive lease with the First Tenant or any other
tenant.
Although we have entered into the non-binding First Tenant LOI, there is no
guarantee that a definitive lease with the First Tenant will be executed, or,
if it is executed, that it will be on the same terms as set forth in the First
Tenant LOI or on other favorable terms. Furthermore, we cannot guarantee that
we will be able to negotiate a definitive lease with any other tenant. If we
are unable to enter into lease agreements with one or more tenants, we will
not be able to generate revenue, and our ability to survive as a going concern
will be severely impacted.
We depend on third-party vendors, contractors, and consultants to support our
business.
From licensing and permitting to design, procurement, construction, and
operations, we depend on a complex ecosystem of third-party providers to
execute our development roadmap. These parties include, among others, nuclear
and gas-fired power generation engineering firms, construction managers, legal
advisors, fiber network providers, and control system integrators. If any such
party experiences delays, disputes, or insolvency, or we lose our license or
use rights to critical third-party technology, it could materially adversely
impact the timing of delivery, cost, or quality of our infrastructure solution
and our ability to attract tenants.
Terrorist 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.
Our energy and compute infrastructure will rely on highly integrated
operational technology, industrial control systems, and AI infrastructure
automation platforms, many of which will be internet-connected or exposed to
remote access for diagnostics, supervisory control, data acquisition, and
maintenance. These systems are increasingly targeted by nation-state and
criminal actors, and even advanced cybersecurity protocols cannot fully
eliminate risk. In addition, we will rely on third-party cloud infrastructure
providers and Software-as-a-Service platforms to operate and manage core
elements of our data, diagnostics, and control environments. Any compromise or
service disruption affecting these external providers could impair our
visibility into asset performance or interrupt critical operations.
A successful attack on our nuclear, gas, solar, battery, or tenant-facing
compute infrastructure could result in physical damage, loss of service,
ransom demands, data exposure, or regulatory fines. Moreover, nuclear assets
are subject to elevated NRC physical security requirements and cybersecurity
standards, which imposes specific requirements on digital system integrity.
For our nuclear and gas assets, a cyber breach could also raise safety,
environmental, or emergency preparedness concerns, potentially triggering
regulatory shutdowns, incident investigations, or long-term reputational harm
beyond the direct operational impacts. Energy and AI-related infrastructure
have been identified as strategic targets for future attacks, and, as such,
may face greater risk of disruption or exploitation than other asset classes.
In addition, such an incident at any nuclear power facility, globally, may
lead to heightened regulatory standards and scrutiny across the entire
industry, leading to increased regulatory compliance burdens, loss of revenue,
and incidental costs related to the alteration of infrastructure, assets, or
systems.
In the ordinary course of business, we will collect, store, and transmit
confidential information (including but not limited to intellectual property,
proprietary business information and personal information). It is critical
that we do so in a secure manner to maintain the confidentiality and integrity
of such confidential information. While we will regularly review any
obligations we may have under applicable data privacy or data protection laws,
any actual or perceived failure to comply with new or existing laws,
regulations and other requirements could cause substantial harm to our
business or result in investigations, claims, proceedings, or other
liabilities that could hurt our reputation and brand, incur significant
expenses, and divert management's attention. We expect to also outsource
elements of our operations to third parties, and as a result we will manage a
number of third-party contractors who have access to our confidential
information. Regarding our nuclear assets, we will be subject to the NRC's
regulations in this area, and for all of our electric generation and related
electric infrastructure, we will be subject to regulation by the U.S. Federal
Energy Regulatory Commission ("FERC"), the Southwest Power Pool (the "SPP"),
the Public Utility Commission of Texas (the "PUCT"), the North American
Electric Reliability Corporation ("NERC"), and the Midwest Reliability
Organization ("MRO"), the violation of which could carry regulatory
enforcement action.
While we expect to implement a comprehensive set of security measures, our
operational technology, industrial control systems, and AI infrastructure
automation platforms and those of our contractors and consultants may be
vulnerable to breakdown or other damage or interruption from service
interruptions, system malfunction, natural disasters, terrorism, war and
telecommunication and electrical failures, as well as security breaches from
inadvertent or intentional actions by our employees, contractors, consultants,
business partners, and/or other third parties, or from cyber attacks by
malicious third parties (including the deployment of harmful malware,
ransomware, denial-of-service attacks, social engineering and other means to
affect service reliability and threaten the confidentiality, integrity and
availability of information), which may compromise our system infrastructure
or lead to data leakage. In particular, ransomware attacks could result in
prolonged operational outages across our compute and energy infrastructure,
delay site commissioning, or trigger fail-safe shutdowns of critical systems.
More sophisticated attack vectors, such as spear phishing, credential
stuffing, and deepfake-based social engineering, may further undermine our
ability to detect and prevent compromise. These disruptions could materially
affect our ability to fulfill tenant obligations and meet development
milestones. We are not able to anticipate, detect, or prevent all
cyberattacks, particularly as attackers adapt methods to evade detection and
exploit zero-day vulnerabilities. Additionally, some cyber incidents,
including surveillance, data exfiltration, or deepfake impersonation, may go
undetected for extended periods.
As part of our planned reviews of potential risks, we will analyze emerging
cyber security threats to us and our contractors, consultants, business
partners and other third parties as well as our plans and strategies to
address them. Our board of directors, which will have oversight responsibility
for cyber security risks, is expected to be briefed by management on such
analyses. Oversight responsibilities will include review of threat
assessments, incident response plans, vendor cybersecurity practices, and the
coordination of efforts across operations, legal, privacy, and IT teams.
As 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.
Additionally, the board of directors is responsible for overseeing the
adequacy of management's conduct of threat environment and vulnerability
assessments, management of cyber incidents, pursuit of projects to strengthen
internal cyber security and the cyber security of our suppliers and other
service providers, work with the Company's privacy and legal teams,
coordination with the Company's operations teams to evaluate the cyber
security implications of our products and offerings, and coordination of
efforts to monitor, detect, and prevent future cyber threats. In addition, the
board of directors, or a duly authorized committee thereof, will annually
review our risk profile with respect to cybersecurity matters. To the extent
that any disruption or security breach were to result in a loss of, or damage
to, our data or applications, or inappropriate disclosure of confidential or
proprietary information, we could incur liability and reputational damage and
the further development and commercialization of our products could be
delayed. We may also be required to expend significant additional capital or
operating costs to investigate and remediate vulnerabilities, strengthen
controls, or comply with evolving cybersecurity regulations.
Furthermore, significant disruptions of our internal information technology
systems or security breaches could result in the loss, misappropriation,
and/or unauthorized access, use, or disclosure of, or the prevention of access
to, confidential information (including, but not limited to, intellectual
property, proprietary business information, export-controlled information, and
personal information), which could result in financial, legal, business, and
reputational harm to us. For example, any such event that leads to
unauthorized access, use, or disclosure of personal information, including
personal information related to our employees, could harm our reputation
directly, compel us to comply with federal and/or state breach notification
laws and foreign law equivalents, subject us to mandatory corrective action,
and otherwise subject us to liability under laws and regulations that protect
the privacy and security of personal information, which could result in
significant legal and financial exposure and reputational damages that could
potentially have an adverse effect on our business.
We will be required to continuously upgrade cybersecurity controls, test
defenses, and maintain redundancy and isolation protocols. Any failure could
materially impair our operations or tenant relationships. We expect to
maintain cybersecurity insurance, but such coverage may not be adequate to
cover all losses. Certain consequential or reputational damages may not be
insurable, and we may be required to self-fund recovery efforts, litigation
costs, and regulatory penalties. As cyberattacks increase globally in
frequency and severity, the cost of such insurance may increase and
availability of such insurance may also decline. Any failure to prevent,
detect, or respond to cybersecurity incidents could materially impair our
operations, delay our infrastructure roadmap, damage our relationships with
tenants or regulators, and result in significant legal or financial exposure.
Our 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.
Like many companies, we are using and looking for more opportunities to use AI
technologies, including those that leverage LLMs, in an effort to reduce costs
and run our business efficiently. In particular, we are evaluating
opportunities to leverage AI operations in our research and development
efforts, as well as in operational areas like procurement and contract
management. However, some of these technologies are nascent and their
reliability and effectiveness is unproven. As a result, the resources and time
we expend to develop and/or use such systems may ultimately fail to create
efficiencies and may even make us less efficient. Additionally, these systems
may generate incorrect outputs that may negatively impact our business or
operations in unexpected ways if we fail to identify and screen out such
errors, particularly if we are using such technologies in our research and
development efforts (for example, if we use such technologies to help us
evaluate design parameters).
Additionally, the legal and regulatory framework that applies to the use of AI
technologies is rapidly evolving. New and proposed laws in the United States
and abroad, including the European Union Artificial Intelligence Act, U.S.
federal and state laws, and FTC enforcement actions, may restrict certain uses
of AI, increase compliance costs, or subject us to disclosures or civil
penalties. Such evolving laws and regulations may prevent or limit us from
being able to effectively use such technologies, may impact the costs of using
or maintaining such technologies, may cause operational costs if we need to
change processes that we implement to use such technologies or third-party
providers that provide such processes, or may subject us to legal or
regulatory liabilities. Our failure to adequately manage the risks associated
with AI use could adversely affect our operations, expose us to liability, or
harm our reputation.
Risks Related to Project Matador
Project Matador is an unprecedented, large-scale, multi-phase development
effort that presents significant planning, execution, and coordination risks.
Fermi's flagship project, Project Matador, is among the largest hybrid
infrastructure developments in the United States, that will combine hyperscale
powered shells and vertically integrated energy assets on a single 5,236-acre
site. We hold 4,523 acres of the Project Matador Site under the Lease
following the lease commencement date and will hold the remaining 713 acres of
the Project Matador Site following the land exchange contemplated under a land
exchange agreement with the Texas Tech University System. Together with
additional acreage acquired or under contract adjacent to the leased property,
the expanded campus is expected to encompass approximately 7,570 acres.
Coordinating the simultaneous construction and operation of nuclear, gas,
solar, battery, fiber, cooling, and computing systems creates an extraordinary
degree of interdependency. Errors in sequencing, delayed component delivery,
construction conflicts, or design misalignment across asset classes could
significantly impact deployment timelines, construction costs, tenant
onboarding, or overall operability. In addition, Project Matador requires a
significant amount of capital for build out and we may not be able to access
this financing in the amounts or at the costs currently anticipated. Failure
to obtain this capital will significantly and adversely affect our efforts to
complete Project Matador.
Our ability to develop and retain site control depends on maintaining our
leasehold interest with the Texas Tech University System.
We hold the Project Matador Site under the Lease. In order for us to begin
development on the Project Matador Site, the Lease provides that we must first
receive a notice to proceed from the Texas Tech University System, which
notice is conditioned on, among other things, (i) delivery by us of sufficient
evidence to demonstrate that we have secured full and unconditional funding
and financing for Phase 1 of Project Matador, including capitalized interest
and all capital costs set forth in the development budget, (ii) an executed
lease with a Phase 1 tenant, (iii) receipt of insurance policies covering the
premises of the Project Matador Site, (iv) delivery of environmental site
assessments, (v) letter of credit in the amount of $5.0 million and (vi)
receipt of all necessary permits and approvals for the commencement of
construction of Phase 1.
The Lease further includes provisions that may trigger reversion or early
termination in the event of non-performance, tenant abandonment, or violation
of specified land-use covenants. The Lease also requires us to demonstrate
tenant adoption or construction commencement within defined milestones,
failure of which could jeopardize our right to continue development.
Furthermore, the Lease is governed under Texas state law and may be subject to
political or administrative changes in future governance of the university or
state policy shifts relating to nuclear energy or AI infrastructure. Our
inability to receive the notice to proceed, or any adverse modification or
termination of the Lease could have a materially adverse effect on our ability
to execute our business model and deliver committed capacity to hyperscaler
tenants.
The scale of infrastructure planned at Project Matador will require extensive
permitting, interconnection, and third-party coordination.
The scope of infrastructure for Project Matador-spanning substations, cooling
corridors, high-pressure gas delivery, nuclear construction, multiple types of
other electric generating and storage facilities, and powered shell
capacity-necessitates cooperation with dozens of agencies, vendors, and EPC
contractors. A delay or dispute with any one of these counterparties or
regulators could cascade into project-wide impacts. For example, if
transmission infrastructure or water lines are delayed, it could stall
multiple phases simultaneously. Coordinating these layers in parallel, with
differing regulatory timelines, creates real risk for budget overruns or
missed commercial operation dates ("CODs").
We may face significant construction delays and global supply chain
disruptions that could materially impact project timelines and costs.
Project Matador requires timely procurement of gas turbines, transformers,
switchgear of a varied nature, power electronics, nuclear reactor components
(including processed and refined uranium), heating. ventilation, and air
conditioning ("HVAC") systems, and modular powered shell elements-many of
which originate from international vendors. Geopolitical conflict, trade
restrictions and tariffs, maritime shipping delays, or semiconductor shortages
may delay site readiness, reduce operational capacity, or force
reprioritization of development phases. In addition, recent global supply
chain disruptions have increasingly affected both the availability and cost of
raw materials (including uranium), component manufacturing and deliveries.
These disruptions may result in delays in equipment deliveries and cost
escalations that could adversely affect our business. Prolonged disruptions in
the supply of any of our key materials or components, difficulty finding
qualifying new sources of supply, implementing the use of replacement
materials or new sources of supply or any volatility in prices could have a
material adverse effect on our ability to operate in a cost-efficient, timely
manner. Such prolonged disruptions could also cause us to experience
cancellations or delays of scheduled launches, tenant cancellations or
reductions in our prices and margins, any of which could harm our business,
financial condition, results of operations and cash flows.
The ongoing military conflict in Ukraine has escalated tensions between the
United States and its North Atlantic Treaty Organization ("NATO") allies, on
one hand, and Russia, on the other hand. The United States and other NATO
member states, as well as some non-member states, have imposed sanctions
against Russia and certain Russian banks, enterprises, and individuals. These
actions include sanctions on Russian companies that supply low-enriched
uranium ("LEU") to fuel nuclear reactors, representing a potential and
material supply chain risk to companies that develop and operate nuclear
reactors in the United States. These sanctions have impacted the commercial
availability of LEU and increased the cost of uranium enrichment services and
could potentially increase the cost and timing of receipt of LEU, which could
have a material adverse effect on our ability to deploy our Westinghouse
Reactors at the Project Matador Site.
The scale and complexity of Project Matador's multi-source energy
platform-including nuclear, natural gas, solar, and battery assets-exposes us
to construction and logistics risks at each development phase. The
availability of critical path equipment such as heat exchangers, reactor
modules, turbines, switchgear, and gas infrastructure is subject to global
supply chain variability and vendor capacity. Many components required for
nuclear construction, including pressure vessels, reactor coolant pumps and
steam generating equipment, are manufactured by a limited number of qualified
suppliers and may require long-lead orders with multi-year production
timelines.
We do not have manufacturing assets and will rely on third-party manufacturers
and construction firms to build our facilities. Moreover, we are dependent on
future supplier capability to meet production demands attendant to our
forecasts. If our supply chain cannot meet the schedule demands of the market,
our projected sales revenues could be materially impacted.
Additionally, shortages in skilled labor, construction permitting delays,
inclement weather, or force majeure events could delay or halt construction of
major systems. Each delay can cause cascading impacts on integration,
interconnection, and tenant move-in schedules, reducing our ability to
generate revenue or meet Lease milestones.
High 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.
Project Matador is permitted for up to approximately 6 GW of natural gas-fired
generation capacity. On March 27, 2026, we filed an application with the TCEQ
for approximately an incremental 5 GW air permit of natural gas-fired
generation capacity. Industrial scale gas-fired turbines are in high demand in
the United States and globally for grid power generation, new and expanded LNG
facilities and AI hyperscalers, creating significant delays in delivery as
well as increasing costs. This increase in demand for gas-fired combustion
turbines, after years of little or no demand for new gas-fired combustion
turbines, appears to have significantly outstripped available supply,
resulting in reports of lead-times for delivery of new gas-fired combustion
turbines of up to seven years. In addition, our purchase of certain used
gas-fired combustion turbines presents a risk that a prior owner may not have
maintained such turbines in accordance with manufacturer's recommendations. As
a result, we could experience significant delays and increased costs in
obtaining the gas-fired turbines needed to develop the natural gas-fired power
generation infrastructure that we need to meet our current design plans, and
those delays and costs could increase substantially should we deploy gas-fired
power in excess of those amounts initially anticipated, which could adversely
affect our ability to attract tenants, our ability to deliver service and
power to our tenants on the expected schedule, and our operating results and
financial condition.
Westinghouse 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.
The development, construction, and commercialization of Westinghouse Reactors
and SMR projects involve significant time and cost. The design, engineering,
licensing, and construction of nuclear reactors, including the AP1000 and
SMRs, are complex, highly regulated, and subject to lengthy timelines. The
Westinghouse Reactor, a large-scale light water reactor, has historically
faced delays and cost overruns in projects due to challenges in supply chain
management, regulatory approvals, and construction complexities. SMRs, while
designed to be more cost-effective and scalable, are still in early stages of
development and deployment globally, with limited operational history and a
lack of commercially available, fully licensed designs. This increases the
risk of unforeseen technical challenges, delays in regulatory approvals, and
higher-than-anticipated costs.
The costs associated with developing and deploying these technologies are
substantial, including expenses related to site preparation, specialized
materials, and compliance with stringent nuclear safety and environmental
regulations. Further, the limited number of nuclear power plants constructed
in the United States over the last 20 years has reduced the number of skilled
laborers, such as welders, necessary to construct new nuclear power plants.
Any delays or cost overruns, or failure or delay in securing the services of
qualified laborers, could strain our financial resources, require additional
capital, or result in project delays or cancellations.
Our 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.
Furthermore, the limited availability of commercially viable SMRs poses
additional risks. The technology is still emerging, with few operational SMRs
globally, and the supply chain for specialized components is underdeveloped.
This could result in delays in securing necessary materials, higher costs, or
reliance on unproven suppliers. If we are unable to successfully develop,
license, and deploy Westinghouse Reactor or SMR projects on time and within
budget, or if we fail to mitigate the inherent risks of nuclear power, our
business prospects, financial condition, and ability to achieve our strategic
objectives could be materially adversely affected.
We may be subject to credit risks.
Credit risk includes the risk that our customers will not pay their bills,
which may lead to a reduction in liquidity and an increase in bad debt
expense. Credit risk is comprised of numerous factors including the price of
products and services provided, the overall economy and local economies in the
geographic areas we serve, including local unemployment rates.
Credit risk also includes the risk that various counterparties that owe us
money or product will breach their obligations. Should the counterparties to
these arrangements fail to perform, we may be forced to enter into alternative
arrangements. In that event, our financial results could be adversely affected
and we could incur losses.
One alternative available to address counterparty credit risk is to transact
on liquid commodity exchanges. The credit risk is then socialized through the
exchange central clearinghouse function. While exchanges do remove
counterparty credit risk, all participants are subject to margin requirements,
which create an additional need for liquidity to post margin as exchange
positions change value daily. The Dodd-Frank Wall Street Reform and Consumer
Protection Act (the "Dodd-Frank Act") requires broad clearing of financial
swap transactions through a central counterparty, which could lead to
additional margin requirements that would impact our liquidity. However, we
have taken advantage of an exception to mandatory clearing afforded to
commercial end-users who are not classified as a major swap participant,
thereby allowing such commercial end-users to enter into uncleared bilateral
swaps to hedge their exposure to commercial risk. We intend to authorize SPS
and its subsidiaries to take advantage of this end-user exception.
We may at times have direct credit exposure in our short-term wholesale and
commodity trading activity to various financial institutions trading for their
own accounts or issuing collateral support on behalf of other counterparties.
We may also have some indirect credit exposure due to participation in
organized markets, such as SPP, PJM and the Midcontinent Independent System
Operator ("MISO"), in which any credit losses are socialized to all market
participants.
We do have additional indirect credit exposures to various domestic and
foreign financial institutions in the form of letters of credit provided as
security by power suppliers under various long-term physical purchased power
contracts. If any of the credit ratings of the letter of credit issuers were
to drop below the designated investment grade rating stipulated in the
underlying long-term purchased power contracts, the supplier would need to
replace that security with an acceptable substitute. If the security were not
replaced, the party could be in technical default under the contract, which
would enable us to exercise our contractual rights.
We may face physical site risks, including severe weather events,
environmental conditions, or other disasters which could result in an
interruption of our operations, a delay in the completion of Project Matador,
higher construction costs and the deferral of the dates on which we could
receive revenue, all of which could adversely affect us.
While Amarillo, Texas, offers many logistical advantages, including proximity
to one of the largest known natural gas fields in the United States and cool
ambient temperatures, it is also subject to certain regional hazards. These
risks include occasional high-wind events, water access variability, and
regional dust or environmental permitting restrictions. Severe weather,
including winter storms, can be destructive, causing construction delays,
outages and property damage that require incurring additional expenses. A
major weather or geological event affecting our future infrastructure,
especially nuclear or gas, could impair the safety or reliability of Project
Matador.
Furthermore, our operations could be adversely affected, and our physical
facilities could be at risk of damage, should global climate conditions
produce, among other conditions, unusual variations in temperature and weather
patterns, resulting in more intense, frequent and severe weather events or
abnormal levels of precipitation. Although the current designs of Project
Matador include certain measures to protect against weather conditions, they
may not be effective to protect against any of these events.
In addition, site access or operation could be affected by new environmental
protections or public opposition.
Any 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.
Our business depends on providing tenants with highly reliable solutions. We
must safehouse our tenants' infrastructure and equipment located in our
facilities. Our facilities could be subject to break-ins, sabotage and
intentional acts of vandalism causing potential disruptions. Some of our
systems may not be fully redundant, and our disaster recovery planning cannot
account for all eventualities. Any problems at our facilities and/or cloud
infrastructure could result in lengthy interruptions in our service and our
business operations. There can be no assurance that any security or other
operational measures that we or our third-party service providers or vendors
have implemented will be effective against any of the foregoing threats or
issues.
The offerings we will provide in each of our facilities are subject to failure
resulting from numerous factors, including:
• human error;
• equipment failure;
• physical, electronic and cybersecurity breaches;
• fire, earthquake, hurricane, flood, tornado and other natural
disasters;
• extreme temperatures;
• water damage;
• fiber cuts;
• power loss;
• terrorist acts;
• theft, sabotage and vandalism; and
• failure of business partners.
Problems at one or more of our facilities, whether or not within our control,
could result in service interruptions or significant equipment damage. Because
our facilities may be critical to many of our tenants' businesses, service
interruptions or significant equipment damage in our facilities could also
result in lost profits or other indirect or consequential damages to our
tenants. We cannot guarantee that a court would enforce any contractual
limitations on our liability in the event that one of our tenants brings a
lawsuit against us as a result of a problem at one of our facilities.
In addition, any loss of service, equipment damage or inability to meet our
service level commitment obligations could reduce the confidence of our
tenants and could consequently impair our ability to obtain and retain
tenants, which would adversely affect both our ability to generate revenues
and our operating results.
Furthermore, we are dependent upon energy providers, Internet service
providers, telecommunications carriers and other operators in the Texas
Panhandle region and elsewhere, some of which have experienced significant
system failures and electrical outages in the past. Our tenants may in the
future experience difficulties due to system failures unrelated to our systems
and offerings. If, for any reason, these providers fail to provide the
required services, our business, financial condition and results of operations
could be materially and adversely impacted.
Our construction and delivery timeline estimates for our facilities and other
equipment may increase due to a number of factors, including the degree of
pre-fabrication, standardization, on-site construction, long-lead procurement,
contractor performance, facility pre-operational and startup testing, demand
for repairs and other site-specific considerations.
The success of our business will depend in large part on our ability to
successfully construct our facilities and provide potential tenants the
required services as part of the lease, including delivering electricity to
tenants as an incident of tenancy. Our business will require on-time and
on-budget services at guaranteed performance levels, which would tend to
establish greater confidence in our subsequent tenants. There is no guarantee
that all necessary components will be commercially available and substantial
development of new supply chains might be necessary. Additionally, we cannot
guarantee the level of quality of these third-party supplies or import and
export requirements or limitations that might be stipulated by the NRC or U.S.
DOE for the procurement of these components. Some of our equipment may require
repair or replacement, which could further delay development in each of our
planned phases. Only a limited number of large contracting and engineering
firms have the skills or experience to design and construct nuclear reactors.
The lack of recent nuclear reactor construction projects in the United States
means that there are few organizations with substantial institutional and
personal knowledge of such projects. In addition, certain craft labor,
particularly welding, on a nuclear reactor construction project requires a
very high degree of skills and experience on the part of the laborers, meaning
few qualified candidates may be available. The resurgent interest in nuclear
energy projects, along with strong demand for such labor on other energy or
infrastructure projects of similar complexity, means that securing and
retaining the properly qualified workforce may be difficult, time consuming,
and/or require competitive bidding, representing significant cost and schedule
risks to the project.
There is no guarantee that the planned construction, delivery, and performance
of our facilities or the equipment we need to generate electricity will be
successful, timely, or on budget or that our third-party suppliers and
contractors will deliver timely or on budget. In addition, there is no
guarantee that if we shift our power sources or design plans as a reaction to
unforeseen developments or in order to take advantage of optionality to
increase the total amount of gas-fired generation, that those alternatives
would meet our original timeline or budget goals. There is no guarantee that
our facility pre-operational and startup testing, including tests mandated as
license conditions by the NRC, will be successfully completed on-time.
Furthermore, we may experience delays, operational or process failures, repair
down-times and other problems during our first commercial deployment or any
planned deployment thereafter. In addition, the construction of our facilities
may not be completed at the cost and on the timeline we expect. We will depend
on third-party contractors to perform many of the essential activities needed
to deploy our facilities. We do not control the performance of these
contractors and our contracts with them may not provide adequate remedies if
they fail to perform. We do not currently employ any risk sharing structures
to mitigate the risks associated with the construction, delivery and
performance of our facilities. Any delays or setbacks we may experience for
our first commercial delivery or in establishing our facilities, as well as
any failure to obtain final investment decisions for future orders could have
a material adverse effect on our business prospects, financial condition,
results of operations and cash flows and could harm our reputation.
Our business operations rely heavily on securing agreements with suppliers for
essential materials, equipment, and components which will be used to construct
Project Matador facilities.
The execution, termination, expiration, or failure to renew agreements with
our suppliers, whether due to unforeseen circumstances, including, but not
limited to, supplier insolvency and regulatory changes, pose significant risks
to our supply chain. In the event that such agreements are not successfully
maintained or replaced, we may encounter difficulties sourcing required
materials and components for Project Matador, leading to deployment delays,
increased costs, or an inability to meet tenant demand. Any interruption or
inability to maintain relationships with current and future suppliers, or
failure to secure materials from alternative suppliers could adversely impact
our business operations, financial performance, and reputation.
The proximity of the Project Matador Site to the Pantex Plant introduces
potential federal scrutiny.
The Pantex Plant, a high-security DOE facility for nuclear assembly and
disassembly, is located adjacent to the Project Matador Site. While its
proximity offers normalization of nuclear activity, logistical resources, and
industrial-grade infrastructure benefits, it may also increase regulatory
oversight, national security protocols, and limitations on public disclosures
or construction phasing. In addition, there is a risk of an accidental
explosion or other catastrophic incident. Such an incident at the Pantex Plant
or on the Project Matador Site could materially and adversely affect Project
Matador, including causing significant construction delays, significant
disruption of operations and damage to infrastructure and equipment. Any
change in DOE policy or unexpected coordination requirements could introduce
delays, costs, or restrictions on aspects of the Project Matador Site plan.
We are dependent on early infrastructure milestones to unlock downstream
development phases.
Project Matador's success is based on a modular rollout in which early
infrastructure-such as substations, mobile generation, roads, and pads-enables
future tenant installations and long-term energy deployment. If these early
milestones are delayed or come online with performance limitations, it could
prevent or postpone delivery of subleased campus space and utility services.
Any such delay could have a material adverse effect on our business, results
of operations, and financial condition and could trigger contractual
liabilities detrimental to our business.
Construction risk is amplified by the multi-vertical, high-voltage,
high-capacity nature of the Project Matador Site.
Project Matador is designed to host power generation, transmission, compute
workloads, and chip manufacturing equipment all within the same perimeter.
Coordinating simultaneous construction of these systems-while managing safety,
redundancy, and operational commissioning-requires unusually sophisticated
staging and project controls. Delays, EPC disputes, workforce shortages, or
material delivery disruptions (including for gas turbines, heat exchangers, or
Westinghouse Reactor components) could have wide-reaching effects, including
an inability to complete construction of Project Matador in a timely manner or
at all and the loss of potential revenues, which could have a material adverse
effect on our business, results of operations, and financial condition.
Further, any actual or perceived safety or reliability issues may result in
significant reputational harm to our business, in addition to litigation
liability and other costs that may arise. Such issues could result in delaying
or cancelling future phases of Project Matador, increased regulation, or other
systemic consequences. Our inability to meet our safety standards or adverse
publicity affecting our reputation as a result of accidents or mechanical
failures could have a material adverse effect on our business and financial
condition.
We may not maintain eligibility for the full amount of tax abatements granted
to us by Carson County.
We have received a 10-year property tax abatement with Carson County, Texas,
in connection with the construction of Phase 1 of Project Matador. Abatement
eligibility is subject to ongoing compliance with construction timelines,
workforce commitments, and property valuation methodologies.
Risks Related to Our Regulatory Environment and Energy Generation
Nuclear energy development is subject to extensive regulation and uncertainty,
which could materially delay or impair our business.
Our business depends heavily on the successful execution of a multi-phase
energy development plan that includes the construction and operation of four
full-scale nuclear reactors, numerous gas-fired generation assets, solar PV
arrays, and BESS. Each component introduces regulatory, financial,
operational, and technological risks.
As a core component of Project Matador's power platform, we plan to develop
four Westinghouse Reactors, each with 1,100 MW of capacity, with one unit
commencing construction every two years beginning in 2027. This timeline
introduces significant long-term capital exposure, regulatory coordination,
construction risk, and supply chain vulnerability. While construction of new
nuclear power plants in other countries has progressed more efficiently than
in the past, construction of nuclear power plants in the U.S. has slowed
dramatically in the last twenty years.
Construction of the Southern Company's recent Vogtle nuclear power plant,
built in Georgia, took approximately fifteen years. President Trump's recent
Executive Order, dated May 23, 2025, which requires (i) the NRC to shorten its
approval time for new nuclear reactor license applications to no more than 18
months and (ii) the DOE to use its licensing authority under the Atomic Energy
Act ("AEA") to authorize at least three new nuclear power plants with the goal
that each power plant reach "criticality" by July 4, 2026, seeks to speed U.S.
nuclear construction permitting, but there can be no guarantee that this
executive order will be effective in doing so or that a future Presidential
administration will not reverse this executive order. Indeed, certain recent
nuclear power plant projects have taken more than ten years from commencement
to completion and the timeline in our model to make the Westinghouse Reactors
operational is aggressive. Delays or disruptions in any phase could impair our
overall development timeline, reduce forecasted revenue, and increase
financing costs.
Each reactor will, among other things, require:
• full compliance with NRC licensing, testing, and inspection
frameworks;
• multi-year site preparation and nuclear-grade infrastructure
installation; and
• ongoing adherence to evolving federal safety standards.
Failure 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.
We are employing a structural approach-separating the NRC-regulated "nuclear
island" from the rest of the nuclear power plant located downstream of the
nuclear island, which the NRC refers to as the "balance of the plant" ("BOP").
The "nuclear island" contains the reactor core in which the nuclear fuel
undergoes a chain reaction and gives off heat, which heat is captured and
converted into steam in the nuclear island. As a result, the nuclear island is
of primary concern to the NRC, because any release of harmful nuclear
radiation will come from the nuclear fuel in the reactor core that is
contained in the nuclear island.
The non-radioactive steam is delivered from the nuclear island to BOP. The BOP
contains a steam turbine that uses steam from the nuclear island to turn a
generator which in turn produces electric energy. The remainder of the BOP
contains switches, relays, transformers, capacitors, and other electrical
equipment designed to safely deliver such electric energy either to the
transmission grid or to the powered shell tenants.
All elements of nuclear infrastructure, including the nuclear island and the
BOP will remain subject to the oversight of the NRC and potentially other
federal and state agencies. The NRC's review of our COL application will
involve environmental impact assessments, pre-application safety evaluations,
analysis of our proposed construction of each Westinghouse Reactor, as well as
our proposed operation of each Westinghouse Reactor, which involves
site-specific safety analysis reports, testing, inspection, and operating
conditions. The NRC's review process involves an analysis of the proposed site
for the nuclear reactor, which is why some applicants seek an early site
permit from the NRC prior to submitting the COL application.
Our license application under Part 52 of the NRC's regulations (10 CFR Part
52) ("Part 52") will need to achieve specified milestones prior to final
approval. The Part 52 license is a combined construction and operating
license, with parallel licensing tracks related to safety and the environment
converging on a mandatory hearing and an ultimate decision at the end of the
process.
The NRC performs a safety review of each reactor application to assess whether
it provides reasonable assurance of adequate protection of public health and
safety. This involves the review of preliminary and Final Safety Analysis
Reports. The NRC can request additional information during this review, or the
parties can agree on a regulatory audit. Prolongation of this process poses a
significant cost and schedule risk to Project Matador.
The NRC concurrently performs an environmental review which incorporates
compliance with the NEPA. NEPA reviews typically require preparation of an
EIS, which is the most detailed level of review provided for under NEPA,
though the NRC has recently attempted to perform less intensive Environmental
Assessments ("EA"). It is noteworthy that the DOE has recently proposed a
modification of its NEPA review regulations that includes several enumerated
"categorical exceptions," which are intended to safely reduce the time
required to produce EA and EIS reviews for components of new nuclear power
plants that will be subject to such "categorical exceptions," thereby not
requiring an environmental analysis of such components. However, there is no
guarantee that we will be able to qualify for any of these exceptions. Whether
performing an EIS or an EA, the environmental review process may be time
consuming, and changes or delays to the process present significant cost and
schedule risks for Project Matador.
The COL application incorporates by reference the Westinghouse Reactor design
as approved at Vogtle. Though the combined license will include the right to
operate the reactor, it will be contingent on construction of the reactors
conforming exactly to the design, with accuracy measured by a series of
Inspections, Test, Analyses, and Acceptance Criteria ("ITAAC") derived from
both the design certification and certain site specific characteristics, and
evaluated by the NRC as part of a quality assurance regime, which involves
thousands of hours of inspection during construction. Modifying ITAAC, which
may be required due to shifts in the sequence of construction, requires
submitting a modification request to the NRC. ITAAC must be successfully
"closed" before operation can begin and, no later than 270 days prior to the
date of initial fuel loading for the reactor, the NRC will publish a notice of
intended operation in the Federal Register which allows any person whose
interests may be affected by plant operation the opportunity to request a
hearing within 60 days of the publication of the Federal Register notice on
whether the facility as constructed complies, or on completion will comply,
with the acceptance criteria in the combined license. The possibility of
delay, rework, analysis, and other mitigation resulting from ITAAC
nonconformances, along with the potential for ITAAC hearings, pose significant
cost and schedule risks to reactor completion.
In addition to potential ITAAC hearings and opportunities for public
engagement throughout the licensing process, there is a mandatory license
hearing required by the AEA at which the NRC and the license applicant present
detailed evidence. This process takes a significant amount of time, and the
possibility of delay represents a significant cost and schedule risk to
Project Matador. While the public cannot directly participate in the mandatory
hearing, the public can challenge the NRC's review of the reactor application
through the contested hearing process. Should contested hearings occur, they
also present a significant cost and schedule risk to Project Matador.
On May 23, 2025, President Trump issued Executive Order 14300 "Ordering the
Reform of the Nuclear Regulatory Commission" which directed, among other
actions, the NRC to "undertake a review and wholesale revision of its
regulations and guidance documents, and issue notice(s) of proposed rulemaking
effecting this revision within 9 months of the date of this order." EO 14300
also imposed a deadline of "no more than 18 months for final decision on an
application to construct and operate a new reactor of any type, commencing
with the first required step in the regulatory process." It is unclear how
these directions will revise Part 52, or what effect they will have on a
reactor in the midst of the Part 52 application process. Should the directed
revisions require new or revised information to be submitted, that submission
may delay the project, representing a significant cost and schedule risk.
Should the new rules issued be legally challenged, it may delay open
applications, also representing a significant cost and schedule risk to
Project Matador.
The regulatory review and approval process under Part 52 for Fermi to obtain a
license authorizing the construction and the operation of each Westinghouse
Reactor can take several years, and any delays, objections, or changes in NRC
policy or staff interpretations could materially postpone the start of our
nuclear generation at the Project Matador Site. If our application is denied
or subject to material conditions, it could significantly impact our ability
to deliver nuclear generated electric energy as an incident of tenancy under a
lease with our powered shell tenants.
Our development plan requires ongoing engagement with the NRC, the DOE, and
other agencies. For example, if one or more of the Westinghouse Reactors is
interconnected to the transmission grid, then (i) that nuclear power plant
would become part of the bulk power system and would have to comply with NERC
and MRO reliability requirements, and (ii) that nuclear power plant would be
subject to the grid interconnection process with the SPP (which administers
the transmission grid in Carson County, TX), and the resulting interconnection
agreement may need to be filed with FERC.
Currently, FERC is in the process of determining the policies it will apply to
interconnections of nuclear power plants and other generators to the
transmission grid when and if a large high load-factor load, such as a large
private power campus, is co-located with such generating facilities. As such,
we may have to satisfy one or more conditions in order to receive approval
from FERC of the interconnection agreement of each such Westinghouse Reactor
to the extent it is interconnected with the SPP-administered transmission
grid.
Changes 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.
If the NRC declines to issue a combined construction and operation license for
any of our planned reactors, if our bifurcation model for the nuclear island
and the BOP is not approved, or if FERC, SPP, NERC, MRO or the interconnecting
utility imposes unexpected conditions on construction, operation, or
interconnection of any of our planned reactors, our strategy could be
materially impaired. In addition, evolving federal standards on advanced
reactors, emissions, and environmental impact reporting could require redesign
or re-licensing of systems already under development.
We may not obtain timely or successful regulatory approvals for nuclear
development, which would materially impair our business model.
Our nuclear generation strategy depends on our ability to obtain one or more
COLs from the NRC under Part 52 or the NRC Regulations, including Appendix D
to Part 52 - Design Certification Rule for the AP1000 Design, for multiple
Westinghouse Reactors to be developed at the Project Matador Site. Nuclear
power plants are subject to extensive federal regulation and must meet highly
specific siting, safety, environmental, and technical criteria under Part 52,
Licenses, Certifications, and Approvals for Nuclear Power Plants, of the NRC's
regulations (10 CFR Part 52). Although we have submitted a COL application
based on the Westinghouse Reactor design, the NRC's review process is
extensive and can span multiple years. Delays or denial of license issuance,
imposition of additional safety reviews or design modifications, or adverse
public or political opposition could prevent or delay construction start or
commercial operation dates.
Further, while our project benefits from a non-contested, pre-evaluated site
under the control of the Texas Tech University System, the issuance of a COL
is contingent on regulatory findings that satisfy the NRC's standards for
construction and operation, as well as environmental, seismic, and emergency
planning criteria, as set forth in a final safety analysis report that
addresses the "site" requirements of Section 52.79(a)(1) of the NRC
regulations. Any change in regulatory posture, litigation, or adverse
environmental assessments could substantially impair our ability to bring
nuclear units online. The duration of a combined license, if issued, is 40
years from the date the NRC makes its finding that acceptance criteria have
been met. We cannot guarantee that any license will be issued, or that issued
licenses will remain valid over the life of our project.
The Nuclear Waste Policy Act ("NWPA") (42 U.S.C. §10101 et seq.) directed the
selection and creation of a national deep geological repository for the
long-term storage of spent nuclear fuel. Efforts to identify, license, and
construct this site have failed, resulting in nearly all spent nuclear fuel
being stored on-site at licensee facilities. A fee which the DOE was
previously assessing on reactor operators has been suspended pending
resolution of the storage issue. The storage of such spent fuel on-site, with
the prospect that no geological repository will be available for many years,
creates several potential risks to Project Matador. Recently, in Nuclear
Regulatory Commission v. Texas, 605 U.S. ___ (2025), the Supreme Court of the
United States rejected a challenge to the NRC's ability to license temporary
offsite storage of spent nuclear fuel. Such temporary storage onsite would
represent an additional cost to us. Several startups and organizations are
exploring the economic potential of fuel recycling, which is a common practice
in France, but we can provide no assurance that we could incorporate such fuel
recycling.
