Notes to Condensed Consolidated Financial Statements
(in thousands, except unit, per unit, share, and per share numbers)
(unaudited)
1. Organization and Description of Business
Organization
Fermi Inc. is a Texas corporation and references in this Quarterly Report on Form 10-Q (this “Quarterly Report”) to “Fermi,” “we,” “us,” “our,” and “the Company” (i) for periods prior to September 30, 2025, refer to Fermi Inc.’s predecessor, Fermi LLC, and, where appropriate, its consolidated subsidiaries and (ii) for periods from and after September 30, 2025, refer to Fermi Inc., and, where appropriate, its consolidated subsidiaries.
Fermi Inc. was originally formed as Fermi LLC, a Texas limited liability company, on January 10, 2025 (“Inception”). On September 30, 2025, immediately following the effectiveness of its registration statement on Form S-11 in connection with its initial public offering (“IPO”), Fermi LLC converted into a Texas corporation (the “Corporate Conversion”). In connection with the Corporate Conversion, all of Fermi LLC’s outstanding membership interests, consisting of Class A voting units (“Class A Units”), Class B non-voting units (“Class B Units”) and preferred units (“Preferred Units”), were converted into shares of common stock. Prior to the Corporate Conversion, in connection with the issuance of the Preferred Units in August 2025, Fermi LLC’s convertible unsecured promissory notes (the “Seed Convertible Notes”), convertible secured promissory notes (the “Series A Convertible Notes”) and Series B convertible secured promissory notes (the “Series B Convertible Notes”) converted into Class A Units.
The Company’s mission is to power the intelligence of tomorrow. The Company is developing its first campus, Project Matador, in Carson County, Texas, integrating approximately 11 gigawatts (“GW”) of private-grid power generation with large-scale AI data center infrastructure. The Project Matador site includes approximately 5,236 acres held or to be held under a long-term lease with the Texas Tech University System (see Note 6, Leases) and, together with additional acreage acquired, under contract, or subject to options to purchase, 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 optioned and other pending 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 following the closing of a definitive tenant lease and receipt of the related notice to proceed under the TTU Lease, as defined and further described in Note 6, Leases. The expected timing of commercial operations for the first private-grid powered AI data center campus is tied to the closing of a definitive tenant lease and its phased delivery schedule and to the sequencing of construction with executed tenant agreements and the related project-level financing. Disclosures of the energy generation and square footage of facilities are unaudited and outside the scope of our independent registered public accounting firm’s review 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 leases with hyperscalers, neocloud providers, semiconductor companies, and other compute-intensive tenants. As of September 30, 2026, we had not yet commenced revenue generating activities. All activity through September 30, 2026, was 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 private-grid powered AI data center infrastructure 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.
2. Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles 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 unaudited condensed 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 unaudited condensed 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 unaudited condensed 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 periods presented are not necessarily indicative of the results that may be expected for any subsequent period. Certain prior period amounts in the unaudited condensed consolidated statement of cash flows have been reclassified to conform to the current period presentation, including the presentation of capitalized preacquisition costs within investments in property, plant, and equipment and the aggregation of certain operating and financing activities. These reclassifications had no effect on previously reported net cash used in operating or investing activities or net cash provided by financing activities.
The significant accounting policies presented in these unaudited condensed consolidated financial statements are consistent with those described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and should be read in conjunction with the audited consolidated financial statements and notes thereto included therein.
Liquidity, Going Concern, and Capital Resources
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 unaudited condensed consolidated financial statements are issued.
Project Matador will require substantial capital investment to achieve commercial operation. As of September 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 September 30, 2026, the Company had cash and cash equivalents of $286,327 and restricted cash of $29,190, a portion of which is available to fund defined capital expenditures. 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 these 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 its 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 in Note 5, Debt, net. 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 the Company is unable to raise capital in the amounts, timing, or terms it expects, it may be forced to delay capital expenditures, amend or terminate its purchase commitments, or surrender assets pledged as collateral under its financing
agreements in order to preserve liquidity, which could materially extend its development timeline and delay one or more phases of Project Matador, preventing it 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, 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 these 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 these 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.
Related Party Transactions
Related parties include affiliates, equity method investees, principal owners, members of management, their immediate families, and any other party that can significantly influence the management or operating policies of the Company. Transactions with related parties are disclosed when material to the financial statements, even if conducted on terms equivalent to those prevailing in arm’s-length transactions.
During the nine months ended September 30, 2026, the Company incurred rental and related costs of $759, all of which were incurred during the first quarter of 2026, under a non-exclusive aircraft dry lease agreement with TMNN Manager LLC (“TMNN”), an entity affiliated with Toby Neugebauer, the Company’s former Chief Executive Officer. Under the agreement, effective January 8, 2026, the Company leased a Gulfstream GVI aircraft from TMNN on an hourly and monthly rental basis for use in operations. Because either party may terminate the agreement for convenience, the Company has elected the short-term lease exemption. Following the termination of Mr. Neugebauer’s employment during the second quarter of 2026, the Company terminated the aircraft lease agreement.
Effective July 22, 2026, the Board of Directors appointed George Wentz, the founder, a director, and Chief Executive Officer of MAD Energy Limited Partnership (“MAD Energy”), as General Counsel of the Company. MAD Energy is the counterparty to the net profits interest assumed in connection with the Company’s acquisition of its first six Siemens SGT-800 gas turbines (the “Firebird Acquisition”) and has agreed to indemnify the Company and its affiliates against certain claims asserted in the Firebird litigation, each as described in Note 8, Commitments and Contingencies. 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. For the nine months ended September 30, 2026, the Company incurred approximately $579 of fees for legal services from Davillier. 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 are disclosed as related party transactions.
Use of Estimates
The preparation of the unaudited condensed 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 unaudited condensed consolidated financial statements are reasonable and supportable based on the information available as of September 30, 2026.
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 savings 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 relationships, 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 or standby letter of credit agreements. As of September 30, 2026, the Company had restricted cash of $29,190, with $23,857 related to borrowings under the Turbine Warehouse Equipment Financing (as defined in Note 5, Debt, net) and $5,333 for the Company’s cash-collateralized standby letter of credit agreement. Restricted cash is presented separately in the unaudited condensed consolidated balance sheets. The unaudited condensed consolidated statements of cash flows reconcile the beginning-of-period and end-of-period total amounts of cash, cash equivalents and restricted cash.
Income Taxes
The unaudited condensed 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.
