NNE - NASDAQ

Greetings, and welcome to the Nano Nuclear First Quarter 2026 Financial Results and Business Update Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host.

Thank you, and good afternoon, everyone. Joining me on the call today are Jay Yu. Nano Nuclear's Founder, Chairman and President; James Walker, our CEO, and Jaisun Garcha, our CFO. Please note that today's press release and slide presentation to accompany this webcast are available on our website. Before moving ahead, I'll quickly address forward-looking statements made on this call. As reflected in more detail on Slide 2, today's presentation contains forward-looking statements about Nano's future that are made under the safe harbor provisions of the applicable federal securities laws. You are cautioned that actual results including, without limitation, the results of Nano's microreactor development activities, strategies, time lines and other operational plans may differ materially and adversely from those expressed or implied by the forward-looking statements. Important risks and other factors that could cause actual results to differ from those in our forward-looking statements are contained in our filings with the SEC including our annual report on Form 10-K filed this past December, which you are encouraged to review. The forward-looking information provided today is accurate only as of today, and Nano disclaims any obligation to update any information provided except as required by law. With that, I'll turn the call over to Jay Yu, Nano's Founder, Chairman and President.

Thank you, Matt, and thank you, everyone, joining the call today. Nano Nuclear continues to differentiate itself as a microreactor developer with a focus on vertical integration across the nuclear fuel supply chain. We are advancing our K MMR, KRONOS MMR, a high TRL, high temperature gas-cooled reactor design backed by decades of operating history and meaningful prior capital investments, which we believe can significantly derisk future construction, licensing and deployment. We expect the compact modular design of our KRONOS MMR system to support factory fabrication, repeatable construction and learnings that can accelerate deployment time lines and drive cost efficiencies over time. Importantly, we believe the inherent safety profile of our KRONOS MMR and can enable a smaller footprint, co-location and off-grid deployment, unlocking high-value applications previously unavailable to traditional nuclear reactors. We paired this foundation with a focus on vertical integration across critical aspects of the nuclear fuel supply chain, which we believe will give us an advantage over our competitors, uniquely positioning us to expedite reactor deployment, benefit from growing nuclear renaissance and enhance long-term economics of our reactors. Turning to our Q1 highlights. We continue to make meaningful progress across business during this quarter. Our KRONOS MMR continues to advance towards licensing and construction. We completed site characterization and drilling at the University of Illinois and are incorporating those results into our planned construction permit application to the U.S. Nuclear Regulatory Commission. We also signed a formal MOU with the Board of Trustees at the University of Illinois, detailing the next steps as we advance the project. The State of Illinois announced that we will receive $6.8 million in incentive awards, underscoring growing support for advanced nuclear technology. In Canada, we continue to make progress towards initiating formal licensing following our acquisition of Global First Power, now rebranded as True North Nuclear. And lastly, we're advancing discussions with numerous supply chain partners for key components and long lead items as well as discussions with commercial enrichment provider and TRISO manufacturers to procure fuel for our first KRONOS MMR prototypes. On the commercial side, we signed a feasibility study agreement with BaRupOn to evaluate the potential deployment of many KRONOS MMR systems to provide up to 1 gigawatt of power for their AI data center and manufacturing campus under development. We believe this announcement highlights the potential scalability of our platform for customers with significant energy needs. Nano is also expanding its pipeline of potential data center, industrial and military customers interested in KRONOS for a range of power needs. Nano saw a growing interest from potential strategic partners, highlighted by a recent MOU with DS Dansuk to explore localization, manufacturing and deployment opportunities for KRONOS reactors in South Korea and the broader Asian region. DS Dansuk is a leading South Korean industrial enterprise with extensive capabilities in energy, chemical processing and advanced manufacturing, providing a strong platform to support commercialization of our technology. We also signed an MOU with Ameresco to explore integration of their EPC capabilities for deployments for our KRONOS MMR systems on federal and commercial sites. These announcements reflect a broader trend of interest from strategic partners, including established companies with decades of experience with large-scale energy and industrial infrastructure projects who recognize the value proposition of KRONOS. As it relates to our strategic focus of vertical integration, we also made progress towards expanding our conversion and transportation capabilities through active exploration partnerships and acquisitions. In addition, our strategic affiliate LIS Technologies received a key radioactive material license for Tennessee's demonstration facility while also announcing plans to invest $1.38 billion over time to build a commercial enrichment facility in Oak Ridge, Tennessee supported by its patented laser enrichment technology. Each of these announcements reinforce our progress in securing our nuclear fuel supply chain. From a financial perspective, we raised gross proceeds of $400 million through an October private placement, significantly strengthening our balance sheet and extending our operational runway. This capital raise included participation from a growing base of institutional investors, reflecting increased confidence in our strategy and execution. We were also added to the Morgan Stanley National Security index, further expanding our visibility among institutional investors. Our Q1 progress reflects our continued execution, advancing KRONOS towards licensing, construction, expanding commercial traction, working to expand our vertical integration across the nuclear fuel supply chain and maintaining our strong financial position to support execution of our long-term strategy. We believe our progress to date differentiates technology and strategy have positioned us to be a key benefactor of the global nuclear renaissance driven by several durable secular growth trends. These include growth in demand and reliable baseload energy for AI data centers, industrial reshoring and the broader electrification, energy, sustainability, independence and climate mandates and unprecedented policy support. Recent developments in the U.S. power markets are bringing increased focus on each of these trends. Electricity demand tied to AI data centers and other power-intensive applications is expanding faster than the new generation and transmission can be delivered creating rising concerns around power availability, grid expansion and energy affordability. In January, the administration supported an emergency auction organized by the largest regional grid operator aimed at driving 15-year power purchase agreements to fund an estimated $15 billion of new generation. The same grid operator is also considering co-location generation policies to help large energy users bring supply closer to demand. While these actions are important and reflect a growing recognition of current power bottlenecks, they alone are unlikely to close the structural gap between demand growth and reliable supply. Against that backdrop, we believe assets capable of delivering high uptime, long-term cost certainty and operational resilience independent of constrained grid infrastructure are likely to command a meaningful premium in the future. We view our KRONOS MMR as an ideal feature solution to address these challenges, which are expected to intensify in the years ahead. By offering the potential to provide behind-the-meter or off-grid baseload power directly to the end users and customers, we can meet expected demand growth without driving higher costs for everyday Americans. In short, the recent actions across the country are reinforcing the need for global nuclear renaissance and highlighting what we have long believed. Reliable, clean baseload energy is a strategic necessity, and we are building our KRONOS MMR as a next-generation solution aligned with national priorities, customer needs and long-term economics of the AI-driven energy future. Before handing the call over to our CEO, James, I'll briefly highlight why we view 2026 as an important year with multiple potential catalysts offering the opportunity to create shareholder value. First, we expect progress towards regulatory licensing of KRONOS in the U.S. and Canada. We are targeting submission of a construction permit application to the NRC in the coming months to formally begin the U.S. lysis process. This submission will represent a key milestone that could set the stage for initial construction at the University of Illinois in mid- to late 2020. Second, we see potential for several commercial announcements this year, reflecting growing interest in our KRONOS MMR from customers in several markets. Third, we're advancing discussions on commercial partnerships and acquisition opportunities across nuclear fuel supply chain, providing the potential to address key bottlenecks in areas like conversion and field transportation. And lastly, we expect additional progress to our strategic partnerships that could accelerate and derisk large-scale deployment of our reactors while also significantly expanding commercial opportunities globally. With that, I'll turn the call over to James.

