Fermi Inc.
08/14/2026 | Press release | Distributed by Public on 08/14/2026 14:49
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
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 unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. 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 Quarterly Report on Form 10-Q, 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 developing a utility-scale and utility-grade private-grid powered campus for AI-centric customers-developing and leasing large-scale, grid-independent and interdependent 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 held or to be held under a long-term ground lease with the Texas Tech University System that is designed to deliver up to 11 GW of predominantly private power generation capacity supplemented by strong grid interconnections and utility-supplied system power designed to support up to approximately 15 million square feet of AI-ready hyperscale compute infrastructure over a multi-decade timeline. Together with adjacent acreage acquired, under contract, or subject to options to purchase, the expanded campus is expected to encompass approximately 8,400 acres in the aggregate, with generation capacity expandable up to approximately 17 GW, subject to the closing of the optioned and other pending land acquisitions and receipt of incremental Texas Commission on Environmental Quality air permits. We plan to develop and lease private-grid powered data center 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 for both enhanced system reliability and to modulate the effects of customer-facing load volatility, solar generation for low-cost, zero-carbon energy displacement, and longer-term nuclear baseload supply, all in furtherance of our objective to support large, long-duration, and reliability-sensitive 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 commence delivery under definitive tenant lease agreements, including the TensorWave Lease described below, at Project Matador of leased private-grid powered data center capacity and associated private power and site services provided as an incident of tenancy, and our ability to execute our plan depends on obtaining required approvals, converting additional tenant discussions into binding agreements, and raising strategic capital.
We previously stated that we intended to elect to be taxed as a REIT for U.S. federal income tax purposes commencing with our short taxable year ended December 31, 2025; however, we have determined to defer our REIT election. Accordingly, we do not have a REIT election in place for U.S. federal income tax purposes at this time. We were taxable as
a C corporation for our short taxable year ended December 31, 2025, and we expect to be taxable as a C corporation for U.S. federal income tax purposes at least through our taxable year ending December 31, 2026. It is possible that we may seek to qualify and elect to be taxable as a REIT for U.S. federal income tax purposes in the future, but the timing of any such election has not been determined, and it is possible that we will never make a REIT election. See Note 2, Significant Accounting Policies - Income Taxes, to our unaudited condensed consolidated financial statements and the risk factors under "Risks Related to REIT Qualification" in Part II, Item 1A of this Quarterly Report on Form 10-Q.
Recent Developments
MPS Pre-commencement Lease Amendment
On April 13, 2026, Fermi Mobile Gen LLC, a wholly owned subsidiary of the Company, entered into the First Amendment (the "Amendment") to the master lease agreement (the "MPS Agreement") with Mobile Power Solutions LLC ("MPS"). Fermi Inc. acknowledged and reaffirmed its guaranty of Fermi Mobile Gen LLC's obligations under the MPS Agreement in connection with the Amendment.
As of June 30, 2026, lease commencement had not occurred for any of the seven units because the contractual preconditions for the Company's pick-up obligation had not been satisfied. The Amendment was entered into by mutual agreement of the parties to restructure the delivery timeline in light of these circumstances.
Under the Amendment, the pick-up dates for all seven units will commence July 1, 2027, and end September 30, 2027, with the pick-up deadline for all units extended to September 30, 2027. All other material terms of the MPS Agreement, including the monthly base rent structure extending through 2045 and the absence of termination rights for convenience, remain unchanged.
In connection with the deferral, the Amendment permits MPS to lease, sublease, or otherwise make the units available to third parties during the extension period. In the event that any unit is not available for pick-up during the amended pick-up dates as a result of third-party use, the applicable pick-up deadline will automatically extend until such time as the unit is made available by MPS. See Note 6, Leases to our unaudited condensed consolidated financial statements for additional information.
Management Changes
On April 17, 2026, Toby Neugebauer was removed by the Company's Board of Directors (the "Board") from the positions of President and Chief Executive Officer of the Company. Mr. Neugebauer remained an employee and a member of the Board. On the same date, the Board established an Interim Office of the CEO, which includes Jacobo Ortiz Blanes, the Company's Chief Operating Officer, and Anna Bofa, each of whom was appointed as a Co-President of the Company. Mr. Ortiz Blanes and Ms. Bofa shared responsibility for the day-to-day operations of the Company while a search for a permanent Chief Executive Officer was underway.
Also on April 17, 2026, pursuant to the Director Nomination Agreement, dated September 30, 2025, by and among the Company, TMNN Manager, LLC, Caddis Capital, LLC, and the Melissa A. Neugebauer 2020 Trust, the Melissa A. Neugebauer 2020 Trust exercised its right to nominate Miles Everson to the Board, and the Board appointed him as a director.
Effective April 19, 2026, Mr. Everson resigned from his position as Chief Financial Officer of the Company. For purposes of the employment agreement between the Company and Mr. Everson, dated September 30, 2025, Mr. Everson's resignation was without "Good Reason" (as defined therein).
On April 29, 2026, the Board appointed Robert L. Masson as Interim Chief Financial Officer and principal financial officer of the Company. Mr. Masson served as Interim Chief Financial Officer until his appointment as the Company's permanent Chief Financial Officer on July 20, 2026.
