NextDecade Corp. - Quarter Report: 2022 September (Form 10-Q)

next20220930_10q.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-36842

NEXTDECADE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		46-5723951
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

1000 Louisiana Street, Suite 3900, Houston, Texas 77002

(Address of principal executive offices) (Zip Code)

(713) 574-1880

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:		Trading Symbol		Name of each exchange on which registered:
Common Stock, $0.0001 par value		NEXT		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 4, 2022, the issuer had 144,392,130 shares of common stock outstanding.

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NEXTDECADE CORPORATION

FORM 10-Q FOR THE QUARTER ENDED September 30, 2022

TABLE OF CONTENTS

	Page
Organizational Structure
Part I. Financial Information	2
Item 1. Consolidated Financial Statements	2
Consolidated Balance Sheets	2
Consolidated Statements of Operations	3
Consolidated Statements of Stockholders’ Equity and Convertible Preferred Stock	4
Consolidated Statements of Cash Flows	6
Notes to Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3. Quantitative and Qualitative Disclosures About Market Risk	19
Item 4. Controls and Procedures	19
Part II. Other Information	20
Item 1. Legal Proceedings	20
Item 1A. Risk Factors	20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3. Defaults Upon Senior Securities	20
Item 4. Mine Safety Disclosures	20
Item 5. Other Information	20
Item 6. Exhibits	21
Signatures	22

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Organizational Structure

The following diagram depicts our abbreviated organizational structure as of September 30, 2022 with references to the names of certain entities discussed in this Quarterly Report on Form 10-Q.

Unless the context requires otherwise, references to “NextDecade,” the “Company,” “we,” “us” and “our” refer to NextDecade Corporation (NASDAQ: NEXT) and its consolidated subsidiaries.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

NextDecade Corporation

Consolidated Balance Sheets

(in thousands, except per share data)

(unaudited)

	*September 30,*			*December 31,*
	*2022*			*2021*
Assets
Current assets
Cash and cash equivalents	$	109,223		$	25,552
Prepaid expenses and other current assets		1,309			835
Total current assets		110,532			26,387
Property, plant and equipment, net		182,818			173,816
Operating lease right-of-use assets, net		1,065			590
Other non-current assets, net		26,301			21,312
Total assets	$	320,716		$	222,105

Liabilities, Convertible Preferred Stock and Stockholders’ Equity
Current liabilities
Accounts payable	$	4,887		$	281
Share-based compensation liability		182			182
Accrued liabilities and other current liabilities		10,988			5,791
Current common stock warrant liabilities		—			1,376
Current operating lease liabilities		968			596
Total current liabilities		17,025			8,226
Non-current common stock warrant liabilities		8,234			2,587
Non-current operating lease liabilities		143			—
Other non-current liabilities		23,000			23,000
Total liabilities		48,402			33,813

Commitments and contingencies (Note 13)

Series A Convertible Preferred Stock, $1,000 per share liquidation preference; Issued and outstanding: 80,516 shares and 73,713 shares at September 30, 2022 and December 31, 2021, respectively		70,594			63,791
Series B Convertible Preferred Stock, $1,000 per share liquidation preference; Issued and outstanding: 76,922 shares and 70,433 shares at September 30, 2022 and December 31, 2021, respectively		71,091			64,602
Series C Convertible Preferred Stock, $1,000 per share liquidation preference; Issued and outstanding: 57,630 shares and 42,490 shares at September 30, 2022 and December 31, 2021, respectively		54,273			40,007
Stockholders’ equity
Common stock, $0.0001 par value Authorized: 480.0 million shares at September 30, 2022 and December 31, 2021; Issued and outstanding: 143.2 million shares and 120.8 million shares at September 30, 2022 and December 31, 2021, respectively		14			12
Treasury stock: 889,713 shares and 346,126 shares at September 30, 2022 and December 31, 2021, respectively, at cost		(4,127	)		(1,315	)
Preferred stock, $0.0001 par value Authorized: 0.5 million, after designation of the Convertible Preferred Stock Issued and outstanding: none at September 30, 2022 and December 31, 2021		—			—
Additional paid-in-capital		291,684			191,264
Accumulated deficit		(211,215	)		(170,069	)
Total stockholders’ equity		76,356			19,892
Total liabilities, convertible preferred stock and stockholders’ equity	$	320,716		$	222,105

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NextDecade Corporation

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

	*Three Months Ended*						*Nine Months Ended*
	*September 30,*						*September 30,*
	*2022*			*2021*			*2022*			*2021*
Revenues	$	—		$	—		$	—		$	—
Operating expenses
General and administrative expense		14,616			2,937			29,233			10,840
Development expense, net		1,133			—			3,870			—
Lease expense		299			240			808			678
Depreciation expense		41			43			129			136
Total operating expenses		16,089			3,220			34,040			11,654
Total operating loss		(16,089	)		(3,220	)		(34,040	)		(11,654	)
Other income (expense)
Gain (loss) on common stock warrant liabilities		(2,773	)		4,442			(7,192	)		(2,363	)
Other, net		65			—			86			1
Total other expense		(2,708	)		4,442			(7,106	)		(2,362	)
Net loss attributable to NextDecade Corporation		(18,797	)		1,222			(41,146	)		(14,016	)
Preferred stock dividends		(6,248	)		(5,264	)		(17,777	)		(13,015	)
Deemed dividends on Series A Convertible Preferred Stock		—			(16	)		—			(47	)
Net loss attributable to common stockholders	$	(25,045	)	$	(4,058	)	$	(58,923	)	$	(27,078	)

Net loss per common share - basic and diluted	$	(0.19	)	$	(0.03	)	$	(0.47	)	$	(0.23	)

Weighted average shares outstanding - basic and diluted		129,418			119,374			125,716			118,677

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NextDecade Corporation

Consolidated Statement of Stockholders’ Equity and Convertible Preferred Stock

(in thousands)

(unaudited)

	*For the Three Months Ended September 30, 2022*
	*Common Stock*					*Treasury Stock*														*Series A*		*Series B*		*Series C*
				*Par*							*Additional*						*Total*			*Convertible*		*Convertible*		*Convertible*
				*Value*							*Paid-in*			*Accumulated*			*Stockholders’*			*Preferred*		*Preferred*		*Preferred*
	*Shares*			*Amount*		*Shares*		*Amount*			*Capital*			*Deficit*			*Equity*			*Stock*		*Stock*		*Stock*
Balance at June 30, 2022		127,254		$	13		742	$	(3,067	)	$	213,749		$	(192,418	)	$	18,277		$	68,259	$	68,863	$	52,604
Share-based compensation		—			—		—		—			3,041			—			3,041			—		—		—
Restricted stock vesting		620			—		—		—			—			—			—			—		—		—
Shares repurchased related to share-based compensation		(147	)		—		147		(1,060	)		—			—			(1,060	)		—		—		—
Issuance of common stock, net		15,454			1		—		—			81,142			—			81,143			—		—		—
Preferred stock dividends		—			—		—		—			(6,248	)		—			(6,248	)		2,335		2,228		1,669
Net income		—			—		—		—			—			(18,797	)		(18,797	)		—		—		—
Balance at September 30, 2022		143,181		$	14		889	$	(4,127	)	$	291,684		$	(211,215	)	$	76,356		$	70,594	$	71,091	$	54,273

