Prepared remarks
Greetings. Welcome to the NANO Nuclear Q3 2026 Financial Results and Business Update Call. Please note this conference is being recorded. I will now turn the conference over to Matthew Barry.
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. We caution that actual results, including without limitation the results of NANO's microreactor development activities, our plans for vertical integration, customer acquisition and other strategies and plans, timelines for achieving goals and other matters relating to our future operations 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're 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 to everyone joining the call today. I'd like to begin the call by reminding investors what differentiates NANO Nuclear and why we believe we're well positioned to capture value in the advanced nuclear industry. We've intentionally built our strategy around 6 factors we believe will determine commercial success at scale. First is our technology. KRONOS is built upon high-temperature gas-cooled reactor technology, which has been demonstrated through decades of global deployments. The TRISO fuel used by KRONOS also benefits from extensive qualification work under the U.S. DOE's AGR program, contributing to our confidence in building upon mature advanced reactor technology. At the same time, KRONOS' enhanced safety profile using helium as coolant and TRISO fuel positions it well for applications requiring colocation with the customer, including AI data centers, industrial applications, military installations, and remote mining operations. The second is design maturity and fuel flexibility. KRONOS' high TRL is backed by substantial historic investment over a decade of development. Our confidence in KRONOS' design maturity is supported by the NRC's formal acceptance of the University of Illinois construction permit application for review, making NANO Nuclear the first commercially ready microreactor developer building a full-scale unit, and one of only a handful of Generation 4 advanced reactor developers to reach this stage. Our reactor is also designed to utilize LEU+ fuel, that's commercially available today, while maintaining the flexibility to utilize HALEU in the future without redesign once HALEU is available and economically viable. Next is scalability. We believe success will be measured by the ability to manufacture a standardized design economically and at scale. KRONOS, this small modular architecture, is intended to support standardized manufacturing and repeatable deployment. We expect this approach to provide one of the clearest pathways to benefit from new expedited licensing pathways, including Part 53 and proposed Part 57, shorten deployment schedules and economies of scale. Fourth is commercialization. Our first full-scale prototype development at the University of Illinois is advancing through formal NRC licensing with a clear pathway towards first power around 2030. Our commercial pipeline also continues to grow. We recently completed a feasibility study assessing the potential to deploy up to 1 gigawatt of power with BaRupOn. And at the same time, we are advancing discussions with a potential strategic collaborator and customer advancing planned gigawatt scale data centers in the U.S. and internationally. These discussions continue to progress, and we see a potential to soon reach an initial framework identifying NANO Nuclear as their preferred nuclear technology provider. In parallel, we're exploring strategic alignment mechanisms, which could include milestone-based investments tied to defined commercial and project development milestones we believe would drive meaningful value for shareholders. This proposed structure is designed to align long-term interests and incentivize our joint success. Separately, we are advancing discussions with a nuclear power project developer and AI infrastructure company to jointly evaluate several projects. And lastly, we're also seeing strong interest from earlier stage discussions with potential defense, mining and industrial customers. We believe these opportunities provide visibility into multiple gigawatts of potential commercial deployments. Next is vertical integration. We believe one of the greatest challenges facing the advanced nuclear industry over the coming decade will be execution across a broader nuclear fuel cycle, which is why we're strategically focused on expanding our capabilities in that area. Our recently announced acquisition of Secure Transportation Services, or STS, has accelerated our progress by providing the ability to transport nuclear fuel and spent fuel. Our team has already identified opportunities to leverage STS's specialized expertise to de-risk KRONOS' advancement and our expansion across the fuel cycle. Equally as important, STS has demonstrated a history of profitability, and our team is excited for several significant opportunities to grow the business organically, as well as through an additional M&A opportunity currently under evaluation. We also continue to advance M&A and partnership discussions targeting fuel facility assets to further de-risk the nuclear fuel cycle. And lastly, execution requires both capital and the right team. We ended the quarter with approximately $580 million of liquidity, providing what we believe is one of the strongest balance sheets among advanced reactor developers. Our strong financial position provides the financial flexibility to advance our first deployment, while also pursuing strategic acquisitions and partnerships across the nuclear fuel cycle. Equally as important, we've assembled an experienced team from the DOE, the NRC, U.S. National Labs, the U.S. military, and advanced reactor developers. Our team has grown significantly over the past year, with our headcount increasing to 85 employees and contractors as of the end of our third quarter, from 31 one year prior. And we have expectations for significant growth. We believe this combination of technology, financial strength, and industry experience has built one of the industry's strongest foundations for long-term value creation. Our team looks forward to additional progress and remains excited for both short and long-term opportunities to create further value for shareholders. With that, I'll turn over the call to our CEO, James Walker, who will provide additional details on our progress and recent developments.