On April 30, 2026, the Company terminated Mr. Neugebauer's employment for Cause pursuant to his employment agreement as a result of conduct in violation of the terms of such agreement and of Company policies. As a result of his termination for Cause, Mr. Neugebauer was automatically removed from the Board.
On May 4, 2026, pursuant to the Director Nomination Agreement, Vicksburg Equity Holdings, LLC ("Vicksburg"), as assignee from TMNN Manager, LLC ("TMNN"), exercised the right to nominate Larry Kellerman, the Company's Head
of Power, to the Board, and the Board appointed him as a director to fill the vacancy created by Mr. Neugebauer's removal from the Board. Vicksburg is controlled by Mr. Neugebauer.
On July 10, 2026, Mr. Everson resigned from the Board.
On July 20, 2026, the Company's Board appointed the following individuals as officers of the Company: George Wentz as General Counsel, Anna Bofa as Chief Commercial Officer, Jacobo Ortiz Blanes as Chief Operating Officer, and Robert L. Masson, previously the Company's Interim Chief Financial Officer, as Chief Financial Officer (the "Officer Appointments"). The Officer Appointments were effective as of July 22, 2026. Ms. Bofa and Mr. Ortiz Blanes continued to serve as Co-Presidents of the Interim Office of the CEO, in addition to their respective Officer Appointments, until the appointment of Lee McIntire as Chief Executive Officer on August 11, 2026, as described below.
Mr. Wentz is the founder, a director, and Chief Executive Officer of MAD Energy, the counterparty to the net profits interest assumed in connection with the Firebird Acquisition and a named co-defendant in the Firebird litigation. Mr. Wentz is also a member of the Davillier Law Group ("Davillier"), a law firm that has provided, and continues to provide, legal services to the Company. Accordingly, from the effective date of Mr. Wentz's appointment, MAD Energy, Davillier, and their respective affiliates are related parties of the Company, and transactions with, or amounts arising under existing arrangements payable to, MAD Energy or Davillier from that date will be disclosed as related party transactions in future periods. See Note 2, Significant Accounting Policies-Related Party Transactions, Note 8, Commitments and Contingencies, and Note 9, Subsequent Events to our unaudited condensed consolidated financial statements.
On August 11, 2026, the Board appointed Lee McIntire as Chief Executive Officer of the Company, effective immediately, concluding the search for a permanent Chief Executive Officer. Mr. McIntire has served as a member of the Board since September 2025 and has more than 40 years of engineering, construction, and global infrastructure leadership experience, including as Chairman, Chief Executive Officer, and President of CH2M Hill, Chief Executive Officer of TerraPower, and a Partner, Executive Vice President, and member of the board of directors of Bechtel Corporation. See Note 9, Subsequent Events, to our unaudited condensed consolidated financial statements.
Convertible Senior Notes Offering
On July 14, 2026, we issued $431.3 million aggregate principal amount of 5.00% convertible senior notes due 2031 (the "Notes") in a private offering (the "Offering") to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act, including $56.3 million aggregate principal amount of Notes issued upon the exercise in full by the initial purchasers of their option to purchase additional Notes. Net proceeds from the Offering were approximately $416.8 million, after deducting the initial purchasers' discounts and commissions and estimated offering expenses. In connection with the Offering, we entered into privately negotiated capped call transactions (the "Capped Call Transactions") at a cost of approximately $34.5 million, which are generally expected to reduce the potential dilution to our common stock upon any conversion of the Notes, effectively increasing the initial conversion price of approximately $9.52 per share to a cap of approximately $14.64 per share. We intend to use the remaining net proceeds for general corporate purposes. See "-Liquidity and Capital Resources" and Note 9, Subsequent Events, to our unaudited condensed consolidated financial statements for additional information.
TensorWave Lease Overview
On August 9, 2026, Fermi Campus 1 LLC, a Delaware limited liability company (the "Landlord") and wholly owned subsidiary of the Company, entered into that certain Data Center Lease and Services Agreement (the "TensorWave Lease" or the "Lease") with TensorWave TEX1, LLC, a Delaware limited liability company (the "Tenant") and a subsidiary of TensorWave Inc. Pursuant to the Lease, the Landlord will design, construct, operate, and lease to the Tenant a build-to-suit data center to be located on approximately 250 acres within the Company's Project Matador development (the "Premises"). The Lease is a modified net lease under which the Company expects to receive approximately $6.5 billion in contracted revenue over its initial 15-year term, excluding the exercise of any renewals or the expansion option.
Premises and Term
The Premises will contain approximately 311,496 square feet, with total facility power of 222 MW, configured across four data halls and one network data hall. The initial term of the Lease is 15 years, commencing on the commencement date of the final delivered phase. The Lease grants the Tenant two options to extend the Lease term by five years each.
Expansion Option
The Tenant has an option to expand the Premises with two additional buildings, which, when aggregated with the initial phase of the Lease, would provide a total of 650 MW of total facility power. The two additional buildings must be energized on or before December 31, 2028, in each case on the terms set forth in the Lease.