Thank you, Jay. Let me start with a brief update of our University of Illinois prototype project, which will be essential to advancing our KRONOS MMR towards commercial deployment. As Jay mentioned, we've completed site characterization and drilling and also signed an MOU with U. of I's Board of Trustees to outline the next steps for the design, construction, ownership and operation of our KRONOS MMR system on campus. We remain on track to submit our construction permit application to the NRC in the coming months under the Part 50 licensing pathway. Our team is working on the application closely with AECOM and other partners and have begun engaging with the NRC for several months to ensure alignment on scope and technical requirements. In parallel, we're advancing discussions to procure key long lead components, including discussions around reactive pressure vessel capacity, fuel enrichment application, graphite supply and other key components. Based on our progress to date, we aim to begin construction in mid- to late 2027 and see a realizable road map to a full-scale prototype online in or around 2030. Our team is also evaluating opportunities to accelerate this schedule and secure additional project funding to reduce overall capital costs. Turning to our growing pipeline of commercial opportunities. We believe growing commercial interest has been driven by KRONOS' compelling value proposition. KRONOS has a strong safety profile that we expect to enable colocation directly at the customer site and provides the option for off-grid power. KRONOS is also particularly well suited for large-scale multiunit deployments where reactors can be connected and scaled over time to match customer demand. Its modular architecture and compatibility with factory fabrication and standardized production create the opportunity to capture meaningful economies of scale as we deploy at larger scales. We believe manufacturing efficiencies combined with operational learning curves can position us to achieve highly competitive economics over time, while still delivering the 24/7 reliability and uptime that data centers, industrial customers and other mission-critical users require. Moreover, KRONOS' patented flexible design also provides the ability to serve projects with smaller power needs requiring only one or several units, expanding our served available market to new applications previously unavailable to nuclear energy. During the quarter, we announced a feasibility study with BaRupOn to evaluate the potential deployment of up to 1 gigawatt of power to support their AI data center and manufacturing campus. We are actively advancing the study, which includes the site evaluation, project scoping and time line development. Following completion, we'll aim to perform EPC cost estimates, begin early project development activities and work towards finalizing a formal agreement to sell our reactors. Beyond BaRupOn, we continue to build a growing pipeline of prospective customers across data center, industrial and military applications. A consistent theme across these discussions is the need for reliable baseload power, particularly solutions with favorable footprints that can be deployed behind the meter to reduce grid dependence and accelerate deployment time lines. Notably, power requirements for these projects range from below 50 megawatts up to 1 gigawatt plus. We also see meaningful opportunities in additional markets where KRONOS is well suited, including remote communities, mining operations and other energy-intensive applications requiring reliable off-grid solutions. And as Jay highlighted, we're making progress towards several strategic partnerships we believe can further expand our commercial reach and accelerate deployment, beginning with our recent MOU with DS Dansuk. We recently announced a collaboration with DS Dansuk, a leading South Korean industrial company to accelerate deployment of our KRONOS MMR in South Korea. DS Dansuk brings deep capabilities and operational experience across energy, chemical processing and advanced manufacturing, along with long-standing relationships across key industrial and government stakeholders in South Korea. We're confident their credibility within the Korean industrial ecosystem can facilitate engagement with state-owned entities as well as potential Korean industrial customers seeking reliable carbon-free baseload energy. As such, our collaboration with DS Dansuk has the potential to meaningfully derisk regulatory licensing as well as accelerate site identification and project development, facilitate introductions to prospective customers and support localization of manufacturing and component production within South Korea. Moreover, we also see this collaboration as a pathway to strengthen project financing opportunities and establish broader strategic partnerships that can accelerate commercialization and deployment in South Korea, one of the world's most sophisticated nuclear and industrial markets as well as the broader Asia region. Now that we've touched upon KRONOS' growing commercial momentum and value proposition, I'd now like to elaborate on KRONOS' technical differentiation. KRONOS is supported by a proven and well-understood foundation with nearly a decade of development and an estimated $120 million invested into its design by its prior owner. We believe this materially derisks the platform and provides a strong technical basis as we advance towards licensing and deployment. KRONOS' 15-megawatt electric design builds on high-temperature gas-cooled reactor technology that has been deployed and validated across multiple countries for more than 5 decades. Core elements of the design, including TRISO fuel, helium coolant and graphite moderation are mature technologies supported by extensive real-world operating data. Beyond the reactor itself, our balance of plant strategy prioritizes commercially proven systems, including steam generators, turbines and thermal energy storage technologies already in use in today's concentrated solar plants. We also expect to operate within conservative temperature and pressure parameters that align with successful deployments. As a result, our focus is not on developing new or experimental reactor technology, but on integrating well-understood components into a compact modular microreactor platform that can be licensed, manufactured and deployed efficiently. With that operating history in mind, I'll now outline the key advantages of KRONOS as a prismatic high-temperature gas-cooled reactor. First, on technology readiness, prismatic high-temperature gas-cooled reactors utilize well-characterized materials with established commercial supply chains and the performance data from prior deployments provides a high TR level foundation for our design. Second, the safety profile is fundamentally different from other reactor types. TRISO fuel retains vision products at extreme temperatures. Helium is an inert coolant and the design relies on passive heat removal. As such, we don't expect a credible meltdown pathway, and the core can shut itself down without reliance on active safety systems. Third, prismatic high-temperature gas-cooled reactors are inherently simple. There are few active systems and high-stress components, and many elements can be commercially off-the-shelf rather than safety grade. The core configuration itself has no moving parts other than the control rods and the materials are inert and well understood, contrasting with the complexity of certain other advanced designs. Fourth, prismatic high-temperature gas reactors like KRONOS are especially well suited for export. The use of TRISO fuel presents minimal proliferation risk compared with other fuel technologies and a superior safety case potentially offers streamlined licensing with international regulators. Fifth, we believe this architecture is uniquely flexible. In particular, the standard design can be deployed for smaller capacities by simply decreasing operating pressure. This flexibility allows KRONOS' output to be scaled without redesign to meet the needs of a wide array of customers. And lastly, we believe these characteristics could enable lower long-term maintenance and stronger economies of scale. And inert coolant, passive safety and advanced fuel reduce the need for complex chemistry controls and high maintenance systems. Combined with a simpler design and greater use of nonspecialized commercial components, we see opportunity for reduced operating costs, lower maintenance costs and favorable cost scaling over time. Our focus on vertical integration stems from our belief that one of the largest constraints to deploying advanced reactors at scale isn't the reactor technology, but fuel availability. We're working to gain exposure to several critical stages of the fuel cycle, starting with enrichment through our collaboration with our affiliate, LIS Technologies. LIS owns the only U.S. origin patented laser enrichment technology and our relationship with List has the potential to provide Nano with a differentiated uranium enrichment solution. In parallel, we're exploring opportunities to build our capabilities in conversion and fuel transportation through strategic commercial partnerships and acquisitions. Further progress in each of these areas can not only derisk future reactor deployments, but also positions Nano to generate revenue across the nuclear fuel cycle while remaining aligned with federal funding opportunities and national energy security needs. With that, I'll turn the call over to our CFO, Jaisun, to provide financial highlights.

