NEXT Biometrics Group
Annual Report 2018

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, 2018 ☐☐ 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.) 1000 Louisiana Street, Suite 3900 Houston, Texas 77002(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 LLC(Title of Class) (Name of each exchange on which registered) Securities registered pursuant to Section 12(g) of the Act:Redeemable Warrants, each to purchase one Share of Common Stock 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, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark 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☐ 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 $137.1 million as of June 29, 2018. 109,850,774 shares of the registrant’s Common Stock, $0.0001 par value, were outstanding as of March 1, 2019. Documents incorporated by reference: The definitive proxy statement for the registrant’s Annual Meeting of Stockholders (to be filed within 120 days of theclose of the 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 24Item 2. Properties 24Item 3. Legal Proceedings 24Item 4. Mine Safety Disclosures 24Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 25Item 6. Selected Financial Data 25Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 26Item 7A. Quantitative and Qualitative Disclosures About Market Risks 31Item 8. Financial Statements and Supplementary Data 32Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 55Item 9A. Controls and Procedures 55Item 9B. Other Information 55Part III Part IV Item 15. Exhibits 57Item 16. Form 10-K Summary 59Signatures 60 1 Table of ContentsOrganizational StructureThe following diagram depicts our abbreviated organizational structure as of December 31, 2018 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,” “would,” “could,” “should,” “can have,” “likely,” “continue,” “design” and other words and terms of similarexpressions, are intended 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:·our ability to maintain the listing of our securities on a securities exchange or quotation medium;·changes adversely affecting the business in which we are engaged;·management of growth;·general economic conditions;·our development of 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” and, 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 the Project’s construction andoperations 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;3 Table of Contents·compliance with environmental laws and regulations; and·the result of future financing efforts and applications for customary tax incentives. Should one or more of the foregoing risks or uncertainties materialize in a way that negatively impacts us, or shouldthe underlying assumptions prove incorrect, our actual results may vary materially from those anticipated in our forward-looking statements and, our business, financial condition and results of operations could be materially and adverselyaffected.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 LNGdevelopment company founded in 2010 to develop LNG export projects and associated pipelines. Prior to the merger withNextDecade LLC, we had no operations and our assets consisted of cash proceeds received in connection with our initialpublic offering.Our common stock trades on the Nasdaq Capital Market (“Nasdaq”) under the symbol “NEXT.”Our warrants issued in connection with our initial public offering in 2015 (the “IPO Warrants”) trade on the OTCPink 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 and have undertaken andcontinue to undertake various initiatives to evaluate, design and engineer the Project that we expect will result in demand forLNG supply at the Terminal, which would allow us to seek construction financing to develop the Project. We believe theProject possesses competitive advantages in several important areas, including engineering, design, commercial, regulatoryand gas supply. We submitted a pre-filing request for the Project to the Federal Energy Regulatory Commission (the “FERC”)in March 2015 and filed a formal application with the FERC in May 2016. We also believe we have robust commercialofftake and gas supply strategies and we estimate that the Project will commence commercial operations as early as 2023.We believe that the Terminal, to be located on a 984-acre site in Brownsville, Texas, along with the Pipelineconnecting the Terminal to the Agua Dulce market area, is well-positioned among the second wave of United States (“U.S.”)LNG projects. The Terminal is engineered to have liquefaction capacity of 27 million metric tons of LNG per annum(“mtpa”). It is located to take advantage of natural gas resources in Texas, including the Permian Basin and Eagle Ford Shale.We plan to construct, develop, own and operate the Project. We have an exclusive option for a long-term lease with the Portof Brownsville for the Terminal site through November 5, 2019.The Project is expected to be permitted for up to six liquefaction trains (each with a nominal capacity of at least 4.5mtpa), four LNG storage tanks (each with a capacity of 180,000 cubic meters), two marine jetties for ocean-going LNGvessels, one turning basin, and six truck loading bays for LNG and natural gas liquids. The Pipeline is expected to becomprised of twin, 137-mile-long, 42-inch-outside diameter, natural gas pipelines, three 180,000-horsepower compressorstations, two 30,000-horsepower interconnect booster stations, six mainline valve sites, four metering sites, and variousancillary facilities. The twin pipelines are expected to be rated to a maximum allowable operating pressure of 1,480 poundsper square inch and total deliverability of at least 4.5 billion cubic feet per day (“Bcf/d”). We are exploring designenhancements to increase throughput capacity for the Project.We have also leased a 994-acre site on the Houston Ship Channel in Texas City, Texas for our second U.S. LNGproject, which is expected to be permitted for up to three trains (each with a nominal capacity of 5.5 mtpa), a minimum of twoLNG storage tanks (each with a capacity of 200,000 cubic meters), two marine jetties for ocean-going LNG vessels and oneturning basin (the “Galveston Bay Terminal”). We intend to use similar design and engineering as the Terminal. Engineering, Procurement, and ConstructionDuring the third quarter of 2018, we initiated a competitive engineering, procurement and construction (“EPC”) bidprocess. We received expressions of interest (the “EOIs”) from multiple EPC contractors to participate in the EPCprocess. We reviewed the EOIs against a series of selection criteria and issued formal invitations to bid to Bechtel Oil, Gasand Chemicals, Inc., Fluor Enterprises, Inc. and McDermott International, Inc. In December 2018, each of the EPC5 Table of Contentsbidders provided us with an endorsement of the Terminal’s front-end engineering and design (“FEED”), which indicates thebidders’ confirmation that the Terminal is technically feasible and can be further designed, engineered, permitted,constructed, commissioned and safely placed into operations. The EPC bid process is scheduled to culminate on April 22,2019 with the submission by each EPC contractor of a lump-sum turnkey EPC price. We expect to execute a final EPCcontract in the third quarter of 2019.CommercialWe are continuing commercial discussions with a variety of parties ranging from large utilities and state-sponsoredenterprises to portfolio and multinational commodity interests. Leveraging the global relationships and extensiveexperience of our management team, we expect to sign long-term binding offtake commitments for substantially all of theTerminal’s capacity prior to a final investment decision (“FID”).We believe the Project’s location will provide customers with access to low-cost natural gas from the Permian Basinand Eagle Ford Shale. We are focused on selling LNG to customers through a “free on board” model whereby a marketingaffiliate would acquire feed gas, the Terminal would produce the LNG and the title transfer would occur at the interfacebetween the Terminal and the customer’s ship.In 2018, we complemented our Henry Hub-based offering with LNG pricing indexed to the Agua Dulce area, Wahaand Brent crude oil prices. As discussed below, we believe this Brent indexed product is a competitive advantage related toour access to associated gas from the Permian basin as it allows us to access new customer segments that desire an alternativeto Henry Hub priced LNG. This builds on natural advantages of U.S. LNG export projects such as the country’s abundant gassupply, existing pipeline infrastructure, political stability, and a competitive project execution environment.Governmental Permits, Approvals and AuthorizationsWe 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 regulated activity and is subject to Section 3of the federal Natural Gas Act (the “NGA”). Federal law has bifurcated regulatory jurisdiction of LNG export and importactivities. The FERC has jurisdiction over the siting, construction and permitting of LNG import and export facilities. TheU.S. Department of Energy (the “DOE”) has jurisdiction over the import and export of the natural gas commodity, includingnatural gas in the form of LNG. The FERC also has jurisdiction over the siting, construction and operation of interstatenatural gas pipelines under Section 7 of the NGA and regulates interstate pipelines’ terms and conditions of service underSections 4 and 5 of the NGA. In 2002, the FERC established a policy of not regulating the terms and conditions of service forLNG import or export facilities or requiring that LNG import or export facilities operate as “open access” facilities for allcustomers. The Energy Policy Act of 2005, which amended the NGA, codified this policy until January 1, 2015, and theFERC has not indicated that it intends to depart from its policy of not regulating the terms or conditions of service orrequiring that LNG terminals operate on an open access basis.Although the FERC is the primary agency with jurisdiction over LNG import and export facilities, the FERC worksclosely with other federal and state agencies to evaluate applications for LNG export facilities. These agencies include theU.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (the “PHMSA”), the U.S. CoastGuard (the “Coast Guard”), the U.S. Army Corps of Engineers, the U.S. Environmental Protection Agency, the InternationalBoundary and Water Commission and other federal agencies with jurisdiction over potential environmental impacts of LNGterminal construction and operation. Certain federal laws, such as the Clean Water Act, the Clean Air Act and the CoastalZone Management Act, delegate authority over certain actions to state agencies. In reviewing an application for an LNGimport or export terminal or an interstate natural gas pipeline, the FERC also works with these state agencies that havejurisdiction over certain aspects of LNG terminal or interstate natural gas pipeline construction or operation.In particular, the PHMSA has established safety standards for interstate natural gas pipelines and LNGfacilities. Similarly, the Coast Guard has established safety regulations for marine operations at LNG facilities and theoperation of LNG carriers. The FERC, the PHMSA and the Coast Guard entered into a Memorandum of Understanding in2004 that6 Table of Contentsestablishes the FERC’s primary role in evaluating LNG terminal applications and defines the process for coordinating thereview of an LNG import or export terminal application with the PHMSA and the Coast Guard. In 2018, the FERC and thePHMSA entered into a separate Memorandum of Understanding that establishes the process and timeline by which thePHMSA should determine whether an LNG terminal project will meet the PHMSA’s LNG safety siting standards.We filed our formal application for the Project with the FERC on May 5, 2016 and received a Draft EnvironmentalImpact Statement from the FERC on October 12, 2018. The FERC’s approval of the Terminal under Section 3 of the NGAand of the Pipeline under Section 7 of the NGA is expected in late July 2019. Separately, we submitted a pre-filing request tothe FERC for the Galveston Bay Terminal on August 31, 2018, and the FERC initiated its pre-filing process for thatapplication on October 10, 2018.Section 3 of the NGA requires prior authorization by the DOE for the import or export of natural gas, including LNG,from the U.S. The DOE’s practice has been to include certain reporting requirements in its LNG export authorizations,including mandating the reporting of the foreign destination of U.S.-sourced LNG. In December 2018, the DOE clarified itsreporting requirements, directing LNG export authorization holders and their downstream counterparties to report thedestination to which the U.S.-sourced LNG was “actually delivered,” in contrast to the agency’s prior policy requiring thereporting of where the LNG was “delivered for end use.” This revised policy recognizes the increasing flexibility andliquidity in the global LNG market.On September 7, 2016, Rio Grande obtained an authorization for export of LNG to countries with which the U.S. hasa Free Trade Agreement (“FTA”) on our own behalf and as an agent for others for a term of 30 years. On June 13, 2018,Galveston Bay obtained a similar authorization for export of LNG to FTA countries on our own behalf and as an agent forothers for a term of 20 years. The DOE’s December 2018 order adjusting the reporting requirements applies to both of theauthorizations for LNG to FTA countries. However, many of our target markets are not FTA countries. We have applied tothe DOE for approval to export LNG to non-FTA countries. Non-FTA authorizations are expected shortly after completion ofthe FERC’s environmental review processes.Gas SupplyThe proposed Terminal site will be located in Brownsville, Texas, benefiting from close access to the Permian Basinand Eagle Ford Shale. We expect to realize material benefits from providing our customers with access to these low-costassociated gas resources. Independent shale producers have created extraordinary efficiencies and improvements, includingenhanced well recoveries through extended lateral lengths and hydraulic fracturing technology, rig productivity, andoperating and lifecycle 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 the past fewdecades, the level of new discoveries and production has been significant. According to the U.S. Energy InformationAdministration (the “EIA”), domestic demand for natural gas has increased from approximately 20 trillion cubic feet (“Tcf”)per year in 1980 to approximately 27.1 Tcf in 2017, a 35 percent increase. However, proved reserves of natural gas haveincreased by approximately 200 Tcf over the same period, a 100 percent increase. Due to technological 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 theapproximate price implied by gas forward curves for at least the next ten years.The Permian Basin has exceeded expectations and produced large quantities of associated gas, the production ofwhich occurs as a byproduct with oil production. The State of Texas severely restricts the flaring of natural gas, soinfrastructure is required to transport this associated gas to Gulf Coast markets economically. Two new high-pressure Permianpipeline gas takeaway projects are being constructed. The first is the Gulf Coast Express (“GCX”) project. With an estimatedin-service date of October 2019, the GCX project will move an estimated 1.9 Bcf/d of gas from the Waha area in the PermianBasin to Agua Dulce, Texas, where the Terminal expects to receive gas supply. The second project is the Permian HighwayPipeline, capable of bringing 2.0 Bcf/day of gas supply to the Katy Hub, located just outside of Houston, Texas with aportion of that capacity able to be delivered to markets from Freeport, Texas to the Agua Dulce area of Texas. These newpipelines will provide a much-needed exit strategy for incremental Permian gas supplies. 7 Table of ContentsThe Permian Basin is approaching its 100th year of oil production. At present, production has reached a record 3.8million barrels per day (MBPD) and is estimated to grow to 6.4 MBPD by 2022, making it the world’s second-most-prolificfield, behind Ghawar in Saudi Arabia. In December 2018, the EIA estimated natural gas production in the Permian Basin to be 12.4 Bcf/d, up from 6.9Bcf/d in May 2016. This significant increase in gas production relative to anticipated takeaway capacity constraints(despite expected capacity growth), has led to a negative basis at the Waha Hub relative to the Henry Hub.