	*For the Nine Months Ended September 30, 2022*
	*Common Stock*					*Treasury Stock*														*Series A*		*Series B*		*Series C*
				*Par*							*Additional*						*Total*			*Convertible*		*Convertible*		*Convertible*
				*Value*							*Paid-in*			*Accumulated*			*Stockholders’*			*Preferred*		*Preferred*		*Preferred*
	*Shares*			*Amount*		*Shares*		*Amount*			*Capital*			*Deficit*			*Equity*			*Stock*		*Stock*		*Stock*
Balance at December 31, 2021		120,838		$	12		346	$	(1,315	)	$	191,264		$	(170,069	)	$	19,892		$	63,791	$	64,602	$	40,007
Share-based compensation		—			—		—		—			3,555			—			3,555			—		—		—
Restricted stock vesting		2,293			—		—		—			—			—			—			—		—		—
Shares repurchased related to share-based compensation		(543	)		—		543		(2,812	)		—			—			(2,812	)		—		—		—
Issuance of common stock, net		20,072			2		—		—			111,078			—			111,080			—		—		—
Exercise of common stock warrants		521			—		—		—			3,564			—			3,564			—		—		—
Issuance of Series C Convertible Preferred Stock		—			—		—		—			—			—			—			—		—		9,836
Preferred stock dividends		—			—		—		—			(17,777	)		—			(17,777	)		6,803		6,489		4,430
Net loss		—			—		—		—			—			(41,146	)		(41,146	)		—		—		—
Balance at September 30, 2022		143,181		$	14		889	$	(4,127	)	$	291,684		$	(211,215	)	$	76,356		$	70,594	$	71,091	$	54,273

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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	For the Three Months Ended September 30, 2021
	Common Stock					Treasury Stock														Series A		Series B		Series C
				Par							Additional						Total			Convertible		Convertible		Convertible
				Value							Paid-in			Accumulated			Stockholders’			Preferred		Preferred		Preferred
	Shares			Amount		Shares		Amount			Capital			Deficit			Equity			Stock		Stock		Stock
Balance at June 30, 2021		118,482		$	12		300	$	(1,171	)	$	199,553		$	(163,268	)		35,126		$	59,509	$	60,549	$	33,173
Share-based compensation		—			—		—		—			(3,653	)		—			(3,653	)		—		—		—
Restricted stock vesting		285			—		—		—			—			—			—			—		—		—
Shares repurchased related to share-based compensation		(44	)		—		44		(139	)		—			—			(139	)		—		—		—
Issuance of common stock, net		116			—		—		—			151			—			151			—		—		—
Stock dividend		399			—		—		—			—			—			—			—		—		—
Exercise of common stock warrants		1,485			—		—		—			4,365			—			4,365			—		—		—
Issuance of Series C Convertible Preferred Stock		—			—		—		—			—			—			—			—		—		4,634
Preferred stock dividends		—			—		—		—			(5,264	)		—			(5,264	)		2,089		1,993		1,159
Deemed dividends - accretion of beneficial conversion feature		—			—		—		—			(16	)		—			(16	)		16		—		—
Net loss		—			—		—		—			—			1,222			1,222			—		—		—
Balance at September 30, 2021		120,723		$	12		344	$	(1,310	)	$	195,136		$	(162,046	)	$	31,792		$	61,614	$	62,542	$	38,966

	*For the Nine Months Ended September 30, 2021*
	*Common Stock*					*Treasury Stock*														*Series A*		*Series B*		*Series C*
				*Par*							*Additional*						*Total*			*Convertible*		*Convertible*		*Convertible*
				*Value*							*Paid-in*			*Accumulated*			*Stockholders’*			*Preferred*		*Preferred*		*Preferred*
	*Shares*			*Amount*		*Shares*		*Amount*			*Capital*			*Deficit*			*Equity*			*Stock*		*Stock*		*Stock*
Balance at December 31, 2020		117,829		$	12		249	$	(1,031	)	$	209,481		$	(148,030	)		60,432		$	55,522	$	56,781	$	-
Share-based compensation		—			—		—		—			(5,799	)		—			(5,799	)		—		—		—
Restricted stock vesting		590			—		—		—			—			—			—			—		—		—
Shares repurchased related to share-based compensation		(95	)		—		95		(279	)		—			—			(279	)		—		—		—
Issuance of common stock, net		116			—		—		—			151			—			151			—		—		—
Stock dividend		798			—		—		—			—			—			—			—		—		—
Exercise of common stock warrants		1,485			—		—		—			4,365			—			4,365			—		—		—
Issuance of Series C Convertible Preferred Stock		—			—		—		—			—			—			—			—		—		37,807
Preferred stock dividends		—			—		—		—			(13,015	)		—			(13,015	)		6,045		5,761		1,159
Deemed dividends - accretion of beneficial conversion feature		—			—		—		—			(47	)		—			(47	)		47		—		—
Net loss		—			—		—		—			—			(14,016	)		(14,016	)		—		—		—
Balance at September 30, 2021		120,723		$	12		344	$	(1,310	)	$	195,136		$	(162,046	)	$	31,792		$	61,614	$	62,542	$	38,966

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NextDecade Corporation.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	*Nine Months Ended*
	*September 30,*
	*2022*			*2021*
Operating activities:
Net loss attributable to NextDecade Corporation	$	(41,146	)	$	(14,016	)
Adjustment to reconcile net loss to net cash used in operating activities
Depreciation		129			136
Share-based compensation expense (forfeiture)		3,555			(5,571	)
Loss on common stock warrant liabilities		7,192			2,363
Amortization of right-of-use assets		522			414
Amortization of other non-current assets		354			1,062
Changes in operating assets and liabilities:
Prepaid expenses		(460	)		(234	)
Accounts payable		294			76
Operating lease liabilities		(482	)		(396	)
Accrued expenses and other liabilities		2,081			3,914
Net cash used in operating activities		(27,961	)		(12,252	)
Investing activities:
Acquisition of property, plant and equipment		(5,673	)		(8,390	)
Acquisition of other non-current assets		(5,343	)		(4,666	)
Net cash used in investing activities		(11,016	)		(13,056	)
Financing activities:
Proceeds from sale of Series C Convertible Preferred Stock		10,500			39,500
Proceeds from sale of common stock		115,000			389
Equity issuance costs		(2	)		(117	)
Preferred stock dividends		(38	)		(50	)
Shares repurchased related to share-based compensation		(2,812	)		(279	)
Net cash provided by financing activities		122,648			39,443
Net increase in cash and cash equivalents		83,671			14,135
Cash and cash equivalents – beginning of period		25,552			22,608
Cash and cash equivalents – end of period	$	109,223		$	36,743

Non-cash investing activities:
Accounts payable for acquisition of property, plant and equipment	$	470		$	329
Accrued liabilities for acquisition of property, plant and equipment		3,904			996
Pipeline assets obtained in exchange for other non-current liabilities		—			84
Non-cash financing activities:
Paid-in-kind dividends on Convertible Preferred Stock		17,722			12,965
Accounts payable for equity issuance costs		3,888			148
Accretion of deemed dividends on Series A Convertible Preferred Stock		—			47
Accrued liabilities for equity issuance costs		83			35

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NextDecade Corporation

Notes to Consolidated Financial Statements

(unaudited)

Note 1 — Background and Basis of Presentation

NextDecade Corporation engages in development activities related to the liquefaction and sale of liquefied natural gas (“LNG”) and the capture and storage of CO₂ emissions. We have focused our development activities on the Rio Grande LNG terminal facility at the Port of Brownsville in southern Texas (the “Terminal”), a carbon capture and storage project at the Terminal (the “Terminal CCS project”) and other carbon capture and storage projects (“CCS projects”) with third-party industrial source facilities.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and disclosures required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2021. In our opinion, all adjustments, consisting only of normal recurring items, which are considered necessary for a fair presentation of the unaudited consolidated financial statements, have been included. The results of operations for the three months ended September 30, 2022 are not necessarily indicative of the operating results for the full year.