Fermi previously stated that it intended to elect to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with its short taxable year ended December 31, 2025. However, Fermi has determined to defer its REIT election. Accordingly, Fermi does not have a REIT election in place for U.S. federal income tax purposes at this time. Fermi’s current expectation is that it will be taxable as a C corporation for U.S. federal income tax purposes at least through its taxable year ending December 31, 2026. It is possible that Fermi 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 Fermi will never make a REIT election. If Fermi does decide to elect to be taxable as a REIT in the future, any such election would be made upon the filing of its Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts, for the applicable taxable year.
For any period during which Fermi is taxed as a C corporation, Fermi is subject to U.S. federal income tax on its net taxable income and is not entitled to a deduction for dividends paid. If Fermi qualifies for and elects to be taxed 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. In the event Fermi does qualify for and elects to be taxed as a REIT, Fermi would expect to distribute substantially all of its REIT taxable income and therefore would not expect to incur U.S. federal income tax at the REIT level.
If Fermi qualifies for and elects to be taxed as a REIT, Fermi may nonetheless 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. In addition, any subsidiaries which may become a taxable REIT subsidiary would be subject to U.S. federal, state, and local income taxes as regular C corporations, as described below.
If the Company elects and qualifies to be taxed as a REIT, the Company’s tax attributes generated during its non-REIT periods generally would not be expected to provide a future tax benefit at the REIT level, other than potentially reducing any built-in gains tax on assets held at the time of conversion that are disposed of within the statutory recognition period or tax on undistributed taxable income. Deferred tax balances attributable to periods expected to be governed by the REIT provisions would be remeasured when the Company becomes committed to any such election. Any such remeasurement is not expected to have a material effect on the unaudited condensed consolidated statements of operations, as the Company’s net deferred tax assets are fully offset by a valuation allowance.
As of September 30, 2026 and December 31, 2025, the Company’s deferred tax assets exceeded its deferred tax liabilities. Based on the Company’s cumulative losses since inception, the absence of revenue-generating operations, and the potential effect of any future REIT election, the Company concluded that it is not more likely than not that its net deferred tax assets will be realized and recorded valuation allowances of $113,013 and $79,048 as of September 30, 2026 and December 31, 2025, respectively. Accordingly, no net deferred tax assets or deferred tax liabilities are recognized in the accompanying unaudited condensed consolidated balance sheets, and no current or deferred income tax provision (benefit) was recognized for the periods presented.
Taxable REIT Subsidiary
A taxable REIT subsidiary (“TRS”) is an entity that is taxable as a corporation in which a REIT directly or indirectly owns stock and that elects with the REIT to be treated as a TRS. If we elect to qualify as a REIT, the use of TRSs would enable us to engage in certain businesses and jurisdictions while complying with REIT qualification requirements that would apply following any REIT election. We may, from time to time, change the election of a previously designated qualified REIT subsidiary to a TRS. Effective March 30, 2026, we filed a check-the-box election with the Internal Revenue Service
(“IRS”) for Fermi Turbine Holdco LLC to be taxed as a corporation, which was a necessary step to facilitate a TRS election. See Note 9, Subsequent Events.
As of September 30, 2026, Fermi Turbine Holdco LLC and its subsidiaries did not generate taxable income or loss during the period from the effective date of the election through September 30, 2026. Accordingly, no current or deferred provision (benefit) for U.S. federal, state, or local income taxes has been recognized at these subsidiaries in the accompanying unaudited condensed consolidated financial statements for the periods presented.
Segments
All of the Company’s activities relate to developing its first campus, Project Matador, in Carson County, Texas, integrating approximately 11 GW of private-grid power generation with large-scale AI data center infrastructure. Operating and strategic decision-making responsibility for the Company is exercised by the Company’s Chief Executive Officer, who serves as the chief operating decision maker (“CODM”). Prior to April 2026, a group of the Company’s senior officers, consisting of the Company’s then Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, and Head of Power, functioned collectively as the CODM. From April 2026 until the appointment of the Chief Executive Officer in August 2026, the group consisted of the Co-Presidents of the Company’s Interim Office of the CEO and its Interim Chief Financial Officer. Following the appointment of a Chief Executive Officer in August 2026, and as of September 30, 2026, the Company’s Chief Executive Officer has served as the CODM. Although the identity of the CODM has changed since December 31, 2025, there has been no change in the information regularly reviewed by the CODM, the manner in which operating performance is evaluated, the basis used to allocate resources, or the Company’s determination that it has a single operating and reportable segment. The CODM evaluates performance and allocates resources based on the Company’s overall operations and financial results. Based on the structure of the Company’s operations and the manner in which the CODM monitors and manages the business, management has 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 generate substantially all of its revenue from leasing private-grid powered AI data center infrastructure facilities to hyperscalers, neocloud providers, and other compute-intensive tenants. The CODM manages the Company as a single business and uses GAAP net income (loss), as presented in the unaudited condensed consolidated statement of operations, as the primary financial measure for assessing performance and allocating resources. The CODM regularly reviews the consolidated statement of operations, including the various line items therein, as presented in the Company’s unaudited condensed consolidated financial statements. No significant revenue or expense categories are regularly evaluated by the CODM other than those already reflected in the consolidated statement of operations. Additionally, the CODM assesses segment assets as presented within the Company’s consolidated balance sheet, as there is no distinction between segment assets and total assets. Substantially all assets are located within the United States, with certain equipment located at vendor facilities abroad, pending transport of such equipment to the Company’s Project Matador campus in Texas. Because the Company operates as a single segment, the accounting policies applied are consistent with the Company’s other significant accounting policies described within Note 2, Significant Accounting Policies.
Supplemental Cash Flow Information
The following table shows supplemental cash flow information:
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| Noncash investing and financing activities: | For the Nine Months Ended
September 30, 2026 | For the period from January 10, 2025 (Inception) through September 30, 2025 |
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| Capitalized share-based compensation expense related to Property, plant, and equipment, net | $ | 31,118 | | $ | — | |
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| Capitalized interest related to investments in Property, plant, and equipment, net | 14,892 | | 6,057 | |
| Capitalized operating lease expense related to Property, plant, and equipment, net | 12,627 | | — | |
| Right-of-use asset obtained in exchange for a new operating lease liability | 33,611 | | 24,644 | |
| Common stock issued for debt issuance costs | 15,854 | | — | |
| Issuance of debt in relation to asset acquisition | — | | 137,000 | |
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| Accrued deferred offering costs | — | | 14,862 | |
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Investments in property, plant, and equipment, net included in accounts payable and accrued liabilities were $90,568 and $39,477 as of September 30, 2026 and 2025, respectively.