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 9 to 18 months among key pipeline sponsors. Thecombination of increased production and expanding takeaway capacity indicates that the Agua Dulce hub, from which thePipeline is proposed to be routed, is expected to become increasingly liquid and remain competitively priced to Henry Hub.We believe our proximity to two major gas reserves basins, increasing takeaway capacity in the area, a significant influx ofproduction and infrastructure investment over the last 12 to 18 months, as well as our existing contacts and discussions withsome of the largest regional operators, represent key elements of a compelling feed gas strategy for partners and customersalike. We are continuing to advance substantive negotiations in these areas.CompetitionWe are subject to a high degree of competition in all aspects of our business. See “Item 1.A — Risk Factors—Competition in the energy industry is intense, and some of our competitors have greater financial, technological andother resources.”The Project will compete with liquefaction facilities worldwide to supply low-cost liquefaction to the market. Thereare liquefaction facilities worldwide that we will compete with for customers. In addition, we will compete with a variety ofcompanies in the global LNG market, such as independent, technology-driven companies, major and other independent oiland natural gas companies and utilities. Many of these competitors have longer operating histories, more developmentexperience, greater name recognition, greater access to the LNG market, more employees and substantially greater financial,technical and marketing resources than we currently possess.EmployeesAs of December 31, 2018, we had 36 full-time employees and 11 independent contractors. We hire independentcontractors on an as needed basis and have no collective bargaining agreements with our employees. OfficesOur principal executive offices are located at 1000 Louisiana St., Suite 3900, Houston, Texas, 77002, and ourtelephone number is (713) 574-1880. Available InformationOur internet website address is www.next-decade.com. We intend to use our website as a means of disclosingmaterial non-public information and for complying with disclosure obligations under Regulation FD. Such disclosures willbe included on our website under the heading “Investors.” Accordingly, investors should monitor such portion of ourwebsite, in addition to following our press releases and SEC filings. Within our website under the heading “Investors,” wemake available free of charge our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed with or furnished to the SEC under applicable securities laws. These materials aremade available as soon as reasonably practical after we electronically file such materials with or furnish such materials to theSEC. Information on our website is not incorporated by reference into this Annual Report on Form 10-K and should not beconsidered part of this document. In addition, we intend to disclose on our website any amendments to, or waivers from, ourCode of Conduct and Ethics that are required to be publicly disclosed pursuant to rules of the SEC.The SEC also maintains a website that contains reports, proxy and information statements and other informationregarding issuers that file electronically with the SEC at www.sec.gov.8 Table of Contents Item 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 four 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 abilities 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 while we are in the development and construction stages formultiple years, we will need additional financing to provide the capital required to execute our business plan. We will needsignificant funding to develop and construct the Project as well as for working capital requirements and other operating andgeneral 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 us entering into satisfactory contracts with third parties and theperformance of 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 instability andforeign 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 the then-applicable exchange rates. These translations could result inchanges to our results of operations from period to period.Costs for the Project are subject to various factors. Construction costs for the Project will be subject to various factors such as economic and market conditions,government policy, claims and litigation risk, competition, the final terms of any definitive agreement for services with ourEPC service provider, change orders, delays in construction, legal and regulatory requirements, unanticipated regulatorydelays, site issues, increased component and material costs, escalation of labor costs, labor disputes, increased spending tomaintain our construction schedule and other factors. In particular, costs for the Project are expected to be substantiallyaffected 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 or quotas on steel, aluminum, pipe or other component parts of the Project, which mayraise the prices 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;·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.In addition to our willingness to make a FID and our ability to construct the Project and achieve operations, eventsrelated to such activities may cause actual costs of the Project to vary from the range, combination and timing of assumptionsused for projected costs of the Project. Such variations may be material and adverse, and an investor may lose all or a portionof 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 are required to obtain governmental approvals and authorizations to implement our proposed business strategy,which includes the design, construction and operation of the Project and the export of LNG from the U.S. to foreigncountries. As described above under “Business− Governmental Permits, Approvals and Authorizations,” the design,construction and operation of LNG export terminals is a highly regulated activity in the U.S., subject to a number ofpermitting requirements, regulatory approvals and ongoing safety and operational compliance programs. There is noguarantee that we will obtain or, if obtained, maintain these governmental authorizations, approvals and permits. Failure toobtain, failure to obtain on a timely basis, or failure to maintain any of these governmental authorizations, approvals andpermits could have a material adverse effect on our business, results of operations, financial condition and prospects.Future legislation and regulations, such as those relating to the transportation and security of LNG exported from theproposed LNG facilities, and ongoing reviews relating to certain permits and approvals could cause additionalexpenditures, restrictions and delays in connection with the proposed LNG facilities and their construction, the extent ofwhich cannot be predicted, and which may require us to substantially limit, delay or cease operations in somecircumstances. We consider recent policy and regulatory developments that (i) streamline LNG terminal permitting, such as theFERC’s continuation of its policy of not regulating the terms and conditions of service for LNG import or export facilitiesand the 2018 FERC-PHMSA Memorandum of Understanding, and (ii) clarify LNG export reporting requirements, such as theDOE’s 2018 policy statement on downstream LNG delivery reporting, to be beneficial to us and the broader U.S. LNGindustry. However, revised, reinterpreted or additional laws and regulations that result in increased compliance costs oradditional operating costs and restrictions could have a material adverse effect on our business, results of operations,financial condition, liquidity and prospects.In addition, some of these governmental authorizations, approvals and permits require extensive environmentalreview. Some groups have perceived, and other groups could perceive, that the proposed construction and operation of theProject or the Galveston Bay Terminal could negatively impact the environment or cultural heritage sites. Objections fromsuch groups could cause delays, damage to reputation and difficulties in obtaining governmental authorizations, approvalsor permits or prevent the obtaining of such authorizations, approvals or permits altogether. Although the necessaryauthorizations, approvals and permits to construct and operate the Project and the Galveston Bay Terminal may be11 Table of Contentsobtained, such authorizations, approvals and permits may be subject to ongoing conditions imposed by regulatory agenciesor may be subject to legal proceedings not involving us, which is customary for U.S. LNG projects.The Project and the Galveston Bay Terminal will be subject to a number of environmental laws and regulations thatimpose significant compliance costs, and existing and future environmental and similar laws and regulations could resultin increased compliance costs, liabilities or 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 its liquefaction facilities. These regulationsand laws will require us to maintain permits, provide governmental authorities with access to its facilities for inspection andprovide reports related to its compliance. Violation of these laws and regulations could lead to substantial fines andpenalties or to capital expenditures related to pollution control or remediation equipment that could have a material adverseeffect on our business, results of operations, financial condition, liquidity and prospects. Federal and state laws imposeliability, without regard to fault or the lawfulness of the original conduct, for the release of certain types or quantities ofhazardous substances into the environment. As the owner and operator of the Project and the Galveston Bay Terminal, wecould be liable for the costs of cleaning up hazardous substances released into the environment and for damage to naturalresources.We 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 us.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 connectionwith the 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.12 Table of ContentsFurthermore, 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 lump-sum turnkey EPC contract, which could mitigate certain of these design, construction and executionrisks through performance, time and cost guarantees. We expect to execute an EPC contract in the third quarter of 2019. Our ability to generate cash is substantially dependent upon us 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 efforts to marketthe Project’s export capacity or LNG produced by the Terminal are not successful, our business, results of operations,financial condition and prospects may be materially and adversely affected.Our construction and operations activities will be 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 orother LNG facilities;·shortages of equipment, materials or skilled labor;·natural disasters and catastrophes, such as hurricanes, explosions, fires, floods, industrial accidents andterrorism;·delays in the delivery of ordered materials;·work stoppages and labor disputes;·competition with other domestic and international LNG export terminals;13 Table of Contents·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 additionalfinancing may also make the Project uneconomic. Any delay in completion of the Project may also cause a delay in thereceipt of revenues projected from the Project or cause a loss of one or more customers. As a result, any significantconstruction delay, whatever the cause, could have a material adverse effect on our business, results of operations, financialcondition, liquidity and prospects.Our operations will be 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);·leaks of natural gas, natural gas liquids, or oil or losses of natural gas, natural gas liquid, or oil as a result ofthe malfunction 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.Due to the scale of the Project, we may encounter capacity limits in insurance markets, thereby limiting our abilityto economically obtain insurance with our desired level of coverage limits and terms. We may elect not to obtain insurance14 Table of Contentsfor any or all of these risks if we believe that the cost of available insurance is excessive relative to the risks presented. Inaddition, contractual liabilities and pollution and environmental risks generally are not fully insurable. The occurrence of anevent that is not fully covered by insurance could have a material adverse effect on our business, financial condition andresults 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 U.S. We competewith other energy companies and other employers to attract and retain qualified personnel with the technical skills andexperience 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 U.S. or other general inflationarypressures or changes in applicable laws and regulations could make it more difficult for us to attract and retain qualifiedpersonnel and could require an increase in the wage and benefits packages that we offer, thereby increasing our operatingcosts. Any increase in our operating costs could materially and adversely affect our business, financial condition, operatingresults, 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.Technological 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.Failure of exported LNG to be a competitive source of energy for international markets could adversely affect ourcustomers and could materially and adversely affect our business, contracts, financial condition, operating results, cashflow, liquidity and prospects.Operations of the Project will be dependent upon our ability to deliver LNG supplies from the U.S., which isprimarily dependent upon LNG being a competitive source of energy internationally. The success of our business plan isdependent, in part, on the extent to which LNG can, for significant periods and in significant volumes, be supplied fromNorth America and delivered to international markets at a lower cost than the cost of alternative energy sources. Through theuse of improved exploration technologies, additional sources of natural gas may be discovered outside the U.S., which couldincrease the available supply of natural gas outside the U.S. and could result in natural gas in those markets being availableat a lower cost than that of LNG exported to those markets.Additionally, our liquefaction projects will be subject to the risk of LNG price competition at times when we need toreplace any existing LNG sale and purchase contract, whether due to natural expiration, default or otherwise, or enter intonew LNG sale and purchase contracts. Factors relating to competition may prevent us from entering into a new orreplacement LNG sale and purchase contract on economically comparable terms as prior LNG sale and purchase contracts, orat all. Factors which may negatively affect potential demand for LNG from our liquefaction projects are diverse and include,among others:·increases in worldwide LNG production capacity and availability of LNG for market supply;15 Table of Contents·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 competing sources of natural gas or alternate sources of energy such as coal, heavyfuel oil, diesel, nuclear, hydroelectric, wind and solar;·decrease in the price of non-U.S. LNG, including decreases in price as a result of contracts indexed to lower oilprices;·increases in capacity and utilization of nuclear power and related facilities;·increases in the cost of LNG shipping; and·displacement of LNG by pipeline natural gas or alternate fuels in locations where access to these energysources is not currently available.Political instability in foreign countries that import natural gas, or strained relations between such countries andthe U.S. may also impede the willingness or ability of LNG suppliers, purchasers and merchants in such countries to importLNG from the U.S. Furthermore, some foreign purchasers of LNG may have economic or other reasons to obtain their LNGfrom non-U.S. markets or our competitors’ liquefaction facilities in the U.S.As a result of these and other factors, LNG may not be a competitive source of energy internationally. The failure ofLNG to be a competitive supply alternative to local natural gas, oil and other alternative energy sources in markets accessibleto our customers could adversely affect the ability of our customers to deliver LNG from the U.S. on a commercial basis. Anysignificant impediment to the ability to deliver LNG from the U.S. generally or from the Project specifically could have amaterial adverse effect on our customers and our business, contracts, financial condition, operating results, cash flow,liquidity and prospects.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 sales contracts.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 impose pricelimitations, bidding rules and other mechanisms which may adversely impact or otherwise limit trading margins and16 Table of Contentslead 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, superior tax incentives, more employeesand substantially greater financial, technical and marketing resources than we currently possess. The superior resources thatsome of these competitors have available for deployment could allow them to compete successfully against us, which couldhave a material adverse effect 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.We will rely on third-party engineers to estimate the future capacity ratings and performance capabilities of the Project,and these estimates may prove to be inaccurate.We will rely on third parties for the design and engineering services underlying our estimates of the future capacityratings and performance capabilities of the Project. Any of our LNG facilities, when constructed, may not have the capacityratings and performance capabilities that we intend or estimate. Failure of any of our facilities to achieve our intendedcapacity ratings and performance capabilities could prevent us from achieving the commercial start dates under our futureLNG sale and purchase agreements and could have a material adverse effect on our business, contracts, financial condition,operating results, cash flow, liquidity and prospects.17 Table of ContentsTerrorist 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 our commercialagreements. Instability in the financial markets as a result of terrorism, including cyberterrorism, or war could also materiallyadversely affect our ability to raise capital. The continuation of these developments may subject our construction andoperations to increased risks, as well as increased costs, and, depending on their ultimate magnitude, could have a materialadverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.