Thank you, James. I'll now provide a summary of our Q1 financial performance. Our overall cash position increased significantly during the quarter, ending the period with cash and cash equivalents of $577.5 million. This was an approximate $374 million increase during the quarter ended December 31, driven by the net proceeds of our successful October 2025 private placement. We're confident our substantial cash balance and proven ability to raise capital at scale position us well to accelerate development and commercialization of the KRONOS MMR. Our strong financial position also provides flexibility to pursue value-accretive opportunities via M&A and strategic partnerships to enhance our vertical integration. Turning to the income statement. Q1 loss from operations was $11.6 million. The higher year-over-year loss resulted from an approximate $8 million increase in operating expenses. A substantial majority of these expenses focused on advancement of our KRONOS MMR and other strategic growth opportunities. Q1 net loss totaled $6.5 million, up approximately $3 million from the comparable prior year period. The net loss was lower than the loss from operations as we earned approximately $5 million of interest income on our larger cash balance. Net cash used in operating activities increased by approximately $1 million from the prior year period to $4 million. This resulted from the aforementioned increase in G&A and R&D expenses. Net cash used in investing activities totaled $3.1 million and included payments for our Oak Brook, Illinois engineering facility. Before turning the call over to the operator for Q&A, I'd like to reiterate that our strong balance sheet places us in a great position to execute our strategy of advancing our KRONOS MMR and enhancing our vertical integration. As we look ahead, we will continue to generate value for shareholders by allocating our time and capital prudently toward opportunities offering compelling return on investment. With that, I'll now turn the call over to the operator to open up the call for Q&A.