Other Income (Expense), Net
For the nine months ended September 30, 2026, other income (expense), net of $26,443 consisted primarily of a $24,753 loss on the extinguishment of the Company’s term loan with Macquarie Equipment Capital Inc. (the “Macquarie Term Loan”), recognized during the three months ended March 31, 2026, and a $1,638 write-off of unamortized issuance costs on the Promissory Note (as defined in Note 5, Debt, net) recognized during the three months ended September 30, 2026.
For both the three months ended September 30, 2025 and for the period from January 10, 2025 (Inception) through September 30, 2025, other expense, net of $309,048 consisted of non-cash charges recognized by Fermi LLC before the Corporate Conversion. These charges were $173,784 of share-based charitable contribution expense for the donation of 11,250,000 Class B Units to Dechomai Asset Trust, an unrelated 501(c)(3) public charity, a $61,000 loss on the remeasurement of the Series B Convertible Notes, for which the Company had elected the fair value option, $46,350 of losses on the remeasurement of embedded derivative liabilities related to the Preferred Units, a $23,674 inducement expense recognized on the conversion of the Series A Convertible Notes and the Series B Convertible Notes in connection with the issuance of the Preferred Units, and a $4,240 loss on the remeasurement of an embedded derivative related to the Macquarie Term Loan.
The Series B Convertible Notes and the embedded derivative liabilities were measured at fair value using unobservable (Level 3) inputs until the notes and the Preferred Units were converted in 2025 and the Macquarie embedded derivative ceased to qualify as a derivative on September 30, 2025. The Macquarie Term Loan, including the amount previously accounted for as an embedded derivative, was repaid in February 2026 (see Note 5, Debt, net). No assets or liabilities were measured at fair value on a recurring basis as of September 30, 2026 or December 31, 2025. See Note 2, Significant Accounting Policies — Fair Value Measurement, and Note 3, Stockholders’ Equity, of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, for additional detail.
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 220-40): 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 unaudited condensed 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 unaudited condensed 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 Instruments (“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. The Company adopted this guidance effective January 1, 2026. The adoption of ASU 2024-04 did not have a material impact on our unaudited condensed 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. We early adopted ASU 2025-06 effective January 1, 2026, on a prospective basis and the impact of the adoption was not material to our unaudited condensed consolidated financial statements.
In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract. ASU 2025-07 refines the scope of derivative accounting under Topic 815 and clarifies the treatment of share-based noncash consideration under ASC 606. The guidance will be effective for annual periods beginning after December 15, 2026, including interim periods within those annual periods. Early adoption is permitted. We early adopted ASU 2025-07 effective January 1, 2026, on a prospective basis and the impact of the adoption was not material to our unaudited condensed consolidated financial statements.
3. Net Loss 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
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| Three Months Ended
September 30, | | Nine Months Ended
September 30, 2026 | | For the period from
January 10, 2025
(Inception) through
September 30, 2025 |
| 2026 | | 2025 | | |
| Net loss | $ | (141,599) | | | $ | (346,812) | | | $ | (356,098) | | | $ | (353,180) | |
| Less: Preferred Units dividends and accretion | — | | | (43,384) | | | — | | | (43,384) | |
| Net loss attributable to common stockholders — basic and diluted | $ | (141,599) | | | $ | (390,196) | | | $ | (356,098) | | | $ | (396,564) | |
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| Weighted average shares outstanding — basic and diluted | 642,652,819 | | | 466,493,415 | | | 636,652,949 | | | 416,237,306 | |
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| Net loss per share — basic and diluted | $ | (0.22) | | | $ | (0.84) | | | $ | (0.56) | | | $ | (0.95) | |
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The Company reported a net loss for the three and nine months ended September 30, 2026, and accordingly all potentially dilutive securities outstanding as of September 30, 2026 were anti-dilutive and were excluded from the computation of diluted net loss per share. These consisted of 16.7 million unvested shares underlying restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) and approximately 45.3 million shares issuable upon conversion of the Notes. The computation also excludes an estimated 22.7 million shares contingently issuable to a financial advisor under the remaining fee tranches of the advisory arrangement described in Note 7, Share-Based Compensation, because the conditions for their issuance had not been met as of September 30, 2026. The Capped Call Transactions are not included in diluted net loss per share because their effect is always anti-dilutive. The Notes and the Capped Call Transactions are each as defined in Note 5, Debt, net.
The Company reported a net loss for the three months ended September 30, 2025 and for the period from January 10, 2025 (Inception) through September 30, 2025, and accordingly all potentially dilutive securities outstanding as of September 30, 2025 were anti-dilutive and were excluded from the computation of diluted net loss per share. These consisted of 16.3
million shares of restricted common stock, of which 14.8 million shares were classified as a deposit liability, and 37.2 million shares underlying RSUs.
4. Property, Plant, and Equipment
Property, plant, and equipment, net consisted of the following:
| | | | | | | | |
| September 30,
2026 | December 31,
2025 |
| Construction in progress | $ | 1,660,796 | | $ | 929,371 | |
| Land | 8,843 | | 5,924 | |
| Gross property, plant, and equipment | 1,669,639 | | 935,295 | |
| Less: accumulated depreciation | — | | — | |
| Total property, plant, and equipment, net | $ | 1,669,639 | | $ | 935,295 | |
As of September 30, 2026, 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 nine months ended September 30, 2026. We capitalized $31,118 of share-based compensation during the nine months ended September 30, 2026, as the related employee services were attributable to the Company’s construction activities. Interest expense of $47,962 was capitalized during the nine months ended September 30, 2026, all of which is included within property, plant, and equipment, net on the unaudited condensed consolidated balance sheet. During the three and nine months ended September 30, 2026, the Company wrote off $1,918 and $6,918, respectively, of previously capitalized construction in progress to general and administrative expenses.
5. Debt, net
The table below summarizes the Company’s debt:
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| | | As of September 30, 2026 | | As of December 31, 2025 |
| Maturity | | Amounts | | Effective interest rate | | Amounts | | Effective interest rate |
| | | | | | | | | |
| Macquarie Term Loan | 2026 | | $ | — | | | — | % | | $ | 148,986 | | | 48.9 | % |
| Turbine Warehouse Equipment Financing | 2027 | | 444,862 | | | 12.3 | % | | — | | | — | % |
Convertible Senior Notes | 2031 | | 431,250 | | | 6.7 | % | | — | | | — | % |
| High Voltage Equipment Financing | 2031 | | 91,535 | | | 14.7 | % | | — | | | — | % |
| Turbine Warehouse II Equipment Financing | 2028 | | 32,301 | | | 16.9 | % | | — | | | — | % |
| Total debt | | | $ | 999,948 | | | | | $ | 148,986 | | | |
| Less: Unamortized debt issuance costs and discount | | | (41,595) | | | | | (39,187) | | | |
| Total debt, net | | | $ | 958,353 | | | | | $ | 109,799 | | | |
Macquarie Term Loan
On February 10, 2026, the Company repaid in full all outstanding obligations under the Macquarie Term Loan, including the required prepayment premium, using proceeds from the Company’s Turbine Warehouse Equipment Financing (as defined below). In connection with the repayment, the Company recognized a loss on extinguishment of debt of $24,753, which is included in other income (expense), net in the unaudited condensed consolidated statement of operations for the nine months ended September 30, 2026.