Power Charges and Taxes
In addition to base rent, the Tenant is responsible, as additional rent, for (i) a fixed power charge subject to annual escalation, (ii) a variable power charge equal to the actual cost of electricity delivered to the Premises, and (iii) taxes in excess of a base-year amount, subject to an annual escalation.
Delivery, Construction and Remedies for Delay
The Landlord will construct and deliver the Premises in phases, with target delivery dates ranging from the end of 2027 through the first quarter of 2028 for the network hall, January 1, 2028 for data halls 1 and 2, and February 1, 2028 for data halls 3 and 4, in each case subject to extensions for force majeure events and Tenant delay. If the Landlord fails to deliver a phase by its target delivery date, the Tenant is entitled to escalating rent credits, subject to a cap. If a phase is not delivered by the outside delivery date, the Tenant may terminate the Lease as to the affected space without penalty and recover prepaid amounts and the security deposit.
Guaranties
The Lease provides that the Tenant's obligations under the Lease are to be guaranteed by TensorWave Inc., the Tenant's parent, pursuant to an unconditional guaranty that includes financial-reporting and change-of-control covenants. The Company is in the process of negotiating a guarantee of the Tenant's rent obligations with a global leader in AI infrastructure. In connection with the Lease, the Company has agreed to provide a guaranty of the Landlord's obligations and a completion guaranty supporting the Landlord's construction obligations.
Service Levels; Interruption and Termination Rights
The Landlord is required to operate the facility in accordance with specified service levels. The Tenant is entitled to outage credits for defined service interruptions and may terminate the Lease upon an extended unremediated performance failure. Additional termination rights arise from chronic or sustained interruptions. Each party's aggregate liability under the Lease is capped, subject to customary exceptions.
Conditions to Effectiveness and Closing
The effectiveness of the Lease is subject to the satisfaction or waiver of specified conditions at a closing expected to occur on or before September 30, 2026 (subject to an extension provision), including, but not limited to: (i) the execution and delivery of related work letters and the guaranties described above; (ii) finalized operations schedules and the execution of a service level agreement; (iii) Board approvals; and (iv) the Landlord obtaining project-level financing sufficient to fund construction of the Premises. If these conditions are not satisfied by the closing date, or its extension, either party may terminate the Lease. See Note 9, Subsequent Events, to our unaudited condensed consolidated financial statements.
Hillcore Framework Agreement
On August 11, 2026, the Company entered into a framework agreement (the "Framework Agreement") with Hillcore Energy Capital Corporation ("Hillcore"), a corporation incorporated under the laws of the Province of Alberta, Canada. Under the Framework Agreement, Hillcore intends to finance, construct, own, and operate a gas-fired power generation, solar generation, and battery energy storage facility, the Hillcore Power Center (the "HPC"), on an approximately 400-acre portion of the Project Matador campus to be subleased to Hillcore at a nominal rent under a build-own-operate-transfer ("BOOT") structure, with the Company serving as anchor offtaker under a series of long-term end-user power purchase agreements ("PPAs"). Hillcore intends to install up to approximately 2.6 GW of total power capacity at the HPC site, including approximately 100 MW of solar and battery energy storage system capacity, and has agreed to use reasonable commercial efforts to construct an initial block of approximately 360 MW without any condition that the Company first enter into tenant power purchase arrangements for that capacity. Because Hillcore will finance, construct, own, and operate
the HPC, the Framework Agreement, if consummated, is expected to reduce the direct capital expenditures the Company would otherwise incur to develop the corresponding gas-fired generation capacity at Project Matador.
During the operating period, the Company will purchase capacity under the end-user PPAs on a take-or-pay basis in an amount equal to or greater than 50% of the aggregate power requirements of all tenants at the Project Matador campus, at a fixed capacity charge, with gas costs treated as a pass-through. The fixed capacity charge is itself a pass-through obligation to the Company's tenants, and the Company's guarantee of its payment obligations under the end-user PPAs is capped at twelve months of fixed capacity charge payments then payable. The Framework Agreement has an initial term of three years, provides for three-year exclusivity arrangements covering BOOT gas-fired power supply and excess power marketing at Project Matador, and grants the Company an option to acquire the HPC assets at fair market value after specified anniversaries. The transactions contemplated by the Framework Agreement remain subject to the negotiation and execution of definitive documentation within 90 days following execution and to a 45-day diligence, feasibility, and structural review period. There can be no assurance that the definitive documentation will be executed or that the transactions contemplated by the Framework Agreement will be consummated on the anticipated timeline or at all. See Note 9, Subsequent Events, to our unaudited condensed consolidated financial statements for additional information.
Nuclear Program Update
In July 2026, Hyundai Engineering & Construction Co., Ltd., a global engineering, procurement, and construction contractor with extensive experience in the construction of nuclear power plants, completed a front-end engineering design ("FEED") study for the nuclear generation component of Project Matador. The FEED study supports the feasibility of our planned nuclear deployment, subject to completion of the ongoing ground investigation analysis, and provided initial cost and schedule estimates that we expect to serve as the basis for the negotiation of one or more engineering, procurement, and construction agreements.
