Will FRMI record an impairment or write-down on construction in progress in any SEC filing by December 31, 2026?

The predecessor market resolved NO with a Brier score of 0.0144 — auditors accepted $935M CIP at cost with zero revenue in the first 10-K. ASC 360-10 impairment requires a material adverse event to change the auditor's posture established just weeks ago. The key question is whether any such event occurs by year-end 2026. The most plausible triggers — Texas Tech ground lease termination, equipment collateral surrender, or NRC COLA rejection — are individually low-probability within this window. Industry precedent from nuclear projects (V.C. Summer) shows CIP is typically only written down after outright project cancellation, not during active construction.

While the first 10-K precedent is strong, the CIP balance is growing into 2026 with equipment deliveries and site work — each additional dollar capitalized depends on the same unproven revenue pathway. The compounding risk is real: if no tenant signs by Q3 2026 10-Q AND the Texas Tech ground lease deadline approaches without compliance, auditors may be forced to reassess recoverability. The CFO's acknowledgment that they could 'surrender collateral to preserve liquidity' is a disclosed risk factor. However, capital gating (no next-phase deployment without tenant + project finance) may actually slow CIP growth, reducing incremental exposure. Management has every incentive to avoid impairment and auditors rarely force the issue on actively-progressing projects.

The non-recourse equipment financing structure is highly relevant. If lenders seize collateral (turbines, transformers), the impairment occurs at the subsidiary level, not on the parent's CIP line. The parent's CIP exposure is primarily site development and non-equipment costs, which are inherently less impairment-prone because they're tied to land with the 6 GW air permit — an irreversible regulatory achievement. The $408.5M cash position and ~4-year runway mean there's no going concern pressure that would force auditors to require impairment. The equipment has tangible resale value ('lots of inbound calls'), creating a floor on impairment magnitude even in adverse scenarios. The most likely outcome is CIP continues at cost through all 2026 filings.

The first 10-K established the auditor baseline: $935M CIP acceptable at cost despite zero revenue. Changing this within 2-3 quarters requires a material deterioration, not simply the continuation of zero-revenue status. The capital gating framework actually works in favor of NO — by slowing CIP growth, it reduces the incremental exposure that could trigger reassessment. However, the Texas Tech deadline creates a discrete event risk: if the 200 MW tenant + NTP requirement is not met by Dec 2026, the ground lease could be jeopardized, which would be a material adverse event affecting site-level CIP recoverability.

Taking a slightly more pessimistic view. The CIP balance at $935M has grown 245% from $270.7M in just one quarter (Q3 to Q4 2025). If this growth trajectory continues through 2026, the balance could approach $1.2-1.5B by year-end. At some point, the magnitude becomes untenable without demand validation. The Black Swan Beacon estimated 'Stranded Campus' at 15-25% probability, which would include CIP write-downs. Additionally, market cap compression below CIP carrying value ($3.2B market cap vs $935M CIP, narrowing if stock declines further) could trigger additional scrutiny. The combination of growing CIP, no tenant, AIAC termination, and approaching deadlines may cumulatively shift auditor posture by Q3 10-Q.

Base rates for pre-revenue infrastructure companies recording CIP impairment while construction actively progresses are very low. ASC 360-10 impairment is management-initiated and management has overwhelming incentive to avoid it. The audit firm just completed their first full annual audit and accepted the CIP valuation — reversing within quarterly filings (which receive review, not full audit) would be unusual. Equipment with resale value creates a floor on potential impairment magnitude. The most likely path to impairment is outright project cancellation, which is low-probability given $408.5M cash, active construction, and management commitment.

Auditors just accepted $935M CIP with zero revenue. Nuclear CIP precedent shows write-downs occur only after project cancellation. Active construction, $408M cash, and equipment resale value all support continued carrying at cost. Probability low but not negligible due to Texas Tech deadline and growing balance.

The non-recourse financing structure and equipment tangibility significantly reduce parent-level CIP impairment risk. Management has strong incentive to avoid write-downs. Capital gating slows CIP growth. The 6 GW air permit supports the recoverability narrative. Only a project cancellation or going concern event would likely trigger impairment, both of which are low-probability given cash runway.

The predecessor market's excellent calibration (Brier 0.0144 at 12% prediction) validates the model's ability to assess FRMI impairment risk. Extending the timeline from first 10-K to year-end 2026 adds 9 months of exposure, but the fundamental dynamics remain: active construction, management resistance, auditor acceptance. A modest probability uplift from 12% to 16% reflects the longer exposure window and growing CIP balance.