Certain reclassifications have been made to conform prior period information to the current presentation. The reclassifications did not have a material effect on our consolidated financial position, results of operations or cash flows.

The Company has incurred operating losses since its inception and management expects operating losses and negative cash flows to continue for the foreseeable future and, as a result, the Company will require additional capital to fund its operations and execute its business plan. As of September 30, 2022, the Company had $109.2 million in cash and cash equivalents, which may not be sufficient to fund the Company's planned operations through one year after the date the consolidated financial statements are issued. Accordingly, there is substantial doubt about the Company's ability to continue as a going concern. The analysis used to determine the Company's ability to continue as a going concern does not include cash sources outside of the Company's direct control that management expects to be available within the next twelve months.

The Company plans to alleviate the going concern issue by obtaining sufficient funding through additional equity, equity-based or debt instruments or any other means and managing certain operating and overhead costs. The Company's ability to raise additional capital in the equity and debt markets, should the Company choose to do so, is dependent on a number of factors, including, but not limited to, the market demand for the Company's equity or debt securities, which itself is subject to a number of business risks and uncertainties, as well as the uncertainty that the Company would be able to raise such additional capital at a price or on terms that are satisfactory to the Company. In the event the Company is unable to obtain sufficient additional funding, there can be no assurance that it will be able to continue as a going concern.

These consolidated financial statements have been prepared on a going concern basis and do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary in the event the Company can no longer continue as a going concern.

Note 2 — Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

	*September 30,*		*December 31,*
	*2022*		*2021*
Prepaid subscriptions	$	278	$	85
Prepaid insurance		484		272
Prepaid marketing and sponsorships		—		60
Other		547		418
Total prepaid expenses and other current assets	$	1,309	$	835

Note 3 — Sale of Equity Interests in Rio Bravo

On March 2, 2020, NextDecade LLC closed the transactions (the “Closing”) contemplated by that certain Omnibus Agreement, dated February 13, 2020, with Spectra Energy Transmission II, LLC, a wholly owned subsidiary of Enbridge Inc. (“Buyer”), pursuant to which NextDecade LLC sold one hundred percent of the equity interests (the “Equity Interests”) in Rio Bravo Pipeline Company, LLC (“Rio Bravo”) to Buyer for consideration of approximately $19.4 million. Buyer paid $15.0 million of the Purchase Price to NextDecade LLC at the Closing and the remainder will be paid within five business days after the date that Rio Grande has received, after a final positive investment decision, the initial funding of financing for the development, construction and operation of the Terminal. Rio Bravo is developing a proposed interstate natural gas pipeline (the “Pipeline”) to supply natural gas to the Terminal. In connection with the Closing, Rio Grande LNG Gas Supply LLC, an indirect wholly-owned subsidiary of the Company (“Rio Grande Gas Supply”), entered into (i) a Precedent Agreement for Firm Natural Gas Transportation Service for the Rio Bravo Pipeline (the “RBPL Precedent Agreement”) with Rio Bravo and (ii) a Precedent Agreement for Natural Gas Transportation Service (the “VCP Precedent Agreement”) with Valley Crossing Pipeline, LLC (“VCP”). VCP and, as of the Closing, Rio Bravo are wholly owned subsidiaries of Enbridge Inc. The Valley Crossing Pipeline is owned and operated by VCP.

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Pursuant to the RBPL Precedent Agreement, Rio Bravo agreed to provide Rio Grande Gas Supply with firm natural gas transportation services on the Pipeline in a quantity sufficient to match the full operational capacity of each proposed liquefaction train of the Terminal. Rio Bravo’s obligation to construct, install, own, operate and maintain the Pipeline is conditioned on its receipt, no later than December 31, 2023, of notice that Rio Grande Gas Supply or its affiliate has issued a full notice to proceed to the engineering, procurement and construction contractor (the “EPC Contractor”) for the construction of the Terminal. Under the RBPL Precedent Agreement, in consideration for the provision of such firm transportation services, Rio Bravo will be remunerated on a dollar-per-dekatherm, take-or-pay basis, subject to certain adjustments, over a term of at least twenty years, all in compliance with the federal and state authorizations associated with the Pipeline.

Pursuant to the VCP Precedent Agreement, VCP agreed to provide Rio Grande Gas Supply with natural gas transportation services on the Valley Crossing Pipeline in a quantity sufficient to match the commissioning requirements of each proposed liquefaction train of the Terminal. VCP’s obligation to construct, install, own, operate and maintain the necessary interconnection to the Terminal and the Pipeline is conditioned on its receipt, no later than December 31, 2023, of notice that Rio Grande Gas Supply or its affiliate has issued a full notice to proceed to the EPC Contractor for the construction of the Terminal. VCP will be responsible, at its sole cost and expense, to construct, install, own, operate and maintain the tap, riser and valve facilities (the “VCP Transporter Facilities”), which shall connect to Rio Grande Gas Supply’s custody transfer meter and such other facilities as necessary in order for the Terminal to receive gas from the VCP Transporter Facilities (the “Rio Grande Gas Supply Facilities”). Rio Grande Gas Supply will be responsible, at its sole cost and expense, to construct, install, own, operate and maintain the Rio Grande Gas Supply Facilities. Under the VCP Precedent Agreement, in consideration for the provision of the commissioning transportation services, VCP will be remunerated on the same dollar-per-dekatherm, take-or-pay basis as set forth in the RBPL Precedent Agreement for the duration of such commissioning services, all in compliance with the federal and state authorizations associated with the Valley Crossing Pipeline.

If Rio Grande or its affiliate fails to issue a full notice to proceed to the EPC Contractor on or prior to December 31, 2023, Buyer has the right to sell the Equity Interests back to NextDecade LLC and NextDecade LLC has the right to repurchase the Equity Interests from Buyer, in each case at a price not to exceed $23 million. Accordingly, the proceeds from the sale of the Equity Interests and additional costs incurred by Buyer are presented as a non-current liability and the assets of Rio Bravo have not been de-recognized in the consolidated balance sheet at September 30, 2022.

Note 4 — Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):

	*September 30,*			*December 31,*
	*2022*			*2021*
Fixed Assets
Computers	$	697		$	633
Furniture, fixtures, and equipment		664			464
Leasehold improvements		101			101
Total fixed assets		1,462			1,198
Less: accumulated depreciation		(973	)		(844	)
Total fixed assets, net		489			354
Project Assets (not placed in service)
Terminal		161,312			152,445
Pipeline		21,017			21,017
Total Terminal and Pipeline assets		182,329			173,462
Total property, plant and equipment, net	$	182,818		$	173,816

Depreciation expense was $41 thousand and $43 thousand for the three months ended September 30, 2022 and 2021, respectively, and $129 thousand and $136 thousand for the nine months ended September 30, 2022 and 2021, respectively.

Note 5 — Leases

Our leased assets primarily consist of office space.