In July 2026, the U.S. Nuclear Regulatory Commission ("NRC") issued a letter formally acknowledging receipt of our applicant-prepared draft Environmental Impact Statement, submitted under the NRC's pilot environmental review program, and confirming completion of the required steps under that program. The NRC concurrently provided its review schedule and resource estimate for the environmental review of Project Matador. Project Matador is the first project to complete these steps under the NRC's pilot program.
Our current plan envisions the commissioning of one Westinghouse reactor unit in each of 2033, 2034, 2035, and 2036, reflecting an expected delay of approximately one year for the first unit relative to our previously disclosed plan. We continue to expect the subsequent units to be commissioned on their original schedule.
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 U.S. Securities and Exchange Commission ("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 first quarter of 2026, a portion of which was capitalized to property, plant, and equipment, net. In the second quarter of 2026, we recognized a net share-based compensation gain, as forfeitures triggered by the departure of certain executives resulted in the reversal of expense previously recorded for those awards. Notwithstanding that reversal, we recognized net share-based compensation expense for the six months ended June 30, 2026, and we expect to recognize recurring non-cash share-based compensation charges in future periods as the requisite service periods for outstanding unvested awards are satisfied.
Interest Income (Expense)
Interest income consists of interest earned on cash and cash equivalents held in interest-bearing accounts during the period. We recognized no interest expense for the three and six months ended June 30, 2026, because all interest was capitalized to qualifying assets.
Other Income (Expense), Net
Other income (expense), net consists of a loss on extinguishment of the term loan with Macquarie Equipment Capital, Inc. (the "Macquarie Term Loan").
Results of Operations
The following table sets forth the components of our statements of operations for the periods presented below:
| Three Months Ended June 30, | Six Months Ended June 30, 2026 |
For the period from January 10, 2025 (Inception) through June 30, 2025 |
||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||
| General and administrative | $ | 26,759 | $ | 5,609 | $ | 193,003 | $ | 5,687 | ||||||||||||||||||
| Total expenses | 26,759 | 5,609 | 193,003 | 5,687 | ||||||||||||||||||||||
| Loss from operations | (26,759) | (5,609) | (193,003) | (5,687) | ||||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||
| Interest income (expense) | 953 | (680) | 3,302 | (680) | ||||||||||||||||||||||
| Other income (expense), net | - | - | (24,798) | - | ||||||||||||||||||||||
| Total other income (expense) | 953 | (680) | (21,496) | (680) | ||||||||||||||||||||||
| Net loss | $ | (25,806) | $ | (6,289) | $ | (214,499) | $ | (6,367) | ||||||||||||||||||
General and Administrative
General and administrative expenses for the three and six months ended June 30, 2026, totaled $26.8 million and $193.0 million, respectively, compared to $5.6 million for the three months ended June 30, 2025, and $5.7 million for the period from January 10, 2025 (Inception) through June 30, 2025. General and administrative expenses primarily reflect the following for the three and six months ended June 30, 2026, respectively: (1) share-based compensation, which was a net credit of $15.3 million and a net expense of $118.7 million; (2) $6.0 million and $10.4 million of personnel-related expenses, including recruiting costs, for employees and service providers supporting corporate, executive, finance, and administrative functions; (3) $27.7 million and $39.6 million of costs for outside professional services such as legal, accounting, and audit; (4) $8.4 million and $19.3 million of other general corporate activities including travel and marketing; and (5) none and $5.0 million related to a contract cancellation fee. The net share-based compensation credit during the three months ended June 30, 2026, was primarily attributable to the reversal of previously recognized expense for awards forfeited upon the departure of certain executives.
General and administrative expense of $5.6 million for the three months ended June 30, 2025, and $5.7 million for the period from January 10, 2025 (Inception) through June 30, 2025, primarily reflects $3.6 million of share-based compensation expense in both periods related to equity grants to related parties and $2.0 million and $2.1 million, respectively, of costs incurred in connection with our formation and initial engagement with commercial parties to facilitate procurement, leasing, and marketing activities.
Interest Income (Expense)
Interest income for the three and six months ended June 30, 2026, totaled $1.0 million and $3.3 million, respectively, compared to $0.7 million of interest expense for both the three months ended June 30, 2025 and for the period from January 10, 2025 (Inception) through June 30, 2025. The increase primarily reflects interest earned on the Company's cash and cash equivalents held during the period.
Interest expense for the three and six months ended June 30, 2026, excludes $14.3 million and $25.8 million, respectively, of interest that was capitalized to property, plant, and equipment, net. No interest was capitalized in either prior year period.
Other Income (Expense), Net
Other income (expense), net was not significant for the three months ended June 30, 2026, and was a net expense of $24.8 million for the six months ended June 30, 2026, compared to no activity for both the three months ended June 30, 2025 and
for the period from January 10, 2025 (Inception) through June 30, 2025. The net expense for the six months ended June 30, 2026, primarily reflects $24.8 million of non-cash charges related to the extinguishment of the Macquarie Term Loan.
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 accompanying unaudited condensed consolidated financial statements are issued.