We 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.
Our operations require significant quantities of water for cooling, steam
generation and other processes. The availability of adequate water supplies is
essential to the operations and expansion of Project Matador. Prolonged
droughts, changes in precipitation patterns, increased competition for water
resources or the implementation of a more stringent regulatory regime
regarding water rights and water usage (or changes to such regulatory regime)
could limit our ability to obtain sufficient water for Project Matador. If we
are unable to secure the necessary water resources, we could be forced to
limit our operations. Additionally, increased cost of obtaining and treating
water or compliance with other environmental regulations related to water
could adversely affect our financial conditions and results of operations.
Connecting Project Matador with Tier 1 data center markets will require
amplification and may introduce other risks associated with long-distance
fiber connections.
We will be required to utilize amplification for existing fiber pairs to at
least 400 Gpbs for our data throughput from endpoint to endpoint. Reliance on
long-haul fiber optic connections may introduce technical challenges,
including signal degradation requiring amplifiers, increased latency, and
higher maintenance costs. These factors may result in reduced performance for
latency-sensitive applications, higher operational expenses for amplifier
infrastructure and repairs, and increased risk of downtime due to fiber cuts
or equipment failures in remote locations. Environmental vulnerabilities,
regulatory complexities across jurisdictions, and physical security risks
associated with long fiber routes and remote amplifier sites could further
disrupt operations. These challenges may limit our ability to compete
effectively with other operations closer to Tier 1 markets, potentially
adversely affecting our business, financial condition, and results of
operations.
Our costs to comply with federal, state and local environmental laws and
regulations-both existing and new-may be material.
Our business is subject to extensive, evolving, and increasingly stringent
federal, state, and local environmental laws and regulations. Such federal,
state, and local environmental laws and regulations govern our activities,
including those laws and regulations with respect to air emissions, waste
disposal, protection of environmentally sensitive areas or endangered,
threatened or otherwise protected species, protection of archaeological or
cultural resources, water use and discharges, and with respect to the
treatment, storage, recycling, disposal, and transportation of hazardous and
solid waste and low-level radioactive waste. These laws and regulations impose
numerous requirements, including requiring permits to conduct hazardous and
non-hazardous activities, incurring costs to limit or prevent pollution or
releases of regulated materials to the environment, and imposing substantial
civil, administrative and criminal penalties and liabilities for
noncompliance. Noncompliance may also result in injunctive relief and
potential third party claims or citizen suits to enforce such laws and
regulations. These laws and regulations may impose joint and several liability
upon us to address pollution or contamination on the Project Matador Site
where we operate, regardless of whether we caused the pollution or
contamination. We may incur substantial costs to obtain and maintain
compliance with environmental laws and regulations.
Changes in laws and regulations can occur and these changes can be difficult
to predict. New laws or regulations, or more stringent enforcement of existing
laws or regulations, could adversely affect our business, financial condition
and results of operations.
If 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.
Under environmental laws and regulations we must obtain and maintain permits
or licenses to conduct our activities and then conduct those activities in
compliance with such permits and licenses as well as with environmental laws
and regulations. Issuance of permits for the Project Matador activities is
subject to the discretion of government authorities, and Project Matador may
be unable to obtain or maintain such permits. Permits required for future
development may not be obtainable on reasonable terms or on a timely basis. We
may not be able to obtain or maintain any of the permits required for the
continued development of Project Matador (or any other properties that we may
subsequently acquire).
Failure to obtain and maintain the required permits or licenses or failure to
comply with environmental laws and regulations would have a material adverse
effect on our operations and financial condition. If any of our facilities are
unable to maintain permits or licenses or obtain any additional permits or
licenses which may be required to conduct its operations, we may not be able
to continue those operations at these facilities, which could have a material
adverse effect on us.
Decommissioning costs and unresolved spent nuclear fuel storage and disposal
policy issues, as well as current U.S. policy related to storage and disposal
of used fuel from our power plant, and/or negative customer perception of
risks relating to these policies could have a significant negative impact on
our business prospects, financial condition, results of operations, and cash
flows.
During the licensing process, a nuclear power plant operator must indicate how
it will decommission its power plant and must have a "standard agreement" with
the DOE related to the storage of the fuel waste created during the plant's
operating life. The requirements for developing the first of its kind facility
for fuel disposal may create both timing and cost challenges.
Specifically, the NWPA requires the DOE to provide for the permanent disposal
of spent nuclear fuel ("SNF") and associated high-level nuclear waste ("HLW").
In 1987, Congress amended the NWPA to identify Yucca Mountain, in Nevada, as
the only site that the DOE could consider for a permanent repository. The DOE
has since failed to pursue the licensing of Yucca Mountain. While operators
are currently able to successfully sue the DOE for costs incurred as a result
of its continued failure to provide for permanent disposal, there is a
potential in the future that operators may have to bear the costs of
developing and maintaining these spent fuel storage facilities.
As such, the establishment of a national repository for the storage and/or
permanent disposal of SNF, such as the one previously considered at Yucca
Mountain, Nevada, the timing of such a facility's opening and the ability of
such a facility to accept waste from our nuclear facilities, and any related
regulatory action, could impact the costs associated with our powerhouses'
storage and/or disposal of SNF/HLW. These issues could be material to our
operations if potential customers view waste disposal issues or the onsite
storage of SNF as problematic, detrimental or a negative factor in considering
purchasing power produced by our reactors or leasing space in our facilities.
We 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.
Our operations will be subject to a variety of federal, state, local
environmental, health and safety laws and regulations governing, among other
things, air emissions, wastewater discharges, management and disposal of
hazardous, non-hazardous, radioactive materials and waste and remediation of
releases of hazardous materials. A release of such toxic, hazardous and/or
radioactive materials could pose a health risk to humans or animals.
The severity of an accidental release often depends on the volume of the
release and the speed of corrective action taken by emergency response
personnel, as well as other factors beyond our control, such as weather and
wind conditions. Actions taken in response to an actual or suspected release
of these materials, including a precautionary evacuation, could result in
significant costs for which we could be legally responsible. In addition to
health risks, a release of these materials may cause reputational damage to
the project, and could result in the loss of or damage to property and may
adversely affect property values.
Additionally, we are responsible for the decommissioning of facilities where
we conduct, or previously conducted, commercial, NRC-licensed, operations.
Activities of our contractors, suppliers or other counterparties similarly may
involve toxic, hazardous, and radioactive materials and we are or may be
liable contractually, including pursuant to the Lease, or under applicable
law, to contribute to the remediation of damage or other costs arising from
such activities, including the decontamination and decommissioning of
third-party facilities.
We may be liable if we fail to comply with federal, state, and local
environmental, health and safety laws and regulations with respect to
hazardous or radioactive materials. Failing to comply with such laws and
regulations, including failing to obtain any necessary permits, could result
in substantial fines or enforcement actions. These actions might require us to
stop or curtail operations or conduct or fund remedial or corrective measures,
make additional investments into safety-related improvements or perform other
actions. The enactment of more stringent laws, regulations or permit
requirements or other unanticipated events may arise in the future and
adversely impact our ability to operate, which could materially and adversely
affect our business, financial condition, and results of operations. We could
incur substantial costs as a result of a violation of, or liabilities under,
environmental laws.
Nuclear project execution depends on specialized vendors, whose failure or
delay could materially impact our business.
Our nuclear facilities will rely heavily on Westinghouse and its partners for
design compliance, engineering support, component manufacturing, and field
commissioning. While we are in active discussions with Westinghouse regarding
the procurement of Westinghouse Reactors, we do not have a binding agreement
with Westinghouse for such procurement and can provide no assurance regarding
the timing or terms of such agreement. The Westinghouse Reactor design, while
licensed, is a highly sophisticated and integrated system that depends on
successful vendor coordination. Failure by any key subcontractor or vendor to
meet quality, schedule, or cost obligations could delay commercial operation
dates.
We face significant risk associated with interconnecting and operating private
energy infrastructure at scale.
Our business model relies on the successful deployment of independent
utility-scale interconnection systems, including substations, microgrid
routing, and redundancy pathways to support 99.999% reliability for AI
workloads. Interconnection delays or disputes with transmission operators,
including SPS, SPP or local balancing authorities, could materially delay
construction or the energization of key assets.
Moreover, the non-standard nature of our private power systems-where
hyperscaler tenants draw power directly from co-located, on-site nuclear,
natural gas, battery and solar generation assets also owned by us as the
landlord-may lead to unforeseen compliance issues or technical
incompatibilities with tenants' computer workloads or future battery storage
integration. For example, Texas law generally entitles only an "electric
utility" to generate, transmit, distribute, furnish or otherwise provide power
to end-users within the electric utility's service territory as certificated
by the PUCT; however, Texas law also recognizes an exception to this general
rule when a landlord provides power to its tenants as an incident of tenancy,
if the power is not resold to or used by others. We entered into an agreement
with SPS recognizing that private power supply to hyperscaler tenants will
occur as an incident of tenancy pursuant to our lease agreements with those
tenants. If we are unable to maintain our agreement with SPS, or if a party or
a regulatory authority were to challenge any such agreement we enter into with
SPS, our ability to provide power to our tenants could be limited or
prohibited. Regardless of any agreement of SPS, our provision of power to
tenants could be challenged under applicable law. If successful, those
challenges could require us to sell power to other entities or require our
tenants to procure power from other sources, potentially on less favorable
terms, which could increase our costs or decrease our revenues.
As noted above, any interconnection agreement entered into between us and SPS
or SPP will be subject to the regulatory jurisdiction of FERC, and FERC is
currently in the process of developing policies applicable to interconnection
arrangements that involve large loads, such as powered shells, which are
co-located and connected directly to large electricity generators. To the
extent that FERC adopts and implements interconnection policies that are in
any way adverse to our proposed design and configuration of the Project
Matador facilities, such policies could require modifications to our project
configuration, which could involve cost increases and delays in regulatory
approvals. Interconnection infrastructure requires long-lead equipment such as
step-up transformers and gas-insulated switchgear, and delays in procurement
or installation could delay power availability and revenue realization.
We will be subject to execution risks with respect to our natural gas, solar
and BESS power sources.
While our planned natural gas and renewable portfolio will diversify power
generation, it introduces risks related to:
• fuel pricing volatility and natural gas pipeline transportation
issues;
• equipment procurement and construction timing for combined cycle
combustion turbine gensets and solar PV arrays; and
• battery safety, longevity, and regulatory fire protection
standards.
Our decision to deploy a larger number of modular, smaller-frame gas turbines
on an accelerated schedule introduces execution risks related to equipment
availability, procurement timelines, and construction labor. While this
approach enhances system reliability and reduces reserve capacity
requirements, it also increases the complexity of coordination across multiple
vendors, EPC contractors, and commissioning phases. Delays in turbine
delivery, civil works, or fuel routing may materially adversely impact the
readiness of initial MW blocks or delay the commissioning of downstream
combined cycle assets. In addition, the increase in baseline fuel consumption
from these slightly less efficient units may expose the project to higher
sensitivity around long-term gas supply contracting and volume stability.
Furthermore, we are reliant on third-party OEMs and EPC contractors for
project delivery, and disruptions or quality control issues could affect our
energy availability and cost structure. Failure to manage the multi-phase
development of our energy platform in full compliance with all applicable
regulatory standards could materially impair our operational timelines, tenant
revenue, and long-term value. We continue to engage proactively with relevant
agencies, advisors, and policymakers to mitigate these risks.
We are subject to complex, evolving, and potentially burdensome regulatory
requirements.
Our business is subject to regulation by various federal, state and local
governmental agencies. In the United States, such regulation includes the
radioactive material exposure and nuclear facilities regulatory activities of
the NRC, the DOE, NERC, MRO, FERC, the SPP, the PUCT, the anti-trust
regulatory activities of the Federal Trade Commission and Department of
Justice, the import/export regulatory activities of the Department of
Commerce, the Department of State and the Department of Treasury, the
regulatory activities of the Department of Labor (including the Occupational
Safety and Health Administration), the regulations of the FDA, the
environmental regulatory activities of the Environmental Protection Agency and
the TCEQ, the regulatory activities of the Equal Employment Opportunity
Commission and tax and other regulations by a variety of regulatory
authorities in each of the areas in which we conduct business. These include
licensing of nuclear power plants, environmental reviews, safety assessments,
emissions and discharge standards for environmental contaminants (including
discharges to air and water, as well as waste disposal), and water use
permitting. Regulatory approvals may impose restrictions, conditions, or
delays that impact project economics or construction sequencing.
The 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.
Interested parties may also intervene and file protests against Fermi and
Project Matador, which could result in prolonged proceedings. A change in the
Atomic Energy Act, other applicable statutes, or the applicable regulations or
licenses, or the NRC's interpretation thereof, may require a substantial
increase in capital expenditures or may result in increased operating or
decommissioning costs and could materially affect the results of operations,
liquidity, or financial condition of Fermi or certain of the utility operating
companies. A change in the classification of a plant owned by one of these
companies under the NRC's reactor oversight process, which is the NRC's
program to collect information about plant performance, assess the information
for its safety significance, and provide for appropriate licensee and NRC
response, also could cause the owner of the plant to incur material additional
costs as a result of the increased oversight activity and potential response
costs associated with the change in classification.
Changes 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.
Accidents involving nuclear power facilities, including but not limited to
events similar to the Three Mile Island or Fukushima Daiichi nuclear
accidents, or other high profile events involving radioactive materials, could
materially and adversely affect the public perception of the safety of nuclear
energy, our customers and the markets in which we operate and potentially
decrease demand for nuclear energy or facilities, increase regulatory
requirements and costs or result in liabilities or claims that could
materially and adversely affect our business.
Historical nuclear accidents and/or future incidents resulting in the
uncontrolled release of radioactive material and fears of a new nuclear
accident could hinder our efforts to develop new nuclear facilities. Nuclear
power faces strong opposition from certain individuals and organizations both
in the United States and abroad. With respect to public perceptions, the
accident that occurred at the Fukushima nuclear power plant in Japan in 2011
increased public opposition to nuclear power in some countries, resulting in a
slowdown in, or, in some cases, a complete halt to new construction of nuclear
power plants, an early shut down of existing power plants and a dampening of
the favorable regulatory climate needed to introduce new nuclear technologies.
As a result of the Fukushima accident, some countries that were considering
launching new domestic nuclear power programs delayed or cancelled the
preparatory activities they were planning to undertake as part of such
programs. In the past, adverse public reaction, increased regulatory scrutiny
and related litigation contributed to extended licensing and construction
periods for new nuclear power plants, sometimes delaying construction
schedules by decades, or even shutting down operations at already-constructed
nuclear power facilities.
Additionally, such an accident could lead to a pause in regulatory approval by
the NRC, a change in regulatory compliance requirements increasing the cost
and/or delaying the schedule associated with procuring necessary licenses, the
creation of new licenses or regulatory requirements, additional governmental
oversight concerns and compliance costs, a change in binding international
treaties or agreements altering the rules governing the operation of nuclear
power facilities or a change in the liability exposure of the project, a
change in rules applying to private ownership of nuclear power facilities, or
a ban on nuclear power. Such an accident need not occur at Project Matador or
within the United States to result in these public and governmental reactions
and requirements.
Successful execution of our business model is dependent upon public and
political support for nuclear power in the United States and other countries.
The risks associated with uses of radioactive materials by our customers in
future deployments of our designs, and the public perception of those risks,
can affect our business. Opposition by third parties can delay or prevent the
licensing and construction of new nuclear power facilities and in some cases
can limit the operation of nuclear reactors. Adverse public reaction to
developments in the use of nuclear power could directly affect our customers
and indirectly affect our business. If a high-visibility or high-consequence
nuclear incident, including the loss or mishandling of nuclear materials, or
other event, such as a terrorist attack involving a nuclear facility, occurs,
public opposition to nuclear power may increase dramatically, regulatory
requirements and costs could become more onerous or prohibitive, and customer
demand could suffer, which could materially and adversely affect our business
prospects, financial condition, results of operations and cash flows.
We are subject to federal environmental review processes, including NEPA, that
may materially delay or restrict project development.
Portions of our development may trigger federal environmental reviews under
NEPA, depending on the use of federal funding, involvement of federal lands or
water systems, or participation in programs such as the DOE Office of Energy
Dominance Financing. These processes require environmental assessments or
environmental impact statements, which can introduce significant uncertainty
and delay. In some cases, NEPA reviews can take multiple years to complete and
are subject to litigation by environmental advocacy groups or local
stakeholders. The DOE published the interim final rule on July 3, 2025, at 90
FR 29676, which amends much of 10 CFR 1021, the regulations for DOE's
procedures for implementing NEPA. It also proposes an exemption from certain
NEPA requirements for emergency situations. Notably, President Trump declared
a national energy emergency on January 20, 2025, and there is an ongoing
national emergency concerning cyber-enabled activities. These declarations
could provide opportunities for us to seek exemptions to certain resource
consuming permitting requirements associated with our planned operations.
Alternatively, a change to these policies could result in additional costs and
delays in licensing.
Adverse findings or delays in NEPA review could prevent site preparation,
construction, or interconnection activities any of which would materially
adversely affect our business, results of operations and financial condition.
We may also face indirect delays if third-party infrastructure (e.g., gas
pipelines or transmission upgrades) triggers NEPA reviews beyond our control.
Additionally, recent action taken by the current presidential administration
has resulted in changes to NEPA regulations. Although guidance released by the
administration advises the implementation of NEPA in a way that expedites
permitting and prioritizes energy production, the impact of these recent
actions may result in delays as these changes are understood and then executed
by applicable federal agencies.
Influential 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.
Our business plan depends on sustained alignment among a broad range of
governmental bodies, elected officials, appointed regulators, and other
influential political stakeholders at the federal, state, and local levels.
Shifts in the domestic political landscape-whether driven by changes in
administration, legislative turnover, evolving policy priorities, or the
actions of individual political actors with outsized influence-could create an
operating environment that is materially less favorable to Project Matador and
to our business generally.
At the federal level, our success depends in part on continued bipartisan
support for nuclear energy development, AI infrastructure investment, and the
associated regulatory frameworks that enable large-scale projects like Project
Matador. Key executive branch officials, members of Congress, and senior
appointees at agencies including the NRC, DOE, FERC, and the EPA each exercise
significant discretion over policies that directly affect our permitting
timelines, financing eligibility, and operational approvals. A change in
presidential administration, a shift in the composition or leadership of
relevant congressional committees, or the appointment of agency heads who are
skeptical of nuclear energy, large-scale AI campus development, or private
energy infrastructure could result in regulatory delays, more burdensome
compliance requirements, curtailment or elimination of federal incentive
programs, or outright policy reversals. Changes in trade policy-including the
imposition of tariffs, import restrictions, or export controls on critical
equipment, construction materials, or energy technology components-could
increase our development costs, disrupt our supply chain, or delay the
delivery of key infrastructure assets, any of which could materially and
adversely affect our development timeline and budget. Any of these actions
could also result in policy reversals that undermine the economic assumptions
underlying our business model.
At the state level, our operations in Texas and our leasehold interest with
the Texas Tech University System expose us to the policy preferences of the
Texas Governor, state legislators, the members of the Texas Tech University
System Board of Regents, the Public Utility Commission of Texas, the TCEQ, and
other state and regional bodies. Elected officials or political appointees who
oppose nuclear development, object to the scale of Project Matador, question
the use of public university land for private commercial infrastructure, or
seek to redirect state energy policy could introduce legislation, initiate
regulatory proceedings, or exert informal political pressure that delays or
restricts our ability to develop the Project Matador Site. Changes in the
composition of the Texas Tech University System Board of Regents-whose members
are appointed by the Governor-could result in a reevaluation of our Lease or
the imposition of additional conditions on our continued use of the site.
At the local level, officials in Carson County and the surrounding communities
hold authority over property tax abatements, land use approvals, local
permitting, and community engagement processes that are important to our
development timeline and cost structure. Opposition from county commissioners,
local elected officials, or politically influential community leaders could
jeopardize our existing 10-year property tax abatement, delay local permitting
approvals, or generate organized resistance to the project that affects our
ability to recruit workers, secure local services, or maintain constructive
relationships with the surrounding community.
In addition, individuals and organizations with significant political
influence-including current and former elected officials, political donors,
media figures, leaders of advocacy organizations, and other prominent public
voices-may seek to use their platforms and relationships to oppose, delay, or
undermine Project Matador for reasons that may include policy disagreements
over nuclear energy or AI development, concerns about environmental impacts,
competition for political attention or resources, ideological opposition to
large-scale private infrastructure projects, or personal or commercial
interests that conflict with our success. Such actors may exert influence
through legislative lobbying, media campaigns, regulatory interventions,
litigation, or informal pressure on governmental decision-makers. The impact
of such opposition may be difficult to predict and could be disproportionate
to the number of individuals involved, particularly where those individuals
hold positions of public trust or command significant media attention.
Furthermore, the current political environment surrounding AI infrastructure,
powered shell development, and energy policy is characterized by rapidly
evolving and sometimes conflicting viewpoints across the political spectrum.
While the current federal administration has signaled support for accelerated
energy development and nuclear permitting reform, there can be no assurance
that these policy positions will persist through future election cycles or
that competing political priorities-such as concerns about water usage, land
use, environmental justice, or the perceived societal risks of artificial
intelligence-will not gain sufficient political momentum to materially alter
the regulatory and policy landscape in ways that are adverse to our interests.
Any of the foregoing political risks, individually or in combination, could
result in material delays to our development timeline, increased costs
associated with permitting and compliance, loss of or reduction in tax
incentives or federal subsidies, adverse modifications to our Lease with the
Texas Tech University System, diminished access to capital markets,
reputational harm that discourages prospective tenants, or other outcomes that
could have a material adverse effect on our business, financial condition,
results of operations, and prospects.
Our operations and infrastructure may be materially adversely affected by
geopolitical risks, including cyberattacks and physical disruptions by
nation-state actors and other hostile parties.
We are developing what is expected to be the largest artificial intelligence
data center complex in the United States upon full build-out. The scale,
strategic significance, and critical nature of this infrastructure make it a
high-value target for nation-state actors, state-sponsored groups, terrorist
organizations, and other hostile parties seeking to disrupt U.S. technological
leadership, national security capabilities, or critical infrastructure. The
concentration of computational capacity at our facilities may elevate the risk
profile of our operations beyond that of comparable facilities.
Nation-state actors and state-affiliated groups have demonstrated increasingly
sophisticated capabilities to conduct cyberattacks against critical
infrastructure, including advanced persistent threats, zero-day exploits,
ransomware campaigns, supply chain compromises, and other cyber-intrusion
techniques. Our facilities, networks, and information systems may be targeted
by such actors seeking to disrupt, degrade, destroy, or exfiltrate data from
our operations. A successful cyberattack could result in prolonged service
outages, corruption or loss of proprietary data or customer workloads,
compromise of artificial intelligence models or training data, unauthorized
access to sensitive or classified information, or manipulation of
computational outputs. Such incidents could be difficult to detect, and
remediation could be prolonged and costly.
In addition to cyber threats, our physical infrastructure faces risks of
sabotage, attack, or other intentional disruption. The geographic
concentration of our facilities means that a single physical attack, whether
through explosive devices, drone strikes, or disruption of supporting
utilities such as power transmission, water supply, or telecommunications
interconnections, could cause significant damage to a material portion of our
operational capacity. Geopolitical tensions, armed conflicts, trade disputes,
or deteriorating diplomatic relations involving the United States could
increase the likelihood of such threats materializing. The evolving nature of
asymmetric warfare means that threat vectors may emerge that we have not
anticipated or for which we have not adequately prepared.
Our dependence on complex, global supply chains for critical components,
including power generation and cooling systems and specialized construction
materials, exposes us to additional geopolitical risk. Export controls, trade
sanctions, retaliatory trade actions, or supply chain disruptions arising from
international conflict could delay construction timelines, increase costs,
limit our ability to maintain or expand operations, or force reliance on
alternative components that may be less performant or less secure. Certain
components may be sourced from or transit through jurisdictions where
geopolitical instability is elevated.
We invest significantly in physical security, cybersecurity, and business
continuity measures, and we work with federal, state, and local government
agencies on threat assessment and facility protection. However, no security
measures can eliminate all risks, and a sufficiently resourced and determined
adversary, particularly a nation-state actor, may be capable of overcoming our
defenses. Our security measures may also become targets themselves, with
adversaries seeking to identify and exploit gaps in our protective systems.
The occurrence of any such attack or disruption could result in significant
damage to or destruction of our facilities, loss of life, prolonged
operational outages, loss or compromise of data, substantial remediation and
recovery costs, increased insurance premiums or loss of coverage, reputational
harm, loss of customer confidence, regulatory investigations or enforcement
actions, and potential liability to customers, partners, or other third
parties. Any of these outcomes could have a material adverse effect on our
business, financial condition, results of operations, and prospects.
Furthermore, even the credible threat of such attacks, absent their actual
occurrence, could increase our operating costs, divert management attention,
and impair our ability to attract customers, employees, or investment capital.
Regulatory changes or political shifts could materially adversely affect
nuclear licensing and financial feasibility.
Nuclear policy in the United States is evolving, including through the passage
of the ADVANCE Act in 2024 and through the efforts of the Trump
administration. While recent years have seen bipartisan support for advanced
reactor deployment and DOE funding programs (e.g., the Advanced Reactor
Demonstration Program), the regulatory and political environment may change.
Shifts in federal administration, state-level opposition, or judicial
challenges to nuclear permitting frameworks could create uncertainty or add
cost burdens. Similarly, changes in tax credit policy (e.g., removal or
modification of 45J eligibility) or low-carbon energy investment programs
could materially reduce the financial attractiveness of nuclear energy for the
Project Matador Site.
Commodity 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.
Natural gas represents the primary fuel necessary to power the initial phases
of Project Matador. Although we expect to enter into contracts with our future
tenants that will provide for contractual pass-through provisions relating to
the cost of natural gas, there are no assurances that the costs of natural gas
process will be effectively passed through to tenants or that we will be able
to offset fully, or on a timely basis, the effects of higher natural gas
costs. Commodity prices are inherently volatile and are subject to
fluctuations in response to changes in supply and demand, market uncertainty
and a variety of additional factors that are beyond our control. Our business
depends heavily on the successful execution of a multi-phase energy
development plan that includes the construction and operation of numerous
gas-fired generation assets that will require an increase in baseline fuel
consumption, which may expose the project to higher sensitivity around
long-term gas supply contracting and volume stability. While we expect to
secure strategic relationships with gas providers, we remain exposed to
fluctuations in natural gas prices, especially as we scale from temporary
TM-2500 turbines to combined cycle gas turbine ("CCGT") platforms. If we are
not able to effectively pass through the cost of natural gas or other raw
materials to our tenants, fluctuations in commodity prices have the potential
to negatively impact our ability to achieve our earnings or cash flow targets,
which could have a consequential material adverse effect on our business,
results of operations and financial condition. In addition, actual power
prices and fuel costs will differ from those assumed in financial projections
used to value our trading and marketing transactions, and those differences
may be material. As a result, our financial results may be diminished in the
future as those transactions are marked to market.
Furthermore, worldwide political, economic, and military events have
contributed to oil and natural gas price volatility and are likely to continue
to do so in the future. The broader consequences of the Russian-Ukrainian
conflict and unrest in the Middle East, which may include further sanctions,
embargoes, supply chain disruptions, regional instability and geopolitical
shifts, may have adverse effects on global macroeconomic conditions, increase
volatility in the price and demand for oil and natural gas, increase exposure
to cyberattacks, cause disruptions in global supply chains, increase foreign
currency fluctuations, cause constraints or disruption in the capital markets
and limit sources of liquidity. We cannot predict the extent of the conflict's
effect on our business and results of operations as well as on the global
economy and energy markets.
Our natural gas supply will be subject to market volatility and pipeline
transportation risk.
While we expect to secure strategic relationships with natural gas providers
and natural gas pipelines, such as Transwestern and ONEOK, we will be exposed
to fluctuations in natural gas prices, especially as we scale from temporary
TM-2500 turbines to CCGT platforms. See "-Commodity prices (particularly for
natural gas) could impact the economic viability of our businesses, in
particular the development of Project Matador and the Company's ability to
commence operations." Price spikes, regional delivery bottlenecks, pipeline
outages, weather-related interruptions to wellhead production and related
impacts on available pipeline deliveries, or contractual disputes could
increase our levelized cost of energy ("LCOE") and reduce margin on
take-or-pay tenant contracts. While the Project Matador Site is located
adjacent to one of the largest known natural gas fields in the United States,
delivery will depend on functional and contractual pipeline interconnects. In
addition, the use of alternative forms of transportation such as trucks or
rail transportation of LNG involve risks as well. For example, recent and
well-publicized accidents involving trains delivering energy commodities could
result in increased levels of regulation and transportation costs. Our gas
providers are dependent on third party pipeline infrastructure to deliver
their natural gas production to us. In addition to causing production
curtailments, capacity constraints can also increase the price we pay for
natural gas.
Solar and battery deployment is subject to permitting, environmental, and
production risks.
The solar PV and battery energy storage components of Project Matador are
expected to be developed in 2027-2029 to displace peak gas usage and enhance
lower greenhouse gas emissions and decarbonization profiles for tenant loads.
However, deployment will be contingent on equipment availability and
environmental clearances. The acquisition, installation and operation of our
solar PV arrays and BESS at a particular site are generally subject to supply
constraints, import tariffs, and other forms of oversight and regulation in
accordance with national, state and local laws and ordinances relating to
building codes, safety, environmental protection and related matters, and
typically requires obtaining and keeping in good standing various local and
other governmental approvals and permits. In addition, solar development may
be subject to scrutiny from water conservation authorities, endangered species
regulators, or neighboring land stakeholders. In addition, fluctuating prices
and adverse tariff policies for solar PV panels, inverters, or lithium-based
BESS could create material procurement delays or cost overruns. For storage
facilities, in particular there are ongoing anti-dumping disputes and
potential import tariffs with respect to certain storage equipment sourced
from China.
As discussed above with respect to nuclear and natural gas electricity
generation facilities, if any of Project Matador's systems are interconnected
to the SPS transmission grid, that could result in conditions being imposed by
FERC, NERC, MRO or SPP on our configuration and operation of proposed solar PV
arrays and/or BESS components, thereby potentially requiring costly
modifications and delays in obtaining regulatory approvals.
In some cases, these approvals and permits require periodic renewal. It is
difficult and costly to track the requirements of every individual authority
having jurisdiction over solar and storage components, to design our solar and
storage components to comply with these varying standards, and for our
customers to obtain all applicable approvals and permits. We cannot predict
whether or when all permits required for a given customer's project will be
granted or whether the conditions associated with the permits will be
achievable. In addition, we cannot predict whether the permitting process will
be lengthened due to complexities and appeals. Delay in the review and
permitting process for a project can impair or delay our operations or
increase the cost so substantially that the project is no longer attractive to
our customers. Furthermore, unforeseen delays in the review and permitting
process could delay the timing of the installation of our solar and storage
components and could therefore adversely affect the timing of the recognition
of revenue related to hardware acceptance by our customer, which could
adversely affect our operating results in a particular period.
Our energy generation strategy requires multi-year planning and access to
specialized equipment.
Nuclear reactors, gas turbines, HRSGs, transformers, and utility-scale battery
systems all require long lead-times and complex shipping, staging, and
installation logistics. Certain assets, like GE 6Bs or Siemens SGT-800
turbines, may only be available on the secondary market or through
refurbishment programs. Any failure to source or deploy these assets in a
timely manner could affect our development schedule and financial forecast.
In addition, we may fail to meet requirements for energy-related federal
incentives. We expect to rely on potential eligibility for numerous federal
energy programs and tax incentives, including the:
• 45J Nuclear Production Tax Credit;
• 45Q Carbon Capture Tax Credit;
• 45V Clean Hydrogen Tax Credit; and
• 48C Advanced Manufacturing Credit.
Each of these programs has eligibility thresholds, domestic content rules,
prevailing wage mandates, and reporting burdens. If we are unable to structure
our SPEs or operations to meet these requirements, we may forfeit millions of
dollars in expected benefits or financing backstops. In addition, changes to
these credits currently under review by President Trump, the U.S. House of
Representatives and the U.S. Senate, or under subsequent review in the future,
due to tax reforms or political policy redirection initiatives, could
materially adversely reduce the return profile of our energy assets.
We may be subject to opposition from environmental groups, litigation, or
reputational campaigns, which could delay permitting or reduce site
flexibility.
The TCEQ has approved and issued Fermi's approximately 6 GW Clean Air Permit
for natural gas generation. Opposition from environmental groups, including
permit challenges or reputational campaigns, could delay the issuance of any
additional permits that may be required for us to develop Project Matador
and/or could reduce site flexibility.
New nuclear projects as well as some other types of energy projects (and their
associated infrastructure) in the United States frequently face opposition
from non-governmental organizations, environmental advocacy coalitions, and
some local stakeholders. These groups may challenge NRC proceedings, file
administrative appeals, or initiate litigation under NEPA, the Clean Water
Act, or the Endangered Species Act as well as challenge government activities
to grant required environmental permits. Even unsuccessful litigation can
delay project timelines, increase legal costs, and discourage investors or
tenants.
Furthermore, 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.
In addition, future phases of the project will still interact with
environmental and public stakeholder processes-especially regarding nuclear
permitting, air quality emissions, and water usage. Any local opposition or
environmental group litigation could restrict our ability to expand or require
costly mitigation efforts.
The Project Matador Site's location near the former Pantex Plant presents
certain restrictions on the development of operations.
The Pantex Plant, located to the north of the Project Matador Site, is subject
to federal and state investigation and remediation efforts to address
contaminant releases into groundwater. Such contaminants include volatile
organic compounds, metals, and contaminants associated with explosive
manufacturing. The remediation plan implements various post-closure care and
institutional controls such as restrictions on drilling to depths greater than
180 feet, restrictions on the use of groundwater, and allowing access to
various federal and state agencies for purposes of cleanup. The Pantex Plant
is listed on the national priorities list as a superfund site.
The area, located on the northern boundary of the Project Matador Site, is
subject to a groundwater deed certification. While regulatory closure remains
outstanding, the groundwater monitoring wells located in the area must remain
undisturbed and the integrity of other applicable components of the remedial
action (e.g., injection wells, conveyance lines, in situ remediation vaults,
etc.) must be maintained.
Our development strategy and construction efforts must account for the impacts
of the Pantex Plant upon groundwater and the associated remedial measures
implemented and may restrict our ability to build and/or expand. Additionally,
until regulatory closure is achieved, our development plans and resultant
operations may be impacted by various federal and state agencies undertaking
their respective remedial obligations.
Risks Related to Tenant Concentration and Leasing
Our near-term revenue may be heavily concentrated among a small number of
anchor tenants.
Our development strategy will initially be dependent on securing long-term,
take-or-pay lease agreements with a limited number of AI hyperscale tenants.
While we have engaged in discussions with potential lessees, we have not
executed binding lease agreements as of the date hereof. If these parties
delay or decline to execute long-term leases, or if terms become unfavorable,
it could materially impact our ability to generate revenue and meet financial
obligations associated with site development and energy infrastructure.
Failure of any major tenant to perform under its lease could result in
material financial losses.
Once executed, our leases are expected to include long-term, take-or-pay
structures, under which tenants are obligated to pay base rent and service
fees regardless of usage. However, if a tenant defaults, restructures, or
declares bankruptcy, we may be unable to enforce full lease payment
obligations, particularly if our rights as lessor are contested or if
operational performance requirements are not met. Given the scale of
infrastructure allocated per tenant (up to 3.5 million square feet each), any
lease disruption could significantly impair site-level cash flow and cause
valuation write-downs on real estate or energy assets.
Our leases may include operational covenants that create performance
liability.
Certain tenant agreements may require us to maintain continuous availability
of power, cooling, and security infrastructure at service levels that match
hyperscale standards (e.g., 99.999% uptime, tiered failover, dedicated thermal
recovery). Failure to meet these conditions-due to delays in nuclear
licensing, gas turbine failures, water shortages, or other force majeure
events-could trigger contractual penalties, rent abatements, or early
termination rights. These provisions could materially increase our liability
exposure even if subleases are nominally long-term and fixed-rate.
Our ability to scale leasing revenue depends on the timely delivery of powered
shells and infrastructure-ready pads.
We are pursuing a "power-first" development model in which energy
infrastructure is commissioned before tenants occupy or commit to their full
buildout. However, sublease execution and ramp-up efforts depend on our
ability to deliver modular, pre-permitted, powered shell infrastructure by
scheduled CODs. If our pads, substations, or core and shell designs are
delayed due to permitting, supply chain, or contractor disputes, we may face
rent delays, occupancy penalties, renegotiation of tenant lease rates or lease
terminations. Moreover, any such delays or disputes may materially adversely
impact our ability to attract future tenants on favorable terms, or at all.
Tenant consolidation or vertical integration could reduce long-term leasing
demand.
We face risks related to industry consolidation and tenant vertical
integration, including the potential termination of our Lease. Major
hyperscalers are increasingly seeking to build and own their own
infrastructure, including energy generation assets and fully integrated data
campuses. If these companies successfully verticalize their power generation
and real estate strategies, demand for third-party infrastructure platforms
such as ours may decline. In addition, consolidation within the AI sector
could result in tenant concentration risk or create new infrastructure
monopolies that exclude new entrants like us.
This trend may limit our ability to renew leases at market rates or expand
existing tenant footprints as intended.
We may be required to offer lease concessions or capital subsidies to secure
long-term tenants.
As competition for AI-aligned tenants increases, we may need to provide
infrastructure rebates, tenant improvement allowances, or direct capital
support for high-density power configurations, cooling corridors, or private
substations. These concessions may reduce net effective rent and extend
payback periods, particularly in earlier phases of the development where
site-wide utilities and redundancy are still being constructed.
Subtenant improvements impact our leaseback model and base rent escalations.
Our Lease includes an AV-based rent escalation clause that is based on the
appraised value of "Data Center Facilities," which is defined to be each data
center building that houses networked computer services or machines. If
tenants delay improvements, minimize capital deployments, or build in stages,
our ability to meet payment obligations may lag. Any of these actions could
result in the termination of such tenants' leases with us and the loss of
rental revenue attributable to the terminated leases. Conversely, if capital
improvements exceed projections, our payments to the Texas Tech University
System may escalate faster than tenant revenue is recognized, creating
temporary timing mismatches in cash flow.
Risks Related to REIT Qualification
We intend to be classified as a REIT for U.S. federal income tax purposes
commencing with our short taxable year ended December 31, 2025. Our failure to
qualify or maintain our qualification as a REIT for U.S. federal income tax
purposes would reduce the amount of funds we have available for distribution
and limit our ability to make distributions to our shareholders.
We elected to be classified as a corporation for U.S. federal income tax
purposes effective as of our date of formation, January 10, 2025, via late
classification relief sought under Revenue Procedure 2009-41. We adopted a
fiscal year end of July 31, 2025, for our initial taxable, non-REIT year, and,
in order to make a REIT election for the taxable period of August 1, 2025
through December 31, 2025, we changed our taxable year to a calendar year end
for U.S. federal income tax purposes effective as of August 1, 2025. We
believe that we are organized and operate in a manner to qualify for taxation
as a REIT for such short taxable year ended December 31, 2025 and subsequent
taxable years. However, we cannot assure you that we will qualify or remain
qualified as a REIT. Our qualification and taxation as a REIT will depend upon
our ability to meet on a continuing basis, through actual annual operating
results, certain qualification tests set forth in the U.S. federal income tax
laws. Accordingly, no assurance can be given that our actual results of
operations for any particular taxable year will satisfy such requirements.