Turbine Warehouse Equipment Financing
On February 10, 2026 (the “Closing Date”), Fermi Turbine Warehouse LLC entered into an Equipment Supply Loan Financing Agreement with MUFG Bank, Ltd. (“MUFG”) providing for a senior secured equipment loan warehouse facility with a total commitment of up to $500,000 (the “Turbine Warehouse Equipment Financing”). The facility matures on August 10, 2027. Borrowings may be made from the Closing Date through the nine-month anniversary of the Closing Date.
Borrowings bear interest at Term SOFR or Daily Simple SOFR, each as defined in the Equipment Supply Loan Financing Agreement and based on the Secured Overnight Financing Rate (“SOFR”), in each case plus 4.0% per annum. As of September 30, 2026, $444,862 was outstanding under the facility. Minimum principal payments are due quarterly, with the remaining principal and other obligations due at maturity. No minimum principal payment is due prior to the nine-month anniversary of the Closing Date. As of September 30, 2026, the facility provided that the minimum quarterly principal payment thereafter would be 10% of the aggregate principal amount of loans outstanding, reduced to 5% if a lease or offtake agreement with respect to the first phase of Project Matador for at least 400 megawatts (“MW”) of power had been signed prior to the nine-month anniversary of the Closing Date, and that if no such agreement had been signed by that date the administrative agent could begin marketing the equipment to potential buyers but could not sell or foreclose absent an event of default. The facility also provides that an event of default will occur if the Company or one of its affiliates has not consummated, by February 10, 2027, a fully committed financing facility for the first phase of Project Matador sufficient, together with any equity, to fund at least 400 MW of power generation capacity. See Note 9, Subsequent Events.
High Voltage Equipment Financing
On February 19, 2026, Fermi High Voltage Warehouse LLC (“HVW”) entered into a master loan agreement (the “Keystone Master Loan Agreement”) with Keystone National Group, LLC, as agent, and Keystone Private Income Fund, as initial lender, providing for equipment-backed advances of up to $120,000 in aggregate principal, with the potential to increase by an additional $100,000 subject to lender approval (the “High Voltage Equipment Financing”). Advances fund up to 80% of the purchase price of financed equipment, with the remaining 20% funded by HVW or its affiliates. As of September 30, 2026, HVW had received advances totaling $94,691 under two promissory notes, each of which bears interest at a fixed rate of 12.90% per annum and matures on August 19, 2031. During the three months ended September 30, 2026, HVW made the first two scheduled principal installments totaling $3,156. As of September 30, 2026, $91,535 was outstanding under the High Voltage Equipment Financing. Each advance is evidenced by a separate promissory note with interest rate and term set at issuance. The High Voltage Equipment Financing is not a revolving credit facility. As of September 30, 2026, no further advances were available to HVW under the High Voltage Equipment Financing.
The Keystone Master Loan Agreement includes a minimum liquidity covenant of $20,000, a mandatory prepayment requirement if an approved customer agreement has not been received by December 31, 2026, and a collateral coverage requirement under which outstanding principal may not exceed 110% of the fair market value of the financed equipment.
Turbine Warehouse II Equipment Financing
On March 26, 2026, Fermi Turbine Warehouse II LLC (“FTW II”), a Texas limited liability company and indirect wholly owned subsidiary of the Company, entered into an Equipment Supply Loan Financing Agreement with CLMG Corp., as agent, and the lenders party thereto, providing for a senior secured term loan facility of up to $165,000 to fund the acquisition of six Siemens SGT-800 gas turbines and related equipment for Project Matador (the “Turbine Warehouse II Equipment Financing”). Loans bear interest at 12.00% per annum (14.00% upon an event of default), payable quarterly in arrears. The facility matures 33 months after the closing date. As of September 30, 2026, $32,301 was outstanding under the facility.
Of the total commitment, up to $22,900 is reserved to fund interest and commitment fee payments. An unused commitment fee of 1% per annum is payable quarterly on the undrawn portion. On the maturity date (or upon earlier payment in full), FTW II is required to pay an exit fee equal to $37,000 less cumulative interest and commitment fees paid through such date. Mandatory prepayment is required upon, among other things, an event of loss, a disposition of equipment or equity interests, or a change of control.
Convertible Senior Notes
In July 2026, the Company issued $431,250 aggregate principal amount of its 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 of 1933, as amended (the “Securities Act”). The amount issued included $56,250 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 $418,004, after deducting the initial purchasers’ discounts and commissions and other offering expenses paid in cash by the Company. The Notes were initially recorded at $402,149, net of $29,101 of debt issuance costs, including the $15,854 fair value of the shares issued to a financial advisor described below. For the three and nine months ended September 30, 2026, interest on the Notes was $5,580, consisting of $4,552 of contractual interest and $1,028 of amortization of debt issuance costs, all of which was capitalized to property,
plant, and equipment, net. At September 30, 2026, the carrying amount of the Notes was $403,177, net of debt issuance costs of $28,073.
The Notes are senior, unsecured obligations of the Company, 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 of common stock, subject to adjustment upon the occurrence of specified events. Before April 15, 2031, holders may convert only upon specified conditions related to the trading price of the Company’s common stock or the Notes, a redemption, or specified corporate events, and thereafter at any time until two scheduled trading days before maturity. None of these conditions had been met as of September 30, 2026. Upon conversion, the Company may satisfy its conversion obligation in cash, shares of its common stock, or a combination thereof, at the Company’s election. The Notes are redeemable, in whole or in part, for cash at the Company’s option on or after July 20, 2029, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period, and in whole (but not in part) at any time in a cleanup redemption if less than 10% of the aggregate principal amount of the Notes remains outstanding, in each case at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest.