Thank you, Jay. NANO Nuclear has established a strong foundation within the advanced nuclear industry, and we continued converting that foundation into tangible execution during the third quarter. In May, the NRC formally accepted for review the construction permit application for the deployment of the KRONOS MMR at the University of Illinois, Urbana-Champaign, initiating formal review activities. The NRC subsequently announced its expectation to complete its environmental assessment in Q1 2027 and its safety evaluation in Q3 2027. These projected milestones remain consistent with our expectation for the review process to complete in 2027, providing the opportunity to begin initial construction activities in the second half of 2027. In parallel, we're advancing several critical engineering work streams. We recently announced progress with an engineering collaboration with FORTIL, an internationally recognized engineering and consulting firm, to advance KRONOS' fuel handling and storage system. This system is an important element of both our first deployment and our broader commercialization of the platform. We're also advancing an engineering collaboration with another globally recognized engineering firm to advance KRONOS' primary helium circulator. This firm has decades of experience supporting gas-cooled nuclear reactor programs, and this collaboration has now advanced into the detailed design phase. Together, these advancements reflect progress across several critical path work streams. They are helping us mature key reactor subsystems, reduce first-of-a-kind execution risk, and establish repeatable designs for future standardized commercial deployments. Another significant area of progress during the quarter was the continued expansion of our vertically integrated nuclear platform. As Jay highlighted, we completed the acquisition of STS in May. STS is a globally operating nuclear logistics, transportation, and services company with a history of profitability. With more than 20 years of experience supporting the movement of radioactive and nuclear materials, STS supports both commercial nuclear customers and critical missions for the U.S. DOE, and NNSA. By bringing these capabilities in-house, we can reduce reliance on third-party providers, accelerate our expansion across several aspects of the fuel cycle, and accelerate future reactor deployments. At the same time, we've made strong progress advancing several synergistic acquisition and partnership opportunities across the nuclear fuel cycle. These include an additional fuel transportation business and nuclear fuel facility assets. We see potential for more than one announcement in the coming months, subject to further diligence and closing conditions, with one positioned to contribute revenue upon closing. And another offering more meaningful revenue potential in or around the 2030 timeframe. The third key area of progress came from the expansion of KRONOS' commercial pipeline. During the quarter, we continued progressing our deployment opportunity with BaRupOn by completing the previously announced feasibility study, which evaluated a phased deployment of up to 1 gigawatt of KRONOS MMR capacity. We view this as an important milestone, and we're advancing discussions towards initiation of the NRC licensing process. We're concurrently advancing discussions towards an initial framework with a potential strategic collaborator and customer to support their planned multi-gigawatt pipeline of data center projects. If finalized, the framework could position NANO Nuclear as the preferred nuclear technology provider. While terms remain under discussion, we believe this framework and future collaboration could significantly strengthen our path towards commercialization by aligning NANO Nuclear with an experienced infrastructure developer with a strong track record of developing, financing, and executing large-scale projects. We're also evaluating mechanisms to align interests through future investment in NANO Nuclear tied to defined commercial milestones we believe could drive substantial value for our shareholders. Moreover, we believe this collaboration could be a meaningful validator of our technology and our commercialization strategy, while also providing visibility into a multi-gigawatt deployment pipeline, which could help accelerate KRONOS' commercialization. We also signed an MOU with Supermicro to evaluate the integration of KRONOS with Supermicro's AI server and data center infrastructure platforms, as well as potential joint go-to-market opportunities and off-grid deployments for next-generation AI infrastructure. By engaging early, we can jointly evaluate how in the future nuclear-powered data centers may be designed as integrated systems rather than treating the power source and computing infrastructure as separate development decisions. Moreover, we continue to advance several opportunities within and outside of the data center market, further demonstrating the breadth and scale of the market opportunity for KRONOS. To this end, we were recently selected for an SBIR Phase I award by AFWERX, the innovation arm of the Department of the Air Force, to advance the KRONOS MMR for the U.S. Air Force. The latest award further expands our opportunity set with the Department of the Air Force following the company's previously announced direct Phase II SBIR award for Joint Base Anacostia-Bolling, which continues to progress on schedule. We recently submitted our fourth contract line item deliverable, with the remaining 4 deliverables expected to be completed over the next 12 to 18 months. Lastly, we further enhanced our strong balance sheet by raising approximately $26 million in net proceeds from our at-the-market or ATM facility. At quarter end, we held