Operating lease right-of-use assets are as follows (in thousands):

	*September 30,*		*December 31,*
	*2022*		*2021*
Office leases	$	1,065	$	590
Total operating lease right-of-use assets, net	$	1,065	$	590

Operating lease liabilities are as follows (in thousands):

	*September 30,*		*December 31,*
	*2022*		*2021*
Office leases	$	968	$	596
Total current lease liabilities	$	968	$	596
Non-current office leases		143		—
Total lease liabilities	$	1,111	$	596

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Operating lease expense is as follows (in thousands):

	*Three Months Ended September 30,*				*Nine Months Ended September 30,*
	*2022*		*2021*		*2022*		*2021*
Office leases	$	230	$	156	$	608	$	470
Total operating lease expense		230		156		608		470
Short-term lease expense		69		84		200		208
Total lease expense	$	299	$	240	$	808	$	678

Maturity of operating lease liabilities as of September 30, 2022 are as follows (in thousands, except lease term and discount rate):

2022 (remaining)	$	169
2023		1,027
2024		—
2025		—
2026		—
Thereafter		—
Total undiscounted lease payments		1,196
Discount to present value		(85	)
Present value of lease liabilities	$	1,111

Weighted average remaining lease term - years		1.3
Weighted average discount rate - percent		12.0

Other information related to our operating leases is as follows (in thousands):

	*Nine Months Ended September 30,*
	*2022*		*2021*
Cash paid for amounts included in the measurement of operating lease liabilities:
Cash flows from operating activities		$ 684		$ 509
Noncash right-of-use assets recorded for operating lease liabilities:
In exchange for new operating lease liabilities during the period		1,332		712

Note 6 — Other Non-Current Assets

Other non-current assets consisted of the following (in thousands):

	*September 30,*		*December 31,*
	*2022*		*2021*
Permitting costs⁽¹⁾	$	8,250	$	7,644
Enterprise resource planning system, net		—		354
Rio Grande Site Lease initial direct costs		18,051		13,314
Total other non-current assets, net	$	26,301	$	21,312

⁽¹⁾

Permitting costs primarily represent costs incurred in connection with permit applications to the United States Army Corps of Engineers and the U.S. Fish and Wildlife Service for mitigation measures for potential impacts to wetlands and habitat that may be caused by the construction of the Terminal and the Pipeline.

Note 7 — Accrued Liabilities and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	*September 30,*		*December 31,*
	*2022*		*2021*
Employee compensation expense	$	4,619	$	4,358
Terminal costs		3,905		926
Accrued legal services		485		70
Other accrued liabilities		1,979		437
Total accrued liabilities and other current liabilities	$	10,988	$	5,791

Note 8 – Preferred Stock and Common Stock Warrants

Preferred Stock

As of December 31, 2021, the Company had outstanding 73,713 shares of Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), 70,433 shares of Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”) and 42,490 shares of Series C Convertible Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock” and, together with the Series A Preferred Stock and the Series B Preferred Stock, the “Convertible Preferred Stock”).

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In March 2022, the Company sold an aggregate of 10,500 shares of Series C Preferred Stock (the “2022 Series C Preferred Stock”), together with associated warrants to purchase Company common stock (the “2022 Series C Warrants”) at $1,000 per share for an aggregate purchase price of $10.5 million and issued an additional 210 shares of Series C Preferred Stock in aggregate as origination fees to the purchasers of the Series C Preferred Stock.

Net proceeds from the sales of the 2022 Series C Preferred Stock were allocated on a fair value basis to the 2022 Series C Warrants and on a relative fair value basis to the 2022 Series C Preferred Stock. The allocation of net cash proceeds is as follows (in thousands):

				Allocation of Proceeds
						2022 Series C
				*2022 Series C*		*Preferred*
				*Warrants*		*Stock*
Gross proceeds	$	10,500
Equity issuance costs		(20	)
Net proceeds - Initial Fair Value Allocation	$	10,480		$	644	$	9,836
Per balance sheet upon issuance				$	644	$	9,836

As of September 30, 2022, shares of Series A Preferred Stock and Series B Preferred Stock were convertible into shares of Company common stock at a conversion price of approximately $5.48 per share and $5.53 per share, respectively, and shares of Series C Preferred Stock were convertible into shares of Company common stock at a weighted average conversion price of approximately $2.98 per share.

The Company has the option to convert all, but not less than all, of the Convertible Preferred Stock into shares of Company common stock at the applicable conversion price on any date on which the volume weighted average trading price of shares of Company common stock for each trading day during any 60 of the prior 90 trading days is equal to or greater than 175% of the Series B Conversion Price, in each case subject to certain terms and conditions. Furthermore, the Company must convert all of the Convertible Preferred Stock into shares of Company common stock at the applicable conversion price on the earlier of (i) ten (10) business days following an FID Event, as defined in the certificates of designations of the Convertible Preferred Stock, and (ii) the respective dates that are the tenth (10th) anniversaries of the closings of the issuances of the Convertible Preferred Stock, as applicable.

The shares of Convertible Preferred Stock bear dividends at a rate of 12% per annum, which are cumulative and accrue daily from the respective dates of issuance on the $1,000 stated value. Such dividends are payable quarterly and may be paid in cash or in-kind. During the nine months ended September 30, 2022 and 2021, the Company paid-in-kind $17.7 million and $13.0 million of dividends, respectively, to the holders of the Convertible Preferred Stock. On October 12, 2022, the Company declared dividends to the holders of the Convertible Preferred Stock as of the close of business on September 15, 2022. On October 17, 2022, the Company paid-in-kind $6.5 million of dividends to the holders of the Convertible Preferred Stock.

Common Stock Warrants

The Company has issued warrants exercisable to purchase Company common stock in connection with its issuances of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (collectively, the “Common Stock Warrants”). The Company revalues the Common Stock Warrants at each balance sheet date and recognized a loss of $2.8 million and a gain of $4.4 million during the three months ended September 30, 2022 and 2021, respectively, and a loss of $7.2 million and $2.4 million for the nine months ended September 30, 2022 and 2021, respectively. The Common Stock Warrant liabilities are included in Level 3 of the fair value hierarchy.

The assumptions used in the Monte Carlo simulation model to estimate the fair value of the Common Stock Warrants are as follows:

	*September 30,*			*December 31,*
	*2022*			*2021*
Stock price	$	6.02		$	2.85
Exercise price	$	0.01		$	0.01
Risk-free rate		4.2	%		0.1	%
Volatility		55.9	%		62.6	%
Term (years)		2.0			1.6

Note 9 — Stockholders' Equity

Common Stock Purchase Agreements

On April 6, 2022, the Company entered into a common stock purchase agreement (the “Stock Purchase Agreement”) with HGC NEXT INV LLC (the “Purchaser”), pursuant to which the Company sold 4,618,226 shares of the Company's common stock to the Purchaser, at a purchase price of $6.496 per share for an aggregate purchase price of approximately $30 million. The consummation of the transactions contemplated by the Stock Purchase Agreement occurred on April 7, 2022.

On September 14, 2022, the Company entered into a common stock purchase agreement for a private placement (the “Private Placement”) with several institutional investors (collectively, the “Purchasers”), pursuant to which the Company agreed to sell, and the Purchasers severally agreed to purchase, an aggregate of 15,454,160 shares of the Company’s common stock at a purchase price of $5.50 per share for an aggregate purchase price of approximately $85.0 million. The Private Placement closed on September 19, 2022.

Common Stock Warrants

During the nine months ended September 30, 2022, Common Stock Warrants were exercised by certain holders of Series B Preferred Stock. In connection with the exercises of Common Stock Warrants, the Company issued an aggregate of 520,335 shares of Company common stock.

