NEXT Biometrics Group
Annual Report 2017

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10‑K (MARK ONE) ☒☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2017 ☐☐ 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 incorporation or organization) (I.R.S. Employer Identification No.) 3 Waterway Square Place, Suite 400 The Woodlands, Texas 77380(Address of principal executive offices) (Zip code) Registrant’s telephone number, including area code: (713) 574-1880 Securities registered pursuant to Section 12(b) of the Act: Common Stock, $ 0.0001 par value The NASDAQ Stock Market LLCRedeemable Warrants, each to purchase one Share of Common Stock The OTC Pink Market(Title of Class) (Name of each exchange on which registered) Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒ 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 thepreceding 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 past90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to besubmitted and posted 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 registrantwas required to submit and post such files). Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not becontained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerginggrowth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 ofthe Exchange Act. Large accelerated filer☐Accelerated filer☒Non-accelerated filer☐ (Do not check if a smaller reporting company)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 revisedfinancial 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 ☒ The aggregate market value of the registrant’s Common Stock held by non-affiliates of the registrant was approximately $113.7 million as of June 30, 2017. 106,397,602 shares of the registrant’s Common Stock, $0.0001 par value, were outstanding as of March 1, 2018. Documents incorporated by reference: The definitive proxy statement for the registrant’s Annual Meeting of Stockholders (to be filed within 120 days of the close ofthe registrant’s fiscal year) is incorporated by reference into Part III. Table of ContentsNEXTDECADE CORPORATIONTABLE OF CONTENTS PagePart I Item 1. Business 5Item 1A. Risk Factors 9Item 1B. Unresolved Staff Comments 22Item 2. Properties 22Item 3. Legal Proceedings 22Item 4. Mine Safety Disclosures 22Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 23Item 6. Selected Financial Data 23Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24Item 7A. Quantitative and Qualitative Disclosures About Market Risk 29Item 8. Financial Statements and Supplementary Data 30Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 50Item 9A. Controls and Procedures 50Item 9B. Other Information 50Part III Part IV Item 15. Exhibits 52Item 16. Form 10-K Summary 53Signatures 54 1 Table of ContentsOrganizational StructureThe following diagram depicts our abbreviated organizational structure as of December 31, 2017 with references tothe names of certain entities discussed in this annual report.Unless the context requires otherwise, references to “NextDecade,” the “Company,” “we,” “us” and “our” refer toNextDecade Corporation and its consolidated subsidiaries.2 Table of ContentsCautionary Statement Regarding Forward-Looking StatementsThis Annual Report on Form 10-K contains certain statements that are, or may be deemed to be, “forward-lookingstatements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), andSection 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statementsof historical fact contained in this Annual Report on Form 10‑K, including statements regarding our future results ofoperations and financial position, strategy and plans, and our expectations for future operations, are forward-lookingstatements. The words “anticipate,” “contemplate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,”“might,” “will,” “should,” “can have,” “likely,” “continue,” “design” and other words and terms of similar expressions, areintended to identify forward-looking statements.We have based these forward-looking statements largely on our current expectations and projections about futureevents and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-termbusiness operations and objectives and financial needs.Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual resultscould 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 thosedescribed in the section entitled “Risk Factors” in this 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 statementsincluding, but not limited to:·changes adversely affecting the business in which we are engaged;·management of growth;·general economic conditions;·our development liquefied natural gas (“LNG”) liquefaction and export projects;·our ability to secure additional debt and equity financing in the future to complete the terminal at the Port ofBrownsville in southern Texas (the “Terminal”) and an associated 137-mile pipeline to supply gas to theTerminal (the “Pipeline” together with the Terminal, the “Project”);·the accuracy of estimated costs for the Project;·the governmental approval of construction and operation of the Project;·the successful completion of the Project by third-party contractors;·our ability to generate cash;·the development risks, operational hazards, regulatory approvals applicable to Rio Grande’s and Rio Bravo’sconstruction and operations activities;·our anticipated competitive advantage;·the global demand for and price of natural gas (versus the price of imported LNG);·the availability of LNG vessels worldwide;·legislation and regulations relating to the LNG industry;·negotiations for the Terminal site lease and right-of-way options for the Pipeline route;·compliance with environmental laws and regulations; and3 Table of Contents·the result of future financing efforts You should not rely upon forward-looking statements as predictions of future events. In addition, neither we nor anyother person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Except asrequired by applicable law, we do not undertake any obligation to publicly correct or update any forward-looking statement.Please read “Risk Factors” contained in this Annual Report on Form 10-K for a more complete discussion of therisks and uncertainties mentioned above and for a discussion of other risks and uncertainties. All forward-looking statementsattributable to us are expressly qualified in their entirety by these cautionary statements and hereafter in our other filingswith the Securities and Exchange Commission (the “SEC”) and public communications. You should evaluate all forward-looking statements made by us in the context of these risks and uncertainties.4 Table of Contents Part I Item 1. BusinessOur FormationWe were incorporated in Delaware on May 21, 2014 and were formed for the purpose of acquiring, through a merger,share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, oneor more businesses or entities. On July 24, 2017, one of our subsidiaries merged with and into NextDecade LLC, a liquefiednatural gas (“LNG”) development company founded in 2010 to develop LNG export projects and associated pipelines in theState of Texas. Prior to the merger with NextDecade LLC, we had no operations and our assets consisted of cash proceedsreceived in connection with our initial public offering.Our first proposed LNG export facility, the Project, is well-positioned among the second wave of United States(“U.S”) LNG projects. We have undertaken and continue to undertake various initiatives to evaluate, design and engineerthe Project that we expect will result in demand for contracted capacity at the Terminal, which will allow us to seekconstruction financing to develop the Project.Our common stock trades on the Nasdaq Capital Market (“Nasdaq”) under the symbol “NEXT.”As a result of our failure to satisfy the initial listing requirements of Nasdaq with respect to our warrants, on February22, 2018, our warrants were delisted from trading on Nasdaq and began trading on the OTC Pink Market under the symbol“NEXTW.”Company OverviewOur management is comprised of a team of industry leaders with extensive experience in LNG marketing and projectdevelopment. We have focused and continue to focus our development activities on the Project. We believe the Projectpossesses competitive advantages in several important areas, including, engineering, commercial, regulatory, and gas supply.We submitted a pre-filing request for the Project to the Federal Energy Regulatory Commission (“FERC”) in March 2015 andfiled a formal application with the FERC in May 2016. We also believe we have robust commercial offtake and gas supplystrategies in place and we estimate that the Project will commence commercial operations as early as 2023.We believe that the Terminal, located on a 984-acre site in Brownsville, Texas, along with the Pipeline connectingthe Terminal to the Agua Dulce market area, is well-positioned among the second wave of U.S. LNG projects. The Terminal isengineered to have liquefaction capacity of 27 million tons of LNG per annum (“mtpa”). It is located to take advantage ofgas reserves in West and South Texas, benefiting from recent discoveries in the Permian Basin and Eagle Ford Shale. We planto own, develop, and operate the Project. We have an exclusive option for a long-term lease with the Port of Brownsville forthe Terminal site through November 5, 2019.The Project will include up to six liquefaction trains (each with a nominal capacity of at least 4.5 mtpa/train), fourLNG storage tanks (each with a capacity of 180,000 cubic meters), two marine jetties for ocean-going LNG vessels, oneturning basin, and six truck loading bays for LNG and natural gas liquids. The Pipeline is expected to be comprised of twin,137-mile-long, 42-inch-outside diameter, natural gas pipelines, three 180,000-horsepower compressor stations, two 30,000-horsepower interconnect booster stations, six mainline valve sites, four metering sites, and various ancillary facilities. Thetwin pipelines are expected to be rated to a maximum allowable operating pressure of 1,480 pounds per square inch and totaldeliverability of at least 4.5 Bcf/d. We are exploring design enhancements to increase throughput capacity for the Project.We have leased a second 994-acre site on the Houston Ship Channel in Texas City for an expected two or threetrains with at least 13.5 mtpa capacity (the “Galveston Bay Terminal”). We intend to use similar design and engineering asthe Terminal as we retain rights to the design specifications and intellectual property associated with the Terminal.5 Table of ContentsCapital Cost, Liquefaction Technology, and EngineeringOur expected engineering, procurement, and construction (“EPC”) contractor, CB&I LLC (“CB&I), has vastexperience in the LNG industry. CB&I is one of the world’s premier EPC firms, specializing in oil and gas infrastructureprojects. Founded in 1889, CB&I has been involved with LNG projects for more than 50 years, including construction of thefirst double-walled storage tank (1958) and the first marine distribution terminal (1970). Additionally, CB&I has anextraordinary record with workplace safety; CB&I won the National Safety Council’s Green Cross for Safety in 2015.Based on the progress of its detailed engineering and cost optimization exercises to date, in conjunction withCB&I’s own work with Baker Hughes, a GE Company (the Terminal’s primary rotating equipment provider), we estimateconstruction costs for the first three liquefaction trains of the Terminal of $490/ton before owners’ costs, financing costs, andcontingencies, with a target EPC cost reduction to $450/ton. Our FERC applications contemplate the Terminal’s entire sixtrains of production. We anticipate taking a positive final investment decision (“FID”) on the first phase of the Project withthree trains at the Terminal, though we can take an initial positive FID on as few as two trains.CB&I has conducted front end engineering and design (“FEED”) work on behalf of numerous LNG export projectsglobally and served as EPC contractor for Peru LNG, which commenced operations in 2010 and has successfully deliveredmore than 430 cargoes, as well as two LNG export projects currently under construction in the U.S. (the Cameron andFreeport projects). The Terminal is of substantially similar design to the Peru LNG project that CB&I completed several yearsago. During the construction of Peru LNG, CB&I experienced a lost time incident rate of only 0.01 and successfully trainedand hired thousands of local workers. Additionally, hundreds of workers from the Rio Grande Valley have been hired andtrained by CB&I in recent years to work on other U.S. LNG project developments in Texas and Louisiana. We believe a well-trained workforce will be prepared to return to the Rio Grande Valley upon successful completion of those projects.We have selected Air Products’ C3MR™ liquefaction technology, which is used in a wide array of LNG projectsaround the world, including in several LNG projects under construction in the U.S. With global expertise in LNG EPCprojects, CB&I performed our FEED work for the Terminal. We are currently progressing design, regulatory, engineering, andcommercial activities. We are finalizing detailed negotiations for a lump-sum turnkey (“LSTK”) EPC contract that includesperformance, time, and cost guarantees, and we expect to execute the LSTK EPC contract in the second quarter of 2018. Webelieve that the combination of proven technology with one of the foremost LNG EPC contractors significantly mitigatesdesign, construction, and execution risk and is expected to be viewed favorably by prospective customers and to facilitateattractively priced project financing.CommercialWe are continuing commercial discussions with a variety of other parties ranging from large utilities and state-sponsored enterprises to portfolio and multinational commodity interests and expect to sign long-term binding offtakecommitments prior to FID, leveraging the global relationships and extensive experience of our management team.We believe our project locations will provide customers with access to low-cost natural gas from the Permian Basinand Eagle Ford Shale. Importantly, we have offered customers a choice of flexible offtake contracting models such as tolling,free on board or delivered ex-ship.We believe traditional LNG buyers are seeking to diversify away from oil-linked contracts and are looking toincrease destination flexibility. As a result, low-cost U.S. LNG is poised to capture market share, supported by the country’sabundant gas supply, existing pipeline infrastructure, political stability, and a competitive project execution environment.RegulatoryWe filed our formal application with the FERC on May 5, 2016 and expect to receive a Draft Environmental ImpactStatement from the FERC as early as the second quarter of 2018. Final authorization of the Terminal under Section 3(a) ofthe Natural Gas Act, and of the Pipeline under Section 7(c) of the Natural Gas Act, is expected as early as the end of 2018. OnSeptember 7, 2016, we received authorization from the U.S. Department of Energy (the “DOE”) to export LNG to FTAcountries on our own behalf and as agent for others, for a term of 30 years. A non-FTA authorization is expected shortly aftercompletion of the FERC National Environmental Policy Act review process.6 Table of ContentsGas SupplyThe Terminal is located in Brownsville, Texas, benefiting from access to the Permian Basin and Eagle Ford Shale.We expect to realize material benefits from providing our customers with access to these low-cost associated gas resources inTexas. Independent shale producers have created extraordinary efficiencies and improvements, including enhanced wellrecoveries through extended lateral lengths and hydraulic fracturing technology, rig productivity, and operating andlifecycle costs. However, U.S. demand has not risen proportionally with the growth in recoverable reserves.For example, whereas U.S. demand for natural gas has generally increased modestly year-over-year over the past fewdecades, the level of new discoveries and production has been remarkable. U.S. domestic demand for natural gas hasincreased from approximately 20 Tcf per year in 1980 to approximately 27 Tcf in 2015, a 35 percent increase. However,proved reserves of natural gas have increased by approximately 200 Tcf over the same period, a 100 percent increase. Due totechnological advancements, almost all U.S. reserve basins are able to produce gas for a break-even cost of less than$3.00/MMBtu, which is less than the approximate price implied by gas forward curves for at least the next ten years.The development of the Marcellus Shale and Utica Shale figures in the strategic importance of the Permian Basinand Eagle Ford Shale. In 2010, Marcellus production totaled approximately 2 Bcf/d; by the end of 2017, this numberexceeded 23.7 Bcf/d. Currently, Marcellus production is greater than any individual country in the world except for Russia.This has caused the northeast to swing from an importer of natural gas (8 Bcf/d in 2010) to an exporter (-3.7 Bcf/d in 2017).There is more than 13 Bcf/d of northeast pipeline capacity scheduled to enter service during 2018 and Marcellus and Uticaproducers remain focused on moving volumes to more favorable Gulf Coast markets. This indicates that Texas production isincreasingly less likely to flow towards northeast markets and expected to be consumed in or exported from the southwest orGulf of Mexico regions.The Permian Basin is expected to produce large quantities of associated gas, the production of which occurs as abyproduct with oil production. The State of Texas severely restricts the flaring of natural gas, so infrastructure will berequired to transport this associated gas to Gulf Coast markets economically. In the fall of 2017, KinderMorgan announced ithad enough binding customer commitments to proceed with the development of its Gulf Coast Express (“GCX”) project. TheGCX project will move gas from the Waha area in the Permian Basin to Agua Dulce, Texas where the Project expects toreceive gas supply. The GCX project is expected to have an estimated capacity of 1.9 Bcf/d and is expected to be in serviceby October 2019. This new high-pressure pipeline will provide a much needed exit strategy for incremental Permian gassupplies. Due to the production economics for the primary resource (oil), many Permian producers are expected to face sub-zero breakeven prices with respect to the price of the associated gas — in other words, producers should be able toeconomically produce oil even if they have to pay someone to take the gas. We believe that the scope for incrementaldomestic gas demand may be limited, making large, stable sources of gas demand, such as the Terminal, highly attractive togas producers.The Permian Basin is approaching its 100 year of oil production. At present, production has reached a record 2.9million barrels per day (MBPD), making it the world’s second-most-prolific field, behind the formidable Ghawar in SaudiArabia. The Texas side of the Permian Basin (excluding the portion underneath New Mexico) has already produced 30billion barrels of crude and 75 trillion cubic feet (Tcf) of natural gas. Since 2012, Permian Basin production has increased bynearly 2 MBPD, which is a larger increase than any other oilfield in the world. The natural gas production volumesassociated with this oil have been just as impressive. According to the U.S. Energy Information Administration, 2018 naturalgas production in the Permian Basin is expected to rise to more