approximately $580 million in liquidity. Overall, the quarter included substantial progress across each of our principal strategic priorities. I'd now like to provide additional color on our recent acquisitions of STS. The progress we've made since completing the transaction, and the opportunities we see to create long-term shareholder value. Our acquisition of STS represents more than a fuel transportation business. Beyond its established operating business, regulatory approvals, experienced personnel, and longstanding customer relationships, STS provides a strategic platform to expand our capabilities across the nuclear fuel cycle, helping to further de-risk KRONOS' deployments. Since joining NANO Nuclear, STS has continued demonstrating the strength of its platform by supporting several important DOE and NNSA missions, including the successful transport of HALEU from Japan to the United States, the removal of highly enriched uranium from Venezuela, and additional domestic transportation campaigns supporting the U.S. nuclear industry. We believe these missions reflect both the highly specialized nature of STS's capabilities and the confidence key government agencies place in the organization. Looking ahead, we believe STS is exceptionally well positioned to benefit from the continued growth of the nuclear industry. Increasing reactor deployments are expected to drive demand for fuel transportation and related fuel cycle services. And STS is one of the established leaders in this specialized market. Under the NANO Nuclear umbrella, STS is already advancing initiatives to broaden its capabilities in anticipation of that growth. STS also strengthens NANO Nuclear beyond transportation and logistics. The team includes personnel with decades of experience supporting the industry. We believe this expertise can support future reactor operations while further strengthening our relationships with key government organizations. We've also been encouraged by the feedback we've received from prospective customers, several of whom view our ability to offer a more integrated solution as a meaningful differentiator compared with other reactor developers. STS provides a successful standalone operating business we expect will continue generating a solid base of revenue while offering multiple avenues for significant organic growth. At the same time, we're already evaluating a complementary acquisition we believe could meaningfully expand STS's capabilities, geographic footprint, and revenue base. We look forward to sharing updates on our progress in the coming quarters. And with that, I'll hand over the call to our CFO, Jaisun, to discuss the financial highlights.
Thank you, James. I'll now provide a brief overview of our financial performance for the third quarter and the year-to-date period. Our acquisition of STS provides NANO Nuclear with a revenue generating fuel transportation business with a demonstrated history of profitability. STS generated approximately $3.9 million of unaudited revenue during the first 6 months of calendar year 2026, including $200,000 from the May 22nd closing of the transaction through June 30. Operating expenses totaled $15.9 million, driven by higher G&A and R&D expenses as we continue to advance KRONOS development, progress KRONOS through the formal NRC licensing process, advance activities at the U of I, and expand capabilities across the nuclear fuel cycle. As expected, operating expenses increased versus the prior year period as we scale our engineering, regulatory, commercial, and fuel cycle workstreams. Our Q3 net loss was $10.1 million compared to $7.6 million in the prior year quarter. The increase reflects higher OpEx, partially offset by higher interest income driven by our larger liquidity position. Year-to-date net loss totaled $25.8 million, an improvement versus the $32 million in the prior year period, benefiting from substantially higher interest income and lower equity-based compensation. Year-to-date net cash used in operating activities was $18.7 million, primarily reflecting the year-to-date net loss, partially offset by non-cash equity-based compensation. Year-to-date net cash used in investing activities was $297.6 million, driven by our approximate $281 million purchase of short-term investments, approximately $10 million in plant, property, and equipment additions, and approximately $6 million related to the STS acquisition. At quarter end, we held $580 million in liquidity, an increase of roughly $11 million from the prior quarter. This increase reflects approximately $26 million in net proceeds from our ATM program, partially offset by capital deployed to advance KRONOS development, NRC licensing activities, and broader fuel cycle initiatives. We believe our balance sheet is among the strongest in the advanced nuclear energy sector, providing a clear competitive advantage as we progress toward our first-of-kind deployment. Our strong financial position could be further enhanced by several non-dilutive funding opportunities for the U of I project, which we believe could meaningfully reduce the capital required. Taken together, this liquidity profile not only positions us well to advance our first-of-kind prototype, but also provides the flexibility to pursue value-accretive acquisitions across the fuel cycle while continuing to advance KRONOS towards commercialization. We will continue to deploy capital strategically to de-risk KRONOS development and commercialization, and prudently in line with prior successful value accretive investments, such as the acquisition of the KRONOS MMR assets and STS. Overall, we remain confident that our financial strength positions us exceptionally well to execute on our growth strategy. With that, I'll turn the call over to the operator for Q&A.