Project Matador will require substantial capital investment to achieve commercial operation. As of June 30, 2026, the Company had not generated any revenues, had incurred recurring losses from operations and negative cash flows from operating activities since inception, and had substantial near-term capital expenditure obligations under existing equipment purchase, construction, lease, and other project-related commitments. As of June 30, 2026, the Company had cash on hand of $62.5 million and restricted cash of $29.2 million, a portion of which is available to fund defined capital expenditures. In addition, in July 2026, subsequent to quarter-end, we issued $431.3 million aggregate principal amount of the Notes for net proceeds of approximately $416.8 million, of which approximately $34.5 million was used to pay the cost of the related Capped Call Transactions, with the remainder available for general corporate purposes. See "-Recent Developments-Convertible Senior Notes Offering" and Note 9, Subsequent Events, to our unaudited condensed consolidated financial statements. When measured against forecasted disbursements under the Company's current operating plan, these resources are not sufficient to satisfy the Company's financial obligations as they become due within one year after the date the accompanying unaudited condensed consolidated financial statements are issued. Considered in the aggregate and before consideration of management's plans, these conditions raise substantial doubt about the Company's ability to continue as a going concern within that period.
In order to alleviate the substantial doubt, the Company has approved and undertaken several measures. In addition to existing cash on hand and restricted cash, the Company has undrawn committed borrowing capacity under the Company's existing equipment financing facilities, the terms of which are further described below. The Company also holds significant equity in its power generation, substation and transformer, data center, and other ancillary equipment, and, in the event the Company elects to monetize all or any portion of these assets in markets where demand currently exceeds available supply, such monetization would further mitigate the Company's near-term liquidity needs. In addition, the Company is actively working with its suppliers, contractors, and other counterparties to sequence the timing of future capital expenditures with the execution of definitive tenant agreements and the corresponding project-level financing arrangements expected to be secured in connection therewith, in order to align cash outflows with available liquidity through the assessment period. Certain of the Company's near-term cash commitments, including obligations to post collateral and credit support in connection with certain commercial arrangements, would arise only if the Company elects to proceed under those arrangements and are intended to secure capacity for anticipated future tenant demand rather than to support current operations. In addition, because the Company's equipment financing obligations are secured by the financed equipment, whose value exceeds the related obligations, the Company could satisfy those obligations through the pledged equipment itself, limiting the demand on its other liquidity sources. Management expects to defer, scale, or renegotiate the timing and amount of these obligations with the applicable counterparties as development progresses and tenant requirements are finalized. There is no guarantee that these counterparties will agree to renegotiate the terms of their commercial arrangements with the Company, and it is possible that management's efforts to renegotiate terms or defer obligations under existing commercial arrangements, such as deferring or renegotiating obligations to post collateral and credit support in connection with certain commercial arrangements, could result in a termination of those arrangements by the counterparties. 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. The Company is also pursuing additional project-level capital arrangements and customer arrangements with strategic counterparties that, although subject to counterparty action and other conditions outside the Company's control and therefore not relied upon by management in concluding that substantial doubt has been alleviated, would, if executed, provide further liquidity to the Company.
Based on the magnitude and timing of the Company's cash on hand and restricted cash, the net proceeds from the Notes issued in July 2026 (as described in Note 9, Subsequent Events), undrawn capacity under the Company's existing committed equipment financing facilities, and the Company's ability to sequence capital expenditures to align with the execution of definitive tenant agreements and associated project financing, management has concluded that (i) it is
probable that the Company's plans will be effectively implemented within twelve months following the issuance of the accompanying unaudited condensed consolidated financial statements and (ii) it is probable that those plans, when implemented, will mitigate the conditions and events that raise substantial doubt about the Company's ability to continue as a going concern within that period. Accordingly, management has concluded that its plans alleviate the substantial doubt, and the accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis. There can be no guarantee that the Company's plans will be successfully implemented or, if implemented, that they will mitigate the conditions and events that gave rise to substantial doubt within that period.
Turbine Warehouse Equipment Financing
On February 10, 2026 (the "Closing Date"), the Company consummated a strategic financing with MUFG Bank, Ltd. ("MUFG") (the "Turbine Warehouse Equipment Financing") pursuant to an Equipment Supply Loan Financing Agreement (the "Credit Agreement") entered into by Fermi Turbine Warehouse LLC (the "Borrower"), Firebird Equipment Holdco, LLC, as subsidiary guarantor, and MUFG, as sole lender. The Turbine Warehouse Equipment Financing will enable the Company to fund purchases under the Company's equipment purchase agreement with Siemens Energy, Inc. for three SGT6-5000F turbines (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. 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. As of June 30, 2026, $444.9 million was outstanding under the facility.
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 Closing Date, 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.
High Voltage Equipment Financing
On February 19, 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, as sole arranger, and Keystone Private Income Fund, as the initial lender, to finance the purchase of certain equipment.
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 "High Voltage Equipment Financing"). Advances may be requested from the closing date through the earlier of (i) 12 months following the closing date and (ii) the date the High Voltage Equipment Financing 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. As of June 30, 2026, $77.3 million was outstanding under the High Voltage Equipment Financing. The High Voltage Equipment Financing 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 High Voltage Equipment Financing 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 High Voltage Equipment Financing 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.