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Note 10 — Net Loss Per Share

The following table (in thousands, except for loss per share) reconciles basic and diluted weighted average common shares outstanding for each of the nine months ended September 30, 2022 and 2021:

	*Three Months Ended*						*Nine Months Ended*
	*September 30,*						*September 30,*
	*2022*			*2021*			*2022*			*2021*
Weighted average common shares outstanding:
Basic		129,418			119,374			125,716			118,677
Dilutive unvested stock, convertible preferred stock, Common Stock Warrants and IPO Warrants		—			—			—			—
Diluted		129,418			119,374			125,716			118,677

Basic and diluted net loss per share attributable to common stockholders	$	(0.19	)	$	(0.03	)	$	(0.47	)	$	(0.23	)

Potentially dilutive securities not included in the diluted net loss per share computations because their effect would have been anti-dilutive were as follows (in thousands):

	*Three Months Ended*				*Nine Months Ended*
	*September 30,*				*September 30,*
	*2022*		*2021*		*2022*		*2021*
Unvested stock and stock units ⁽¹⁾		1,918		1,831		1,751		1,581
Convertible preferred stock		47,707		34,095		45,653		29,174
Common Stock Warrants		1,240		2,510		1,388		2,486
IPO Warrants⁽²⁾		—		12,082		—		12,082
Total potentially dilutive common shares		50,865		50,518		48,792		45,323

⁽¹⁾	Includes the impact of unvested shares containing performance conditions to the extent that the underlying performance conditions are satisfied based on actual results as of the respective dates.

⁽²⁾	The IPO Warrants were issued in connection with our initial public offering in 2015 and expired on July 24, 2022.

Note 11 — Share-based Compensation

We have granted shares of Company common stock, restricted Company common stock and restricted stock units to employees, consultants and non-employee directors under our 2017 Omnibus Incentive Plan, as amended (the “2017 Plan”).

Total share-based compensation consisted of the following (in thousands):

	*Three Months Ended*					*Nine Months Ended*
	*September 30,*					*September 30,*
	*2022*		*2021*			*2022*		*2021*
Share-based compensation expense (forfeiture):
Equity awards	$	3,041	$	(3,653	)	$	3,555	$	(5,799	)
Liability awards		—		—			—		—
Total share-based compensation (forfeiture)		3,041		(3,653	)		3,555		(5,799	)
Capitalized share-based compensation		—		944			—		228
Total share-based compensation expense (forfeiture)	$	3,041	$	(2,709	)	$	3,555	$	(5,571	)

Note 12 — Income Taxes

Due to our cumulative loss position, we have established a full valuation allowance against our deferred tax assets at September 30, 2022 and December 31, 2021. Due to our full valuation allowance, we have not recorded a provision for federal or state income taxes during either of the three and nine months ended September 30, 2022 or 2021.

Note 13 — Commitments and Contingencies

Obligation under LNG Sale and Purchase Agreement

In March 2019, we entered into a 20-year sale and purchase agreement (the “SPA”) with Shell NA LNG LLC (“Shell”) for the supply of approximately two million tonnes per annum of liquefied natural gas from the Terminal. Pursuant to the SPA, Shell will purchase LNG on a free-on-board (“FOB”) basis starting from the date the first liquefaction train of the Terminal that is commercially operable, with approximately three-quarters of the purchased LNG volume indexed to Brent and the remaining volume indexed to domestic United States gas indices, including Henry Hub.

In the first quarter of 2020, pursuant to the terms of the SPA, the SPA became effective upon the conditions precedent in the SPA being satisfied or waived. The SPA obligates Rio Grande to deliver the contracted volumes of LNG to Shell at the FOB delivery point, subject to the first liquefaction train at the Terminal being commercially operable.

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Other Commitments

On March 6, 2019, Rio Grande entered into a lease agreement (the “Rio Grande Site Lease”) with the Brownsville Navigation District of Cameron County, Texas (“BND”) for the lease by Rio Grande of approximately 984 acres of land situated in Brownsville, Cameron County, Texas for the purposes of constructing, operating, and maintaining (i) a liquefied natural gas facility and export terminal and (ii) gas treatment and gas pipeline facilities. On April 20, 2022, Rio Grande and the BND amended the Rio Grande Site Lease (the “Rio Grande Site Lease Amendment”) to extend the effective date for commencing the Rio Grande Site Lease to May 6, 2023 (the “Effective Date”).

In connection with the Rio Grande Site Lease Amendment, Rio Grande is committed to pay approximately $1.5 million per quarter to the BND through the earlier of the Effective Date and lease commencement.

In the fourth quarter of 2021, Rio Grande entered into an amended agreement for wetland mitigation measures. In connection with the amended agreement, Rio Grande is committed to spend approximately $0.5 million during 2022.

Legal Proceedings

From time to time the Company may be subject to various claims and legal actions that arise in the ordinary course of business. As of September 30, 2022, management is not aware of any claims or legal actions that, separately or in the aggregate, are likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows, although the Company cannot guarantee that a material adverse effect will not occur.

Note 14 — Recent Accounting Pronouncements

The following table provides a brief description of recent accounting standards that have been adopted by the Company during the reporting period:

Standard		Description		Date of Adoption		Effect on our Consolidated Financial Statements or Other Significant Matters
ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in Entity's Own Equity		This standard simplifies the accounting for convertible instruments primarily by eliminating the existing cash conversion and beneficial conversion models within Subtopic 470-20, which will result in fewer embedded conversion options being accounted for separately from the host. This standard also amends and simplifies the calculation of earnings per share relating to convertible instruments.		January 1, 2022		The Company adopted this standard using the modified retrospective approach, which did not have an effect on the Company's consolidated financial statements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “anticipate,” “contemplate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “might,” “will,” “would,” “could,” “should,” “can have,” “likely,” “continue,” “design” and other words and terms of similar expressions, are intended to identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs.

Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ from those expressed in our forward-looking statements. Our future financial position and results of operations, as well as any forward-looking statements are subject to change and inherent risks and uncertainties, including those described in the section titled “Risk Factors” in our most recent Annual Report on Form 10-K. You should consider our forward-looking statements in light of a number of factors that may cause actual results to vary from our forward-looking statements including, but not limited to:

●

our progress in the development of our liquefied natural gas (“LNG”) liquefaction and export project and any carbon capture and storage projects (“CCS projects”) we may develop and the timing of that progress;

●

the timing of achieving a final investment decision (“FID”) in the construction and operation of a 27 million tonne per annum (“mtpa”) LNG export facility at the Port of Brownsville in southern Texas (the “Terminal”);

●

our reliance on third-party contractors to successfully complete the Terminal, the pipeline to supply gas to the Terminal and any CCS projects we develop;

●

our ability to develop our NEXT Carbon Solutions business through implementation of our CCS projects;

●

our ability to secure additional debt and equity financing in the future to complete the Terminal and other CCS projects on commercially acceptable terms and to continue as a going concern;

●

the accuracy of estimated costs for the Terminal and CCS projects;

●

our ability to achieve operational characteristics of the Terminal and CCS projects, when completed, including amounts of liquefaction capacities and amount of CO₂ captured and stored, and any differences in such operational characteristics from our expectations;

●

the development risks, operational hazards and regulatory approvals applicable to our LNG and carbon capture and storage development, construction and operation activities and those of our third-party contractors and counterparties;

●

technological innovation which may lessen our anticipated competitive advantage or demand for our offerings;

●

the global demand for and price of LNG;

●

the availability of LNG vessels worldwide;

●

changes in legislation and regulations relating to the LNG and carbon capture industries, including environmental laws and regulations that impose significant compliance costs and liabilities;

●

scope of implementation of carbon pricing regimes aimed at reducing greenhouse gas emissions;

●

global development and maturation of emissions reduction credit markets;

●

adverse changes to existing or proposed carbon tax incentive regimes;

●

global pandemics, including the 2019 novel coronavirus (“COVID-19”) pandemic, the Russia-Ukraine conflict, other sources of volatility in the energy markets and their impact on our business and operating results, including any disruptions in our operations or development of the Terminal and the health and safety of our employees, and on our customers, the global economy and the demand for LNG or carbon capture;

●

risks related to doing business in and having counterparties in foreign countries;

●

our ability to maintain the listing of our securities on the Nasdaq Capital Market or another securities exchange or quotation medium;

●

changes adversely affecting the businesses in which we are engaged;

●

management of growth;

●

general economic conditions;

●

our ability to generate cash; and

●

the result of future financing efforts and applications for customary tax incentives.