Questions and answers
Our first question comes from Sameer Joshi with H.C. Wainwright.
Congratulations on the progress. The CPA acceptance was a real achievement and the STS acquisition also fits nicely in your strategy. So my first question is about just as the regulatory process goes through with the safety evaluation and environmental assessment, on the other side, you said you're working with FORTIL and another engineering firm. Are there any long lead items that you might need to order now to start construction in the second half of 2027?
So the initial construction focuses on things like installing the citadel, a large subterranean concrete structure that will house the reactor. At the very start of construction we don't need reactor-related components. That doesn't mean we haven't started sourcing them; we are already negotiating with vendors on costs and delivery schedules. The initial construction does not wait on those. Once we get approval and turnaround from the NRC, the federal regulator, we'll proceed immediately with ground excavation, concrete pouring, and steel installation for the portion of the project that will house the nuclear reactor. The other parts of the KRONOS system include the thermal energy storage system, using solar salt as a kind of battery, and the adjacent plant that converts that thermal output into electricity. None of that is nuclear, and many of those components are standard — turbines, generators, and the like — which don't require NRC approval and can be built right away since they are off-the-shelf. So there's a lot we can do even before we procure every component. By the time we receive approval next year, we want to know where everything is coming from, the costs, and have the full pathway to build out the reactor system lined out.
That is reassuring and good to know. My next question is about the acquisition you spoke about, of course, STS is in the bag. You spoke about adjacent acquisition and maybe another one. Have you allocated any budget, particular amount, dollar amount that you want to spend during 2026 or you are more likely to be opportunistic and strategic about this?
So it's not that there's a ceiling on the limit to which we're about to spend on acquisitions, but we are very capital conscious. And I think that's important because we don't want to go off to big acquisitions that are in the order of like hundreds of millions of dollars, even if it was to acquire a big revenue generating businesses for NANO internally. The focus has always largely been on acquisitions that provide us that in-house capability that will facilitate the rollout of our reactor systems. And a lot of the time, all that means is acquiring small companies. And so for instance, even with STS, I think the initial payment as part of that acquisition, we're only in the region of about $7 million with some future payments for retention allowances factored in. But that's kind of emblematic of the other acquisitions that we're considering at the moment. They are small scale, it's to bring in-house capabilities to us. The only contradiction to that might be a fuel facility that we are looking at. But again, that fuel facility, there's no acquisition cost exactly. Our equity position in that would be earned through investment into the completion of that facility. So it does need to all be very strategic, and all of these acquisitions are of course to facilitate the rollout, the mass rollout of the reactor systems. But we don't want to spend big money on acquisitions, the revenue is obviously beneficial and it does de-risk the company to some degree, but it's in-house capabilities. And it's partially also to take advantage of the massively expanding nuclear market. That STS acquisition already, we're looking at all sorts of contracts that are way in excess of contracts that STS has been able to solicit for before because it needed more capital backing, which we can now give it. So there's the expansion potential that exists for these small entities, but succinctly to the question, no, we're not looking to have big outlays for big acquisitions.