[Operator Instructions] Our first question comes from the line of Sameer Joshi with H.C. Wainright.

So the 1 strategic alliance you announced with the DS Dansuk group, are there any sort of milestones or catalysts over the next 12 to 18 months that we should be watching out for?

So yes, I'm quite pleased to answer the question about this actually because the plan with DS Dansuk is actually a pretty large one. So what they actually wanted was that they envision massive bottlenecks with regard power for their industry. And so when we went over there and me and the technical team, we were talking to them about how we actually create a manufacturing facility there. And we've been working with them in the interim months to break down the reactor into sections and how we would manufacture those sections and what can be done in Korea, what cannot be. So what's been happening over the last few months is we've been looking at what can be fabricated in Korea, what can be sourced there, where materials would going to be come from because one major thing that companies are looking at is that great, you build a reactor and it gets licensed. How are you going to mass manufacture that reactor? So we are obviously turning our attention to that in the U.S., but DS Dansuk wants to do the same thing with our reactor in Korea. So what we're likely going to see over the coming year is just more development in that direction. We are going to put together a plan about how we arrive at a centralized local core manufacturing facility to take the South Korean market initially, but it's really the whole East Asia region where there's a huge demand for the product. So in terms of what you are going to see, you're going to see more engagement with us and DS Dansuk. You're going to see that MOU advancing into more critical planning stages. At some point, you're going to start seeing -- it's difficult to say exactly the time lines now. You're going to see [indiscernible] factories that are going to be built for the purposes of mass manufacturing reactor. And you're going to see additional partnerships between us and them regarding certain key strategic things like partnerships on graphite acquisitions and fuel supply and things like that to get things into place. The other part is what you're going to see is that there's a big demand for this. So you're probably going to see some related news about our interaction with the government, with KHNP, with big vendors in South Korea. And ultimately, over the years, you'll see increasing contracts between ourselves and customers in the region regarding offtake agreements for power, PPA agreements, those kind of things, as we look to actually ourselves so that when we hit that period when we have the reactor fully constructed and licensed, we're then ready able to start manufacturing the reactor immediately, achieve economies of scale and then start installing those reactors en masse.

Understood. So should we -- I mean we also talk about strategic partnerships worldwide, but also within the U.S. and North America. Should we also include like an EPC kind of a strong partnership signed in this region?

Yes. So this is a very good point actually because [indiscernible] now is that we are on the verge of submitting our construction permit. We're very close to finishing that submission. Now when that goes in, that means that we can pivot the technical team to be able to refocus on what the next big stages are. And one of the big next stages is going to have to be how we mass manufacture these things. Now beyond that, there becomes a larger question. Say we have 10 sites, a dozen sites, whatever it is, that we need to surface. Now that is a lot of local construction crews that need to be coordinated. And so the EPC element to this becomes quite important because when you are doing that kind of digging that well for the reactor to go into because [indiscernible] concrete, that's all stuff that Nano doesn't have to be involved and it can locally contract out. But that's still a huge amount of coordination. So you might have seen partnerships between ourselves and Ameresco and Hatch. And previously, actually even Hyundai, I think, we were involved in looking at how we deploy this reactor around the world. So the EPCM part of this is going to be a fairly large component of how we deploy here. So we have made a few announcements as we begin to look at how we deploy these things, how it gets coordinated. That is obviously a very separate thing to DS Dansuk where they are going to be an industrial factory partner. So they wouldn't be doing EPC. But those EPC contractors in the U.S. are going to be very important. In South Korea, they're going to be just as important as well.

Understood. And then just one last one. The construction permit, should we see any like news prior to your -- like submitting the application, which also is it on track for like first half of this year?

It is on track for the first half of this year. It's actually going very well at the moment. We've been quite aggressive about it. So we worked the team pretty hard on this one because it is a very big differentiator. There's actually not many companies -- there might be a lot of reactor companies that are sprouting up because it's a hot market, but there's nobody putting in for a construction permit because it is a big difference between a paper reactor that you can make in your bedroom and an application to actually build. There's a lot of technical data that need to go into it. I wouldn't say we're going to announce anything prior to the submission specifically on this, but we will announce when it gets submitted because it is important to let the industry know where we are. And it is as well a very good indicator for the market that this is a very credible thing that's being taken forward at a time when there's not a lot of reactors being constructed. And if we stick to our time lines, we should still be the first company in the U.S. to build a full-scale licensed microreactor system.