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.18 Table of ContentsWe 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 ofthese customers to enter into satisfactory downstream arrangements in their home markets for the licenses to import and sellre-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.We 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 a Section 7 certificate holder with the right of eminent domain, any recourse to eminent domainproceedings will increase the time and cost at which these rights-of-way will be secured. If the time or cost required to obtainthese rights-of-way increases substantially or we are unable to obtain the rights-of-way, our business could be materiallyadversely 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 our application for avalue limitation agreement pursuant to the State of Texas tax code provisions for economic development. We intend toresubmit the application for consideration, but there is no guaranty that it will be accepted and approved. Approval of thesetax incentives is an important component of the Project’s competitiveness. Failure to gain approval of tax incentives byPIISD and other applicable tax authorities on comparable terms with competitors could materially impact the Project’scompetitiveness.On October 3, 2017, we executed four tax abatement agreements with the County; however, there is no assurancethat 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, limit access to or increase the cost of construction capital, cause reputational damage andimpede us in obtaining or renewing permits.19 Table of ContentsThe 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 includes deliveries from, but not limited to, ConocoPhillip’s 1,100-mile SouthTexas intrastate and gas gathering pipeline system and ExxonMobil’s 925 MMcf/d King Ranch processing facility. As thePipeline system interconnects are expected to be relatively close to the Agua Dulce Hub, it is expected that gas will beavailable for purchase in large volumes at commercially acceptable prices. Nonetheless, disruptions in upstream supplysources or increased market demand could impact the availability of gas supply to the Pipeline header system, which wouldresult 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 operational agreementsin time for operational start-up as early as 2023. Delays caused by third parties in the course of negotiating agreements andconstructing 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 organization.Our legal team screens potential partners, agents and advisors in multiple data-bases to which it has access and regularlyconducts due diligence interviews with potential counterparties. Due to the global nature of the LNG business and thediversity of jurisdictions in which our customers operate, it is possible that a prospective counterparty could be accused ofbehavior that falls short of our expectations in this regard, leading to reputational damage and potential legal liabilities,notwithstanding our 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.20 Table of ContentsThe market price of our common stock has fluctuated in the past and is likely to fluctuate in the future. Holders of ourcommon stock could lose all or part of their investment. The securities markets in general and our common stock have 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, 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;·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.21 Table of ContentsOur 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. In the third quarter of 2018,our board of directors designated 50,000 shares of preferred stock as Series A Convertible Preferred Stock, par value $0.0001per share (the “Series A Preferred Stock”), and 50,000 shares of preferred stock as Series B Convertible Preferred Stock, parvalue $0.0001 per share (the “Series B Preferred Stock” and together with the Series A Preferred Stock, the “ConvertiblePreferred Stock”), in each case such designated number of shares subject to adjustment pursuant to the provisions of thecertificate of designations governing such shares. The board of directors, without any action by our stockholders, maydesignate and issue additional shares of preferred stock in such classes or series as it deems appropriate and establish therights, preferences and privileges of such shares, including dividends, liquidation and voting rights. The rights of holders ofother classes or series of stock that may be issued could be superior to the rights of holders of our common stock. Thedesignation and issuance of shares of capital stock having preferential rights could adversely affect other rights appurtenantto shares of our common stock.The dividend, liquidation, and redemption rights of the holders of the Convertible Preferred Stock may adversely affect ourfinancial position and the rights of the holders of our common stock.At December 31, 2018, we had 51,720 shares of Series A Preferred Stock and 29,636 shares of Series B PreferredStock outstanding. The shares of Convertible Preferred Stock bear dividends at a rate of 12% per annum, which arecumulative and accrue daily from the date of issuance on the $1,000 stated value. Such dividends are payable quarterly andmay be paid in cash or in-kind. No dividends may be paid to holders of our common stock while accumulated dividendsremain unpaid on the Convertible Preferred Stock.Further, we are required, on the earlier of (i) ten (10) business days following a FID Event (as defined in thecertificates of designations of the Convertible Preferred Stock) and (ii) the date that is the tenth (10th) anniversary of theclosings of the issuances of the Convertible Preferred Stock, as applicable, to convert all of the Convertible Preferred Stockinto shares of Company common stock at a strike price of $7.50 per share of Company common stock. The conversion of theConvertible Preferred Stock would directly dilute the holders of our common stock. In the event we are liquidated whileshares of Convertible Preferred Stock are outstanding, holders of Convertible Preferred Stock will be entitled to receive apreferred liquidation distribution, plus any accumulated and unpaid dividends, before holders of our common stock receiveany distributions.Holders of the Convertible Preferred Stock have certain voting and other rights that may adversely affect holders of ourcommon stock, and the holders of Convertible Preferred Stock may have different interests from and vote their shares in amanner deemed adverse to, holders of our common stock.The holders of Convertible Preferred Stock vote on an “as-converted” basis with the holders of our common stockon all matters brought before the holders of our common stock. In addition, prior to the conversion of the ConvertiblePreferred Stock, the consent of the holders of at least a majority of each of the Series A Preferred Stock and the Series BPreferred Stock then outstanding, in each case voting together as a single class, will be required for the Company to takecertain actions, including, among others, (i) authorizing, creating or approving the issuance of any shares, or of any securityconvertible into, or convertible or exchangeable for shares of, senior to the Convertible Preferred Stock; (ii) authorizing,creating or approving the issuance of any shares of, or of any security convertible into, or convertible or exchangeable forshares of, Parity Stock (as defined in the certificates of designations of the Convertible Preferred Stock), subject to certainexceptions; (iii) adversely affecting the rights, preferences or privileges of the Convertible Preferred Stock, as applicable,subject to certain exceptions; (iv) amending, altering or repealing any of the provisions of the Certificate of Incorporation ina manner that would adversely affect the powers, designations, preferences or rights of the Convertible Preferred Stock, asapplicable; or (v) amending, altering or repealing any of the provisions of the certificates of designations of the ConvertiblePreferred Stock, as applicable.The holders of Convertible Preferred Stock may have different interests from the holders of our common stock andcould vote their shares in a manner deemed adverse to the holders of our common stock. 22 Table of ContentsExercise of warrants may have a dilutive effect on our common stock.As of December 31, 2018, outstanding IPO Warrants to purchase an aggregate of 12,081,895 shares of our commonstock were exercisable in accordance with the terms of the warrant agreement governing such warrants. 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 of our common stock, subject to certain adjustments.In addition, we issued warrants together with the Series A Preferred Stock and the Series B Preferred Stock. Thewarrants issued together with the Series A Preferred Stock represent the right to acquire in the aggregate approximately 71basis points (0.71%) of the fully diluted shares of all outstanding shares of Company common stock on the exercise date witha strike price of $0.01 per share. The warrants issued together with the Series B Preferred Stock represent the right to acquirein the aggregate 42 basis points (0.42%) of the fully diluted shares of all outstanding shares of Company common stock onthe exercise date with a strike price of $0.01 per share. The warrants issued together with the Convertible Preferred Stockhave a fixed three-year term commencing on the closings of the issuances of the associated Convertible Preferred Stock andmay only be exercised by the holders thereof at the expiration of such three-year term; however, we can force exercise of suchwarrants prior to expiration of such term if the volume weighted average trading price of shares of Company common stockfor each trading day during any 60 of the prior 90 trading days is equal to or greater than 175% of the $7.50 per share ofCompany common stock and, in the case of the warrants issued together with the Series B Preferred Stock, also if wesimultaneously elect to force a mandatory exercise of all other warrants then-outstanding and unexercised and held by anyholder of Parity Stock.To the extent the IPO Warrants are exercised or the warrants issued together with the Convertible Preferred Stock areexercised, additional shares of our common stock will be issued, which will result in dilution to the holders of our commonstock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares inthe public market or the fact that such warrants may be exercised could adversely affect the market price of our commonstock.Provisions of our charter documents or Delaware law could discourage, delay or prevent us from being acquired even ifbeing acquired 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 (the “Bylaws”) maydiscourage, delay or prevent a merger, acquisition or other change in control that stockholders might otherwise considerfavorable, including transactions in which stockholders might otherwise receive a premium for their shares. In addition, theseprovisions may frustrate or prevent any attempt by our stockholders to replace or remove our current management by makingit more difficult to replace or remove our board of directors. Among other things, these provisions include:·elimination of our stockholders’ ability to call special meetings of stockholders;·elimination of our stockholders’ ability to act by written consent;·an advance notice requirement for stockholder proposals and nominations for members of our board ofdirectors;·a classified board of directors, the members of which serve staggered three-year terms;·the express authority of our board of directors to make, alter or repeal the Bylaws;·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.In addition, the Certificate of Incorporation provides, subject to limited exceptions, that the Court of Chancery ofthe State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for any claims, including (i)any derivative actions or proceedings brought on our behalf, (ii) any action asserting a claim of a breach of a fiduciary23 Table of Contentsduty owed by, or any wrongdoing by, a director, officer or employee or (iii) any action asserting a claim pursuant to anyprovision of the Delaware General Corporation Law, the Certificate of Incorporation or the Bylaws, (iv) any actionto interpret, apply, enforce or determine the validity of the Certificate of Incorporation or the Bylaws or (v) any actionasserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring anyinterest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions describedabove. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it findsfavorable for disputes with us or any of our directors, officers, other employees or stockholders which may discouragelawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision that is contained inthe Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associatedwith resolving such action in other jurisdictions, which could adversely affect our business, operating results and financialcondition. Item 1B. Unresolved Staff CommentsNone. Item 2. PropertiesWe currently lease approximately 25,600 square feet of office space for general and administrative purposes inHouston, Texas under a lease agreement that expires on September 30, 2020.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. In October 2018, NextDecade LLC exercised itsoption to renew the Brownsville Lease for an additional six-month term, which expires May 6, 2019.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.24 Table of Contents PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket Information, Holders and DividendsOur common stock trades on Nasdaq under the symbol “NEXT.” The IPO Warrants traded on Nasdaq under thesymbol “NEXTW” until February 22, 2018. Since February 22, 2018, the IPO Warrants have traded on the OTC Pink Marketunder the symbol “NEXTW.” As of March 1, 2019, we had 109.9 million shares of Company common stock outstanding held by approximately90 record owners. All shares of Company common stock held in street name are recorded in our stock register as being heldby 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 Company common stock in the foreseeable future. Any future change in our dividend policywill be made at the discretion of our board of directors in light of our financial condition, capital requirements, earnings,prospects and any restrictions under any financing agreements, as well as other factors it deems relevant.Purchase of Equity Securities by the IssuerThe following table summarizes stock repurchases for the three months ended December 31, 2018:Period Total Number of SharesPurchased Average Price Paid PerShare Total Number of SharesPurchased as a Part ofPublicly Announced Plans Maximum Number ofUnits That May Yet BePurchased Under thePlansOctober 2018 — — — —November 2018 — — — —December 2018 3,223 $ 5.03 — — (1)Represents shares of Company common stock surrendered to us by participants in our 2017 Omnibus Incentive Plan (the“2017 Plan”) to settle the participants’ personal tax liabilities that resulted from the lapsing of restrictions on sharesawarded to the participants under the 2017 Plan.(2)The price paid per share of Company common stock was based on the closing trading price of Company common stockon the dates on which we repurchased shares of Company common stock from the participants under the 2017 Plan.Recent Issuances of Unregistered SecuritiesOn December 31, 2018, the Company issued 25,000 shares of Company common stock to a consultant under theterms of a consulting services agreement. Such shares were fully vested on the date of issuance and were issued in atransaction exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof as a transactionby an issuer not involving any public offering. The Company relied on the representations made by such consultant. Nocommissions were paid, and no underwriter or placement agent was involved in such transaction. Item 6. Selected Financial DataWe are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are notrequired to provide the information under this item.25 (1)(2)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 ofTexas. We have focused and continue to focus our development activities on the Project and have undertaken and continueto undertake various initiatives to evaluate, design and engineer the Project that we expect will result in demand forcontracted capacity at the Terminal, which would allow us to seek construction financing to develop the Project. We believethe Project possesses competitive advantages in several important areas, including, engineering, commercial, regulatory, andgas supply. We submitted a pre-filing request for the Project to the FERC in March 2015 and filed a formal application withthe FERC in May 2016. We also believe we have robust commercial offtake and gas supply strategies in place and weestimate that the Project could commence commercial operations as early as 2023.Overview of Significant EventsReceipt of FERC Scheduling Notice and Draft Environmental Impact StatementOn August 31, 2018, the FERC issued a notice of schedule for environmental review of the Project. According tothe notice, the FERC will issue its final Environmental Impact Statement (“EIS”) on April 26, 2019, based on issuance of thedraft EIS in October 2018. The FERC subsequently issued the draft EIS on October 12, 2018. The FERC has established aFederal Authorization Decision Deadline of July 25, 2019, the date by which all other agencies responsible for issuingrequired Project-related permits pursuant to federal law must act. This deadline does not apply to the FERC.Engineering, Procurement, and Construction ContractDuring the third quarter of 2018 we initiated a competitive engineering, procurement and construction (“EPC”) bidprocess. We received expressions of interest (the “EOIs”) from multiple EPC contractors to participate in the EPCprocess. We reviewed the EOIs against a series of selection criteria and issued formal invitations to bid to Bechtel Oil, Gasand Chemicals, Inc., Fluor Enterprises, Inc. and McDermott International, Inc. See additional information relating to theinvitations to bid in Note 12 – Commitments and Contingencies of our Notes to Consolidated Financial Statements. Weexpect to execute a final EPC contract in the third quarter of 2019.26 Table of ContentsPreferred Equity OfferingsSeries A Convertible Preferred Stock OfferingIn August 2018, we sold an aggregate of 50,000 shares of Series A Preferred Stock at $1,000.00 per share for anaggregate purchase price of $50 million and we issued an additional 1,000 shares of Series A Preferred Stock in aggregate asorigination fees to (i) York Capital Management Global Advisors, LLC, severally on behalf of certain funds or accountsmanaged by it or its affiliates (“York”), (ii) Valinor Management, L.P., severally on behalf of certain funds or accounts forwhich it is investment manager (“Valinor”), (iii) Bardin Hill Investment Partners LP (formerly known as Halcyon CapitalManagement LP), severally on behalf of certain funds or accounts managed by it or its affiliates (“Bardin Hill,” and togetherwith York and Valinor, the “Fund Purchasers”) and (iv) HGC NEXT INV LLC (“HGC” and, together with the FundPurchasers, the “Series A Preferred Stock Purchasers”). Warrants were issued together with the shares of Series A PreferredStock (the “Series A Warrants”). In connection with the issuance of Series A Preferred Stock and pursuant to backstop commitment agreements withthe Fund Purchasers dated April 11, 2018, as subsequently amended on August 3, 2018 (as amended, the “BackstopAgreements”), we also issued a total of 413,658 shares of Company common stock as fees to the Fund Purchasers. Each FundPurchaser is a Company stockholder and, pursuant to that certain Agreement and Plan of Merger, dated as of April 17, 2017,by and among the Company, each Fund Purchaser and/or one or more of its affiliates, and the other parties named therein,three individuals, two individuals, and one individual from York, Valinor, and Bardin Hill, respectively, were appointed tothe Company’s board of directors. For further descriptions of the Series A Preferred Stock and the Series A Warrants, see Note8 – Preferred Stock and Common Stock Warrants, and for additional details on the Series A Preferred Stock offering and thetransactions in connection therewith, please refer to our Current Report on Form 8-K filed with the SEC on August 7, 2018.Series B Convertible Preferred Stock OfferingIn September 2018, we sold an aggregate of 29,055 shares of Series B Preferred Stock at $1,000.00 per share for anaggregate purchase price of $29.055 million and issued an additional 581 shares of Series B Preferred Stock in aggregate asorigination fees to certain funds managed by BlackRock (collectively, the “Series B Preferred Stock Purchasers”). Warrantswere issued together with the shares of Series B Preferred Stock (the “Series B Warrants” and, together with the Series AWarrants, the “Common Stock Warrants”). For further descriptions of the Series B Preferred Stock and the Series B Warrants,see Note 8 – Preferred Stock and Common Stock Warrants, and for additional details on the Series B Preferred EquityOffering and the transactions in connection therewith, please refer to our Current Report on Form 8-K filed with the SEC onAugust 24, 2018.Air PermitsOn December 12, 2018, the Texas Commission on Environmental Quality (“TCEQ”) Commissioners voted to issue aseries of air permits for the Project, which include Air Quality Permit No. 104792, PSD Air Quality Permit No. PSDTX1498,and GHPSD Air Quality Permit No. GHGPSDTX158. In addition, all requests for hearing and a motion for reconsiderationwere denied.Liquidity and Capital ResourcesCapital ResourcesWe have funded and continue to fund the development of the Project and general working capital needs through ourcash on hand and proceeds from the issuances of equity. As discussed above in “Overview of Significant Events – PreferredEquity Offerings,” in August 2018, we sold an aggregate of 50,000 shares of Series A Preferred Stock at $1,000.00 per sharefor an aggregate purchase price of $50 million and we issued an additional 1,000 shares of Series A Preferred Stock inaggregate to Series A Preferred Stock Purchasers, together with the Series A Warrants. In September 2018, we sold anaggregate of 29,055 shares of Series B Preferred Stock at $1,000.00 per share for an aggregate purchase price of $29.055million and we issued an additional 581 shares of Series B Preferred Stock in aggregate to the Series B Preferred StockPurchasers, together with the Series B Warrants. Our capital resources consisted of approximately $3.2 million of cash andcash equivalents and $72.5 million of investment securities as of December 31, 2018.27 Table of ContentsSources and Uses of CashThe following table summarizes the sources and uses of our cash for the periods presented (in thousands): Year Ended December 31, 2018 2017Operating cash flows $(23,285) $(12,830)Investing cash flows (86,161) 11,862Financing cash flows 76,912 24,147 Net (decrease) increase in cash and cash equivalents (32,534) 23,179Cash and cash equivalents – beginning of period 35,703 12,524Cash and cash equivalents – end of period $3,169 $35,703 Operating Cash FlowsOperating cash outflows during the years ended December 31, 2018 and 2017 were $23.3 million and $12.8 million,respectively. The increase in operating cash outflows in 2018 compared to 2017 was primarily related to additionalemployees and travel costs, Invitation to Bid Contract Costs, increased professional fees and increased marketing andconference sponsorship costs. Investing Cash FlowsInvesting cash (outflows) inflows during the years ended December 31, 2018 and 2017 were $(86.2) million and$11.9 million, respectively. The investing cash outflows in 2018 were the result of cash used in the development of theProject of $18.7 million and a net investment of $67.5 million in investment securities. The investing cash inflows in 2017were primarily the result of cash received in the reverse recapitalization of $26.8 million partially offset by cash used in thedevelopment of the Project of $14.8 million.Financing Cash FlowsFinancing cash inflows during the years ended December 31, 2018 and 2017 were $76.9 million and $24.1 million,respectively. Financing cash inflows in 2018 was the result of $79.1 million of proceeds from the issuance of preferredequity offset by $2.1 million of equity issuance costs. Financing cash inflows in 2017 was the result of $30.1 million ofproceeds from the issuance of Company common stock and membership interests in NextDecade LLC offset by $6.0 millionof equity issuance costs.Capital Development ActivitiesWe are primarily engaged in developing the Project, which will likely require additional capital to support furtherproject development, engineering, regulatory approvals and compliance, and commercial activities in advance of a finalinvestment decision (“FID”) made to finance and construct the Project. Even if successfully completed, the Project will notbegin to operate and generate significant cash flows until at least several years from now, which management currentlyestimates being as early as 2023. Construction of the Project would not begin until, among other requirements for projectfinancing, the FERC issues an order granting the necessary authorizations under the Natural Gas Act and once all requiredfederal, state and local permits have been obtained. We estimate that we will receive all regulatory approvals and beginconstruction to support the commencement of commercial operations as early as 2023. Additionally, approval of taxincentives is an important component of the Project’s competitiveness. Failure to gain approval of tax incentives oncomparable terms with competitors could materially impact the Project’s competitiveness. As a result, our business successwill depend, to a significant extent, upon our ability to obtain the funding necessary to construct the Project, to bring it intooperation on a commercially viable basis and to finance our staffing, operating and expansion costs 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.28 Table of ContentsWe 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 by us. 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, 2018: Total 2019 2020- 2021 2022 - 2023 ThereafterOperating lease obligations$1,829$1,299$530$ —$ —Invitation to Bid Contract Costs 14,900 14,900 — — —Total $16,729 $16,199 $530 $ — $ —(1)Represents the maximum obligation up to $14.9 million.Operating lease obligations primarily relate to our land site for our Galveston Bay Terminal and office space inHouston, Texas. During the third quarter of 2018, we initiated a competitive EPC bid process. In connection with the EPC bidprocess, we entered into agreements with potential EPC contractors that provide for payments to be made by us to the EPCcontractors as bid milestones are achieved (“Invitation to Bid Contract Costs”). Future potential payments for Invitation toBid Contract Costs are up to $14.9 million in 2019.A discussion of these obligations can be found at Note 12 – Commitments and Contingencies of our Notes toConsolidated Financial Statements.Results of OperationsThe following table summarizes costs, expenses and other income for the year ended December 31, 2018 and 2017(in thousands): Year Ended December 31, 2018 2017 ChangeRevenues $ — $ — $ —General and administrative expenses 35,182 34,551 631Invitation to Bid Contract Costs 6,563 — 6,563Land option and lease expenses 1,099 981 118Depreciation expense 171 106 65Operating loss (43,015) (35,638) (7,377)Gain on Common Stock Warrant Liabilities 164 — 164Interest income, net 1,019 343 676Other (128) (31) (97)Net loss attributable to NextDecade Corporation (41,960) (35,326) (6,634)Preferred stock dividends (724) — (724)Deemed dividends on Series A Convertible Preferred Stock (822) — (822)Net loss attributable to common stockholders $(43,506) $(35,326) $(8,180) 29 (1)Table of ContentsOur consolidated net loss was $42.0 million, or $0.41 per common share (basic and diluted), for the year endedDecember 31, 2018, compared to a net loss of $35.3 million, or $0.35 per common share (basic and diluted), for the yearended December 31, 2017. This $6.7 million increase in net loss was primarily a result of increased general andadministrative expenses and Invitation to Bid Contract Costs partially offset by interest income discussed separately below.General and administrative expenses during the year ended December 31, 2018 increased $0.6 million compared tothe year ended December 31, 2017, due primarily to, (i) an increase in the number of employees which resulted in increasedsalaries and employee benefits, office expenses, travel, and professional fees of $5.6 million and (ii) increased marketing andpromotion costs, insurance, taxes and license fees of $0.9 million, partially offset by a decrease in share-based compensationexpense of $5.9 million as a result of forfeitures of restricted stock awards during the period and changes in the probabilityand expected timing of achievement of performance conditions.As of December 31, 2018, we incurred approximately $6.6 million of Invitation to Bid Contract Costs. There wereno Invitation to Bid Contract Costs incurred during 2017.Interest income, net during the year ended December 31, 2018 increased $0.7 million compared to the year endedDecember 31, 2017 due to increased yield and higher average balances maintained in our cash accounts and investmentsecurities.Preferred stock dividends of $0.7 million in 2018 were paid-in-kind with the issuance of an additional 720 shares ofSeries A Preferred Stock. The Series A Preferred Stock was not issued or outstanding during 2017.Deemed dividends on the Series A Preferred Stock for the year ended December 31, 2018 represents the accretion ofthe beneficial conversion feature associated with the Series A Preferred Stock issued in 2018. Due to the price of our commonstock as of the closing date of the Series B Preferred Stock, the Series B Preferred Stock does not have a beneficial conversionfeature.Off-Balance Sheet ArrangementsWe did not have any off-balance sheet arrangements as of December 31, 2018.Summary 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, Common Stock Warrant liabilities, and income taxes. Changes in facts andcircumstances or additional information may result in revised estimates, and actual results may differ from theseestimates. Management considers the following to be its most critical accounting estimates that involve significantjudgment.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 fromresults. Management reviews its estimates of cash flows on an ongoing basis using historical experience and other factors,including the 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 factors30 Table of Contentschange and 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.Valuation of Common Stock Warrant LiabilitiesThe fair value of Common Stock Warrant liabilities is determined using a Monte Carlo valuationmodel. Determining the appropriate fair value model and calculating the fair value of Common Stock Warrant requiresconsiderable judgment. Any change in the estimates used may cause the value to be higher or lower than that reported. Theestimated volatility of our common stock at the date of issuance, and at each subsequent reporting period, is based on ourhistorical volatility. The risk-free interest rate is based on rates published by the government for bonds with maturity similarto the expected remaining life of the Common Stock Warrants at the valuation date. The expected life of the Common StockWarrants is assumed to be equivalent to their remaining contractual term.The Common Stock Warrants are not traded in an active market and the fair value is determined using valuationtechniques. The estimates may be significantly different from those recorded in the consolidated financial statementsbecause of the use of judgment and the inherent uncertainty in estimating the fair value of these instruments that are notquoted in an active market. All changes in the fair value are recorded in the consolidated statement of operations andcomprehensive loss each reporting period.For additional information regarding the valuation of Common Stock Warrant liabilities, see Note 8 – PreferredStock and Common Stock Warrants of our 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. Item 7A. Quantitative and Qualitative Disclosures About Market RiskWe are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are notrequired to provide the information under this item. 31 Table of Contents Item 8. Financial Statements and Supplementary DataIndex to Consolidated Financial StatementsNextDecade Corporation and Subsidiaries PageReport of Independent Registered Public Accounting Firm – Grant Thornton LLP 33Report of Independent Registered Public Accounting Firm – Marcum LLP 34Consolidated Balance Sheets 35Consolidated Statements of Operations and Comprehensive Loss 36Consolidated Statements of Stockholders’ Equity, Series A and Series B Convertible Preferred Stock 37Consolidated Statements of Cash Flows 38Notes to Consolidated Financial Statements 39Supplemental Information to Consolidated Financial Statements – Summarized Quarterly Financial Data 54 32 Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and StockholdersNextDecade CorporationOpinion on the financial statementsWe have audited the accompanying consolidated balance sheet of NextDecade Corporation and subsidiaries (the“Company”) as of December 31, 2018, the related consolidated statements of operations and comprehensive loss,stockholders’ equity, series A and series B convertible preferred stock, and cash flows for the year ended December 31, 2018and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements presentfairly, in all material respects, the financial position of the Company as of December 31, 2018 and the results of its operationsand its cash flows for the year ended December 31, 2018, in conformity with accounting principles generally accepted in theUnited 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 audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether dueto error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control overfinancial reporting. As part of our audit 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 audit included performing procedures to assess the risks of material misstatement of the financial statements, whether dueto error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements. Our audit 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 audit provides a reasonable basis for our opinion./s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2018.Houston, TXMarch 6, 2019 33 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 sheet of NextDecade Corporation and Subsidiaries (the“Company”) as of December 31, 2017, the related consolidated statements of operations and comprehensive loss,stockholders’ equity and cash flows for the year ended December 31, 2017, and the related notes (collectively referred to asthe “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financialposition of the Company as of December 31, 2017, and the results of its operations and its cash flows for the year endedDecember 31, 2017, in conformity with accounting principles generally accepted 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 audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether dueto error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control overfinancial reporting. As part of our audit 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 audit included performing procedures to assess the risks of material misstatement of the financial statements, whether dueto error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,evidence regarding the amounts and disclosures in the financial statements. Our audit 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 audit provides a reasonable basis for our opinion./s/ Marcum LLPWe have served as the Company’s auditor since 2017.New York, NYMarch 8, 201834 Table of ContentsNextDecade Corporation and SubsidiariesConsolidated Balance Sheets(in thousands, except share data) December 31, December 31, 2018 2017Assets Current assets Cash and cash equivalents $3,169 $35,703Investment securities 72,453 5,063Prepaid expenses and other current assets 1,310 2,099Total current assets 76,932 42,865Property, plant and equipment, net 92,070 73,226Total assets $169,002 $116,091 Liabilities, Series A and Series B Convertible Preferred Stock and Stockholders’ Equity Current liabilities Accounts payable $719 $726Share-based compensation liability 3,018 1,815Accrued liabilities and other current liabilities 8,353 5,856Total current liabilities 12,090 8,397Non-current Common Stock Warrant liabilities 7,441 —Non-current compensation liabilities — 2,015Non-current share-based compensation liability — 2,587Total liabilities 19,531 12,999 Commitments and contingencies (Note 12) Series A Convertible Preferred Stock, $1,000 per share liquidation preferenceIssued and outstanding: 51,720 shares and zero shares at December 31, 2018 and December 31, 2017,respectively 40,091 —Series B Convertible Preferred Stock, $1,000 per share liquidation preferenceIssued and outstanding: 29,636 shares and zero shares at December 31, 2018 and December 31, 2017,respectively 26,159 — Stockholders’ equity Common stock, $0.0001 par valueAuthorized: 480.0 million shares at December 31, 2018 and December 31, 2017Issued and outstanding: 106.9 million shares and 106.3 million shares at December 31, 2018 andDecember 31, 2017, respectively 11 11Treasury stock: 6,425 shares and zero shares at December 31, 2018 and December 31, 2017,respectively, at cost (35) —Preferred stock, $0.0001 par valueAuthorized: 0.9 million, after designation of the Series A and Series B Convertible Preferred StockIssued and outstanding: none at December 31, 2018 and December 31, 2017 — —Additional paid-in-capital 180,862 158,738Accumulated deficit (97,617) (55,617)Accumulated other comprehensive loss — (40)Total stockholders’ equity 83,221 103,092Total liabilities, Series A and Series B Convertible Preferred Stock and stockholders’ equity $169,002 $116,091 The accompanying notes are an integral part of these Consolidated Financial Statements.35 Table of ContentsNextDecade Corporation and SubsidiariesConsolidated Statements of Operations and Comprehensive Loss(in thousands, except per share data) Year Ended December 31, 2018 2017 Operations Revenues $ — $ — Operating Expenses General and administrative expenses 35,182 34,551 Invitation to Bid Contract Costs 6,563 — Land option and lease expenses 1,099 981 Depreciation expense 171 106 Total operating expenses 43,015 35,638 Total operating loss (43,015) (35,638) Other income (expense) Gain on Common Stock Warrant liabilities 164 — Interest income, net 1,019 343 Other (128) (31) Total other income 1,055 312 Net loss attributable to NextDecade Corporation (41,960) (35,326) Preferred stock dividends (724) — Deemed dividends on Series A Convertible Preferred Stock (822) — Net loss attributable to common stockholders $(43,506) $(35,326) Net loss per common share - basic and diluted $(0.41) $(0.35) Weighted average shares outstanding - basic and diluted 106,564 100,926 Comprehensive Loss Net loss attributable to NextDecade Corporation $(41,960) $(35,326) Other comprehensive loss: Change in fair value of investments — (13) Comprehensive loss $(41,960) $(35,339) The accompanying notes are an integral part of these Consolidated Financial Statements.36 Table of ContentsNextDecade Corporation and SubsidiariesConsolidated Statements of Stockholders’ Equity, Series A and Series B Convertible Preferred Stock(in thousands) Common Stock Treasury Stock Accumulated Par Additional Other Total Series A Series B Value Paid-in Accumulated Comprehensive Stockholders’ Convertible Convertible Shares Amount Shares Amount Capital Deficit Loss Equity Preferred Stock Preferred StockBalance at December 31, 2016 95,680 $10 — $ — $88,406 $(20,291) $(27) $68,098 $ — $ —Pre-merger equity issuance 2,810 — — — 20,100 — — 20,100 — —Reverse recapitalization 6,759 1 — — 26,773 — — 26,774 — —Issuance of common stock 1,026 — — — 10,000 — — 10,000 — —Equity issuance costs — — — — (6,295) — — (6,295) — —Share-based compensation — — — — 19,754 — — 19,754 — —Other 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 $ — $ —Adoption of ASU 2016-01 — — — — — (40) 40 — — —Share-based compensation — — — — 19,032 — — 19,032 — —Restricted stock vesting 173 — — — — — — — — —Shares repurchased related toshare-based compensation (6) — 6 (35) — — — (35) — —Issuance of Series A preferredstock 414 — — — 4,638 — — 4,638 38,549 —Issuance of Series B preferredstock — — — — — — — — — 26,159Preferred stock dividends — — — — (724) — — (724) 720 —Deemed dividends - accretionof beneficial conversionfeature — — — — (822) — — (822) 822 —Net loss — — — — — (41,960) — (41,960) — —Balance at December 31, 2018 106,856 $11 6 $(35) $180,862 $(97,617) $ — $83,221 $40,091 $26,159 The accompanying notes are an integral part of these Consolidated Financial Statements.37 Table of ContentsNextDecade Corporation and SubsidiariesConsolidated Statements of Cash Flows(in thousands) Year Ended December 31, 2018 2017Operating activities: Net loss attributable to NextDecade Corporation $(41,960) $(35,326)Adjustment to reconcile net loss to net cash used in operating activities Depreciation 171 106Share-based compensation expense 16,840 22,693Gain on Common Stock Warrant liabilities (164) —Loss on investment securities 114 —Changes in operating assets and liabilities: Prepaid expenses 440 (1,003)Other current assets 349 349Accounts payable 124 (137)Accrued expenses and other liabilities 801 488Net cash used in operating activities (23,285) (12,830)Investing activities: Acquisition of property, plant and equipment (18,658) (14,833)Issuance of note receivable — (115)Repayment of note receivable — 115Cash received in reverse recapitalization — 26,774Proceeds from sale of investment securities 17,113 —Purchase of investment securities (84,616) (79)Net cash (used in) provided by investing activities (86,161) 11,862Financing activities: Proceeds from equity issuance 79,055 30,100Equity issuance costs (2,104) (5,953)Shares repurchased related to share-based compensation (35) —Payment of convertible preferred stock cash dividends (4) —Net cash provided by financing activities 76,912 24,147Net (decrease) increase in cash and cash equivalents (32,534) 23,179Cash and cash equivalents – beginning of period 35,703 12,524Cash and cash equivalents – end of period $3,169 $35,703 Non-cash investing activities: Accounts payable for acquisition of property, plant and equipment $367 $498Accrued liabilities for acquisition of property, plant and equipment 4,014 3,317Non-cash financing activities: Paid-in-kind dividends on Series A Convertible Preferred Stock 720 —Accretion of deemed dividends on Series A Convertible Preferred Stock 822 — The accompanying notes are an integral part of these Consolidated Financial Statements.38 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”). In January of 2017, we also secured a 36-month leaseof a 994-acre site near Texas City, Texas for another potential LNG terminal (the “Galveston Bay Terminal”) with the optionto extend the lease for an additional 12 months.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. Prior to the merger with NextDecade LLC, we had no operations and our assets consisted of cashproceeds 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 results of operations and cash flows prior to the Merger Date, relate to NextDecade LLCand its subsidiaries. Subsequent to the Merger Date, the information relates to the consolidated entities of NextDecade. Wecontinue to operate in a single operating segment for financial 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.39 Table of ContentsCash EquivalentsWe consider all highly liquid investments with an original maturity of three months or less when purchased to becash equivalents. Investment SecuritiesWe define investment securities as investments in marketable securities that can be readily converted to cash. Wedetermine the appropriate classification of investment securities at the time of purchase and reevaluate such classification ateach balance sheet date. Investment securities are initially recorded at cost and remeasured to fair value, with changespresented in other income in our Consolidated Statements of Operations and Comprehensive Loss.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 them 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, the amount ofimpairment loss is measured as the excess, if any, of the carrying value of the asset over its estimated fair value.Warrants The Company determines the accounting classification of warrants that are issued, as either liability or equity, byfirst assessing whether the warrants meet liability classification in accordance with Accounting Standards Codification40 Table of Contents(“ASC”) 480 Distinguishing Liabilities from Equity (“ASC 480”), and then in accordance with ASC 815-40, Accounting forDerivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock (“ASC 815-40”). UnderASC 480, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate the issuer to settlethe warrants or the underlying shares by paying cash or other assets, or warrants that must or may require settlement byissuing a variable number of shares.If warrants do not meet liability classification under ASC 480, the Company assesses the requirements under ASC815-40, which states that contracts that require or may require the issuer to settle the contract for cash or a variable number ofshares are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cashsettlement feature. If the warrants do not require liability classification under ASC 815-40, in order to conclude equityclassification, the Company assesses whether the warrants are indexed to our common stock and whether the warrants areclassified as equity under ASC 815-40 or other applicable GAAP. After all relevant assessments are made, the Companyconcludes whether the warrants are classified as liability or equity. Liability classified warrants are required to be accountedfor at fair value both on the date of issuance and on subsequent accounting period ending dates, with all changes in fair valueafter the issuance date recorded in the statements of operations as a gain or loss. Equity classified warrants are accounted forat fair value on the issuance date with no changes in fair value recognized after the issuance date.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 investment securities as disclosed in Note 5 –Investment Securities and for Common Stock Warrant liabilities as disclosed in Note 8 – Preferred Stock and Common StockWarrants. The carrying amount of cash and cash equivalents and accounts payable reported on the Consolidated BalanceSheets approximates fair value due to their short-term maturities.Treasury StockTreasury stock is recorded at cost. Issuance of treasury stock is accounted for on a weighted average cost basis.Differences between the cost of treasury stock and the re-issuance proceeds are charged to additional paid-in capital.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 and the dilutive effect of convertible securities is calculated using the if-convertedmethod. Basic and diluted EPS for all periods presented are the same since the effect of our potentially dilutive securities areanti-dilutive to our net loss per share, as disclosed in Note 9 – Net Loss Per Share Attributable to Common Stockholders.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 and41 Table of Contentsusing the graded-vesting attribution method for awards that vest based on performance conditions. We estimate the serviceperiods for performance awards utilizing a probability assessment based on when we expect to achieve the performanceconditions. For liability classified share-based compensation awards (which include grants of stock and restricted stock tonon-employees), compensation cost is initially recognized on the grant date using estimated payout levels. Compensationcost is subsequently adjusted quarterly to reflect the updated estimated payout levels based on the changes in our stockprice. We account for forfeitures as they occur.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 net deferred tax assets whenit is 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.Emerging 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. We may take advantage of these reporting exemptions until we are no longeran emerging growth company.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 such time as those standards apply to private companies. The Companyhas elected to “opt-out” of this exemption and, therefore, will be subject to the same new or revised accounting standards asother public companies that are not emerging growth companies.Additionally, under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), theCompany qualifies as a “smaller reporting company” because the value of its common stock held by non-affiliates as of theend of its most recently completed second fiscal quarter was less than $250 million. For as long as the Company remains asmaller reporting company, it may take advantage of certain exemptions from the SEC’s reporting requirements that areotherwise applicable to public companies that are not smaller reporting companies. 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 4,214,130 shares,607,349 shares and 71,847 shares, respectively, of our common stock (“Additional Shares”) upon the achievement by us ofeach 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 (the “FERC”) by June 30, 2018.42 Table of Contents·Milestone 2 — The execution by us or one or more of our subsidiaries of a binding sale and purchase ortolling agreement (with customary conditions precedent) for the sale and purchase of, or the provision oftolling services 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.Additional Share Milestones 1, 2, and 3 were not achieved by the respective dates. As such, the right to receiveAdditional Shares by pre-Merger members, management and consultants of NextDecade LLC for these milestones wereforfeited.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.Note 4 — Prepaid Expenses and Other Current AssetsPrepaid expenses and other current assets consisted of the following (in thousands): December 31, December 31, 2018 2017Rio Grande LNG site option $508 $1,080Short-term security deposits 18 364Galveston Bay leases — 100Rio Bravo Pipeline options 54 111Prepaid insurance 233 208Prepaid marketing and sponsorships 242 55Other 255 181Total prepaid expenses and other current assets $1,310 $2,099 During the years ended December 31, 2018 and 2017, we recognized $572 thousand and $584 thousand,respectively, of lease option expense related to the Rio Grande LNG site option which expires November 5, 2019.Note 5 — Investment SecuritiesIn 2018, we invested in Class L shares of the JPMorgan Managed Income Fund. The JPMorgan Managed IncomeFund has an average maturity of approximately one year, duration of approximately six months, and approximately 7% ofsuch fund’s holdings are AAA-rated with 0% non-investment grade rated. Prior to our investment in the JPMorgan ManagedIncome Fund, we also maintained cash reserves in the Ultra-Short-Term Bond Fund and the Short-Term Bond Index Fund,which were managed by The Vanguard Group, Inc. Investment securities are included in Level 1 of the fair value hierarchy and consisted of the following (inthousands): December 31, December 31, 2018 2017 Fair value Cost Fair value CostJPMorgan Managed Income Fund $72,453 $72,567 $ — $ —Ultra-Short-Term Bond Fund — — 3,811 3,825Short-Term Bond Index Fund — — 1,252 1,278Total investment securities $72,453 $72,567 $5,063 $5,103 43 Table of ContentsNote 6 — Property, Plant and EquipmentProperty, plant and equipment consisted of the following (in thousands): December 31, December 31, 2018 2017Fixed Assets Computers $164 $69Furniture, fixtures, and equipment 316 246Leasehold improvements 420 264Total fixed assets 900 579Less: accumulated depreciation (542) (371)Total fixed assets, net 358 208Project Assets (not placed in service) Rio Grande 80,407 62,866Rio Bravo 11,305 10,152Total project assets 91,712 73,018Total property, plant and equipment, net $92,070 $73,226 Depreciation expense for the years ended December 31, 2018 and 2017 was $171 thousand and $106 thousand,respectively.Note 7 — Accrued Liabilities and Other Current LiabilitiesAccrued expenses and other current liabilities consisted of the following (in thousands): December 31, December 31, 2018 2017Employee compensation expense $3,130 $1,851Project asset costs 2,014 3,317Valve installation incentive 2,000 —Accrued legal services 313 141Other accrued liabilities 896 547Total accrued liabilities and other current liabilities $8,353 $5,856 (1)In April 2018, we entered into an agreement with an intrastate pipeline company with assets near our Terminal whichincentivizes the pipeline company to procure, permit and install a valve on an intrastate pipeline near our Terminal. Weagreed that, upon the later of (i) March 31, 2019 and (ii) thirty days after the valve has been installed, we will reimbursethe pipeline company a cash amount equal to 50% of the costs incurred in connection with the valve, up to a maximumpayment by us not to exceed $2.0 million. Such valve had been installed as of December 31, 2018. Note 8 — Preferred Stock and Common Stock WarrantsPreferred StockIn August 2018, we sold an aggregate of 50,000 shares of Series A Convertible Preferred Stock, par value $0.0001per share (the “Series A Preferred Stock), at $1,000.00 per share for an aggregate purchase price of $50 million and we issuedan additional 1,000 shares of Series A Preferred Stock in aggregate as origination fees to (i) York Capital Management GlobalAdvisors, LLC, severally on behalf of certain funds or accounts managed by it or its affiliates (“York”), (ii) ValinorManagement, L.P., severally on behalf of certain funds or accounts for which it is investment manager (“Valinor”), (iii)Bardin Hill Investment Partners LP (formerly known as Halcyon Capital Management LP), severally on behalf of certainfunds or accounts managed by it or its affiliates (“Bardin Hill,” and together with York and Valinor, the “Fund Purchasers”)and (iv) HGC NEXT INV LLC (“HGC” and, together with the Fund Purchasers, the “Series A Preferred Stock Purchasers”).Warrants were issued together with the shares of Series A Preferred Stock (the “Series A Warrants”). 