And Sameer, I would also just add as well that if there are acquisitions that have a bigger outlay relative to some of the acquisitions we've executed upon thus far, we're very conscious of that as James highlighted in terms of the capital outlay. And we also are ideally evaluating several different funding mechanisms to reduce that, whether it's like government programs or other mechanisms to reduce that capital outlay. And also, if there were other larger type acquisitions, it would be safe to say that those capital outlays would occur over a number of years rather than all up front.
Understood. Thanks for that color. And thanks. I will step back in queue.
Our next question comes from Craig Irwin with ROTH Capital Partners.
Good evening. So I wanted to ask about the project outlook, right? So your prepared remarks make it very clear the UIUC project is on track, construction start by the end of next year. And you've announced a particularly interesting relationship with Ameresco that I don't think is appreciated appropriately by the market. So Ameresco has 8 enhanced use leases from the Navy and actually bidding for leases right now from the Army, where this gives them land and access to easy permitting or much faster permitting than commercial or sort of non-military land for power projects to support data centers that would be used both by hyperscalers and by the military itself. They've talked publicly about a $10 billion near-term pipeline, the billion and a half in bookings they had this last quarter, a very large chunk of that actually came from data center. And I understand the actual number is mid-20s is sort of the medium term. Mid-20s billion is the medium term power opportunity they're looking down. Given that they can move faster and they probably have access to DOE and DOD licensing pathways for nuclear power. This could be one of the most interesting customers in the market. Can you maybe expand on your relationship with Ameresco? Have you been in discussions with them about potentially using these alternative pathways for construction approval, for plan approval, given that these would be DOD projects. They've talked about 70% funded by third party debt. And I think there are names that are big names that are lined up and competing for those slots. Anything you can share about your conversations with that company that can help people understand the real value there?
Sure. I'm happy to give some background and color on that. So the challenge for NANO is that we're a technology company, we've got a great reactor system. But when we start commercially deploying the reactors, we're going to be looking at dozens of different sites and many different reactors that will be deploying all around the place. That means a lot of components coming from a lot of different sources and going to one place. It's going to require a lot of EPC work. So the initial conversations with Ameresco were based around that engineering procurement and construction work, the coordination of that because it is a big operation in and of itself, especially considering the size of the potential scale of some of these operations that we're looking at. Now, Ameresco, I think they're clean energy projects. When they're looking at things like DOD, it's almost similar to how we're dealing with the Air Force and our Air Force contracts. Now, they are also the DOD pushing through in the direction of trying to get these systems online so they can have that energy sovereignty. But it is, even for the DOD, these are now new endeavors. They have a lot of familiarity with naval reactor systems, aircraft carriers reactor systems, but even this is a bit new territory for them. So it's also, whether it's through Ameresco's projects or it's through the Air Force, we still need to go through that feasibility study analysis similar to how we're going through with the Air Force. I wouldn't say that Ameresco's projects could expedite us hugely, just given, say, our existing experience of what we're having to go through at the moment in terms of providing the necessary information for the military to get comfortable with the installation of reactors at their sites. Now, they do need to defer to the NRC on some things, just given these are new reactor systems. I think even for Ameresco's projects, where they'll be looking at the introduction of nuclear reactors onto their sites, it's still, no matter how you slice it, a new endeavor for the DOD that they will need NRC assistance and they do benefit from projects like the UIUC project, the University of Illinois construction project, because they can see it being constructed. They can see the NRC working through the process and it does provide more reassurance, and they are in that phase now where they are trying to analyze the real players in this because there are really only a few handful on that sort of commercial path. And they're distilling that down as they get more expert now at understanding this sort of advanced reactor industry in total. So it's not to convolute the answer, but effectively it's really a factor of conventional licensing frameworks that need to be worked through for reassurance and the ability to fast track them is rather minimal.
Yes, and I just wanted to add with Ameresco, we are in active talks with them. They do have a robust nuclear kind of group there. So we're working with them actively and we are looking at different strategies with them. So just to reinforce what you said, they are looking at different areas, and one of their areas is nuclear, and there are synergies there, as you mentioned. So we are ongoing and talking with them about these possibilities.