In connection with the pricing of the Notes (including the additional Notes), the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain of the initial purchasers or their affiliates and other financial institutions at a total cost of approximately $34,500 ($34,747 including allocated transaction costs). The Capped Call Transactions cover, subject to customary adjustments, the number of shares of common stock initially underlying the Notes and are generally expected to reduce the potential dilution to the Company’s common stock upon any conversion of the Notes, or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, with such reduction or offset subject to a cap initially corresponding to a price of approximately $14.64 per share. The Capped Call Transactions have a strike price of approximately $9.52 per share, cover approximately 45.3 million shares, and expire on July 15, 2031. They settle in net shares unless the Company elects cash, are classified in equity, and are not remeasured. As of September 30, 2026, they were out of the money. The Company intends to use the remainder of the net proceeds from the Offering for general corporate purposes.
In July 2026, the Company issued 2,352,273 shares of common stock with a grant-date fair value of $15,854 to a financial advisor as a fee for services related to the Offering under an advisory services agreement (the “Advisory Agreement”). The fair value of these shares was recorded as debt issuance costs of the Notes as described above. In September 2026, the Company issued additional shares to the financial advisor under the Advisory Agreement for services unrelated to the Offering, which are described in Note 7, Share-Based Compensation. In total, the Company issued 6,897,729 shares of common stock with an aggregate grant-date fair value of $37,399 under the Advisory Agreement during the three months ended September 30, 2026.
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 $156,250 that was reduced by approximately $26,042 every 30 days. The Company did not request any advances under the Promissory Note. The committed principal amount had been reduced to zero as of September 30, 2026, and the period during which advances could be requested expired on October 1, 2026, with no amounts drawn or outstanding. The Company wrote off $1,638 of unamortized issuance costs to other income (expense), net as a result of the reduction of the committed principal amount to zero.
As of September 30, 2026, the Company was in compliance with all material covenants under its debt agreements, except for potential defaults under the Turbine Warehouse Equipment Financing relating to the relocation of certain financed equipment and certain insurance requirements, which the lenders waived on a one-time basis on October 9, 2026 (see Note 9, Subsequent Events).
As of September 30, 2026, the estimated fair value of the Notes, based on Level 1 inputs, was $360,000, and the carrying amounts of the Company’s other debt facilities approximated their fair values.
6. Leases
TTU Lease
On May 14, 2025, the Company entered into a 99-year ground lease (the “TTU Lease”) with the Texas Tech University System (“TTU”) for 5,769 acres of land in Carson County, Texas, intended for the development of Project Matador. Following a first amendment executed in August 2025, the Project Matador site was set at approximately 4,523 acres, with an additional 713-acre tract to be added upon transfer from a federal agency to TTU. Lease commencement for the 4,523-acre site occurred in September 2025. The lease term for the additional 713-acre tract had not yet commenced as of September 30, 2026. The lease contains no lessee-controlled options to extend or terminate and provides for annual escalations to lease payments.
At lease commencement, the Company recognized an operating lease right-of-use (“ROU”) asset and corresponding lease liability, measured at the present value of future lease payments, discounted using the Company’s incremental borrowing rate of 16.1%. As of September 30, 2026, the ROU asset and lease liability totaled $11,818 and $23,596, respectively. As of December 31, 2025, the ROU asset and lease liability totaled $21,737 and $21,320, respectively. Because lease cost is recognized on a straight-line basis over the 99-year lease term while contractual rent escalates over that term, cumulative lease cost recognized exceeds cumulative cash rent paid, and the resulting accrued rent reduces the carrying amount of the ROU asset relative to the lease liability.
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 private-grid powered AI data center infrastructure facilities 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 data center space in that year (up to $3.0 billion in total appraised value) and 0.5% on additional appraised value above $3.0 billion, 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 September 30, 2026, no variable lease payments had been made. The lease provides that, before beginning vertical construction of data center facilities on the leased site, the Company must receive a notice to proceed from TTU by December 31, 2026, and TTU may terminate the lease if the notice is not received by that date. Issuance of the notice to proceed is conditioned on, among other things, the Company’s execution of a lease with a Phase 1 tenant for not less than 200 MW of capacity at Project Matador, together with other customary conditions.
On March 30, 2026, TTU and the Company entered into a collaboration agreement (the “Collaboration Agreement”) regarding the future of Project Matador, which reflects each party’s intent to move forward collaboratively with the development of the leased site. As a result of the agreement, the Company agreed to pay a fee in the amount of $2,000 within 75 days of the date of the Collaboration Agreement, which the Company paid and recognized within general and administrative expenses in the condensed consolidated statements of operations during the nine months ended September 30, 2026. The Company is also required to fund an additional $9,000 into escrow on or before December 31, 2026, with such amounts to be released from escrow as they become due under the TTU Lease and applied to any amounts payable (including rent) to TTU. As of September 30, 2026, the Company had not funded the escrow. Because amounts funded into escrow will be applied against the Company’s obligations under the TTU Lease, which are reflected in its lease liability, no separate liability has been recognized for this funding commitment.
Other Operating Leases
During the nine months ended September 30, 2026, the Company entered into six groundwater lease agreements, each of which commenced during the period and is classified as an operating lease.
Groundwater Leases
Fermi Water LLC, a wholly owned subsidiary of the Company, entered into six groundwater lease agreements with various lessors (collectively, the “Groundwater Leases”). The Groundwater Leases cover approximately 5,227 acres in the aggregate in Carson and Potter Counties, Texas, separate from the acreage leased under the TTU Lease.
Each of the Groundwater Leases has an initial term of 30 years, subject to extension so long as operations are conducted on the leased premises without a cessation of more than 12 consecutive months, and is terminable by the lessee upon 365 days’ prior written notice to the lessor, together with a payment equal to four months of the then-applicable minimum annual royalty. The Company has concluded that it is reasonably certain it will not exercise the termination option. Accordingly, the full 30-year contractual term has been used to measure the Groundwater Leases.
The Groundwater Leases provide for aggregate minimum annual royalty of $3,855 in the first year of each lease. The minimum annual royalty and royalty rate increase by 2.00% per year on each January 1 following commencement of production. Variable royalty payments of three dollars per one thousand gallons of groundwater produced in excess of the volume covered by the minimum annual royalty in a given calendar year are payable by February 1 of the succeeding year. As of September 30, 2026, no variable royalty payments had been made. Upon commencement, the Company recognized operating lease ROU assets and corresponding lease liabilities of $33,007 in the aggregate, measured at the present value of future minimum royalty payments discounted using the Company’s incremental borrowing rate of 14.1% for leases that commenced on January 1, 2026, and 13.8% for leases that commenced on May 1, 2026.