than 9.2 MMcf/d from May 2016 levels of approximately 6.9MMcf/d. Current oil production in the Permian has risen to more than 2.9 MBPD from 1.9 MBPD in May 2016. Thesecomprise 33.0% and 53.0% increases, respectively, and both capital spending and production are expected to continue risingprecipitously in the coming years. Significant gas production relative to anticipated takeaway capacity constraints (despiteexpected capacity growth), could lead to negative basis to Henry Hub that could benefit our projects relative to other second-wave U.S. LNG projects.We believe that the Pipeline, projected to have at least eight interconnects with a combined 6.7 Bcf/d of receiptcapacity, will have supply flexibility and be price competitive. Eastward takeaway capacity from the Permian is alreadyexpanding in the region, with high-profile plans over the next 12 to 18 months among key sponsors such as KinderMorgan,NAmerico and others. The combination of increased production and expanding takeaway capacity indicates that the AguaDulce hub, from which the Pipeline is proposed to be routed, is expected to become increasingly liquid and remaincompetitively priced to Henry Hub. We believe our proximity to two major gas reserves basins, increasing takeaway capacityin the area, a significant influx of investment over the last 12 to 18 months, as well as our existing contacts and7 thTable of Contentsdiscussions with some of the largest regional operators, represent key elements of a compelling feedgas strategy for partnersand customers alike. We are continuing to advance substantive negotiations in these areas.EmployeesAs of December 31, 2017, we had 23 full-time employees and 12 independent contractors. We hire independentcontractors on an as needed basis and have no collective bargaining agreements with our employees. We believe that ouremployee relationships are satisfactory.OfficesOur principal executive offices are located at 3 Waterway Square Place, Suite 400, The Woodlands, Texas, 77380,and our telephone number is (713) 574-1880. Available InformationOur internet website address is www.next-decade.com. We routinely post important information for investors on ourwebsite. Within our website’s investors section, we make available free of charge our annual report on Form 10-K, quarterlyreports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed with or furnished to the SEC underapplicable securities laws. These materials are made available as soon as reasonably practical after we electronically file suchmaterials with or furnish such materials to the SEC. Information on our website is not incorporated by reference into thisreport and should not be considered part of this document.The public may also read and copy materials we file with the SEC at the SEC’s Public Reference Room, which islocated at 100 F Street, NE, Room 1580, Washington, DC 20549. You can obtain information on the operation of the PublicReference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website that contains reports, proxy andinformation statements and other information regarding issuers that file electronically with the SEC at www.sec.gov.8 Table of ContentsItem 1A. Risk FactorsWe are subject to uncertainties and risks due to the nature of the business activities we conduct. The followinginformation describes certain uncertainties and risks that could affect our business, financial condition or results ofoperations or could cause actual results to differ materially from estimates or expectations contained in our forward-lookingstatements on page 3 of this Annual Report on Form 10-K. This section does not describe all risks applicable to us, ourindustry or our business, and it is intended only as a summary of known material risks that are specific to us. We mayexperience additional risks and uncertainties not currently known to us or that we currently deem to be immaterial whichmay materially and adversely affect our business, financial condition and results of operations.We are in the process of developing LNG liquefaction and export projects, and the success of such projects isunpredictable; as such, positive cash flows and even revenues will be several years away, if they occur at all.We are not expected to generate cash flow, or even obtain revenues, unless and until the Project is operational,which is expected to be at least five years away, and, accordingly, distributions to investors may be limited, delayed, or non-existent.Our cash flow and consequently our ability to distribute earnings is solely dependent upon the revenues Rio Grandeand Rio Bravo receive from the Project and the transfer of funds by Rio Grande and Rio Bravo to NextDecade in the form ofdistributions or otherwise. Rio Grande’s and Rio Bravo’s ability to complete the Project, as discussed further below, will bedependent upon, among other things, our ability to obtain necessary regulatory approvals and raise the capital necessary tofund development of the Project.Our ability to pay dividends is almost entirely dependent upon our ability to complete the Project and generate cashand net operating income from operations. We do not expect to generate any revenues until the completion of constructionof the first phase of the Project. Upon such completion, financing and numerous other factors affecting the Project mayreduce our cash flow. As a result, we may not make distributions of any amount or any distributions may be delayed.Substantially all of our anticipated revenue will be dependent upon the Project. Due to our lack of assetdiversification, adverse developments at or affecting the Project would have a significantly greater impact on our financialcondition and results of operations than if we maintained a more diverse portfolio of assets.We will be required to seek additional debt and equity financing in the future to complete the Project and may not be ableto secure such financing on acceptable terms, or at all.Since we will be unable to generate any revenue from our operations and expect to be in the development orconstruction stage for multiple years, we will need additional financing to provide the capital required to execute ourbusiness plan. We will need significant funding to develop and construct the Project as well as for working capitalrequirements and other operating and general corporate purposes.There can be no assurance that we will be able to raise sufficient capital on acceptable terms, or at all. If sufficientcapital is not available on satisfactory terms, we may be required to delay, scale back or eliminate the development ofbusiness opportunities, and our operations and financial condition may be adversely affected to a significant extent.Debt financing, if obtained, may involve agreements that include liens on Project assets and covenants limiting orrestricting our ability to take specific actions, such as paying dividends or making distributions, incurring additional debt,acquiring or disposing of assets and increasing expenses. Debt financing would also be required to be repaid regardless of ouroperating results.In addition, the ability to obtain financing for the Project is expected to be contingent upon, among other things,our ability to enter into sufficient long-term commercial agreements prior to the commencement of construction. Foradditional information regarding our ability to enter into sufficient long-term commercial agreements, see “— Our ability togenerate cash is substantially dependent upon it entering into satisfactory contracts with third parties and the performanceof those third parties under those contracts.”9 Table of ContentsWe may be subject to risks related to doing business in, and having counterparties based in, foreign countries.We may engage in operations or make substantial commitments to and investments in, and enter into agreementswith, counterparties located outside the U.S., which would expose us to political, governmental, and economic instabilityand foreign currency exchange rate fluctuations.Any disruption caused by these factors could harm our business, results of operations, financial condition, liquidityand prospects. Risks associated with potential operations, commitments and investments outside of the U.S. include but arenot limited to risks of:·currency exchange restrictions and currency fluctuations;·war or terrorist attack;·expropriation or nationalization of assets;·renegotiation or nullification of existing contracts or international trade arrangements;·changing political conditions;·macro-economic conditions impacting key markets and sources of supply;·changing laws and policies affecting trade, taxation, financial regulation, immigration, and investment;·duplicative taxation by different governments;·general hazards associated with the assertion of sovereignty over areas in which operations are conducted,transactions occur, or counterparties are located; and·the unexpected credit rating downgrade of countries in which our LNG customers are based.As our reporting currency is the U.S. dollar, any operations conducted outside the U.S. or transactions denominatedin foreign currencies would face additional risks of fluctuating currency values and exchange rates, hard currency shortagesand controls on currency exchange. In addition, we would be subject to the impact of foreign currency fluctuations andexchange rate changes on our financial reports when translating our assets, liabilities, revenues and expenses from operationsor transactions outside of the U.S. into U.S. dollars at then-applicable exchange rates. These translations could result inchanges to our results of operations from period to period.Our estimated costs for the Project may not be accurate and are subject to change due to various factors.Our construction cost estimates are only an approximation of the actual costs of construction and are before owners’costs, financing costs, pipeline construction costs and contingencies. Moreover, cost estimates may change due to variousfactors, such as economic and market conditions, government policy, claims and litigation risk, competition, the final termsof any definitive request for services with our EPC service provider, as well as change orders, delays in construction, legaland regulatory requirements, site issues, increased component and material costs, escalation of labor costs, labor disputes,increased spending to maintain our construction schedule and other factors. In particular, our estimated costs for the Projectare expected to be substantially affected by:·global prices of nickel, steel, concrete, pipe, aluminum and other component parts of the Project and thecontractual terms upon which our contractors are able to source and procure required materials;·any U.S. import tariffs on steel, aluminum, pipe or other component parts of the Project, which may raise theprices of certain materials used in the Project;·commodity and consumer prices (principally, natural gas, crude oil and fuels that compete with them in ourtarget markets) on which our economic assumptions are based;10 Table of Contents·the exchange rate of the U.S. Dollar with other currencies since a portion of the Terminal EPC price will bedenominated in foreign currencies and subject to adjustment between contract execution and the time that a fullnotice to proceed is issued;·changes in regulatory regimes in the U.S. and the countries to which we will be authorized to sell LNG;·levels of competition in the U.S. and worldwide;·changes in the tax regimes in the countries to which we sell LNG or in which we operate;·cost inflation relating to the personnel, materials and equipment used in our operations;·delays caused by events of force majeure or unforeseeable climatic events;·interest rates; and·synergy benefits associated with the development of multiple phases of the Project using identical design andconstruction philosophies.Cost estimates may change, and actual costs of construction may vary from current cost estimates, due to variousfactors, such as the final terms of any LSTK contract into which we enter with CB&I, as well as any change orders, delays inconstruction, unanticipated regulatory delays, increased material or staffing costs, or other factors.In addition to our actual willingness to take FID, and our ability to construct the Project and achieve operations,events related to such activities may cause actual costs of the Project to vary from the range, combination and timing ofassumptions used for the projected costs of the Project, such variations may be material and adverse, and an investor may loseall or a portion of its investment.The construction and operation of the Project remains subject to further governmental approvals, and some approvals maybe subject to further conditions, review and/or revocation.We will be required to obtain governmental approvals and authorizations to implement our proposed businessstrategy, which includes the design, construction and operation of the Project and the export of LNG from the U.S. to foreigncountries. The design, construction and operation of LNG export terminals is a highly regulated activity. The approval of theFERC under Section 3 of the Natural Gas Act, as well as several other material governmental and regulatory approvals andpermits, is required in order to construct and operate an LNG terminal. An equivalent approval under Section 7 of the NaturalGas Act is required to construct and operate the Pipeline. There is no guarantee that such approvals can be obtained.Although the necessary authorizations to construct and operate the Project may be obtained, such authorizations are subjectto ongoing conditions imposed by regulatory agencies, and additional approval and permit requirements may be imposed.Substantially all of our revenue will be generated from exports of LNG from the U.S. to foreign countries. UnderSection 3 of the Natural Gas Act authorization of the DOE is required to export LNG from the U.S. We have obtained suchauthorization for export to countries with which the U.S. has a Free Trade Agreement (“FTA”), but many of our target marketsare not FTA countries. We have applied to the DOE for approval to export LNG to non-FTA countries. There is no assurancethat we will obtain or, if obtained, maintain these governmental authorizations, approvals and permits. Failure to obtain,failure to obtain on a timely basis, or failure to maintain any of these governmental authorizations, approvals and permitscould have a material adverse effect on our business, results of operations, financial condition and prospects.For example, some of these governmental authorizations, approvals and permits require extensive environmentalreview. Some groups have perceived, and other groups could perceive the proposed construction and operation of the Projectas negatively impacting the environment or cultural heritage sites. Objections from such groups could cause delays, damageto reputation and difficulties in obtaining governmental authorizations, approvals or permits, or prevent the obtaining ofsuch authorizations, approvals or permits altogether.11 Table of ContentsWe will be dependent on third-party contractors for the successful completion of the Project, and these contractors may beunable to complete the Project or may build a non-conforming Project.The construction of the Project is expected to take several years, will be confined to a limited geographic area andcould be subject to delays, cost overruns, labor disputes and other factors that could adversely affect financial performance orimpair our ability to execute our scheduled business plan.Timely and cost-effective completion of the Project in conformity with agreed-upon specifications will be highlydependent upon the performance of third-party contractors pursuant to their agreements. However, we have not yet enteredinto definitive agreements with certain of the contractors, advisors and consultants necessary for the development andconstruction of the Project. We may not be able to successfully enter into such construction contracts on terms or at pricesthat are acceptable to it.Further, faulty construction that does not conform to our design and quality standards may have an adverse effect onour business, results of operations, financial condition and prospects. For example, improper equipment installation may leadto a shortened life of our equipment, increased operations and maintenance costs or a reduced availability or productioncapacity of the affected facility. The ability of our third-party contractors to perform successfully under any agreements to beentered into is dependent on a number of factors, including force majeure events and such contractors’ ability to:·design, engineer and receive critical components and equipment necessary for the Project to operate inaccordance with specifications and address any start-up and operational issues that may arise in connection withthe commencement of commercial operations;·attract, develop and retain skilled personnel and engage and retain third-party subcontractors, and address anylabor issues that may arise;·post required construction bonds and comply with the terms thereof, and maintain their own financialcondition, including adequate working capital;·adhere to any warranties the contractors provide in their EPC contracts; and·respond to difficulties such as equipment failure, delivery delays, schedule changes and failure to perform bysubcontractors, some of which are beyond their control, and manage the construction process generally,including engaging and retaining third-party contractors, coordinating with other contractors and regulatoryagencies and dealing with inclement weather conditions.Furthermore, we may have disagreements with our third-party contractors about different elements of theconstruction process, which could lead to the assertion of rights and remedies under the related contracts, resulting in acontractor’s unwillingness to perform further work on the relevant project. We may also face difficulties in commissioning anewly constructed facility. Any of the foregoing issues or significant project delays in the development or construction of theProject could materially and adversely affect our business, results of operations, financial condition and prospects. We planto enter into a LSTK EPC contract, which could mitigate certain of these design, construction, and execution risks throughperformance, time and cost guarantees. We expect to execute the EPC contract in the second quarter of 2018.Our ability to generate cash is substantially dependent upon it entering into satisfactory contracts with third parties andthe performance of those third parties under those contracts.We have not yet entered into, and may never be able to enter into, satisfactory commercial arrangements with third-party suppliers of feedstock or other required supplies to the Project, or customers for products and services from the Project.Our business strategy regarding how and when the Project’s export capacity or LNG produced by the Terminal ismarketed may change based on market factors. Without limitation, our business strategy may change due to inability to enterinto agreements with customers or based on our or market participants’ views regarding future supply and demand of LNG,prices, available worldwide natural gas liquefaction capacity or regasification capacity, or other factors. If efforts12 Table of Contentsto market the Project’s export capacity or LNG produced by the Terminal are not successful, our business, results