So my second question is about Dioxitek, right? So there's been public coverage out there that NANO Nuclear proposed a $230 million investment structured in 2 phases. I think it's fairly obvious that didn't come from you, but it is out there in the public domain. So maybe that increases the bandwidth or the opportunity for you to maybe discuss this potential investment. I know it was a proposal and that there's a negotiation going on and that, you don't necessarily, like there could be other parties that might win the bid in this process. But can you maybe just give us a little bit of color from your perspective where things stand at the moment, and how this could be a strategic fit for NANO over the next couple years?
Sure. So, yes. Well, I could quickly answer that. Our proposal is currently under review and we hope to have an update in the coming months. But we can't really touch on that right now. But we are looking to be vertically integrated, obviously, so this would be a big kind of achievement for us, but right now it's still under review, so we don't really have too much comment on that.
Understood, completely understood. My last question, if I may. It's not easy to hire people with nuclear expertise, right? And NANO has done a fantastic job bringing on experienced executives, bureaucrats, engineers from the industry, people with decades of experience, many of them. Can you talk about your hiring plans over the next year? Would you expect the growth in employees to continue at the similar rate that it's been materializing over the course of the last year? And do we need to see double in the total number of employees in the medium to longer term to have the capabilities that you foresee and that you're planning for the broader NANO Nuclear energy capacity and execution potential.
It's a good question because NANO has obviously transitioned from a small company to a medium-sized company, and that brought a major reorganization of how we run things and integrate departments. The technical team still needs to expand further; we need to build the in-house infrastructure to carry a reactor project from advanced design all the way through to a physical, operating reactor system. I'm calling from the University of Illinois today, and conversations with the chancellors and deans already involve a significant amount of personnel and technical work. Over the next few months you'll likely see a substantial increase in technical staff as we bring on more people, and that will expand even further over the next couple of years. That expansion is essential, and it applies specifically to the reactor system. Additional acquisitions will add people in other parts of the nuclear industry as well, including transportation, and we are also recruiting in areas related to fuel and the fuel supply chain. NANO is expanding quickly, but the most important thing is to be sensible in hiring because over-hiring or lacking proper organizational structure and reporting lines can quickly result in personnel who are not allocated properly and do not have designated tasks aligned with NANO’s mission. We're trying to be careful, but the pressure is on us to upscale as fast as we can.
Our next question comes from Nate Pendleton with Texas Capital Bank.
Good afternoon. In your prepared remarks, you talked about advancing discussions toward a framework with a strategic collaborator and customer for a multi-gigawatt pipeline. Can you provide some insight into what that kind of structure would look like, what it could unlock from a commercialization perspective for you, and maybe what attracted the customer to NANO specifically?
Sure. We haven't publicly released a huge amount of information, but I can speak at a high level to the framework being put in place with this large partner. They establish many data center campuses and are looking to integrate NANO systems into those campuses over time. They would provide financing for the campuses and the power infrastructure, and NANO would provide the reactors, fuel, licensing support, and operational capabilities. We structured this based on how other companies structure PPA agreements. Many of those are deficient because they don’t require investment from the potential customer they will be serving. That creates weakness because a non-binding agreement that says if you build a reactor system at a given cost we will buy the power, but if it doesn’t meet the requirement we have no obligation, is an insufficient model for how reactor companies will successfully market and deploy their systems. Our structure gives the partner the ability to receive equity grants and warrants in NANO, and also allows them to invest tens of millions, if not $100 million, into NANO as development and reactor purchase milestones are achieved. It’s a very incentivizing arrangement where NANO could even invest in the nuclear data center project itself and take equity in that position. That could generate additional revenue for the company once nuclear construction begins. This approach binds us more closely with the technology partner. That joint level of investment de-risks both sides and provides a way for both parties to capture revenue. That synergistic partnership is essentially what we are aiming for with this new framework for KRONOS in collaboration with the data center partner.