44 (1)Table of ContentsIn connection with the issuance of Series A Preferred Stock and pursuant to backstop commitment agreements withthe Fund Purchasers dated April 11, 2018, as subsequently amended on August 3, 2018 (as amended, the “BackstopAgreements”), we also issued a total of 413,658 shares of Company common stock as fees to the Fund Purchasers. Each FundPurchaser is a Company stockholder and, pursuant to that certain Agreement and Plan of Merger, dated as of April 17, 2017,by and among the Company, each Fund Purchaser and/or one or more of its affiliates, and the other parties named therein,three individuals, two individuals, and one individual from York, Valinor, and Bardin Hill, respectively, were appointed tothe Company’s board of directors. In September 2018, we sold an aggregate of 29,055 shares of Series B Convertible Preferred Stock, par value$0.0001 per share (the “Series B Preferred Stock” and, together with the Series A Preferred Stock, the “Convertible PreferredStock”), at $1,000.00 per share for an aggregate purchase price of $29.055 million and we issued an additional 581 shares ofSeries B Preferred Stock in aggregate as origination fees to certain funds managed by BlackRock (collectively, the “Series BPreferred Stock Purchasers”). Warrants were issued together with the shares of Series B Preferred Stock (the “Series BWarrants” and, together with the Series A Warrants, the “Common Stock Warrants”).The Company has the option to convert all, but not less than all, of the Preferred Stock into shares of Companycommon stock at a strike price of $7.50 per share of Company common stock (the “Conversion Price”) on any date on whichthe volume weighted average trading price of shares of Company common stock for each trading day during any 60 of theprior 90 trading days is equal to or greater than 175% of the Conversion Price, in each case subject to certain terms andconditions. Furthermore, the Company must convert all of the Preferred Stock into shares of Company common stock at theConversion Price on the earlier of (i) ten (10) business days following a FID Event (as defined in the certificates ofdesignations of the Preferred Stock) and (ii) the date that is the tenth (10th) anniversary of the closings of the issuances of thePreferred Stock, as applicable.The shares of Convertible Preferred Stock bear dividends at a rate of 12% per annum, which are cumulative andaccrue daily from the date of issuance on the $1,000 stated value. Such dividends are payable quarterly and may be paid incash or in-kind. During 2018, the Company paid-in-kind $0.7 million of dividends to holders of the Series A PreferredStock. On January 9, 2019, the Company declared dividends to holders of the Convertible Preferred Stock as of the close ofbusiness on December 15, 2018. On January 15, 2019, the Company paid-in-kind $2.5 million of dividends to holders of theConvertible Preferred Stock. The holders of Convertible Preferred Stock vote on an “as-converted” basis with the holders of the Companycommon stock on all matters brought before the holders of Company common stock. In addition, the holders of ConvertiblePreferred Stock have separate class voting rights with respect to certain matters affecting their rights.The Convertible Preferred Stock do not qualify as liability instruments under ASC 480, because they are notmandatorily redeemable. However, as SEC Regulation S-X, Rule 5-02-27 does not permit a probability assessment for achange of control provision, the Convertible Preferred Stock must be presented as mezzanine equity between liabilities andstockholders’ equity in our Consolidated Balance Sheets because a change of control event, although not consideredprobable, could force the Company to redeem the Convertible Preferred Stock for cash or assets of the Company. At eachbalance sheet date, we must re-evaluate whether the Convertible Preferred Stock continue to qualify for equity classification.Common Stock WarrantsThe Series A Warrants issued to HGC represent the right to acquire in the aggregate 50 basis points (0.50%) of thefully diluted shares of all outstanding shares of Company common stock on the exercise date with a strike price of $0.01 pershare. The Series A Warrants issued to each of the Fund Purchasers represent the right to acquire approximately 21 basispoints (0.21%) in the aggregate of the fully diluted shares of all outstanding shares of Company common stock on theexercise date with a strike price of $0.01 per share. The Series B Warrants issued to the Series B Preferred Stock Purchasersrepresent the right to acquire in the aggregate 42 basis points (0.42%) of the fully diluted shares of all outstanding shares ofCompany common stock on the exercise date with a strike price of $0.01 per share.The Common Stock Warrants have a fixed three-year term commencing on the closings of the issuances of theassociated Convertible Preferred Stock. The Common Stock Warrants may only be exercised by the holders thereof at theexpiration of such three-year term; however, the Company can force exercise of the Common Stock Warrants prior to45 Table of Contentsexpiration of such term if the volume weighted average trading price of shares of Company common stock for each tradingday during any 60 of the prior 90 trading days is equal to or greater than 175% of the Conversion Price and, in the case of theSeries B Warrants, also if the Company simultaneously elects to force a mandatory exercise of all other warrants then-outstanding and unexercised and held by any holder of parity stock (as defined in the Certificate of Designations of Series BConvertible Preferred Stock). Pursuant to ASC 815-40, the fair value of the Common Stock Warrants was recorded as a non-current liability on our Consolidated Balance Sheet on the issuance dates. The Company revalued the Common StockWarrants as of December 31, 2018 and recognized a gain of approximately $164 thousand. The Common Stock Warrants areincluded in Level 3 of the fair value hierarchy.The assumptions used in the Monte Carlo simulation to estimate the fair value of the Common Stock Warrants as ofDecember 31, 2018 are as follows:Stock price $5.40 Exercise price $0.01 Risk-free rate 2.5%Volatility 33.1%Term (years) 2.7 Initial Fair Value AllocationNet cash proceeds were allocated on a fair value basis to the Series A Warrants and the Series B Warrants and on arelative fair value basis to the Company common stock, the Series A Preferred Stock and the Series B Preferred Stock. Asdescribed below, $2.5 million of the $41.1 million allocated to the Series A Preferred Stock was allocated to additional paid-in capital to give effect to the intrinsic value of a beneficial conversion feature (“BCF”). The allocation of net cash proceeds is as follows (in thousands): Allocation of Proceeds Additional Paid-in Capital Series A Series B Beneficial Series A Series B Convertible Convertible Common Conversion Warrants Warrants Preferred Preferred Stock FeatureGross proceeds $79,055 Equity issuance costs (2,104) Net proceeds - Initial Fair ValueAllocation $76,951 $4,859 $2,746 $41,079 $26,159 $2,108 $ —Allocation to BCF — — (2,530) — — 2,530Per balance sheet upon issuance $4,859 $2,746 $38,549 $26,159 $2,108 $2,530 Beneficial Conversion FeatureASC 470-20-20 – Debt – Debt with conversion and Other Options (“ASC 470-20”) defines a BCF as anondetachable conversion feature that is in the money at the issuance date. The Company was required by ASC 470-20 toallocate a portion of the proceeds from the Series A Preferred Stock equal to the intrinsic value of the BCF to additional paid-in capital. The intrinsic value of the BCF is calculated at the issuance date as the difference between the “accountingconversion price” and the market price of shares of Company common stock multiplied by the number of shares of Companycommon stock into which the Series A Preferred Stock is convertible. The accounting conversion prices of $5.58 per shareand $6.24 per share for the Fund Purchasers and HGC, respectively, is different than the contractual conversion price of $7.50per share. The “accounting conversion price” is derived by dividing the proceeds allocated to the Series A Preferred Stockby the number of shares of Company common stock into which the Series A Preferred Stock is convertible. We are recordingthe accretion of the $2.5 million Series A Preferred Stock discount attributable to the BCF as a deemed dividend using theeffective yield method over the period prior to the expected conversion date.46 Table of ContentsNote 9 — Net Loss Per Share Attributable to Common StockholdersThe following table (in thousands, except for loss per share) reconciles basic and diluted weighted average commonshares outstanding for the years ended December 31, 2018 and 2017: Year ended December 31, 2018 2017Weighted average common shares outstanding: Basic 106,564 100,926Dilutive unvested stock, convertible preferred stock, Common Stock Warrants and IPOWarrants — —Diluted 106,564 100,926 Basic and diluted net loss per share attributable to common stockholders $(0.41) $(0.35) 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, 2018 2017Unvested stock 498 258Convertible preferred stock 3,552 —Common Stock Warrants 454 —IPO Warrants 12,082 12,082Total potentially dilutive common shares 16,586 12,340(1)Does not include 10.8 million shares and 25.7 million shares of unvested stock for the year ended December 31, 2018and 2017 because the performance conditions had not yet been satisfied as of December 31, 2018 and 2017,respectively.(2)The IPO Warrants are exercisable at a price of $11.50 per share and expire July 24, 2022. The Company may redeem theWarrants at a price of $0.01 per IPO 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. If the Company redeems the IPO Warrantsin this manner, the Company will have the option to do so on a cashless basis with the issuance of an economicallyequivalent number of shares of Company common stock. Note 10 — Share-based CompensationWe have granted shares of Company common stock and restricted stock to employees, consultants and a non-employee director under our 2017 Omnibus Incentive Plan (the “2017 Plan”) and in connection with the special meeting ofstockholders on July 24, 2017.Total share-based compensation consisted of the following (in thousands): Year ended December 31, 2018 2017Share-based compensation: Equity awards $19,032 $19,754Liability awards (2,400) 4,402Total share-based compensation 16,632 24,156Capitalized share-based compensation 208 (1,463)Total share-based compensation expense $16,840 $22,693 47 (1)(2)Table of ContentsCertain employee contracts provided for cash bonuses upon a positive FID in the Project (the “FID Bonus”). InJanuary 2018, the nominating, corporate governance and compensation committee of the board of directors approved, andcertain employees party to such contracts accepted, an amendment to such contracts whereby the FID Bonuses would besettled in shares of Company common stock equal to 110% of the FID Bonus. The associated liability for FID Bonuses to besettled in shares of Company common stock of $0.4 million and $1.0 million is included in share-based compensationliability and non-current compensation liabilities in our Consolidated Balance Sheets at December 31, 2018 and 2017respectively.The total unrecognized compensation costs at December 31, 2018 relating to equity-classified awards and liability-classified awards were $23.3 million and $1.1 million, respectively, which are expected to be recognized over a weightedaverage period of 0.8 years.Restricted stock awards are awards of Company common stock that are subject to restrictions on transfer and to arisk of forfeiture if the recipient’s employment with the Company is terminated prior to the lapse of therestrictions. Restricted stock awards vest based on service conditions and/or performance conditions. The amortization ofthe value of restricted stock grants is accounted for as a charge to compensation expense, or capitalized, depending on thenature of the services provided by the employee, with a corresponding increase to additional-paid-in-capital over therequisite 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, 2018 and changesduring the year ended December 31, 2018 (in thousands, except for per share information): Shares WeightedAverageGrant DateFair ValuePer ShareNon-vested at January 1, 2018 9,104 $10.15Granted 1,868 7.29Vested (173) 7.76Forfeited (3,668) 10.17Non-vested at December 31, 2018 7,131 $9.44 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 prior to July 24, 2017, 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, 2018 and 2017, since it was a pass-through entity fortax purposes. As such, the income tax provision for the year ended December 31, 2017 represents the period from July 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, 2018 and 2017. Due to NextDecade LLC’s previous pass-through status and our full valuation allowance, wehave not recorded a provision for federal or state income taxes during the years ended December 31, 2018 or 2017.48 Table of ContentsThe reconciliation of the federal statutory income tax rate to our effective income tax rate is as follows: Year Ended December 31, 2018 2017 U.S. federal statutory rate, beginning of year 21% 35% NextDecade LLC pre-merger net loss — (5) Officers' compensation (5) (12) U.S. tax reform rate change — (7) Other (1) — Valuation allowance (15) (11) Effective tax rate as reported —% —% Significant components of our deferred tax assets and liabilities at December 31, 2018 and 2017 are as follows (inthousands): Year Ended December 31, 2018 2017Deferred tax assets Net operating loss carryforwards and credits $5,302 $1,694Share-based compensation expense 3,548 2,203Property, plant and equipment 1,399 3Other 51 11Less: valuation allowance (10,300) (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, 2018, we had federal net operating loss (“NOL”) carryforwards of approximately $25.2 million.Approximately $7.8 million of 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, 2018 and 2017. Wewill continue to evaluate our ability to release the valuation allowance in the future. Deferred tax assets and deferred taxliabilities 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 creditcarryforwards if there has been a change in ownership as described in Section 382 of the Internal Revenue Code (“Section382”). 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 carryforwards 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 carryforwards. 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.49 Table of ContentsWe 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.Note 12 — Commitments and ContingenciesOperating LeasesDuring the years ended December 31, 2018 and 2017, we recognized expense for all operating leases of $1.0 millionand $0.7 million, respectively, related primarily to office space and site leases. We currently lease approximately 25,600 square feet of office space for general and administrative purposes inHouston, Texas under a lease agreement that expires on September 30, 2020.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. In October 2018, NextDecade LLCexercised its option to renew the Brownsville Lease for an additional six-month term, which expires May 6,2019. 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 2019 $1,2992020 1,1592021 32022 —2023 —Thereafter —Total $2,461(1)Includes certain lease option renewals that are reasonably assured.Other CommitmentsDuring the third quarter of 2018, we initiated a competitive EPC bid process. In connection with the EPC bidprocess, we entered into agreements with potential EPC contractors that provide for payments to be made by us to the EPCcontractors as bid milestones are achieved (“Invitation to Bid Contract Costs”). Future potential payments for Invitation toBid Contract Costs are up to $14.9 million in 2019.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. As of December 31, 2018, management is not aware of any claims or legal actions that, separately or in theaggregate, are likely to have a material adverse effect on the Company’s financial position, results of operations or cashflows, although the Company cannot guarantee that a material adverse event may not occur. 50 (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, 2018:Standard Description Expected Date ofAdoption Effect on our Consolidated FinancialStatements or Other SignificantMattersAccountingStandardsUpdate ("ASU")2016‑02, Leases(Topic 842) 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 a modifiedretrospective approach with certain availablepractical expedients. January 1, 2019 We will adopt the accountingstandard using a prospectivetransition approach, which appliesthe provisions of the new guidanceat the effective date withoutadjusting the comparative periodspresented. We have elected thepackage of practical expedientspermitted under the transitionguidance within the new standard,which among other things, allowsus to carry forward the historicalaccounting relating to leaseidentification and classification forexisting leases upon adoption. Wehave also elected the optionalpractical expedient permittedunder the transition guidancewithin the new standard related toland easements that allows us tocarry forward our historicalaccounting treatment for landeasements on existing agreementsupon adoption. We have made anaccounting policy election to keepleases with an initial term of 12months or less off of ourConsolidated Balance Sheet. Weare finalizing our evaluation of theimpacts that the adoption of thisaccounting guidance will have onthe Consolidated FinancialStatements, and estimateapproximately $1.6 million and$1.9 million of right-of-use assetsand liabilities, respectively, will berecognized in our ConsolidatedBalance Sheet upon adoption. Theadoption of this standard will nothave a material impact to ourresults of operations or cash flows.51 Table of ContentsASU 2018-07, Compensation-StockCompensation(Topic 718) This standard simplifies aspects of share-basedcompensation issued to non-employees bymaking the guidance consistent withaccounting for employee share-basedcompensation. The amendments specify thatTopic 718 applies to all share-based paymenttransactions in which a grantor acquires goodsor services to be used or consumed in agrantor's own operations by issuing share-based payment awards. This standard may beearly adopted, and must be adopted using amodified retrospective approach. January 1, 2019 Upon adoption of this standard, weexpect to reclassify approximately$2.0 million from Share-basedcompensation liability toAdditional paid-in-capital in ourConsolidated Balance Sheets as ofDecember 31, 2018. The fair valueof share based compensationawards to non-employees will notbe remeasured subsequent toDecember 31, 2018. The adoptionof this standard will not have anyimpact to our results of operationsor cash flows.ASU 2018-15,Intangibles,Goodwill andOther InternalUse Software(Subtopic 350-40) The amendments in this update align therequirements for capitalizing implementationcosts incurred in a hosting arrangement that isa service contract with the requirements forcapitalizing implementation costs incurred todevelop or obtain internal-use software (andhosting arrangements that include an internal-use software license). The accounting for theservice element of a hosting arrangement thatis a service contract is not affected by theamendments in this update. Accordingly, theamendments in this update require an entity(customer) in a hosting arrangement that is aservice contract to follow the guidance inSubtopic 350-40 to determine whichimplementation costs to capitalize as an assetrelated to the service contract and which coststo expense. These amendments may be earlyadopted and are required to be appliedretrospectively or prospectively to allimplementation costs incurred after the date ofadoption. January 1, 2020 We are currently evaluating theeffect of this standard on ourConsolidated Financial Statements. 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 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.We elected to adopt this standard using a fullretrospective approach. January 1, 2018 The adoption of this new standarddid not affect the amounts shownin our Consolidated FinancialStatements or related disclosuresas the Company has no revenues.52 Table of ContentsASU 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 didnot have an impact on ourConsolidated Financial Statementsor related disclosures.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 didnot have an impact on ourConsolidated Financial Statementsor related disclosures.ASU 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 Upon the adoption of thisstandard, we made a cumulativeeffect adjustment of $40 thousandto accumulated deficit forunrealized losses on our available-for-sale investment securities. 