As of September 30, 2026, the aggregate ROU assets and lease liabilities for the Company’s operating leases other than the TTU Lease totaled approximately $33,058 and $33,948, respectively.
Operating lease costs for the three and nine months ended September 30, 2026, were as follows:
| | | | | | | | |
Financial Statement Classification | Three Months Ended September 30, 2026 | Nine Months Ended September 30, 2026 |
| Property, plant, and equipment, net | $ | 4,209 | | $ | 12,627 | |
General and administrative expenses | 1,319 | | 3,432 | |
| Total operating lease cost | $ | 5,528 | | $ | 16,059 | |
Supplemental information related to operating leases for the nine months ended September 30, 2026, was as follows:
| | | | | |
| Nine Months Ended September 30, 2026 |
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | 2,974 | |
| |
| Operating lease ROU assets obtained in exchange for new lease liabilities (non-cash): | |
| Groundwater Leases | $ | 33,007 | |
| Other leases | 604 | |
Total | $ | 33,611 | |
The future minimum lease payments included in the measurement of the Company’s operating lease liabilities as of September 30, 2026 and December 31, 2025, were as follows:
| | | | | | | | |
| September 30, 2026 | December 31, 2025 |
| 2026 | $ | 964 | | $ | 432 | |
| 2027 | 5,951 | | 1,836 | |
| 2028 | 6,467 | | 2,268 | |
| 2029 | 7,969 | | 3,684 | |
| 2030 | 8,404 | | 4,031 | |
| Thereafter | 1,786,100 | | 1,649,323 | |
| Total undiscounted lease payments | $ | 1,815,855 | | $ | 1,661,574 | |
| Less: imputed interest | (1,758,311) | | (1,640,254) | |
| Present value of lease liabilities | $ | 57,544 | | $ | 21,320 | |
Information relating to the lease term and discount rate for operating leases as of September 30, 2026 and December 31, 2025, was as follows:
| | | | | | | | |
| September 30, 2026 | December 31, 2025 |
| Weighted average remaining lease term | 57 years | 99 years |
| Weighted average discount rate | 14.8 | % | 16.1 | % |
Leases Not Yet Commenced
MPS Agreement
On October 22, 2025, Fermi Mobile Gen LLC, a wholly owned subsidiary of the Company, entered into a master lease agreement (the “MPS Agreement”) with Mobile Power Solutions LLC (“MPS”) for seven GE TM2500 Gen 4 mobile power generation units, with monthly base rent payments extending through 2045. The MPS Agreement supports the natural gas component of Project Matador’s initial generation capacity. Fermi Inc. has guaranteed the obligations of the lessee, Fermi Mobile Gen LLC.
On April 13, 2026, Fermi Mobile Gen LLC and MPS entered into the First Amendment (the “Amendment”) to the MPS Agreement, deferring the delivery schedule. Pick-up dates for all seven units will commence July 1, 2027, and end September 30, 2027, with lease commencement now expected in the third quarter of 2027. During the extension period, MPS may lease, sublease, or otherwise make the units available to third parties. If a 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 the unit is made available. All other material terms, including the monthly base rent structure extending through 2045 and the absence of termination rights for convenience, remain unchanged. The Company accounted for the Amendment as a pre-commencement modification. The modified contract continues to contain a lease, and the ROU asset and lease liability will be measured and recognized at the commencement date based on the modified terms.
As of September 30, 2026, lease commencement had not occurred because the contractual preconditions for the Company’s pick-up obligation had not been satisfied, and the Company did not control the units. Accordingly, no ROU asset or lease liability had been recognized. As of September 30, 2026, the Company had capitalized $37,016 of lease payments made or accrued in advance of lease commencement within prepaid expenses and other assets, of which $23,679 was settled through the issuance of 1,190,476 shares of common stock at a fair value of $19.89 per share, the closing market price on the date of issuance. These amounts will be reclassified to lease ROU assets upon lease commencement.
7. Share-Based Compensation
2025 Long-Term Incentive Plan
Share-based compensation expense included in general and administrative expenses was $65,750 and $184,475 for the three and nine months ended September 30, 2026, respectively. The corresponding expense was $24,814 for the three
months ended September 30, 2025, and $28,430 for the period from January 10, 2025 (Inception) through September 30, 2025.
Expense for the three and nine months ended September 30, 2026, includes $61 and $64,896, respectively, of reversals of previously recognized compensation costs for awards forfeited, with the nine month amount primarily reflecting the departure of certain executives during the second quarter of 2026.
Share-based compensation of $31,118 was capitalized in property, plant, and equipment, net, during the nine months ended September 30, 2026, none of which was capitalized during the three months ended September 30, 2026.
During the three months ended September 30, 2026, the Company granted 7,805,676 RSUs and 1,201,968 target PSUs under the Company’s 2025 Long-Term Incentive Plan. The RSUs include 953,146 annual awards granted in July 2026 and 6,852,530 other awards, principally sign-on awards to newly appointed executive officers, with vesting periods from immediate to four years. The PSUs were all annual awards granted in July 2026 and are earned based on 2026 commercial, power development and safety objectives, adjusted by a stock-price modifier, and vest following the service period ending December 31, 2028. The PSU payout ranges from zero to 190% of target before the modifier. PSUs were valued as of the grant date using a Monte Carlo simulation that incorporated the stock-price modifier in grant-date fair value. Compensation cost for the PSUs is recognized over the requisite service period based on the probable outcome of the performance conditions.
As of September 30, 2026, unrecognized compensation cost for unvested awards, including performance awards considered probable of vesting, was $117,505, and is expected to be recognized over the weighted-average requisite service period of 1.67 years.
The following table summarizes the share-based compensation activity:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSUs | | PSUs |
| Nine Months Ended September 30, 2026 | | Shares | | Weighted-Average
Fair Value | | Shares | | Weighted-Average
Fair Value |
| Balance at December 31, 2025 | | 12,585,290 | | $ | 4.97 | | | 27,326,780 | | $ | 20.39 | |
| Granted | | 12,085,395 | | $ | 6.62 | | | 1,201,968 | | $ | 5.38 | |
| Released | | (1,828,858) | | | $ | 6.61 | | | (9,040,080) | | | $ | 21.00 | |
| Forfeited | | (10,206,529) | | $ | 4.54 | | | (7,774,320) | | $ | 19.02 | |
| Balance at September 30, 2026 | | 12,635,298 | | $ | 6.65 | | | 11,714,348 | | $ | 19.29 | |
Shares Issued to a Financial Advisor
Under the Advisory Agreement described in Note 5, Debt, net, the Company settles certain financial advisory fees in common stock. These shares are nonemployee share-based payments measured at grant-date fair value and are excluded from the amounts above.