And also, if I could just jump in and just add some additional color as well. So this potential partner is a global infrastructure investment and development firm. Has experience building, owning and operating large infrastructure projects globally, which they expect will translate well to some of their ambitious plans for some gigawatt scale, AI industrial campuses in the U.S. and also internationally. And so I'd say, as James highlighted, close to finalizing an initial framework where NANO could be their preferred nuclear technology provider. This would be structured, obviously James talked about seeing some of the challenges with types of agreements, whether it's PPA agreements or other, this would be potentially structured a little bit differently as this company would look to purchase NANO's reactor, so given their experience with some of these large scale infrastructure projects, experience identifying land, procuring power, and sort of executing on these. They're very adept and also financing them as well. They're very adept at all of that, which would be very complimentary to us. And so they would purchase our reactors in what we envision. But as James highlighted, there would be an opportunity for things like options to potentially have equity interest in some of that, nuclear company that would be selling the power, which is really interesting. And then lastly, as James highlighted, yes, I think the potential to have an arrangement where there is a level of investment in NANO not only signifies additional capital potentially in the future, but also signifies a level of seriousness to this and a level of, I'd say, belief and confidence in NANO Nuclear and how strongly positioned we are in terms of being the first microreactor developer building a full scale prototype to enter formal NRC licensing and obviously having, being able to procure fuel that's commercially available today and having a design that has had significant investment. And so I think it also signifies confidence in NANO as a company and I think also important is that given the potential planned pipeline, potential multi-gigawatt opportunity for NANO, I think it would really be, accelerate potentially our commercialization as well and obviously it being with a credible partner I think is also makes it really, really important. So hopefully all that kind of helps.
Absolutely. Sounds really exciting. So I'll stay tuned on the specifics. And then maybe for my follow-up, going back to your prepared remarks on the supply chain, fuel availability tends to be a key critical path item that a lot are focused on right now. Can you provide an update on how your conversations with commercial enrichment providers and TRISO fabricators are progressing? And what does that availability look like based on your commercialization timelines at UIUC and beyond?
This is, I think, an intrinsically important question for every reactor company at the moment. Conversations with enrichment and fabricators are very different conversations. But on the enrichment front, I think the big advantage we have over most of our competitors is the fact that we can use low enriched uranium. So fuel that can actually be manufactured today. Companies like Urenco, we've already started conversations with them about them being able to provide us the enrichment that we would need for the mass rollout of systems. So that's obviously different from the University of Illinois project where we're obviously sourcing the fuel that's necessary for that first of a kind initial reactor system. There are a number of fabricators on that side that I'll discuss in just a second. But the enrichment part is fortunately plays into our favor. Now, when HALEU is available, and there are a number of companies that we are already speaking with, groups like Centrus, that do intend to make HALEU fuel, we will take that fuel. We will be able to refuel our reactors without modification with that HALEU fuel that will allow for longer periods between refueling. But the advantage is we want to get to market soon. We want to get to market sooner and the ability to actually utilize enrichment companies that don't need any site amendment, license amendment to make our fuel is a big one. So those conversations thankfully, they've been very positive, the capacity exists to do that. And the other reactor companies that are looking at utilizing HALEU, they're not having those conversations with existing enrichment companies, because they would not be able to source their type of fuel from them. Now on the fabrication side of things, the interesting part of this is that there are emerging players in this market. So everyone's probably familiar with BWXT, they've already been manufacturing TRISO for many years. They are looking now for a commercial arm of that venture where they would establish a Category 2 site, principally because their Category 1 site creates far too many overheads to make a competitive product. And then there are groups like Standard Nuclear partnered with Framatome and even TRISO-X with the subsidiary of X-energy. The nice part is that as there are more and more players involved in this space, we are in a nice position to negotiate and find the best prices. So with everybody that I've mentioned, we are speaking to all of them at the moment and we are trying to lock down long term contracts. The ability to fabricate the fuel that we need for the first of a kind reactor system already exists. We aren't worried about getting that fabrication done and meeting our timelines because that capacity and that capability is already there. Now, the long-term strategy could look a bit different as we look at bigger bulk loads with escalating production of reactors over time. And there still might have to be some element of NANO that we would bring online in the future to manufacture certain elements of the fuel, like the SCM that's necessary for our fuel. It could be that we want to be more involved in that and we establish joint ventures in that department for a long-term de-risking, but the important part is those are considerations I think for the future as we want to de-risk the mass rollout of reactor systems. First of a kind of line, both on enrichment and fabrication. I think already we've turned our focus towards 2030 and beyond where we want to be in a position where we hit that timeline and we can mass manufacture reactors with mass fabricated fuel.