Turbine Warehouse II Equipment Financing
On March 26, 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, and the lenders party thereto, to fund the acquisition of six Siemens Energy SGT-800 industrial gas turbines and related equipment for Project Matador (the "Turbine Warehouse II 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. As of June 30, 2026, $14.7 million was outstanding under the facility.
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 of the Turbine Warehouse II Equipment Financing. 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 Turbine Warehouse II 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.
Promissory Note
On March 30, 2026, the Company entered into a senior unsecured promissory note (the "Promissory Note") with YA II PN, Ltd., an investment fund managed by Yorkville Advisors Global, LP, with a committed principal amount of $156.3 million (reduced to a maximum of $78.1 million as of June 30, 2026). As of June 30, 2026, no amounts were drawn under the facility.
The Promissory 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 Promissory 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 Promissory 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.
Beginning on the amortization period commencement date (thirty days following the first advance), the Company is required to make monthly amortization payments. At least $10.0 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 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 Promissory Note is unsecured, ranks pari passu with any other notes the Company may issue to YA II PN and is 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 Promissory Note, the Company agreed to negotiate in good faith and execute documentation to establish a committed equity line of credit facility with YA II PN, Ltd. 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 Promissory Note and the equity line of credit.
Convertible Senior Notes
On July 14, 2026, we issued $431.3 million aggregate principal amount of the Notes, including $56.3 million aggregate principal amount of Notes issued upon the exercise in full by the initial purchasers of their option to purchase additional Notes. The Notes are our senior, unsecured obligations, bear interest at a rate of 5.00% per year, payable semiannually in arrears on January 15 and July 15 of each year, beginning January 15, 2027, and mature on July 15, 2031, unless earlier converted, redeemed, or repurchased. The Notes are convertible at an initial conversion rate of 105.0862 shares of common stock per $1,000 principal amount of Notes, equivalent to an initial conversion price of approximately $9.52 per share, and upon conversion we may settle our conversion obligation in cash, shares of our common stock, or a combination thereof, at our election. Net proceeds from the Offering were approximately $416.8 million, of which approximately $34.5 million was used to pay the cost of the Capped Call Transactions. We intend to use the remaining net proceeds for general corporate purposes, including funding a portion of our capital expenditures for Project Matador. See Note 9, Subsequent Events, to our unaudited condensed consolidated financial statements for additional information.
Macquarie Term Loan
On August 29, 2025, Fermi Equipment Holdco, LLC and Firebird Equipment Holdco, LLC entered into the Macquarie Term Loan with Macquarie Equipment Capital, Inc. for a $100.0 million senior secured bridge loan to finance the purchase of six Siemens SGT-800 turbines and other ancillary equipment. 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 Turbine Warehouse Equipment Financing was used to repay the Macquarie Term Loan in full.
Dividends and Distributions
We were taxable as a C corporation for U.S. federal income tax purposes for our short taxable year ended December 31, 2025. We also expect to be taxable as a C corporation for U.S. federal income tax purposes at least through our taxable year ending December 31, 2026. It is possible that we may seek to qualify and elect to be taxable as a REIT for U.S. federal income tax purposes in the future, but the timing of any such election has not been determined, and it is possible that we will never make a REIT election. 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. If we elect and qualify to be taxed as a REIT, 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. In that event, 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.
If we make a REIT election, then as a result of the REIT distribution requirement, we would 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 data center space, and the payment of outstanding payables. We believe these assets, when combined with the intrinsic value of the Project Matador site, should allow us to finance future developments by special purpose entities ("SPEs") with capital provided by customer prepayments and the SPEs' creditors without requiring cash contributions from the Company.
Our principal sources of liquidity are expected to include:
•Net Proceeds from our IPO: We have used, and expect to continue using, 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 private-grid powered AI data center infrastructure construction. These investments support foundational project elements required to unlock additional strategic capital and advance our Project Matador milestones.
•Net Proceeds from the Notes: In July 2026, we issued $431.3 million aggregate principal amount of the Notes for net proceeds of approximately $416.8 million, of which approximately $34.5 million was used to pay the cost of the related Capped Call Transactions, with the remainder available for general corporate purposes. See "-Recent Developments-Convertible Senior Notes Offering."
•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. Other than the TensorWave Lease, as of the date of this Quarterly Report, we have not entered into definitive agreements with any other tenants, and there can be no assurance that the conditions to commencement under the TensorWave Lease will be satisfied or that we will enter into definitive agreements with additional 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 private-grid powered data center infrastructure 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 (qualifying advanced energy project) of the Internal Revenue Code of 1986, as amended (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 and the net proceeds from the Notes, 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;
•Remediation of historic environmental conditions;
•NRC licensing and environmental permitting activities;
•Construction of modular private-grid powered AI data center infrastructure 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 2033, 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 industrial frame-class gas turbines such as the GE 6B, Siemens SGT-800, and Siemens SGT6-5000F, together with mobile aeroderivative units such as the TM2500 for early-power deployment, peaking, and reserve capacity. We intend to commission the industrial frame-class units initially in simple cycle configuration to accelerate first power delivery, with subsequent conversion to combined cycle operation through the addition of heat recovery steam generators and steam turbines to enhance thermal efficiency, overall plant output, and economic returns. 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 Southwestern Public Service Company 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 satisfaction of the conditions under the TensorWave Lease 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 1, 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 of large-scale projects of this nature.