Our next question comes from the line of Nate Pendleton with Texas Capital Bank.

Congrats on the continued progress. Staying on the same topic, James, in your prepared remarks, you mentioned looking at ways to accelerate the 2030 time line for the UIUC project. Can you elaborate on the potential pathways there?

Sure. So it's a very good question. So obviously, there's -- what's happened very recently is that there's been a huge amount of government pressure that's come on to the NRC to try and expedite time lines. And you've seen that manifest in things like the formal licensing period being firstly reduced to 18 months and then subsequently 12 months. So there's a possibility there that the licensing process is expedited for us. Now I would say with our 2030 time line, we've not factored into consideration these adjustments because we want to be as conservative as possible, but there's also a reality to the assessment of a reactor system for any regulator anywhere in the world. And their principal focus is safety. And to do -- to interrogate that properly for any design, it is still very difficult to expedite that even if you throw people at the problem. So the 2030 time line could be expedited. It's certainly possible. But it's prudent, I think, for us to stick to that because there is a -- there's been a tendency in recent years of companies to make very ambitious date targets. And I think all of those are going to be missed now or they're just going to keep evaluating and moving things right. We don't really want to be in that situation. If we say 2030 and maybe gets delivered earlier, great. If there are expedited time lines that benefit us as well, fantastic. I would say that aside from those sort of things, obviously, we will work on the construction, get all that expedited. We've got a lot of resources already that we can pay to the full construction of this. A lot of it will depend on industry and supply chains and those kind of things. But those things we're already identifying now and working on. So a lot of it is already derisked. The other thing I would say, too, is that what's missed a bit in the industry is that a lot of companies might be focused in the near term on getting their first reactor constructed and licensed. And obviously, that's a very important milestone. But when you hit that period and you have a reactor that can be commercially sold, how do you actually get economies of scale? You need to be able to mass manufacture it. So when we talk about expediting the time lines, it would be very nice to hit 2030 and be in a position where we are actually able to start mass selling the reactor. And that's going to mean that over the next few years, while the reactor is being constructed, we do actually refocus a lot of our attention on reactor for manufacturing facilities, how these things are going to be mass produced, how the EPCM contractors are going to get into place for coordinating localization. So there's 2 answers to the question is, one, there's a lot of initiatives that can benefit us and can move our time line forward. And the other part is that if we really want to expedite ourselves as a business, we need to attack this problem now. So once the construction permit goes in, we really want to focus people's energy on getting these -- what can actually be manufactured in the U.S., how much can we centralize them. All of these different considerations will come into it. Which partners do we need to bring in to make certain components that centralize their production capacities within this facility as well? All of this is going to be very important so that we hit the ground running when it gets to 2030, hopefully earlier. But again, the reason why we haven't adjusted those time lines is that we -- myself and a lot of others in Nano, we've done a lot of licensing before. And we're very familiar with what's typically involved. And even though there are pressures on the NRC to expedite things, it still seems prudent to us to keep the longer time lines because the evaluation process, it is difficult to see how it could be shortened substantially from what it currently is.

Got it. That makes complete sense. And then shifting gears a little bit for my follow-up. Can you talk a bit about your decision to announce the request for information for the LOKI MMR? Specifically, what options are your team looking at for that reactor design? And have you received any notable feedback?

So we did. So the interesting part about this was that the LOKI design can be thought of a bit like a scaled-down KRONOS reactor. So as we work on KRONOS, it has immediate benefits for the advancement of the LOKI reactor. But the LOKI reactor was originally envisaged as being a solution for space power. Now when we began looking at actually attributing more resources towards LOKI, we looked at who the previous interest came from, and that was predominantly things like Blue Origin, NASA. These kind of groups were interested in it because it was a very advanced space reactor type. And there was this kind of examination of additional resources being allocated into LOKI was coming at the same time when there was an emerging bigger push into space. And we realized actually we're in a very advantageous position to produce a working system that could actually supply power for a lot of these initiatives. So whether it was zero gravity or low gravity because it was a base. And this could be for a variety of different applications in the space program. But we are not a space industry either. We're not -- we don't have space engineers and people who are involved in that space. So if we are going to pursue this, it needs to be done in partnership with groups that are involved in that space and know what they're doing. So when we put out the RFI, effectively, we were looking for partners already involved in that and they were looking for power. So what we can say is that there are a number of companies that were looking for power that were not involved in that space, launch companies, people like that. So we did receive a large number of RFIs. And I believe we just completed a submission with one at the moment. Obviously, it's -- these are very early days, and we're just putting our toe in the water of the space industry. It's not to say that LOKI couldn't be applied in terrestrial environments either. But certainly, we wanted to take advantage of the interest in the space industry. LOKI had a big head start on a lot of other space reactor types, years and years and millions and millions of investment. And so that's what precipitated the -- our interest to partner with people in the existing space industry because nuclear, we know very well. Space industry build is foreign to us.