If we fail to qualify as a REIT in any taxable year, we will face serious tax
consequences that will substantially reduce the funds available for
distributions to our shareholders because:
• we would not be allowed a deduction for dividends paid to
shareholders in computing our taxable income and would be subject to U.S.
federal income tax at the regular U.S. federal corporate tax rate;
• we could be subject to increased state and local taxes; and
• unless we are entitled to relief under certain U.S. federal
income tax laws, we could not re-elect REIT status until the fifth calendar
year after the year in which we failed to qualify as a REIT.
In addition, if we fail to qualify as a REIT, we will no longer be required to
make distributions. As a result of all these factors, our failure to qualify
as a REIT could impair our ability to expand our business and raise capital,
and it would adversely affect the value of our common stock.
Restrictions 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.
We would be "closely held" within the meaning of Section 856(h) of the Code if
the rule prohibiting capital stock of the REIT from being "closely held"
applied to a REIT's first taxable year. Effective as of June 30, 2026, our
Certificate of Formation, as amended (the "Charter"), will prohibit any person
or entity from beneficially owning or constructively owning shares of our
capital stock to the extent that such beneficial ownership or constructive
ownership would result in us being "closely held" within the meaning of
Section 856(h) of the Code (without regard to whether the ownership interest
is held during the last half of a taxable year). In order for us to ensure we
will not be deemed "closely held," commencing in June 2026, we will have the
right to redeem any or all shares of capital stock of certain individuals
named in our Charter from time to time during the month of June 2026, at a
redemption price equal to the fair market value of such capital stock (as
determined by an independent valuation firm selected by our board of directors
and approved by the holders of such capital stock), plus any declared and
unpaid dividends or other distributions to, but excluding, the date fixed for
redemption. We may not have funds available to effectuate any such
redemptions, and we may have to sell assets or borrow money in adverse market
conditions to obtain sufficient funds for the redemptions. Alternatively,
shareholders subject to this provision may choose to dispose of all or a
portion of their capital stock in market transactions. In the event we are not
in compliance with the "closely held" requirement at June 30, 2026, our
Charter will cause all or a portion of the capital stock of such shareholder
to be transferred to a charitable trust pursuant to the terms of our Charter.
Such events could adversely affect the price of our common stock and our
ability to operate our business. If we are unable to comply with the
requirement that we not be "closely held" within the meaning of Section 856(h)
of the Code by July 1, 2026, we could fail to qualify as a REIT.
Qualification as a REIT involves a highly technical and evolving set of
requirements.
To qualify as a REIT, at least 75% of our assets must be real estate-related
and at least 75% of our income must derive from rents, mortgage interest, or
other qualifying passive income sources. At least 95% of our gross income must
be from these sources plus other forms of passive income such as interest and
dividends. We will not be able to acquire securities (other than securities in
a TRS or which are treated as a real estate asset) of any single issuer that
would represent either more than 5% of the total value of our assets, 10% of
the voting securities of such issuer, or more than 10% of the total value of
the issuer's outstanding securities. No more than 25% of the value of our
total assets may consist of securities in one or more TRSs. In addition, we
must distribute at least 90% of our taxable income (determined without regard
to the deduction for dividends paid and excluding any net capital gain) to
shareholders annually. We will be subject to a 4% nondeductible excise tax on
the amount, if any, by which certain distributions paid with respect to any
calendar year are less than the sum of (i) 85% of our ordinary income for that
year, (ii) 95% of our capital gain net income for that year and (iii) 100% of
our undistributed ordinary income and capital gain net income from prior
years. Given our evolving mix of revenue, we may not meet these thresholds in
all periods. Even a small misstep in structuring or reporting could cause us
to fail one or more REIT qualification tests or incur significant excise
taxes.
Certain energy infrastructure assets may be non-qualifying assets, and certain
of energy infrastructure activities may generate non-qualifying income for
REIT purposes.
Our strategy involves developing power generation assets-including nuclear,
natural gas, solar, and storage. It is possible that certain of these assets
could be non-qualifying assets and/or generate non-qualifying income for REIT
purposes. Such assets could also generate net income subject to the tax on
prohibited transactions, or that are otherwise incompatible with REIT status.
A REIT will incur a 100% tax on the net income (including foreign currency
gain) from a prohibited transaction. Generally, a prohibited transaction
includes a sale or disposition of property, other than foreclosure property,
held primarily for sale to customers in the ordinary course of business. The
100% tax will not apply to gains from the sale of property that is held
through a TRS, although such income will be taxed to the TRS at regular U.S.
federal corporate income tax rates. If these operations are not properly
structured through TRSs, we may generate excessive non-qualifying income or
pay excessive amounts of prohibited transaction tax. While we plan to
structure the ownership of our assets and the conduct of our activities in a
REIT-compliant manner, there is no assurance that we will be successful in
doing so.
Legislative 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.
At any time, the U.S. federal income tax laws governing REITs or the
administrative interpretations of those laws may be amended, possibly with
retroactive effect. We cannot predict when or if any new U.S. federal income
tax law, regulation or administrative interpretation, or any amendment to any
existing U.S. federal income tax law, regulation or administrative
interpretation, will be adopted, promulgated or become effective. We and our
shareholders could be adversely affected by any such change in the U.S.
federal income tax laws, regulations or administrative interpretations.
There 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.
Overall, no more than 25% of the value of a REIT's assets may consist of stock
or securities of one or more TRS. A TRS will be subject to applicable U.S.
federal, state and local corporate income tax on its taxable income, and its
after tax net income will be available for distribution to us but is not
required to be distributed to us. In addition, the Code limits deductibility
of interest paid or accrued by a TRS to its parent REIT to assure that the TRS
is subject to an appropriate level of corporate taxation and, in certain
circumstances, other limitations on deductibility may apply. The Code also
imposes a 100% excise tax on certain transactions between a TRS and its parent
REIT that are not conducted on an arm's-length basis. We will monitor the
value of our respective investments in any TRSs for the purpose of ensuring
compliance with TRS ownership limitations and will structure our transactions
with such TRSs on terms that we believe are arm's length to avoid incurring
the 100% excise tax described above. There can be no assurance, however, that
will be able to comply with the 25% limitation or to avoid application of the
100% excise tax.
Failure to make required distributions would subject us to U.S. federal
corporate income tax.
We intend to operate in a manner so as to qualify and maintain our
qualification as a REIT for U.S. federal income tax purposes. In order to
qualify and maintain our qualification as a REIT, we generally are required to
distribute at least 90% of our REIT taxable income, determined without regard
to the dividends paid deduction and excluding any net capital gain, each year
to our shareholders. To the extent that we satisfy this distribution
requirement but distribute less than 100% of our REIT taxable income, we will
be subject to U.S. federal corporate income tax on our undistributed taxable
income. In addition, we will be subject to a 4% nondeductible excise tax if
the actual amount that we pay out to our stockholders in a calendar year is
less than a minimum amount specified under the Code. Any of these taxes would
decrease cash available for distributions to our shareholders which, in turn,
could materially adversely affect our business, financial condition, results
of operations, our ability to make distributions to our shareholders and the
trading price of our common stock. To the extent that we do not generate
positive REIT taxable income, we will not be required to make such
distributions.
Complying with REIT requirements may cause us to forego otherwise attractive
opportunities or liquidate otherwise attractive investments.
To qualify and maintain our qualification as a REIT for U.S. federal income
tax purposes, we must continually satisfy tests concerning, among other
things, the sources of our income, the nature and diversification of our
assets, the amounts we distribute to our shareholders and the ownership of our
stock. In order to meet these test, we may be required to forego investments
we might otherwise make. Thus, compliance with the REIT requirements may
hinder our performance.
In particular, we must ensure that at the end of each calendar quarter, at
least 75% of the value of our assets consists of cash, cash items, government
securities and qualified real estate assets. The remainder of our investment
in securities (other than government securities, securities of TRSs and
qualified real estate assets) generally cannot include more than 10% of the
outstanding voting securities of any one issuer or more than 10% of the total
value of the outstanding securities of any one issuer. In addition, in
general, no more than 5% of the value of our assets (other than government
securities, securities of TRSs and qualified real estate assets) can consist
of the securities of any one issuer, no more than 25% of the value of our
total assets can be represented by the securities of one or more TRSs and no
more than 25% of our assets can be represented by debt of "publicly offered
REITs" (i.e., REITs that are required to file annual and periodic reports with
the SEC under the Exchange Act), unless secured by real property or interests
in real property. If we fail to comply with these requirements at the end of
any calendar quarter, we must correct the failure within 30 days after the end
of the calendar quarter or qualify for certain statutory relief provisions to
avoid losing our REIT qualification and suffering adverse tax consequences. As
a result, we may be required to liquidate otherwise attractive investments.
These actions could have the effect of reducing our income and amounts
available for distribution to our stockholders.
Complying with REIT requirements may limit our ability to hedge our
liabilities effectively and may cause us to incur tax liabilities.
The REIT provisions of the Code may limit our ability to hedge our
liabilities. Any income from a hedging transaction we enter into to manage
risk of interest rate changes, price changes or currency fluctuations with
respect to borrowings made or to be made to acquire or carry real estate
assets, if properly identified under applicable Treasury Regulations, does not
constitute "gross income" for purposes of the 75% or 95% gross income tests
applicable to REITs. In addition, certain income from hedging transactions
entered into to hedge existing hedging positions after any portion of the
hedged indebtedness or property is extinguished or disposed of will not be
included in income for purposes of the 75% and 95% gross income tests. To the
extent that we enter into other types of hedging transactions, the income from
those transactions will likely be treated as non-qualifying income for
purposes of both of the gross income tests. As a result of these rules, we may
need to limit our use of advantageous hedging techniques or implement those
hedges through a TRS. This could increase the cost of our hedging activities
because such TRS would be subject to tax on gains or forgoing the hedge could
expose us to greater risks associated with changes in interest rates than we
would otherwise want to bear. In addition, losses in a TRS generally will not
provide any tax benefit, except for being carried forward against future
taxable income of such TRS.
The prohibited transactions tax may limit our ability to dispose of assets.
A REIT's net income from prohibited transactions is subject to a 100% tax. In
general, prohibited transactions are sales or other dispositions of property,
other than foreclosure property, held primarily for sale to customers in the
ordinary course of business. We may be subject to the prohibited transaction
tax equal to 100% of net gain upon such a disposition. Although a safe harbor
to the characterization of the sale of real property by a REIT as a prohibited
transaction is available, we cannot assure you that we can comply with the
safe harbor or that we will avoid owning property that may be characterized as
held primarily for sale to customers in the ordinary course of business.
Consequently, we may choose not to engage in certain sales of our assets or
may conduct such sales through a TRS, which would be subject to U.S. federal
corporate income tax.
Dividends on our common stock do not qualify for the reduced tax rates
available for some dividends.
The maximum tax rate applicable to "qualified dividend income" payable to U.S.
shareholders that are individuals, trusts and estates is 20%. Dividends
payable by REITs, including the dividends on our common stock, however,
generally are not eligible for these reduced rates. U.S. shareholders that are
individuals, trusts and estates generally may deduct up to 20% of the ordinary
dividends (e.g., dividends not designated as capital gain dividends or
qualified dividend income) received from a REIT. Although this deduction
reduces the effective tax rate applicable to certain dividends paid by REITs
(generally to 29.6% assuming the shareholder is subject to the 37% maximum
rate), such tax rate is still higher than the tax rate applicable to corporate
dividends that constitute qualified dividend income. Accordingly, investors
who are individuals, trusts and estates may perceive investments in REITs to
be relatively less attractive than investments in the stocks of non-REIT
corporations that pay dividends, which could adversely affect the value of the
shares of REITs, including our common stock.
The board of directors' revocation of the Company's REIT status without
shareholder approval may decrease the Company's shareholders' total return.
Our Charter provides that the Company's board of directors may revoke or
otherwise terminate the Company's REIT election, without the approval of the
Company's shareholders if the Company's board of directors determines that it
is no longer in the Company's best interest to continue to qualify as a REIT.
If the Company ceases to be a REIT, it would become subject to U.S. federal
income tax on its taxable income and would no longer be required to distribute
most of its taxable income to the Company's shareholders, which may have
adverse consequences on our total return to the Company's shareholders.
In 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.
Our Charter authorizes our board of directors to take such actions as are
necessary and desirable to preserve our qualification as a REIT for U.S.
federal income tax purposes. Unless exempted by our board of directors, no
person may actually or constructively own more than 2.5% in value or number of
shares, whichever is more restrictive, of the outstanding shares of our common
stock, which may inhibit large investors from desiring to purchase our stock.
This restriction may have the effect of delaying, deferring, or preventing a
change in control, including an extraordinary transaction (such as a merger,
tender offer, or sale of all or substantially all of our assets) that might
provide a premium price for our common stock or otherwise be in the best
interest of our shareholders.
Our 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.
The Code imposes numerous constraints on the operations of REITs that do not
apply to other investment vehicles. Our qualification as a REIT depends upon
our ability to meet requirements regarding our organization and ownership,
distributions of our income, the nature and diversification of our income and
assets and other tests imposed by the Code. Any failure to comply could cause
us to fail to satisfy the requirements associated with maintaining our REIT
status. We have relatively limited experience operating under these
constraints, which may hinder our ability to take advantage of attractive
investment opportunities and to achieve our investment objectives and/or may
cause us to fail to qualify as a REIT. As a result, we cannot assure you that
we will be able to operate our business under these constraints. If we fail to
qualify as a REIT for any taxable year, we will be subject to U.S. federal
income tax on our taxable income at corporate rates. In addition, we would
generally be disqualified from treatment as a REIT for the four taxable years
following the year of losing our REIT status. Losing our REIT status would
reduce our net earnings available for investment or distribution to
shareholders because of the additional tax liability. In addition,
distributions to shareholders would no longer qualify for the dividends paid
deduction, and we would no longer be required to make distributions. If this
occurs, we might be required to borrow funds or liquidate some investments in
order to pay the applicable tax.
Risks Related to Our Governance and Operating Model
We rely on a highly concentrated leadership team and may face succession or
key personnel risks.
Our Company is led by a senior management team with extensive experience in
energy infrastructure, nuclear regulation, and AI-aligned data development.
Our team includes individuals with deep institutional knowledge of our
operating model, site entitlement history, and financing structure. However,
our operations and the growth of our business are still dependent on a
relatively small group of key personnel. If one or more of our executive
officers or senior advisors-including our CEO, CFO, Head of Power or Chief
Nuclear Construction Officer-were to become unavailable to us, we may not be
able to replace their expertise in a timely manner or at all. The loss of
their services, and the inability to recruit or retain key personnel, could
delay business decisions, impact external relationships, disrupt execution of
critical milestones and have a material adverse effect on our business
prospects, financial condition and results of operations.
In addition, the success of our operations will depend, in part, on our
ability to identify, attract, develop and retain experienced personnel. There
is competition within our industry for experienced technical personnel and
certain other professionals, which could increase the costs associated with
identifying, attracting and retaining such personnel. If we cannot identify,
attract, develop or retain key personnel, including technical and professional
personnel, our ability to compete in our industry and implement our business
plans could be materially harmed.
Some members of our management team have limited experience in operating a
public company.
Some members of our management team, including our executive officers, have
limited experience in the management of a publicly traded company. Their
limited experience in dealing with the increasingly complex laws pertaining to
public companies could be a significant disadvantage in that it is likely that
an increasing amount of their time may be devoted to these activities, which
will result in less time being devoted to our business's management and
growth. We may need to add additional personnel with the appropriate level of
knowledge, experience, and training in the accounting policies, practices or
internal controls over financial reporting to maintain what is required of
public companies in the United States. The development and implementation of
the standards and controls necessary for us to maintain the level of
accounting standards required of a public company in the United States may
require greater costs than expected. We could be required to expand our
employee base and hire additional employees and advisors to support our
operations as a public company, which will increase our operating costs in
future periods.
Our operating model includes multiple legal entities with interlocking
governance structures, which may create oversight or coordination challenges.
We plan to operate through a network of parent and subsidiary entities,
including energy-focused SPEs, infrastructure development arms, and,
potentially, TRSs. Each of these entities may have separate boards, operating
agreements, or regulatory reporting obligations. Coordinating decision-making
across these units requires formal delegation and clear internal controls. Any
failure to maintain governance alignment or resolve inter-entity conflicts
could increase our regulatory, legal, or reputational risk.
Our contractual arrangements with the Texas Tech University System may create
alignment or interpretation risks over time.
We operate under the Lease with the Texas Tech University System, a public
academic institution. While this arrangement provides entitlement benefits, it
may also introduce governance complexity over the 99-year term of the Lease.
Changes in Texas Tech University's leadership, Board of Regents, or policy
objectives could lead to reinterpretations of the Lease, including the
variable rent formula or naming rights. Additionally, because the Lease relies
on AV-based calculations tied to tenant improvements, disputes over valuation
methodologies or permitted uses could arise.
We may enter into related-party transactions that could pose conflicts of
interest or governance scrutiny.
Certain of our founders, executives, and strategic advisors may in the future
be investors, vendors, or partners in Company-related development entities or
energy SPEs. However, such dual roles may pose perceived or actual conflicts
of interest-particularly in matters of pricing, revenue sharing, or site
access. If these conflicts are not properly managed or disclosed, they could
damage investor confidence or subject us to regulatory investigation or
litigation.
Certain 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.
Our President and Chief Executive Officer, Toby Neugebauer, is involved in a
number of entrepreneurial endeavors and investments. From time to time, Mr.
Neugebauer may be involved in legal proceedings that have in the past, and may
in the future, garner negative publicity. These legal proceedings may at times
require his attention.
On January 4, 2023, creditors of Animo Services, LLC ("Animo"), an affiliate
of GloriFi (defined below), involuntarily placed Animo in Chapter 7 of Title
11 of the United States Code ("Chapter 7"). On February 7, 2025, the Chapter 7
Trustee in Animo's bankruptcy proceedings filed a series of adversary
proceedings against Mr. Neugebauer, and his related entities, alleging a
series of fraudulent transfers and breaches of fiduciary duties (such
proceedings, collectively with the ongoing bankruptcy proceedings, the "Animo
Proceedings").
On February 8, 2023, With Purpose, Inc. (d/b/a GloriFi) ("GloriFi") filed for
bankruptcy protection in the U.S. Bankruptcy Court for the Northern District
of Texas under Chapter 7. On February 7, 2025, the Chapter 7 Trustee in
GloriFi's bankruptcy proceedings filed a series of adversary proceedings
against Mr. Neugebauer, and his related entities, alleging a series of
fraudulent transfers and breaches of fiduciary duties (such proceedings,
collectively with the ongoing bankruptcy proceedings, the "GloriFi Bankruptcy
Proceedings").
Similarly, on March 3, 2023, a group of GloriFi investors also filed a lawsuit
in the 191st Judicial District of the District Court of Dallas County, Texas,
against Mr. Neugebauer, and related entities, alleging (i) fraudulent
inducement, (ii) negligent misrepresentation, (iii) breach of fiduciary duty,
(iv) unjust enrichment, and (v) exemplary damages (such proceedings, the
"GloriFi State Court Proceedings").
On May 16, 2024, and on May 17, 2024, Mr. Neugebauer, and related entities,
also filed lawsuits in the District of Georgia and District of Delaware,
respectively, against certain GloriFi investors alleging, among other things,
investor violations under the Racketeer Influenced and Corrupt Organizations
Act (RICO) as it relates to GloriFi (such proceedings, the "RICO Proceedings,"
and together with the Animo Proceedings, the GloriFi Bankruptcy Proceedings,
and the GloriFi State Court Proceedings, the "Animo/GloriFi Proceedings"). The
RICO Proceedings have been temporarily stayed in connection with the GloriFi
Bankruptcy Proceedings but may be resumed.
Although Mr. Neugebauer continues to vigorously contest the allegations
against him, assert his rights, and pursue causes of action, the Animo/GloriFi
Proceedings may attract negative press coverage and other forms of attention
to the Company, and at times could divert Mr. Neugebauer's attention from the
day-to-day operations of the Company.
We cannot predict the outcome of the Animo/GloriFi Proceedings or the impact
they may have on the Company or its financial condition. The publicity
surrounding the Animo/GloriFi Proceedings, or any investigation, inquiry or
any enforcement action as a result thereof, even if ultimately resolved
favorably for Mr. Neugebauer, could cause additional public scrutiny of our
Company. As a result, such proceedings, investigations and inquiries could
have an adverse effect on our perceived reputation and our ability to raise
new capital.
Risks Related to Market Conditions and Macroeconomic Factors
Adverse macroeconomic conditions could impair our ability to raise capital or
complete development phases.
Project Matador's success depends on continued access to both equity and
project-level debt to fund real estate, energy, and infrastructure
development. In the event of economic downturns, financial market volatility,
interest rate increases, or reduced investor risk appetite-particularly for
real asset or infrastructure investments-we may be unable to secure sufficient
capital on acceptable terms or at all. This could result in construction
delays, contract renegotiations, or asset impairments, any of which would have
a material adverse effect on our business, results of operations and cash
flows.
Cost overruns and inflationary pressures could materially increase development
and operating costs and impact our capital budget and profitability.
Project Matador's construction is expected to span multiple years and include
capital-intensive civil, electrical, and mechanical engineering work. The
prices of steel, concrete, turbine components, piping systems, racks, and
high-voltage equipment have experienced material inflation in recent years.
Similarly, prices for imported materials, equipment and supplies used in our
business may also be negatively impacted by tariff policy, which can be
inflationary. If inflation or tariffs affect labor rates, raw materials (e.g.,
steel, concrete), or specialized equipment, our project budgets may increase
significantly. Historically, nuclear projects in the U.S. have experienced
budget escalations due to engineering rework, licensing scope changes, and
schedule slippage. Similarly, labor costs for skilled construction workers,
electricians, and qualified engineers continue to rise.
If inflation persists or accelerates, the cost to complete Project Matador may
exceed our estimates, reducing return on investment and increasing reliance on
additional capital raises. While we have incorporated contingency planning
into our baseline financial models, these provisions may not be sufficient to
cover real-time market variability. Unexpected inflation or commodity price
shocks may necessitate budget revisions or additional capital raising.
Changes 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.
The U.S. government announced changes to its trade policies in 2025 and
significantly increased tariffs on certain imports under emergency
authorities, including the International Emergency Economic Powers Act
("IEEPA"). In February 2026, the Supreme Court of the United States ruled that
IEEPA does not authorize the President to impose tariffs. The current tariff
environment remains dynamic and uncertain, including regarding potential
refunds of tariffs paid under IEEPA. For now, the U.S. government has turned
to Section 122 of the Trade Act as a stopgap to impose 15% global tariffs
while it considers its next moves. Such replacement measures and changes to
tariffs and other trade restrictions may lead to continuing uncertainty and
volatility in U.S. and global financial markets and economic conditions.
We will depend on a limited number of suppliers, including suppliers of our
reactors, gas turbines and other long-lead time system components that may be
manufactured oversees, to provide us, directly or through other suppliers,
with items such as equipment for the construction and development of our
reactors, other components and raw materials. Tariffs on such components would
increase our costs to the extent those components are imported into the United
States. While a certain portion of the increased costs may be absorbed by
certain suppliers, some suppliers may struggle to absorb the increased costs,
especially over the long term, potentially leading to supply disruptions or
cost pass-throughs to us, which may lead to an increase in our expenditures.
Any shortage, delay or component price change from these suppliers, including
as a result of changes in exchange rates, taxes or tariffs, could result in
sales and installation delays, cancellations and loss of market share. If
there are substantial tariffs imposed by the United States on countries from
which we import certain of our key products, we may not be able to pass the
cost through to our tenants.
We cannot predict future trade policy and its impact on our business. The
adoption and expansion of trade restrictions, the occurrence of a trade war,
or other governmental action related to tariffs or trade agreements or
policies has the potential to adversely impact demand for our products, our
costs, our tenants, our suppliers, and the United States economy, which in
turn could adversely impact our business, financial condition and results of
operations. Our attempts to mitigate potential disruptions to our supply chain
and offset procurement and operational cost pressures, such as through
alternative sourcing and/or increases in the selling prices of some of our
products, may not be successful. To the extent that cost increases result in
significant increases in our expenditures, or if our price increases are not
sufficient to offset these increased costs adequately or in a timely manner,
and/or if our revenues decrease, our business, financial condition or
operating results may be adversely affected.
Interest rate fluctuations may increase our cost of capital and reduce
profitability.
Project Matador will utilize a mix of fixed and variable rate financing
instruments across its SPEs and real estate platform. Increases in benchmark
interest rates, lender spreads, or risk premiums for long-duration
infrastructure projects may increase debt service costs, reduce debt
availability, or constrain financial flexibility. Rising rates may also reduce
the relative attractiveness of our common equity to yield-seeking investors,
limiting the success of future follow-on financings.
Shifts in federal, state, or local policy may affect permitting, taxation, or
infrastructure incentives.
Our development strategy is currently supported by a policy environment that
encourages energy innovation, U.S.-based manufacturing, and advanced
infrastructure deployment. However, changes in political leadership or budget
priorities at the federal or state level could result in the rollback of tax
credits (such as 45Q, 45J, 45V, or 48C), delays in DOE funding programs, or
new environmental permitting requirements. At the state level, changes in law
or interpretation regarding water rights, transmission access, or land use
could materially adversely impact Project Matador's ability to expand or
conduct its core business any of which could materially adversely affect our
business.
Sustainability expectations may evolve in ways that affect project costs or
tenant commitments.
We are seeking to build the world's most resilient and energy-diverse AI
infrastructure platform. However, sustainability expectations-particularly
around carbon neutrality, sustainable water use, and nuclear energy-may
continue to evolve. In the future, certain institutional investors or tenants
may require additional certifications, climate audits, or supply chain
transparency that increase compliance costs. Failure to meet such expectations
could limit tenant participation, equity investment, or long-term valuation.
Global supply chain disruptions may delay delivery of critical infrastructure
components.
Project Matador requires timely procurement of gas turbines, transformers,
power electronics, nuclear reactor components, HVAC systems, and modular
powered shell elements-many of which originate from international vendors.
Acts of God, geopolitical conflict, war, terrorism, social unrest, global
health crises, trade restrictions, maritime shipping delays, or semiconductor
shortages may result in global supply chain disruptions that could delay site
readiness, reduce operational capacity, or force reprioritization of
development phases.
Risks Related to Our Common Stock
Since 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.
As a new public company, our stock price has been, and may continue to be,
volatile. As a result, you may not be able to resell your shares at or above
the price you paid for such shares due to a number of factors included herein,
including the following:
• results of operations that vary from the expectations of
securities analysts and investors;
• results of operations that vary from those of our competitors;
• changes in expectations as to our future financial performance,
including financial estimates and investment recommendations by securities
analysts and investors;
• changes in economic conditions for companies in our industry;
• changes in market valuations of, or earnings and other
announcements by, companies in our industry;
• declines in the market prices of stocks generally, particularly
those of power and utilities businesses as well as hyperscalers;
• strategic actions by us or our competitors;
• changes in general economic or market conditions or trends in
our industry or the economy as a whole;
• changes in business or regulatory conditions;
• future sales of our common stock or other securities;
• investor perceptions of the investment opportunity associated
with our common stock relative to other investment alternatives;
• the public's response to press releases or other public
announcements by us or third parties, including our filings with the SEC;
• announcements relating to litigation or governmental
investigations;
• guidance, if any, that we provide to the public, any changes in
this guidance, or our failure to meet this guidance;
• the development and sustainability of an active trading market
for our stock;
• changes in accounting principles; and
• other events or factors, including those resulting from system
failures and disruptions, natural or man-made disasters, extreme weather
events, war, acts of terrorism, an outbreak of highly infectious or contagious
diseases or responses to these events.
Furthermore, the stock market may experience extreme volatility that, in some
cases, may be unrelated or disproportionate to the operating performance of
particular companies. These broad market and industry fluctuations may
adversely affect the market price of our common stock, regardless of our
actual operating performance. In addition, price volatility may be greater if
the public float and trading volume of our common stock is low.
In 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.
As a result of becoming a public company, we are obligated to develop and
maintain proper and effective internal controls over financial reporting in
order to comply with Section 404 of the Sarbanes-Oxley Act. We may not
complete our analysis of our internal controls over financial reporting in a
timely manner, or these internal controls may not be determined to be
effective, which may adversely affect investor confidence in us and, as a
result, the value of our common stock.
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting. Internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
in accordance with GAAP. We are in the very early stages of the costly and
challenging process of compiling the system and processing documentation
necessary to perform the evaluation needed to comply with Section 404 of the
Sarbanes-Oxley Act. We may not be able to complete our evaluation, testing and
any required remediation in the time required. If we are unable to assert that
our internal control over financial reporting is effective, we could lose
investor confidence in the accuracy and completeness of our financial reports,
which would cause the price of our common stock to decline, and we may be
subject to investigation or sanctions by the SEC.
We will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to
furnish a report by management on, among other things, the effectiveness of
our internal control over financial reporting as of the end of the fiscal year
that coincides with the filing of our second annual report on Form 10-K. This
assessment will need to include disclosure of any material weaknesses
identified by our management in our internal control over financial reporting.
We will also be required to disclose changes made in our internal control and
procedures on a quarterly basis. However, our independent registered public
accounting firm will not be required to report on the effectiveness of our
internal control over financial reporting pursuant to Section 404 of the
Sarbanes-Oxley Act until the later of the year following our first annual
report required to be filed with the SEC, or the date we are no longer an
"emerging growth company" as defined in the JOBS Act if we take advantage of
the exemptions contained in the JOBS Act. At such time, our independent
registered public accounting firm may issue a report that is adverse in the
event it is not satisfied with the level at which our controls are documented,
designed or operating.
Additionally, the existence of any material weakness or significant deficiency
would require management to devote significant time and incur significant
expense to remediate any such material weaknesses or significant deficiencies
and management may not be able to remediate any such material weaknesses or
significant deficiencies in a timely manner. The existence of any material
weakness in our internal control over financial reporting could also result in
errors in our financial statements that could require us to restate our
financial statements, cause us to fail to meet our reporting obligations and
cause shareholders to lose confidence in our reported financial information,
all of which could materially and adversely affect our business and stock
price. To comply with the requirements of being a public company, we may need
to undertake various costly and time-consuming actions, such as implementing
new internal controls and procedures and hiring accounting or internal audit
staff, which may adversely affect our business, financial condition, results
of operations, cash flows and prospects.
We have identified a material weakness in our internal control over financial
reporting. If our remediation of the material weakness is not effective, or if
we experience additional material weaknesses in the future or otherwise fail
to develop and maintain effective internal control over financial reporting,
our ability to produce timely and accurate financial statements or comply with
applicable laws and regulations could be impaired.
As a public company, we are required to maintain internal control over
financial reporting and to evaluate and determine the effectiveness of our
internal control over financial reporting. Beginning with our second annual
report following our IPO, we will be required to provide a management report
on internal control over financial reporting. However, while we remain an
emerging growth company, we will not be required to include an attestation
report on internal control over financial reporting issued by our independent
registered public accounting firm. Thus, in accordance with the provisions of
the JOBS Act, we and our independent registered public accounting firm were
not required to, and did not, perform an evaluation of our internal control
over financial reporting as of December 31, 2025, nor any period subsequent
in accordance with the provisions of the Sarbanes-Oxley Act.
However, while preparing the financial statements that are included in this
report, we identified a material weakness in our internal control over
financial reporting. A material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting such that there is
a reasonable possibility that a material misstatement of our annual or interim
financial statements will not be prevented or detected on a timely basis.
The material weakness pertains to a lack of formalized processes, policies,
and procedures, inadequate segregation of duties across functions relevant to
financial reporting, and an insufficient number of qualified personnel within
our accounting, finance, and operational functions who possess an appropriate
level of expertise to provide reasonable assurance that transactions are being
appropriately recorded and disclosed. We have concluded that the material
weakness exists because we are a newly formed company and have not yet fully
developed or implemented our internal control over financial reporting or
operational control environment, and therefore do not have the necessary
business processes, systems, personnel, and related internal controls
necessary to satisfy the accounting and financial reporting requirements of a
public company. The material weakness was not identified as a result of a
misstatement to our financial statements.
We have taken and will continue to take certain actions to remediate the
material weakness, including:
• designing and documenting an internal controls framework,
including control activities over financial reporting, modeled on the
Committee of Sponsoring Organizations (COSO) principles, with periodic
internal reviews and testing;
• implementing formal policies and procedures to govern key
financial processes and internal controls, including documented accounting
policies aligned with U.S. GAAP standards and supported by external advisors;
• hiring additional qualified personnel with appropriate expertise
in operational finance activities, accounting, and financial reporting,
including the appointment of a Chief Financial Officer and financial reporting
expert, and the establishment of an experienced finance team with public
company financial reporting and internal controls expertise;
• enhancing segregation of duties across critical accounting and
operational functions and implementing robust liquidity planning and cash
management controls to support daily operating needs and strategic
investments;
• evaluating and implementing appropriate financial and reporting
systems to support internal controls requirements including engagement of a
third-party accounting advisory firm to assist with timely remediation of
control deficiencies; and
• establishing an audit committee composed of independent
directors to provide oversight of our financial reporting and internal control
environment.
We will not be able to fully remediate the material weakness until these steps
have been completed and have been operating effectively for a sufficient
period of time. There can be no assurance that our remediation efforts to
address this material weakness described above, which may be time-consuming
and costly, will be successful, or that our internal control over financial
reporting will be effective in accomplishing all of its objectives. Our
business could be adversely impacted if we have deficiencies in our disclosure
controls and procedures or internal control over financial reporting,
including as a result of the identified material weakness discussed above.
Furthermore, as we grow, our business, and hence our internal control over
financial reporting, will likely become more complex, and we may require
significantly more resources to develop and maintain effective controls.
Designing and implementing an effective system of internal control over
financial reporting is a continuous effort that requires significant
resources, including the expenditure of a significant amount of time by senior
members of our management team. As a result, management's attention may be
diverted from other business concerns, which could harm our business,
operating results, financial condition, and future prospects. Additionally, as
stated above, we have not performed an evaluation of our internal control over
financial reporting as permitted under the JOBS Act; accordingly, we cannot
assure you that we have identified all, or that we will not in the future have
additional material weaknesses. Material weaknesses may still exist when we
report on the effectiveness of our internal control over financial reporting
as required under Section 404 of the Sarbanes-Oxley Act, beginning with our
second annual report after the completion of our IPO.
If during the evaluation and testing process we identify additional material
weaknesses in our internal control over financial reporting or determine that
existing material weaknesses have not been remediated, our management will be
unable to assert that our internal control over financial reporting is
effective. Even if our management concludes that our internal control over
financial reporting is effective, our independent registered public accounting
firm may conclude that there are material weaknesses with respect to our
internal control over financial reporting. If we are unable to assert that our
internal control over financial reporting is effective, or if our independent
registered public accounting firm is unable to express an unqualified opinion
as to the effectiveness of our internal control over financial reporting,
investors may lose confidence in the accuracy and completeness of our
financial reports, the market price of our common stock could be adversely
affected and we could become subject to litigation or investigations by the
stock exchange on which our securities are listed, the SEC, or other
regulatory authorities, which could require additional financial and
management resources.
The JOBS Act allows us to postpone the date by which we must comply with
certain laws and regulations intended to protect investors and to reduce the
amount of information we provide in our reports filed with the SEC. We cannot
be certain if this reduced disclosure will make our common stock less
attractive to investors.
The JOBS Act is intended to reduce the regulatory burden on "emerging growth
companies." As defined in the JOBS Act, a public company whose initial public
offering of common equity securities occurs after December 8, 2011, and whose
annual net sales are less than $1.235 billion will, in general, qualify as an
"emerging growth company" until the earliest of:
• the last day of its fiscal year following the fifth anniversary
of the date of its initial public offering of common equity securities;
• the last day of its fiscal year in which it has annual gross
revenue of $1.235 billion or more;
• the date on which it has, during the previous three-year period,
issued more than $1.0 billion in nonconvertible debt; and
• the date on which it is deemed to be a "large accelerated
filer," which will occur at such time as we (i) have an aggregate worldwide
market value of common equity securities held by non-affiliates of
$700.0 million or more as of the last business day of its most recently
completed second fiscal quarter, (ii) have been required to file annual and
quarterly reports under the Exchange, for a period of at least 12 months, and
(iii) have filed at least one annual report pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
Under this definition, we are an "emerging growth company" and will remain an
"emerging growth company" until as late as the fifth anniversary of the
completion of our IPO. For so long as we are an "emerging growth company," we
will, among other things:
• not be required to comply with the auditor attestation
requirements of Section 404(b) of the Sarbanes-Oxley Act;
• not be required to hold a nonbinding advisory shareholder vote
on executive compensation pursuant to Section 14A(a) of the Exchange Act;
• not be required to seek shareholder approval of any golden
parachute payments not previously approved pursuant to Section 14A(b) of the
Exchange Act;
• be exempt from the requirement of the PCAOB regarding the
communication of critical audit matters in the auditor's report on the
financial statements; and
• be subject to reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements.
In addition, Section 107 of the JOBS Act provides that an emerging growth
company can use the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act for complying with new or revised accounting standards.
This permits an emerging growth company to delay the adoption of certain
accounting standards until those standards would otherwise apply to private
companies. We have chosen to "opt out" of this transition period and, as a
result, we will comply with new or revised accounting standards as required
when they are adopted. This decision to opt out of the extended transition
period is irrevocable.
We cannot predict if investors will find our common stock less attractive as a
result of our decision to take advantage of some or all of the reduced
disclosure requirements above. If some investors find our common stock less
attractive as a result, there may be a less active trading market for our
common stock and our stock price may be more volatile.
The requirements of being a public company may strain our resources and
distract our management, which could make it difficult to manage our business,
particularly after we are no longer an "emerging growth company."
As a public company, we incur legal, accounting and other expenses that we did
not previously incur. We are subject to the reporting requirements of the
Exchange Act and the Sarbanes-Oxley Act, the listing requirements of Nasdaq,
the London Stock Exchange and other applicable securities rules and
regulations. Compliance with these rules and regulations will increase our
legal and financial compliance costs, make some activities more difficult,
time-consuming or costly and increase demand on our systems and resources,
particularly after we are no longer an "emerging growth company." The Exchange
Act requires that we file annual, quarterly and current reports with respect
to our business, financial condition, results of operations, cash flows and
prospects. The Sarbanes-Oxley Act requires, among other things, that we
establish and maintain effective internal controls and procedures for
financial reporting. Furthermore, the need to establish the corporate
infrastructure demanded of a public company may divert our management's
attention from implementing our growth strategy, which could prevent us from
improving our business, financial condition, results of operations, cash flows
and prospects. We have made, and will continue to make, changes to our
internal controls and procedures for financial reporting and accounting
systems to meet our reporting obligations as a public company. However, the
measures we take may not be sufficient to satisfy our obligations as a public
company. In addition, these rules and regulations will increase our legal and
financial compliance costs and will make some activities more time-consuming
and costly. For example, we expect these rules and regulations to make it more
difficult and more expensive for us to obtain director and officer liability
insurance, and we may be required to incur substantial costs to maintain the
same or similar coverage. These additional obligations could have a material
adverse effect on our business, financial condition, results of operations,
cash flows and prospects.
In addition, changing laws, regulations and standards relating to corporate
governance and public disclosure are creating uncertainty for public
companies, increasing legal and financial compliance costs and making some
activities more time-consuming. These laws, regulations and standards are
subject to varying interpretations, in many cases due to their lack of
specificity, and, as a result, their application in practice may evolve over
time as new guidance is provided by regulatory and governing bodies. This
could result in continuing uncertainty regarding compliance matters and higher
costs necessitated by ongoing revisions to disclosure and governance
practices. We intend to invest resources to comply with evolving laws,
regulations and standards, and this investment may result in increased general
and administrative expenses and a diversion of our management's time and
attention from revenue-generating activities to compliance activities. If our
efforts to comply with new laws, regulations and standards differ from the
activities intended by regulatory or governing bodies due to ambiguities
related to their application and practice, regulatory authorities may initiate
legal proceedings against us and there could be a material adverse effect on
our business, financial condition, results of operations, cash flows and
prospects.
The body of case law interpreting the Texas Business Organizations Code is
less developed than the body of case law interpreting the Delaware General
Corporation Law and the Maryland General Corporation Law, and the Texas
Business Court has less precedent to draw from adjudicating corporate and
business-related matters.