In September 2026, the Company issued 4,545,456 fully vested shares with a grant-date fair value of $21,545 for advisory services unrelated to the Offering, recognized in general and administrative expenses and included in share-based payments for professional services in the condensed consolidated statements of cash flows. With the 2,352,273 shares issued in July 2026 as debt issuance costs of the Notes, shares issued under the Advisory Agreement in the quarter totaled 6,897,729 with a grant-date fair value of $37,399.
Additional share-based fees under the Advisory Agreement depend on the completion of certain future transactions that were not considered probable as of September 30, 2026, and no amount had been recognized. See Note 3, Net Loss Per Share.
8. Commitments and Contingencies
Commitments
Lease Commitments
As of September 30, 2026, the Company had various fixed and variable lease payment obligations associated with the TTU Lease and the Groundwater Leases. The Company also has a lease agreement with MPS through which the Company will be subject to fixed lease payments once the lease commences. In connection with the Collaboration Agreement, the Company is required to fund $9,000 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 September 30, 2026, this amount had not been funded, and no related liability had been accrued. See Note 6, Leases, for additional information.
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. As of September 30, 2026, we had outstanding surety bonds issued for our benefit of approximately $35,810 and letters of credit of $5,333. In addition, our natural gas supply contract and electric service agreement require us to provide credit support to the applicable counterparty, which may include standby letters of credit. Under the natural gas supply contract, the credit support must be provided by the earlier of our election to commence deliveries or December 31, 2026. Under the electric service agreement, it must be provided prior to the commencement of electric service, and as of September 30, 2026, deliveries and service had not commenced under either contract and no credit support had been provided.
Reservation Payments
The reservation payments under the Company’s natural gas supply contract, including $5,390 that had been previously accrued, were paid in full during the three months ended September 30, 2026. In connection with its electrical supply contract, the Company is required to make fixed reservation payments to preserve electric delivery capacity in advance of the commencement of service under that contract. As of September 30, 2026, remaining reservation payments under this contract totaled $5,000, all of which is due within the next twelve months. Of this amount, none was accrued as a liability on the unaudited condensed consolidated balance sheet as of September 30, 2026, as the remaining payments do not represent a present obligation of the Company.
Unconditional Purchase Obligations
For the nine months ended September 30, 2026, the Company entered into unrecognized commitments that require the future purchase of goods or services (“unconditional purchase obligations”). As of September 30, 2026, the Company’s unconditional purchase obligations of $126,179 related to long-lead-time equipment purchases, of which approximately $111,630 is expected to be funded through draws on the Company’s existing equipment financing facilities.
Future payments under unconditional purchase obligations as of September 30, 2026, were as follows:
| | | | | | | | |
| Years Ending December 31, | | Payments by Year |
| Remainder of 2026 | | $ | 21,960 | |
| 2027 | | 71,279 | |
| 2028 | | 32,940 | |
| 2029 | | — | |
| 2030 | | — | |
| Thereafter | | — | |
Total unconditional purchase obligations | | $ | 126,179 | |
The amounts in the table above represent the fixed price component of these contracts. Certain of the contracts also include a variable component, consisting primarily of transportation costs and applicable import duties, that is billed as incurred. Variable amounts are excluded from the table above.
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. Except as described below, as of September 30, 2026, we were 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 had not accrued any material losses related to such matters.
Litigation — Securities Class Action
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 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 intends to vigorously defend against the action. The court has not appointed a lead plaintiff and the defendants have not yet responded to the complaint. As of September 30, 2026, the Company was unable to reasonably estimate the possible loss or range of loss, if any, associated with this matter.
Litigation — Firebird
On January 27, 2026, a petition captioned 340 Energy, LLC v. Firebird LNG, LLC, et al. was filed in the District Court of Harris County, Texas, and subsequently removed to the Business Court of Texas, Eleventh Division (Cause No. 26-BC11B-0016). The complaint names as defendants Firebird LNG, LLC, MAD Energy Limited Partnership, Firebird Equipment Holdco, LLC, Fermi Equipment Holdco, LLC (“Fermi Equipment Holdco”), the Company, and George Wentz. The plaintiff, as assignee of XO Energy Worldwide LLP, alleges that the defendants evaded payment of a brokerage commission allegedly owed in connection with the sale of a contract for six natural gas turbines. As the petition notes, in connection with the transaction, MAD Energy agreed to indemnify the Company and its affiliates against any claims arising out of the engagement of XO Energy, Stephen Murphy, or their affiliates as a broker or finder.
The petition asserts claims for, among other things, violations of the Texas Uniform Fraudulent Transfer Act (and, in the alternative, the Delaware Uniform Voidable Transfers Act), money had and received, tortious interference, civil conspiracy, breach of contract, and quantum meruit, and seeks compensatory damages of not less than $5,985, exemplary damages, avoidance of the challenged transfers, the imposition of a constructive trust and other equitable relief, pre- and post-judgment interest, and attorneys’ fees and costs. The Company and its named affiliates moved to dismiss under Texas Rule of Civil Procedure 91a on March 31, 2026. A hearing on the motion to dismiss was held on July 13, 2026. At the hearing the court took the motion under advisement and issued an order denying the motion to dismiss on August 11, 2026. On September 30, 2026, the parties executed a binding settlement term sheet resolving the action, and the parties subsequently executed a settlement agreement and petitioned the court to dismiss the matter, which was dismissed with prejudice on October 29, 2026. Under the settlement, neither the Company nor any of its subsidiaries will make any payment or provide other consideration, and each party will bear its own attorneys’ fees and costs. The releases in favor of the Company and its subsidiaries became effective upon payment of the settlement amount by MAD Energy, which is a related party of the Company (see Note 2, Significant Accounting Policies — Related Party Transactions) and made the payment under its indemnification of the Company and its affiliates. Because the Company will not make any payment under the settlement and MAD Energy’s payment is not an obligation of the Company, no liability was accrued for this matter as of September 30, 2026.
Litigation — Bayonne
On June 29, 2026, Bayonne Plant Holding, L.L.C. (“Bayonne”) filed a complaint against the Company’s subsidiary Fermi Equipment Holdco in the U.S. District Court for the District of New Jersey (Case No. 2:26-cv-07904-JXN-JBC). The complaint was served on the subsidiary’s registered agent on July 8, 2026. The claims arise out of a June 26, 2025 Equipment Purchase Agreement, as amended, under which Fermi Equipment Holdco purchased power-generation
equipment from Bayonne and agreed to remove the equipment from, and restore, Bayonne’s site in Bayonne, New Jersey. Bayonne alleges that Fermi Equipment Holdco failed to complete the removal and restoration, abandoned the site, and did not pay certain site-access charges, restoration and remediation costs, and related late fees and interest, and asserts claims for breach of contract, account stated, and contractual indemnification. Bayonne seeks damages of no less than approximately $8,500, plus additional late fees, pre- and post-judgment interest, and attorneys’ fees and costs.