Liquidity Outlook
As described above under "-Liquidity and Going Concern," management has concluded that the Company's plans alleviate the substantial doubt about the Company's ability to continue as a going concern for the twelve months following the issuance of the accompanying unaudited condensed consolidated financial statements. Successful completion of Phase 1 of Project Matador, however, will require capital in addition to the sources currently available to the Company. As further described above under "-Sources of Liquidity," we expect to fund the remaining capital needs of Phase 1 through a combination of additional sources, which may include additional non-recourse equipment financings, structured project-level non-recourse debt, tenant prepayments upon execution of one or more lease agreements, strategic equity investments, monetization of federal energy tax credits, government grants, and property tax abatements. Although we entered into the TensorWave Lease on August 9, 2026, the effectiveness of the lease remains subject to the satisfaction or waiver of customary closing conditions, including Board approvals and the obtaining of project-level financing, and there can be no assurance that the lease will commence. We have not secured additional project-level debt financing beyond the financings we have previously announced or any strategic equity financing. If the TensorWave Lease does not commence, or if we are unable to secure additional tenants and raise additional debt financing or strategic equity capital, our liquidity will be materially constrained. In addition, on August 11, 2026, we entered into the Framework Agreement with Hillcore, under which Hillcore would finance, construct, own, and operate up to approximately 2.6 GW of generation capacity at Project Matador under a BOOT structure, which, if the transactions contemplated by the Framework Agreement are consummated, is expected to reduce the direct capital expenditures we would otherwise incur to develop the corresponding gas-fired generation capacity at Project Matador. The transactions contemplated by the Framework Agreement remain subject to the negotiation and execution of definitive documentation and other conditions, and there can be no assurance that they will be consummated. See "-Recent Developments-Hillcore Framework Agreement."
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) | Six Months Ended June 30, 2026 | For the period from January 10, 2025 (Inception) through June 30, 2025 | |||||||||
| Net cash used in operating activities | $ | (56,016) | $ | (2,618) | |||||||
| Net cash used in investing activities | $ | (626,157) | $ | (42,872) | |||||||
| Net cash provided by financing activities | $ | 365,375 | $ | 85,822 | |||||||
Cash Flows Used in Operating Activities
Cash used in operating activities for the six months ended June 30, 2026, totaled $56.0 million, compared to $2.6 million for the period from January 10, 2025 (Inception) through June 30, 2025. The use of cash for the six months ended June 30, 2026, primarily reflects a net loss of $214.5 million, partially offset by $118.7 million net non-cash expense of share-based compensation, $24.8 million of loss on extinguishment of the Macquarie Term Loan, and $1.5 million of other items. Changes in working capital provided $13.5 million of net cash, driven by a $35.5 million increase in accounts payable and accrued liabilities reflecting growth in vendor activity related to pre-development efforts, partially offset by a $22.0 million increase in prepaid expenses and other assets, primarily deposits and prepaid amounts associated with ongoing project development.
The use of cash of $2.6 million for the period from January 10, 2025 (Inception) through June 30, 2025, primarily reflects a net loss of $6.4 million, primarily driven by $3.6 million of non-cash share-based compensation expense related to equity grants to related parties and $0.7 million of non-cash interest expense associated with paid-in-kind convertible notes. Working capital changes also impacted cash flows from operations related to the prior year period. Accounts payable and accrued liabilities increased $1.3 million, reflecting growth in vendor activity related to pre-development efforts. This increase was partially offset by a $2.0 million use of cash related to prepaid expenses and other assets, primarily driven by initial deposits and prepaid rent related to the lease associated with Project Matador.
Cash Flows Used in Investing Activities
Cash used in investing activities for the six months ended June 30, 2026, totaled $626.2 million, compared to $42.9 million for the period from January 10, 2025 (Inception) through June 30, 2025. The use of cash for the six months ended June 30, 2026, primarily reflects $626.2 million of investments in property, plant, and equipment, net for early-stage development of Project Matador, including equipment procurement and construction in progress, reflecting our continued execution of the development roadmap for Phase 0 and Phase 1 of the Project Matador campus.
The use of cash of $42.9 million for the period from January 10, 2025 (Inception) through June 30, 2025, primarily reflects $40.3 million of investments in construction in progress for early-stage development of Project Matador, including equipment procurement. An additional $2.6 million was associated with capitalized preacquisition cost.
Cash Flows Provided by Financing Activities
Cash provided by financing activities for the six months ended June 30, 2026, totaled $365.4 million, compared to $85.8 million for the period from January 10, 2025 (Inception) through June 30, 2025. The amount for the six months ended June 30, 2026, primarily reflects $513.5 million of proceeds from the issuance of debt under the Turbine Warehouse, High Voltage, and Turbine Warehouse II equipment financing agreements, partially offset by $144.3 million for repayment of the Macquarie Term Loan and $3.8 million of debt issuance costs.