As a Texas corporation, we are subject to the Texas Business Organizations
Code (the "TBOC"). The body of case law interpreting the TBOC is less
developed than the body of case law interpreting the Delaware General
Corporation Law and the Maryland General Corporation Law and Maryland REIT
Law. Many U.S. corporations have historically chosen Delaware as their state
of incorporation because of, among other reasons, the extensive experience of
the Delaware courts in adjudicating corporate and business-related matters.
The Delaware Court of Chancery and Supreme Court are highly respected and
experienced business courts with an extensive body of case law. As a result,
the Delaware system has long and widely been lauded for its expertise.
Furthermore, many U.S. businesses that have been formed with a view to elect
to qualify and operate as REITs have chosen Maryland as their state of
incorporation or formation because of, among other reasons, historical
precedent, the extensive experience of the Maryland courts in adjudicating
corporate and business matters involving REITs and the protections afforded to
the directors of Maryland corporations or trustees of Maryland real estate
investment trusts, including those that elect to qualify and operate as REITs.
The newly created Texas Business Court, on the other hand, is in its infancy,
began hearing cases in September 2024 and will need time to develop
reputationally and build a body of case law that provides comparable levels of
guidance to directors and officers as might be available in Delaware or
Maryland, which may result in less certainty for our officers and directors as
well as our shareholders.
The Texas Business Organization Code has been recently amended to provide
additional protections for our officers, directors and affiliates while making
it more difficult for shareholders to make proposals at our annual meeting or
to bring derivative claims. As a result, our shareholders may be disadvantaged
as compared to shareholders of Delaware corporations.
In an effort to attract U.S. corporations to reincorporate in and move their
respective headquarters to Texas, the Texas legislature has passed a number of
changes to the TBOC. For example, the TBOC was recently amended to (i) permit
broad exculpation of officers along with directors for breaches of duty of
care pursuant to Senate Bill 2411, which took effect on September 1, 2025,
(ii) put certain limitations on shareholder derivative lawsuits, including a
3% ownership requirement to bring such a claim, pursuant to Senate Bill 29
("SB 29"), which became effective on May 14, 2025, and (iii) streamline
approval of mergers and other fundamental transactions, including by
eliminating class voting requirements. Senate Bill 1057, which took effect on
September 1, 2025, imposes stock ownership requirements for shareholders
seeking to submit shareholder proposals at an annual or special meeting. For
more information, see the risk factor titled "Texas 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" below.
Taken together, these TBOC provisions mean our shareholders may be
disadvantaged as compared to shareholders of Delaware corporations.
In addition, on June 20, 2025, the Texas legislature passed Senate Bill 2337
("SB 2337"), which took effect on September 1, 2025. SB 2337 imposes certain
disclosure obligations on proxy advisors if they consider non-financial
factors (including a commitment, initiative, policy, target, or subjective or
value-based standard based on ESG, DEI, sustainability or social credit
metrics or membership or commitment to certain groups) when they provide proxy
voting recommendations or in the provision of proxy advisory services. In
response to SB 2337, Institutional Shareholder Services (ISS) and Glass Lewis,
the two largest proxy advisors in the United States, recently filed separate
lawsuits challenging the new law.
Certain provisions of Texas law and antitakeover provisions in our
organizational documents could delay or prevent a change of control.
Certain provisions of Texas law and our Charter and Bylaws may have an
antitakeover effect and may delay, defer, or prevent a merger, acquisition,
tender offer, takeover attempt, or other change of control transaction that a
shareholder might consider in its best interest, including those attempts that
might result in a premium over the market price for the shares held by our
shareholders.
Under our Charter, our board of directors can authorize the issuance of
preferred stock, which could diminish the rights of holders of our common
stock and make a change of control of the Company more difficult even if it
might benefit our shareholders. The board of directors is authorized to issue
shares of preferred stock in one or more series and to fix the voting powers,
preferences and other rights and limitations of the preferred stock.
Accordingly, we may issue shares of preferred stock with a preference over our
common stock with respect to dividends or distributions on liquidation or
dissolution, or that may otherwise adversely affect the voting or other rights
of the holders of common stock. Issuances of preferred 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.
In addition, provisions of our Charter and Bylaws may delay or discourage
transactions involving an actual or potential change in our control or change
in our management, including transactions in which shareholders might
otherwise receive a premium for their shares, or transactions that our
shareholders might otherwise deem to be in their best interests. For example,
our Charter and Bylaws (i) do not provide for cumulative voting rights
(therefore allowing the holders of a majority of the shares of common stock
entitled to vote in any election of directors to elect all of the directors
standing for election, if they should so choose), (ii) require that special
meetings of the shareholders may be called at any time only by the affirmative
vote of a majority of the board of directors or the chairman of the board of
directors, and states that shareholders do not have the power to call a
special meeting, (iii) permit our board of directors to alter, amend or repeal
our Bylaws or to adopt new bylaws, and (iv) enable our board of directors to
increase the number of persons serving as directors and to fill vacancies
created as a result of the increase by a majority vote of the directors
present at a meeting of directors.
We are subject to the provisions of Section 21.606 of the TBOC, which provides
that a Texas corporation that qualifies as an "issuing public corporation" (as
defined in the TBOC) may not engage in specified types of business
combinations, including mergers, consolidations and asset sales, with a
person, or an affiliate or associate of that person, who is an "affiliated
shareholder." Section 21.606 may deter any potential offers or other efforts
to obtain control of us that are not approved by our board of directors,
potentially depriving our shareholders of opportunities to sell shares of our
common stock at a premium to the prevailing market price.
Our Charter designates the Business Court in the First Business Court Division
of the State of Texas as the exclusive forum for certain litigation that may
be initiated by our shareholders and the federal district courts of the United
States as the exclusive forum for litigation arising under the U.S. federal
securities laws, including the Securities Act, which could limit our
shareholders' ability to obtain a favorable judicial forum for disputes with
us.
Pursuant to our Charter, unless we consent in writing to the selection of an
alternative forum, the Business Court in the First Business Court Division of
the State of Texas (the "Business Court") (or, if the Business Court
determines that it lacks jurisdiction, the federal district court for the
Northern District of Texas, Dallas Division) shall, to the fullest extent
permitted by the TBOC, be the sole and exclusive forum for (i) any derivative
action or proceeding brought on behalf of the Company, (ii) any action
asserting a claim for or based on a breach of a fiduciary duty owed by any
current or former director, officer, other employee, agent or shareholder of
the Company to the Company or the Company's shareholders, including a claim
alleging the aiding and abetting of such a breach of fiduciary duty, (iii) any
action arising pursuant to any provision of the TBOC or our Charter or the
Bylaws or as to which the TBOC confers jurisdiction on the Business Court,
(iv) any action to interpret, apply, enforce or determine the validity of our
Charter or the Bylaws, (v) any action asserting a claim related to or
involving the Company that is governed by the internal affairs doctrine, (vi)
any action asserting an "internal entity claim" as that term is defined in
Section 2.115 of the TBOC, or (vii) any other action within the jurisdiction,
or supplemental jurisdiction of the Business Court. Notwithstanding the
foregoing sentence, the federal district courts of the United States of
America shall be the exclusive forum for the resolution of any complaint
asserting a cause of action arising under U.S. federal securities laws,
including the Securities Act and the Exchange Act. Any person or entity
purchasing or otherwise acquiring any interest in shares of capital stock of
our Company shall be deemed to have notice of and consented to the forum
provisions in our Charter. However, the enforceability of similar exclusive
forum provisions in other companies' certificates of formation has been
challenged in legal proceedings, and it is uncertain whether a court would
find these types of provisions in our Charter to be enforceable. For example,
under the Securities Act, federal courts have concurrent jurisdiction over all
suits brought to enforce any duty or liability created by the Securities Act,
and investors cannot waive compliance with the federal securities laws and the
rules and regulations thereunder. The forum selection provisions in our
Charter may have the effect of discouraging lawsuits against us or our
directors and officers and may limit our shareholders' ability to obtain a
favorable judicial forum for disputes with us.
If the enforceability of our forum selection provision were to be challenged,
we may incur additional costs associated with resolving such a challenge.
While we currently have no basis to expect any such challenge would be
successful, if a court were to find our forum selection provision to be
inapplicable or unenforceable, we may incur additional costs associated with
having to litigate in other jurisdictions, which could have an adverse effect
on our business, financial condition and results of operations and result in a
diversion of the time and resources of our employees, management and board of
directors.
Our Charter includes provisions limiting the personal liability of our
directors and officers for breaches of fiduciary duties under Texas law.
Our Charter contains a provision eliminating a director's and officer's
personal liability for acts or omissions in the director's or officer's
capacity as a director or officer to the fullest extent permitted under Texas
law. In addition, pursuant to the TBOC, a corporation has the power to
indemnify its directors and officers against judgments and certain expenses
other than judgments that are actually and reasonably incurred in connection
with a proceeding, provided that there is a determination that the individual
acted in good faith and in a manner reasonably believed to be in the best
interests of the corporation and, with respect to any criminal proceeding, had
no reasonable cause to believe the individual's conduct was unlawful. However,
no indemnification may be made in respect of any proceeding in which such
individual is liable to the corporation or improperly received a personal
benefit and is found liable for willful misconduct, breach of the duty of
loyalty owed to the corporation, or an act or omission deemed not to be
committed in good faith.
The principal effect of the limitation on liability provision is that a
shareholder will be unable to prosecute an action for monetary damages against
a director unless the shareholder can demonstrate a basis for liability for
which indemnification is not available under the TBOC. The inclusion of this
provision in our Charter may discourage or deter shareholders or management
from bringing a lawsuit against directors or officers for a breach of their
fiduciary duties, even though such an action, if successful, might otherwise
have benefited us and our shareholders.
Texas 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.
The TBOC and our governing documents include certain provisions which may
limit our shareholders' ability to bring certain derivative claims against our
officers and directors. For example, the TBOC provides that, if a corporation
has a class of stock listed on a national securities exchange or has 500 or
more shareholders, no shareholder or group of shareholders may institute or
maintain a derivative proceeding in the right of the Company unless such
shareholder or group of shareholders, at the time the derivative proceeding is
instituted, holds at least 3% of the outstanding shares of the Company. The
TBOC also permits corporations to request a court, at the start of a
transaction (including related party transactions) or investigation of a
derivative claim, to judicially determine the independence and
disinterestedness of directors on special committees reviewing transactions or
individuals on panels reviewing derivative claims. Future challenges to
independence or disinterestedness would require new facts.
In addition, Section 21.419 of the TBOC sets forth certain presumptions
concerning compliance by directors and officers with respect to their duties
to a corporation, including the duty of care and duty of loyalty as those
duties pertain to transactions with interested persons. Specifically, in
taking or declining to take any action on any matters of a corporation's
business, Section 21.419 provides that a director or officer is presumed to
have acted (i) in good faith, (ii) on an informed basis, (iii) in furtherance
of the interests of the corporation and (iv) in obedience to the law and the
corporation's governing documents. These provisions are described as codifying
the "business judgment rule." In order to succeed in a cause of action against
a director or officer, the Company or a shareholder must rebut one or more of
the foregoing presumptions and prove the director or officer's act or omission
constituted a breach of duty as a director or officer and that such breach
involved fraud, intentional misconduct, an ultra vires act or a knowing
violation of law.
The 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.
Section 21.419 applies to a corporation that has a class or series of voting
shares listed on a national securities exchange or includes within its
organizational documents an affirmative election to be governed by such
section. In our Charter, we have affirmatively elected, in the manner provided
under the TBOC, to be governed by Section 21.419 and any successor provision
thereto. The inclusion of this provision in our Charter and the fact that our
common stock will be listed on a national securities exchange may discourage
or deter shareholders or management from bringing derivative lawsuits or
making books and records requests, even though such an action, if successful,
might otherwise have benefited us and our shareholders.
Texas 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.
Section 21.373 of the TBOC permits a "nationally listed corporation" (as
defined in the TBOC and described below) to amend its governing documents to
impose stock ownership requirements on shareholders seeking to submit a
proposal on a matter (other than director nominations and procedural
resolutions ancillary to the conduct of a shareholder meeting) to the
shareholders of such corporation for approval at a shareholder meeting. If a
corporation elects to be governed by Section 21.373 of the TBOC, a shareholder
or group of shareholders may submit a proposal on a matter to the shareholders
of such corporation for approval at a meeting of shareholders only if such
shareholder or group of shareholders (i) holds an amount of shares entitled to
vote at such meeting equal to at least $1.0 million in market value of the
Company (determined as of the date of submission of the proposal) or 3% of the
total number of shares eligible to vote at such meeting, and (ii) has held
such amount for a continuous period of at least six months before the date of
the meeting, (iii) holds such amount throughout the meeting and (iv) solicits
the holders of shares representing at least 67% of the voting power of shares
entitled to vote on the proposal at the shareholder meeting.
We are considered a "nationally listed corporation" and adopted these
requirements for having standing to make a shareholder proposal, effective as
of our first annual meeting of shareholders following our IPO. Such adoption
limits our shareholders' ability to make proposals as compared to shareholders
of a Delaware corporation.
An active, liquid trading market for our common stock may not be sustained,
which may limit your ability to sell your shares.
Prior to our IPO, there was no public market for our common stock. Although
our common stock is listed for trading on Nasdaq and the London Stock Exchange
under the trading symbol "FRMI," an active trading market for our common stock
may not be sustained in the future. A public trading market having the
desirable characteristics of depth, liquidity and orderliness depends upon the
existence of willing buyers and sellers at any given time, such existence
being dependent upon the individual decisions of buyers and sellers over which
neither we nor any market maker has control. The failure of an active and
liquid trading market to continue would likely have a material adverse effect
on the value of our common stock. The market price of our common stock may
decline below the price you paid, and you may not be able to sell your shares
of our common stock at or above the price you paid, or at all. An inactive
market may also impair our ability to raise capital to continue to fund
operations by issuing additional shares of our common stock or other equity or
equity-linked securities and may impair our ability to make acquisitions by
using any such securities as consideration.
A 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.
Sales of a substantial number of shares of our common stock in the public
market could occur at any time. These sales, or the perception in the market
that the holders of a large number of shares of common stock intend to sell
shares, could reduce the market price of our common stock. The shares
purchased in our recent initial public offering may be resold in the public
market immediately, unless such shares are held by "affiliates," as that term
is defined in Rule 144 under the Securities Act. In connection with our IPO, a
substantial portion of our outstanding shares were subject to a 180-day
lock-up period provided under lock-up agreements executed in connection with
the offering and were restricted from immediate resale under the federal
securities laws. All of these shares of common stock will, however, be able to
be resold after the expiration of the lock-up period, as well as pursuant to
customary exceptions thereto or upon the waiver of the lock-up agreement by
the representatives on behalf of the underwriters. We also have registered
shares of common stock that we have or may issue under our equity compensation
plans. These shares can be freely sold in the public market upon issuance,
subject to the lock-up agreements. As restrictions on resale end, the market
price of our stock could decline if the holders of currently restricted shares
of common stock sell them or are perceived by the market as intending to sell
them.
If securities or industry analysts do not publish research or reports about
our business, if they publish unfavorable research or reports, or adversely
change their recommendations regarding our common stock or if our results of
operations do not meet their expectations, our stock price and trading volume
could decline.
As the trading market for our common stock continues to develop, the trading
market will be influenced by the research and reports that industry or
securities analysts publish about us or our business. We do not have any
control over these analysts. As a newly public company, we may be slow to
attract research coverage. In the event we obtain securities or industry
analyst coverage, if any of the analysts who cover us provide inaccurate or
unfavorable research, issue an adverse opinion regarding our stock price or if
our results of operations do not meet their expectations, our stock price
could decline. Moreover, if one or more of these analysts cease coverage of us
or fail to publish reports on us regularly, we could lose visibility in the
financial markets, which in turn could cause our stock price or trading volume
to decline.
We 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.
Our Charter authorizes us to issue one or more series of preferred stock. Our
board of directors has the authority to determine the preferences, limitations
and relative rights of the shares of preferred stock and to fix the number of
shares constituting any series and the designation of such series, without any
further vote or action by our shareholders. Our preferred stock could be
issued with voting, liquidation, dividend and other rights superior to the
rights of our common stock. The potential issuance of preferred stock may
delay or prevent a change in control of us, discouraging bids for our common
stock at a premium to the market price, and materially adversely affect the
market price and the voting and other rights of the holders of our common
stock.
We are currently, and may continue to be, subject to securities class action
litigation.
In the past, securities class action litigation has often been instituted
against companies following periods of volatility in the market price of a
company's securities. This type of litigation, if instituted, could result in
substantial costs and a diversion of management's attention and resources,
which could adversely affect our business, operating results, or financial
condition. Additionally, the dramatic increase in the cost of directors' and
officers' liability insurance may cause us to opt for lower overall policy
limits and coverage or to forgo insurance that we may otherwise rely on to
cover significant defense costs, settlements, and damages awarded to
plaintiffs, or incur substantially higher costs to maintain the same or
similar coverage. These factors could make it more difficult for us to attract
and retain qualified executive officers and members of our board of directors.
We are currently a party to a putative securities class action lawsuit. The
complaint, filed in January 2026, names the Company, certain of our directors
and officers, and certain underwriters of our initial public offering as
defendants. We believe the claims-that the defendants made materially false
and misleading statements and omissions in the registration statement and
prospectus issued in connection with our initial public offering and in other
public statements during the alleged class period-are without merit. For more
information about the securities litigation that we currently face, see Part
I, Item 3. "Legal Proceedings" in this Annual Report.
Dual listing on the Nasdaq and the London Stock Exchange may lead to an
inefficient market in the shares of common stock.
Our common stock is dual listed on Nasdaq and the London Stock Exchange. Dual
listing of the shares of common stock results in differences in liquidity,
settlement and clearing systems, trading currencies, prices and transaction
costs between the exchanges where the shares of common stock are quoted. These
and other factors may hinder the transferability of the shares of common stock
between the two exchanges.
Consequently, the price of the shares of common stock may fluctuate and may at
any time be different on the Nasdaq and the London Stock Exchange. Investors
could seek to sell or buy their shares of common stock to take advantage of
any price differences between the two markets through a practice referred to
as arbitrage. Any arbitrage activity could create unexpected volatility in
both the share of common stock prices on either exchange and in the volumes of
shares of common stock available for trading on either market. This could
adversely affect the trading of the shares of common stock on these exchanges
and increase their price volatility and/or adversely affect the price and
liquidity of the shares of common stock on these exchanges. In addition,
holders of shares of common stock in either jurisdiction will not be
immediately able to transfer such shares for trading on the other market
without effecting necessary procedures with our transfer agents/registrars.
This could result in time delays and additional costs for shareholders. The
market price of the shares of common stock on those exchanges may also differ
due to exchange rate fluctuations. Additionally, to the extent the Company's
listing on the London Stock Exchange does not proceed, all common stock issued
in this offering will be listed solely on Nasdaq.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk management and strategy
We have implemented and continue to enhance information security processes
designed to identify, assess and manage material risks from cybersecurity
threats to our information systems and data, including systems and services
that support our corporate operations and third-party hosted platforms on
which we rely. Our approach is intended to support operational resilience and
protection of critical assets and information as we build our business.
As an early-stage company, our cybersecurity program has been governed through
cross-functional management oversight, supported by external specialists. In
connection with this approach, we completed a structured assessment of key IT
and security domains and developed a phased mitigation plan to improve our
security posture and maturity over time. The assessment informed prioritized
initiatives focused on common early-stage risk areas such as identity and
access controls, device and endpoint management, mobile access controls,
external sharing and data protections, and security monitoring and alerting.
We have implemented, and are continuing to implement, security measures
appropriate to our environment and stage of development, including measures
focused on (i) stronger authentication and access controls, (ii) management
and security baselines for endpoints and mobile devices, (iii) email and
collaboration security, (iv) enhanced logging and monitoring, and (v) incident
response preparedness. We also leverage managed IT and cybersecurity
capabilities to support functions such as endpoint protection, DNS security
filtering, dark web monitoring, cybersecurity awareness training, and email
security and recovery capabilities.
We consider cybersecurity risks as part of our broader enterprise risk
management processes, including when evaluating key vendors and service
providers. For a description of risks from cybersecurity threats that may
materially affect us and how they may do so, see Part I, Item 1A. "Risk
Factors" in this Annual Report on Form 10-K.
Governance
Our board of directors oversees cybersecurity risk as part of its oversight of
enterprise risk management. Management provides updates to the board as
appropriate regarding cybersecurity risks, program maturity and key
initiatives.
Management is responsible for day-to-day cybersecurity risk management.
Historically, strategic oversight of our cybersecurity risk management program
has been led by our Vice President of Risk, with active involvement from our
Chief Financial Officer, Chief Operating Officer, and General Counsel, and
support from external service providers. In March 2026, we hired a Chief
Information Officer to provide internal executive leadership for enterprise IT
and cybersecurity strategy and execution. Our Chief Information Officer has
more than 35 years of IT leadership experience, including experience
overseeing cybersecurity, cloud-first architectures and Zero Trust
implementations, and large-scale technology and vendor management programs.
We maintain incident management and escalation practices designed to support
timely internal reporting and coordination, including involvement of senior
management based on the nature and potential impact of an event and, as
appropriate, reporting to the board.
As an enhancement to our board's oversight of our risk management function,
our board has formed a risk and disclosure committee comprised of independent
directors to monitor our risk management function and disclosure practices and
to provide oversight and direction with respect to our efforts to identify,
manage and mitigate material risks.
Item 2. Properties
Our principal executive offices are located at 620 S. Taylor Street, Suite
301, Amarillo, Texas 79101, where we lease office space to support our
administrative and corporate functions. In addition, we lease a modular office
trailer located on the Project Matador campus that supports on-site project
management, administrative, and operational activities. The trailer is a
prefabricated unit equipped with standard office infrastructure, including
HVAC, electrical service, and telecommunications connectivity, and is
connected to site utilities as required. We believe these facilities are
adequate for our near-term needs. If required, we believe that suitable
additional or alternative space would be available in the future on
commercially reasonable terms.
Item 3. Legal Proceedings
We are involved in, and may in the future become involved in, legal
proceedings, claims, and governmental or regulatory investigations arising in
the ordinary course of business. These matters may relate to, among other
things, commercial matters and contracts, intellectual property, labor and
employment, discrimination, regulatory matters, competition, tax, consumer
protection, torts, real estate, privacy and data protection, and securities.
The matters described below are those that we believe are material:
Putative Securities Class Action
On January 5, 2026, a putative securities class action complaint was filed in
the U.S. District Court for the Southern District of New York captioned Lupia
v. Fermi Inc., et al., Case No. 1:26-cv-00050. The complaint names the
Company, certain of our directors and officers, and certain underwriters of
our initial public offering as defendants. The complaint purports to be
brought on behalf of a class of persons and entities that purchased or
otherwise acquired (i) our common stock pursuant and/or traceable to the
registration statement and prospectus issued in connection with our initial
public offering and/or (ii) our securities between October 1, 2025 and
December 11, 2025, inclusive.
The complaint alleges that defendants made materially false and misleading
statements and omissions in the registration statement and prospectus issued
in connection with our initial public offering and in other public statements
during the alleged class period, including statements and disclosures relating
to, among other things, tenant demand and funding arrangements for Project
Matador and the risk of termination of a prospective tenant's funding
commitment. The complaint asserts claims under Sections 11 and 15 of the
Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934, as well as Rule 10b-5 promulgated thereunder, and seeks
unspecified damages and other relief (including attorneys' fees and costs).
We intend to vigorously defend against the action. At this time, we are unable
to reasonably estimate the possible loss or range of loss, if any, associated
with this matter.
We are not currently a party to any other legal proceedings that we believe
are material. Regardless of the outcome, litigation can be costly and
time-consuming and can divert management's attention and resources. For
additional information, see Part I, Item 1A. "Risk Factors" and "Commitments
and Contingencies" in the notes to our consolidated financial statements
included in this Annual Report on Form 10-K.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Market Information
The Company's common stock began trading on the Nasdaq Global Select Market on
October 1, 2025 under the symbol "FRMI." Prior to that date, there was no
public trading market for the Company's common stock.
Holders
As of March 23, 2026, there were approximately 292 holders of record of the
Company's common stock. The number of beneficial owners is substantially
greater than the number of shareholders of record because a large portion of
the common stock is held in "street name" by brokers, banks, and other
financial institutions.
Dividends
U.S. federal income tax law generally requires that a REIT distribute annually
at least 90% of its REIT taxable income, without regard to the deduction for
dividends paid and excluding net capital gains, and that it pay tax at regular
U.S. federal corporate rates to the extent that it annually distributes less
than 100% of its REIT taxable income. As a rapidly growing business with
significant anticipated capital investments, including substantial investments
in assets on which we will incur large amounts of non-cash depreciation
expense that will reduce our net income, we do not expect to generate material
amounts of REIT taxable income in the near term. While it is possible that we
may elect to pay dividends to our shareholders out of operating cash flow
before we begin earning material amounts of REIT taxable income, we do not
have any current intention to do so. As we begin to earn REIT taxable income,
we will begin to pay dividends in order to satisfy the requirements for us to
qualify as a REIT and generally not be subject to U.S. federal income and
excise tax. Our policy will be to pay dividends to our shareholders equal to
all or substantially all of our REIT taxable income out of assets legally
available therefor.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Recent Sales of Unregistered Securities
None.
Use of Proceeds
On September 30, 2025, our Registration Statement was declared effective by
the SEC. On October 2, 2025, in connection with its initial public offering
("IPO"), in which the Company issued and sold 32,500,000 shares of its common
stock at a public offering price of $21.00 per share, the Company received net
proceeds of $648.4 million after deducting the underwriting discounts and
commissions, and before deducting deferred offering costs of $14.2 million. On
October 2, 2025, concurrently with the closing of the IPO, the underwriters
exercised their over-allotment option and purchased from the Company an
additional 4,875,000 shares of common stock at the IPO price, which resulted
in net proceeds to the Company of $97.3 million after deducting the
underwriting discounts and commissions. The total net proceeds from the IPO
were $745.6 million.
Performance Graph
The following stock performance graph shall not be deemed soliciting material
or to be filed with the SEC for purposes of Section 18 of the Exchange Act,
nor shall such information be incorporated by reference into any of our other
filings under the Exchange Act or the Securities Act of 1933 ("Securities
Act").
The stock performance graph compares the cumulative total return to
stockholders of our common stock relative to the cumulative total returns of
the S&P Global 500 Index ("S&P 500") and the MSCI US REIT Index
("RMZ"). All share price performance assumes an initial investment of $100 at
the beginning of the period and assumes the reinvestment of dividends. As the
Company's common stock began trading on October 1, 2025, an investment of $100
is assumed to have been made on that date, and its relative performance is
tracked through December 31, 2025.
The following table summarizes stock performance graph data points in dollars.
10/01/25 10/15/25 10/31/25 11/14/25 11/28/25 12/05/25 12/12/25 12/31/25
Fermi Inc $ 100 $ 88 $ 81 $ 56 $ 51 $ 47 $ 31 $ 25
S&P Global 500 Index $ 100 $ 99 $ 102 $ 100 $ 102 $ 102 $ 102 $ 102
MSCI US REIT Index $ 100 $ 100 $ 98 $ 98 $ 100 $ 99 $ 98 $ 97
Item 6. Reserved
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis of our financial condition and results
of operations should be read together with the consolidated financial
statements and related notes included in this Annual Report on Form 10-K
("Form 10-K"). Our actual results could differ materially from those discussed
in the forward-looking statements. Factors that could cause or contribute to
those differences include those discussed below and elsewhere in this Annual
Report on Form 10-K, particularly in "Risk Factors" and "Special Note
Regarding Forward-Looking Statements." "Fermi", "we", "us", "our" and "the
Company" (i) for periods prior to the Corporate Conversion, refer to Fermi
LLC, and, where appropriate, its consolidated subsidiaries and (ii) for
periods after the Corporate Conversion, refer to Fermi Inc., and, where
appropriate, its consolidated subsidiaries.
Overview
Fermi Inc. ("Fermi," "we," "us," or "our") exists to power the artificial
intelligence needs of tomorrow. We are building a private power campus for
AI-centric customers-developing and leasing large-scale, grid-independent
energy generation and high-performance computing facilities purpose-built for
the hyperscale era. Our strategy is anchored by Project Matador in the Texas
Panhandle, a multi-phased development on a 5,236-acre site under a long-term
ground lease that is designed to deliver up to 11 GW of private power
generation capacity and support up to approximately 15 million square feet of
AI-ready hyperscale compute infrastructure over a multi-decade timeline.
Together with additional acreage acquired or under contract adjacent to the
leased property, the expanded campus is expected to encompass approximately
7,570 acres, with generation capacity expandable to approximately 17 GW,
subject to the closing of additional land acquisitions and receipt of
incremental TCEQ air permits. We plan to develop and lease powered shell space
supported by an integrated, on-demand energy and site infrastructure platform,
including on-site natural gas-fired generation, supplemental grid-supplied
power, battery energy storage systems, solar generation for energy
displacement, and longer-term nuclear baseload supply, all in furtherance of
our objective to support large, long-duration hyperscale deployments.
We were formed in January 2025 and have not generated revenue to date. Our
efforts to date have focused on advancing site control and infrastructure
readiness, engineering and procurement, permitting and regulatory activities,
grid interconnection and fuel and water arrangements, and commercial
discussions with prospective tenants. We do not expect to generate operating
revenues until we execute definitive tenant lease agreements and commence
delivery of leased powered shell capacity and associated private power and
site services provided as an incident of tenancy, at Project Matador, and our
ability to execute our plan depends on obtaining required approvals,
converting tenant discussions into binding agreements, and raising strategic
capital. We also intend to elect to qualify as a REIT for U.S. federal income
tax purposes commencing with our short taxable year ended December 31, 2025.
For a detailed overview of the Company, see the information above presented
under the section labeled Part I, Item 1. "Business" of this Annual Report.
Recent Developments
Initial Public Offering
On October 2, 2025, in connection with its initial public offering ("IPO"), in
which the Company issued and sold 32,500,000 shares of its common stock at a
public offering price of $21.00 per share, the Company received net proceeds
of $648.4 million after deducting the underwriting discounts and commissions,
and before deducting deferred offering costs of $14.2 million. On October 2,
2025, concurrently with the closing of the IPO, the underwriters exercised
their over-allotment option and purchased from the Company an additional
4,875,000 shares of common stock at the IPO price, which resulted in net
proceeds to the Company of $97.3 million after deducting the underwriting
discounts and commissions. The total net proceeds from the IPO were $745.6
million.
Siemens F-Class Equipment Purchase Agreement
On January 28, 2026, the Company formed its first long-lead equipment
warehouse entity Fermi Turbine Warehouse LLC, a Texas limited liability
company and indirect wholly owned subsidiary of the Company ("FTW"), entered
into an arrangement with Siemens Energy, Inc. ("Siemens") for the purchase of
three F-class gas turbine units and related equipment and services for Project
Matador (the "Siemens F-Class EPA").
The fixed price portion of the Siemens F-Class EPA is approximately
$324.4 million, and as of the date of this Annual Report, the Company has
paid approximately $276.6 million. In addition to the fixed price amount, the
Company is obligated to pay shipping costs and applicable import duties, as
incurred, pursuant to the contract. The first two turbine cores are expected
to be available for shipment in the first half of 2026, with ancillary
equipment to follow in the second half of the year.
The Siemens F-Class EPA includes customary provisions relating to delivery,
transfer of title and risk of loss, performance warranties and liquidated
damages for delay or performance shortfalls, subject to negotiated caps. In
connection with the equipment supply contract, FTW also entered into a related
long-term commercial agreement with Siemens providing for ongoing payments
over a ten-year period following acceptance of the equipment, based primarily
on specified reliability metrics. The equipment supply contract and the
related agreement were negotiated together and are intended to operate as a
single integrated commercial arrangement with Siemens.
MUFG and Keystone Equipment Financing Arrangements
In February 2026, we completed the MUFG Equipment Financing, a senior secured
equipment loan warehouse facility with total commitments of up to
$500.0 million to fund the Siemens F-Class EPA and related equipment for
Project Matador, refinance our Macquarie Term Loan, and support turbine
delivery, construction, and deployment across our campus. Also in February
2026, we entered into the Keystone High Voltage Financing, an equipment-backed
facility with up to $120.0 million of initial capacity (with the ability to
increase up to an additional $100.0 million subject to approvals) to finance
equipment for Project Matador. See "-Liquidity and Capital Resources" for
additional information.
Yorkville Promissory Note
In March 2026, we entered into the Yorkville Note, a senior unsecured
promissory note with YA II PN, Ltd., an investment fund managed by Yorkville,
with a committed principal amount of $156.3 million available through a series
of advances during an availability period through October 1, 2026. Proceeds
are intended to be used for general corporate purposes. See "-Liquidity and
Capital Resources" for additional information.
Beal Equipment Financing
In March 2026, we entered into an equipment supply loan financing agreement
with CSG Investments, an affiliate of Beal Bank USA, (the "Beal Equipment
Financing") providing for a senior secured limited-recourse term loan facility
in an aggregate principal amount of up to $165.0 million to fund the
acquisition of six Siemens Energy SGT-800 industrial gas turbines and related
equipment for Project Matador. Loans bear interest at 12.00% per annum, and
the facility matures 33 months after closing. See "-Liquidity and Capital
Resources" for additional information.
Initial 6 GW Clean Air Permit Approved
On November 4, 2025, we announced that the TCEQ granted preliminary approval
for air permitting associated with the first approximately 6 GW of a
multi-gigawatt natural gas-fired generation facility planned for Project
Matador. This milestone supported continued engineering and procurement
sequencing for our initial natural gas generation buildout.
On February 25, 2026, we received final approval from TCEQ for our
approximately 6 GW Clean Air Permit, which we believe represents one of the
largest natural gas-fired air permits issued in the Western Hemisphere. We
believe this approval materially advances Project Matador's development
readiness and strengthens our ability to convert tenant discussions into
binding lease agreements and to pursue project-level financing for the initial
tenant campus.
On March 27, 2026, we filed an additional application with the TCEQ for an
incremental 5 GW Clean Air Permit. If approved, this permit would authorize
the site for up to approximately 11 GW of total natural gas-fired generation
capacity, providing the flexibility to achieve the full 11 GW campus buildout
entirely through gas-fired generation independent of the nuclear development
timeline.
NRC Environmental Review Scoping
On March 20, 2026, the NRC published a Notice of Intent in the Federal
Register to conduct a scoping process and prepare an EIS in connection with
our COL application for four Westinghouse AP1000 reactors at Project Matador,
initiating a 30-day public scoping period. Fermi America was selected as the
first private company to participate in the NRC's transformative pilot program
for applicant-prepared environmental impact statements under the NEPA. This
pilot-enabled by recent amendments to NEPA-is expected to reduce in-house NRC
review time and deliver resource savings, while maintaining full regulatory
compliance. We believe our participation in this program reflects the progress
we are making on Project Matador and positions us as a leader in
next-generation nuclear licensing.
Collaboration Agreement with Texas Tech University System
On March 30, 2026, Texas Tech University System ("TTU") and the Company
entered into a Collaboration Agreement pursuant to which TTU confirms it is
committed to its relationship with the Company, is encouraged by the progress
with tenants to date and looks forward to Project Matador being brought to
fruition.
In addition, the Company agreed to pre-pay rent in the amount of $2.0 million
within 75 days of the date of the Collaboration Agreement, with an additional
$9.0 million to be paid into escrow prior to December 31, 2026, with such
amounts to be released from escrow as they become due under the ground lease
and applied to any amounts payable (including rent) to TTU.
The Collaboration Agreement was entered into following an exchange between TTU
and the Company regarding the future of Project Matador and reflects each
party's intent to move forward collaboratively with the development of the
leased site.
Trends and Other Factors Impacting Our Performance
The growth and future success of our business depends on many factors. While
these factors present significant opportunities for our business, they also
pose risks and challenges, including those discussed below and described in
Part I, Item 1A. "Risk Factors," that we must successfully address to achieve
growth, improve our results of operations, and generate profits.
AI-Driven Demand for Compute and Energy Infrastructure
The rapid adoption and advancement of generative artificial intelligence,
high-performance computing, and cloud infrastructure have created
unprecedented demand for compute power and associated energy infrastructure.
Our ability to attract and retain large-scale AI tenants will depend on our
ability to deliver reliable, scalable, and low-latency power directly to
powered shell environments. A decline or slowdown in AI infrastructure
deployment, shifts in customer architecture preferences, or market saturation
could adversely impact demand for our solutions.
Energy as a Constraint to Digital Expansion
Grid congestion, transmission delays, and utility interconnection bottlenecks
have emerged as major constraints on the expansion of hyperscale
infrastructure in the U.S. Our model-which delivers private, compute-adjacent
power-responds directly to this macro constraint. As traditional grid-tied
campuses experience years-long permitting delays, Fermi offers tenants the
opportunity to decouple from these risks and achieve accelerated deployment
schedules. Nevertheless, the successful deployment of additional nuclear power
generation capacity at scale is a long-term endeavor that will be costly and
is subject to a number of risks, including political changes, supply chain
delays, cost overruns, capital constraints, and other risks that are more
fully described in Part I, Item 1A. "Risk Factors."
Nuclear Re-Emergence as Strategic Infrastructure
Amid global efforts to decarbonize and reduce dependence on fossil fuels,
nuclear power is being re-evaluated as a critical component of energy security
and resilience. We believe we are at the forefront of this shift. Favorable
federal support, investor appetite, and policy alignment are accelerating
licensing efforts and enabling public-private partnerships for nuclear
innovation. Our successful filing of a COL application for Westinghouse
Reactors positions Fermi to capitalize on this trend in the next cycle of U.S.
nuclear development. While the current environment for nuclear power in the
U.S. and Texas is currently favorable, we can provide no assurance it will
continue.
Sovereign Cloud and AI Nationalization
Foreign governments and large enterprises are increasingly seeking full-stack
control over their digital infrastructure-from chip to cloud to energy. This
shift toward "sovereign compute" and secure, onshore data environments creates
new demand for purpose-built campuses like Project Matador. Our site
structure, secure energy delivery, and onshore control model are well-aligned
with this emerging preference for high-security, mission-critical
infrastructure.
Power Generation and Energy Sourcing Strategy
Our private power generation strategy relies on a diversified mix of gas,
nuclear, and solar energy, with grid connectivity designed to scale
selectively as the campus grows. As our development plans move forward, we are
retaining the optionality to modify our power mix, including upsizing our gas
supply infrastructure to increase our ability to develop additional gas-fired
generation. We are currently in discussions to increase our natural gas supply
and related infrastructure sufficient to power up to 11 GW of natural
gas-fired generation while continuing to pursue our nuclear, solar and other
development plans. The timely delivery and commissioning of these systems is
critical to supporting tenant workloads and achieving planned uptime and
redundancy levels. Any underperformance of natural gas assets, delays in
nuclear buildout, or variability in solar generation could reduce the
availability or reliability of power delivery, impacting tenant satisfaction
and lease revenue.
Furthermore, our access to natural gas is enabled by proximity to major
reserves and pipeline infrastructure. Supply disruptions, price volatility, or
shifts in regulatory treatment of fossil fuel generation could affect both
cost and availability of fuel for gas-fired systems.
Technological Change and Industry Evolution
The AI and energy infrastructure sectors are characterized by rapid
technological evolution. Advances in chip design, cooling methods, power
conversion, or energy storage may influence tenant expectations and
infrastructure compatibility. Our long-term success depends on our ability to
anticipate and integrate emerging technologies into our platform and adapt our
energy delivery models accordingly.
Failure to remain aligned with tenant technology requirements or to offer
competitive energy efficiency, latency, or power density could diminish our
value proposition.
Environmental and Community Factors
Although the Project Matador Site benefits from strong local support, public
perception and environmental stewardship remain critical to long-term
viability. Any material change in local sentiment, stakeholder opposition, or
perceived environmental risk could lead to reputational damage or permitting
disruption. We must manage water use, emissions, noise, and land disturbance
in accordance with both regulatory and community expectations.
Additionally, extreme weather, drought, or other climate-related events could
affect site operations and infrastructure resilience-particularly in the
context of water rights and cooling systems.