The Company intends to vigorously defend against the action. The matter is at a preliminary stage and no discovery has occurred. On August 24, 2026, Fermi Equipment Holdco filed a partial motion to dismiss the complaint, which remains pending. As of September 30, 2026, the Company was unable to determine whether an unfavorable outcome was reasonably possible or to estimate the amount or range of reasonably possible loss, if any, associated with this matter.
Litigation — Class B Unit Reclamation
On July 27, 2026, two principals of a consulting firm that provided services to Fermi LLC, the Company’s predecessor, filed a petition against the Company and its former Chief Executive Officer, in the Business Court of Texas, First Business Court Division (Cause No. 26-BC01B-0066), asserting claims for conversion against both defendants and for breach of contract against the Company, arising out of the reclamation in July 2025 of 25,000 Class B Units of Fermi LLC previously granted to the plaintiffs. The plaintiffs allege that, absent the reclamation, the units would have converted into approximately 11,250,000 shares of the Company’s common stock in connection with the Corporate Conversion and IPO, and they seek monetary relief alleged to exceed $415,000, together with the imposition of a constructive trust on shares or proceeds, interest, attorneys’ fees, and costs. The Company was served with the petition on August 19, 2026, and has filed a motion to compel arbitration and to stay the proceeding, which the plaintiffs opposed on October 1, 2026. The Company filed its reply on October 8, 2026, and on November 12, 2026, the court granted the Company’s motion, ordered the plaintiffs to arbitrate their claims against the Company, and stayed the proceeding in its entirety, including the claim against the Company’s former Chief Executive Officer, pending completion of the arbitration. No discovery has been taken. The Company has concluded that it is not probable that a liability was incurred as of September 30, 2026, and accordingly no liability has been accrued for this matter. An unfavorable outcome is reasonably possible, but the Company is unable to estimate the possible loss or range of loss at this time. The Company does not believe that the amount of monetary relief sought in the petition is a meaningful indicator of its potential liability.
Contingent Consideration
In connection with the Firebird Acquisition, the Company assumed an obligation to pay MAD Energy a net profits interest (the “NPI”). Under the NPI, the Company is obligated to pay 2.5% of the net operating income from the first 1.0 GW of installed dispatchable generation capacity at the Company’s AI infrastructure campus subject to a $100,000 cap on a net present value basis. No amounts were recognized related to the NPI as of September 30, 2026. See 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, 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.
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”) with Siemens Energy, Inc. (“Siemens”) as additional, contingent consideration for the turbines. Under the RCA, the Company is liable to pay Siemens up to $2,000 per turbine per calendar quarter based on the operating reliability of each turbine, and not less than $80 per turbine per quarter, for ten years commencing upon provisional acceptance of the turbines, subject to a maximum of approximately $240,000 on an undiscounted basis. No amounts were recognized under the RCA as of September 30, 2026. See Note 2, Significant Accounting Policies — Contingent Consideration, of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, for information regarding the Company’s accounting policy for contingent consideration.
9. Subsequent Events
Termination of TensorWave Lease
On August 9, 2026, Fermi Campus 1 LLC (the “Landlord”), a wholly owned subsidiary of the Company, entered into a Data Center Lease and Services Agreement (the “TensorWave Lease”) with TensorWave TEX1, LLC (the “Tenant”), a subsidiary of TensorWave Inc., for a build-to-suit data center within Project Matador. On October 9, 2026, the Landlord and the Tenant amended and restated the TensorWave Lease to, among other things, provide that the parties may extend the October 31, 2026 closing date to no later than December 31, 2026. The closing date passed without extension, and on
November 10, 2026, the TensorWave Lease was terminated in accordance with its terms. The TensorWave Lease termination had no effect on the unaudited condensed consolidated financial statements as of and for the periods ended September 30, 2026.
Hyperscaler Agreements
On November 10, 2026, the Company entered into a non-binding letter of intent with an investment-grade hyperscaler for the delivery of approximately 600 MW of powered land at Project Matador. In connection with the letter of intent, the Company and the hyperscaler have entered into a $200,000 prepayment agreement and a $15,000 early construction and site development agreement. These agreements had no effect on the unaudited condensed consolidated financial statements as of and for the periods ended September 30, 2026.
Amendment to Turbine Warehouse Equipment Financing
On October 9, 2026, Fermi Turbine Warehouse LLC and Firebird Equipment Holdco, LLC, as subsidiary guarantor, entered into a Limited Waiver and Amendment No. 1 to the Turbine Warehouse Equipment Financing (“Amendment No. 1”) with MUFG, as administrative agent, and the lenders party thereto. Among other things, Amendment No. 1 set the minimum quarterly principal payment at 5% of the aggregate principal amount of loans outstanding and eliminated the condition under which that payment would have increased, and the administrative agent could have begun marketing the financed equipment, if the Company had not entered into a lease or offtake arrangement for at least 400 MW at Project Matador by November 10, 2026. It did not modify the separate requirement that the Company consummate project financing for the first phase of Project Matador by February 10, 2027, described in Note 5, Debt, net, which remains in effect. The amendment also permitted the transport to and storage of financed equipment at the Project Matador site and at third-party storage facilities, and waived, on a one-time basis, potential defaults arising from the relocation of certain equipment from a port facility in Houston, Texas, and from certain insurance requirements.
In connection with Amendment No. 1, MUFG assigned all of its loans and commitments under the Turbine Warehouse Equipment Financing to a syndicate of new lenders. Fermi Turbine Warehouse LLC paid amendment fees totaling $25,000. The Company is currently evaluating the accounting implications of the amendment and the related loan assignment, and any resulting impacts will be reflected in the Company’s Annual Report on Form 10-K for the year ending December 31, 2026.
Withdrawal of Check-the-Box Election
On October 23, 2026, the Company filed a request with the IRS to withdraw the check-the-box election for Fermi Turbine Holdco LLC (see Note 2, Significant Accounting Policies) so that it remains a disregarded entity for the taxable year ending December 31, 2026, consistent with the Company’s decision not to make a REIT election for that year. Approval of the rescission is anticipated, but is not effective until confirmation of the rescission is received from the IRS.