53 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, 2018: Revenues $ — $ — $ — $ —Total operating loss (16,280) (3,616) (10,979) (12,140)Net loss attributable to common stockholders (16,200) (3,482) (10,951) (12,873)Basic and diluted loss per share (0.15) (0.03) (0.10) (0.12) Year ended December 31, 2017: Revenues $ — $ — $ — $ —Total operating loss (2,417) (2,496) (14,290) (16,435)Net loss attributable to common stockholders (2,388) (2,453) (14,157) (16,328)Basic and diluted loss per share (0.02) (0.03) (0.14) (0.15)(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. 54 (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 Securities andExchange Commission’s rules and forms, and that such information is accumulated and communicated to our management,including our principal executive officer and principal financial officer or persons performing similar functions, asappropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls andprocedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectivesand management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls andprocedures.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, 2018. Based on this evaluation, our principal executive officer and principal financial officer have concludedthat, as of December 31, 2018, 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 the Company. In order to evaluate the effectiveness of internal control over financial reporting, as required bySection 404 of the Sarbanes-Oxley Act of 2002, we have conducted an assessment, including testing using the criteria inInternal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the TreadwayCommission (“COSO”). The Company’s system of internal control over financial reporting is designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with accounting principles generally accepted in the United States of America. Because of its inherentlimitations, internal control over financial reporting may not prevent or detect misstatements and, even when determined tobe effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Based on our assessment, we have concluded that the Company maintained effective internal control over financialreporting as of December 31, 2018, 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 ReportingDuring the most recent fiscal quarter, there have been no changes in internal control over financial reporting thathave materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other InformationNone.55 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 of the Exchange Act within 120 days after the end of NextDecade’s fiscal year endedDecember 31, 2018.56 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 – Grant Thornton LLP 33Report of Independent Registered Public Accounting Firm – Marcum LLP 34Consolidated Balance Sheets 35Consolidated Statements of Operations and Comprehensive Loss 36Consolidated Statements of Stockholders’ Equity 37Consolidated Statements of Cash Flows 38Notes to Consolidated Financial Statements 39Supplemental Information to Consolidated Financial Statements – Summarized Quarterly Financial Data 54 (2)Financial Statement Schedules:All schedules are omitted because they are not applicable or the required information is shown in the financialstatements or the notes thereto.(3)Exhibits:Exhibit No. Description2.1 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 Second Amended and Restated Certificate of Incorporation of NextDecade Corporation, dated July 24, 20173.2 Amended and Restated Bylaws of NextDecade Corporation, dated July 24, 20173.3 Certificate of Designations of Series A Convertible Preferred Stock, dated August 9, 20183.4 Certificate of Designations of Series B Convertible Preferred Stock, dated September 28, 20184.1 Specimen Common Share Certificate4.2 Specimen Unit Certificate4.3 Specimen Warrant Certificate4.4 Form of Warrant Agreement between Harmony Merger Corp. and Continental Stock Transfer & TrustCompany4.5 Form of Warrant Agreement for the Series A Warrants4.6 Form of Warrant Agreement for the Series B Warrants10.1 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 Promissory Note issued to Eric Rosenfeld on November 21, 201610.3 Form of Harmony Voting Agreement10.4 Form of Member Support Agreement 10.5 Indemnity Escrow Agreement10.6 Registration Rights Agreement10.7 Form of Lock-Up Agreement10.8 Employment Agreement of Kathleen Eisbrenner, dated May 20, 201510.9 Letter Agreement with Kathleen Eisbrenner, dated April 17, 201710.10 Letter Agreement with Kathleen Eisbrenner, dated November 13, 201510.11 Employment Agreement, dated September 8, 2017, between NextDecade Corporation and Matthew K.Schatzman57 (1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)(14)(15)(16)(17)(18)(19)†(20)†(21)†(22)†Table of Contents10.12 Form of Restricted Stock Award Agreement for Non-Executive Employees and Contractors10.13 Backstop Commitment Agreement, dated as of April 11, 2018, by and between NextDecade Corporation andYork Capital Management Global Advisors, LLC, severally on behalf of certain funds or accounts advised byit or its affiliates10.14 Backstop Commitment Agreement, dated as of April 11, 2018, by and between NextDecade Corporation andValinor Management, L.P., severally on behalf of certain funds or accounts for which it is investmentmanager10.15 Backstop Commitment Agreement, dated as of April 11, 2018, by and between NextDecade Corporation andHalcyon Capital Management LP, severally on behalf of certain funds or accounts advised by it or itsaffiliates10.16 Series A Convertible Preferred Stock Purchase Agreement, dated as of August 3, 2018, entered into by andbetween NextDecade Corporation and York Capital Management Global Advisors, LLC, severally on behalfof certain funds or accounts managed by it or its affiliates10.17 Series A Convertible Preferred Stock Purchase Agreement, dated as of August 3, 2018, entered into by andbetween NextDecade Corporation and Valinor Management, L.P., severally on behalf of certain funds oraccounts for which it is investment manager10.18 Series A Convertible Preferred Stock Purchase Agreement, dated as of August 3, 2018, entered into by andbetween NextDecade Corporation and Halcyon Capital Management LP, severally on behalf of certain fundsor accounts managed by it or its affiliates10.19 Series A Convertible Preferred Stock Purchase Agreement, dated as of August 3, 2018, entered into by andbetween NextDecade Corporation and HGC NEXT INV LLC10.20 Form of Registration Rights Agreement10.21 Purchaser Rights Agreement by and between NextDecade Corporation and HGC NEXT INV LLC10.22 Amendment No. 1 to Backstop Commitment Agreement, made effective as of August 3, 2018, by andbetween NextDecade Corporation and York Capital Management Global Advisors, LLC, severally on behalfof certain funds or accounts advised by it or its affiliates10.23 Amendment No. 1 to Backstop Commitment Agreement, made effective as of August 3, 2018, by andbetween NextDecade Corporation and Valinor Management, L.P., severally on behalf of certain funds oraccounts for which it is investment manager10.24 Amendment No. 1 to Backstop Commitment Agreement, made effective as of August 3, 2018, by andbetween NextDecade Corporation and Halcyon Capital Management LP, severally on behalf of certain fundsor accounts advised by it or its affiliates10.25 Series B Convertible Preferred Stock Purchase Agreement, dated as of August 23, 2018, entered into by andbetween NextDecade Corporation and the Purchasers named therein10.26 Form of Registration Rights Agreement.10.27 Form of Purchaser Rights Agreement10.28* Amendment No. 1 to Registration Rights Agreement, effective as of December 7, 2018, by and betweenNextDecade Corporation and York Capital Management Global Advisors, LLC, severally on behalf of certainfunds or advised by it or its affiliates10.29* Amendment No. 1 to Registration Rights Agreement, effective as of December 7, 2018, by and betweenNextDecade Corporation and Valinor Management L.P., severally on behalf of certain funds or accounts forwhich it is investment manager10.30* Amendment No. 1 to Registration Rights Agreement, effective as of December 7, 2018, by and betweenNextDecade Corporation and Bardin Hill Investment Partners LP (formerly Halcyon Capital ManagementLP), on behalf of the accounts it manages10.31* Amendment No. 1 to Employment Agreement, effective January 1, 2019, by and between NextDecadeCorporation and Matthew K. Schatzman21.1* Subsidiaries of the Company23.1* Consent of Grant Thornton LLP23.2* 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 2002.32.2** 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 Document58 (23)†(24)(25)(26)(27)(28)(29)(30)(31)(32)(33)(34)(35)(36)(37)(38)†Table of Contents101.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 4.3 of the Registrant’s Registration Statement on Form S-3, filed December 20,2018.(5)Incorporated by reference to Exhibit 3.4 of the Registrant’s Quarterly Report on Form 10-Q, filed November 9, 2018.(6)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.(7)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.(8)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.(9)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.(10)Incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K, filed August 7, 2018.(11)Incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K, filed August 24, 2018(12)Incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K, filed January 9, 2017.(13)Incorporated by reference to Exhibit 10.13 of the Registrant’s Annual Report on Form 10-K, filed March 10, 2017. (14)Incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K, filed April 18, 2017.(15)Incorporated by reference to Exhibit 10.5 of the Registrant’s Current Report on Form 8-K, filed April 18, 2017.(16)Incorporated by reference to Exhibit 10.1 of the Company’s Form 8‑K, filed July 28, 2017.(17)Incorporated by reference to Exhibit 10.2 of the Company’s Form 8‑K, filed July 28, 2017.(18)Incorporated by reference to Exhibit 10.3 of the Company’s Form 8‑K, filed July 28, 2017.(19)Incorporated by reference to Exhibit 10.4 of the Company’s Form 8‑K, filed July 28, 2017.(20)Incorporated by reference to Exhibit 10.5 of the Company’s Form 8‑K, filed July 28, 2017.(21)Incorporated by reference to Exhibit 10.6 of the Company’s Form 8‑K, filed July 28, 2017.(22)Incorporated by reference to Exhibit 10.1 of the Company’s Form 8‑K, filed September 11, 2017.(23)Incorporated by reference to Exhibit 10.2 of the Company’s Form 8‑K, filed December 20, 2017.(24)Incorporated by reference to Exhibit 10.1 of the Company’s Form 8‑K, filed April 12, 2018.(25)Incorporated by reference to Exhibit 10.2 of the Company’s Form 8‑K, filed April 12, 2018.(26)Incorporated by reference to Exhibit 10.3 of the Company’s Form 8‑K, filed April 12, 2018.(27)Incorporated by reference to Exhibit 10.1 of the Company’s Form 8‑K, filed August 7, 2018.(28)Incorporated by reference to Exhibit 10.2 of the Company’s Form 8‑K, filed August 7, 2018.(29)Incorporated by reference to Exhibit 10.3 of the Company’s Form 8‑K, filed August 7, 2018.(30)Incorporated by reference to Exhibit 10.4 of the Company’s Form 8‑K, filed August 7, 2018.(31)Incorporated by reference to Exhibit 10.5 of the Company’s Form 8‑K, filed August 7, 2018.(32)Incorporated by reference to Exhibit 10.6 of the Company’s Form 8‑K, filed August 7, 2018.(33)Incorporated by reference to Exhibit 10.7 of the Company’s Form 8‑K, filed August 7, 2018.(34)Incorporated by reference to Exhibit 10.8 of the Company’s Form 8‑K, filed August 7, 2018.(35)Incorporated by reference to Exhibit 10.9 of the Company’s Form 8‑K, filed August 7, 2018.(36)Incorporated by reference to Exhibit 10.1 of the Company’s Form 8‑K, filed August 24, 2018.(37)Incorporated by reference to Exhibit 10.2 of the Company’s Form 8‑K, filed August 24, 2018.(38)Incorporated by reference to Exhibit 10.3 of the Company’s Form 8‑K, filed August 24, 2018.† Indicates management contract or compensatory plan.* Filed herewith.** Furnished herewith. Item 16. Form 10-K SummaryNone.59 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 6, 2019 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 6, 2019Matthew K. Schatzman (Principal Executive Officer) /s/ Benjamin A. Atkins Chief Financial Officer March 6, 2019Benjamin A. Atkins (Principal Financial Officer) /s/ Eric Garcia Chief Accounting Officer March 6, 2019Eric Garcia (Principal Accounting Officer) /s/ Kathleen Eisbrenner Chairman of the Board March 6, 2019Kathleen Eisbrenner /s/ Brian Belke Director March 6, 2019Brian Belke /s/ Matthew Bonanno Director March 6, 2019Matthew Bonanno /s/ David Gallo Director March 6, 2019David Gallo /s/ Avinash Kripalani Director March 6, 2019Avinash Kripalani /s/ Koo Yung Lee Director March 6, 2019Koo Yung Lee /s/ David Magid Director March 6, 2019David Magid /s/ Eric S. Rosenfeld Director March 6, 2019Eric S. Rosenfeld /s/ William Vrattos Director March 6, 2019William Vrattos /s/ Spencer Wells Director March 6, 2019Spencer Wells 60Exhibit 10.28AMENDMENT NO. 1 TOREGISTRATION RIGHTS AGREEMENT This AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT (this“Amendment”) is made effective as of December 7, 2018 (the “Effective Date”), by andamong NextDecade Corporation, a Delaware corporation (the “Company”), and certainentities listed on Schedule I (the “Holders”) attached hereto. Capitalized terms used but nototherwise defined in this Amendment shall have the meaning ascribed to such term in theOriginal Agreement (as defined below). RECITALS:WHEREAS, the Company and the Holders entered into that certain Registration RightsAgreement, dated as of August 9, 2018 (the “Original Agreement”); andWHEREAS, the Company and the Holders desire to amend the Original Agreement toprovide for certain changes as more fully set herein.AGREEMENT:NOW, THEREFORE, in consideration of the premises, the terms and provisions set forthherein and other good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties agree as follows:1.Amendment. Section 2(a)(i) of the Original Agreement is amended and restated in its entiretyas follows:“(i) Filing. The Company shall, as soon as practicable after the date that is one hundredtwenty (120) days from the date of this Agreement, but in any event within thirty (30)days after the date that is one hundred twenty (120) days from the date of thisAgreement, file a Registration Statement under the Securities Act to permit the publicresale of all the Registrable Securities held by the Holders from time to time aspermitted by Rule 415 under the Securities Act (or any successor or similar provisionadopted by the Commission then in effect) (the “Shelf Registration Statement”) on theterms and conditions specified in this Section 2(a) and shall use its reasonable bestefforts to cause such Shelf Registration Statement to be declared effective as soon aspracticable after the filing thereof, but in any event no later than the earlier of (i) ninety(90) days (or one hundred and twenty (120) days if the Commission notifies theCompany that it will “review” the Shelf Registration Statement) after the date that is onehundred twenty (120) days from the date of this Agreement and (ii) the tenth (10th)business day after the date the Company is notified (orally or in writing, whichever isearlier) by the Commission that such Shelf Registration Statement will not be“reviewed” or will not be subject to further review (such earlier date, the “EffectivenessDeadline”). The Shelf Registration Statement filed with the Commission pursuant to this Section 2(a) shall be on Form S-3 or, if Form S-3 is notthen available to the Company, on Form S-1 or such other form of registration statementas is then available to effect a registration for resale of such Registrable Securities,covering such Registrable Securities, and shall contain a prospectus in such form as topermit any Holder to sell such Registrable Securities pursuant to Rule 415 under theSecurities Act (or any successor or similar provision adopted by the Commission then ineffect) at any time beginning on the effective date for such Shelf Registration Statement.A Shelf Registration Statement filed pursuant to this Section 2(a) shall provide for theresale pursuant to any method or combination of methods legally available to, andrequested by, the Holders. As soon as practicable following the effective date of aShelf Registration Statement filed pursuant to this Section 2(a), but in any event withinthree (3) business days of such date, the Company shall notify the Holders of theeffectiveness of such Registration Statement. When effective, a Shelf RegistrationStatement filed pursuant to this Section 2(a) (including the documents incorporatedtherein by reference) will comply as to form in all material respects with all applicablerequirements of the Securities Act and the Exchange Act and will not contain an untruestatement of a material fact or omit to state a material fact required to be stated therein ornecessary to make the statements therein not misleading (in the case of any Prospectuscontained in such Shelf Registration Statement, in the light of the circumstances underwhich such statement is made).2.Reference to and Effect on the Original Agreement. This Amendment shall be deemed toform an integral part of the Original Agreement and construed in connection with and as partof the Original Agreement, and all terms, conditions, covenants and agreements set forth in theOriginal Agreement, except as explicitly set forth herein, are hereby ratified and confirmedand shall remain in full force and effect, unmodified in any way. In the event of anyinconsistency or conflict betweenthe provisions of the Original Agreement and this Amendment, the provisions of thisAmendment will prevail and govern. All references to the “Agreement” in the OriginalAgreement shall hereinafter refer to the Agreement as amended and supplemented by thisAmendment.3.Counterparts. This Amendment may be executed in any number of counterparts and by theparties hereto in separate counterparts, each of which when so executed shall be deemed to bean original and all of which taken together shall constitute one and the same agreement.