Regulatory Approvals and Permitting Processes
Our operations are subject to extensive federal, state, and local
regulation-including nuclear licensing by the NRC, air and water permitting by
the TCEQ, power generation by the PUCT, and environmental approvals under
NEPA. Our ability to construct and operate generation facilities, particularly
nuclear reactors, depends on our success in obtaining and maintaining these
approvals. Regulatory delays, changes in policy, or third-party legal
challenges could significantly impact our development timelines and cost
structure.
Geopolitical and Policy Dynamics
Energy infrastructure and compute are increasingly viewed through the lens of
national security and economic competitiveness. Changes in U.S. energy policy,
AI regulation, foreign investment review, export controls, or sovereign data
localization requirements may impact both our operations and those of our
tenants. Our ability to navigate this evolving policy landscape-especially as
it pertains to nuclear energy, grid resilience, and critical infrastructure
designation-will affect long-term scalability.
Tenant Acquisition and Retention
Our revenue model is heavily dependent on securing multi-GW scale anchor
tenants and maintaining long-term powered shell leasing agreements. Our
ability to attract high-credit-quality tenants-particularly large AI
developers, hyperscalers, and sovereign compute platforms-is critical to
achieving scale and recurring revenues. Changes in customer requirements,
economic conditions, or competitive offerings could hinder tenant growth or
increase churn risk. Delays in tenant onboarding or renegotiation of terms due
to construction timelines may also impact financial performance.
Components of Results of Operations
General and Administrative
General and administrative expenses consist primarily of non-cash share-based
compensation and personnel-related expenses for our employees and service
providers, including those supporting our corporate, executive, finance, and
administrative functions. These expenses also include costs for outside
professional services such as legal, accounting, and audit services, as well
as other general corporate expenses such as travel and recruiting.
We expect our general and administrative expenses to increase for the
foreseeable future as we continue to scale as a company. We also anticipate
incurring additional costs as a result of operating as a public company,
including expenses associated with compliance with the rules and regulations
of the SEC and applicable securities exchanges, as well as legal, audit,
investor relations, insurance, and other administrative and professional
services. We incurred significant non-cash share-based compensation charges in
the fourth quarter of 2025 and expect recurring share-based compensation
charges thereafter.
Interest Income (Expense), Net
Interest income (expense), net consists of interest earned on cash and cash
equivalents held in interest-bearing accounts during the period, partially
offset by interest expense on outstanding borrowings and financing
arrangements, including stated interest, commitment fees, and the amortization
of deferred financing costs, deferred issuance costs, and debt discounts.
Interest income (expense), net is reflected net of capitalized interest.
Other Income (Expense), Net
Other income (expense), net consists primarily of charitable contribution
expense, inducement expense related to financing arrangements, and gains or
losses resulting from changes in the fair value of financial instruments,
including convertible notes accounted for under the fair value option and
embedded derivative liabilities.
Results of Operations
The following table sets forth the components of our statements of operations
for the periods presented below:
(in thousands) For the period from
January 10, 2025 (Inception)
through December 31, 2025
Expenses:
General and administrative $
177,779
Total expenses
177,779
Loss from operations
(177,779)
Other income (expense):
Interest income (expense), net
3,732
Other income (expense), net
(312,332)
Total other income (expense)
(308,600)
Net loss $
(486,379)
General and Administrative
General and administrative expenses for the period from January 10, 2025
(Inception) through December 31, 2025, totaled $177.8 million. The amount
primarily reflects $132.7 million of share-based compensation expense and
$11.9 million of personnel-related expenses for employees and service
providers supporting corporate, executive, finance, and administrative
functions, along with $21.8 million of costs for outside professional services
such as legal, accounting, and audit, and $11.4 million of other general
corporate activities including recruiting, travel, marketing, and other
general corporate activities.
Interest Income (Expense), Net
Interest income (expense), net for the period from January 10, 2025
(Inception) through December 31, 2025, totaled $3.7 million. The amount
primarily reflects $4.4 million of interest income earned on cash and cash
equivalents held in interest-bearing accounts during the period, partially
offset by $0.7 million of interest expense related to outstanding borrowings
and financing arrangements, including stated interest, commitment fees, and
amortization of deferred financing costs. Interest expense excludes $18.4
million of interest that was capitalized to Property, plant and equipment,
net.
Other Income (Expense), Net
Other income (expense), net for the period from January 10, 2025 (Inception)
through December 31, 2025, totaled $312.3 million. The amount primarily
reflects non-cash charges, including a $173.8 million charitable contribution
expense related to the donation of 11,250,000 Class B Units to Dechomai Asset
Trust, an unrelated, third party, 501(c)(3) public nonprofit organization, a
$61.0 million fair value loss recognized on the Series B Convertible Notes for
which the Company elected the fair value option, $46.4 million of fair value
losses on embedded derivative liabilities associated with the Preferred Units
Financing, and a $23.7 million inducement expense recognized in connection
with the Preferred Units Financing.
Liquidity and Capital Resources
Liquidity and Going Concern
Under ASC Topic 205-40, Presentation of Financial Statements-Going Concern, we
are required to evaluate whether conditions or events raise substantial doubt
about our ability to meet future financial obligations as they become due
within one year after the consolidated financial statements are issued.
As of December 31, 2025, the Company had not generated any revenues. Tenant
revenues are currently expected to commence in 2027; however, as of the date
of this Annual Report on Form 10-K, the Company has not executed a lease
agreement with a tenant, and even if the Company is successful in doing so,
such revenues are not expected to be sufficient to fund the Company's full
operating and capital requirements until Phase 4 of Project Matador is
completed and operating at scale. Project Matador will require substantial
capital investment to achieve commercial operation. To finance the
construction and development of Project Matador during this period, we intend
to raise capital through a combination of equity financings, various debt
issuances, and tenant prepayments. These financings are not certain to occur.
If we are unable to raise capital in the amounts, timing, or terms we expect,
we may be forced to delay capital expenditures, amend or terminate our
purchase commitments or surrender assets pledged as collateral under our
financing agreements in order to preserve liquidity, which could materially
extend our development timeline and delay one or more phases of Project
Matador, preventing us from achieving planned operational and financial
milestones within the anticipated timeframe. See "-Sources of Liquidity" and
"-Planned Use of Capital" below.
Based on our current operating plan and our available capital, we believe our
resources are sufficient to satisfy our financial obligations for at least
twelve months following the issuance of these consolidated financial
statements. Our anticipated liquidity includes our existing cash balance, the
net proceeds from the MUFG Equipment Financing and Keystone High Voltage
Financing, which closed in February 2026, available borrowing capacity under
the Yorkville Note and Beal Equipment Financing, which were entered into in
March 2026, and planned near term funding sources, including anticipated
tenant prepayments, project-level debt, and strategic equity capital. Our
operating plan for the upcoming year is designed to align with capital sources
that are either in hand or reasonably expected to be secured within that
timeframe.
MUFG Equipment Financing
On February 10, 2026 (the "Closing Date"), the Company consummated a strategic
financing with MUFG Bank, Ltd. ("MUFG") (the "MUFG Equipment Financing")
pursuant to an Equipment Supply Loan Financing Agreement (the "Credit
Agreement") entered into by FTW ("Borrower"), Firebird Equipment Holdco as
subsidiary guarantor (the "Subsidiary Guarantor"), and MUFG, as sole lender.
The MUFG Equipment Financing will enable the Company to fund the Siemens
F-Class EPA and related equipment for Project Matador, refinance the Company's
existing Macquarie Term Loan, and support the delivery, construction, and
deployment of turbines across Fermi's existing fleet.
The Credit Agreement provides for a senior secured equipment loan warehouse
facility in an aggregate principal amount of up to $500.0 million (the "Total
Loan Commitment"). Borrowings under the Credit Agreement may be made from the
Closing Date through the nine-month anniversary of the Closing Date. Each loan
under the Credit Agreement bears interest at a rate per annum equal to (i) in
the case of Term SOFR Loans, the Term SOFR rate for the applicable interest
period plus 4.0% per annum, or (ii) in the case of RFR Loans, Daily Simple
SOFR plus 4.0% per annum.
Proceeds of the loans under the Credit Agreement may be used to (i) pay
equipment acquisition costs or make distributions to the Company or its
affiliates to reimburse for equipment acquisition costs paid prior to the
Closing Date, (ii) pay fees and transaction costs, (iii) fund required reserve
accounts, and (iv) make distributions to the Company to repay existing
indebtedness of the Company or its affiliates in respect of qualified
equipment to be financed under the Credit Agreement. Proceeds of borrowings
were used, in part, to make payments to Siemens Energy in an amount equal to
$201.6 million pursuant to the Siemens F-Class EPA.
The loans under the Credit Agreement mature on the eighteen-month anniversary
of the Closing Date. The Borrower is required to repay (i) on each quarterly
payment date, the minimum principal payment then due and owing, and (ii) on
the loan maturity date, the remaining unpaid principal amount of all loans
plus any other obligations under the financing documents. Prior to the
nine-month anniversary of the Closing Date, no minimum principal payment is
due. Thereafter, the minimum principal payment is (a) 10% of the aggregate
principal amount of loans outstanding if no lease or offtake agreement with
respect to the first phase of Project Matador for at least 400 MW of power has
been signed prior to the nine-month anniversary of the Credit Agreement, or
(b) 5% of the aggregate principal amount of loans outstanding if such a lease
or offtake agreement has been signed prior to such anniversary.
The Credit Agreement also contains customary negative covenants that, among
other things, restrict the ability of each loan party to (i) incur additional
indebtedness, (ii) create liens on assets other than permitted liens, (iii)
make certain investments, (iv) sell, lease, or transfer assets except as
permitted, (v) make distributions other than as provided in the account
agreement, (vi) engage in transactions with affiliates, and (vii) permit a
change of control.
The Credit Agreement imposes loan-to-value requirements on the collateral. The
target loan-to-value ratio for delivered equipment is 65%, and the target
loan-to-value ratio for undelivered equipment is 55%. If the loan-to-value
ratio exceeds the applicable target ratio for more than thirty consecutive
days following an updated appraisal with a value more than 2% lower than the
initial appraisal for such equipment, an event of default will occur unless
the applicable shortfall amount is paid within such thirty-day period.
Keystone Equipment Financing
In February 2026, Fermi High Voltage Warehouse LLC, a Texas limited liability
company and indirect wholly owned subsidiary of the Company ("HVW"), entered
into a master loan agreement (the "Keystone Master Loan Agreement") with
Keystone National Group, LLC, as collateral agent and administrative agent for
the lenders (the "Keystone Agent"), Cape Commercial Finance LLC ("CCF"), as
sole arranger, and Keystone Private Income Fund, as the initial lender (the
"Keystone Lender"), to finance the purchase of certain equipment (the
"Keystone High Voltage Financing").
The Keystone Master Loan Agreement provides for an equipment-backed financing
structure pursuant to which HVW may request one or more advances of up to an
aggregate principal amount of $120.0 million, which amount may be increased
from time to time by up to an additional $100.0 million subject to lender
approvals (collectively, the "Keystone Facility"). Advances may be requested
from the closing date through the earlier of (i) 12 months following the
closing date and (ii) the date the Keystone Facility is fully advanced. Each
advance is evidenced by a separate promissory note, and the term and annual
interest rate applicable to each advance are set forth in the applicable
promissory note. Borrowings under the Keystone High Voltage Financing
agreement totaled $39.5 million in 2026. The Keystone Facility is not a
revolving credit facility, and each advance is subject to satisfaction of
specified conditions and acceptance by the Keystone Agent and the applicable
lender.
Advances generally fund up to 80% of the purchase price of the related
equipment, with the remaining 20% funded by HVW and/or its affiliates. As of
the closing date, HVW had funded approximately $52.2 million of equipment
costs prior to closing, which may be applied toward the required equity
contribution for future advances.
The obligations under the Keystone Facility are secured by a first-priority
security interest in the financed equipment and related collateral, and the
Company has provided a limited guaranty of HVW's obligations. The Keystone
Master Loan Agreement contains customary affirmative and negative covenants
and events of default, including restrictions on additional indebtedness and
liens and a change of control. In addition, the Keystone Master Loan Agreement
includes (i) a minimum liquidity covenant requiring the Company to maintain at
least $20.0 million of liquidity until the Keystone Facility is paid in full
or a qualifying customer agreement is executed, (ii) a mandatory prepayment
requirement if the Keystone Agent has not received an approved customer
agreement by December 31, 2026, and (iii) a collateral coverage requirement
under which HVW must repay outstanding amounts or provide additional
collateral if the aggregate outstanding principal exceeds 110% of the fair
market value of the collateral based on the most recent appraisal.
Yorkville Promissory Note
In March 2026, the Company entered into the Yorkville Note with YA II PN, an
investment fund managed by Yorkville, with a committed principal amount of
$156.3 million.
The Yorkville Note provides for up to five advances during an availability
period commencing the first business day following the issuance date through
October 1, 2026. The committed principal amount automatically reduces by
approximately $26.0 million every 30 days following the issuance date. Each
advance is funded net of a 4% funding premium. The Yorkville Note is not a
revolving commitment, and once an advance is funded, the corresponding portion
of the committed principal amount is not available for re-borrowing. The
Yorkville Note matures in September 2027 and bears interest at 0% per annum,
subject to increase to 18% upon the occurrence of an event of default. No
amounts have been drawn under the Yorkville Note.
Beginning on the amortization period commencement date (thirty days following
the first advance), the Company is required to make monthly amortization
payments. At least $10 million of each monthly amortization payment must be
satisfied in shares of common stock, with the Company having the option to
settle a greater portion in shares. When paid in shares, the shares are valued
at the greater of 100% of the lowest daily volume-weighted average price
during the three trading days immediately preceding the applicable notice
date, or 91% of the closing price on the trading day immediately preceding the
amortization share notice subject to a cap of 8,000,000 shares per monthly
amortization payment, an aggregate cap of 40,000,000 shares issuable under the
note, and a 4.99% beneficial ownership limitation. If paid in cash, the
payment is made at 102% of the applicable amortization principal amount of
100% if funded through proceeds of the equity line of credit.
The Company is also required to pay a monthly exit fee on outstanding
principal, which is 0% for the first 180 days following issuance, 1% from day
181 through day 365, and 1.33% thereafter. An undrawn commitment fee of 1% of
the undrawn committed principal amount is payable on or about the funding of
the first advance. Proceeds of each advance are to be used for general
corporate purposes. The Yorkville Note is unsecured, ranks pari passu with any
other notes the Company may issue to YA II PN and senior to the Company's
other unsecured indebtedness. The note contains customary affirmative and
negative covenants, including restrictions on additional indebtedness (subject
to certain exceptions when outstanding principal is less than 50% of the
committed principal amount) and liens, as well as customary representations
and warranties and events of default.
In connection with the Yorkville Note, the Company agreed to negotiate in good
faith and execute documentation to establish a committed equity line of credit
facility with Yorkville. The Company also agreed to use commercially
reasonable efforts to prepare and file a registration statement to register
the resale of the shares of common stock issuable under the Yorkville Note and
the equity line of credit.
Beal Equipment Financing
In March 2026, Fermi Turbine Warehouse II LLC, a Texas limited liability
company and indirect wholly owned subsidiary of the Company ("FTW II"),
entered into an Equipment Supply Loan Financing Agreement (the "Beal Credit
Agreement") with CSG Investments, an affiliate of Beal Bank USA, with CLMG
Corp., as administrative agent and collateral agent for the lenders (the "Beal
Agent"), and the lenders party thereto (the "Beal Lenders"), to fund the
acquisition of six Siemens Energy SGT-800 industrial gas turbines and related
equipment for Project Matador (the "Beal Equipment Financing").
The Beal Credit Agreement provides for a senior secured term loan facility in
an aggregate principal amount of up to $165.0 million (the "Total Loan
Commitment"). Borrowings may be made from the closing date through the
maturity date, subject to a maximum of 45 borrowings during the loan
availability period. Of the Total Loan Commitment, up to $22.9 million is
reserved to fund interest and commitment fee payments. Each loan under the
Beal Credit Agreement bears interest at a rate of 12.00% per annum, payable
quarterly in arrears. Upon the occurrence and during the continuance of an
event of default, interest accrues at a default rate of 14.00% per annum.
Proceeds of the loans may be used to pay equipment acquisition costs,
including progress payments to Siemens Energy, Inc. under an equipment supply
agreement originally entered into in October 2025 and subsequently assigned to
FTW II, and to pay financing costs, including interest and fees.
The loans mature on the date that is 33 months after the closing date. On the
maturity date (or upon earlier payment in full), FTW II is required to pay an
exit fee equal to $37.0 million less the cumulative amount of interest and
commitment fees paid to the lenders through such date.
The Beal Credit Agreement also provides for an unused commitment fee of 1% per
annum on the daily unused and uncancelled portion of the commitments, payable
quarterly in arrears.
The obligations under the Beal Equipment Financing are secured by a
first-priority security interest in the financed equipment and related
collateral, and the Company has provided a guaranty of FTW II's obligations
pursuant to a Sponsor Equity Contribution and Guaranty Agreement. The Beal
Credit Agreement contains customary affirmative and negative covenants and
events of default, including restrictions on additional indebtedness, liens,
dispositions of equipment (subject to a permitted disposition of three
turbines under certain conditions), and change of control. Mandatory
prepayment is required upon, among other things, an event of loss, a
disposition of equipment or equity interests, a change of control, or receipt
of non-permitted debt proceeds.
Macquarie Equipment Financing
On August 29, 2025, Fermi Equipment HoldCo, LLC and Firebird Equipment HoldCo,
LLC (the "Borrowers") entered into the Macquarie Term Loan with Macquarie for
a $100.0 million senior secured bridge loan to finance the Company's
obligations under the Siemens Contract and which is guaranteed by the Company.
Immediately following the closing of the Macquarie Term Loan, the Company
borrowed $100.0 million under that facility. In February 2026, a portion of
the proceeds from the issuance of the MUFG Equipment Financing was used to
repay the Macquarie Term Loan in full.
Preferred Units Financing
On August 29, 2025, the Company issued and sold approximately $107.6 million
of its Preferred Units in a private placement to a consortium of third-party
investors led by Macquarie. The holders of Preferred Units received a
cumulative in-kind dividend at a rate of 15% per annum, compounding annually.
Upon the Company's election, it could satisfy such dividend in cash.
Additionally, the holders of the Preferred Units were entitled to receive, on
an as-converted basis, the same dividends (as to amount and timing) as any
dividends paid by the Company on its Class A Units and Class B Units.
In connection with the IPO and Corporate Conversion, the Preferred Units
converted into 7,586,546 shares of common stock, based on a conversion ratio
equal to the quotient of (i) $1,000 plus any accrued and unpaid dividends per
Preferred Unit, divided by (ii) the applicable conversion price, which was
equal to 68.4% of the IPO price per share.
Convertible Debt Financing
We have issued $246.6 million through convertible debt financing as follows:
Series Seed Convertible Notes
In May 2025, we issued the Seed Convertible Notes for an aggregate principal
amount of $26.1 million. The Seed Convertible Notes bore 15% interest per
annum, which interest was payable in-kind on a quarterly basis, and were to
mature five years from the date of their issuance. The Seed Convertible Notes
were convertible into Class A Units at a conversion price of $2.67 per unit.
In connection with the Preferred Units Financing, the Seed Convertible Notes
converted into 10,190,931 Class A Units of the Company, with such unit figures
presented prior to giving effect to the Corporate Conversion.
Series A Convertible Notes
In June and July of 2025, we issued Series A Convertible Notes for an
aggregate principal amount of $75.5 million. The Series A Convertible Notes
bore 15% interest per annum, which interest was payable in-kind on a quarterly
basis, and were to mature in five years from the date of their issuance. The
Series A Convertible Notes were convertible into Class A Units at a conversion
price of $4.00 per unit. In connection with the Preferred Units Financing, the
holders of the Series A Convertible Notes elected to convert their Series A
Convertible Notes into 19,479,315 Class A Units of the Company, with such unit
figures presented prior to giving effect to the Corporate Conversion.
Series B Convertible Note
The Company issued the Series B Convertible Note for an aggregate principal
amount of $145.0 million in connection with the closing of the Firebird
Acquisition. The Series B Convertible Note bore 11% interest per annum, which
interest was payable in-kind on a quarterly basis, and was to mature on
January 31, 2026. At any time at MAD's election, the Series B Convertible Note
was convertible into Class A Units at a conversion price equal to $3.0 billion
divided by the Company's fully-diluted capitalization immediately prior to the
applicable conversion event, assuming exercise or conversion of all
convertible securities of the Company, but excluding any Class A Units
issuable upon conversion of the Series B Convertible Note or any of the other
Series B Convertible Secured Promissory Notes. In connection with the
Preferred Units Financing, the holder of the Series B Convertible Note elected
to convert its Series B Convertible Note into 9,592,340 Class A Units of the
Company, with such unit figures presented prior to giving effect to the
Corporate Conversion.
Dividends and Distributions
U.S. federal income tax law generally requires that a REIT distribute annually
at least 90% of its REIT taxable income, without regard to the deduction for
dividends paid and excluding net capital gains, and that it pay tax at regular
U.S. federal corporate rates to the extent that it annually distributes less
than 100% of its REIT taxable income. As a rapidly growing business with
significant anticipated capital investments, including substantial investments
in assets on which we will incur large amounts of non-cash depreciation
expense that will reduce our net income, we do not expect to generate material
amounts of REIT taxable income in the near term. While it is possible that we
may elect to pay dividends to our shareholders out of operating cash flow
before we begin earning material amounts of REIT taxable income, we do not
have any current intention to do so. As we begin to earn REIT taxable income,
we will begin to pay dividends in order to satisfy the requirements for us to
qualify as a REIT and generally not be subject to U.S. federal income and
excise tax. Our policy will be to pay dividends to our shareholders equal to
all or substantially all of our REIT taxable income out of assets legally
available therefor.
As a result of the REIT distribution requirement, we will be unable to rely on
retained earnings to fund our ongoing operations to the same extent that other
companies which are not REITs can. We may need to continue to raise capital in
the debt and equity markets to fund our working capital needs.
Sources of Liquidity
We expect our liquidity to be supported by a diversified capital strategy
designed to fund phased infrastructure development and long-term operations.
In addition to the net proceeds from our IPO and the financings we have
completed to date as described above, our approach is expected to include
additional non-recourse equipment financings, structured project-level
non-recourse debt, monetization of federal energy tax credits, strategic
equity investments, government grants, and property tax abatement. In
addition, we anticipate receiving tenant prepayments from tenants with whom we
enter into lease agreements. We believe our sources of liquidity will support
the procurement and timely-delivery of key power generation assets and powered
shell space. These assets, when combined with the intrinsic value of the
Project Matador Site, we believe should allow us to finance future SPE
developments with capital provided by customer prepayments and the SPE's
creditors without requiring cash contributions from the Company.
Our principal sources of liquidity are expected to include:
• Net Proceeds from our IPO: We intend to use a portion of the net
proceeds from the IPO to fund early-stage infrastructure investments,
including site mobilization, nuclear licensing, turbine procurement, and the
initial wave of powered shell construction. These investments support
foundational project elements required to unlock additional strategic capital
and advance our Project Matador milestones.
• Tenant Prepayments: We expect a significant portion of our
contracted revenue base to come from investment-grade tenants, many of whom
are anticipated to provide upfront capital contributions or structured
prepayments to support dedicated infrastructure buildout. These prepayments
enhance early-stage liquidity and reduce reliance on dilutive equity or bridge
financing. For non-investment grade tenants, we intend to require larger
upfront prepayments, third-party credit enhancements, or insurance wrappers to
mitigate counterparty risk and preserve underwriting standards. This
structured approach to tenant capital participation is designed to strengthen
our balance sheet, support project-level debt financing, and align tenant
incentives with long-term infrastructure utilization. As of the date of this
Annual Report, we have not entered into agreements with any tenants.
• Non-Recourse and Limited Recourse Equipment Financing: We intend
to utilize equipment-backed, non-recourse financing facilities to fund the
acquisition and deployment of critical long-lead equipment, such as gas
turbines and high-voltage electrical infrastructure, prior to final project
financing. These financings are generally secured by the financed equipment
and related collateral and are structured at subsidiary-level entities aligned
with specific equipment portfolios. See "-Recent Developments" above for a
discussion of recent equipment financings.
• Vendor Financing: We intend to negotiate extended payment terms
and structured vendor financing arrangements with key equipment manufacturers
and engineering, procurement, and construction (EPC) contractors. These
arrangements may include deferred payment schedules, milestone-based
installment structures, or vendor-provided credit facilities tied to equipment
delivery and commissioning timelines. Vendor financing reduces upfront capital
requirements, preserves liquidity during the construction phase, and aligns
payment obligations with project progress and value creation. Where available,
we may also pursue vendor take-back financing or equipment lease-to-own
structures to further optimize working capital deployment across concurrent
development workstreams.
• Project-Level Debt Financing: We intend to primarily utilize
milestone-driven, non-recourse debt raised through project-specific SPEs, each
aligned with discrete infrastructure components such as nuclear, natural gas,
solar, and battery assets. These financings will be secured by
revenue-generating infrastructure, including tenant lease payments, energy
generation assets, or renewable infrastructure.
• Finance Lease Financing: We intend to utilize finance lease
structures to finance certain infrastructure assets, including power
generation equipment, cooling systems, and powered shell mechanical and
electrical components. Under these arrangements, we expect to secure long-term
lease agreements with purchase options at or below fair market value, enabling
us to deploy critical assets while managing upfront capital expenditures.
Finance lease financing allows us to match asset utilization with payment
obligations, preserve borrowing capacity under corporate credit facilities,
and maintain operational flexibility across phased campus buildout. These
leases are expected to be structured at the project or subsidiary level.
• Federal Tax Credits: To the extent that tax incentives, such as
those under Sections 45J (nuclear production), 45Q (carbon capture), 45V
(clean hydrogen production credit), and 48C (advanced manufacturing) of the
Code, are available to us, we expect to apply for and monetize such tax
incentives.
• Strategic Equity Capital: We may raise equity capital from
infrastructure investors, energy sponsors, or anchor tenants seeking
co-investment opportunities in our vertically integrated campus model. In
addition, we may opportunistically access the capital markets through
follow-on equity offerings, private placements, convertible debt instruments,
or bond issuances. All capital raising activities will be evaluated based on
market conditions, expected accretion, and alignment with our long-term
capital structure and development strategy.
• Government Grants and Public Incentives: We have submitted or
plan to submit applications to federal and state infrastructure programs,
including the DOE Office of Energy Dominance Financing, the Advanced Reactor
Demonstration Program, and the Texas HB14 Advanced Nuclear Completion Fund. We
are currently in the pre-approval process with the DOE Office of Energy
Dominance Financing. If approved, the DOE loan would provide long-term,
low-cost capital to finance key components of our advanced energy
infrastructure, significantly reduce our weighted average cost of capital,
de-risk private participation, and enable milestone-based funding aligned with
regulatory and construction schedules. The DOE loan is expected to support
broader investor confidence, catalyze private equity co-investment, and serve
as a critical enabler of long-term project viability.
• Property Tax Abatement: In October 2025, Carson County approved
a 10-year property tax abatement and established a reinvestment zone for the
Project Matador campus. This agreement provides a framework that encourages
local investment, supports regional economic growth, and creates long-term,
sustainable jobs while generating new tax revenues for the community. The
approved abatement will significantly reduce early-year site tax liabilities,
improving free cash flow during the initial construction phase.
• Monetization of Lease Agreements: We plan to monetize long-term
lease agreements with hyperscale and industrial tenants through structured
financing arrangements, including upfront payments, securitizations, or
synthetic sale structures. These agreements-anchored by take-or-pay provisions
and long-duration contract terms-are expected to generate predictable,
investment-grade cash flows suitable for conversion into near-term liquidity.
By monetizing long-term lease agreements, we can unlock non-dilutive capital
to fund infrastructure buildout while maintaining operational control of our
energy assets. This strategy complements our broader project finance approach
and supports capital recycling across phases of campus development.
Although we plan to fund near-term development activities through a
combination of proceeds from our IPO, expected tenant prepayments upon
execution of one or more lease agreements, non-recourse equipment financings
and expected project-level non-recourse debt, and strategic equity capital,
there can be no assurance that such capital will be available in the amounts
required, on the timeline needed, or on favorable terms. Access to financing
may be constrained by changes in macroeconomic conditions, increases in
interest rates, tenant-specific credit risks, regulatory shifts, or other
market factors beyond our control. In addition, if we encounter adverse
findings during environmental diligence, engineering assessments, or other
aspects of site development that render all or part of the Project Matador
campus unsuitable-or impair the use of our real estate assets as collateral
for secured financing-then our ability to raise additional debt or equity
capital could be significantly limited.
We may also experience delays in construction that extend beyond our estimated
development timeline. Prolonged development periods could increase project
costs beyond budgeted amounts and reduce the availability of expected tenant
contributions or rent payments to fund operations during interim periods. Any
such timing misalignments could necessitate additional bridge capital or
contingency financing, which may not be available on acceptable terms, or at
all. Furthermore, unanticipated events-such as permitting delays, failure to
secure required regulatory approvals, evolving tenant demand, or force majeure
events-could result in liquidity shortfalls or force us to amend our capital
plan.
Market conditions may also affect our ability to raise capital. For example,
credit providers or their regulators may shift policy away from funding
projects involving nuclear or fossil-based generation assets, or may reduce
exposure to long-duration infrastructure development with extended pre-revenue
periods. Even if financing is available, we may be required to accept
unfavorable terms, including higher cost of capital, restrictive covenants, or
equity dilution, all of which could impair our ability to execute our business
plan. If we are unable to raise capital in the amounts, timing, or terms we
expect, we may be forced to delay capital expenditures, amend or terminate our
purchase commitments or surrender assets pledged as collateral under our
financing agreements in order to preserve liquidity, which could materially
extend our development timeline and delay one or more phases of Project
Matador, preventing us from achieving planned operational and financial
milestones within the anticipated timeframe.
Planned Use of Capital
We anticipate deploying our capital resources to support the following
development activities:
• Civil site preparation, pad grading, utility trenching, and
fiber backhaul installation;
• Procurement and installation of mobile and permanent gas-fired
and nuclear power infrastructure;
• Address historic environmental conditions;
• NRC licensing and environmental permitting activities;
• Construction of modular powered shell facilities and supporting
infrastructure; and
• Capitalization of early-phase SPEs to enable project-level debt
financing.
The Company's long-range capital plan is shaped by a phased infrastructure
delivery model, including a roadmap to deploy four Westinghouse Reactors, and
a multi-phase gas generation strategy. Our current plan envisions the
commissioning of one Westinghouse Reactor unit in each of 2032, 2034, 2035 and
2036. Each unit is expected to be financed through a combination of tenant
prepayments, non-recourse equipment financings and project-level non-recourse
debt, DOE loan guarantees, state-level incentive programs, and strategic
equity.
For our gas-fired assets, we expect to deploy modular TM-2500, GE 6B, Siemens
SGT-800, Siemens SGT6-5000F, and similarly reliable and efficient industrial
frame-class gas turbines operating in combined cycle mode, as well as
aeroderivative turbines used for peaking and reserve capacity. Capital outlays
are staged to support our construction timelines, with anticipated fuel
consumption for the initial 1 GW of load averaging around 175,000 MMBtu per
day, after accounting for approximately 200 MW of SPS grid power. We are
actively engaged in procurement and EPC partner selection processes to secure
long-lead assets and ensure cost containment.
The capital expenditures we expect to incur as we complete the development of
Project Matador will be significant. We currently estimate that the
incremental capital expenditures we will incur to complete the development of
Phase 0 and Phase 1 of Project Matador could exceed $3 billion in the
aggregate, of which approximately $2 billion is expected to be incurred in the
next twelve months across these two phases, subject to the execution of a
definitive lease agreement and alignment with tenant deployment timelines and
power delivery requirements. These near-term expenditures are expected to be
funded through a combination of net proceeds from our IPO, tenant prepayments,
project-level debt financing, and strategic equity capital. The required
capital expenditures for the remaining phases are difficult to estimate with
precision and will depend on final tenant composition, generation mix, supply
chain dynamics, and site optimization decisions; however, we currently expect
total capital needs across all phases could range from approximately $70
billion to $90 billion, which is dependent on several factors including (i)
EPC costs currently being negotiated, (ii) precise configuration of power
equipment, which is largely complete for Phase I, but in process for future
phases, (iii) whether the nuclear and solar aspects of the project qualify for
tax credits, which is dependent on ongoing policy decisions, and (iv) general
uncertainties associated with detailed long-term forecasting large-scale
projects of this nature.
Liquidity Outlook
We believe the proceeds from our IPO, our pre-IPO convertible note and
preferred unit issuances, our existing equipment financings, anticipated
future tenant prepayments upon execution of one or more lease agreements, and
potential project-level debt and strategic equity capital, will provide
sufficient liquidity to execute Phase 1 of Project Matador.
Future phases of development will require additional capital. We expect to
access capital markets periodically, and in the event of delays in lease
execution, permitting, or financing, we may adjust the deployment timeline or
pursue interim bridge financing. We continuously monitor our capital
structure, access to credit markets, project execution risk, and market
conditions, and will adjust our funding strategy as necessary to support
long-term development goals while maintaining financial flexibility and
scalability.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
(in thousands) For the period from
January 10, 2025 (Inception)
through December 31, 2025
Net cash used in operating activities $
(34,151)
Net cash used in investing activities
(570,260)
Net cash provided by financing activities $
1,012,940
Cash Flows Used in Operating Activities
For the period from January 10, 2025 (Inception) through December 31, 2025,
net cash used in operating activities was $34.2 million. This reflects a net
loss of $486.4 million, which is offset by certain non-cash charges including
(i) $173.8 million related to the charitable contribution of Class B Units to
Dechomai Asset Trust, an unrelated, third party, 501(c)(3) public nonprofit
organization, (ii) $132.7 million of share-based compensation expense, (iii) a
total of $111.6 million of fair value adjustments consisting of $61.0 million
of fair value losses on our Series B Convertible Notes accounted for under the
fair value option, $46.4 million of fair value losses on embedded derivative
liabilities related to the Preferred Units Financing, and $4.2 million of fair
value losses on embedded derivative liabilities associated with the Macquarie
Term Loan, (iv) $23.7 million of inducement expense related to the Preferred
Units Financing, (v) $3.3 million of realized foreign exchange losses, and
(vi) $0.7 million of other non-cash activities.
Working capital changes also impacted cash flows from operations. Accounts
payable and accrued liabilities increased $15.0 million, reflecting growth in
vendor activity related to pre-development efforts. This increase was
partially offset by an $8.5 million use of cash related to prepaid expenses
and other assets, primarily driven by deposits and prepaid amounts associated
with ongoing project development.
Cash Flows Used in Investing Activities
For the period from January 10, 2025 (Inception) through December 31, 2025,
net cash used in investing activities totaled $570.3 million. The primary
driver was $569.3 million of investments in property, plant and equipment for
early-stage development of Project Matador, including equipment procurement
and construction in progress. An additional $1.0 million was associated with
other investing activities. These investments reflect our continued execution
of the development roadmap for Phase 0 and Phase 1 of the Project Matador
campus.
Cash Flows Provided by Financing Activities
For the period from January 10, 2025 (Inception) through December 31, 2025,
net cash provided by financing activities was $1.0 billion. The primary
sources of cash were $745.6 million from the issuance of shares in our initial
public offering, net of underwriting discounts and commissions, $107.6 million
from the issuance of Preferred Units, $100.0 million from the issuance of the
Macquarie Term Loan, $75.5 million from the issuance of Series A Convertible
Notes, and $26.1 million from the issuance of Seed Convertible Notes.
These inflows were partially offset by $21.2 million of offering costs, $20.0
million of payments on a promissory note, and $1.0 million of debt issuance
costs. The proceeds were used to support early operating activities, satisfy
financing-related obligations, and fund equipment procurement and other
development milestones for Project Matador.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires the
appropriate application of certain accounting policies, many of which require
us to make estimates, judgments and assumptions about future events and their
impact on amounts reported in the financial statements and related notes.
Since future events and the impact of those events cannot be determined with
certainty, the actual results will inevitably differ from our estimates. These
differences could be material to the financial statements. We believe our
application of accounting policies, and the estimates and assumptions
inherently required therein, are reasonable. These accounting policies and
estimates are constantly reevaluated, and adjustments are made when facts and
circumstances dictate a change. Historically, our application of accounting
policies has been appropriate, and actual results have not differed materially
from those determined using necessary estimates.
The following critical accounting policies affect our more significant
judgments and estimates used in the preparation of our financial statements.
Property, Plant, and Equipment, net
Construction in Progress
Construction in progress represents the accumulation of development and
construction costs related to the Company's capital projects. These costs are
reclassified to property, plant, and equipment, net when the associated
project is placed in service. The Company begins capitalizing project costs
once acquisition or construction of the relevant asset is considered probable.
Interest costs incurred associated with the construction are capitalized as
part of construction in progress until the underlying asset is ready for its
intended use. Once the asset is placed in service, the capitalized interest is
amortized as a component of depreciation expense over the life of the
underlying asset. Interest is capitalized on qualifying assets using a
weighted average effective interest rate applicable to borrowings outstanding
during the period to which it is applied and limited to interest expense
actually incurred.
Share-based Compensation
The Company accounts for share-based compensation in accordance with ASC 718,
Compensation-Stock Compensation. Equity instruments issued to employees and
non-employees in exchange for goods or services are measured at fair value on
the grant date and recognized over the requisite service period, which is
generally the vesting period. The Company has elected to account for
forfeitures as they occur.
The Company has granted restricted equity units ("REUs") and restricted stock
units ("RSUs") that vest upon the satisfaction of either a service-based
condition only or a combination of service-based, performance-based, and
market-based conditions. The grant-date fair value of REUs and RSUs are
generally determined based on the fair value of the Company's units on the
grant date. For awards that include a market-based condition, the grant-date
fair value is estimated using a Monte-Carlo simulation model that incorporates
assumptions such as expected term, expected volatility, and risk-free interest
rates. Following the completion of the IPO, the fair value of each share
underlying new awards is based on the closing price of the Company's common
stock on the Nasdaq Stock Market on the grant date.
Share-based compensation expense is recognized on a straight-line basis over
the requisite service period for awards with only service-based conditions.
For awards with performance-based or market-based vesting conditions (or both)
compensation expense is recognized using the graded vesting method over the
requisite service period. For awards with performance-based conditions,
expense recognition begins when the performance condition is deemed probable
of achievement, and cumulative expense is recognized for service rendered to
date. If the performance condition is not deemed probable, no expense is
recognized until such time as it becomes probable.
The determination of grant-date fair value and the timing of expense
recognition for awards containing market or performance conditions require
significant judgment, including assumptions regarding the likelihood of
achieving specific performance targets, the expected volatility of the
Company's common units or shares, and the expected term of the awards. These
judgments could materially affect the amount and timing of share-based
compensation expense recognized in future periods.
Fair Value of Class A and Class B Units
We have issued certain Class A and Class B Units as equity compensation. Each
Class A and Class B Unit represents an identical economic interest in the
Company. Class B Units are non-voting. For all issuances prior to our IPO, the
fair value of the units granted was determined on the applicable grant date by
our board of managers, which exercised reasonable judgment in the absence of a
public trading market for our equity.
To determine the fair value of the units, our board considered a number of
objective and subjective factors and relied on third-party valuations of the
Company's equity prepared in accordance with the guidance provided by the
American Institute of Certified Public Accountants' 2013 Practice Aid,
Valuation of Privately-Held-Company Equity Securities Issued as Compensation
(the "Practice Aid"). Key considerations in determining fair value included,
but were not limited to:
• the prices, rights, preferences, and privileges of the Company's
outstanding debt and equity instruments;
• our business condition, results of operations, and related
industry dynamics;
• probabilities of success and resulting business enterprise
valuation;
• the likelihood, timing, and nature of a potential liquidity
event;
• the lack of marketability of our equity;
• the Company's cost of borrowing;
• the market performance of comparable publicly traded companies;
and
• prevailing U.S. and global economic, capital market, and
regulatory conditions.