For the period from January 10, 2025 (Inception) through June 30, 2025, net cash provided by financing activities was $85.8 million. This included gross proceeds of $58.9 million from the issuance of Series A Convertible Notes and $26.1 million from Seed Convertible Notes, supporting both early operating needs and preconstruction milestones. We also had $0.9 million in other financing activities. Offsetting these inflows were $0.1 million in debt issuance costs and deferred offering costs incurred in connection with our IPO and related strategic capital efforts.
Commitments and Contractual Obligations
Lease Commitments
As of June 30, 2026, the Company had various fixed and variable lease payment obligations associated with our 99-year ground lease with the Texas Tech University System (the "TTU Lease") and the groundwater leases described in Note 6, Leases to our unaudited condensed consolidated financial statements. In October 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. During the three months ended June 30, 2026, the Company prepaid $2.0 million under its collaboration agreement with the Texas Tech University System, which is recorded within prepaid expenses and other assets and will be applied against amounts due under that agreement. Under the same agreement, the Company is required to fund an additional $9.0 million into a third-party escrow on or before December 31, 2026, to be released to satisfy amounts payable when due under the TTU Lease. As of June 30, 2026, this amount had not been funded, and no related liability had been accrued. See Note 6, Leases, to our unaudited condensed consolidated financial statements for additional information.
Reservation Payments
In connection with its gas and electrical supply contracts, the Company is required to make fixed reservation payments to preserve natural gas supply and electric delivery capacity in advance of the commencement of service under those contracts. As of June 30, 2026, remaining reservation payments under these contracts totaled $12.2 million, all of which are due within the next twelve months. Of this amount, $5.4 million was accrued as a liability on the unaudited condensed consolidated balance sheet as of June 30, 2026.
Unconditional Purchase Obligations
As of June 30, 2026, we had purchase commitments of approximately $142.6 million under executed contracts with Siemens Energy (the "Siemens Contracts") for the supply of three SGT6-5000F gas turbine generator units and six SGT-800 gas turbine generator units for Project Matador. Under the Siemens Contracts, we are obligated to make the remaining contractual payments and related shipping costs pursuant to contract milestones. See Note 8, Commitments and Contingencies, for the payments through 2028 for the purchase obligations related to these long-lead-time equipment purchases.
Contingent Consideration
In connection with the acquisition of the Company's first six Siemens SGT-800 gas turbines from MAD Energy Limited Partnership ("MAD Energy") (the "Firebird Acquisition"), the Company assumed an obligation to pay MAD Energy a net profits interest (the "NPI"). Under the NPI, the Company is liable to pay a portion of 2.5% of net operating income from the first 1.0 GW of installed dispatchable generation capacity at the Company's AI infrastructure campus subject to a $100.0 million cap on a net present value basis. Refer to Note 2, Significant Accounting Policies - Contingent Consideration, and Note 5, Acquisitions, of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "Annual Report") for additional detail on the acquisition and related consideration. Effective July 22, 2026, George Wentz, the founder, a director, and Chief Executive Officer of MAD Energy, was appointed General Counsel of the Company; accordingly, from that date the NPI constitutes an arrangement with a related party. See Note 2, Significant Accounting Policies - Related Party Transactions, Note 8, Commitments and Contingencies, and Note 9, Subsequent Events.
In connection with the purchase of the Company's three Siemens SGT6-5000F gas turbines, the Company entered into a Rated Capacity Agreement (the "RCA") as additional, contingent consideration for the turbines. Under the RCA, the Company is liable to pay Siemens up to $2 million per turbine per calendar quarter based on the operating reliability of each turbine, and not less than $80 thousand per turbine per quarter, for ten years commencing upon provisional acceptance of the turbines, subject to a maximum of approximately $240.0 million on an undiscounted basis. No amounts were recognized under the RCA as of June 30, 2026. Refer to Note 2, Significant Accounting Policies - Contingent Consideration, of the Company's Annual Report for information regarding the Company's accounting policy for contingent consideration.
Off-Balance Sheet Arrangements
Surety Bonds and Letters of Credit
In the ordinary course of business, we are required to provide financial commitments in the form of surety bonds and letters of credit to third parties as a guarantee of our performance on and our compliance with certain obligations. If we fail to perform or comply with these obligations, a draw on the applicable surety bond or letter of credit would trigger our obligation to reimburse the issuer. We had outstanding surety bonds issued for our benefit of approximately $35.8 million and letters of credit of $5.3 million as of June 30, 2026.
Other than the surety bonds and letters of credit described above, as of June 30, 2026, we did not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("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. Our critical policies and accounting estimates are described in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report for the fiscal year ended December 31, 2025, and the consolidated financial statements and the notes included therein. There have been no material changes concerning our critical accounting policies described in our Annual Report for the fiscal year ended December 31, 2025.
Recent Accounting Pronouncements
See Note 2, Significant Accounting Policies, to our unaudited condensed consolidated financial statements for more information about recent accounting pronouncements and the anticipated effects on our unaudited condensed consolidated financial statements.
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