[Signature Page Follows] 2 IN WITNESS WHEREOF, the parties hereto have executed this Amendment in order toevidence the adoption hereof as of the Effective Date.NEXTDECADE CORPORATION By: /s/ Matthew SchatzmanName:MatthewSchatzmanTitle:President andCEO [Signature Page to Amendment No. 1 to Registration Rights Agreement] IN WITNESS WHEREOF, the parties hereto have executed this Amendment in order toevidence the adoption hereof as of the Effective Date.York Capital Management Global Advisors,LLC, severally on behalf of certain funds oraccounts advised by it or its affiliatesBy: /s/ John J. FosinaName:John J.FosinaTitle:Chief Financial Officer[Signature Page to Amendment No. 1 to Registration Rights Agreement] SCHEDULE IHOLDERS1. York European Distressed Credit Fund II, L.P.2. York Capital Management, LP3. York Credit Opportunities Fund, LP4. York Credit Opportunities Investment Master Fund, L.P.5. York Multi-Strategy Master Fund, L.P.[Schedule I to Amendment No. 1 to Registration Rights Agreement] Exhibit 10.29AMENDMENT NO. 1 TOREGISTRATION RIGHTS AGREEMENT This AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT (this“Amendment”) is made effective as of December 7, 2018 (the “Effective Date”), by and amongNextDecade Corporation, a Delaware corporation (the “Company”), and certain entities listedon Schedule I (the “Holders”) attached hereto. Capitalized terms used but not otherwise defined inthis Amendment shall have the meaning ascribed to such term in the Original Agreement (asdefined below). RECITALS:WHEREAS, the Company and the Holders entered into that certain Registration RightsAgreement, dated as of August 9, 2018 (the “Original Agreement”); andWHEREAS, the Company and the Holders desire to amend the Original Agreement toprovide for certain changes as more fully set herein.AGREEMENT:NOW, THEREFORE, in consideration of the premises, the terms and provisions set forthherein and other good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties agree as follows:1.Amendment. Section 2(a)(i) of the Original Agreement is amended and restated in its entiretyas follows:“(i) Filing. The Company shall, as soon as practicable after the date that is onehundred twenty (120) days from the date of this Agreement, but in any event withinthirty (30) days after the date that is one hundred twenty (120) days from the date of thisAgreement, file a Registration Statement under the Securities Act to permit the publicresale of all the Registrable Securities held by the Holders from time to time aspermitted by Rule 415 under the Securities Act (or any successor or similar provisionadopted by the Commission then in effect) (the “Shelf Registration Statement”) on theterms and conditions specified in this Section 2(a) and shall use its reasonable bestefforts to cause such Shelf Registration Statement to be declared effective as soon aspracticable after the filing thereof, but in any event no later than the earlier of (i) ninety(90) days (or one hundred and twenty (120) days if the Commission notifies theCompany that it will “review” the Shelf Registration Statement) after the date that is onehundred twenty (120) days from the date of this Agreement and (ii) the tenth (10th)business day after the date the Company is notified (orally or in writing, whichever isearlier) by the Commission that such Shelf Registration Statement will not be“reviewed” or will not be subject to further review (such earlier date, the “EffectivenessDeadline”). The Shelf Registration Statement filed with the Commission pursuant to this Section 2(a) shall be on Form S-3 or, if Form S-3 is notthen available to the Company, on Form S-1 or such other form of registration statementas is then available to effect a registration for resale of such Registrable Securities,covering such Registrable Securities, and shall contain a prospectus in such form as topermit any Holder to sell such Registrable Securities pursuant to Rule 415 under theSecurities Act (or any successor or similar provision adopted by the Commission then ineffect) at any time beginning on the effective date for such Shelf Registration Statement.A Shelf Registration Statement filed pursuant to this Section 2(a) shall provide for theresale pursuant to any method or combination of methods legally available to, andrequested by, the Holders. As soon as practicable following the effective date of aShelf Registration Statement filed pursuant to this Section 2(a), but in any event withinthree (3) business days of such date, the Company shall notify the Holders of theeffectiveness of such Registration Statement. When effective, a Shelf RegistrationStatement filed pursuant to this Section 2(a) (including the documents incorporatedtherein by reference) will comply as to form in all material respects with all applicablerequirements of the Securities Act and the Exchange Act and will not contain an untruestatement of a material fact or omit to state a material fact required to be stated therein ornecessary to make the statements therein not misleading (in the case of any Prospectuscontained in such Shelf Registration Statement, in the light of the circumstances underwhich such statement is made).2.Reference to and Effect on the Original Agreement. This Amendment shall be deemed toform an integral part of the Original Agreement and construed in connection with and as partof the Original Agreement, and all terms, conditions, covenants and agreements set forth in theOriginal Agreement, except as explicitly set forth herein, are hereby ratified and confirmedand shall remain in full force and effect, unmodified in any way. In the event of anyinconsistency or conflict betweenthe provisions of the Original Agreement and this Amendment, the provisions of thisAmendment will prevail and govern. All references to the “Agreement” in the OriginalAgreement shall hereinafter refer to the Agreement as amended and supplemented by thisAmendment.3.Counterparts. This Amendment may be executed in any number of counterparts and by theparties hereto in separate counterparts, each of which when so executed shall be deemed to bean original and all of which taken together shall constitute one and the same agreement.[Signature Page Follows] 2 IN WITNESS WHEREOF, the parties hereto have executed this Amendment in order toevidence the adoption hereof as of the Effective Date.NEXTDECADE CORPORATION By: /s/ Matthew SchatzmanName:MatthewSchatzmanTitle:President andCEO [Signature Page to Amendment No. 1 to Registration Rights Agreement] IN WITNESS WHEREOF, the parties hereto have executed this Amendment in order toevidence the adoption hereof as of the Effective Date.Valinor Management, L.P.By: /s/ Owen SchmidtName:OwenSchmidtTitle:General Counsel[Signature Page to Amendment No. 1 to Registration Rights Agreement] SCHEDULE IHOLDERS1. Valinor Capital Partners, L.P.2. Valinor Capital Partners Offshore Master Fund, L.P.3. VND Partners, L.P.[Schedule I to Amendment No. 1 to Registration Rights Agreement] Exhibit 10.30AMENDMENT NO. 1 TOREGISTRATION RIGHTS AGREEMENT This AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT (this“Amendment”) is made effective as of December 7, 2018 (the “Effective Date”), by and amongNextDecade Corporation, a Delaware corporation (the “Company”), and certain entities listedon Schedule I (the “Holders”) attached hereto. Capitalized terms used but not otherwise defined inthis Amendment shall have the meaning ascribed to such term in the Original Agreement (asdefined below). RECITALS:WHEREAS, the Company and the Holders entered into that certain Registration RightsAgreement, dated as of August 9, 2018 (the “Original Agreement”); andWHEREAS, the Company and the Holders desire to amend the Original Agreement toprovide for certain changes as more fully set herein.AGREEMENT:NOW, THEREFORE, in consideration of the premises, the terms and provisions set forthherein and other good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties agree as follows:1.Amendment. Section 2(a)(i) of the Original Agreement is amended and restated in its entiretyas follows:“(i) Filing. The Company shall, as soon as practicable after the date that is onehundred twenty (120) days from the date of this Agreement, but in any event withinthirty (30) days after the date that is one hundred twenty (120) days from the date of thisAgreement, file a Registration Statement under the Securities Act to permit the publicresale of all the Registrable Securities held by the Holders from time to time aspermitted by Rule 415 under the Securities Act (or any successor or similar provisionadopted by the Commission then in effect) (the “Shelf Registration Statement”) on theterms and conditions specified in this Section 2(a) and shall use its reasonable bestefforts to cause such Shelf Registration Statement to be declared effective as soon aspracticable after the filing thereof, but in any event no later than the earlier of (i) ninety(90) days (or one hundred and twenty (120) days if the Commission notifies theCompany that it will “review” the Shelf Registration Statement) after the date that is onehundred twenty (120) days from the date of this Agreement and (ii) the tenth (10th)business day after the date the Company is notified (orally or in writing, whichever isearlier) by the Commission that such Shelf Registration Statement will not be“reviewed” or will not be subject to further review (such earlier date, the “EffectivenessDeadline”). The Shelf Registration Statement filed with the Commission pursuant to this Section 2(a) shall be on Form S-3 or, if Form S-3 is notthen available to the Company, on Form S-1 or such other form of registration statementas is then available to effect a registration for resale of such Registrable Securities,covering such Registrable Securities, and shall contain a prospectus in such form as topermit any Holder to sell such Registrable Securities pursuant to Rule 415 under theSecurities Act (or any successor or similar provision adopted by the Commission then ineffect) at any time beginning on the effective date for such Shelf Registration Statement.A Shelf Registration Statement filed pursuant to this Section 2(a) shall provide for theresale pursuant to any method or combination of methods legally available to, andrequested by, the Holders. As soon as practicable following the effective date of aShelf Registration Statement filed pursuant to this Section 2(a), but in any event withinthree (3) business days of such date, the Company shall notify the Holders of theeffectiveness of such Registration Statement. When effective, a Shelf RegistrationStatement filed pursuant to this Section 2(a) (including the documents incorporatedtherein by reference) will comply as to form in all material respects with all applicablerequirements of the Securities Act and the Exchange Act and will not contain an untruestatement of a material fact or omit to state a material fact required to be stated therein ornecessary to make the statements therein not misleading (in the case of any Prospectuscontained in such Shelf Registration Statement, in the light of the circumstances underwhich such statement is made).2.Reference to and Effect on the Original Agreement. This Amendment shall be deemed toform an integral part of the Original Agreement and construed in connection with and as partof the Original Agreement, and all terms, conditions, covenants and agreements set forth in theOriginal Agreement, except as explicitly set forth herein, are hereby ratified and confirmedand shall remain in full force and effect, unmodified in any way. In the event of anyinconsistency or conflict betweenthe provisions of the Original Agreement and this Amendment, the provisions of thisAmendment will prevail and govern. All references to the “Agreement” in the OriginalAgreement shall hereinafter refer to the Agreement as amended and supplemented by thisAmendment.3.Counterparts. This Amendment may be executed in any number of counterparts and by theparties hereto in separate counterparts, each of which when so executed shall be deemed to bean original and all of which taken together shall constitute one and the same agreement.[Signature Page Follows] 2 IN WITNESS WHEREOF, the parties hereto have executed this Amendment in order toevidence the adoption hereof as of the Effective Date.NEXTDECADE CORPORATION By: /s/ Matthew SchatzmanName:MatthewSchatzmanTitle:President andCEO [Signature Page to Amendment No. 1 to Registration Rights Agreement] IN WITNESS WHEREOF, the parties hereto have executed this Amendment in order toevidence the adoption hereof as of the Effective Date.Bardin Hill Investment Partners LP (formerlyHalcyon Capital Management LP), on behalf ofthe accounts it manages listed on Schedule IBy: /s/ John FreeseName:John FreeseTitle:Authorized SignatoryBy: /s/ Suzanne McDermottName:SuzanneMcDermottTitle:Authorized Signatory [Signature Page to Amendment No. 1 to Registration Rights Agreement] SCHEDULE IHOLDERS1. HCN LP2. First Series of HDML Fund I, LLC3. Bardin Hill Event-Driven Master Fund LP[Schedule I to Amendment No. 1 to Registration Rights Agreement] Exhibit 10.31 AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT This Amendment No. 1 (this “Amendment”) to the Employment Agreement effective as ofSeptember 18, 2017 (the “Agreement”) is entered into by and between NextDecade Corporation (the“Company”) and Matthew K. Schatzman (the “Executive”) as of January 1, 2019 (the “EffectiveDate”);WHEREAS, Company and Executive have heretofore entered into and are parties to theAgreement; andWHEREAS, Company and Executive mutually desire to amend certain provisions of theAgreement;Now, therefore, in consideration for the promises and mutual agreements contained herein,Company and Executive hereby agree as follows:1.Amendments: As of the Effective Date, the Agreement has been and is hereby amended asfollows:a.Section 4.1 is hereby deleted and replaced in its entirety with the following clause whichshall become the new Section 4.1:4.1 Base Salary: The Company will pay the Executive an annual base salary of sixhundred and seventeen thousand, five hundred dollars ($617,500.00), before allapplicable payroll deductions (“Base Salary”). This Base Salary will be paid inaccordance with the usual payroll practices of the Company. The Base Salary may beincreased (but not decreased) by the Board (or any duly constituted committee thereof)as determined in its sole discretion. The Base Salary payable to Executive hereunder inrespect of any calendar year during which Executive is employed by the Company forless than the entire year shall be prorated in accordance with the total number ofcalendar days in such calendar year during which he is so employed.b.Section 4.2(a) is hereby deleted and replaced in its entirety with the following clause whichshall become the new Section 4.2(a):4.2 (a) Bonus: Subject to the provisions of Section 4.2(b) below, the Company shall(subject to the following sentence), during the Term of this Agreement, pay or cause tobe paid to the Executive an annual cash bonus with a target of one hundred percent(100%) of the Base Salary (“Annual Bonus”). In accordance with the Company’sgoverning documents, the amount of any such bonus shall be determined by the Board(or any duly constituted committee thereof) based on target objectives and/or metricswith respect to the Executive’s individual performance and the overall performance ofthe Company which are mutually agreed upon by the Executive and the Board at thebeginning of each fiscal year (but no later than January 31 of the applicable year). 2.Definitions: Terms not defined in this Amendment shall have the meaning set forth in theAgreement. 3.Priority and Effect: To the extent any provisions of this Amendment are inconsistent with,conflict with, or vary from the provisions of the Agreement, the provisions of this Amendmentshall control. All other terms and conditions of the Agreement shall remain in full force andeffect except as otherwise modified by this Amendment. Company and Executive agree thatthis Amendment is incorporated into the Agreement and, upon execution by the parties, shallbecome a part thereof.4.Counterparts: This Amendment may be signed in any number of counterparts and eachcounterpart shall represent a fully executed original as if signed by each of theparties. Facsimile signatures shall be deemed as effective as original signatures.The signatures of the parties’ authorized officers in the space below will confirm the parties’acceptance of and agreement to this Amendment as of the Effective Date. NEXTDECADE CORPORATIONMATTHEW K.SCHATZMAN /s/ Krysta De Lima_____________/s/ Matthew Schatzman_________By: Krysta De LimaDate: January 8, 2019General CounselDate: January 8, 2019 3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 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We have issued our reports dated March 6, 2019, with respect to the consolidated financial statements includedin the Annual Report of NextDecade Corporation on Form 10-K for the year ended December 31, 2018. Weconsent to the incorporation by reference of said reports in the Registration Statements of NextDecadeCorporation on Form S-8 (No. 333-222082, effective December 15, 2017) and Forms S-3 (File No. 333-228914, effective December 26, 2018, File No. 333-222477, effective January 23, 2018, and File No. 333-220263, effective October 10, 2017). /s/ GRANT THORNTON LLPHouston, TexasMarch 6, 2019 Exhibit 23.2INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT We consent to the incorporation by reference in the Registration Statements of NextDecade Corporation andSubsidiaries on Forms S-3 (File Nos. 333-228914, 333-222477 and 333-220263) and Form S-8 (File Nos. 333-222082)of our report dated March 8, 2018, with respect to our audit of the consolidated financial statements of NextDecadeCorporation and Subsidiaries as of December 31, 2017 and for the year then ended appearing in the Annual Report onForm 10-K of NextDecade Corporation and Subsidiaries for the year ended December 31, 2018./s/ Marcum llpMarcum llpNew York, NYMarch 6, 2019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 6, 2019 /s/ Matthew K. Schatzman Matthew K. Schatzman President and 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 6, 2019 /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, President and Chief Executive Officer of NextDecade Corporation (the “Company”), herebycertify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of myknowledge: (1)The Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 2018 (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 6, 2019 /s/ Matthew K. Schatzman Matthew K. Schatzman President and 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, 2018 (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 6, 2019 /s/ Benjamin A. Atkins Benjamin A. Atkins Chief Financial Officer(Principal Financial Officer) 

Continue reading text version or see original annual report in PDF format above