Enterprise Valuation Methodology
Our third-party valuation firm prepares our valuations in accordance with the
guidelines in the Practice Aid, which prescribes several valuation approaches
for setting the value of an enterprise, such as the cost, income and market
approaches, and various methodologies for allocating the value of an
enterprise to its common stock. The cost approach establishes the value of an
enterprise based on the cost of reproducing or replacing the property less
depreciation and functional or economic obsolescence, if present. The income
approach establishes the value of an enterprise based on the present value of
future cash flows that are reasonably reflective of a company's future
operations, discounting to the present value with an appropriate risk adjusted
discount rate or capitalization rate. The market approach is based on the
assumption that the value of an asset is equal to the value of a substitute
asset with the same characteristics. Our third-party valuation firm utilized
the income approach to estimate the enterprise value of the Company. Under the
income approach, enterprise value is determined using a discounted cash flow
analysis that reflects management's projections of future cash flows. These
projected cash flows are discounted to present value using weighted average
cost of capital, which is informed by market data from guideline public
companies with comparable operating and financial characteristics, adjusted to
reflect the Company's stage of development, capital structure, and
company-specific risk factors. The resulting enterprise value was adjusted by
a probability decision tree to derive the value of the Company as of the
valuation dates.
Recent Accounting Pronouncements
See Note 2, Significant Accounting Policies to our consolidated financial
statements for more information about recent accounting pronouncements and the
anticipated effects on our consolidated financial statements.
Commitments and Contractual Obligations
Commitments
As of December 31, 2025, we had purchase commitments of approximately $155.6
million related to the Siemens Contract. Under the Siemens Contract, we are
obligated to make the remaining contractual payments and related shipping
costs pursuant to contract milestones. See Note 10, Commitments and
Contingencies, for the payments through 2028 for the purchase obligations
related to these long lead time equipment purchases. See Note 5, Acquisitions
to our consolidated financial statements for a description of the Firebird
Acquisition and the related Siemens Contract.
As of December 31, 2025, the Company had various fixed and variable lease
payment obligations associated with the TTU Lease, and in October of 2025, the
Company entered into a lease agreement with MPS through which the Company will
be subject to fixed lease payments once the lease commences. See Note 8,
Leases to our consolidated financial statements for additional information.
Off-Balance Sheet Arrangements
As of December 31, 2025, we did not have any off-balance sheet arrangements.
Surety Bonds
In the course of business, we are required to provide financial commitments in
the form of surety bonds to third parties as a guarantee of our performance on
and our compliance with certain obligations. If we were to fail to perform or
comply with these obligations, any draws upon surety bonds issued on our
behalf would then trigger our payment obligation to the surety bond issuer. We
have outstanding surety bonds issued for our benefit of approximately $31.8
million as of December 31, 2025.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the exposure to loss resulting from changes in market factors
such as interest rates, foreign currency exchange rates, commodity prices, and
equity prices. The primary market risk that we are exposed to is interest rate
risk. As of December 31, 2025, we had cash and cash equivalents of $408.5
million, consisting of investments in cash and cash equivalents. Due to the
short-term duration of our investment portfolio, an immediate 100 basis point
change in interest rates would not have a material effect on the fair market
value.
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Page
Report of Independent Registered Public Accounting Firm (#Section29) (PCAOB ID 88
42)
Consolidated Financial Statements:
Consolidated Balance Sheet (#Section30) 89
Consolidated Statement (#Section31) of Operations (#Section31) 90
Consolidated Statement (#Section32) of Stockholders'/Members' Equity 91
(#Section32)
Consolidated Statement of Cash Flows (#Section33) 92
Notes to Consolidated Financial Statements (#Section34) 93
S (#Section46) upplemental Schedule (#Section46) (#Section46) - (#Section46) 118
(#Section46) Schedule (#Section46) (#Section46) III (#Section46) (#Section46)
- (#Section46) (#Section46) Real Estate (#Section46) and Accumulated
Depreciation (#Section46)
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Fermi Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Fermi Inc. (the
Company) as of December 31, 2025, the related consolidated statements of
operations, shareholders'/members' equity and cash flows for the period from
January 10, 2025 (Inception) through December 31, 2025, and the related notes
and financial statement schedule listed in the Index at Item 15(a)
(collectively referred to as the "consolidated financial statements"). In our
opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 2025, and the
results of its operations and its cash flows for the period from January 10,
2025 (Inception) through December 31, 2025, in conformity with U.S. generally
accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the Company's financial
statements based on our audit. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audit we are required to obtain an
understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such
opinion.
Our audit included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audit also included evaluating the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe
that our audit provides a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 2025.
Fort Worth, Texas
March 30, 2026
Fermi Inc.
Consolidated Balance Sheet
(in thousands, except par value amounts and share numbers)
As of
December 31, 2025
Assets
Property, plant, and equipment, net $ 935,295
Cash and cash equivalents 408,529
Prepaid expenses and other assets 47,753
Operating lease right-of-use assets 21,737
Total assets $ 1,413,314
Liabilities and stockholders' equity
Debt, net $ 109,799
Accounts payable and accrued liabilities 176,572
Operating lease liabilities 21,320
Other liabilities 9,751
Total liabilities 317,442
Commitments and contingencies (Note 10)
Stockholders' equity
Common stock, $0.001 par value; 2,400,000,000 shares authorized, 629,839,790
shares issued and outstanding as of December 31, 2025 628
Preferred stock, $0.001 par value; 10,000,000 shares authorized, and no shares
issued or outstanding as of December 31, 2025 -
Additional paid-in capital 1,228,443
Accumulated deficit (133,199)
Total stockholders' equity 1,095,872
Total liabilities and stockholders' equity $ 1,413,314
The accompanying notes are an integral part of these consolidated financial
statements.
Fermi Inc.
Consolidated Statement of Operations
(in thousands, except share and per share numbers)
For the period from
January 10, 2025
(Inception) through
December 31, 2025
Expenses:
General and administrative $ 177,779
Total expenses 177,779
Loss from operations (177,779)
Other income (expense):
Interest income (expense), net
3,732
Other income (expense), net (312,332)
Total other income (expense) (308,600)
Net loss $ (486,379)
Net loss per share - basic and diluted $
(1.13)
Weighted average shares outstanding - basic and diluted 467,963,408
The accompanying notes are an integral part of these consolidated financial
statements.
Fermi Inc.
Consolidated Statement of Stockholders'/Members' Equity
(in thousands, except unit and share numbers)
Members' Members' Common Stock Preferred Stock Additional Paid-in Accumulated Total Stockholders'/
Equity - Class A Equity - Class B Members'
Units Amount Units Amount Shares Amount Shares Amount Capital Deficit Equity
Balance, January 10, 2025 (Inception) - $ - - $ - - $ - - $ - $ - $ - $ -
Capital contributions, net of deferred offering costs (Note 3) 359,261,550 847 58,764,263 130 - - - - - - 977
Share-based compensation expense - related party (Note 9) - 3,616 - - - - - - - - 3,616
Share-based compensation expense (Note 9) 4,500,000 23,304 - 1,509 1,500,000 - - - 171,416 - 196,229
Share-based charitable contribution expense, including repurchase of unvested - - 7,875,000 173,777 - - - - - - 173,777
Class B Units and subsequent reissuance upon donation (Note 9)
Vesting of Class B Units (Note 9) - - 19,202,719 43 14,796,474 15 - - 18 - 76
Series Seed, A and B Conversion (Note 3) 117,787,762 282,176 - - - - - - - - 282,176
Induced conversion of Series A and Series B Convertible Notes (Note 3) - 23,674 - - - - - - - - 23,674
Issuance of the Preferred Units and effect of the conversion of Preferred - 37,869 - - 7,586,546 8 - - 108,700 - 146,577
Units (Note 3)
Effect of the Corporate Conversion (481,549,312) (44,519) (85,841,982) (149,246) 567,391,294 567 - - 193,198 - -
Issuance of common stock sold in initial public offering, net of offering - - - - 37,375,000 37 - - 731,434 - 731,471
costs
Issuance of common stock in connection with finance lease (Note 8) - - - - 1,190,476 1 - - 23,677 - 23,678
Net loss - (326,967) - (26,213) - - - - - (133,199) (486,379)
Balance, December 31, 2025 - $ - - $ - 629,839,790 $ 628 - $ - $ 1,228,443 $ (133,199) $ 1,095,872
The accompanying notes are an integral part of these consolidated financial
statements.
Fermi Inc.
Consolidated Statement of Cash Flows
(in thousands)
For the period from
January 10, 2025
(Inception) through
December 31, 2025
Cash flows used in operating activities:
Net loss $ (486,379)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense, related party
3,616
Share-based compensation expense 129,129
Share-based charitable contribution expense 173,784
Change in fair value as a result of fair value remeasurements 111,590
Series A and Series B Convertible Notes inducement expense
23,674
Foreign exchange (gain) loss, net
3,273
Other non-cash activities
653
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities
14,995
Prepaid expenses and other assets
(8,486)
Net cash used in operating activities $ (34,151)
Cash flows used in investing activities:
Investments in property, plant, and equipment (569,304)
Other investing activities
(956)
Net cash used in investing activities $ (570,260)
Cash flows from financing activities:
Proceeds from issuance of Series A Convertible Notes
75,500
Proceeds from issuance of Seed Convertible Notes
26,124
Proceeds from issuance of Preferred Units 107,552
Proceeds from issuance of Macquarie Term Loan 100,000
Payment of Promissory Note
(20,000)
Payment of debt issuance costs
(1,012)
Payment of offering costs
(21,209)
Proceeds from share issuance upon initial public offering, net of underwriting 745,631
discounts and commissions
Other financing activities
354
Net cash provided by financing activities $ 1,012,940
Change in cash and cash equivalents 408,529
Cash and cash equivalents, at beginning of period
-
Cash and cash equivalents, at end of period $ 408,529
The accompanying notes are an integral part of these consolidated financial
statements.
Fermi Inc.
Notes to Consolidated Financial Statements
(in thousands, except unit, per unit, share, and per share numbers)
1. Organization and Description of Business
Organization
Fermi Inc. was originally formed as Fermi LLC on January 10, 2025
("Inception") as a Texas limited liability company. On September 30, 2025,
immediately following the effectiveness of our registration statement on Form
S-11, the Company effected a statutory conversion from a Texas limited
liability company to a Texas corporation pursuant to and in accordance with a
plan of conversion (the "Corporate Conversion"). The purpose of the Corporate
Conversion was to reorganize the Company's corporate structure so that the
entity offering its securities to the public in the IPO would be a corporation
rather than a limited liability company. References in this Annual Report on
Form 10-K to "Fermi", "we", "us", "our" and "the Company" (i) for periods
prior to the Corporate Conversion, refer to Fermi LLC, and, where appropriate,
its consolidated subsidiaries and (ii) for periods after the Corporate
Conversion, refer to Fermi Inc., and, where appropriate, its consolidated
subsidiaries.
In conjunction with the Corporate Conversion, all of Fermi LLC's membership
interests, including outstanding preferred units, were converted into an
aggregate of 591,274,308 shares of our issued common stock, of which
574,977,840 shares were outstanding as of the date of the Corporate
Conversion. Prior to the Corporate Conversion, the Company's outstanding
convertible notes had converted into Class A units of Fermi LLC (the
"Convertible Notes Conversion") in connection with the issuance of preferred
units ("Preferred Units") in a private placement to a consortium of investors
(the "Preferred Units Financing"). See Note 3, Stockholders' Equity, for
further information regarding the Preferred Units Financing.
As a result of the Corporate Conversion, Fermi Inc. succeeded to all of the
property, assets, debts, and obligations of Fermi LLC. Fermi Inc. is governed
by a certificate of formation filed with the Texas Secretary of State and
bylaws adopted by its board of directors (the "Bylaws"). The consolidated
financial statements and accompanying footnotes give effect to the Corporate
Conversion, which occurred on September 30, 2025.
The Company's mission is to power the intelligence of tomorrow. The Company is
in the development process of its first campus, Project Matador, as an
approximately 11-gigawatt on-demand energy generation and powered shell AI
infrastructure campus located in Carson County, Texas. With additional acreage
acquired or under contract, Project Matador is expandable to approximately 17
gigawatts of total generation capacity, subject to the closing of additional
land acquisitions and receipt of incremental permits. Project Matador is
planned to provide hyperscale customers with approximately 15 million square
feet of AI infrastructure space powered by a combination of on-site solar,
gas, and nuclear power infrastructure. Preliminary site development commenced
in 2025, and vertical construction is expected to commence upon execution of a
definitive lease agreement with a prospective tenant. Commercial operations
for the first powered shell campus are targeted by the first half of 2027.
Disclosures of the energy generation and square footage of facilities are
unaudited and outside the scope of our independent registered public
accounting firm's audit of our financial statements in accordance with the
standards of the Public Company Accounting Oversight Board (U.S.).
We anticipate generating substantially all of our revenue from lease rental
income from hyperscaler tenants. As of December 31, 2025, we have not yet
commenced revenue generating activities. All activity through December 31,
2025, is related to our formation and initial engagement with various
commercial parties to facilitate infrastructure procurement, leasing,
preliminary site development, and marketing activities for Project Matador. We
do not expect to generate operating revenues until powered shell facilities
are delivered to tenants. We generate non-operating income in the form of
interest income on cash. Our fiscal year ends on December 31.
Unit Split and Stock Split
On July 2, 2025, we amended Fermi LLC's limited liability company agreement
(the "Fermi LLC Agreement") to reflect a 150-to-1 forward unit split (the
"Unit Split") of our issued Class A Units and Class B Units (as defined
below). As a result of the Unit Split, each record holder of Class A and Class
B Units as of July 2, 2025, received 149 additional Units of Class A Units or
Class B Units, as applicable, distributed on July 2, 2025.
On September 30, 2025, in connection with the Corporate Conversion, the
Company effected a 3-for-1 forward stock split of its membership units into
shares of common stock (the "September Stock Split").
All unit, per unit, share, and per share amounts presented in the consolidated
financial statements have been adjusted retrospectively, where applicable, to
reflect the Unit Split and the September Stock Split.
In connection with the Corporate Conversion, the Company filed its certificate
of incorporation (the "Charter"), which authorizes a total of 2,400,000,000
shares of common stock and 10,000,000 shares of preferred stock.
Initial Public Offering
On October 2, 2025, in connection with its initial public offering ("IPO"), in
which the Company issued and sold 32,500,000 shares of its common stock at a
public offering price of $21.00 per share, the Company received net proceeds
of $648,375 after deducting the underwriting discounts and commissions, and
before deducting deferred offering costs of $14,160. On October 2, 2025,
concurrently with the closing of the IPO, the underwriters exercised their
over-allotment option and purchased from the Company an additional 4,875,000
shares of common stock at the IPO price, which resulted in net proceeds to the
Company of $97,256 after deducting the underwriting discounts and commissions.
2. Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements have been prepared in
accordance with accounting policies generally accepted in the United States of
America ("GAAP") as established by the Financial Accounting Standards Board
("FASB") in the Accounting Standards Codification ("ASC") including
modifications issued under Accounting Standards Updates ("ASUs"). The
reporting currency of the Company is the U.S. Dollar. Dollar amounts in the
financial statements are presented in thousands, except as otherwise stated.
Share, per share, unit and per unit data are presented as whole numbers. The
consolidated financial statements include the accounts of Fermi Inc. and its
consolidated subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
These consolidated financial statements are presented in accordance with the
rules and regulations of the U.S. Securities and Exchange Commission ("SEC").
In management's opinion, the consolidated financial statements include all
adjustments, which include only normal recurring adjustments, necessary to
fairly state the Company's financial position and results of operations.
Results for the period presented are not necessarily indicative of the results
that may be expected for any subsequent period.
The Company determines at the inception of each arrangement whether an entity
in which the Company has made an investment or in which the Company has other
variable interests is considered a variable interest entity ("VIE").
Investments that are considered VIEs are evaluated to determine whether the
Company is the primary beneficiary of the VIE, in which case it would be
required to consolidate the entity. The Company evaluates whether it has (1)
the power to direct the activities that most significantly impact the VIE's
economic performance, and (2) the obligation to absorb losses or the right to
receive benefits from the VIE that could potentially be significant to the
VIE. If the Company is not the primary beneficiary of the VIE, the investment
or other variable interest is accounted for in accordance with applicable U.S.
GAAP.
In circumstances where an entity does not have the characteristics of a VIE,
it would be considered a voting interest entity ("VOE"). The Company would
consolidate a VOE when the Company has a majority equity interest and has
control over significant operating, financial, and investing decisions of the
entity.
Liquidity, Going Concern and Capital Resources
Under ASC 205-40, Presentation of Financial Statements-Going Concern, we are
required to evaluate whether conditions or events raise substantial doubt
about our ability to meet future financial obligations as they become due
within one year after the consolidated financial statements are issued.
Project Matador will require substantial capital investment to achieve
commercial operation. As of December 31, 2025, the Company had not generated
any revenues. To finance the construction and development of Project Matador,
we have successfully raised capital and intend to raise additional capital
through a combination of equity financings, various debt issuances,
monetization of federal energy credits, strategic equity investments,
government grants and tenant prepayments. In February 2026, we completed two
equipment financings to support the buildout of Project Matador, including an
initial draw on a $220,000 facility to accelerate procurement of long-lead
high-voltage equipment and a $500,000 non-recourse turbine warehouse facility
to fund the acquisition of additional turbine equipment. See Note 11,
Subsequent Events, for more information. Additional financings are not certain
to occur. If we are unable to raise capital in the amounts, timing, or terms
we expect, we may be forced to delay capital expenditures, amend or terminate
our purchase commitments or surrender assets pledged as collateral under our
financing agreements in order to preserve liquidity, which could materially
extend our development timeline and delay one or more phases of Project
Matador, preventing us from achieving planned operational and financial
milestones within the anticipated timeframe.
Based on our current operating plan and our available cash on hand of $408,529
as of December 31, 2025, we believe our resources are sufficient to satisfy
our financial obligations for at least twelve months following the issuance of
these consolidated financial statements.
Use of Estimates
The preparation of the consolidated financial statements in conformity with
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities as of the date of the balance sheet. Actual results
could differ from those estimates. We believe the estimates and assumptions
underlying our consolidated financial statements are reasonable and
supportable based on the information available as of December 31, 2025.
Cash and Cash Equivalents
We consider short-term, highly liquid investments with original maturities of
three months or less at the time of purchase to be cash equivalents. Cash
consists of funds held in our checking and saving accounts. Cash is maintained
with financial institutions located in the United States that management
believes to be creditworthy. While we monitor the credit quality of our
banking relationship, our cash balances may, at times, exceed the federally
insured limits.
Restricted Cash
Restricted cash represents amounts deposited in a bank account that are
required to remain restricted in accordance with the terms of the related
financing agreements. On August 29, 2025, the Company received $99,300 of
restricted cash related to the Macquarie Term Loan (as defined in Note 7,
Debt, net) for payments under the Siemens Contract (as defined in Note 5,
Acquisitions) and for loan transaction fees and expenses. During the period
from January 10, 2025 (Inception) through December 31, 2025, the Company used
the entirety of the restricted cash for its intended purposes, with no
restricted cash balance remaining as of December 31, 2025. When the Company
has a restricted cash balance at the beginning or end of a reporting period,
restricted cash amounts are included with cash and cash equivalents when
reconciling the beginning-of-period and end-of-period total amounts shown in
the consolidated statement of cash flows.
Income Taxes
The consolidated financial statements have been prepared using the tax
classification of the Company as a corporation for U.S. federal income tax
purposes for the periods presented.
On July 1, 2025, Fermi LLC filed an election to be classified as a corporation
for U.S. federal income tax purposes effective as of its date of formation,
January 10, 2025, via late classification relief sought under Revenue
Procedure 2009-41. The election was approved by the IRS. Fermi LLC adopted a
fiscal year end of July 31, 2025 for its initial taxable, non-REIT year.
Accordingly, the Company will file its U.S. federal income tax return for the
short taxable period from January 10, 2025 (Inception) through July 31, 2025
as a corporation for U.S. federal income tax purposes.
The Company has generated taxable losses since inception and has recorded a
full valuation allowance against its deferred tax assets. As a result, the
Company does not expect to incur U.S. federal income tax for the period from
January 10, 2025 (Inception) through July 31, 2025.
Fermi intends to elect to be taxed as a REIT for U.S. federal income tax
purposes beginning August 1, 2025, with the filing of its initial Form
1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts for its
taxable year ended December 31, 2025. As long as Fermi qualifies as a REIT, it
generally will not be subject to U.S. federal income tax at the REIT level on
taxable income that is currently distributed to stockholders. Fermi intends to
distribute substantially all of its REIT taxable income and therefore does not
expect to incur U.S. federal income tax at the REIT level. Fermi may, however,
be subject to U.S. federal income tax and excise taxes in certain
circumstances, including on undistributed taxable income or if it fails to
satisfy REIT requirements. Accordingly, no provision for U.S. federal income
taxes has been recognized in the accompanying consolidated financial
statements for the periods presented.
Comprehensive Income (Loss)
For the period from January 10, 2025 (Inception) through December 31, 2025, we
had no other comprehensive income (loss) items; therefore, comprehensive
income (loss) equaled net income (loss). Accordingly, we have not included a
separate statement of comprehensive income (loss) as part of these
consolidated financial statements.
Segments
All of the Company's activities relate to our business of building and owning
powered shell facilities. As of December 31, 2025, operational and strategic
decision-making responsibilities were overseen collectively by the Company's
officers, including the Chief Executive Officer, Chief Financial Officer,
Chief Operating Officer, and the Head of Power. This group, functioning
collectively in the role of the chief operating decision maker ("CODM"),
evaluates performance and allocates resources based on the overall operations
and financial results of the Company as a whole. Based on the structure of our
operations and the manner in which the CODMs monitor and manage the business,
we have concluded that the Company operates as a single operating segment and,
accordingly, a single reportable segment for accounting and financial
reporting purposes.
The Company's single reportable segment is expected to earn substantially all
of its revenue from lease rental income from hyperscaler tenants. The CODMs
manage the Company as a single business and use GAAP net income (loss), as
presented in the consolidated statement of operations, as the primary
financial measure for assessing performance and allocating resources. The
CODMs regularly review the consolidated statement of operations, including the
various expense and other line items, as presented in the Company's
consolidated financial statements. No significant separate revenue or expense
categories are regularly evaluated by the CODMs other than those already
reflected in the consolidated statement of operations. Additionally, the CODMs
assess segment assets as presented within the Company's consolidated balance
sheet, as there is no distinction between segment assets and total assets. All
assets will be located within the United States or vendor locations abroad.
Because the Company operates as a single segment, the accounting policies
applied are consistent with those described in the accompanying consolidated
financial statements.
Share-based Compensation
The Company accounts for share-based compensation in accordance with ASC 718,
Compensation - Stock Compensation ("ASC 718"). Equity instruments issued to
employees and non-employees in exchange for goods or services are measured at
fair value on the grant date and recognized over the requisite service period,
which is generally the vesting period. The Company accounts for forfeitures as
they occur.
The Company granted restricted equity units ("REUs") and restricted stock
units ("RSUs") that vest upon the satisfaction of either a service-based
condition only or a combination of service-based, market-based and
performance-based conditions. The grant-date fair value of these REUs and RSUs
is the fair value of the Company's units on the date of grant.
Following the completion of the IPO, the fair value of each share of the
underlying common stock is based on the closing price of our common shares as
reported on the Nasdaq Stock Market on the date of the grant.
For awards that include a market-based condition, the grant-date fair value is
estimated using the Monte-Carlo simulation method which incorporates the
probability that the market-based condition may not be satisfied, and includes
assumptions such as expected term, expected volatility, and risk-free interest
rates.
The Company recognizes share-based compensation expense on a straight-line
basis over the requisite service period for equity awards with only
service-based conditions, including those with a graded vesting feature.
Share-based compensation expense for equity awards with a service-based
condition and a performance-based condition or a market-based condition, or
both, will be recognized using the graded vesting method over the requisite
service period. For equity awards with a market-based condition, the
share-based compensation expense is recognized using the appropriate
attribution method over the requisite service period, regardless of whether
the market-based condition is met.
Share-based compensation expense for awards with performance conditions is
recognized only when achievement of the performance condition is considered
probable. Performance conditions may include the occurrence of a specified
event or achievement of a performance target. When achievement becomes
probable, compensation expense is recognized using the accelerated attribution
method and includes a cumulative catch-up adjustment for the portion of the
requisite service period rendered to date. Any remaining share-based
compensation expense is recognized over the remaining requisite service period
once the performance condition is satisfied.
Fair Value of Class A and Class B Units
Prior to the IPO, as there was no public market for the equity of the Company,
the Company utilized a third-party valuation firm to determine estimates of
fair value using generally accepted valuation methodologies, specifically
income-based methods. Under the income approach, enterprise value was
determined using a discounted cash flow analysis that reflects management's
projections of future cash flows. These projected cash flows were discounted
to present value using a weighted average cost of capital, which was informed
by market data from guideline public companies with comparable operating and
financial characteristics and further adjusted to reflect the Company's stage
of development, capital structure, and company-specific risk factors. The
resulting enterprise value was then adjusted by a probability-weighted
decision tree to derive the estimated fair value of the Company as of each
valuation date.
Leases
At contract inception, the Company determines whether an arrangement contains
a lease in accordance with ASC 842, Leases ("ASC 842"). Prior to lease
commencement, any payments are recorded as prepaid rent and included in
prepaid expenses and other assets on the Company's consolidated balance sheet.
The prepaid rent balance is reclassified to the right-of-use ("ROU") asset at
lease commencement.
ROU assets and lease liabilities are established on the consolidated balance
sheet for leases with an expected term greater than one year. Lease
liabilities are recognized at the present value of future lease payments, less
any incentives payable to the Company. ROU assets are recognized based on the
initial measurement of the lease liability, plus any initial direct costs
incurred by the Company and any lease payments made to the lessor at or before
lease commencement minus any lease incentives received. When the rate implicit
in the lease is not determinable, the Company uses its incremental borrowing
rate to determine the present value of the lease payments. Leases with an
initial term of 12 months or less are not recorded on the consolidated balance
sheet and the related lease expense is recognized on a straight-line basis
over the expected lease term.
The Company has elected the practical expedient to not separate lease and
non-lease components for its real estate leases in which the Company is the
lessee.
The Company recognizes lease expense for operating leases on a straight-line
basis over the term of the lease. In determining the lease term, the Company
includes any options to extend or terminate the underlying lease when it is
reasonably certain that the Company will exercise that extension option or is
reasonably certain not to exercise a termination option.
Variable lease payments and contingent obligations are recognized as incurred
or when the underlying contingency is resolved.
Debt Issuance Costs
Costs incurred in connection with the issuance of debt are deferred and
amortized to interest expense over the term of the related debt using the
effective-interest method. Debt issuance costs associated with the Company's
convertible unsecured promissory notes (the "Seed Convertible Notes"),
convertible secured promissory notes (the "Series A Convertible Notes"),
Series B Convertible Secured Promissory Note ("Series B Convertible Note"),
secured promissory note ("Promissory Note"), and Macquarie Term Loan are
presented as a direct deduction from the carrying amount of the related debt
on the consolidated balance sheet. As of December 31, 2025, the Company had
deferred $432 of debt issuance costs. See Note 7, Debt, net for additional
details related to outstanding debt and associated debt issuance costs.
Deferred Offering Costs
Deferred offering costs consisted of legal, accounting, consulting, and other
professional fees that were directly attributable to the Company's IPO and
Preferred Units Financing. Offering costs attributable to the IPO were
capitalized within prepaid expenses and other assets on the consolidated
balance sheet. Upon the completion of our IPO on October 2, 2025, deferred
offering costs of $14,160 were reclassified from prepaid expenses and other
assets to additional paid-in capital as an offset against proceeds. Offering
costs attributable to the Preferred Units Financing of $7,049 were recorded as
a reduction to additional paid-in capital.
Acquisitions
The Company evaluates each acquisition to determine whether it meets the
definition of a business under ASC 805, Business Combinations ("ASC 805"). If
the acquired set of assets and activities does not meet the definition of a
business, the transaction is accounted for as an asset acquisition.
For asset acquisitions, the total cost of the acquisition, including
transaction costs, is allocated to the individual assets acquired and
liabilities assumed based on their relative fair values. No goodwill is
recognized in an asset acquisition. Transaction costs incurred in connection
with asset acquisitions are capitalized as part of the cost of the acquired
assets. The fair values of tangible and intangible assets acquired are
generally determined using a combination of cost, market, and income
approaches, which may require management to make significant estimates and
assumptions regarding future cash flows, discount rates, and other relevant
factors. The allocation of purchase price in asset acquisitions affects the
amounts recognized for tangible and intangible assets and liabilities, as well
as the related depreciation and amortization expense recognized in future
periods.
Contingent Consideration
The Company's acquisition agreements may include contingent consideration
arrangements that provide for additional payments upon the occurrence of
specified events or the achievement of certain performance or operational
milestones. For business combinations, contingent consideration is measured at
fair value as of the acquisition date and recorded as part of the purchase
price. Subsequent changes in the fair value of contingent consideration
classified as a liability are recognized in earnings in the period in which
they occur, while contingent consideration classified as equity is not
remeasured.
For asset acquisitions, contingent consideration is recognized only when the
contingency is resolved and the consideration is paid or becomes payable,
unless the arrangement meets the definition of a derivative, in which case the
contingent consideration is recorded at fair value on the acquisition date.
Upon recognition, contingent consideration in an asset acquisition is included
in the cost of the acquired asset or group of assets.
The determination of the fair value of contingent consideration requires
management to make significant estimates and assumptions regarding the
probability of achieving specified outcomes, projected cash flows, discount
rates, and other relevant factors. Actual results may differ from these
estimates, which could have a material impact on the Company's consolidated
financial statements.
Property, Plant, and Equipment, net
Property, plant, and equipment, net are initially recorded at cost, which
includes all expenditures directly attributable to the acquisition or
construction of the asset, such as materials, labor, professional fees,
permitting costs, lease costs and insurance. Expenditures for repairs and
maintenance are expensed as incurred, while major renewals and improvements
that extend the useful life of an asset are capitalized. Once assets are
placed in service, depreciation is computed using the straight-line method
over the estimated useful lives of the respective assets. The estimated useful
lives and depreciation methods are reviewed periodically to ensure they
reflect the expected pattern of economic benefits. As of December 31, 2025,
property, plant, and equipment, net consists exclusively of land and assets
for which development or construction is in progress.
Construction in Progress
Construction in progress represents the accumulation of development and
construction costs related to the Company's capital projects. These costs are
reclassified to depreciable assets within property, plant, and equipment, net
when the associated project is placed in service. The Company begins
capitalizing project costs once acquisition or construction of the relevant
asset is considered probable. As preliminary site development commenced in the
fourth quarter of 2025, lease costs incurred during that period that are
directly attributable to the construction of qualifying assets were
capitalized as part of construction in progress within property, plant, and
equipment, net, on the consolidated balance sheet, and will be capitalized
with the corresponding asset and depreciated over the remaining life of that
asset once placed into service. See Note 8, Leases, for additional
information. Interest costs incurred associated with the construction are
capitalized as part of construction in progress within property, plant, and
equipment, net on the consolidated balance sheet until the underlying asset is
ready for its intended use. Once the asset is placed in service, the
capitalized interest is amortized as a component of depreciation expense over
the life of the underlying asset. Interest is capitalized on qualifying assets
using a weighted average effective interest rate applicable to borrowings
outstanding during the period to which it is applied and limited to interest
expense actually incurred. As of December 31, 2025, $18,354 of interest costs
have been capitalized, all of which are included within property, plant, and
equipment, net on the consolidated balance sheet. We allocate a portion of
payroll and payroll-related costs, including share-based compensation, to both
capitalized cost of construction and to salaries or compensation expense based
on the percentage of time certain employees worked in the related areas. We
capitalized compensation costs of $67,608 related to development,
pre-construction and construction projects for the period from January 10,
2025 (Inception) through December 31, 2025.
Impairment
We review property, plant, and equipment, net for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. If such indicators are present, we compare the carrying
amount of the asset to the estimated undiscounted future cash flows expected
to result from the use and eventual disposition of the asset, including
estimated cash outflows needed to prepare the asset for its intended use. If
the carrying amount exceeds the estimated future net cash inflows, an
impairment loss is recognized for the amount by which the carrying amount
exceeds the asset's fair value. As of December 31, 2025, no impairment
indicators existed.
As of December 31, 2025, the Company had no depreciable property, plant, and
equipment, net, and thus no depreciation expense has been recognized. See Note
6, Property, Plant, and Equipment for additional details.
Cloud Computing Software Implementation Costs
The Company's cloud computing arrangements are primarily hosting arrangements
that are accounted for as service contracts. The Company capitalizes certain
implementation costs incurred in connection with these arrangements when the
costs are directly attributable to configuring and implementing the hosted
software for its intended use. Capitalized implementation costs include
external consulting fees and internal payroll and payroll-related costs
(including share-based compensation) directly associated with implementation
activities. Capitalization begins when (i) management has authorized and
committed to fund the implementation and (ii) it is probable the
implementation will be completed and the hosted solution will be used as
intended. Capitalization ceases when the related implementation is
substantially complete and ready for its intended use, including completion of
significant testing. Capitalized implementation costs are included in prepaid
expenses and other assets on the consolidated balance sheet and are amortized
on a straight-line basis over the fixed, non-cancelable term of the associated
hosting arrangement, as well as any renewal periods that are reasonably
certain that the Company will exercise.
Capitalized implementation costs totaled $3,003 as of December 31, 2025. As
of December 31, 2025, the Company had capitalized implementation costs
related to certain cloud computing arrangements that were not yet ready for
their intended use; accordingly, amortization of these costs had not
commenced.
Supplemental Cash Flow Information
The following table shows supplemental cash flow information:
Noncash investing and financing activities: For the period from
January 10, 2025
(Inception) through
December 31, 2025
Conversion of Series Seed, Series A, and Series B to common stock $ 282,176
Issuance of Class A Unit associated with Preferred Units issuance
37,869
Capital contribution expense related to induced conversion of Series A and
Series B convertible Notes 23,674
Accrued investments in Property, plant and equipment, net
158,106
Capitalized share-based compensation expense related to Property, plant and
equipment, net 66,661
Capitalized interest related to investments in Property, plant and equipment,
net 18,354
Issuance of Series B Convertible Note in relation to asset acquisition
117,000
Issuance of Promissory Note in relation to asset acquisition
20,000
ROU asset obtained in exchange for a new operating lease liability
24,644
Common stock issued pursuant to prepayment of finance lease
23,679
Recognition of embedded derivative liability associated with Preferred Units
Issuance 31,990
Recognition of embedded derivative liability associated with Macquarie Term
Loan Issuance 5,500
Other Income (Expense), Net
Other income (expense), net consists primarily of changes in the fair value of
embedded derivatives, an inducement expense incurred in connection with the
Preferred Units Financing, a charitable donation expense, and foreign exchange
losses resulting from foreign currency transactions. For the period from
January 10, 2025 (Inception) through December 31, 2025, other income
(expense), net included approximately $111,590 of fair value remeasurements on
embedded derivatives, $23,674 of inducement expense, $173,784 of charitable
donation expense, and $3,284 of foreign exchange losses.
Fair Value Measurement
The Company follows the guidance in ASC 820, Fair Value Measurement ("ASC
820") for its fair value measurements. Valuation techniques used to measure
fair value require us to utilize observable and unobservable inputs. The
hierarchy gives the highest priority to quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the lowest priority
to unobservable inputs (Level 3 measurements). Financial instruments measured
at fair value are to be classified and disclosed in one of the following three
levels of the fair value hierarchy, of which the first two are considered
observable and the last is considered unobservable:
• Level 1: Quoted prices in active markets for identical or assets
or liabilities.
• Level 2: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or indirectly
observable.
• Level 3: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is unobservable.
The reported fair values for financial instruments that use Level 2 or Level 3
inputs to determine fair value are based on a variety of factors and
assumptions. Accordingly, certain fair values may not represent actual values
of the Company's financial instruments that could have been realized as of any
balance sheet dates presented or that will be recognized in the future, and do
not include expenses that could be incurred in an actual settlement.
The Company's financial instruments include cash, cash equivalents, accounts
payable, accrued liabilities, debt, net and embedded derivatives. Cash and
cash equivalents, accounts payable, and accrued liabilities are stated at
their carrying value, which approximates fair value due to the short time to
the expected receipt or payment date. Embedded derivatives are remeasured at
fair value on a recurring basis and any changes in the fair value of the
embedded derivatives are recorded within other income (expense), net in the
consolidated statement of operations.
ASC 825, Financial Instruments ("ASC 825"), allows entities to voluntarily
choose to measure certain financial assets and liabilities at fair value (fair
value option). The fair value option may be elected on an
instrument-by-instrument basis and is irrevocable. If the fair value option is
elected for an instrument, unrealized gains and losses for that instrument
should be reported in earnings at each subsequent reporting date.
As of December 31, 2025, the Company does not have any financial instruments
outstanding that are required to be carried at fair value. For the period from
January 10, 2025 (Inception) through December 31, 2025, the Company issued and
derecognized or reclassified certain financial instruments and the fair value
of such financial instrument was estimated using Level 3 input. The following
table presents changes in the liability balances for financial instruments
measured using significant unobservable inputs (Level 3) for the period from
January 10, 2025 (Inception) through December 31, 2025:
Series B Convertible Embedded Embedded
Notes Derivative in Derivative in
Preferred Units Macquarie Term
Loan
(See Note 7) (See Note 3) (See Note 7)
As of January 10, 2025 (Inception) $ - $ - $ -
Initial recognition 117,000 31,990 5,500
Remeasurement (gain)/loss 61,000 46,350 4,240
Derecognition/Reclassification(1) (178,000) (78,340) (9,740)
As of December 31, 2025 $ - $ - $ -
(1 ) The Company reclassified the embedded derivative within
the Macquarie Term Loan to other liabilities on September 30, 2025, as the
instrument no longer met the definition of an embedded derivative under ASC
815, Derivatives and Hedging ("ASC 815").
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting
Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):
Disaggregation of Income Statement Expenses ("ASU 2024-03"). In January 2025,
the FASB issued ASU 2025-01, Income Statement-Reporting Comprehensive
Income-Expense Disaggregation Disclosures (Subtopic 220-30): Clarifying the
Effective Date, which clarified the effective date of this standard. The
standard requires the disclosure of additional information about specific
expense categories in the notes to the consolidated financial statements. The
standard is effective for fiscal years beginning after December 15, 2026, and
interim periods within fiscal years beginning after December 15, 2027. Early
adoption is permitted. The standard allows for adoption on a prospective or
retrospective basis. We are currently assessing the impact of adopting ASU
2024-03 on our consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-04, Debt-Debt with Conversion and
Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt
Instrument ("ASU 2024-04"), to improve the relevance and consistency in
application of the induced conversion guidance in Subtopic 470-20, Debt-Debt
with Conversion and Other Options. The amendments in this ASU are effective
for annual periods beginning after December 15, 2025, and interim reporting
periods within those annual reporting periods. Early adoption is permitted for
all entities that have adopted the amendments in ASU 2020-06. We are currently
assessing the impact of adopting ASU 2024-04 on our consolidated financial
statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and
Other-Internal-Use Software ("Subtopic 350-40"): Targeted Improvements to the
Accounting for Internal-Use Software ("ASU 2025-06"), which amends certain
aspects of the accounting for and disclosure of software costs under Subtopic
350-40. The amendments improve the operability of the guidance by removing all
references to software development project stages so that the guidance is
neutral to different software development methods, including methods that
entities may use to develop software in the future. ASU 2025-06 is effective
for annual periods beginning after December 15, 2027 and for interim periods
within those annual reporting periods, with early adoption permitted. The
Company elected to early adopt this guidance for the period from January 10,
2025 (Inception) through December 31, 2025, effective as of January 10, 2025
(Inception), and chose the prospective transition approach through which the
Company would apply the guidance to new software costs incurred for all
projects. The adoption did not have a material impact on the consolidated
financial statements.