ofoperations, financial condition and prospects may be materially and adversely affected.Rio Grande’s construction and operations activities are subject to a number of development risks, operational hazards,regulatory approvals and other risks which may not be fully covered by insurance, and which could cause cost overrunsand delays that could have a material adverse effect on our business, results of operations, financial condition, liquidityand prospects.Siting, development and construction of the Project will be subject to the risks of delay or cost overruns inherent inany construction project resulting from numerous factors, including, but not limited to, the following:·difficulties or delays in obtaining, or failure to obtain, sufficient debt or equity financing on reasonable terms;·failure to obtain all necessary government and third-party permits, approvals and licenses for the constructionand operation of any of the proposed LNG facilities;·failure to obtain sale and purchase agreements that generate sufficient revenue to support the financing andconstruction of the Project;·difficulties in engaging qualified contractors necessary to the construction of the contemplated Project or otherLNG facilities;·shortages of equipment, material or skilled labor;·natural disasters and catastrophes, such as hurricanes, explosions, fires, floods, industrial accidents andterrorism;·unscheduled delays in the delivery of ordered materials;·work stoppages and labor disputes;·competition with other domestic and international LNG export terminals;·unanticipated changes in domestic and international market demand for and supply of natural gas and LNG,which will depend in part on supplies of and prices for alternative energy sources and the discovery of newsources of natural resources;·unexpected or unanticipated additional improvements; and·adverse general economic conditions.Delays beyond the estimated development periods, as well as cost overruns, could increase the cost of completionbeyond the amounts that are currently estimated, which could require us to obtain additional sources of financing to fund theactivities until the Project is constructed and operational (which could cause further delays). The need for more financingmay also make the Project uneconomic. Any delay in completion of the Project may also cause a delay in the receipt ofrevenues projected from the Project or cause a loss of one or more customers. As a result, any significant construction delay,whatever the cause, could have a material adverse effect on our business, results of operations, financial condition, liquidityand prospects.Our operations are subject to all of the hazards inherent in the receipt and processing of natural gas to LNG, andassociated short-term storage including:·damage to pipelines and plants, related equipment, loading terminal, and surrounding properties caused byhurricanes, tornadoes, floods, fires and other natural disasters, acts of terrorism and acts of third parties;·damage from subsurface and/or waterway activity (for example, sedimentation of shipping channel access);13 Table of Contents·leaks of natural gas, natural gas liquids, or oil or losses of natural gas, natural gas liquid, or oil as a result of themalfunction of equipment or facilities;·fires, ruptures and explosions;·other hazards that could also result in personal injury and loss of life, pollution and suspension of operations;and·hazards experienced by other operators that may affect our operations by instigating increased regulations andoversight.Any of these risks could adversely affect our ability to conduct operations or result in substantial loss to us as aresult of claims for:·injury or loss of life;·damage to and destruction of property, natural resources and equipment;·pollution and other environmental damage;·regulatory investigations and penalties;·suspension of our operations;·failure to perform contractual obligations; and·repair and remediation costs.We may elect not to obtain insurance for any or all of these risks if we believe that the cost of available insurance isexcessive relative to the risks presented. In addition, contractual liabilities and pollution and environmental risks generallyare not fully insurable. The occurrence of an event that is not fully covered by insurance could have a material adverse effecton our business, financial condition and results of operations.We may experience increased labor costs, and the unavailability of skilled workers or our failure to attract and retainqualified personnel could adversely affect us. In addition, changes in our senior management or other key personnel couldaffect our business operations.We are dependent upon the available labor pool of skilled employees authorized to work in the United States. Wecompete with other energy companies and other employers to attract and retain qualified personnel with the technical skillsand experience required to construct and operate our facilities and pipelines and to provide our customers with the highestquality service. A shortage in the labor pool of skilled workers able to legally work in the United States or other generalinflationary pressures or changes in applicable laws and regulations could make it more difficult for us to attract and retainqualified personnel and could require an increase in the wage and benefits packages that we offer, thereby increasing ouroperating costs. Any increase in our operating costs could materially and adversely affect our business, financial condition,operating results, liquidity and prospects.We depend on our executive officers for various activities. We do not maintain key person life insurance policies onany of our personnel. Although we have arrangements relating to compensation and benefits with certain of our executiveofficers, we do not have any employment contracts or other agreements with key personnel binding them to provide servicesfor any particular term. The loss of the services of any of these individuals could have a material adverse effect on ourbusiness.14 Table of ContentsTechnological innovation, competition or other factors may negatively impact our anticipated competitive advantage orour processes.Our success will depend on our ability to create and maintain a competitive position in the natural gas liquefactionindustry. We do not have any exclusive rights to any of the technologies that we will be utilizing. In addition, thetechnology we anticipate using in the Project may face competition due to the technological advances of other companies orsolutions, including more efficient and cost-effective processes or entirely different approaches developed by one or more ofour competitors or others, which could affect our business, results of operations, financial condition, liquidity and prospects.Factors that may negatively affect potential demand for LNG from the Project are diverse and include, among others:·increases in worldwide LNG production capacity and availability of LNG for market supply;·decreases in demand for LNG or increases in demand for LNG, but at levels below those required to maintaincurrent price equilibrium with respect to supply;·increases in the cost of natural gas feedstock supplied to any project;·decreases in the cost of, and competition with, sources of alternate fuels (such as coal, oil, nuclear power andhydroelectric, wind and solar energy);·displacement of LNG by pipeline natural gas or alternate fuels in locations where access to these energy sourcesis not currently available;·political instability in foreign countries that import natural gas, or strained relations between such countries andthe U.S.; and·economic or other reasons for LNG buyers to obtain their LNG from non-U.S. markets or from competitors’ LNGfacilities in the United States.Decreases in the global demand for and price of natural gas (versus the price of imported LNG) could lead to reduceddevelopment of LNG projects worldwide.We are subject to risks associated with the development, operation and financing of domestic LNG facilities. Thedevelopment of domestic LNG facilities and projects is generally based on assumptions about the future price of natural gasand LNG and the conditions of the global natural gas and LNG markets. Natural gas and LNG prices have been, and are likelyto remain in the future, volatile and subject to wide fluctuations that are difficult to predict. As a result, our activities willexpose us to risks of commodity price movements, which we believe could be mitigated by entering into long-term LNGsales contracts. There can be no assurance that we will be successful in entering into long-term LNG salescontracts. Additionally, the global LNG market could shift toward the use of shorter-term LNG sales contracts.Fluctuations in commodity prices may create a mismatch between natural gas and petroleum prices, which couldhave a significant impact on our future revenues. Commodity prices and volumes are volatile due to many factors over whichwe have no control, including competing liquefaction capacity in North America; the international supply and receivingcapacity of LNG; LNG marine transportation capacity; weather conditions affecting production or transportation of LNGfrom the Terminal; domestic and global demand for natural gas; the effect of government regulation on the production,transportation and sale of natural gas; oil and natural gas exploration and production activities; and the development of andchanges in the cost of alternative energy sources for natural gas and political and economic conditions worldwide.Our activities are also dependent on the price and availability of materials for the construction of the Project, such asnickel, aluminum, pipe, and steel, which may be subject to import tariffs in the U.S. market and are all also subject to factorsaffecting commodity prices and volumes. In addition, authorities with jurisdiction over wholesale power rates in the U.S.,Europe and elsewhere, as well as independent system operators overseeing some of these markets, may impose15 Table of Contentsprice limitations, bidding rules and other mechanisms which may adversely impact or otherwise limit trading margins andlead to diminished opportunities for gain. We cannot predict the impact energy trading may have on our business, results ofoperations or financial condition.Further, the development of liquefaction facilities takes a substantial amount of time, requires significant capitalinvestment, may be delayed by unforeseen and uncontrollable factors and is dependent on our financial viability and abilityto market LNG internationally.Competition in the LNG industry is intense, and some of our competitors have greater financial, technological and otherresources.We plan to operate in the highly competitive area of LNG production and face intense competition fromindependent, technology-driven companies as well as from both major and other independent oil and natural gas companiesand utilities.Many competing companies have secured access to, or are pursuing development or acquisition of, LNG facilities inNorth America. We may face competition from major energy companies and others in pursuing our proposed businessstrategy to provide liquefaction and export products and services at the Project. In addition, competitors have and aredeveloping LNG terminals in other markets, which will compete with U.S. LNG facilities. Some of these competitors havelonger operating histories, more development experience, greater name recognition, larger staffs and substantially greaterfinancial, technical and marketing resources than we currently possess. The superior resources that some of these competitorshave available for deployment could allow them to compete successfully against us, which could have a material adverseeffect on our business, results of operations, financial condition, liquidity and prospects.There may be shortages of LNG vessels worldwide, which could have a material adverse effect on our business, results ofoperations, financial condition, liquidity and prospects.The construction and delivery of LNG vessels requires significant capital and long construction lead times, and theavailability of the vessels could be delayed to the detriment of our business and customers due to the following:·an inadequate number of shipyards constructing LNG vessels and a backlog of orders at these shipyards;·political or economic disturbances in the countries where the vessels are being constructed;·changes in governmental regulations or maritime self-regulatory organizations;·work stoppages or other labor disturbances at the shipyards;·bankruptcies or other financial crises of shipbuilders;·quality or engineering problems;·weather interference or catastrophic events, such as a major earthquake, tsunami, or fire; or·shortages of or delays in the receipt of necessary construction materials.Terrorist attacks, including cyberterrorism, or military campaigns involving us or the Project could result in delays in, orcancellation of, construction or closure of the Project.A terrorist or military incident involving the Project may result in delays in, or cancellation of, construction of theProject, which would increase our costs and prevent us from obtaining expected cash flows. A terrorist incident could alsoresult in temporary or permanent closure of the Project, which could increase costs and decrease cash flows, depending on theduration of the closure. Operations at the Project could also become subject to increased governmental scrutiny that mayresult in additional security measures at a significant incremental cost. In addition, the threat of terrorism and the impact ofmilitary campaigns may lead to continued volatility in prices for natural gas that could adversely affect our business andcustomers, including the ability of our suppliers or customers to satisfy their respective obligations under our16 Table of Contentscommercial agreements. Instability in the financial markets as a result of terrorism, including cyberterrorism, or war couldalso materially adversely affect our ability to raise capital. The continuation of these developments may subject ourconstruction and operations to increased risks, as well as increased costs, and, depending on their ultimate magnitude, couldhave a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity andprospects.Changes in legislation and regulations relating to the LNG industry could have a material adverse impact on our business,results of operations, financial condition, liquidity and prospects.Future legislation and regulations, such as those relating to the transportation and security of LNG exported fromthe proposed LNG facilities, could cause additional expenditures, restrictions and delays in connection with the proposedLNG facilities and their construction, the extent of which cannot be predicted, and which may require us to substantiallylimit, delay or cease operations in some circumstances. Revised, reinterpreted or additional laws and regulations that result inincreased compliance costs or additional operating costs and restrictions could have a material adverse effect on ourbusiness, results of operations, financial condition, liquidity and prospects.Our operations will be subject to a number of environmental laws and regulations that impose significant compliancecosts, and existing and future environmental and similar laws and regulations could result in increased compliance costsor additional operating restrictions.Our business will be subject to extensive federal, state and local regulations and laws, including regulations andrestrictions on discharges and releases to the air, land and water and the handling, storage and disposal of hazardous materialsand wastes in connection with the development, construction and operation of our liquefaction facilities. These regulationsand laws will require us to maintain permits, provide governmental authorities with access to our facilities for inspection andprovide reports related to our compliance. Violation of these laws and regulations could lead to substantial fines andpenalties or to capital expenditures related to pollution control equipment that could have a material adverse effect on ourbusiness, results of operations, financial condition, liquidity and prospects. Federal and state laws impose liability, withoutregard to fault or the lawfulness of the original conduct, for the release of certain types or quantities of hazardous substancesinto the environment. As the owner and operator of the Project, we could be liable for the costs of cleaning up hazardoussubstances released into the environment and for damage to natural resources.In addition, future federal, state and local legislation and regulations may impose unforeseen burdens and increasedcosts on our business that could have a material adverse effect on our financial results, such as regulations regardinggreenhouse gas emissions and the transportation of LNG. As an international shipper of LNG, our operations could also beimpacted by environmental laws applicable under international treaties or foreign jurisdictions.The operation of the Project may be subject to significant operating hazards and uninsured risks, one or more of whichmay create significant liabilities and losses that could have a material adverse effect on our business, results of operations,financial condition, liquidity and prospects.The plan of operations for the Project is subject to the inherent risks associated with LNG operations, includingexplosions, pollution, release of toxic substances, fires, hurricanes and other adverse weather conditions, and other hazards,each of which could result in significant delays in commencement or interruptions of operations and/or result in damage to ordestruction of the Project and assets or damage to persons and property.We do not, nor do we intend to, maintain insurance against all these risks and losses. We may not be able tomaintain desired or required insurance in the future at rates that we consider reasonable. The occurrence of a significant eventnot fully insured or indemnified against could have a material adverse effect on our business, contracts, financial condition,operating results, cash flow, liquidity and prospects.We are dependent on a limited number of customers for the purchase of LNG.The number of potential customers is limited. Some potential purchasers of the LNG to be produced from theTerminal are new to the LNG business and have limited experience in the industry. We will be reliant upon the ability forthese customers to enter into satisfactory downstream arrangements in their home markets for the licenses to import and re-sell re-gasified LNG. Some of these jurisdictions are heavily regulated and dominated by state entities. In certain instances,customers may require credit enhancement measures in order to satisfy project-financing requirements.17 Table of ContentsWe have not yet concluded negotiations for the Terminal site lease and have obtained right-of-way options for only part ofthe Pipeline route.Our strategy currently involves leasing or otherwise acquiring suitable sites for the construction of new facilities totransport gas to the Terminal and to produce large quantities of LNG for delivery under tolling arrangements or sale. For thesiting of the Terminal, we have entered into a site option agreement for a 984-acre tract of land owned by the BrownsvilleNavigation District which operates the Port of Brownsville along the Brownsville