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Should one or more of the foregoing risks or uncertainties materialize in a way that negatively impacts us, or should the underlying assumptions prove incorrect, our actual results may vary materially from those anticipated in our forward-looking statements, and our business, financial condition, and results of operations could be materially and adversely affected.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements.

Except as required by applicable law, we do not undertake any obligation to publicly correct or update any forward-looking statements. All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements as well as others made in our most recent Annual Report on Form 10-K as well as other filings we have made and will make with the Securities and Exchange Commission (the “SEC”) and our public communications. You should evaluate all forward-looking statements made by us in the context of these risks and uncertainties.

Overview

NextDecade Corporation engages in development activities related to the liquefaction and sale of LNG and the capture and storage of CO₂ emissions. We have undertaken and continue to undertake various initiatives to evaluate, design and engineer the Terminal, including the Terminal CCS project, that we expect will result in demand for LNG supply at the Terminal, and other CCS projects that would be hosted at industrial source facilities.

Unless the context requires otherwise, references to “NextDecade,” “the Company,” “we,” “us,” and “our” refer to NextDecade Corporation and its consolidated subsidiaries.

Recent Developments

Rio Grande Development Activity

LNG Sale and Purchase Agreements

In April 2022, we entered into a 20-year sale and purchase agreement (“SPA”) with ENN LNG (Singapore) Pte Ltd (“ENN LNG”) for the supply of 1.5 mtpa of LNG indexed to Henry Hub on a free-on-board basis from the Terminal (“ENN LNG SPA”). The LNG supplied to ENN LNG will be from the first two trains at the Terminal.

In April 2022, we also entered into a 15-year SPA with ENGIE S.A. (“ENGIE”) for the supply of 1.75 mtpa of LNG indexed to Henry Hub on a free-on-board basis from the Terminal (“ENGIE SPA”). The LNG supplied to ENGIE will be from the first two trains at the Terminal.

In July 2022, we entered into a 20-year SPA with China Gas Hongda Energy Trading Co., LTD (“China Gas”) for the supply of 1.0 mtpa of LNG indexed to Henry Hub on a free-on-board basis from the Terminal (“China Gas SPA”). The LNG supplied to China Gas will be from the second train at the Terminal.

In July 2022, we also entered into a 20-year SPA with Guangdong Energy Group (“Guangdong Energy”) for the supply of 1.0 mtpa of LNG indexed to Henry Hub delivered on an ex-ship basis from the Terminal (“Guangdong Energy SPA”). The LNG supplied to Guangdong Energy will be from the first train at the Terminal.

In July 2022, we also entered into a 20-year SPA with ExxonMobil LNG Asia Pacific (“EMLAP”), an affiliate of ExxonMobil, for the supply of 1.0 mtpa of LNG indexed to Henry Hub delivered on a free-on-board basis from the Terminal (“EMLAP SPA”). The LNG supplied to EMLAP will be from the first two trains at the Terminal.

Each of the ENN LNG SPA, ENGIE SPA, China Gas SPA, Guangdong Energy SPA and EMLAP SPA become effective upon the satisfaction of certain conditions precedent, which include a positive final investment decision in the initial phase of the Terminal.

Rio Grande Site Lease

On March 6, 2019, Rio Grande entered into a lease agreement (the “Rio Grande Site Lease”) with the Brownsville Navigation District of Cameron County, Texas (the “BND”) for the lease by Rio Grande of approximately 984 acres of land situated in Brownsville, Cameron County, Texas for the purposes of constructing, operating, and maintaining (i) a liquefied natural gas facility and export terminal and (ii) gas treatment and gas pipeline facilities.

On April 20, 2022, Rio Grande and the BND amended the Rio Grande Site Lease to extend the effective date for commencing the Rio Grande Site Lease to May 6, 2023.

Engineering, Procurement and Construction (“EPC”) Agreements

In April 2022, Rio Grande and Bechtel Energy Inc. (formerly known as Bechtel Oil, Gas and Chemicals, Inc., “Bechtel”) amended each of the Trains 1 and 2 EPC Agreement and the Train 3 EPC Agreement to extend the respective contract validity to July 31, 2023.

In September 2022, Rio Grande and Bechtel amended each of the Trains 1 and 2 EPC Agreement and the Train 3 EPC Agreement. The amendments to the EPC Agreements primarily give effect to certain updated lump-sum, separated contract pricing components. Consistent with information previously disclosed by the Company, we currently estimate the lump-sum EPC cost to construct Trains 1-3 of the Terminal at approximately $11.4 billion. The final EPC lump-sum contract pricing for Trains 1-3 of the Terminal will be determined prior to an FID on Trains 1-3.

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NEXT Carbon Solutions Development Activity

Front-end Engineering and Design (“FEED”) Agreements

In May 2022, we entered into an agreement with California Resources Corporation, whereby NEXT Carbon Solutions will perform a FEED study for the post combustion capture and compression of up to 95% of the CO₂ produced at the Elk Hills Power Plant. During the FEED, NEXT Carbon Solutions and California Resources Corporation expect to finalize definitive commercial documents allowing the project to proceed with a final investment decision.

In June 2022, we entered into agreements with an energy infrastructure fund to perform preliminary FEED studies at two power generation facilities. Through performance of the preliminary FEED studies, we have generated cash proceeds of $0.7 million and expect to generate an additional $0.3 million in the fourth quarter of 2022.

Financing Activity

Private Placements of Company Common Stock

In April 2022, we sold 4,618,226 shares of Company common stock for gross proceeds of approximately $30 million to HGC NEXT INV LLC, as described in Note 9 - Stockholders' Equity in the Notes to Consolidated Financial Statements.

In September 2022, we sold 15,454,160 shares of Company common stock for gross proceeds of approximately $85 million. The Private Placement closed on September 19, 2022, as described in Note 9 - Stockholders' Equity in the Notes to Consolidated Financial Statements.

Private Placement of Series C Convertible Preferred Stock

In March 2022, we sold an aggregate of 10,500 shares of Series C Convertible Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock”), at $1,000 per share for an aggregate purchase price of $10.5 million and issued an additional 210 shares of Series C Preferred Stock in aggregate as origination fees. Warrants representing the right to acquire an aggregate number of shares of our common stock equal to approximately 14.91 basis points (0.1491%) of all outstanding shares of Company common stock, measured on a fully diluted basis, on the applicable exercise date with a strike price of $0.01 per share were issued together with the issuances of the Series C Preferred Stock.

For further descriptions of the Series C Preferred Stock and related warrants, see Note 8 - Preferred Stock and Common Stock Warrants, in the Notes to Consolidated Financial Statements.

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Liquidity and Capital Resources

Near Term Liquidity and Capital Resources

Our primary cash needs have historically been funding development activities in support of the Terminal and our CCS projects, which include payments of initial direct costs of our Rio Grande site lease and expenses in support of engineering and design activities, regulatory approvals and compliance, commercial and marketing activities and corporate overhead. We spent approximately $37 million on such development activities during 2021, which we funded through our cash on hand and proceeds from the issuances of equity and equity-based securities. Our capital raising activities since January 1, 2022 have included the following:

In March 2022, we sold 10,500 shares of Series C Preferred Stock at $1,000 per share together with associated warrants to purchase Company common stock for a purchase price of $10.5 million and issued an additional 210 shares of Series C Preferred Stock as origination fees.