Our next question comes from the line of Jeff Grampp with Northland Capital Markets.

James, I'm curious, with respect to the supply chain and some of the work you guys are doing to engage various partners and strategics there, what's your all kind of assessment on the longest lead times or most challenging parts of that puzzle that need to get solved sooner rather than later? And is there any imminent need from your standpoint to solve any of these, say, in calendar '26? Or would you say you have a little bit of time given the timing with engaging with the NRC, getting the permit, that sort of thing?

So this is actually a very good question. I think it's pertinent to anybody involved in the nuclear space at the moment. So what I would say the advantage we have with KRONOS is the vast majority of components are not that specialized. So the complete adjacent plant that converts the thermal output of the reactor into electricity as an example, basic turbine systems, even things like heat exchangers, control rod mechanisms, the citadel thing. These are all things that can be built independently of any NRC involvement. Obviously, they need to be up to a certain standard, which we can ensure. But the vast majority of components, we don't need to worry about the long lead times. These are things that can be readily manufactured now or there are immediate solutions that are very obvious that could be put together in short order. Now there are actually components though that are the longer lead items. So there's a number -- like our reactor and a number of other reactors use like nuclear-grade graphite. And I would say that's an item that needs special consideration because there's only, as far as I know, 3 nuclear-grade graphite producers in the world. I think 2 are in China and 1 is in Japan. Now what that means is that, obviously, there's going to be a lot of demand for these things, but it's also -- it's too much to expect more nuclear-grade graphite to come online anytime soon. The reason why is that principally, a lot of these manufacturers of the substance are located at the mine site. So first of all, you need the graphite mine. And then to get yourself to a point where you reach that sort of certification level where you're at an acceptable level of quality, that can take a substantial amount of time. So the time to bring a mine online to get producing and then get it certified, you could be looking at more than 10 years. So I expect at some point in the future, North America will bring on some nuclear-grade graphite line. But for the next few years, what we expect to do is just buy or even -- maybe even co-build production lines to make our graphite blocks with these manufacturers. So that's probably going to take us some investment that goes into that. We're obviously talking with them. We know what their prices are, and we're arranging for the first-of-a-kind and second-of-a-kind cause with these suppliers now. So that's obviously an important part of it. The other major part for the U.S. is the fuel supply. Now the U.S. is obviously throwing money back at the problem. The DOE has put billions of dollars back into things like enrichment. But there's bigger bottlenecks beyond that. There's conversion considerations to provide the feed grade. Now it is actually investing a substantial amount of labor and [indiscernible] involve itself in that [indiscernible] can have its own uranium hexafluoride that it can then provide to enrichment companies. So it keeps ownership of that fuel. But the -- but for everybody involved in this, that enrichment capacity to come online, whether it's Centrus or Arano or LIS Technologies or General Matter or even Urenco increasing their capacity, the time lines on that are a little bit uncertain. So that's principally also why Nano has opted to use -- to make a reactor that can utilize LEU because that's fuel that can be manufactured today. Now there's going to be -- that's fine because most [indiscernible] use HALEU fuel. So that means that even they might even have much longer wait times to get towards that fuel than we do because, one, they're going to need several things. They're going to need a Category 3 site to be upgraded to a Cat 2 site. That could take some time by [indiscernible] the facility to be licensed up to a level so it can handle Cat 2 material, so 10% to 20% material. That could be a long lead time, too. We don't have to wait for that, which is fortunate. We could benefit from HALEU fuel and the reactor will have the ability to switch out the LEU for HALEU in the future, but we can -- we want to get going as soon as possible. But the fuel supply thing needs a lot of consideration. And then related to that also is the fabrication of the TRISO. Now there are several companies that are really leading in this space. I would say Standard Nuclear in partnership with Framatome. Framatome obviously has a huge experience with fuel. And BWXT, again, very experienced company, very competent. So there's no -- I don't think there's any risk that these big companies don't know how to do this kind of thing. What could happen with them is that there could be a bit of a bottleneck on fuel supply just because of the demand. So getting in now and putting in the orders is going to be very important. And then two, what we're weighing up at the moment is the right contracts because even though we understand the first-of-a-kind reactor might be expensive, we need to have a sustainable fabrication toll fee applied to the material that we supply the fabricators so they can make the TRISO. Well -- and this is principally our strategy, too. We're going to invest very heavily into the fuel supply so we can own our own fuel and supply it to the fabricators, so we don't get stuck, but they will still have to increase their capacity probably to meet the market expectations. And I would say those are principally the main issues -- not issues exactly, but longer lead items that need consideration. But beyond those, even the reactor vessel, the capability exists to do that in North America. It's those longer lead items, the fuel and the graphite, I think, which need more consideration and earlier engagement to derisk.

Great. I really appreciate that answer, James. You kind of hit on the follow-up that I was hoping to ask on the fuel side of things. You guys have been seemingly increasingly vocal about some acquisition or strategic opportunities to put some capital to work there. So I was just hoping to get a little bit of an update on, I guess, level of maturity or intensity of conversations with different companies in that endeavor or just any kind of, I guess, update on what we could see from you guys in that avenue of the cycle.