Ship Channel. Our option is valid untilNovember 2019. If we are unable to timely complete the lease negotiations or extend the lease option, we may not be able tosite the Terminal and our business will be materially adversely affected.We have commenced work on securing options for rights-of-way along the approximately 137-mile Pipeline route.This involves direct negotiations with more than 125 landowners along the route, some of whom may not be familiar with oiland gas developments or negotiate terms in good faith. It is possible that as we progress these negotiations, we mayencounter recalcitrant land-owners or competitive projects offering more attractive terms which could result in additionaltime and cost in order to secure the Pipeline route. Although the Pipeline is being permitted under Section 7 of the NaturalGas Act, which provides permit holders rights of eminent domain, any recourse to eminent domain proceedings will increasethe time and cost at which these rights-of-way will be secured. If the time or cost required to obtain these rights-of-wayincreases substantially or we are unable to obtain the rights-of-way, our business could be materially adversely affected.Our U.S. competitors have acquired significant property tax incentives, and we may not be able to acquire or may not haveacquired similar incentives from applicable taxing entities.Due to the size of the Project’s capital investment, property taxes represent large operating costs for the Project. Theprincipal taxing entities are the Point Isabel Independent School District (“PIISD”) and Cameron County (the “County”). Dueto local opposition supported by national environmental interest groups, PIISD did not initially accept Rio Grande’sapplication for a value limitation agreement pursuant to the State of Texas tax code provisions for economic development.We intend to resubmit Rio Grande’s application for consideration, but there is no guaranty that it will be accepted andapproved. Approval of these tax incentives is an important component of the Project’s competitiveness. Failure to gainapproval of tax incentives by PIISD on comparable terms with competitors could materially impact the Project’scompetitiveness. On October 3, 2017, Rio Grande executed four tax abatement agreements with the County; however, there is noassurance that the terms of such tax abatement agreements are competitive with other Gulf Coast liquefaction projects.Objections from local communities can delay the Project.Some local communities could perceive the proposed construction and operation of the Project as negativelyimpacting the environment, wildlife, cultural heritage sites or the public health of residents. Objections from localcommunities could cause delays, damage to reputation and difficulties in obtaining or renewing permits.The Project will be dependent on the availability of gas supply at the Agua Dulce Hub.The Pipeline will collect and transport natural gas to the Terminal. The Pipeline route passes through Jim Wells,Kleberg, Kenedy, Willacy, and Cameron Counties in Texas. The header system at the upstream end of the Pipeline isintended to have multiple interconnects to the existing natural gas pipeline grid located in the Agua Dulce market area (the“Agua Dulce Hub”). The Agua Dulce Hub is located in Nueces County, Texas, and includes deliveries from (but not limitedto) ConocoPhillip’s 1,100-mile South Texas intrastate and gas gathering pipeline system and ExxonMobil’s 925 MMcf/dKing Ranch processing facility. As the Pipeline system interconnects are expected to be relatively close to the Agua DulceHub, it is expected that gas will be available for purchase in large volumes at commercially acceptable prices. Nonetheless,disruptions in upstream supply sources or increased market demand could impact the availability of gas supply to thePipeline header system, which would result in curtailments at the Terminal.Each liquefaction train for the Terminal is expected to involve the transportation and liquefaction of approximately0.75 Bcf/day of natural gas (for a total of 4.5 Bcf/day for six liquefaction trains at full build-out). Gas sales agreements for thesupply of these volumes could entail negotiations with multiple parties for firm and interruptible gas supply andtransportation services to the Pipeline header system, as well as pipeline interconnects and ancillary operational18 Table of Contentsagreements in time for operational start-up as early as 2023. Delays caused by third parties in the course of negotiatingagreements and constructing the required interconnects could delay the start of commercial operations for the Project. Unethical conduct and non-compliance with applicable laws could have a significant adverse effect on our business.Incidents of unethical behavior, fraudulent activity, corruption or non-compliance with applicable laws andregulations could be damaging to our operations and reputation and may subject us to criminal and civil penalties or loss ofoperating licenses. We have implemented an anti-corruption policy which applies to all employees and contractors withoutexception and we are a member of TRACE International, an internationally recognized anti-bribery compliance provider. Ourlegal team screens potential partners, agents and advisors in multiple data-bases to which it has access and regularly conductsdue diligence interviews with potential counterparties. Due to the global nature of the LNG business and the diversity ofjurisdictions in which our customers operate, it is possible that a prospective counterparty could be accused of behavior thatfalls short of our expectations in this regard, leading to reputational damage and potential legal liabilities, notwithstandingour best efforts to prevent such behaviors.Our common stock could be delisted from Nasdaq.Our common stock is currently listed on Nasdaq. However, we cannot assure you that we will be able to comply withthe continued listing standards of Nasdaq. If we fail to comply with the continued listing standards of Nasdaq, our commonstock may become subject to delisting. If Nasdaq delists our common stock from trading on its exchange for failure to meetthe continued listing standards, we and our stockholders could face significant material adverse consequences including:· a limited availability of market quotations for our securities;· a limited amount of analyst coverage; and· a decreased ability for us to issue additional securities or obtain additional financing in the future.The market price of our common stock has fluctuated in the past and is likely to fluctuate in the future. Holders of commonstock could lose all or part of their investment.The securities markets in general and our common stock has experienced significant price and volume volatility.The market price and trading volume of our common stock may continue to experience significant fluctuations due not onlyto general stock market conditions but also to a change in sentiment in the market regarding our operations or businessprospects or those of companies in our industry. In addition to the other risk factors discussed above, the price and volumevolatility of our common stock may be affected by:·domestic and worldwide supply of and demand for natural gas and corresponding fluctuations in the price ofnatural gas;·fluctuations in our quarterly or annual financial results or those of other companies in our industry;·issuance of additional equity securities which causes further dilution to stockholders;·sales of a high volume of shares of our common stock by our stockholders;·operating and stock price performance of companies that investors deem comparable to us;·events affecting other companies that the market deems comparable to us;·changes in government regulation or proposals applicable to us;·actual or potential non-performance by any customer or a counterparty under any agreement;·announcements made by us or our competitors of significant contracts;19 Table of Contents·changes in accounting standards, policies, guidance, interpretations or principles;·general conditions in the industries in which we operate;·general economic conditions; and·the failure of securities analysts to cover our common stock or changes in financial or other estimates byanalysts.The stock prices of companies in the LNG industry have experienced wide fluctuations that have often beenunrelated to the operating performance of these companies. Following periods of volatility in the market price of acompany’s securities, securities class action litigation often has been initiated against a company. If any class actionlitigation is initiated against us, we may incur substantial costs and our management’s attention may be diverted from ouroperations, which could materially adversely affect our business and financial condition.Raising additional capital may cause dilution to existing stockholders, restrict our operations or require us to relinquishrights. Additionally, sales of a substantial number of shares of our common stock or other securities in the public marketcould cause our stock price to fall. We may seek the additional capital necessary to fund our operations through public or private equity offerings anddebt financings. To the extent that we raise additional capital through the sale of equity or convertible debt securities,existing stockholders’ ownership interests will be diluted, and the terms may include liquidation or other preferences thatadversely affect their rights as a stockholder. Debt financing, if available, may involve agreements that include covenantslimiting or restricting our ability to take specific actions such as incurring additional debt, making capital expenditures ordeclaring dividends. In addition, sales of a substantial number of shares of our common stock or other securities in the publicmarket could occur at any time. These sales, or the perception in the market that the holders of a large number of sharesintend to sell shares, could reduce the market price of our common stock.Warrants are exercisable for our common stock, which, if exercised, would increase the number of shares eligible for futureresale in the public market and result in dilution to our stockholders.As of December 31, 2017, outstanding warrants to purchase an aggregate of 12,081,895 shares of our common stockbecame exercisable in accordance with the terms of the warrant agreement governing those securities. These warrants willexpire at 5:00 p.m., New York time, on July 24, 2022 or earlier upon redemption or liquidation. The exercise price of thesewarrants is $11.50 per one full share, subject to certain adjustments. To the extent such warrants are exercised, additionalshares of our common stock will be issued, which will result in dilution to the holders of our common stock and increase thenumber of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market orthe fact that such warrants may be exercised could adversely affect the market price of our common stock.Our Second Amended and Restated Certificate of Incorporation grants our board of directors the power to designate andissue additional shares of common and/or preferred stock.Our authorized capital consists of 480,000,000 shares of common stock and 1,000,000 shares of preferred stock. Ourpreferred stock may be designated into series pursuant to authority granted by our Second Amended and Restated Certificateof Incorporation (the “Certificate of Incorporation”), and on approval from our board of directors. The board of directors,without any action by our stockholders, may designate and issue shares in such classes or series as it deems appropriate andestablish the rights, preferences and privileges of such shares, including dividends, liquidation and voting rights. The rightsof holders of other classes or series of stock that may be issued could be superior to the rights of holders of our commonstock. The designation and issuance of shares of capital stock having preferential rights could adversely affect other rightsappurtenant to shares of our common stock.Provisions of our charter documents or Delaware law could delay or prevent an acquisition of NextDecade even if theacquisition would be beneficial to our stockholders and could make it more difficult to change management. Provisions of the Certificate of Incorporation and our Amended and Restated Bylaws may discourage, delay orprevent a merger, acquisition or other change in control that stockholders might otherwise consider favorable, includingtransactions in which stockholders might otherwise receive a premium for their shares. In addition, these provisions may20 Table of Contentsfrustrate or prevent any attempt by our stockholders to replace or remove our current management by making it more difficultto replace or remove our board of directors. These provisions include:·limitations on our stockholders’ ability to call special meetings of stockholders;·an advance notice requirement for stockholder proposals and nominations for members of our board ofdirectors;·the authority of our board of directors to determine the number of director seats on our board of directors; and·the authority of our board of directors to issue preferred stock with such terms as it may determine.U.S. federal income tax reform could adversely affect us.On December 22, 2017, the Tax Cuts and Jobs Act (the “2017 Tax Act”) was signed into law, significantly reformingthe IRC. The 2017 Tax Act, among other things, includes changes to U.S. federal tax rates, imposes significant additionallimitations on the deductibility of interest, allows for the expensing of capital expenditures, reduces or eliminates certaindomestic deductions and imposes limitations on the use of net operating losses arising in taxable years beginning afterDecember 31, 2017. The reduction of the U.S. corporate tax rate results in a decreased valuation of our deferred tax asset andliabilities. We continue to examine the impact the 2017 Tax Act may have on our business. The estimated impact of the 2017Tax Act is based on our management’s current knowledge and assumptions and recognized impacts could be materiallydifferent from current estimates based on our actual results.21 Table of ContentsItem 1B. Unresolved Staff CommentsNone. Item 2. PropertiesWe currently lease approximately 8,300 square feet of office space for general and administrative purposes in TheWoodlands, Texas under an amended lease agreement that expires on September 30, 2018.In January 2017, NextDecade LLC executed surface lease agreements with the City of Texas City and the State ofTexas for a 994‑acre site for the Galveston Bay Terminal (collectively, the “Galveston Bay Leases”). The term of theGalveston Bay Leases is 36 months with an option to extend for an additional 12 months. In March 2017, NextDecade LLC executed a lease agreement with the Brownsville Navigation District for a ten‑acretract subsumed within the site for the Terminal (the “Brownsville Lease”). The Brownsville Lease has an eight‑month primaryterm with the option to renew such lease for six additional six-month terms. On October 10, 2017, NextDecade LLCexercised its option to renew the Brownsville Lease for an additional six-month term, which expires May 5, 2018.We do not own or lease any other real property that is materially important to our business. We believe that ourcurrent properties are adequate for our current needs and that additional space will be available when and as needed. Item 3. Legal ProceedingsNone. Item 4. Mine Safety DisclosuresNot applicable.22 Table of Contents PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecuritiesMarket Information, Holders and DividendsOur common stock trades on Nasdaq under the symbol “NEXT.” Our warrants traded on Nasdaq under the symbol“NEXTW” until February 22, 2018, the date on which our warrants were delisted from Nasdaq as a result of our failure tosatisfy the initial listing requirements of Nasdaq. Since February 22, 2018, our warrants have been trading on the OTC PinkMarket under the symbol “NEXTW.” The table below presents the high and low sales prices of our common stock andwarrants, as reported by the Nasdaq, for each quarter during 2017 and 2016. Common Stock Warrants High Low High Low2017 First Quarter $10.26 $10.12 $1.00 $0.23Second Quarter 10.34 10.16 1.00 0.17Third Quarter 20.00 6.55 1.19 0.26Fourth Quarter 10.80 5.54 0.94 0.42 2016 First Quarter $10.00 $9.82 $0.40 $0.20Second Quarter 10.50 9.83 0.34 0.17Third Quarter 10.21 9.98 0.45 0.19Fourth Quarter 10.30 9.98 0.50 0.25 As of March 1, 2018, we had 106.4 million shares of common stock outstanding held by approximately 81 recordowners. All shares of common stock held in street name are recorded in our stock register as being held by one stockholder.We currently intend to retain earnings to finance the growth and development of our business and do not anticipatepaying any cash dividends on the common stock in the foreseeable future. Any future change in our dividend policy will bemade at the discretion of our board of directors in light of our financial condition, capital requirements, earnings, prospectsand any restrictions under any financing agreements, as well as other factors it deems relevant. Item 6. Selected Financial DataSelected financial data set forth below (in thousands, except per share data) are derived from our auditedConsolidated Financial Statements for the periods indicated. The financial data should be read in conjunction withManagement’s Discussion and Analysis of Financial Condition and Results of Operations and our Consolidated FinancialStatements and the accompanying notes thereto included elsewhere in this report. December 31, 2017 2016 2015 2014Property, plant and equipment, net $73,226 $56,233 $36,879 $1,369Total assets 116,091 75,777 82,596 2,165Total liabilities 12,999 7,679 6,032 1,051 Year Ended December 31, 2017 2016 2015 2014Revenues $ — $ — $ — $ —Total operating loss (35,638) (8,502) (7,773) (2,886)Net loss (35,326) (8,439) (7,764) (2,888)Net loss per common share - basic and diluted (0.35) (0.09) (0.14) (0.47)Weighted average shares outstanding - basic and diluted 100,926 95,680 55,226 6,19123 Table of Contents Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.IntroductionThe following discussion and analysis presents management’s view of our business, financial condition and overallperformance and should be read in conjunction with our Consolidated Financial Statements and the accompanying notes in“Financial Statements and Supplementary Data.” This information is intended to provide investors with an understanding ofour past performance, current financial condition and outlook for the future. Our discussion and analysis include thefollowing subjects:·Overview of Business·Overview of Significant Events·Liquidity and Capital Resources·Contractual Obligations·Results of Operations·Off-Balance Sheet Arrangements·Summary of Critical Accounting Estimates·Recent Accounting StandardsOverview of BusinessWe are a LNG development company focused on LNG export projects and associated pipelines in the State of Texas.We have focused and continue to focus our development activities on the Project. We believe we maintain key competitiveadvantages involving engineering, commercial, regulatory, and gas supply considerations. We submitted a pre-filing requestfor the Project to the FERC in March 2015 and filed a formal application with the FERC in May 2016. We also believe wehave robust commercial offtake and gas supply strategies in place and we