In April 2022, we sold 4,618,226 shares of Company common stock for approximately $30 million.

In September 2022, we sold 15,454,160 shares of Company common stock for approximately $85 million.

During the three and nine months ended September 30, 2022 we spent approximately $16 million and $42 million, respectively, on development activities, and we expect spending on development activities to continue to increase during the three months ending December 31, 2022, as we increase headcount, engage consultants, ramp up our contractors, including Bechtel, in preparation for a positive FID of the initial phase of the Terminal. Because our businesses and assets are in development, we have not historically generated cash flow from operations, nor do we expect to do so until the Terminal is operational or until we install CCS systems on third-party industrial facilities. We intend to fund development activities for the foreseeable future with cash and cash equivalents on hand and through the sale of additional equity, equity-based or debt securities in us or in our subsidiaries. There can be no assurance that we will succeed in selling such securities or, if successful, that the capital we raise will not be expensive or dilutive to stockholders.

Our consolidated financial statements as of and for the three and nine months ended September 30, 2022 have been prepared on the basis that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Based on our balance of cash and cash equivalents of $109.2 million at September 30, 2022, there is substantial doubt about our ability to continue as a going concern within one year after the date that our consolidated financial statements were issued. Our ability to continue as a going concern will depend on managing certain operating and overhead costs and our ability to raise capital through equity, equity-based or debt financings. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty, which could have a material adverse effect on our financial condition.

Long Term Liquidity and Capital Resources

The Terminal will not begin to operate and generate significant cash flows unless and until the Terminal is operational, which is expected to be at least four years away, and the construction of the Terminal will require a significant amount of capital expenditure. CCS projects will similarly take an extended period of time to develop, construct and become operational and will require significant capital deployment. We currently expect that the long-term capital requirements for the Terminal and any CCS projects will be financed predominately through project financing and proceeds from future debt, equity-based, and equity offerings by us, and that construction of the Terminal or any CCS projects would not begin until such financing has been obtained. As a result, our business success will depend, to a significant extent, upon our ability to obtain the funding necessary to construct the Terminal and any CCS projects, to bring them into operation on a commercially viable basis and to finance our staffing, operating and expansion costs during that process. There can be no assurance that we will succeed in securing additional debt and/or equity financing in the future to complete the Terminal or any CCS projects or, if successful, that the capital we raise will not be expensive or dilutive to stockholders. Additionally, if these types of financing are not available, we will be required to seek alternative sources of financing, which may not be available on terms acceptable to us, if at all.

Sources and Uses of Cash

The following table summarizes the sources and uses of our cash for the periods presented (in thousands):

	Nine Months Ended
	September 30,
	2022			2021
Operating cash flows	$	(27,961	)	$	(12,252	)
Investing cash flows		(11,016	)		(13,056	)
Financing cash flows		122,648			39,443
Net increase in cash and cash equivalents		83,671			14,135
Cash and cash equivalents – beginning of period		25,552			22,608
Cash and cash equivalents – end of period	$	109,223		$	36,743

Operating Cash Flows

Operating cash outflows during the nine months ended September 30, 2022 and 2021 were $28.0 million and $12.3 million, respectively. The increase in operating cash outflows during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 was primarily due to an increase in employee costs and professional fees paid to consultants as we prepare for a positive FID in the initial phase of the Terminal.

Investing Cash Flows

Investing cash outflows during the nine months ended September 30, 2022 and 2021 were $11.0 million and $13.1 million, respectively. Investing cash outflows primarily consist of cash used in the development of the Terminal and CCS project. The decrease in investing cash outflows during the nine months ended September 30, 2022 compared to the same period in 2021 was primarily due to lower spend with Bechtel. During the third quarter of 2022, we issued a limited notice to proceed to Bechtel to begin ramping up its personnel and initiate site preparation work; as a result, investing cash outflows will increase in the fourth quarter of 2022 relative to the quarterly investing cash outflows during the nine months ended September 30, 2022 and 2021.

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Financing Cash Flows

Financing cash inflows during the nine months ended September 30, 2022 and 2021 were $122.6 million and $39.4 million, respectively, primarily representing proceeds from the sale of Series C Preferred Stock and the sale of common stock in 2022 and the sale of Series C Preferred Stock in 2021.

Contractual Obligations

There have been no material changes to our contractual obligations from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

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Results of Operations

The following table summarizes costs, expenses and other income for the periods indicated (in thousands):

	For the Three Months Ended									For the Nine Months Ended
	September 30,									September 30,
	2022			2021			Change			2022			2021			Change
Revenues	$	—		$	—		$	—		$	—		$	—		$	—
General and administrative expense		14,616			2,937			11,679			29,233			10,840			18,393
Development expense, net		1,133			—			1,133			3,870			—			3,870
Lease expense		299			240			59			808			678			130
Depreciation expense		41			43			(2	)		129			136			(7	)
Total operating loss		(16,089	)		(3,220	)		(12,869	)		(34,040	)		(11,654	)		(22,386	)
Gain (loss) on common stock warrant liabilities		(2,773	)		4,442			(7,215	)		(7,192	)		(2,363	)		(4,829	)
Other, net		65			—			65			86			1			85
Net loss attributable to NextDecade Corporation		(18,797	)		1,222			(20,019	)		(41,146	)		(14,016	)		(27,130	)
Preferred stock dividends		(6,248	)		(5,264	)		(984	)		(17,777	)		(13,015	)		(4,762	)
Deemed dividends on Series A Convertible Preferred Stock		—			(16	)		16			—			(47	)		47
Net loss attributable to common stockholders	$	(25,045	)	$	(4,058	)	$	(20,987	)	$	(58,923	)	$	(27,078	)	$	(31,845	)

Our consolidated net loss was $25.0 million, or $0.20 per common share (basic and diluted), for the three months ended September 30, 2022 compared to a net loss of $4.1 million, or $0.03 per common share (basic and diluted), for the three months ended September 30, 2021. The $21.0 million increase in net loss was primarily a result of increases in general and administrative expense, development expense, net, preferred stock dividends and loss on common stock warrant liabilities.

Our consolidated net loss was $58.9 million, or $0.47 per common share (basic and diluted), for the nine months ended September 30, 2022 compared to a net loss of $27.1 million, or $0.23 per common share (basic and diluted), for the nine months ended September 30, 2021. The $31.8 million increase in net loss was primarily a result of increases in general and administrative expense, development expense, net, preferred stock dividends and loss on common stock warrant liabilities.

General and administrative expense during the three months ended September 30, 2022 increased approximately $11.7 million compared to the same period in 2021 primarily due to an increase in share-based compensation expense of $5.8 million and increases in salaries and wages, professional fees, travel expenses, and IT and communications. The increase in share-based compensation expense for the three months ended September 30, 2022 was primarily due to forfeitures of awards upon the departure of certain employees during 2021. The increase in salaries and wages, professional fees, travel expense, and IT and communications is primarily due to fewer pandemic restrictions in 2022 and an increase in the average number of employees during the three months ended September 30, 2021 compared to the same period of the prior year.