( )
(
)
3. Stockholders' Equity
Authorized Equity
Prior to the Corporate Conversion, we issued two classes of common units to
members in the form of Class A voting units ("Class A Units") and Class B
non-voting units ("Class B Units"). Class A Units and Class B Units
participated pro-rata, on the basis of total outstanding units, in our
ordinary and liquidating distributions. The Company retained the right to
repurchase both vested and unvested Class B Units at the original $0.0022 per
unit purchase price in the event of a breach of fiduciary duty, fraud,
disparagement, or other conduct materially detrimental to the Company, as
determined by the Board of Managers. Additionally, we issued the Preferred
Units in connection with the Preferred Units Financing. The holders of
Preferred Units received a cumulative in-kind dividend at a rate of 15% per
annum, compounding annually. Upon the Company's election, it may satisfy such
dividend in cash. Additionally, the holders of the Preferred Units were
entitled to receive, on an as-converted basis, the same dividends, as to
amount and timing, as any dividends paid by the Company on its common units.
The Preferred Units were convertible into the equity securities issued upon an
IPO.
Class B Units were subject to vesting provisions: 25% of Class B Units
immediately vested on the date of issuance, and the remaining 75% vest in
equal monthly installments over five years. Unvested Class B Units did not
participate in distributions. See Note 9, Share-Based Compensation for further
discussion of Class B Units issued to service providers.
The Corporate Conversion resulted in the elimination of Fermi LLC's historical
members' equity accounts and the recognition of 567,391,294 shares of common
stock at par value of $0.001 and an increase to additional paid-in capital of
$193,198. The Company's authorized capital stock consists of 2,400,000,000
shares of common stock, $0.001 par value per share, of which 629,839,790
shares are issued and outstanding and 10,000,000 shares of preferred stock,
$0.001 par value per share, of which no shares are issued and outstanding. The
outstanding shares of common stock presented on the consolidated balance sheet
exclude 38,412,070 shares of restricted stock units issued under ASC 718 that
are compensatory and subject to service-based and performance-based vesting
conditions.
In connection with the Corporate Conversion, all issued Class A Units and
Class B Units automatically converted, on a 3-for-1 basis, into 483,049,312
and 100,638,450 shares of common stock, respectively. Concurrently, all issued
Preferred Units automatically converted into 7,586,546 shares of common stock
at a conversion price of $14.36 per share, which reflects a 31.6% discount to
the initial offering price of $21.00 (the "Preferred Units Conversion"). On
September 23, 2025, we accelerated the vesting of certain Class B Units that
were held by certain service providers. The remaining restricted shares issued
upon conversion of Class B Units remained subject to the original
service-based vesting provision. On December 31, 2025, we accelerated the
vesting of all remaining shares of restricted common stock issued originally
as Class B Units that were held by service providers.
Equity Transactions
Prior to the Corporate Conversion, we issued 359,261,550 Class A Units for
cash contributions of $798. On August 2, 2025, the Company issued 4,500,000
Class A Units to an affiliate of the Company's Co-Founder, President, and
Chief Executive Officer in connection with a compensation arrangement. See
Note 9, Share-Based Compensation for further discussion.
Additionally, prior to the Corporate Conversion, we issued 104,716,350 Class B
Units for cash contributions of $233. This total includes 12,128,850 Class B
Units that were issued during April 2025 in connection with the conversion of
an equivalent number of Class A Units, which were subsequently reissued to
newly admitted Class B members. In June 2025, the Company repurchased
4,077,900 unvested Class B Units from a service provider following the
termination of the service relationship. The units were repurchased at the
original purchase price of $0.0022 per unit. In August 2025, the Company
repurchased 11,250,000 Class B Units in aggregate from two former service
providers following the termination of the service relationships. The units
were repurchased by the Company at the original $0.0022. In September 2025,
the Company donated the repurchased 11,250,000 Class B Units to Dechomai Asset
Trust, an unrelated, third party, 501(c)(3) public nonprofit organization. On
September 23, 2025, the Company modified the vesting conditions to accelerate
vesting of 16,551,563 Class B Units, which were unvested Class B Units granted
to certain employees and service providers, including certain executive
officers. See Note 9, Share-Based Compensation for further discussion.
Additionally, in connection with the IPO, we issued and sold 37,375,000 shares
of common stock, inclusive of the exercised over-allotment option by the
underwriters, for $745,631 in cash, after deducting the underwriting discounts
and commissions. On October 22, 2025, in connection with the MPS Agreement (as
defined below) the Company issued 1,190,476 shares of common stock as partial
consideration for initial lease prepayments. See Note 8, Leases, for
additional details. On December 31, 2025, the Company modified the vesting
conditions to accelerate vesting of the remaining 13,996,125 restricted shares
of common stock, which were issued from unvested Class B Units granted to
certain employees and service providers, including certain executive officers.
See Note 9, Share-Based Compensation for further discussion.
Preferred Units Financing - Issuance
Prior to the Corporate Conversion, we issued and sold 322,654,500 Preferred
Units for $107,552 in cash. The Company incurred $7,049 of offering costs
directly attributable to this issuance, which were recorded as a reduction to
additional paid-in capital.
Preferred Units Financing - Founder-granted Options
To incentivize the investors to participate in the Preferred Units Financing,
certain founders of the Company granted the investors on August 29, 2025, an
aggregate total of 2,868,000 options to purchase Class A Units held by the
founders, at a Company valuation of $5,000,000 until June 30, 2026 (the
"Preferred Unit Investor Options"). The Company is not a party to these
options and as such the options will not exist on the consolidated balance
sheet. Consistent with Staff Accounting Bulletin ("SAB") Topic 5T, because the
options were granted by the Company's founders to facilitate the Preferred
Units Financing, the Company recognized a capital contribution from the
founders of $39,292, equal to the fair value of the options, with a
corresponding reduction to issuance proceeds from investors.
Separately, to induce the conversion of the Series A Convertible Notes and
Series B Convertible Note, certain founders granted the noteholders an
aggregate total of 1,728,000 options to purchase Class A Units held by the
founders with the same terms as the Preferred Unit Investor Options. The
Company is not a party to these options and as such the options will not exist
on the consolidated balance sheet. Consistent with SAB Topic 5T, because the
options were granted by the Company's founders to facilitate these voluntary
conversions, the Company recognized a capital contribution from the founders
of $23,674, equal to the fair value of the options, with a corresponding
inducement expense recorded to other income (expense), net in the consolidated
statement of operations for the period from January 10, 2025 (Inception)
through December 31, 2025.
Preferred Units Financing - Embedded Derivative
In connection with the Preferred Units, the Company bifurcated an embedded
derivative related to the premium payable upon share-settlement triggered by
an IPO. The bifurcated embedded derivative was measured at fair value using
Level 3 inputs and was initially recorded at $31,990 on August 29, 2025.
After reflecting the capital contribution described above and the bifurcated
embedded derivative, the Preferred Units were initially recorded at $35,993,
which is net of $277 of deferred offering costs.
Preferred Units Financing - Conversion
Upon the Corporate Conversion on September 30, 2025, the Preferred Units
automatically converted into common stock of the Company. As a result, the
Company derecognized the Preferred Units and the embedded derivative as of
September 30, 2025. Prior to derecognition, the Company accreted preferred
dividends of $1,423 on Preferred Units and the Company also recognized a
change in fair value of the bifurcated embedded derivative of $46,350, which
was recorded as an expense within other income (expense), net in the
consolidated statement of operations.
The excess of the fair value of common stock over the carrying values of the
Preferred Units and the embedded derivative is a reduction of income available
to common stock within the computation of net loss per share. See Note 4, Net
Loss Per Share.
The Preferred Units were classified as mezzanine equity during the period
because redemption was outside the Company's control. The Company has not
separately presented the activity between August 29, 2025 (the issuance date)
and September 30, 2025 (the conversion date) related to the classification of
Preferred Units as mezzanine equity within the consolidated statement of
stockholders'/members' equity. Because the Preferred Units were not
outstanding at either the beginning or end of any period presented, the
Company determined that such presentation would not be meaningful to the users
of these consolidated financial statements.
Convertible Notes Conversion
On August 29, 2025, in connection with the issuance of Preferred Units, the
Seed Convertible Notes automatically converted into 30,572,796 Class A units
pursuant to the original terms. On the same date, the holders of the Series A
Convertible Notes and Series B Convertible Note elected to convert their
convertible notes into 87,214,966 Class A units, pursuant to the original
terms of the notes. The Company accounted for the conversions by derecognizing
the carrying amounts of the respective notes and recognizing the issuance of
Class A Units for the same amounts.
Governance and Voting Rights
Prior to the Corporate Conversion, the Company was governed by the Board of
Managers (the "Pre-Conversion Board") who was appointed and can be replaced by
the affirmative vote of Class A members holding the Requisite Voting
Threshold. Each Class A Unit was entitled to one vote. Pre-Conversion Board
decisions required the unanimous consent of all managers. The Pre-Conversion
Board had three managers, and Class A members could appoint up to three
additional managers. The Pre-Conversion Board could not approve certain
business decisions without the affirmative vote of Class A members holding the
Requisite Voting Threshold. These decisions included raising external capital,
issuing dividends, entering fundamental business transactions, and asset
purchases above a specified threshold.
Subsequent to the Corporate Conversion, the Company is governed by the board
of directors (the "Board"). In connection with the IPO, we entered into a
director nomination agreement (the "Director Nomination Agreement") which
resulted in TMNN Manager LLC ("TMNN") and Caddis Holdings LLC each designating
one nominee to the board. The Melissa A. Neugebauer 2020 Trust has elected not
to designate a director as of the date that these financial statements were
available to be issued and has certified to the Company that it does not
intend to do so for the foreseeable future. Our certificate of incorporation
("Charter") provides that the number of directors on our Board shall be
determined by a majority of our board of directors. Our Charter provides that
our Board is divided into three classes as nearly equal in size as
practicable, designated Class I, Class II and Class III, until the annual
meeting of shareholders to be held in 2029, at which time, a phase-in of a
declassified Board shall begin. The term of office of the initial Class I,
Class II and Class III directors expires at the first, second and third
regularly-scheduled annual meetings of the shareholders following
December 31, 2025, respectively. Commencing with the annual meeting of
shareholders to be held in 2029, directors succeeding those whose terms are
then expired shall be elected to hold office for a term expiring at the annual
meeting of shareholders held in the year following the year of their election.
In addition, the Company established an audit committee and a compensation
committee.
Holders of shares of our common stock are entitled to one vote for each share
held of record on all matters on which shareholders are entitled to vote
generally, including the election or removal of directors. The holders of our
common stock do not have cumulative voting rights in the election of
directors. Holders of our common stock are entitled to receive dividends when,
as, and if declared by our Board out of funds legally available therefore,
subject to any statutory or contractual restrictions on the payment of
dividends and to any restrictions on the payment of dividends imposed by the
terms of any outstanding preferred stock. The Company's common stock is
neither convertible nor redeemable.
4. Net Loss Per Share
The Company computes net loss per share in accordance with ASC 260, Earnings
Per Share. Basic net loss per share is calculated by dividing net loss by the
weighted-average number of shares outstanding during the period. Diluted net
loss per share reflects the potential dilution that would occur if securities
or other contracts to issue shares were exercised, converted, or otherwise
settled in shares, unless the effect would be anti-dilutive.
Net Loss Per Share Computation
For the period from
January 10, 2025
(Inception) through
December 31, 2025
Net loss $
(486,379)
Preferred Units dividends and accretion
(43,384)
Net loss - basic and diluted $
(529,763)
Weighted average number of common shares outstanding - basic and diluted 467,963,408
Net loss per common share - basic and diluted $
(1.13)
The computation of net loss per share for the period from January 10, 2025
(Inception) through December 31, 2025 excludes 38,412,070 shares of restricted
stock units, as the Company reported a net loss for the period and the effect
of all potentially dilutive securities outstanding as of December 31, 2025
would have been anti-dilutive.
5. Acquisitions
Firebird Acquisition
On July 29, 2025, the Company completed the acquisition of 100% of the
membership interests in Firebird Equipment Holdco from MAD Energy Limited
Partnership (the "Seller") (the "Firebird Acquisition"). The acquisition
consideration consisted of the $145,000 Series B Convertible Note, the $20,000
Promissory Note, and Net Profits Interest ("NPI") granted to the Seller. The
NPI entitles the Seller to 2.5% of net operating income from the first 1,000
MW of installed dispatchable generation capacity at the Company's campus,
subject to a $100,000 cap on a net present value basis, measured as of May 9,
2025 and calculated using a 10.0% discount rate. Net operating income is
defined as revenues received in connection with the generation capacity as
well as the rents from the powered shell buildings served by such generation
capacity, net of all operating, financing, and carrying costs relating to such
generation capacity.
The Company determined that the Firebird Acquisition did not meet the
definition of a business under ASC 805 and therefore accounted for the
transaction as an asset acquisition. The consideration paid was measured at a
total fair value of $137,000 on the acquisition date, which included the
Series B Convertible Note valued at $117,000 and the Promissory Note of
$20,000. The fair value of the Series B Convertible Note was estimated using
an option pricing framework, incorporating assumptions for the Company's fully
operational value, probability of success, volatility, and probability and
timing of potential exit events, and risk-free rate. The fair value of the
Promissory Note was assumed to be par given the short term to maturity
(December 1, 2025) and periodic principal repayments. The NPI is not a
derivative and represents contingent consideration and will be recognized when
the contingency is resolved and consideration becomes payable with a
corresponding increase to the carrying value of the acquired assets. As of
closing and as of December 31, 2025, no amount was recorded related to the
NPI. For additional information regarding the terms of the Series B
Convertible Note and the Promissory Note, refer to Note 7, Debt, net.
The net assets acquired as part of the Firebird Acquisition consists of an
executed contract between Firebird Equipment Holdco and Siemens Energy AB (the
"Siemens Contract") for the supply of power equipment for a combined cycle
power plant, including six gas turbine generator units, six heat recovery
steam generator units, and one steam turbine generator unit and certain
accounts payable for invoices payable under the Siemens Contract. In October
2025, Siemens Energy AB made the equipment ready for delivery, and the Company
subsequently paid in full all remaining equipment and storage costs under the
Siemens Contract. For the period from January 10, 2025 (Inception) through
December 31, 2025, the Company paid $149,488 in cash under the Siemens
Contract.
As of December 31, 2025, property, plant, and equipment, net included
$283,566 related to the Siemens 6x1 SGT-800 Combined Cycle System, $137,000 of
which related to the consideration transferred by the Company as part of the
Firebird Acquisition and $146,341 related to equipment as well as storage,
prolongation, and transportation costs payments associated with the delivered
equipment.
6. Property, Plant, and Equipment
Property, plant, and equipment, net consisted of the following as of
December 31, 2025 (in thousands):
December 31,
2025
Construction in progress $ 929,371
Land 5,924
Gross property, plant, and equipment $ 935,295
Less: accumulated depreciation -
Total property, plant, and equipment, net $ 935,295
As of December 31, 2025, the Company's property, plant, and equipment, net
consisted entirely of land and construction in progress. No depreciable
property, plant, and equipment had been placed in service, and accordingly, no
depreciation expense was recognized during the period from January 10, 2025
(Inception) through December 31, 2025.
Interest expense of $18,354 was capitalized during the period from January 10,
2025 (Inception) through December 31, 2025, all of which is included within
property, plant, and equipment, net on the consolidated balance sheet as of
December 31, 2025.
7. Debt, net
The table below summarizes the Company's debt as of December 31, 2025:
As of December 31,
2025
Debt - Macquarie Term Loan $ 148,986
Total debt $ 148,986
Less: Unamortized debt issuance costs and discount (39,187)
Total debt, net $ 109,799
As of December 31, 2025, the annual principal maturities of outstanding debt
obligations for each of the next five years is as follows:
2026 $ 148,986
2027 -
2028 -
2029 -
2030 -
Thereafter -
$ 148,986
In May 2025, we issued the Seed Convertible Notes for an aggregate principal
amount of $26,124. The Seed Convertible Notes bore 15.0% simple interest,
payable in-kind, and matured in five years. At any time at the holder's
election, the Seed Convertible Notes were convertible into Class A Units at a
conversion price of $0.89 per unit. Upon the occurrence of certain qualified
events - specifically, either (i) an equity financing transaction in which the
Company raised at least $10,000 through the issuance of equity securities at a
pre-money valuation of $1,000,000, or (ii) entered into binding agreements for
hyperscaler datacenter development - the Seed Convertible Notes would
automatically convert, at the holder's election, into Class A Units or the
class of equity securities issued upon the closing of such qualified event at
a conversion price equal to the lowest price per unit that such equity
securities were sold. Holders had voting rights on an as-converted basis. The
Seed Convertible Notes were unsecured obligations and ranked equally in right
of payment with each other and with all other unsecured debt of the Company,
without any preference or priority among them. In connection with the
Preferred Units issuance, all outstanding Seed Convertible Notes automatically
converted into 30,572,796 Class A Units of Fermi LLC and, in connection with
the Corporate Conversion, those Class A Units converted into shares of common
stock (see Note 3, Stockholders' Equity).
In June 2025, we issued the Series A Convertible Notes for an aggregate
principal amount of $58,900. In July 2025, we issued additional Series A
Convertible Notes for an aggregate principal amount of $16,600. The Series A
Convertible Notes bore 15.0% simple interest, were payable in-kind, and
matured in five years. At any time at the holder's election, the Series A
Convertible Notes were convertible into Class A Units at a conversion price of
$1.33 per unit. Upon the occurrence of certain qualified events -
specifically, either (i) an equity financing transaction in which the Company
raised at least $150,000 through the issuance of equity securities at a
pre-money valuation of at least $1,000,000, or (ii) entered into binding
agreements for hyperscaler datacenter development - the Series A Convertible
Notes would automatically convert, at the holder's election, into Class A
Units or the class of equity securities issued upon the closing of such
qualified event at a conversion price equal to the lowest price per unit that
such equity securities were sold. Holders had voting rights on an as-converted
basis. The Series A Convertible Notes were secured by a first-priority
security interest in certain turbines to be purchased by the Company and cash
deposits and ranked senior to all unsecured indebtedness of the Company. In
connection with the Preferred Units issuance, all holders elected to convert
their Series A Convertible Notes into 58,437,945 Class A Units of Fermi LLC
and, in connection with the Corporate Conversion, those Class A Units
converted into shares of common stock (See Note 3, Stockholders' Equity).
On July 29, 2025, in connection with the Company's acquisition of Firebird
Equipment Holdco, we issued the Series B Convertible Note for an aggregate
principal amount of $145,000. The Series B Convertible Note bore 11.0% simple
interest, was payable in-kind quarterly, and matured on January 31, 2026,
unless earlier converted pursuant to its terms described herein. At any time
at the holder's election, the Series B Convertible Note was convertible into
Class A Units at a conversion price equal to $3,000,000 divided by the
Company's fully diluted capitalization immediately prior to the conversion.
Upon the occurrence of certain qualified events - specifically, either (i) an
equity financing transaction in which the Company raised at least $150,000
through the issuance of equity securities at a pre-money valuation of at least
$1,000,000, or (ii) entered into a binding agreement for hyperscaler data
development - the Series B Convertible Note would automatically convert, at
the holder's election, into Class A Units or the class of equity securities
issued upon the closing of such qualified event at a conversion price equal to
the lowest price per unit at which such equity securities were sold. In the
event of a change of control prior to the maturity date, the holder could
elect to (i) receive a cash payment equal to 115.0% of the outstanding
principal amount or (ii) convert the note into Class A Units at the conversion
price, with any unconverted portion paid in cash equal to 15.0% of the
principal amount. The holder had voting rights on an as-converted basis. The
Series B Convertible Note was secured by a first-priority security interest in
certain retained assets, including equipment to be purchased by the Company
and ranked pari passu with all other Series B Convertible Notes. The note was
subordinated to up to $150,000 of senior bank debt incurred in connection
with, or following the closing of, the Siemens Contract and ranked senior to
all of our unsecured debt. In connection with the Preferred Units Financing,
the holder elected to convert the Series B Convertible Note into 28,777,021
Class A Units of Fermi LLC and, in connection with the Corporate Conversion,
those Class A Units converted into shares of common stock (see Note 3,
Stockholders' Equity). Upon issuance, the Company elected to account for the
Series B Convertible Note using the fair value option and initially recognized
the Series B Convertible Note at a fair value of $117,000. Prior to their
conversion on August 29, 2025, the Series B Convertible Note were remeasured
at a fair value of $178,000 and the change in fair value of $61,000 was
recorded in other income (expense), net within the consolidated statement of
operations. The Company measured the fair value of the Series B Convertible
Note using an option pricing framework using Level 3 inputs like the Company's
fully operational value, probability of success, volatility, and probability
and timing of potential exit events.
On July 29, 2025, in connection with the Company's acquisition of Firebird
Equipment Holdco, we issued the Promissory Note for an aggregate principal
amount of $20,000. The Promissory Note bore interest at a rate of 4.5% per
annum, calculated on a simple interest basis, and matured on December 1, 2025.
The Promissory Note was payable in monthly installments, with the first
installment of $5,000 due and paid on July 29, 2025, and subsequent monthly
installments of $2,500 each through December 2025. The Promissory Note was
secured by a first-priority security interest in certain equipment and related
assets, including rights under a contract for the supply of power generation
equipment, and ranked senior to all unsecured debt of the Company. The
Promissory Note may be prepaid at any time without penalty. Upon the
occurrence of an event of default, all outstanding principal and accrued
interest became immediately due and payable. As of December 31, 2025, the
Company had fully repaid the Promissory Note.
On August 29, 2025, we entered into a senior secured term loan agreement (the
"Macquarie Term Loan") with Macquarie. Pursuant to the Macquarie Term Loan,
the Company received proceeds of $99,342, net of debt issuance costs, with an
obligation to repay $148,986 upon maturity. The Macquarie Term Loan bears 1.0%
interest, payable quarterly, and matures on August 29, 2026. Obligations under
the Macquarie Term Loan are secured on a first-priority basis by equipment
owned by the Company. The agreement allows both optional and lender-elected
prepayments. Any repayment, whether scheduled, early, or due to acceleration,
must include a premium that ensures lenders receive at least 1.50 times their
original investment. Prepayments may be required at the lender's election
under certain circumstances, including after an IPO, which must be repaid
within 150 days of completion. Prepayment may also be required if the Company
makes certain asset sales or incurs debt that is not permitted under the
agreement. If the Company defaults, the outstanding amounts accrue interest at
a rate equal to the regular interest rate plus an additional 1.5% per month.
As of December 31, 2025, the carrying value of the Macquarie Term Loan was
$109,799, net of the debt discount and unamortized debt issuance costs.
In addition, the Macquarie Term Loan contains customary events of default that
entitle the lenders to cause any indebtedness under the Macquarie Term Loan to
become immediately due and payable, and to exercise remedies against the
Company and the collateral securing the Macquarie Term Loan. Under the
Macquarie Term Loan, an event of default will occur if, among other things,
the Company fails to make payments under the Macquarie Term Loan, the Company
breaches any of the covenants under the Macquarie Term Loan, subject to
specified cure periods with respect to certain breaches, the lenders determine
that a material adverse change has occurred, or the Company or the Company's
assets become subject to certain legal proceedings, such as bankruptcy
proceedings. Upon the occurrence and for the duration of an event of default,
an additional default interest rate, equal to 1.0% per annum will apply to all
obligations owed under the Macquarie Term Loan. The prepayment upon default
and other potential additional interest provisions under the Macquarie Term
Loan were determined to be an embedded derivative that was required to be
bifurcated from the loan under ASC 815. Accordingly, a liability related to
the embedded derivative was initially recognized, with a corresponding
discount on the Macquarie Term Loan. The discount is subsequently amortized to
interest expense over the term of the loan. The fair value of the bifurcated
embedded derivative is determined as the difference in the values of the
Macquarie Term Loan with and without the embedded derivative which are
estimated using a discounted cash flow model based on Level 3 inputs including
the discount rate, calibration discount, and the probability and estimated
timing of an IPO. At the inception of the Macquarie Term Loan, the fair value
of the embedded derivative was determined to be $5,500. The embedded
derivative instrument was remeasured at fair value on September 30, 2025, with
the change in fair value reported in other income (expense), net in the
consolidated statement of operations. During the period from January 10, 2025
(Inception) through December 31, 2025, the Company recognized a $4,240 loss in
other income (expense), net related to the change in fair value of the
embedded derivative instrument. The Company reclassified the embedded
derivative within the Macquarie Term Loan to other liabilities on
September 30, 2025, as the instrument no longer met the definition of an
embedded derivative under ASC 815. The fair value of the Macquarie Term Loan
was approximately $145,899 as of December 31, 2025.
For the period from January 10, 2025 (Inception) through December 31, 2025, we
recognized interest income of $4,384 and interest expense of $652,
respectively.
The accrued and unpaid interest was capitalized into the outstanding principal
balance of the Promissory Note each quarter, and interest did not accrue on
any capitalized interest amounts. The total accrued interest on the Promissory
Note of $224 was paid in cash through December 1, 2025, the date of the last
principal repayment. The Promissory Note had an effective interest rate of
4.5% and the Macquarie Term Loan has an effective interest rate of 48.9%. As
of December 31, 2025, accrued interest related to the Macquarie Term Loan
totaled $16,302 and is reflected in debt, net on the consolidated balance
sheet. All accrued interest on the Seed, Series A, and Series B Convertible
Notes converted into Class A Units of Fermi LLC in connection with the
Preferred Units Financing, and, in connection with the Corporate Conversion,
those Class A Units converted into 117,787,762 shares of common stock. See
Note 3, Stockholders' Equity for further detail.
As of December 31, 2025, the Company was in compliance with all material
covenants under its debt agreements.
8. Leases
TTU Lease
On May 14, 2025, the Company entered into a 99-year ground lease ("TTU
Lease") with Texas Tech University ("TTU") for 5,769 acres of land in Carson
County, Texas, intended for the development of Project Matador. Lease
commencement was contingent upon satisfaction of certain conditions precedent,
including the provision of a term sheet to TTU for an approved subtenant for a
powered shell meeting specified size and power requirements. The original
lease term is 99 years with no options to renew or extend. The TTU Lease does
not include any lessee-controlled options to extend or terminate. The
operating lease provides for annual increases to lease payments.
On August 11, 2025, the Company and the Texas Tech University System ("TTUS")
executed a first amendment to the TTU Lease ("First Amendment to the TTU
Lease"). This amendment memorialized the satisfaction or waiver of certain
conditions precedent under the original lease and provided that the lease
commencement date would occur upon execution of a term sheet with a
hyperscaler tenant related to the first powered shell to be constructed. The
amendment also (i) reduced the Project Matador site from approximately 5,769
acres to approximately 4,523 acres, (ii) acknowledged an additional 713-acre
tract that will be added to the leased premises upon transfer from a federal
agency to TTUS, and (iii) designated TTUS as the sole landlord, replacing TTU.
In September 2025, the Company satisfied the remaining commencement conditions
and triggered lease commencement for the 4,523 acres of Project Matador site
under the terms of the First Amendment to the TTU Lease, as evidenced by the
execution and delivery of a notice of commencement and the recording of the
memorandum of lease following the execution and delivery of the Phase One Term
Sheet. The lease term for the additional 713-acre tract had not yet commenced
as of December 31, 2025.
At lease commencement, the Company recognized an operating lease ROU asset and
corresponding lease liability representing only that portion of the lease that
had commenced. The ROU asset and lease liability were measured at the present
value of future lease payments, discounted using the Company's incremental
borrowing rate of 16.1%. As of December 31, 2025, the ROU asset and lease
liability totaled $21,737 and $21,320, respectively. Total lease-related
payments made to TTUS prior to commencement were approximately $1,750, of
which $1,512 was applied to the 4,523-acre portion of the lease and
reclassified from prepaid expenses and other assets to operating lease
right-of-use assets at commencement. The remaining $238, associated with the
713-acre parcel lease that has not yet commenced, is recorded in prepaid
expenses and other assets on the consolidated balance sheet and will be
reclassified to operating lease right-of-use assets when that parcel's lease
term commences.
The Company is obligated to pay annual base rent of $1,200 in the first year,
escalating annually during the initial five years as specified in the lease
agreement, with a fixed 3.0% annual escalator thereafter. During the years
when the Company subleases powered shells to its subtenants, the Company will
be required to pay variable lease payments based on (i) up to 1.0% of the
appraised value of leased powered shell space in that year (up to $3,000,000
in total assessed value) and 0.5% on additional appraised value above
$3,000,000, to the extent greater than the base annual rent, and (ii) a
percentage of gross revenues from the sale of power (1.0% of gross revenues)
and water (25.0% of gross revenues) to its subtenants. As of December 31,
2025, no variable lease payments have been made.
The Company will also provide certain additional benefits to the Texas Tech
University System ("TTUS"), including: (i) within one year following
substantial completion of a powered shell meeting specified size and power
requirements, the subleases of (a) up to 15 acres of land, at no cost to TTUS,
for the construction of a TTUS research campus, at the cost of TTUS, and (b) a
parcel of land on which the Company will construct a standalone 10,000 square
foot powered shell for TTUS' use, at no cost to TTUS, (ii) beginning in the
first year when lease payments are received from its subtenants, the
establishment and funding of the TTUS Excellence Fund at $1,000 annual
contribution plus one-time donation tied to subleased powered shell square
footage, and (iii) the establishment and funding of a sinking fund upon
commencement of variable rent payments, initially funded at $10,000 per annum,
increasing annually by 3.0%, with the annual contribution increasing by an
additional $9,000 upon construction of a nuclear facility at Project Matador.
With respect to the construction of the powered shell that the Company will
sublease to TTUS upon completion, the Company has concluded that the
arrangement is not currently within the scope of build-to-suit accounting
under ASC 842, as TTUS does not control the use of the underlying asset during
the construction period. The Company will continue to monitor the terms of the
arrangement and reassess this conclusion if TTUS's rights or involvement in
the construction activities change prior to lease commencement.
Operating lease costs were $4,723 for the period from January 10, 2025
(Inception) through December 31, 2025, of which $514 were expensed and
included within general and administrative expenses in the consolidated
statement of operations, and $4,209 were capitalized within property, plant,
and equipment, net, on the consolidated balance sheet.
For the period from January 10, 2025 (Inception) through December 31, 2025,
cash paid for amounts included in the measurement of lease liabilities was
$3,628.
Information relating to the lease term and discount rate for operating leases
as of December 31, 2025, were as follows:
December 31,
2025
Weighted-average remaining lease term (in years):
Operating leases 99
Weighted-average discount rate:
Operating leases 16.1%
The future minimum lease payments included in the measurement of the Company's
operating lease liabilities as of December 31, 2025, were as follows:
Years Ending December 31, Future
Minimum
Payments
2026 $ 432
2027 1,836
2028 2,268
2029 3,684
2030 4,031
Thereafter 1,649,323
Total undiscounted lease payments 1,661,574
Less: imputed interest (1,640,254)
Present value of lease liabilities $ 21,320
MPS Agreement
On October 22, 2025, Fermi entered into a master lease agreement (the "MPS
Agreement") with Mobile Power Solutions LLC ("MPS") for the lease of seven GE
TM2500 Gen 4 mobile power generation units. The MPS Agreement expands the
Company's natural gas platform, a key component of Project Matador's initial
generation capacity, and will provide flexible, dispatchable power as the
project integrates multiple energy sources. The arrangement includes monthly
base rent payments extending through 2045. The TM2500 units, totaling
approximately 132 MW under our expected site conditions, are scheduled for
delivery in the first half of 2026. If the Company does not pick up a TM2500
unit prior to the contractual pick-up deadline, lease commencement is deemed
to occur on the pick-up deadline, at which point control and risk of loss
contractually transfers to the Company. The MPS Agreement does not provide for
termination rights for convenience; however, in the event of early termination
or default, the Company would remain obligated for substantially all remaining
lease payments based on the cumulative net present value schedule under the
agreement.
In accordance with ASC 842, the Company has not recognized a ROU asset or
lease liability related to the MPS Agreement as of December 31, 2025, as the
lease has not yet commenced, and the Company does not yet control the TM2500
units. As of December 31, 2025, $33,679 of lease-related payments were paid
in advance of lease commencement, consisting of (i) $10,000 in cash and (ii)
$23,679 in shares of common stock. The stock portion was settled through the
issuance of 1,190,476 shares of common stock at a fair value of $19.89 per
share, equal to the closing market price of our common stock on the date of
issuance. These payments are reflected within prepaid expenses and other
assets on the consolidated balance sheet and will be reclassified to finance
lease right-of-use assets when the lease for each unit commences.
9. Share-Based Compensation
Class B Units
In April 2025, the Company sold 63,382,500 non-voting Class B Units to service
providers for $0.0022 per unit, which vested 25% at issuance and the remaining
75% vested in equal monthly installments over five years, contingent on de
facto continued service through a Company right to repurchase unvested shares
at the original purchase price of $0.0022 per unit. The Company classified
vested Class B Unit awards as equity. Unvested Class B units were considered
compensatory when purchased by service providers as they had vesting
requirements. As these unvested Class B Unit purchases also had economics
similar to "early exercises" of stock options, cash proceeds received for
unvested Class B Units issued to service providers were initially recorded as
a deposit liability and were reclassified to equity as vesting occurred.
The fair value of Class B Units issued was determined to be $0.0022 per unit
based on contemporaneous sales to passive investors and an independent
third-party valuation using an income approach. The Company concluded that
there was no material compensation element associated with the issuance of
Class B Units to service providers. Therefore, no share-based compensation
expense was recognized related to the April 2025 issuance of Class B Units in
the period from January 10, 2025 (Inception) through December 31, 2025. As of
December 31, 2025, there was no unrecognized compensation expense in relation
to the issuance of Class B Units.
In June 2025, the Company repurchased 4,077,900 unvested Class B Units from a
service provider following the termination of the service relationship. The
units were repurchased at the original $0.0022 per unit purchase price and
accounted for as a forfeiture under ASC 718, resulting in a repayment and
reversal of the related deposit liability to the service provider. The
forfeited units were subsequently converted into Class A Units. Two existing
Class A members, who are considered service providers and related parties,
purchased the Class A Units at $0.0022 per unit despite the Class A Units
having a higher estimated fair value on the transaction date. The Company
recognized $3,616 of compensation expense in June of 2025. The expense
represents the difference between the then-current fair value and the purchase
price in accordance with ASC 718 and was recorded within general and
administrative expenses in the consolidated statement of operations for the
period from January 10, 2025 (Inception) through December 31, 2025. As of
December 31, 2025, there was no unrecognized compensation expense in relation
to the issuance of Class A Units.
On August 15, 2025, the Company repurchased 11,250,000 Class B Units in
aggregate from two former service providers following the termination of the
service relationships. The units were repurchased by the Company at the
original $0.0022 per unit purchase price for aggregate cash consideration of
$25 and represented 100% of the Class B Units previously issued to those
service providers. The repurchase included both vested and unvested Class B
Units. The Company has determined that the repurchase of the 2,812,500 Class B
Units that were immediately vested at issuance should be accounted for as a
treasury shares repurchase at their original price and therefore, no gain or
loss should be recognized. Additionally, the repurchase of the 562,500
incrementally vested Class B Units represented a claw back and was recorded as
treasury shares at a fair value of $4.21 per unit, with no contingent gain
recorded, as share-based compensation expense was deemed immaterial and no
expense had been recognized. The repurchase of the remaining 7,875,000
unvested Class B Units represented an in-substance forfeiture under ASC 718
and was recorded as a decrease to the related deposit liability and a decrease
to cash and cash equivalents for $18 with no expense reversal due to the
immaterial compensation cost.
On September 18, 2025, the Company donated 11,250,000 Class B Units to
Dechomai Asset Trust, an unrelated, third party, 501(c)(3) public nonprofit
organization. This donation was effected through an Assignment of Interests
agreement, pursuant to which the Company transferred its full right, title and
interest in the units to the charitable organization free and clear of any
liens or encumbrances. The donation represented a non-cash expense of $173,784
measured using the estimated fair value of the shares at the date of issuance,
which is included within other income (expense), net within the consolidated
statement of operations.
On September 23, 2025, the Company's Board approved modifications to
accelerate the vesting conditions for 16,551,563 unvested Class B Units
previously granted to certain service providers.
The Company had reserved 1,500,000 Class B Units in the form of an equity pool
to be granted to non-executive employees and service providers outside the
2025 Incentive Plan (as defined below). The Company's CEO served as the
administrator of the equity pool and had the authority to issue awards
representing 75,000 Class B Units in any single award on terms and conditions
set in his sole discretion (collectively, the "Employee Compensatory Class B
Grants"). No awards were issued in relation to the equity pool prior to the
Corporate Conversion.
On September 30, 2025, in connection with the Corporate Conversion, all
issued Class B Units automatically converted, on a 3-for-1 basis, into
100,638,450 shares of common stock.
On December 31, 2025, the Company's Board approved a modification to
accelerate the vesting of the remaining 13,996,125 unvested shares of common
stock issued upon the conversion of Class B Units and held by service
providers. As a result, as of December 31, 2025, all shares of common stock
issued upon the conversion of Class B Units were considered outstanding and
the related deposit liability was reclassified to equity.
TMNN Class A Units
On August 2, 2025, the Company granted 4,500,000 Class A Units to TMNN, an
affiliate of Toby Neugebauer, the Company's Co-Founder, President and Chief
Executive Officer (the "TMNN Class A Units"). Each TMNN Class A Unit had a
grant-date fair value of $4.09 per unit, equal to the fair value of the
Company's Class A Units as of August 2, 2025. The award was immediately
vested upon grant. Accordingly, the Company recognized the entire compensation
expense on the grant date, totaling $18,405, which is included within general
and administrative expenses within the consolidated statement of operations
for the period from January 10, 2025 (Inception) through December 31, 2025. In
connection with the Corporate Conversion, the TMNN Class A Units converted
into issued and outstanding shares of common stock.
Neugebauer Compensatory Anti-Dilution Grant
On August 2, 2025, Mr. Neugebauer received a compensatory anti-dilution grant
of 7,500,000 REUs for Class A Units (the "Neugebauer Compensatory
Anti-Dilution Grant"). Each restricted equity unit under the Neugebauer
Compensatory Anti-Dilution Grant had a grant date fair value of $3.93 per unit
as of August 2, 2025. The Neugebauer Compensatory Anti-Dilution Units will
cliff vest (100%) on January 1, 2028, provided that Mr. Neugebauer is a
service provider to the Company on such date. The Company recognizes
compensation expense on a straight-line basis over the requisite service
period from the grant date, August 2, 2025, through January 1, 2028. In
connection with the Corporate Conversion, the Neugebauer Compensatory
Anti-Dilution Units converted into shares of restricted stock units.
Uzman Restricted Class A Units
On August 2, 2025, the Company granted an aggregate of 1,500,000 restricted
Class A Units, consisting of 750,000 restricted Class A Units to Mesut Uzman,
the Company's Chief Nuclear Construction Officer, and 750,000 restricted Class
A Units to Sezin Uzman, an employee of the Company (the "Uzman Restricted
Class A Units"). Each Uzman Restricted Class A Unit has a grant date fair
value of $3.93 per unit, equal to the fair value of the Company's Class A
Units as of August 2, 2025. The grant of Uzman Restricted Class A Units
consisted of (i) 600,000 time-based awards and (ii) 900,000 performance-based
awards. The Uzman Restricted Class A Units are subject to a vesting schedule
whereby (i) for the time-based awards, 20% will vest (rounded down for any
fractional equity interests) on the first, second, third, fourth and fifth
anniversary of the date of grant, provided that the grantee is a service
provider to the Company on each such date and (ii) for the performance based
awards, (A) 50% will vest on the date that the Company's first nuclear reactor
is built and fully operational, as determined by the Company in its sole
discretion and (B) 50% will vest on the effective date of the first contract
by and between the Company and its first customer for nuclear reactor power.
Additionally, the Company previously held the right to repurchase vested Class
A Units upon the termination of services by the Uzmans; however, this
repurchase right expired upon the Company's IPO. In connection with the
Corporate Conversion, the Uzman Restricted Class A Units converted into
restricted shares of common stock. The shares of restricted common stock
issued from Uzman Restricted Class A Units are legally issued and outstanding.
As of December 31, 2025, the 1,500,000 shares of restricted common stock were
unvested.