estimate that the Project will commencecommercial operations as early as 2023.Overview of Significant EventsOur Merger with NextDecade LLCOn July 24, 2017, one of our subsidiaries merged with and into NextDecade LLC, a liquefied natural gas (“LNG”)development company founded in 2010 to develop LNG export projects and associated pipelines in the State of Texas. Priorto the merger with NextDecade LLC, we had no operations and our assets consisted of cash proceeds received in connectionwith our initial public offering.Completion of Front End Engineering and Design Update PackageIn early 2018, we completed the FEED update package with CB&I for the Terminal. The update incorporatesidentified cost reduction and value improvement initiatives and reconfirms market-leading EPC cost estimates for three trainsof $490 per ton with a target of $450 per ton. For two trains the EPC cost estimate improves to $535 per ton with a target of$500 per ton. NextDecade and CB&I are finalizing an Open Book Estimate to incorporate the FEED update improvementsand plan to execute a binding Lump-Sum Turnkey EPC agreement in the second quarter of 2018.24 Table of ContentsLiquidity and Capital ResourcesCapital ResourcesIn March 2015, we completed our initial public offering raising approximately $115 million in cash proceeds. Wehave funded and continue to fund the development of the Project and general working capital needs through our cash onhand and proceeds from the issuance of equity. Our capital resources consist of approximately $35.7 million of cash and $5.1million of available-for-sale investment securities as of December 31, 2017.Sources and Uses of CashThe following table summarizes the sources and uses of our cash for the periods presented (in thousands): For the Year Ended December 31, 2017 2016 2015Operating cash flows $(12,830) $(7,190) $(6,227)Investing cash flows 11,862 (24,416) (33,213)Financing cash flows 24,147 — 83,214 Net increase (decrease) in cash, cash equivalents and restricted cash 23,179 (31,606) 43,774Cash, cash equivalents and restricted cash – beginning of year 12,524 44,130 356Cash, cash equivalents and restricted cash – end of year $35,703 $12,524 $44,130 Operating Cash FlowsOperating cash outflows during the years ended December 31, 2017, 2016 and 2015 were $12.8 million, $7.2million and $6.2 million, respectively. The increase in operating cash outflows in 2017 compared to 2016 was primarilyrelated to increased cash used as a result of additional employees and increased professional fees. The increase in operating cash outflows in 2016 compared to 2015 was primarily related to increased cash used as aresult of additional employees.Investing Cash FlowsInvesting cash inflows (outflows) during the years ended December 31, 2017, 2016 and 2015 were $11.9 million,$(24.4) million and $(33.2) million, respectively. The increase in investing cash inflows in 2017 compared to 2016 wasprimarily the result of cash acquired in the Merger of $26.8 million, a reduction in cash outflows in the development of theProject of $4.6 million and a reduction in cash outflows for the purchase of available-for-sale investment securities of $4.9million.The decrease in investing cash outflows in 2016 compared to 2015 was primarily due to a reduction in cashoutflows in the development of the Project of $13.8 million offset by an increase in cash outflows for the purchase ofavailable-for-sale investment securities of $5.0 million.Financing Cash FlowsFinancing cash inflows during the years ended December 31, 2017, 2016 and 2015 were $24.1 million, zero, and$83.2 million, respectively. Financing cash inflows in 2017 was the result of $30.1 million of equity issued offset by $6.0million of equity issuance costs in 2017 and no financing cash flows in 2016.Financing cash inflows in 2015 was the result of $87.0 million of equity issued offset by $2.7 million of equityissuance costs and $1.0 million dividend paid.25 Table of ContentsCapital Development ActivitiesWe are primarily engaged in developing the Project, which will require significant additional capital to supportfurther project development, engineering, regulatory approvals and compliance, and commercial activities in advance of aFID made to finance and construct the Project. Even if successfully completed, the Project will not begin to operate andgenerate significant cash flows until at least several years from now, which management currently estimates being as early as2023. Construction of the Terminal and Pipeline would not begin until FERC issues an order granting the necessaryauthorizations under the Natural Gas Act and once all required federal, state and local permits have been obtained. Weestimate that we will receive all regulatory approvals and begin construction to support the commencement of commercialoperations as early as 2023. As a result, our business success will depend, to a significant extent, upon our ability to obtainthe funding necessary to construct the Project, to bring it into operation on a commercially viable basis and to finance thecosts of staffing, operating and expanding our company during that process.We have engaged SG Americas Securities, LLC (a business unit of Société Générale) and Macquarie Capital(USA) Inc. to advise and assist us in raising capital for post-FID construction activities. Additionally, we have negotiated anon-binding term sheet with GE Oil & Gas, Inc. for $150 million of pre-FID “bridge loan financing” which, subject to theachievement of certain development milestones, may be utilized to fund certain pre-FID development activities.We currently expect that the long-term capital requirements for the Project will be financed predominately throughproject financing and proceeds from future debt and equity offerings. There can be no assurance that we will succeed insecuring additional debt and/or equity financing in the future to complete the Project or, if successful, that the capital weraise will not be expensive or dilutive to stockholders. Additionally, if these types of financing are not available, we will berequired to seek alternative sources of financing, which may not be available on terms acceptable to us, if at all.Contractual ObligationsWe are committed to make cash payments in the future pursuant to certain of our contracts. The following tablesummarizes certain contractual obligations (in thousands) in place as of December 31, 2017: Total 2018 2019 -2020 2021 -2022 ThereafterOperating lease obligations $1,101 $601 $500 $ — $ — Operating lease obligations primarily relate to our land site for our Galveston Bay Terminal and office space in TheWoodlands, Texas. A discussion of these obligations can be found at Note 12 – Commitments and Contingencies of ourNotes to Consolidated Financial Statements.Results of OperationsThe following table summarizes costs, expenses and other income for the year ended December 31, 2017 and 2016(in thousands): For the Year Ended December 31, 2017 2016 ChangeRevenues $ — $ — $ —General and administrative expenses 34,551 7,300 27,251Land option and lease expenses 981 596 385Depreciation expense 106 100 6Impairment loss on capital projects — 506 (506)Operating loss (35,638) (8,502) (27,136)Interest income, net 343 82 261Other expense (31) (19) (12)Net loss $(35,326) $(8,439) $(26,887) 26 Table of ContentsOur consolidated net loss was $35.3 million, or $0.35 per share (basic and diluted), for the year ended December 31,2017, compared to a net loss of $8.4 million, or $0.09 per share (basic and diluted), for the year ended December 31,2016. This $26.9 million increase in net loss was primarily a result of increased general and administrative expensesdiscussed separately below.General and administrative expenses during the year ended December 31, 2017 increased $27.3 million compared tothe year ended December 31, 2016 due primarily to (i) share-based compensation expense of $22.7 million, which was notincurred in 2016, and (ii) an increase in the number of employees and amount of professional fees increasing from $5.6million in the year ended December 31, 2016 to $9.5 million in the year ended December 31, 2017.Land option and lease expenses during the year ended December 31, 2017, increased $0.4 million compared to theyear ended December 31, 2016 primarily due to lease expense associated with a 994-acre site with the City of Texas City andthe State of Texas of $0.3 million, which was not incurred in 2016. Impairment loss on capital projects decreased in the year ended December 31, 2017 compared to the year endedDecember 31, 2016 due to an approximate $0.5 million impairment charge recognized in May 2016, when we decided toabandon several early-stage, non-core projects to focus on development of the Project.Interest income, net during the year ended December 31, 2017 increased $0.3 million compared to the year endedDecember 31, 2016 due to increased yield and higher average balances maintained in our cash accounts and investments.The following table summarizes costs, expenses and other income for the year ended December 31, 2016 and 2015(in thousands): For the Year Ended December 31, 2016 2015 ChangeRevenues $ — $ — $ —General and administrative expenses 7,300 7,109 191Land option and lease expenses 596 584 12Depreciation expense 100 80 20Impairment loss on capital projects 506 — 506Operating loss (8,502) (7,773) (729)Interest income, net 82 24 58Other expense (19) (15) (4)Net loss $(8,439) $(7,764) $(675) Our consolidated net loss was $8.4 million, or $0.09 per share (basic and diluted), for the year ended December 31,2016, compared to a net loss of $7.8 million, or $0.14 per share (basic and diluted), for the year ended December 31,2016. This $0.7 million increase in net loss was primarily a result of increased general and administrative expenses andimpairment loss on capital projects discussed separately below.General and administrative expenses during the year ended December 31, 2016 increased $0.2 million compared tothe year ended December 31, 2015 due primarily to increased professional fees for legal, financial advisors, and marketconsultants of $1.2 million compared to $1.0 million during the year ended December 31, 2015. Impairment loss on capital projects during the year ended December 31, 2016 increased compared to the year endedDecember 31, 2015 due to an approximate $0.5 million impairment charge recognized in May 2016, when we decided toabandon several early-stage, non-core projects to focus on development of the Project.Off-Balance Sheet ArrangementsWe did not have any off-balance sheet arrangements as of December 31, 2017.27 Table of ContentsSummary of Critical Accounting EstimatesThe preparation of our Condensed Consolidated Financial Statements in conformity with accounting principlesgenerally accepted in the United States of America (“GAAP”) requires management to make certain estimates andassumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes.Management evaluates its estimates and related assumptions regularly, including those related to the value of properties,plant, and equipment, share-based compensation and income taxes. Changes in facts and circumstances or additionalinformation may result in revised estimates, and actual results may differ from these estimates. Management considers thefollowing to be its most critical accounting estimates that involve significant judgment.Impairment of Long-Lived AssetsA long-lived asset, including an intangible asset, is evaluated for potential impairment whenever events or changesin circumstances indicate that its carrying value may not be recoverable. Recoverability generally is determined bycomparing the carrying value of the asset to the expected undiscounted future cash flows of the asset. If the carrying value ofthe asset is not recoverable, the amount of impairment loss is measured as the excess, if any, of the carrying value of the assetover its estimated fair value. We use a variety of fair value measurement techniques when market information for the same orsimilar assets does not exist. Projections of future operating results and cash flows may vary significantly from results. Management reviews its estimates of cash flows on an ongoing basis using historical experience and other factors, includingthe current economic and commodity price environment.Share-based CompensationThe assumptions used in calculating the fair value of share-based payment awards represent our best estimates, butthese estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors changeand we use different assumptions, our share-based compensation expense could be materially different in the future.For additional information regarding our share-based compensation, see Note 10 – Share-based Compensation ofour Notes to Consolidated Financial Statements.Income TaxesProvisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes ontemporary differences between the tax basis of assets and liabilities and their reported amounts in the Consolidated FinancialStatements. Deferred tax assets and liabilities are included in the Consolidated Financial Statements at currently enactedincome tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized orsettled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the currentperiod’s provision for income taxes. We routinely assess our deferred tax assets and reduce such assets by a valuationallowance if we deem it is more likely than not that some portion or all of the deferred tax assets will not be realized. Thisassessment requires significant judgment and is based upon our assessment of our ability to generate future taxable incomeamong other factors.Recent Accounting StandardsFor descriptions of recently issued accounting standards, see Note 13 – Recent Accounting Pronouncements of ourNotes to Consolidated Financial Statements.28 Table of ContentsItem 7A. Quantitative and Qualitative Disclosures About Market RiskThe Company is exposed to market risk in the form of equity price risk related to investments in marketablesecurities and capital market risk related to future debt and equity offerings.Equity Price RiskAt December 31, 2017, the fair value of our investments in securities available-for-sale was $5.1 million. Wedetermined the fair value of our investment based on the closing market price where these securities were listed on December29, 2017. In order to test the sensitivity of the fair value of the available-for-sale securities to changes in equity prices,management modeled a 10% change in the closing market price. This 10% change in closing market price would haveresulted in a $0.5 million change in the fair value of available-for-sale securities as of December 31, 2017 and December 31,2016.Capital Market RiskWe currently have no revenues and depend on funds raised through other sources. Two sources of funding arethrough future debt or equity offerings. Our ability to raise funds in this manner depends upon capital market forces affectingthe share price of our common stock.29 Table of Contents Item 8. Financial Statements and Supplementary DataIndex to Consolidated Financial StatementsNextDecade Corporation and Subsidiaries PageReport of Independent Registered Public Accounting Firm 31Consolidated Balance Sheets 32Consolidated Statements of Operations and Comprehensive Loss 33Consolidated Statements of Stockholders’ Equity 34Consolidated Statements of Cash Flows 35Notes to Consolidated Financial Statements 36Supplemental Information to Consolidated Financial Statements – Summarized Quarterly Financial Data 49 30 Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Stockholders and Board of Directors ofNextDecade Corporation and SubsidiariesOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of NextDecade Corporation and Subsidiaries (the“Company”) as of December 31, 2017 and 2016, the related consolidated statements of operations and comprehensive loss,stockholders’ equity and cash flows for years ended December 31, 2017, 2016 and 2015 and the related notes (collectivelyreferred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, thefinancial position of the Company as of December 31, 2017 and December 2016, and the results of its operations and its cashflows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generallyaccepted in the United States of America.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinionon the Company's financial statements based on our audits. We are a public accounting firm registered with the PublicCompany Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to theCompany in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities andExchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and performthe audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whetherdue to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal controlover financial reporting. As part of our audits we are required to obtain an understanding of internal control over financialreporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control overfinancial reporting. Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whetherdue to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a testbasis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating theaccounting principles used and significant estimates made by management, as well as evaluating the overall presentation ofthe financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ Marcum llpMarcum llpWe have served as the Company’s auditor since 2017.New York, NYMarch 8, 201831 Table of ContentsNextDecade Corporation and SubsidiariesConsolidated Balance Sheets(in thousands, except share data) December 31, December 31, 2017 2016Assets Current assets Cash and cash equivalents $35,703 $12,524Deferred equity issuance costs — 578Investments 5,063 4,997Prepaid expenses and other current assets 2,099 1,096Total current assets 42,865 19,195Property, plant and equipment, net 73,226 56,233Other assets — 349Total assets $116,091 $75,777 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $726 $1,167Share-based compensation liability 1,815 —Accrued liabilities and other current liabilities 5,856 3,767Total current liabilities 8,397 4,934Non-current compensation liabilities 2,015 2,745Non-current share-based compensation liability 2,587 —Total liabilities 12,999 7,679Commitments and contingencies (Note 12) Stockholders’ equity Preferred stock, $0.0001 par value, 1.0 million shares authorized, none issued — —Common stock, $0.0001 par valueAuthorized: 480.0 million shares at December 31, 2017 and 2016Issued and outstanding: 106.3 million shares and 95.7 million shares at December 31,2017 and 2016, respectively 11 10Additional paid-in-capital 158,738 88,406Accumulated deficit (55,617) (20,291)Accumulated other comprehensive loss (40) (27)Total stockholders’ equity 103,092 68,098Total liabilities and stockholders’ equity $116,091 $75,777 The accompanying notes are an integral part of these Consolidated Financial Statements.32 Table of ContentsNextDecade Corporation and SubsidiariesConsolidated Statements of Operations and Comprehensive Loss(in thousands, except per share data) Year Ended December 31, 2017 2016 2015Operations Revenues $ — $ — $ —Operating Expenses General and administrative expenses 34,551 7,300 7,109Land option and lease expenses 981 596 584Depreciation expense 106 100 80Impairment loss on capital projects — 506 —Total operating expenses 35,638 8,502 7,773Total operating loss (35,638) (8,502) (7,773)Other income (expense) Interest income, net 343 82 24Other expense (31) (19) (15)Total other income 312 63 9Net loss $(35,326) $(8,439) $(7,764) Net loss per common share - basic and diluted $(0.35) $(0.09) $(0.14) Weighted average shares outstanding - basic and diluted 100,926 95,680 55,226 Comprehensive Loss Net loss $(35,326) $(8,439) $(7,764)Other comprehensive loss: Change in fair value of investments (13) (27) —Comprehensive loss $(35,339) $(8,466) $(7,764) The accompanying notes are an integral part of these Consolidated Financial Statements.33 Table of ContentsNextDecade Corporation and SubsidiariesConsolidated Statements of Stockholders’ Equity(in thousands) Common Stock Accumulated Par Additional Other Total Value Paid-in Accumulated Comprehensive Stockholders’ Shares Amount Capital Deficit Loss EquityBalance at December 31, 2014 6,191 $ 1 $5,201 $(4,088) $ — $1,114Pre-merger equity issuance 89,489 9 86,991 — — 87,000Equity issuance costs — — (2,746) — — (2,746)Dividend — — (1,040) — — (1,040)Net loss — — — (7,764) — (7,764)Balance at December 31, 2015 95,680 10 88,406 (11,852) — 76,564Other comprehensive loss — — — — (27) (27)Net loss — — — (8,439) — (8,439)Balance at December 31, 2016 95,680 $10 $88,406 $(20,291) $(27) $68,098Pre-merger equity issuance 2,810 — 20,100 — — 20,100Reverse recapitalization 6,759 1 26,773 — — 26,774Issuance of common stock 1,026 — 10,000 — — 10,000Equity issuance costs — — (6,295) — — (6,295)Share-based compensation — — 19,754 — — 19,754Other comprehensive loss — — — — (13) (13)Net loss — — — (35,326) — (35,326)Balance at December 31, 2017 106,275 $11 $158,738 $(55,617) $(40) $103,092 The accompanying notes are an integral part of these Consolidated Financial Statements.34 Table of ContentsNextDecade Corporation and SubsidiariesConsolidated Statements of Cash Flows(in thousands) Year Ended December 31, 2017 2016 2015Operating activities: Net loss $(35,326) $(8,439) $(7,764)Adjustment to reconcile net loss to net cash used in operating activities Depreciation 106 100 80Share-based compensation expense 22,693 — —Impairment loss on capital projects — 506 —Changes in operating assets and liabilities: Prepaid expenses and other currents assets (1,003) (785) (475)Other assets 349 350 (672)Accounts payable (137) 272 39Accrued expenses and other liabilities 488 806 2,565Net cash used in operating activities (12,830) (7,190) (6,227)Investing activities: Acquisition of property, plant and equipment (14,833) (19,392) (33,213)Issuance of note receivable (115) — —Repayment of note receivable 115 — —Cash received in reverse recapitalization 26,774 — —Investments (79) (5,024) —Net cash provided by (used in) investing activities 11,862 (24,416) (33,213)Financing activities: Proceeds from equity issuances 30,100 — 87,000Equity issuance costs (5,953) — (2,746)Dividends paid — — (1,040)Net cash provided by financing activities 24,147 — 83,214Net increase (decrease) in cash, cash equivalents and restricted cash 23,179 (31,606) 43,774Cash, cash equivalents and restricted cash – beginning of year 12,524 44,130 356Cash, cash equivalents and restricted cash – end of year $35,703 $12,524 $44,130 Non-cash investing activities: Accounts payable for acquisition of property, plant and equipment $498 $802 $1,200Accrued liabilities for acquisition of property, plant and equipment 3,317 1,810 1,989 Balances per Consolidated Balance Sheets: December 31, 2017 2016 2015Cash and cash equivalents $35,703 $12,524 $27,127Restricted cash — — 17,003Total cash, cash equivalents and restricted cash $35,703 $12,524 $44,130 The accompanying notes are an integral part of these Consolidated Financial Statements.35 Table of ContentsNextDecade Corporation and SubsidiariesNotes to Consolidated Financial StatementsNote 1 — Background and Basis of PresentationNextDecade Corporation engages in development activities related to the liquefaction and sale of liquefied naturalgas (“LNG”). We have focused and continue to focus our development activities on the Rio Grande LNG terminal facility atthe Port of Brownsville in southern Texas (the “Terminal”) and an associated 137-mile Rio Bravo pipeline to supply gas tothe Terminal (the “Pipeline” together with the Terminal, the “Project”). We have also secured, through December 2019, a994-acre site near Texas City, Texas for another potential LNG terminal (the “Galveston Bay Terminal”).We were incorporated in Delaware on May 21, 2014 and were formed for the purpose of acquiring, through a merger,share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, oneor more businesses or entities. On July 24, 2017 (the “Merger Date”), one of our subsidiaries merged with and intoNextDecade LLC (the “Merger”), a LNG development company founded in 2010 to develop LNG export projects andassociated pipelines in the State of Texas. Prior to the merger with NextDecade LLC, we had no operations and our assetsconsisted of cash proceeds received in connection with our initial public offering.The Merger was accounted for as a reverse acquisition and recapitalization, with NextDecade LLC being treated asthe accounting acquirer. As such, the historical Consolidated Financial Statements as of and for the years ended December31, 2016 and 2015, contained in this report, relate to NextDecade LLC and its subsidiaries. Subsequent to the Merger Date,the information relates to the consolidated entities of NextDecade. We continue to operate in a single operating segment forfinancial reporting purposes.In connection with the Merger, the issued and outstanding membership interests in NextDecade LLC wereexchanged for 98,490,409 shares of our common stock. All share and per share amounts in the Consolidated FinancialStatements and related notes have been retroactively adjusted for all periods presented to give effect to this exchange.Our Consolidated Financial Statements have been prepared in accordance with accounting principles generallyaccepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated inconsolidation.Certain reclassifications have been made to conform prior period information to the current presentation. Thereclassifications had no effect on our overall consolidated financial position, operating results or cash flows.Note 2 — Summary of Significant Accounting PoliciesUse of EstimatesThe preparation of Consolidated Financial Statements in conformity with GAAP requires management to makecertain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and theaccompanying notes. Management evaluates its estimates and related assumptions regularly, including those related to thevalue of property, plant and equipment, income taxes including valuation allowances for net deferred tax assets, share-basedcompensation and fair value measurements. Changes in facts and circumstances or additional information may result inrevised estimates, and actual results may differ from these estimates.Concentrations of Credit RiskFinancial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cashequivalents. We maintain cash balances with a single financial institution, which may at times be in excess of federallyinsured levels. We have not incurred losses related to these cash and cash equivalent balances to date.36 Table of ContentsCash EquivalentsWe consider all highly liquid investments with an original maturity of three months or less when purchased to becash equivalents.Restricted CashRestricted cash consist of funds that are contractually restricted as to usage or withdrawal and are presentedseparately from cash and cash equivalents on our Consolidated Balance Sheets.Investment SecuritiesWe define investment securities as securities that can be readily converted to cash. As of December 31, 2017, and2016, our investment securities are classified as available-for-sale. Available-for-sale investment securities are initiallyrecorded at cost and periodically remeasured to fair value, with changes presented in comprehensive income. We determinethe appropriate classification of investment securities at the time of purchase and reevaluate such classification at eachbalance sheet date. Realized gains and losses and other than temporary declines in fair value are included in earnings.Property, Plant and EquipmentGenerally, we begin to capitalize the costs of our development projects once construction of the individual projectis probable. This assessment includes the following criteria:·funding for design and permitting has been identified and is expected in the near-term;·key vendors for development activities have been identified, and we expect to engage then at commerciallyreasonable terms;·we have committed to commencing development activities;·regulatory approval is probable;·construction financing is expected to be available at the time of a final investment decision (“FID”);·prospective customers have been identified and the FID is probable; and·receipt of customary local tax incentives, as needed for project viability, is probable.Prior to meeting the criteria above, costs associated with a project are expensed as incurred. Expenditures for normalrepairs and maintenance are expensed as incurred.When assets are retired or disposed, the cost and accumulated depreciation are eliminated from the accounts and anygain or loss is reflected in our Consolidated Statements of Operations.Property, plant and equipment is carried at historical cost and depreciated using the straight-line method over theirestimated useful lives.Leasehold improvements are depreciated over the lesser of the economic life of the leasehold improvement or theterm of the lease, without regard to extension/renewal rights.Management tests property, plant and equipment for impairment whenever events or changes in circumstances haveindicated that the carrying amount of property, plant and equipment might not be recoverable. Assets are grouped at thelowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assetsfor purposes of assessing recoverability. Recoverability generally is determined by comparing the carrying value of the assetto the expected undiscounted future cash flows of the asset. If the carrying value of the asset is not recoverable,37 Table of Contentsthe amount of impairment loss is measured as the excess, if any, of the carrying value of the asset over its estimated fair value.Fair Value of Financial InstrumentsFair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transactionbetween market participants. Hierarchy Levels 1, 2 and 3 are terms for the priority of inputs to valuation techniques used tomeasure fair value. Hierarchy Level 1 inputs are quoted prices in active markets for identical assets or liabilities. HierarchyLevel 2 inputs are inputs other than quoted prices included within Level 1 that are directly or indirectly observable for theasset or liability. Hierarchy Level 3 inputs are inputs that are not observable in the market. In determining fair value, we useobservable market data when available, or models that incorporate observable market data. In addition to market information,we incorporate transaction-specific details that, in management’s judgment, market participants would take into account inmeasuring fair value. We maximize the use of observable inputs and minimize our use of unobservable inputs in arriving atfair value estimates. Recurring fair-value measurements are performed for available-for-sale securities as disclosed inNote 5 – Investment Securities. The carrying amount of cash and cash equivalents and accounts payable reported on theConsolidated Balance Sheets approximates fair value due to their short-term maturities.Net Loss Per ShareNet loss per share (“EPS”) is computed in accordance with GAAP. Basic EPS excludes dilution and is computed bydividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPSreflects potential dilution and is computed by dividing net income (loss) by the weighted average number of common sharesoutstanding during the period increased by the number of additional common shares that would have been outstanding if thepotential common shares had been issued and were dilutive. The dilutive effect of unvested stock and warrants is calculatedusing the treasury-stock method. Basic and diluted EPS for all periods presented are the same since the effect of ouroutstanding warrants and unvested stock is anti-dilutive to our net loss per share, as disclosed in Note 9 – Net Loss Per Share.Share-based CompensationWe recognize share-based compensation at fair value on the date of grant. The fair value is recognized as expense(net of any capitalization) over the requisite service period. For equity-classified share-based compensation awards (whichinclude grants of stock and restricted stock to employees), compensation cost is recognized based on the grant-date fair valueusing the quoted market price of our common stock and not subsequently remeasured. The fair value is recognized asexpense (net of any capitalization) using the straight-line basis for awards that vest based on service conditions and using thegraded-vesting attribution method for awards that vest based on performance conditions. We estimate the service periods forperformance awards utilizing a probability assessment based on when we expect to achieve the performance conditions. Forliability classified share-based compensation awards (which include grants of stock and restricted stock to non-employees),compensation cost is initially recognized on the grant date using estimated payout levels. Compensation cost issubsequently adjusted quarterly to reflect the updated estimated payout levels based on the changes in our stock price.Income TaxesProvisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes ontemporary differences between the tax basis of assets and liabilities and their reported amounts in the Consolidated FinancialStatements. Deferred tax assets and liabilities are included in the Consolidated Financial Statements at currently enactedincome tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled.As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the current period’sprovision for income taxes. A valuation allowance is recorded to reduce the carrying value of our deferred tax assets when itis more likely than not that a portion or all of the deferred tax assets will expire before realization of the benefit or futuredeductibility is not probable. We recognize the tax benefit from an uncertain tax position only if it is more likely than notthat the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the taxposition.38 Table of ContentsEmerging Growth CompanyThe Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, asamended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). An“emerging growth company” may take advantage of certain exemptions from various reporting requirements that areapplicable to other public companies that are not emerging growth companies including, but not limited to, not beingrequired to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduceddisclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions fromthe requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any goldenparachute payments not previously approved.Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply withnew or revised financial accounting standards until private companies (that is, those that have not had a Securities Actregistration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. TheJOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirementsthat apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected notto opt out of such extended transition period which means that when a standard is issued or revised, and it has differentapplication dates for public and private companies. Accordingly, the Company, as an emerging growth company, can adoptthe new or revised standard at the time private companies adopt the new or revised standard. This may make comparison ofthe Company’s financial statements with another public company that is neither an emerging growth company nor anemerging growth company that has opted out of using the extended transition period difficult or impossible because of thepotential differences in accounting standards adopted. Note 3 — MergerAs discussed in Note 1 – Background and Basis of Presentation, one of our subsidiaries merged with and intoNextDecade LLC on July 24, 2017. Immediately following the Merger, the pre-Merger members and management ofNextDecade LLC held approximately 94%, or 98,490,409 shares, of our outstanding common stock. The pre-Mergermembers, management and consultants of NextDecade LLC also have the right to receive an additional 2,176,542 shares,2,429,396 shares and 287,388 shares, respectively, (up to 19,573,304 shares in aggregate) of the Company’s common stock(“Additional Shares”) upon the achievement by us of each of the following milestones (the “Additional Share Milestones”):·Milestone 1 — We or one or more of our subsidiaries receive a Final Environment Impact Statement issued bythe Federal Energy Regulatory Commission (“FERC”) by June 30, 2018.·Milestone 2 — The execution by us or one or more of our subsidiaries of a binding sale and purchase or tollingagreement (with customary conditions precedent) for the sale and purchase of, or the provision of tollingservices with respect to, at least one million tons of LNG per annum by June 30, 2018.·Milestone 3 — The execution by us or one or more of our subsidiaries of an engineering procurement andconstruction contract, with customary conditions precedent, for the construction of the Terminal by December31, 2018.