General and administrative expense during the nine months ended September 30, 2022 increased approximately $18.4 million compared to the same period in 2021 primarily due to an increase in share-based compensation expense of $9.1 million and increases in salaries and wages, professional fees, travel expenses, and IT and communications. The increase in share-based compensation expense for the nine months ended September 30, 2022 was primarily due to forfeitures of awards upon the departure of certain employees during 2021. The increase in salaries and wages, professional fees, travel expense, and IT and communications is primarily due to fewer pandemic restrictions in 2022 and an increase in the average number of employees during the nine months ended September 30, 2022 compared to the same period of the prior year.

Development expense, net during the three and nine months ended September 30, 2022 were $1.1 million and $3.9 million, respectively, due to NEXT Carbon Solutions’ preliminary FEED and FEED studies performed on third-party industrial facilities. Similar preliminary FEED and FEED studies were not performed during either of the three or nine months ended September 30, 2021.

Gain (loss) on common stock warrant liabilities for the three and nine months ended September 30, 2022 and 2021 is primarily due to changes in the share price of Company common stock.

Preferred stock dividends for the three months ended September 30, 2022 of $6.2 million consisted of dividends paid-in kind with the issuance of 2,335 additional shares of Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), 2,228 additional shares of Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), and 1,669 additional shares of Series C Preferred Stock, compared to preferred stock dividends of $5.3 million for the three months ended September 30, 2021 that consisted of dividends paid-in kind with the issuance of 2,089, 1,993 and 1,159 additional shares of Series A Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock, respectively.

Preferred stock dividends for the nine months ended September 30, 2022 of $17.8 million consisted of dividends paid-in kind with the issuance of 6,803 additional shares of Series A Preferred Stock, 6,489 additional shares of Series B Preferred Stock and 4,430 additional shares of Series C Preferred Stock, compared to preferred stock dividends of $13.0 million for the nine months ended September 30, 2021 that consisted of dividends paid-in kind with the issuance of 6,045, 5,761 and 1,159 additional shares of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, respectively.

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Summary of Critical Accounting Estimates

The preparation of our Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. There have been no significant changes to our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

We maintain a set of disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports filed by us under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. As of the end of the period covered by this report, we evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective.

During the most recent fiscal quarter, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

The information presented below updates, and should be read in conjunction with, the risk factors disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Except as presented below, there were no changes to the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

There is substantial doubt about our ability to continue as a going concern.

We have incurred operating losses since our inception and management expects operating losses and negative cash flows to continue for the foreseeable future and, as a result, we will require additional capital to fund our operations and execute our business plan. As of September 30, 2022, the Company had $109.2 million in cash and cash equivalents, which may not be sufficient to fund the Company's planned operations through one year after the date the consolidated financial statements are issued. Accordingly, there is substantial doubt about the Company's ability to continue as a going concern. The analysis used to determine the Company's ability to continue as a going concern does not include cash sources outside of the Company's direct control that management expects to be available within the next twelve months.

Our ability to continue as a going concern is dependent upon our ability to obtain sufficient funding through additional debt or equity financing and to manage operating and overhead costs. There can be no assurance that we will be able to raise sufficient capital on acceptable or satisfactory terms to the Company, or at all.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer

The following table summarizes stock repurchases for the three months ended September 30, 2022:

Period	Total Number of Shares Purchased ⁽¹⁾		Average Price Paid Per Share ⁽²⁾		Total Number of Shares Purchased as a Part of Publicly Announced Plans		Maximum Number of Shares That May Yet Be Purchased Under the Plans
July 2022		—	$	—		—		—
August 2022		60,397		7.46		—		—
September 2022		87,053		7.00		—		—

⁽¹⁾	Represents shares of Company common stock surrendered to us by participants in the 2017 Plan to settle the participants’ personal tax liabilities that resulted from the lapsing of restrictions on awards made to the participants under the 2017 Plan.

⁽²⁾	The price paid per share of Company common stock was based on the closing trading price of such stock on the dates on which we repurchased shares of Company common stock from the participants under the 2017 Plan.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit No.		Description
3.1⁽¹⁾		Second Amended and Restated Certificate of Incorporation of NextDecade Corporation, dated July 24, 2017.
3.2⁽²⁾		Amended and Restated Bylaws of NextDecade Corporation, as amended March 3, 2021.
3.3⁽³⁾		Certificate of Designations of Series A Convertible Preferred Stock, dated August 9, 2018.
3.4⁽⁴⁾		Certificate of Designations of Series B Convertible Preferred Stock, dated September 28, 2018.
3.5⁽⁵⁾		Certificate of Designations of Series C Convertible Preferred Stock, dated March 17, 2021.
3.6⁽⁶⁾		Certificate of Amendment to Certificate of Designations of Series A Convertible Preferred Stock, dated July 12, 2019.
3.7⁽⁷⁾		Certificate of Amendment to Certificate of Designations of Series B Convertible Preferred Stock, dated July 12, 2019.
3.8⁽⁸⁾		Certificate of Increase to Certificate of Designations of Series A Convertible Preferred Stock of NextDecade Corporation, dated July 15, 2019.
3.9⁽⁹⁾		Certificate of Increase to Certificate of Designations of Series B Convertible Preferred Stock of NextDecade Corporation, dated July 15, 2019.
10.1*+		Fifth Amendment to the Fixed Price Turnkey Agreement for the Engineering, Procurement and Construction of Trains 1 and 2 of the Rio Grande Natural Gas Liquefaction Facility, made and executed as of September 14, 2022, by and between Rio Grande LNG, LLC and Bechtel Energy Inc.
10.2*+		Fifth Amendment to the Fixed Price Turnkey Agreement for the Engineering, Procurement and Construction of Train 3 of the Rio Grande Natural Gas Liquefaction Facility, made and executed as of September 15, 2022, by and between Rio Grande LNG, LLC and Bechtel Energy Inc.
10.3⁽¹⁰⁾		Common Stock Purchase Agreement, dated as of September 14, 2022, by and between the Company and the Purchasers named therein.
10.4⁽¹¹⁾		Registration Rights Agreement, dated September 14, 2022, by and between the Company and the Purchasers named therein.
31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH*		Inline XBRL Taxonomy Extension Schema Document.
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

⁽¹⁾	Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K, filed July 28, 2017.

⁽²⁾	Incorporated by reference to Exhibit 4.2 of the Registrant’s Registration Statement on Form S-1 filed June 24, 2022.

⁽³⁾	Incorporated by reference to Exhibit 4.3 of the Registrant’s Registration Statement on Form S-3, filed December 20, 2018.

⁽⁴⁾	Incorporated by reference to Exhibit 3.4 of the Registrant’s Quarterly Report on Form 10-Q, filed November 9, 2018.
⁽⁵⁾	Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K, filed March 18, 2021.

⁽⁶⁾	Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K, filed July 15, 2019.
⁽⁷⁾	Incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K, filed July 15, 2019.
⁽⁸⁾	Incorporated by reference to Exhibit 3.7 of the Registrant's Quarterly Report on Form 10-Q, filed August 6, 2019.
⁽⁹⁾	Incorporated by reference to Exhibit 3.8 of the Registrant’s Quarterly Report on Form 10-Q, filed August 6, 2019.
⁽¹⁰⁾	Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, filed September 19, 2022.
⁽¹¹⁾	Incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K, filed September 19, 2022.

^*	Filed herewith.

^**	Furnished herewith.
+	Certain portions of this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NEXTDECADE CORPORATION

Date: November 10, 2022	By:	/s/ Matthew K. Schatzman
		Matthew K. Schatzman
		Chairman of the Board and Chief Executive Officer
		(Principal Executive Officer)


Date: November 10, 2022	By:	/s/ Brent E. Wahl
		Brent E. Wahl
		Chief Financial Officer
		(Principal Financial Officer)