NET Power Inc.NPWR
NET Power Inc. Fair Value Disclosure
NOTE 4 — Fair Value Measurements
The following table presents the assets and liabilities that the Company measures at fair value on a recurring basis included in the consolidated balance sheets and indicates the level of the valuation inputs the Company utilized to determine the fair value:
| December 31, | December 31, | |||||||||||||||||||
| $ in thousands | Level | 2025 | 2024 | |||||||||||||||||
| Assets | ||||||||||||||||||||
| Available-for-sale investments | 1 | $ | 176,704 | $ | 100,972 | |||||||||||||||
| Short-term investments | 2 | — | 100,000 | |||||||||||||||||
| Total assets | $ | 176,704 | $ | 200,972 | ||||||||||||||||
| Liabilities | ||||||||||||||||||||
| Public Warrants | 1 | $ | 4,310 | $ | 31,034 | |||||||||||||||
| Private Placement Warrants | 3 | 6,540 | 50,249 | |||||||||||||||||
| Earnout Shares | 3 | — | 1,958 | |||||||||||||||||
| Total liabilities | $ | 10,850 | $ | 83,241 | ||||||||||||||||
The following table contains a reconciliation of the beginning and ending balances of recurring Level 3 fair value measurements included in the consolidated statements of operations and comprehensive loss:
| Year Ended December 31, | ||||||||||||||
| $ in thousands | 2025 | 2024 | ||||||||||||
| Balance of recurring Level 3 liabilities at beginning of period | $ | 52,207 | $ | 38,622 | ||||||||||
| Change in Earnout Shares liability | (1,958) | 287 | ||||||||||||
| Change in Private Placement Warrant liability | (43,709) | 13,298 | ||||||||||||
| Balance of recurring Level 3 liabilities at end of period | $ | 6,540 | $ | 52,207 | ||||||||||
Short-term Investments
Short-term investments are valued at cost, which approximates fair value. The fair value of the short-term investments is considered a Level 2 fair value measurement because cost basis is observable, but not in an active market.
Available-for-sale Securities
The fair value of the available-for-sale investments is classified as a Level 1 fair value measurement because the investments are valued using the most recent quoted prices for identical assets in active markets.
Warrants
The Public Warrants are exercisable for 8,620,535 shares of Class A Common Stock at a price of $11.50 per share. The Company may redeem the Public Warrants for $0.01 if the last reported trading price of the Company’s Class A Common Stock price equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period. Additionally, the Public Warrants may be redeemed if the last reported trading price of the Company’s Class A Common Stock equals or exceeds $10.00 and is below $18.00 by paying a make-whole premium. The Public Warrants expire June 8, 2028. The Public Warrants are valued using their quoted and publicly-available market prices. Since their fair value is predicated on quoted prices in an active market for identical instruments, the fair value of the Public Warrants is considered a Level 1 fair value measurement.
The Private Placement Warrants are exercisable for 10,900,000 shares of Class A Common Stock at a price of $11.50 per share. The Private Placement Warrants expire June 8, 2028. The Private Placement Warrants are exercisable on a cashless basis and are non-redeemable as long as they are held by the initial purchasers or their permitted transferees. The Private Placement Warrants and Class A Common Stock issuable upon exercise of the Private Placement Warrants are entitled to registration rights.
The Company uses a Black-Scholes Merton Model to value the Private Placement Warrants. Key inputs into the Black-Scholes Merton Model include the last Class A Common Stock closing price of $2.28 as of December 31, 2025 with a strike price of $11.50 per share. The volatility assumption is based on a blended average of equity volatility of publicly traded companies within the Company’s peer group, the Company's own historical volatility, and the implied volatility of the Public Warrants. The fair value of the Private Placement Warrants is considered a Level 3 fair value measurement.
The following table contains the key inputs used in the valuations of the Private Placement Warrants:
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Term (in years) | 2.44 | 3.44 | ||||||||||||
| Volatility | 104.0 | % | 59.3 | % | ||||||||||
| Risk-free rate | 3.5 | % | 4.2 | % | ||||||||||
Earnout Shares
The fair value of the Earnout Shares is estimated using a Monte Carlo simulation. The Monte Carlo simulation considers daily simulated stock prices as a proxy for the Company’s daily volume-weighted average share price. Historically, the volatility assumption is based on a blended average of equity volatility of publicly traded companies within the Company’s peer group, the historical volatility of the Company’s Class A common stock, and the implied volatility of the Public Warrants. For the valuation as of December 31, 2025, the volatility assumption is based on the Company’s own historical volatility, implied volatility on the Company’s own common stock options, and the implied volatility of the Public Warrants.
The following table contains the key inputs used in the valuations of the Earnout Shares:
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Term (in years) | 0.44 | 1.43 | ||||||||||||
| Volatility | 105.0 | % | 59.7 | % | ||||||||||
| Risk-free rate | 3.6 | % | 4.1 | % | ||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 9, 2026 | Showing above |
| 2024 | Mar 10, 2025 | |
| 2023 | Mar 11, 2024 | |
| 2022 | Mar 2, 2023 | |
| 2021 | Mar 30, 2022 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.