·Milestone 4 — An affirmative vote of our board of directors to make a final investment decision for theTerminal or the Pipeline by June 30, 2019.The Merger has been accounted for as a reverse acquisition and recapitalization, with NextDecade LLC beingtreated as the accounting acquirer. In connection with the completion of the Merger, approximately $26.8 million wasreleased from our trust account to NextDecade LLC to be used for development activities.39 Table of ContentsNote 4 — Prepaid Expenses and Other Current AssetsPrepaid expenses and other current assets consisted of the following (in thousands): December 31, December 31, 2017 2016Rio Grande LNG site option $1,080 $495Short-term security deposits 364 349Galveston Bay Leases 100 —Rio Bravo Pipeline options 111 86Prepaid insurance 208 21Other 236 145Total prepaid expenses and other current assets $2,099 $1,096 During each of the years ended December 31, 2017, 2016 and 2015, we recognized $584 thousand of lease optionexpense related to the Rio Grande LNG site option, which expires November 5, 2019.Note 5 — Investment SecuritiesWe maintain cash reserves in the Ultra-Short-Term Bond Fund and the Short-Term Bond Index Fund, which aremanaged by The Vanguard Group, Inc. The target investment allocation between the Ultra-Short-Term Bond Fund and theShort-Term Bond Index Fund are 75% and 25%, respectively. The Ultra-Short-Term Bond Fund has an average maturity ofapproximately one year, and approximately 42% of such fund’s holdings are AAA-rated, with 2% non-investment graderated. The Short-Term Bond Index Fund has an average maturity of approximately three years, and approximately 70% ofsuch fund’s holdings are AAA-rated, with 0% non-investment grade rated. Investment securities are classified as available-for-sale, recorded at fair value based on Level I inputs and consisted of the following (in thousands): December 31, December 31, 2017 2016 Fair value Cost Fair value CostUltra-Short-Term Bond Fund $3,811 $3,825 $3,760 $3,767Short-Term Bond Index Fund 1,252 1,278 1,237 1,257Total investments $5,063 $5,103 $4,997 $5,024 Note 6 — Property, Plant and EquipmentProperty, plant and equipment consisted of the following (in thousands): December 31, December 31, 2017 2016Fixed Assets Computers $69 $42Furniture, fixtures, and equipment 246 232Leasehold improvements 264 264Total fixed assets 579 538Less: accumulated depreciation (371) (265)Total fixed assets, net 208 273Project Assets (not placed in service) Rio Grande 62,866 48,087Rio Bravo 10,152 7,873Total project assets 73,018 55,960Total property, plant and equipment, net $73,226 $56,233 Depreciation expense for the years ended December 31, 2017, 2016, and 2015 was $106 thousand, $100 thousand,and $80 thousand, respectively.40 Table of ContentsIn 2016, we abandoned certain development projects due to less favorable site characteristics relative to theProject. As a result, we recognized impairment charges of $506 thousand associated with development activities related tothe original Pelican Island site of $360 thousand and other noncore projects of $146 thousand. Note 7 — Accrued Liabilities and Other Current LiabilitiesAccrued expenses and other current liabilities consisted of the following (in thousands): December 31, December 31, 2017 2016Employee compensation expense $1,851 $1,535Project asset costs 3,317 1,810Accrued legal services 141 91Other accrued liabilities 547 331Total accrued liabilities and other current liabilities $5,856 $3,767 Certain employee contracts provide for cash bonuses upon a positive FID in the Project, subject to approval by ourboard of directors. At December 31, 2017 and 2016, non-current compensation liabilities related to engineering staff were$0.7 million and $1.1 million, respectively, which were recognized as an addition to project assets. In addition, non-currentcompensation liabilities related to certain executive staff were $1.3 million and $1.6 million as of December 31, 2017, andDecember 31, 2016, respectively.Note 8 — Stockholders’ EquityPreferred StockThe Company is authorized to issue 1.0 million shares of preferred stock with a par value of $0.0001 per share withsuch designation, rights and preferences as may be determined from time to time by the Company’s board of directors. AtDecember 31, 2017, there were no shares of preferred stock issued or outstanding.Common StockThe Company is authorized to issue 480.0 million shares of common stock with a par value of $0.0001 per share. AtDecember 31, 2017, 106.3 million shares of common stock were issued and outstanding.Redeemable WarrantsAt December 31, 2017, the Company had 12.1 million common stock warrants (“Warrants”) issued andoutstanding. The Warrants are exercisable at a price of $11.50 per share and expire July 24, 2022. The Company mayredeem the Warrants at a price of $0.01 per Warrant upon 30 days’ notice, only if the last sale price of our common stock is atleast $17.50 per share for any 20 trading days within a 30-trading day period ending on the third day prior to the date onwhich notice of redemption is given. If the Company redeems the Warrants as described above, the Company will have theoption to do so on a cashless basis. As of December 31, 2017, no warrants have been exercised.41 Table of ContentsNote 9 — Net Loss Per ShareThe following table (in thousands, except for loss per share) reconciles basic and diluted weighted average commonshares outstanding for the years ended December 31, 2017, 2016 and 2015: Year ended December 31, 2017 2016 2015Weighted average common shares outstanding: Basic 100,926 95,680 55,226Dilutive unvested common stock and common stock warrants — — —Diluted 100,926 95,680 55,226 — —Basic and diluted net loss per share $(0.35) $(0.09) $(0.14)Potentially dilutive securities that were not included in the diluted net loss per share computations because theireffect would have been anti-dilutive were as follows (in thousands): Year ended December 31, 2017 2016 2015Unvested stock 258 — —Common Stock Warrants 12,082 12,059 12,059Total dilutive common shares 12,340 12,059 12,059(1)Does not include 25.7 million shares of unvested stock for the year ended December 31, 2017 because the performanceconditions had not yet been satisfied as of December 31, 2017. Note 10 — Share-based CompensationAs discussed in Note 3 – Merger, the stockholders of the Company approved the issuance of Additional Shares uponthe achievement of the Additional Share Milestones. In aggregate, 2,429,396 shares and 287,388 Additional Shares will beawarded to management and consultants, respectively, upon the achievement of the Additional Share Milestones.In addition, in connection with the Merger, the stockholders of the Company also approved the issuance ofrestricted shares of our common stock to certain employees and consultants (“Restricted Shares”) in an amount based on thenumber of shares of common stock outstanding at the time of achieving each of the following milestones. In aggregate, weestimate that total Restricted Shares to be issued and to vest upon achievement of the milestones below to employees andconsultants are 3,832,682 shares and 1,453,776 shares, respectively, with vesting percentage by milestone as follows:·Milestone 1 — 6.25% upon the execution by the Company of a final agreement with an engineering,procurement and construction contractor for an LNG facility.·Milestone 2 — 25.00% upon the execution of one or more binding LNG sale and purchase or tollingagreements, with customary conditions precedent, providing for an aggregate of at least 3.825 million tons perannum.·Milestone 3 — 68.75% upon reaching a positive final investment decision for the Terminal.On December 15, 2017, the Company’s stockholders approved the 2017 Omnibus Incentive Plan (the “2017 Plan”)and the 2017 Plan became effective by its terms on such date. A total of 5,262,461 shares are reserved for issuance under the2017 Plan.42 (1)Table of ContentsTotal share-based compensation consisted of the following (in thousands): Year ended December 31, 2017 2016 2015Share-based compensation: Equity awards $19,754 $ — $ —Liability awards 4,402 — —Total share-based compensation 24,156 — —Capitalized share-based compensation (1,463) — —Total share-based compensation expense $22,693 $ — $ — The total unrecognized compensation costs at December 31, 2017 relating to equity-classified awards and liability-classified awards were $48.5 million and $9.6 million, respectively, which are expected to be recognized over a weightedaverage period of 1.2 years.The Additional Shares, Restricted Shares, and shares granted under the 2017 Plan represent restricted stockawards. Restricted stock awards are awards of common stock that are subject to restrictions on transfer and to a risk offorfeiture if the recipient terminates employment with the Company prior to the lapse of the restrictions. Restricted stockawards vest based on service conditions and/or performance conditions. The amortization of the value of restricted stockgrants is accounted for as a charge to compensation expense, or capitalized, depending on the nature of the services providedby the employee, with a corresponding increase to additional-paid-in-capital over the requisite service period.Grants of restricted stock to employees and non-employee directors that vest based on service and/or performanceconditions are measured at the closing quoted market price of our common stock on the grant date. For restricted stockawards granted to non-employees that vest based on service and/or performance conditions, we record compensation costequal to the fair value of the award at the measurement date, which is determined to be the earlier of the performancecommitment date or the service completion date. In addition, compensation cost for unvested restricted stock awards to non-employees is adjusted quarterly for any changes in our stock price.The table below provides a summary of our restricted stock outstanding as of December 31, 2017 and changesduring the year ended December 31, 2017 (in thousands, except for per share information): Shares WeightedAverageGrant DateFair ValuePer ShareNon-vested at January 1, 2017 — $ —Granted 9,104 10.15Vested — —Forfeited — —Non-vested at December 31, 2017 9,104 $10.15 Note 11 — Income TaxesAs discussed in Note – 1 Background and Basis of Presentation, the Merger was accounted for as a reverseacquisition and recapitalization, with NextDecade LLC being treated as the accounting acquirer. As such, the historicalConsolidated Financial Statements as of December 31, 2016 and 2015, relate to NextDecade LLC and its subsidiaries.We are a C-Corporation and subject to income taxes in the U.S. NextDecade LLC is a limited liability company thatwas not subject to income taxes during the years ended December 31, 2017, 2016 and 2015, since it was a pass-throughentity for tax purposes. As such, the income tax provision for the year ended December 31, 2017 represents the period fromJuly 25, 2017 through December 31, 2017.Due to our cumulative loss position, we have established a full valuation allowance against our deferred tax assets atDecember 31, 2017. Due to NextDecade LLC’s previous pass-through status and our full valuation allowance, we have notrecorded a provision for federal or state income taxes during the years ended December 31, 2017, 2016 or 2015.43 Table of ContentsThe reconciliation of the federal statutory income tax rate to our effective income tax rate for the year endedDecember 31, 2017 is as follows:U.S. federal statutory rate, beginning of year 35%NextDecade LLC pre-merger net loss (5) Officers' compensation (12) Effect of 2017 Tax Act (7) Valuation allowance (11) Effective tax rate as reported —% Significant components of our deferred tax assets and liabilities at December 31, 2017 are as follows (in thousands):Deferred tax assets Net operating loss carryforwards and credits $1,694Share-based compensation expense 2,203Other 14Less: valuation allowance (3,911)Total deferred tax assets — Deferred tax liabilities Total deferred tax liabilities — Net deferred tax assets (liabilities) $ — The federal deferred tax assets presented above do not include the state tax benefits as our net deferred state taxassets are offset with a full valuation allowance. At December 31, 2017, we had federal net operating loss (“NOL”) carryforwards of approximately $8.1 million.These NOL carryforwards will expire between 2034 and 2037. Due to our history of NOLs, current year NOLs and significant risk factors related to our ability to generate taxableincome, we have established a valuation allowance to offset our deferred tax assets as of December 31, 2017 and 2016. Wewill continue to evaluate our ability to release the valuation allowance in the future. The increase in the valuation allowancewas $3.6 million for the year ended December 31, 2017. Deferred tax assets and deferred tax liabilities are classified as non-current in our Consolidated Balance Sheets. The Tax Reform Act of 1986 (as amended) contains provisions that limit the utilization of NOL and tax credit carryforwards if there has been a change in ownership as described in Section 382 of the Internal Revenue Code (“Section 382”). Due to the Company’s initial public offering in 2015 and the Merger in 2017, substantial changes in the Company'sownership have occurred that may limit or reduce the amount of NOL carry forwards that the Company could utilize in thefuture to offset taxable income. The Company has not completed a detailed Section 382 study at this time to determine whatimpact, if any, that ownership changes may have had on its NOL carry forwards. In each period since its inception, theCompany has recorded a valuation allowance for the full amount of its deferred tax assets, as the realization of thedeferred tax asset is uncertain. As a result, the Company has not recognized any federal or state income tax benefit in itsConsolidated Statement of Operations and Comprehensive Loss.We remain subject to periodic audits and reviews by taxing authorities; however, we do not expect these audits willhave a material effect on our tax provision. The federal tax returns for the years beginning 2014 remain open for examination.The Tax Cuts and Jobs Act (“2017 Tax Act”), which was signed into law on December 22, 2017, has resulted insignificant changes to the U.S. corporate income tax system. These changes include a federal statutory rate reduction from35% to 21%, the elimination or reduction of certain domestic deductions and credits and limitations on the deductibility ofinterest expense and executive compensation for domestic companies. These changes are effective beginning in 2018.44 Table of ContentsChanges in tax rates and tax laws are accounted for in the period of enactment. Our deferred tax assets and liabilitiesare measured at the enacted tax rate expected to apply when these temporary differences are expected to be realized orsettled. As a result of the 2017 Tax Act, we remeasured our December 31, 2017 deferred tax assets and liabilities. The resultof the remeasurement was a $2.6 million reduction to our net deferred tax assets offset completely by a reduction in ourvaluation allowance.Note 12 — Commitments and ContingenciesOperating LeasesDuring the years ended December 31, 2017, 2016 and 2015, we recognized expense for all operating leases of $728thousand, $245 thousand and $234 thousand, respectively, related primarily to office space and site leases. NextDecade currently leases approximately 8,300 square feet of office space for general and administrative purposesin The Woodlands, Texas under an amended lease agreement that expires on September 30, 2018.In January 2017, NextDecade LLC executed surface lease agreements with the City of Texas City and the State ofTexas for a 994‑acre site for the Galveston Bay Terminal (collectively, the “Galveston Bay Leases”). The term of theGalveston Bay Leases is 36 months with an option to extend for an additional 12 months. NextDecade LLC has the right toterminate the Galveston Bay Leases with a $50 thousand termination payment to each lessor. In March 2017, NextDecade LLC executed a lease agreement with the Brownsville Navigation District for a ten -acre tract subsumed within the site for the Terminal (the “Brownsville Lease”). The Brownsville Lease has an eight-monthprimary term with the option to renew such lease for six additional six-month terms. On October 10, 2017, NextDecade LLCexercised its option to renew the Brownsville Lease for an additional six-month term, which expires May 5,2018. NextDecade LLC has the right to terminate the Brownsville Lease at the end of any six-month term at no additionalcost.Future annual minimum lease payments, for all operating leases are as follows (in thousands):Years ending December 31, Operating Leases 2018 $6612019 5612020 6302021 —2022 —Thereafter —Total $1,852(1)Includes certain lease option renewals that are reasonably assured.Legal ProceedingsFrom time to time the Company may be subject to various claims and legal actions that arise in the ordinary courseof business. We regularly analyze current information and, as necessary, provide accruals for liabilities we deem probable andestimable. We are not currently a party to any proceeding, the adverse outcome of which would have a material adverseeffect on our financial position or results of operations. 45 (1)Table of ContentsNote 13 — Recent Accounting PronouncementsThe following table provides a brief description of recent accounting standards that have not been adopted by theCompany as of December 31, 2017:Standard Description Expected Date ofAdoption Effect on our Consolidated FinancialStatements or Other SignificantMattersAccountingStandardsUpdate (ASU)2014‑09,Revenue fromContracts withCustomers(Topic 606), andsubsequentamendmentsthereto This standard amends existing revenuerecognition guidance and requires an entity torecognize revenue to depict the transfer ofpromised goods or services to customers in anamount that reflects the consideration to whichthe entity expects to be entitled in exchangefor those goods or services. This standard maybe early adopted beginning January 1, 2017,and may be adopted either retrospectively toeach prior reporting period presented or as acumulative-effect adjustment as of the date ofadoption. January 1, 2018 The adoption of this new standardwill not affect the amounts shownin our Consolidated FinancialStatements or related disclosuresas the Company has no revenues.ASU 2017‑04,Intangibles -Goodwill andOther (Topic350):Simplifying theTest forGoodwillImpairment This standard simplifies the measurement ofgoodwill impairment by eliminating therequirement for an entity to perform ahypothetical purchase price allocation. Anentity will instead measure the impairment asthe difference between the carrying amountand the fair value of the reporting unit. Thisstandard may be early adopted beginningJanuary 1, 2017, and must be adoptedprospectively. January 1, 2018 The adoption of this standard isnot expected to have a materialimpact on our ConsolidatedFinancial Statements or relateddisclosures.ASU 2016‑02,Leases (Topic842) This standard requires a lessee to recognizeleases on its balance sheet by recording a leaseliability representing the obligation to makefuture lease payments and a right-of-use assetrepresenting the right to use the underlyingasset for the lease term. A lessee is permitted tomake an election not to recognize lease assetsand liabilities for leases with a term of12 months or less. The standard also modifiesthe definition of a lease and requires expandeddisclosures. This standard may be earlyadopted, and must be adopted using amodified retrospective approach with certainavailable practical expedients. January 1, 2019 We continue to evaluate the effectof this standard on ourConsolidated FinancialStatements. Preliminarily, weanticipate a material impact fromthe requirement to recognize allleases upon our ConsolidatedBalance Sheets. Because thisassessment is preliminary and theaccounting for leases is subject tosignificant judgment, thisconclusion could change as wefinalize our assessment. We havenot yet determined the impact ofthe adoption of this standard uponour results of operations or cashflows, whether we will elect toearly adopt this standard or which,if any, practical expedients we willelect upon transition.ASU 2016‑16,Income Taxes(Topic 740):Intra-EntityTransfers ofAssets OtherThan Inventory This standard requires the immediaterecognition of the tax consequences ofintercompany asset transfers other thaninventory. This standard may be early adopted,but only at the beginning of an annual period,and must be adopted using a modifiedretrospective approach. January 1, 2018 The adoption of this standard isnot expected to have a materialimpact on our ConsolidatedFinancial Statements or relateddisclosures.46 Table of ContentsASU 2016-01,FinancialInstruments-Overall(Subtopic 825-10): RecognitionandMeasurement ofFinancial Assetsand FinancialLiabilities This standard principally affects accountingstandards for equity investments, financialliabilities where the fair value option has beenelected, and the presentation and disclosurerequirements for financial instruments. Uponthe effective date of the new standards, allequity investments in unconsolidated entities,other than those accounted for using theequity method of accounting, will generally bemeasured at fair value through earnings. Therewill no longer be an available-for-saleclassification and therefore, no changes in fairvalue will be reported in other comprehensiveincome (loss) for equity securities with readilydeterminable fair values. January 1, 2018 The adoption of this standard willnot have a material impact on ourConsolidated Financial Statementsor related disclosures. Additionally, the following table provides a brief description of recent accounting standards that were adopted bythe Company during the reporting period:Standard Description Date of Adoption Effect on our Consolidated FinancialStatements or Other SignificantMattersASU 2016‑09,Compensation -StockCompensation(Topic 718):Improvements toEmployee Share-Based PaymentAccounting This standard primarily requires therecognition of excess tax benefits for share-based awards in the statement of operationsand the classification of excess tax benefits asan operating activity within the statement ofcash flows. The standard also allows an entityto elect to account for forfeitures when theyoccur. This standard may be early adopted, butthe entire standard must be adopted in thesame period. July 1, 2017 Upon adoption of this standard, weelected to account for forfeitures asthey occur. The adoption of thisstandard did not have a materialimpact on our ConsolidatedFinancial Statements or relateddisclosures.ASU 2017‑09,Compensation- StockCompensation(Topic 718):Scope ofModificationAccounting This standard clarifies what changes to theterms and conditions of share-based awardsrequire an entity to apply modificationaccounting. Modification accounting isrequired only if the fair value, the vestingconditions, or the classification of the award(as equity or liability) changes as a result ofthe change in terms or conditions. July 1, 2017 The adoption of this guidance didnot have a material impact on ourConsolidated Financial Statementsor related disclosures.ASU 2017‑01,BusinessCombinations(Topic 805):Clarifying theDefinition of aBusiness This standard clarifies the definition of abusiness to assist entities with evaluatingwhether transactions should be accounted foras acquisitions (or disposals) of assets orbusinesses by providing a screen to determinewhen an integrated set of assets or activities isnot a business. July 1, 2017 The adoption of this standard didnot have a material impact on ourConsolidated Financial Statementsor related disclosures.47 Table of ContentsASU 2016‑18,Statement ofCash Flows(Topic 230):Restricted Cash This standard requires that restricted cash beincluded with cash and cash equivalents whenreconciling the beginning-of-period and end-of-period total amounts shown on thestatement of cash flows. December 31,2017 Upon the adoption of thisstandard, our ConsolidatedStatements of Cash Flowsreconciles the balance of total cashand restricted cash from thebeginning of the period to the endof the period, which resulted in anincrease of $17 million and adecrease of $17 million topreviously reported cash flowsused in investing activities for theyears ended December 31, 2016and 2015, respectively. Note 14 — Subsequent EventsIssuance of Equity Awards under the 2017 PlanIn January 2018, an aggregate of 0.1 million fully-vested common stock awards and 2.1 million restricted commonstock awards were issued to employees, consultants and a non-employee director of the Company under the 2017 Plan.48 Table of ContentsNextDecade Corporation and SubsidiariesSupplemental Information to Consolidated Financial StatementsSummarized Quarterly Financial Data(unaudited)Summarized Quarterly Financial Data – (in thousands, except per share amounts) First Second Third Fourth Quarter Quarter Quarter QuarterYear ended December 31, 2017: Revenues $ — $ — $ — $ —Total operating loss (2,417) (2,496) (14,290) (16,435)Net loss (2,388) (2,453) (14,157) (16,328)Basic and diluted loss per share (0.02) (0.03) (0.14) (0.15) Year ended December 31, 2016: Revenues $ — $ — $ — $ —Total operating loss (2,305) (1,858) (2,061) (2,278)Net loss (2,303) (1,857) (2,049) (2,230)Basic and diluted loss per share (0.02) (0.02) (0.02) (0.02)(1)The sum of the quarterly basic and diluted loss per share may not equal the full year amount as the computation of theweighted average common shares outstanding for basic and diluted shares outstanding for each quarter and the full yearare performed independently. 49 (1)(1)Table of Contents Item 9. Changes in and Disagreements with AccountantsNone. Item 9A. Controls and ProceduresEvaluation of Disclosure Controls and ProceduresDisclosure controls and procedures are designed to ensure that information required to be disclosed by us in ourExchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’srules and forms, and that such information is accumulated and communicated to our management, including our principalexecutive officer and principal financial officer or persons performing similar functions, as appropriate to allow timelydecisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how welldesigned and operated, can provide only reasonable assurance of achieving their objectives and management necessarilyapplies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.Under the supervision and with the participation of our management, including our principal executive officer andprincipal financial officer, we conducted an evaluation of the effectiveness of “our disclosure controls and procedures,” assuch term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the fiscal year endedDecember 31, 2017. Based on this evaluation, our principal executive officer and principal financial officer have concludedthat, as of December 31, 2017, our disclosure controls and procedures were effective. Management’s Report on Internal Controls Over Financial ReportingAs management, we are responsible for establishing and maintaining adequate internal control over financialreporting for NextDecade Corporation and its subsidiaries (“NextDecade”). In order to evaluate the effectiveness of internalcontrol over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002, we have conducted anassessment, including testing using the criteria in Internal Control—Integrated Framework (2013) issued by the Committeeof Sponsoring Organizations of the Treadway Commission (“COSO”). NextDecade’s system of internal control over financialreporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with accounting principles generally accepted in the United Statesof America. Because of its inherent limitations, internal control over financial reporting may not prevent or detectmisstatements and, even when determined to be effective, can only provide reasonable assurance with respect to financialstatement preparation and presentation. Based on our assessment, we have concluded that NextDecade maintained effective internal control over financialreporting as of December 31, 2017, based on criteria in Internal Control—Integrated Framework (2013) issued by the COSO.The JOBS Act permits an emerging growth company such as us to take advantage of specified reduced reporting andother requirements that are otherwise generally applicable to public companies. Among these provisions is an exemptionfrom the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of theemerging growth company’s internal control over financial reporting. We have elected to rely on this exemption and are notproviding such an attestation from our auditors.Changes in Internal Control over Financial ReportingFollowing the completion of the Merger, we have undertaken a variety of efforts to adapt our internal control overfinancial reporting to the nature and scope of our Company following the Merger, including through the hiring of additionalpersonnel with control responsibilities and expertise and the implementation of new controls. Other than these activities,there have been no material changes in internal control over financial reporting. Item 9B. Other InformationNone.50 Table of Contents Part IIIPursuant to paragraph 3 of General Instruction G to Form 10-K, the information required by Items 10 through 14 ofPart III of this Report is incorporated by reference from NextDecade’s definitive proxy statement, which is to be filedpursuant to Regulation 14A within 120 days after the end of NextDecade’s fiscal year ended December 31, 2017.51 Table of Contents Part IV Item 15. Exhibits and Financial Statement Schedules(a)Financial Statements, Schedules and Exhibits(1)Financial Statements – NextDecade Corporation and Subsidiaries:Report of Independent Registered Public Accounting Firm 31Consolidated Balance Sheets 32Consolidated Statements of Operations and Comprehensive Loss 33Consolidated Statements of Stockholders’ Equity 34Consolidated Statements of Cash Flows 35Notes to Consolidated Financial Statements 36Supplemental Information to Consolidated Financial Statements – Summarized Quarterly Financial Data 49 (2)Financial Statement Schedules:None(3)Exhibits:Exhibit No. Description2.1(1) Agreement and Plan of Merger, dated as of April 17, 2017, by and among Harmony Merger Corp., HarmonyMerger Sub, LLC, York Credit Opportunities Investments Master Fund, L.P., York Multi-Strategy MasterFund, L.P., York Select Master Fund, L.P., York Global Finance 43, LLC, Valinor Management, L.P., ValinorCapital Partners SPV XXI, LLC, Halcyon Capital Management LP, Halcyon Energy, Power, and InfrastructureCapital Fund Offshore LLC, Halcyon Energy, Power, and Infrastructure Capital Holdings Offshore LLC,Halcyon Energy, Power, and Infrastructure Capital Fund LP, and NextDecade, LLC3.1(2) Second Amended and Restated Certificate of Incorporation of NextDecade Corporation, dated July 24, 20173.2(3) Amended and Restated Bylaws of NextDecade Corporation, dated July 24, 20174.1(4) Specimen Common Share Certificate4.2(5) Specimen Unit Certificate4.3(6) Specimen Warrant Certificate4.4(7) Form of Warrant Agreement between Harmony Merger Corp. and Continental Stock Transfer & TrustCompany10.1(8) Agreement and Plan of Reorganization, dated as of January 7, 2017, by and among Harmony Merger Corp.,Harmony Merger Sub (Canada) Inc., Customer Acquisition Network (Canada) Inc. and the Shareholders ofCustomer Acquisition Network (Canada) Inc.10.2(9) Promissory Note issued to Eric Rosenfeld on November 21, 201610.3(10) Form of Harmony Voting Agreement10.4(11) Form of Member Support Agreement 10.5(12) Indemnity Escrow Agreement10.6(13) Registration Rights Agreement10.7(14) Form of Lock-Up Agreement10.8(15)† Employment Agreement of Kathleen Eisbrenner, dated May 20, 201510.9(16)† Letter Agreement with Kathleen Eisbrenner, dated April 17, 201710.10(17)† Letter Agreement with Kathleen Eisbrenner, dated November 13, 201510.11(18)† Employment Agreement, dated September 8, 2017, between NextDecade Corporation and Matthew K.Schatzman10.12(19)† Form of Restricted Stock Award Agreement for Non-Executive Employees and Contractors21.1* Subsidiaries of the Company23.1* Consent of Marcum LLP31.1* 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 2002.52 Table of Contents32.2** Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.101.INS* XBRL Instance Document.101.SCH* XBRL Taxonomy Extension Schema Document.101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document.101.LAB* XBRL Taxonomy Extension Label Linkbase Document101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document.101.DEF* XBRL Taxonomy Extension Definition Linkbase Document.(1)Incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K, filed April 18, 2017.(2)Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K, filed July 28, 2017.(3)Incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K, filed July 28, 2017.(4)Incorporated by reference to Exhibit 4.2 of the Amendment No. 2 to the Registrant’s Registration Statement on Form S-1, filed October 10, 2014.(5)Incorporated by reference to Exhibit 4.1 of the Amendment No. 7 to the Registrant’s Registration Statement on Form S-1, filed March 13, 2015.(6)Incorporated by reference to Exhibit 4.3 of the Amendment No. 7 to the Registrant’s Registration Statement on Form S-1, filed March 13, 2015.(7)Incorporated by reference to Exhibit 4.4 of the Amendment No. 7 to the Registrant’s Registration Statement on Form S-1, filed March 13, 2015.(8)Incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K, filed January 9, 2017.(9)Incorporated by reference to Exhibit 10.13 of the Registrant’s Annual Report on Form 10-K, filed March 10, 2017. (10)Incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K, filed April 18, 2017.(11)Incorporated by reference to Exhibit 10.5 of the Registrant’s Current Report on Form 8-K, filed April 18, 2017.(12)Incorporated by reference to Exhibit 10.1 of the Company’s Form 8‑K, filed July 28, 2017.(13)Incorporated by reference to Exhibit 10.2 of the Company’s Form 8‑K, filed July 28, 2017.(14)Incorporated by reference to Exhibit 10.3 of the Company’s Form 8‑K, filed July 28, 2017.(15)Incorporated by reference to Exhibit 10.4 of the Company’s Form 8‑K, filed July 28, 2017.(16)Incorporated by reference to Exhibit 10.5 of the Company’s Form 8‑K, filed July 28, 2017.(17)Incorporated by reference to Exhibit 10.6 of the Company’s Form 8‑K, filed July 28, 2017.(18)Incorporated by reference to Exhibit 10.1 of the Company’s Form 8‑K, filed September 11, 2017.(19)Incorporated by reference to Exhibit 10.2 of the Company’s Form 8‑K, filed December 20, 2017.† Indicates management contract or compensatory plan.* Filed herewith.** Furnished herewith. Item 16. Form 10-K SummaryNone.53 Table of Contents SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NextDecade Corporation (Registrant) By:/s/ Matthew K. Schatzman Matthew K. Schatzman President and Chief Executive Officer (Principal Executive Officer) Date:March 8, 2018 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by thefollowing persons on behalf of the registrant and in the capacities and on the dates indicated.Signature Title Date /s/ Matthew K. Schatzman President and Chief Executive Officer and Director March 8, 2018Matthew K. Schatzman (Principal Executive Officer) /s/ Benjamin A. Atkins Chief Financial Officer March 8, 2018Benjamin A. Atkins (Principal Financial Officer) /s/ Eric Garcia Chief Accounting Officer March 8, 2018Eric Garcia (Principal Accounting Officer) /s/ Kathleen Eisbrenner Chairman of the Board March 8, 2018Kathleen Eisbrenner /s/ Brian Belke Director March 8, 2018Brian Belke /s/ Matthew Bonanno Director March 8, 2018Matthew Bonanno /s/ David Gallo Director March 8, 2018David Gallo /s/ Avinash Kripalani Director March 8, 2018Avinash Kripalani /s/ David Magid Director March 8, 2018David Magid /s/ Eric S. Rosenfeld Director March 8, 2018Eric S. Rosenfeld /s/ David D. Sgro Director March 8, 2018David D. Sgro /s/ Rene van Vliet Director March 8, 2018Rene van Vliet /s/ William Vrattos Director March 8, 2018William Vrattos /s/ Spencer Wells Director March 8, 2018Spencer Wells 54Exhibit 21.1Subsidiaries of NextDecade CorporationSubsidiary Name State of IncorporationNextDecade LNG, LLC DelawareRio Grande LNG, LLC TexasRio Bravo Pipeline Company, LLC TexasGalveston Bay LNG, LLC Texas  Exhibit 23.1INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT We consent to the incorporation by reference in the Registration Statement of NextDecade Corporation and Subsidiarieson Forms S-3 (File Nos. 333-222477 and 333-220263) and Form S-8 (File Nos. 333-222082) of our report dated March8, 2018, with respect to our audits of the consolidated financial statements of NextDecade Corporation and Subsidiariesas of December 31, 2017 and 2016 and for the three years ended December 31, 2017, which report is included in thisAnnual Report on Form 10-K of NextDecade Corporation and Subsidiaries for the year ended December 31, 2017./s/ Marcum llpMarcum llpNew York, NYMarch 8, 2018Exhibit 31.1CERTIFICATIONSI, Matthew K. Schatzman, certify that: 1.I have reviewed this Annual Report on Form 10-K of NextDecade Corporation;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a materialfact necessary to make the statements made, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly presentin all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, theperiods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (asdefined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidatedsubsidiaries, is made known to us by others within those entities, particularly during the period in which this reportis being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting tobe designed under our supervision, to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered bythis report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred duringthe registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) thathas materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financialreporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controlover financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (orpersons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize andreport financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting. Date: March 8, 2018 /s/ Matthew K. Schatzman Matthew K. Schatzman Chief Executive Officer(Principal Executive Officer)  Exhibit 31.2CERTIFICATIONSI, Benjamin A. Atkins, certify that: 1.I have reviewed this Annual Report on Form 10-K of NextDecade Corporation;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a materialfact necessary to make the statements made, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly presentin all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, theperiods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (asdefined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidatedsubsidiaries, is made known to us by others within those entities, particularly during the period in which this reportis being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting tobe designed under our supervision, to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered bythis report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred duringthe registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) thathas materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financialreporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controlover financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (orpersons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize andreport financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting. Date: March 8, 2018 /s/ Benjamin A. Atkins Benjamin A. Atkins Chief Financial Officer(Principal Financial Officer)  Exhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002I, Matthew K. Schatzman, Chief Executive Officer of NextDecade Corporation (the “Company”), hereby certify, pursuant to18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1)The Annual Report on Form 10-K of the Company for the year ended December 31, 2017 (the “Report”) fullycomplies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and resultsof operations of the Company. March 8, 2018 /s/ Matthew K. Schatzman Matthew K. Schatzman Chief Executive Officer(Principal Executive Officer) Exhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002I, Benjamin A. Atkins, Chief Financial Officer of NextDecade Corporation (the “Company”), hereby certify, pursuant to 18U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1)The Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 2017 (the “Report”) fullycomplies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and resultsof operations of the Company. March 8, 2018 /s/ Benjamin A. Atkins Benjamin A. Atkins Chief Financial Officer(Principal Financial Officer) 

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