Compensation expense for the time-based awards is expected to be recognized on
a straight-line basis over the requisite service period of 5 years and extends
from the grant date, August 2, 2025, through August 2, 2030. The requisite
service period for each tranche of the performance-based unit awards will be
from the grant date, August 2, 2025, to the date each performance condition
is expected to be achieved. As of December 31, 2025, the Company concluded
that the performance conditions did not meet the threshold for recognition
under applicable accounting guidance. The Company will continue to monitor
progress and reassess these conditions at each reporting period and will
record a cumulative catch-up adjustment in the period the threshold for
recognition is met.
Senior Management Restricted Class A Units
On August 2, 2025 and September 28, 2025, the Company granted 18,900,000 and
2,250,000 REUs, respectively, to certain senior management members (the
"Senior Management Restricted Class A Units").
Prior to the modification (discussed below), the Senior Management Restricted
Class A Units were subject to performance-based vesting conditions, subject to
continued services, whereby (i) one-third of the total awards would vest upon
the occurrence of an IPO or a change in control event, (ii) one-third of the
total awards would vest on the date the Company signs its first tenant lease
agreement, as determined by the Board, and (iii) one-third of the total awards
would vest on the date the Company achieves at least 1 gigawatt of power
available for delivery to the substation for Project Matador, as determined by
the Board.
On September 28, 2025 the Company and grantees of the Senior Management
Restricted Class A Units agreed to modify the original vesting conditions. The
awards were modified such that they are subject to a vesting schedule whereby
(i) one-third of the total awards would vest 6 months after an IPO ("Tranche
1"), (ii) one-third of the total awards would vest one year after an IPO
("Tranche 2"), and (iii) one-third of the total awards would vest two years
after an IPO ("Tranche 3"). This resulted in a Type IV Modification
(improbable-to-improbable) as none of the performance conditions were probable
of being met prior to and after the modification. As a result, the Company
used the modification date fair value as the new basis to prospectively
recognize compensation expense over the requisite service period, starting on
September 30, 2025 (the date on which the performance condition was met). In
connection with the Corporate Conversion, the Senior Management Restricted
Class A Units converted into restricted stock units.
The fair value of the Senior Management Restricted Class A Units was
determined to be $21.00 per unit as of the modification date. The requisite
service period for each tranche of the Senior Management Restricted Class A
Units extends from the modification date, September 28, 2025, through the
six-month, twelve-month and twenty-four-month anniversary of the IPO,
respectively. In connection with the achievement of the performance condition,
the Company recognized a cumulative catch-up adjustment of $2,853.
Management Restricted Class B Units
On August 2, 2025 and September 28, 2025, the Company granted 8,565,000 and
24,000 REUs, respectively, for Class B Units to certain management members
(the "Management Restricted Class B Units"). Each Management Restricted Class
B Unit had a grant date fair value of $3.93 per unit, equal to the fair value
of the Company's Class B Units as of August 2, 2025. The Management
Restricted Class B Units were subject to a vesting schedule whereby forty
percent (40%) vested solely based on service conditions (the "Management Time
Restricted Class B Units"): (i) 13.33% of the total awards would vest on the
first anniversary of the date of grant, (ii) 13.33% of the total awards would
vest on the second anniversary of the date of grant, (iii) 13.34% of the total
awards will vest on the third anniversary of the date of grant.
The remaining sixty percent (60%) vested upon the achievement of specified
market and performance conditions. Specifically, 20% vested upon the
occurrence of an IPO, subject to continued service; 20% vested upon the later
of the Company achieving a $30,000,000 valuation or the occurrence of an IPO
or change in control, subject to continued service; and 20% vested upon the
later of the Company achieving a $50,000,000 valuation or the occurrence of an
IPO or change in control, subject to continued service.
On September 28, 2025, the Company modified the original vesting conditions
of the Management Restricted Class B Units subject to market and performance
conditions (the "Modified Management Restricted Class B Units"), while the
Management Time Restricted Class B Units were not modified. The modified
awards are subject to a vesting schedule whereby (i) 24% of the total awards
will vest six months from the completion of an IPO, (ii) 18% of the total
awards will vest twelve months from the completion of an IPO and (iii) 18% of
the total awards will vest eighteen months from the completion of an IPO. The
modification also resulted in a Type IV Modification
(improbable-to-improbable) as none of the performance conditions were probable
of being met prior to and after the modification. As a result of the Type IV
modification, the Company will use the modification date fair value as the new
basis to prospectively recognize compensation expense starting on
September 30, 2025 (the date on which the performance condition was met) over
the requisite service period. In connection with the Corporate Conversion, the
Management Restricted Class B Units converted into restricted stock units.
The fair value of the Modified Management Restricted Class B Units was
determined to be $21.00 per unit. The requisite service period for each
tranche of the Modified Management Restricted Class B Units extends from the
modification date, September 28, 2025, through the six-month, twelve-month,
and eighteen-month anniversary of the IPO, respectively. In connection with
the achievement of the performance condition, the Company recognized a
cumulative catch-up adjustment of $786.
2025 Incentive Plan
On September 30, 2025, the 2025 Incentive Plan for employees, contractors and
non-employee directors was approved by the Board and adopted by the Company.
The purpose of the Fermi Inc. 2025 Long-Term Incentive Plan (the "2025
Incentive Plan") is to provide an incentive for employees, directors and
certain consultants and advisors of the Company or its subsidiaries to remain
in the service of the Company or its subsidiaries, to extend to them the
opportunity to acquire a proprietary interest in the Company so that they will
apply their best efforts for the benefit of the Company, and to aid the
Company in attracting able persons to enter the service of the Company and its
subsidiaries. The 2025 Incentive Plan provides for the grant of non-qualified
stock options, incentive stock options, stock appreciation rights, restricted
stock units, performance awards, restricted stock awards and other cash and
equity-based awards.
Unless sooner terminated by the Board, the 2025 Incentive Plan will terminate
and expire on its tenth anniversary. No award may be made under the 2025
Incentive Plan after its expiration date, but awards made prior thereto may
extend beyond that date. 69,073,650 shares of common stock were reserved for
future issuance under the 2025 Incentive Plan.
On December 10, 2025, the Company granted 1,133,690 service-based restricted
stock units ("RSUs") and 249,380 performance-based RSUs under the 2025
Incentive Plan. The Company recognizes compensation expense for the
service-based RSUs over the requisite service period, which ranges from three
to four years. The performance-based RSUs have an operational milestone to be
met over an estimated one-year period, through December 2026. Each RSU has a
grant date fair value of $15.38, equal to the closing market price of the
Company's common stock on the date of grant.
For the period from January 10, 2025 (Inception) through December 31, 2025,
the Company has recognized $132,745 in share-based compensation expense, which
is included within general and administrative expenses within the consolidated
statement of operations. For the period from January 10, 2025 (Inception)
through December 31, 2025, the Company capitalized $67,100 of share-based
compensation expense, of which $66,661 and $439 are included within property,
plant, and equipment, net, and prepaid expenses and other assets,
respectively, on the consolidated balance sheet. As of December 31, 2025,
total unrecognized compensation cost related to unvested awards was $441,847,
and is expected to be recognized over the weighted-average requisite service
period of 2.20 years. The unrecognized compensation expense of $3,534 for the
Uzman Restricted Class A Units with performance conditions will be recognized
when the performance conditions meet the thresholds under applicable
accounting guidance over the vesting term, calculated as the period from the
date the performance conditions meet the thresholds and the expected
achievement date of the milestones.
The following table summarizes the share-based compensation activity:
For the period from January 10, 2025 (Inception) through December 31, 2025 Service-based Weight-Average Performance- Weight-Average
Awards Grant Date FV based Awards Grant Date FV
(Service) (Performance)
Granted / Sold 64,706,165 $ 1.26 27,452,780 $ 20.39
Modified to accelerate vesting (30,547,688) $ 0.00 - $ -
Repurchase/Forfeited (12,036,900) $ 0.03 (126,000) $ 21.00
Vested (9,536,287) $ 1.93 - $ -
Unvested as of December 31, 2025 12,585,290 $ 4.97 27,326,780 $ 20.39
Vested as of December 31, 2025 40,083,975 $ 0.46 - $ -
10. Commitments and Contingencies
Commitments
Lease Commitments
As of December 31, 2025, the Company had various fixed and variable lease
payment obligations associated with the TTU Lease, and in 2025, the Company
entered into a lease agreement with MPS through which the Company will be
subject to fixed lease payments once the lease commences. See Note 8, Leases,
for additional information.
Surety Bonds
In the course of business, we are required to provide financial commitments in
the form of surety bonds to third parties as a guarantee of our performance on
and our compliance with certain obligations. If we were to fail to perform or
comply with these obligations, any draws upon surety bonds issued on our
behalf would then trigger our payment obligation to the surety bond issuer. We
have outstanding surety bonds issued for our benefit of approximately $31,810
as of December 31, 2025.
Unconditional Purchase Obligations
For the period from January 10, 2025 (Inception) through December 31, 2025,
the Company entered into unrecognized commitments that require the future
purchase of goods or services ("unconditional purchase obligations"). The
Company's unconditional purchase obligations primarily relate to long lead
time equipment purchases and vary by vendor. Future payments under
unconditional purchase obligations as of December 31, 2025 are as follows:
Years Ending December 31, Payments by Year
2026 $
65,880
2027
56,730
2028
32,940
2029
-
2030
-
Thereafter
-
Total unconditional purchase obligations $
155,550
Contingencies
Legal Contingencies
In the ordinary course of business, we may become party to various legal
actions that are routine in nature and incidental to the operation of the
business. Liabilities for loss contingencies arising from claims, assessments,
litigation, fines and penalties and other sources are recorded when it is
probable that a liability has been incurred, and the amount can be reasonably
estimated. Legal costs incurred in connection with loss contingencies are
expensed as incurred. As of December 31, 2025, we are not aware of any
matters that are expected to have a material adverse effect on our business,
financial position, results of operations, or cash flows, and therefore we
have not accrued any material losses related to such matters.
Contingent Consideration
As part of the Firebird Acquisition, the Company also assumed the obligation
to pay NPI to the Seller. Under the NPI, the Company is liable to pay a
portion of 2.5% of net operating income from the first 1,000 MW of installed
dispatchable generation capacity at the Company's AI infrastructure campus.
See Note 5, Acquisitions, for more information.
11. Subsequent Events
Litigation
On January 5, 2026, the Company, certain of its directors and officers, and
certain underwriters of the Company's IPO were named as defendants in a
putative securities class action filed in the U.S. District Court for the
Southern District of New York. The complaint alleges that the Company made
materially false and misleading statements and omissions in the registration
statement and prospectus issued in connection with the IPO and in other public
statements during the period from October 1, 2025 through December 11, 2025,
in violation of Sections 11 and 15 of the Securities Act of 1933 and Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, as well as Rule 10b-5
promulgated thereunder. The action seeks unspecified damages on behalf of a
purported class of purchasers of the Company's common stock pursuant and/or
traceable to the IPO registration statement and/or during the alleged class
period. The Company believes the claims are without merit and intends to
vigorously defend against the action. As of December 31, 2025, the Company is
unable to reasonably estimate the possible loss or range of loss, if any,
associated with this matter.
Siemens F-Class Equipment Purchase Agreement
On January 28, 2026, Fermi Turbine Warehouse LLC, a Texas limited liability
company and indirect wholly owned subsidiary of the Company ("FTW"), entered
into an arrangement with Siemens Energy, Inc. ("Siemens") for the purchase of
three F-class gas turbine units and related equipment and services for Project
Matador (the "Siemens F-Class EPA").
The fixed price portion of the Siemens F-Class EPA is approximately $324,400,
and as of the date of issuance of these financial statements, the Company has
paid approximately $276,600. In addition to the fixed price amount, the
Company is obligated to pay shipping costs and applicable import duties, as
incurred, pursuant to the contract.
The Siemens F-Class EPA includes customary provisions relating to delivery,
transfer of title and risk of loss, performance warranties and liquidated
damages for delay or performance shortfalls, subject to negotiated caps. In
connection with the equipment supply contract, FTW also entered into a related
long-term commercial agreement with Siemens providing for ongoing payments
over a ten-year period following acceptance of the equipment, based primarily
on specified reliability metrics. The equipment supply contract and the
related agreement were negotiated together and are intended to operate as a
single integrated commercial arrangement with Siemens.
MUFG Equipment Financing
On February 10, 2026 (the "Closing Date"), the Company consummated a strategic
financing with MUFG Bank, Ltd. ("MUFG") (the "MUFG Equipment Financing")
pursuant to an Equipment Supply Loan Financing Agreement (the "Credit
Agreement") entered into by FTW ("Borrower"), Firebird Equipment Holdco as
subsidiary guarantor (the "Subsidiary Guarantor"), and MUFG, as sole lender.
The MUFG Equipment Financing will enable the Company to fund the Siemens
F-Class EPA and related equipment for Project Matador, refinance the Company's
existing Macquarie Term Loan, and support the delivery, construction, and
deployment of turbines across Fermi's existing fleet.
The Credit Agreement provides for a senior secured equipment loan warehouse
facility in an aggregate principal amount of up to $500,000 (the "Total Loan
Commitment"). Borrowings under the Credit Agreement may be made from the
Closing Date through the nine-month anniversary of the Closing Date.
Borrowings under the MUFG Equipment Financing agreement totaled $394,067 in
2026. Each loan under the Credit Agreement bears interest at a rate per annum
equal to (i) in the case of Term SOFR Loans, the Term SOFR rate for the
applicable interest period plus 4.0% per annum, or (ii) in the case of RFR
Loans, Daily Simple SOFR plus 4.0% per annum.
Proceeds of the loans under the Credit Agreement may be used to (i) pay
equipment acquisition costs or make distributions to the Company or its
affiliates to reimburse for equipment acquisition costs paid prior to the
Closing Date, (ii) pay fees and transaction costs, (iii) fund required reserve
accounts, and (iv) make distributions to the Company to repay existing
indebtedness of the Company or its affiliates in respect of qualified
equipment to be financed under the Credit Agreement. Proceeds of borrowings
were used, in part, to make payments to Siemens Energy in an amount equal to
$201,600 pursuant to the Siemens F-Class EPA. A portion of the proceeds from
the issuance of the MUFG Equipment Financing was used to repay the Macquarie
Term Loan in full.
The loans under the Credit Agreement mature on the eighteen-month anniversary
of the Closing Date. The Borrower is required to repay (i) on each quarterly
payment date, the minimum principal payment then due and owing, and (ii) on
the loan maturity date, the remaining unpaid principal amount of all loans
plus any other obligations under the financing documents. Prior to the
nine-month anniversary of the Closing Date, no minimum principal payment is
due. Thereafter, the minimum principal payment is (a) 10% of the aggregate
principal amount of loans outstanding if no lease or offtake agreement with
respect to the first phase of Project Matador for at least 400 MW of power has
been signed prior to the nine-month anniversary of the Credit Agreement, or
(b) 5% of the aggregate principal amount of loans outstanding if such a lease
or offtake agreement has been signed prior to such anniversary.
The Credit Agreement also contains customary negative covenants that, among
other things, restrict the ability of each loan party to (i) incur additional
indebtedness, (ii) create liens on assets other than permitted liens, (iii)
make certain investments, (iv) sell, lease, or transfer assets except as
permitted, (v) make distributions other than as provided in the account
agreement, (vi) engage in transactions with affiliates, and (vii) permit a
change of control.
The Credit Agreement imposes loan-to-value requirements on the collateral. The
target loan-to-value ratio for delivered equipment is 65%, and the target
loan-to-value ratio for undelivered equipment is 55%. If the loan-to-value
ratio exceeds the applicable target ratio for more than thirty consecutive
days following an updated appraisal with a value more than 2% lower than the
initial appraisal for such equipment, an event of default will occur unless
the applicable shortfall amount is paid within such thirty-day period.
Keystone Equipment Financing
In February 2026, Fermi High Voltage Warehouse LLC, a Texas limited liability
company and indirect wholly owned subsidiary of the Company ("HVW"), entered
into a master loan agreement (the "Keystone Master Loan Agreement") with
Keystone National Group, LLC, as collateral agent and administrative agent for
the lenders (the "Keystone Agent"), Cape Commercial Finance LLC ("CCF"), as
sole arranger, and Keystone Private Income Fund, as the initial lender (the
"Keystone Lender"), to finance the purchase of certain equipment to be used in
the Company's Project Matador site.
The Keystone Master Loan Agreement provides for an equipment-backed financing
structure pursuant to which HVW may request one or more advances of up to an
aggregate principal amount of $120,000, which amount may be increased from
time to time by up to an additional $100,000 subject to lender approvals
(collectively, the "Keystone Facility"). Advances may be requested from the
closing date through the earlier of (i) 12 months following the closing date
and (ii) the date the Keystone Facility is fully advanced. Each advance is
evidenced by a separate promissory note, and the term and annual interest rate
applicable to each advance are set forth in the applicable promissory note.
Borrowings under the Keystone High Voltage Financing agreement totaled $39,540
in 2026. The Keystone Facility is not a revolving credit facility, and each
advance is subject to satisfaction of specified conditions and acceptance by
the Keystone Agent and the applicable lender.
Advances generally fund up to 80% of the purchase price of the related
equipment, with the remaining 20% funded by HVW and/or its affiliates. As of
the closing date, HVW had funded approximately $52,232 of equipment costs
prior to closing, which may be applied toward the required equity contribution
for future advances.
The obligations under the Keystone Facility are secured by a first-priority
security interest in the financed equipment and related collateral, and the
Company has provided a limited guaranty of HVW's obligations. The Keystone
Master Loan Agreement contains customary affirmative and negative covenants
and events of default, including restrictions on additional indebtedness and
liens and a change of control. In addition, the Keystone Master Loan Agreement
includes (i) a minimum liquidity covenant requiring the Company to maintain at
least $20,000 of liquidity until the Keystone Facility is paid in full or a
qualifying customer agreement is executed, (ii) a mandatory prepayment
requirement if the Keystone Agent has not received an approved customer
agreement by December 31, 2026, and (iii) a collateral coverage requirement
under which HVW must repay outstanding amounts or provide additional
collateral if the aggregate outstanding principal exceeds 110% of the fair
market value of the collateral based on the most recent appraisal.
Yorkville Promissory Note
In March 2026, the Company entered into a senior unsecured promissory note
(the "Yorkville Note") with YA II PN, Ltd. ("YA II PN"), an investment fund
managed by Yorkville Advisors Global, LP ("Yorkville"), with a committed
principal amount of $156,250.
The Yorkville Note provides for up to five advances during an availability
period commencing the first business day following the issuance date through
October 1, 2026. The committed principal amount automatically reduces by
approximately $26,042 every 30 days following the issuance date. Each advance
is funded net of a 4% funding premium. The Yorkville Note is not a revolving
commitment, and once an advance is funded, the corresponding portion of the
committed principal amount is not available for re-borrowing. The Yorkville
Note matures in September 2027 and bears interest at 0% per annum, subject to
increase to 18% upon the occurrence of an event of default. No amounts have
been drawn under the Yorkville Note.
Beginning on the amortization period commencement date (thirty days following
the first advance), the Company is required to make monthly amortization
payments. At least $10,000 of each monthly amortization payment must be
satisfied in shares of common stock, with the Company having the option to
settle a greater portion in shares. When paid in shares, the shares are valued
at the greater of 100% of the lowest daily volume-weighted average price
during the three trading days immediately preceding the applicable notice
date, or 91% of the closing price on the trading day immediately preceding the
amortization share notice subject to a cap of 8,000,000 shares per monthly
amortization payment, an aggregate cap of 40,000,000 shares issuable under the
note, and a 4.99% beneficial ownership limitation. If paid in cash, the
payment is made at 102% of the applicable amortization principal amount or
100% if funded through proceeds of the equity line of credit.
The Company is also required to pay a monthly exit fee on outstanding
principal, which is 0% for the first 180 days following issuance, 1% from day
181 through day 365, and 1.33% thereafter. An undrawn commitment fee of 1% of
the undrawn committed principal amount is payable on or about the funding of
the first advance. Proceeds of each advance are to be used for general
corporate purposes. The Yorkville Note is unsecured, ranks pari passu with any
other notes the Company may issue to YA II PN and senior to the Company's
other unsecured indebtedness. The note contains customary affirmative and
negative covenants, including restrictions on additional indebtedness (subject
to certain exceptions when outstanding principal is less than 50% of the
committed principal amount) and liens, as well as customary representations
and warranties and events of default.
In connection with the Yorkville Note, the Company agreed to negotiate in good
faith and execute documentation to establish a committed equity line of credit
facility with Yorkville. The Company also agreed to use commercially
reasonable efforts to prepare and file a registration statement to register
the resale of the shares of common stock issuable under the Yorkville Note and
the equity line of credit.
Beal Equipment Financing
In March 2026, Fermi Turbine Warehouse II LLC, a Texas limited liability
company and indirect wholly owned subsidiary of the Company ("FTW II"),
entered into an Equipment Supply Loan Financing Agreement (the "Beal Credit
Agreement") with CSG Investments, an affiliate of Beal Bank USA, with CLMG
Corp., as administrative agent and collateral agent for the lenders (the "Beal
Agent"), and the lenders party thereto (the "Beal Lenders"), to fund the
acquisition of six Siemens Energy SGT-800 industrial gas turbines and related
equipment for Project Matador (the "Beal Equipment Financing").
The Beal Credit Agreement provides for a senior secured term loan facility in
an aggregate principal amount of up to $165,000 (the "Total Loan Commitment").
Borrowings may be made from the closing date through the maturity date,
subject to a maximum of 45 borrowings during the loan availability period. Of
the Total Loan Commitment, up to $22,900 is reserved to fund interest and
commitment fee payments. Each loan under the Beal Credit Agreement bears
interest at a rate of 12.00% per annum, payable quarterly in arrears. Upon the
occurrence and during the continuance of an event of default, interest accrues
at a default rate of 14.00% per annum.
Proceeds of the loans may be used to pay equipment acquisition costs,
including progress payments to Siemens Energy, Inc. under an equipment supply
agreement originally entered into in October 2025 and subsequently assigned to
FTW II, and to pay financing costs, including interest and fees.
The loans mature on the date that is 33 months after the closing date. On the
maturity date (or upon earlier payment in full), FTW II is required to pay an
exit fee equal to $37,000 less the cumulative amount of interest and
commitment fees paid to the lenders through such date.
The Beal Credit Agreement also provides for an unused commitment fee of 1% per
annum on the daily unused and uncancelled portion of the commitments, payable
quarterly in arrears.
The obligations under the Beal Equipment Financing are secured by a
first-priority security interest in the financed equipment and related
collateral, and the Company has provided a guaranty of FTW II's obligations
pursuant to a Sponsor Equity Contribution and Guaranty Agreement. The Beal
Credit Agreement contains customary affirmative and negative covenants and
events of default, including restrictions on additional indebtedness, liens,
dispositions of equipment (subject to a permitted disposition of three
turbines under certain conditions), and change of control. Mandatory
prepayment is required upon, among other things, an event of loss, a
disposition of equipment or equity interests, a change of control, or receipt
of non-permitted debt proceeds.
Fermi Inc.
Schedule III-Real Estate and Accumulated Depreciation
(Dollar amounts in thousands)
The following table reconciles the historical cost of the Company's real
estate assets for financial reporting purposes for the period ended
December 31, 2025.
Period Ended
Properties Historical Cost December 31, 2025
Balance, beginning of year $
-
Additions during period (acquisitions and improvements) 935,295
Deductions during period (dispositions, impairments and assets held for sale)
-
Balance, end of year ((1)) $ 935,295
The following table reconciles accumulated depreciation of the Company's real
estate assets for financial reporting purposes for the period ended
December 31, 2025.
Period Ended
Accumulated Depreciation December 31, 2025
Balance, beginning of year $
-
Additions during period (depreciation and amortization expense)
-
Deductions during period (dispositions and assets held for sale)
-
Balance, end of year $
-
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
None.
Item 9A. Controls and Procedures
Limitation on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired
control objectives. In addition, the design of disclosure controls and
procedures must reflect the fact that there are resource constraints and that
management is required to apply judgment in evaluating the benefits of
possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and
Chief Financial Officer, conducted an evaluation of the effectiveness of the
design and operation of our disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the
period covered by this Annual Report on Form 10-K. Based on the evaluation of
our disclosure controls and procedures, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures were
not effective at the reasonable assurance level as of December 31, 2025 due
to the material weakness in our internal control over financial reporting
described below.
Previously Reported Material Weakness
A material weakness is a deficiency or combination of deficiencies in our
internal control over financial reporting such that there is a reasonable
possibility that a material misstatement of our annual or interim consolidated
financial statements would not be prevented or detected on a timely basis.
As disclosed in our Registration Statement, we previously identified a
material weakness in our internal control over financial reporting related to
a lack of formalized processes, policies, and procedures, inadequate
segregation of duties across functions relevant to financial reporting, and an
insufficient number of qualified personnel within our accounting, finance, and
operational functions who possess an appropriate level of expertise to provide
reasonable assurance that transactions are being appropriately recorded and
disclosed.
We have concluded that the material weakness continues to exist as of December
31, 2025.
We have concluded that the material weakness exists because we are a newly
formed company and have not yet fully developed or implemented our internal
control over financial reporting or operational control environment, and
therefore do not have the necessary business processes, systems, personnel,
and related internal controls necessary to satisfy the accounting and
financial reporting requirements of a public company. The deficiencies
identified did not result in a material misstatement of our financial
statements, and no material misstatements were identified during the period
ended December 31, 2025.
Remediation Plans
We have taken and will continue to take certain actions to remediate the
material weakness, including:
• designing and documenting an internal controls framework,
including control activities over financial reporting, modeled on the
Committee of Sponsoring Organizations (COSO) principles, with periodic
internal reviews and testing;
• implementing formal policies and procedures to govern key
financial processes and internal controls, including documented accounting
policies aligned with U.S. GAAP standards and supported by external advisors;
• hiring additional qualified personnel with appropriate expertise
in operational finance activities, accounting, and financial reporting,
including the appointment of a Chief Financial Officer and financial reporting
expert, and the establishment of an experienced finance team with public
company financial reporting and internal controls expertise;
• enhancing segregation of duties across critical accounting and
operational functions and implementing robust liquidity planning and cash
management controls to support daily operating needs and strategic
investments;
• evaluating and implementing appropriate financial and reporting
systems to support internal controls requirements including engagement of a
third-party accounting advisory firm to assist with timely remediation of
control deficiencies; and
• establishing an audit committee composed of independent
directors to provide oversight of our financial reporting and internal control
environment.
We believe we are making progress toward achieving effectiveness of our
internal control over financial reporting. The actions that we are taking are
subject to ongoing management review and audit committee oversight. We will
not be able to conclude whether the steps we are taking will fully remediate
the material weakness in our internal control over financial reporting until
we have completed our remediation efforts and subsequently evaluated their
design and effectiveness over a sufficient period of time, and management
concludes, through testing, that these are operating effectively. We may also
conclude that additional measures are required to remediate the material
weakness in our internal control over financial reporting.
Although we have made progress in expanding our team and initiating a
structured remediation plan, we have not yet completed the design,
implementation, or testing of the controls necessary to remediate the material
weakness.
Management's Annual Report on Internal Control Over Financial Reporting
This Annual Report on Form 10-K does not include a report of management's
assessment regarding internal control over financial reporting or an
attestation report of our independent registered public accounting firm due to
a transition period established by the rules of the SEC for emerging growth
companies.
Changes in Internal Control Over Financial Reporting
Except for the remediation measures in connection with the material weakness
described above, there were no changes in our internal control over financial
reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act,
during the period ended December 31, 2025, that materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
Item 9B. Other Information
Rule 10b5-1 Trading Arrangements
During the period ended December 31, 2025, no director or officer (as defined
in Rule 16a-1(f) of the Exchange Act) of the Company adopted, modified, or
terminated any "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading
arrangement" (in each case, as defined in Item 408(a) of Regulation S-K).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item will be included in our Proxy Statement
for our 2026 Annual Meeting of Stockholders to be filed with the SEC within
120 days of the fiscal year ended December 31, 2025 and is incorporated herein
by reference.
Item 11. Executive Compensation
The information required by this Item will be included in our Proxy Statement
for our 2026 Annual Meeting of Stockholders to be filed with the SEC within
120 days of the fiscal year ended December 31, 2025 and is incorporated herein
by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
The information required by this Item will be included in our Proxy Statement
for our 2026 Annual Meeting of Stockholders to be filed with the SEC within
120 days of the fiscal year ended December 31, 2025 and is incorporated herein
by reference.
Item 13. Certain Relationships and Related Transactions, and Director
Independence
The information required by this Item will be included in our Proxy Statement
for our 2026 Annual Meeting of Stockholders to be filed with the SEC within
120 days of the fiscal year ended December 31, 2025 and is incorporated herein
by reference.
Item 14. Principal Accountant Fees and Services
The information required by this Item will be included in our Proxy Statement
for our 2026 Annual Meeting of Stockholders to be filed with the SEC within
120 days of the fiscal year ended December 31, 2025 and is incorporated herein
by reference.
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) See the Index to Consolidated Financial Statements of this Annual Report
on Form 10-K.
(b) The information required to be submitted in the Financial Statement
Schedules has either been shown in the financial statements or notes, or is
not applicable or required under Regulation S-X; therefore, those schedules
have been omitted.
(c) Exhibits.
The following exhibits are incorporated herein by reference or are filed with
this Annual Report on Form 10-K, in each case as indicated therein (numbered
in accordance with Item 601 of Regulation S-K):
Exhibit Index
3.1 Certificate of Formation of Fermi Inc. (as amended through October 1, 2025)
(incorporated by reference to Exhibit 3.1 to the Company's Current Report on
Form 8-K filed with the Commission on October 3, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025095832/ea026005201ex3-1_fermi.htm)
3.2 Bylaws of Fermi Inc. (incorporated by reference to Exhibit 3.2 to the
Company's Current Report on Form 8-K filed with the Commission on October 3,
2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025095832/ea026005201ex3-2_fermi.htm)
4.1 Registration Rights Agreement, dated October 2, 2025
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025109371/ea026331101ex4-1_fermiinc.htm)
, by and among the holders party thereto. (incorporated by reference to
Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q filed with the
Commission on November 12, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025109371/ea026331101ex4-1_fermiinc.htm)
10.1† Fermi Inc. 2025 Long-Term Incentive Plan (incorporated by reference to Exhibit
10.2 to the Company's Current Report on Form 8-K filed with the Commission on
October 3, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025095832/ea026005201ex10-2_fermi.htm)
10.2† Form of Restricted Stock Award Agreement (Employees) under the Fermi Inc. 2025
Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the
Company's Registration Statement on Form S-11/A filed with the Commission on
September 30, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025085175/ea025233301ex10-2_fermi.htm)
10.3† Form of Restricted Stock Award Agreement (Non-Employee Directors) under the
Fermi Inc. 2025 Long-Term Incentive Plan (incorporated by reference to Exhibit
10.3 to the Company's Registration Statement on Form S-11/A filed with the
Commission on September 30, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025085175/ea025233301ex10-3_fermi.htm)
10.4† Form of Restricted Stock Unit Award Agreement (Employees, Time-Based) under
the Fermi Inc. 2025 Long-Term Incentive Plan (incorporated by reference to
Exhibit 10.4 to the Company's Registration Statement on Form S-11/A filed with
the Commission on September 30, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025085175/ea025233301ex10-4_fermi.htm)
10.5† Form of Restricted Stock Unit Award Agreement (Employees, Performance-Based)
under the Fermi Inc. 2025 Long-Term Incentive Plan (incorporated by reference
to Exhibit 10.5 to the Company's Registration Statement on Form S-11/A filed
with the Commission on September 30, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025085175/ea025233301ex10-5_fermi.htm)
10.6† Form of Nonqualified Stock Option Agreement under the Fermi Inc. 2025
Long-Term Incentive Plan (incorporated by reference to Exhibit 10.6 to the
Company's Registration Statement on Form S-11/A filed with the Commission on
September 30, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025085175/ea025233301ex10-6_fermi.htm)
10.7† Form of Indemnification Agreement (incorporated by reference to Exhibit 10.7
to the Company's Registration Statement on Form S-11/A filed with the
Commission on September 30, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025090891/ea025233304ex10-7_fermi.htm)
10.8† Employment Agreement, dated October 6, 2025, by and between the Company and
Toby Neugebauer (incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K filed with the Commission on October 6, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025096560/ea026035001ex10-1_fermi.htm)
10.9† Employment Agreement, dated September 30, 2025, by and between the Company and
Charlie Hamilton (incorporated by reference to Exhibit 10.2 to the Company's
Current Report on Form 8-K filed with the Commission on October 6, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025096560/ea026035001ex10-2_fermi.htm)
10.10† Employment Agreement, dated September 30, 2025, by and between the Company and
Jacobo Ortiz (incorporated by reference to Exhibit 10.3 to the Company's
Current Report on Form 8-K filed with the Commission on October 6, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025096560/ea026035001ex10-3_fermi.htm)
10.11† Employment Agreement, dated September 30, 2025, by and between the Company and
Miles Everson (incorporated by reference to Exhibit 10.4 to the Company's
Current Report on Form 8-K filed with the Commission on October 6, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025096560/ea026035001ex10-4_fermi.htm)
10.12# First Amendment Ground Lease Agreement, dated August 11, 2025, by and among
the Texas Tech University System, Texas Tech University and Fermi SPE, LLC
(incorporated by reference to Exhibit 10.10 to the Company's Registration
Statement on Form S-11/A filed with the Commission on September 30, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025085175/ea025233301ex10-10_fermi.htm)
10.13# Membership Interest Purchase Agreement, dated as of July 29, 2025, by and
among Fermi Equipment Holdco, LLC, Fermi LLC, Firebird LNG, LLC and the
Equityholder of Firebird LNG, LLC (incorporated by reference to Exhibit 10.11
to the Company's Registration Statement on Form S-11/A filed with the
Commission on September 30, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025085175/ea025233301ex10-11_fermi.htm)
10.14# Amendment No. 7 to Contract, dated July 21, 2025 by and between Firebird LNG
LLC and Siemens Energy, AB (incorporated by reference to Exhibit 10.21 to the
Company's Registration Statement on Form S-11/A filed with the Commission on
September 30, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025090891/ea025233304ex10-21_fermi.htm)
10.15# Term Loan Agreement, dated August 29, 2025, among Fermi Equipment HoldCo, LLC,
Firebird Equipment HoldCo, LLC and Macquarie Equipment Capital (incorporated
by reference to Exhibit 10.22 to the Company's Registration Statement on Form
S-11/A filed with the Commission on September 30, 2025).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025085175/ea025233301ex10-22_fermi.htm)
10.16# Equipment Supply Loan Financing Agreement, dated February 10, 2026 among Fermi
Turbine Warehouse LLC, as borrower, Firebird Equipment Holdco, LLC, as
subsidiary guarantor, and MUFG Bank, Ltd., as administrative agent and lender.
(incorporated by reference to Exhibit 10.1 to the Company's Current Report on
Form 8-K filed with the Commission on February 10, 2026).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390026014270/ea027627401ex10-1_fermi.htm)
10.17# Master Loan Agreement, dated as of February 19, 2026, among Fermi High Voltage
Warehouse LLC, the lenders party thereto, Keystone National Group, LLC, as
collateral agent and administrative agent and Cape Commercial Finance LLC, as
sole arranger (incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K filed with the Commission on February 19, 2026).
(https://www.sec.gov/Archives/edgar/data/2071778/000121390026020399/ea027781001ex10-1_fermi.htm)
10.18* S (wurl://docs.v1/doc:079b758b19ef4245afebd064abf83d15) enior
(wurl://docs.v1/doc:079b758b19ef4245afebd064abf83d15) U
(wurl://docs.v1/doc:079b758b19ef4245afebd064abf83d15) nsecured
(wurl://docs.v1/doc:079b758b19ef4245afebd064abf83d15) P
(wurl://docs.v1/doc:079b758b19ef4245afebd064abf83d15) romissory
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(wurl://docs.v1/doc:079b758b19ef4245afebd064abf83d15) ote
(wurl://docs.v1/doc:079b758b19ef4245afebd064abf83d15) dated March 30, 2026
(wurl://docs.v1/doc:079b758b19ef4245afebd064abf83d15) ,
(wurl://docs.v1/doc:079b758b19ef4245afebd064abf83d15) among Fermi Inc
(wurl://docs.v1/doc:079b758b19ef4245afebd064abf83d15) , as borrower,
(wurl://docs.v1/doc:079b758b19ef4245afebd064abf83d15) with YA II PN, Ltd.
(wurl://docs.v1/doc:079b758b19ef4245afebd064abf83d15) , an investment fund
managed by Yorkville Advisors Global, LP
(wurl://docs.v1/doc:079b758b19ef4245afebd064abf83d15) .
(wurl://docs.v1/doc:079b758b19ef4245afebd064abf83d15)
19.1 Fermi Inc. Insider Trading Policy (incorporated by reference to Exhibit 19.1
to the Company's Quarterly Report on Form 10-Q filed with the Commission on
November 12, 2025) .
(https://www.sec.gov/Archives/edgar/data/2071778/000121390025109371/ea026331101ex19-1_fermiinc.htm)
21.1* List of (wurl://docs.v1/doc:3253be67d6c2484e9a914406764c16fa) S
(wurl://docs.v1/doc:3253be67d6c2484e9a914406764c16fa) ubsidiaries of
(wurl://docs.v1/doc:3253be67d6c2484e9a914406764c16fa) Fermi
(wurl://docs.v1/doc:3253be67d6c2484e9a914406764c16fa) Inc.
(wurl://docs.v1/doc:3253be67d6c2484e9a914406764c16fa)
23.1* Consent of (wurl://docs.v1/doc:97920814d9884600907405c9b63956f9) Ernst &
Young (wurl://docs.v1/doc:97920814d9884600907405c9b63956f9) LLP, independent
registered public accounting firm
(wurl://docs.v1/doc:97920814d9884600907405c9b63956f9)
31.1* Certification of Principal Executive Officer in accordance with 18 U.S.C.
Section 1350, as adopted by Section 302 of the Sarbanes-Oxley Act of 2002.
(wurl://docs.v1/doc:d63c9e08d0f14572b62d7ff45dc7530e)
31.2* Certification of Principal Financial Officer in accordance with 18 U.S.C.
Section 1350, as adopted by Section 302 of the Sarbanes-Oxley Act of 2002.
(wurl://docs.v1/doc:ff9b13632c2d447cb98b53612c5377fa)
32.1** Certifications of Principal Executive Officer and Principal Financial Officer
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(wurl://docs.v1/doc:c252673262f641e2ba0a413f51aceb31)
101.INS Inline XBRL Instance Document - the instance document does not appear in the
Interactive Data File because XBRL tags are embedded within the Inline XBRL
document.
101.SCH Inline XBRL Taxonomy Extension Schema Document.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in
Exhibit 101).
* Filed herewith.
** The certifications attached as Exhibit 32.1 are not deemed "filed" with
the SEC and are not to be incorporated by reference into any filing of Fermi
Inc. under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, whether made before or after the date of this Annual
Report on Form 10-K, irrespective of any general incorporation language
contained in such filing.
† Management compensatory plan or contract.
# Certain schedules and exhibits to this agreement have been omitted
pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule
or exhibit will be furnished supplementally to the Securities and Exchange
Commission or its staff upon request. If indicated on the first page of such
agreement, certain confidential information has been excluded pursuant to Item
601(b)(10)(iv) of Regulation S-K. Such excluded information is not material
and is the type that the Company treats as private or confidential.
Item 16. Form 10-K Summary
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FERMI INC.
Date: March 30, 2026 By: /s/ Toby Neugebauer
Toby Neugebauer
Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ Toby Neugebauer Chief Executive Officer March 30, 2026
Toby Neugebauer (Principal Executive Officer)
/s/ Miles Everson Chief Financial Officer March 30, 2026
Miles Everson (Principal Financial Officer and Principal Accounting Officer)
/s/ Cordel Robbin-Coker Director March 30, 2026
Cordel Robbin-Coker
/s/ Marius Haas Director March 30, 2026
Marius Haas
/s/ Lee McIntire Director March 30, 2026
Lee McIntire
/s/ Rick Perry Director March 30, 2026
Rick Perry
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