Sure. So I'm going to be a little bit careful because obviously, it's not public information at the moment. But I don't think it's any great secret that we've been very concerned about the fuel supply chain. And because we're obviously very focused now as we get on in advancement about mass manufacturing reactor, we want to make sure the fuel supply is in place. And part of that over the last few years has involved us looking at fuel supply options. And that involves, obviously, we had a related party transaction called LIS Technologies that we were behind the creation of. And that was obviously -- that is a separate entity that we have a partnership with for enrichment. It's old chemical tech. It had very good results in the '90s. So that has reasonable levels of confidence that we'll get that to a place where it can eventually enrich. But the lead time on that is still going to be after when we want to get going with the mass manufacture reactors. So that means that we need to be working with companies like Urenco that are enriching now. They can enrich your LEU, which is the fuel that we need for a reactor. But even then, if you look at enrichment and you look at all the build back of enrichment, that actually creates the next bottleneck, which is the uranium hexafluoride. So we identified this, I think, back as early as 2023. And for a while, we were in discussions with countries like Namibia, which were large uranium producers about potentially building facilities in the country to take yellow cake and make it into that uranium hexafluoride product for export. I don't mind saying that we have found better options than that, and we've made substantial progress with the governments, the national governments on the acquisition of some of these facilities. I can't give a lot more details at the moment, but I would expect you will see sometime this year some big announcements in that space as we complete some of those discussions and acquisitions.

Next question comes from the line of Sherif Elmaghrabi with BTIG.

I missed a little bit of your response on LEU versus HALEU fuel, but I thought it was pretty interesting. So a couple more on that. From a regulatory point of view, are we talking about a separate regulatory process at NRC or CNSC to use one versus the other? Or is it kind of one approval to run at any enrichment level?

It's a good question because when we do get the reactor licensed, we'll almost certainly get it licensed so we can demonstrate that it could operate with HALEU fuel. We're in a nice position to be able to do that. And the reason why is the operating parameters that we use for our reactors are enormous. So for instance, if we're operating at like 600 degrees centigrade, the melting temperature is 1,800. Now when you've got that kind of margin, then the safety case that you submit to the NRC for a higher enriched fuel is fairly straightforward. I don't think a lot of companies are in that kind of advantage position. So when they are licensing their reactors, they will do it at HALEU level directly, whereas our safety parameters basically allow us to do it simultaneously. The main challenge, I think, with the HALEU is that it's not that it can't be done. Like it's -- we've been enriched much higher up to HEU levels for decades. It's really the fact that in the U.S. at the moment, there's no commercial Cat 2 site. I think BWXT does have a Cat 1 site, but obviously, that's very centered towards military and would make everything very expensive if you manufacture through there. So it's a question of the NRC will need to upgrade sites to Cat 2. They will need to upgrade fuel facilities to be able to handle HALEU fuel and the proliferation -- the increased proliferation concerns that attribute to that fuel. Now those proliferation concerns go away once it's fabricated, but it's still a process the NRC will need to go through for that enrichment of fuel. So it's an interesting thing. We want to take advantage of HALEU fuel as much as everybody else. But like having that option to license the reactor immediately so it can be deployed with LEU. And then once the HALEU is available, immediately switch it out without further licensing engagement is going to be a very important part of the strategy here.

Yes, that's interesting. It sounds like it's not as binary as for other operators. So just one more on University of Illinois. You guys signed that MOU kind of lengthening your relationship. It looks like Illinois will lend a hand designing the reactor. So do they retain a commercial stake when you look to commercialize your design down the road?

No. So they will be the owners and operators of the first-of-a-kind reactor system. And they will supply a huge amount of labor and resources into this project to make sure the first-of-a-kind reactor is built. But beyond that, we own and operate the design of this reactor and the commercial venture [indiscernible] UIUC will be Nano's exclusively. Now the University of Illinois, the big benefit to them is obviously a reactor system that provides them clean energy for their campus system. And -- and also it's obviously, they have got a big nuclear engineering department that they all benefit from involved in this. So it's obviously a big draw if you're training nuclear engineers to say we're building this next-generation Gen 4 reactor system. So they get immediate benefits from this first-of-a-kind. But beyond this, once we have a commercial venture, that will be a strictly Nano endeavor.

Our next question comes from the line of Subhash Chandra with StoneX.

A couple of, I guess, NRC questions. So first, the licensing, so you got on the reactor. To what degree is the balance of plant in that process? And as you sort of address these various use cases, does that again go through the NRC? So just sort of confused there on where that distinction is between the reactor and balance of plant.

No, it's actually a very good question because, for instance, ironically, most of the KRONOS MMR system is not a nuclear system. So for instance, even though your reactor vessel is -- it needs to be nuclear qualified up to a certain level so it can house the reactor itself. It can still be manufactured in a facility that the NRC does not need to oversee that facility. So if you're fabricating that reactor vessel, that facility does not need inspection. Now the component does need to meet a certain standard. So there's still -- when you even get to those sort of parts that are instrumentally important in a reactor deployment, there's still that nuance. I think when -- the NRC mostly care about safety systems, how safe a reactor is. And so their assessment only becomes relevant when it is a nuclear device. So okay, the balance of plants, so you could say things like the entire adjacent plant. So you've got the secondary cooling loop that stores power that creates essentially a battery, so you can ramp up and ramp down very quickly. It's a nonnuclear device that is a heat sync device. That sits outside the NRC. The adjacent plant where you have the turbine systems that convert heat to electric. Again, that would be roughly the same sort of contraction you would find for a gas operation as you would for a nuclear operation. Again, that sits outside of the NRC. Now as you get closer to the reactor, then it becomes a bit more blurry because say, for instance, the citadel, which is the cavity that the reactor sits in, so you dig that into the ground. Now obviously, that can be built by local contractors, that can be concreted and the steel can be put in. Now the standard has to be up to scratch, and you need to be able to demonstrate that it has met those requirements. But the construction itself is not as relevant as the operation of the reactor system. Because what's likely going to happen here is that I think it's Part 52 subpart F. It allows for the -- once the reactor is licensed at the NRC, like KRONOS will be in, say, 2030, all the subsequent reactors that will inherently be licensed to be deployed. So you wouldn't need much more regulatory engagement, and you're going to have a big cost saving as a result of that. Now there's some nuance to that because you still need to be able to supply the NRC with information that they would need at any one time if they wanted to inspect a reactor. So you're still going to have to do the geotechnical drilling, make sure you have all that data that you can demonstrate the ground meets the criteria the NRC allocated. There might have to be inspections of the cores that are being mass produced. Those might need to be inspected to make sure they're up to grade. But provided you are meeting all of those criteria, you could still deploy dozens of those reactors across the country without further regulatory engagement. But yes, the majority of the system can be -- what we anticipate doing is a centralized manufacturing facility where we do a lot of things like the reactor protection and control mechanism, the helium service systems, the mold and salt loops, the instrumentation, the electrical systems, operator training, those kind of aspects, those are still mostly mechanical engineering items. And the majority of the reactor comes under that. And that -- a lot of that stuff can be done under, say, ISO standards rather than NQA1 nuclear-grade standards. It does break down, but it gets a lot easier after that first reactor is licensed because then you have your template and your standards that you need to meet. And provided you meet those, the actual necessity for further regulatory engagement drops off quite dramatically.

Yes. Thank you. Then I guess, to the AI question, I think initially AI was about looking to the vast trove documents and perhaps making it a little bit easier and less repetitive and things like that. But I think lately in the last few weeks or so, they're talking about bringing in digital twins for simulation of these. Do you see -- I mean we see that having a real-time effect in other sectors, of course. And given how lengthy the licensing process is, do you see some of this having a very material effect on the licensing process? Sorry, go ahead.

No, no, I was going to say like that is my actual big hope because I've been involved in licensing before. And it is an enormously complicated thing. So just -- I'm not trying to throw Vogtle under the bus. But for instance, Vogtle is being built, being built very competently. But say, for instance, the regulator suddenly says, well, what about this component of this reactor that was installed 2 years ago? Well, that's already buried in concrete. Well, how do we know it's safe? Did it meet -- where's the checklist with regard the inspection of this component before it was installed and it was encased in concrete? Well, we don't have that. Well, that means we need to dig it up. That means there's going to be a delay to the reactor. That means there's going to be an additional cost component that's going to -- that's why Vogtle is so expensive because you get these things. Now ultimately, that example there is human error. Either someone missed that, that component needed to be qualified or it got installed without anyone realizing that they had to submit it for qualification or something like that. If you have an AI system, my hope here is that it would actually be able to identify very quickly what needs to be qualified, what needs to be identified and you actually will reduce the human error of it down substantially because it will creep into it. If you're thinking just -- it's difficult to even put into -- to explain how complicated a licensing process can be. But if you think about a warehouse and you were to fill it with A4 sheets of paper that contain the licensing documentation, you would fill a warehouse. It would be that much paper, millions and millions of documents. It's a crazy process. Now for a human, that's -- it's -- even if you are 99.99% perfect, that still means thousands and thousands of errors just because of the size of the undertaking that you're going through. So my hope here is that AI can substantially reduce the risk of things being missed. And there's no reason why a computer that's operating like that, that's very familiar with the process that's been exposed to recent licensing data documentation couldn't immediately identify what needs to be focused on, what does need to be done at certain stages. I think that could be a big step forward for nuclear to reduce times of licensing, errors in terms of components get missed, they get very inconrete like the example I gave. There definitely -- that will definitely help us enormously. It will help the whole industry. And I can't see why that won't happen. And that's my big hope for AI. It's not so much reading through all of our submissions and making sure things. It's what needs to be done and when, what has been missed, what could potentially be missed and that kind of thing. I think that looks very plausible. And if that is plausible, then that makes our life a lot easier, and it will make reactors a lot cheaper in the long run.

There are no further questions at this time. I would like to turn the floor back over to Jay Yu for any closing remarks.

I want to thank everyone again for joining us on today's call. The interest and enthusiasm of our investors and market participants is important to us, and we're very grateful for your support. We look forward to providing additional updates in the future. Have a great evening.