Our next question comes from Craig Shere with Tuohy Brothers.
So in a pure SMR industry earnings call, an argument was made that most deployment opportunities to take advantage of both the power and thermal applications can utilize 400- to 450-degree fast reactor technology as readily as high-temperature gas-cooled reactors and that HTGRs are only uniquely optimally suited for perhaps niche applications. Now we've kind of made a bigger deal about the HTGR differentiation, though, noting X-energy's most advanced deployment with Dow and that NNE, in particular, has a great many opportunities from Korea to the Middle East to those remote off-grid cold weather Canadian markets, whether they be communities or mining operations. Can you chime in on just how important that higher temperature run rate even versus metallic fueled fast reactors may actually be?
Sure. As a bit of technical background, and thankfully I have a nuclear engineering background to speak to this somewhat. High-temperature gas reactors have been deployed previously around the world, and operators are familiar with their operating profile. The main criticism has been low capacity factors because ramping power up and down could take a long time, so they can be ill suited for industrial applications with fluctuating demand. In our advanced reactor systems, the solar salt loop acts as energy storage, allowing the reactor to maintain a constant output while the thermal energy storage system handles large fluctuations in demand. That design directly addresses the operating history and the associated information. Fast reactors, by contrast, have never been deployed commercially. To deploy a fast reactor you would need a highly enriched central core, using either HALEU fuel or some blend of plutonium. HALEU is not available now and might not be for a long time, and a commercial company handling plutonium would not be allowed without legal changes. Given that lack of fuel availability and the absence of operating history and commercial deployment, I would choose a high-temperature gas reactor over a fast reactor today. High-temperature gas reactors are also better for industrial applications because, together with thermal energy storage, they produce high thermal output suitable for foundries while using fuel that is available now. Fast reactors, on the other hand, tend to be more efficient at large scale: they rely on a high neutron flux with little moderation, using materials like uranium-238 that are not very fissile on their own but will fission given enough neutron flux. Small fast reactors are difficult to make efficient, so you need a large reactor, which limits flexibility, mobility and modularity compared with high-temperature gas reactors. If I were running a fast reactor company today, I would focus immediately on solving the fuel issue and target larger sizes. It would be hard to argue that fast reactors have an advantage over high-temperature gas reactors for industrial thermal output unless the comparison selectively emphasized certain points.
Very helpful. My second question, some of this has already been touched on when you're responding to questions about the potential strategic developer partner relationship and the fee-based versus some retained equity ownership potential. But I'm interested in kind of the tension between those 2 across your entire business prospects. We've got kind of like on the one end, the Olkо ownership PPA model and then a few others, X-energy, nuclear terrestrial energy with more of a fee-based or fuel sales model. Now I realize you're open to both and that probably the fee-based approach may ultimately comprise the lion's share of deployments. But is there a geographic distinction where you may be, for example, more likely to provide services versus retain ownership internationally?
That's a very interesting question. Funny enough, it ties into your first question because we have a lot of interest coming from countries like South Korea. Much of that interest is around industrial heat for manufacturing operations because they don't have access to the same level of gas, coal, or oil that the U.S. or some other countries have. The long-term derisking of their heavy industry means they're looking at nuclear as a solution. Because they see nuclear that way, there is more interest in being able to mass-deploy these reactor systems, which creates a mix of preferences around ownership. Some want ownership so they don't have long-term payment obligations for the reactors and would only pay for servicing, maintenance, and refueling. I would still say that is a minority compared with those who prefer to pay an agreed monthly or quarterly contractual price for power. Even heavy industries trying to derisk their long-term security are often not interested in owning and operating a reactor themselves. They are willing to put capital into projects, but they generally want the ultimate responsibility to sit with someone else while gaining the long-term derisking benefit.
Our next question comes from Jake Sekelsky with Alliance Global Partners.
Just circling back to STS and the $7 million or so in revenue last year. Can you provide any color on how we should think about this heading into 2027? I'm just wondering if you have plans to scale the business in the near term here? Or is it better viewed as a complementary business to secure fuel transport?
So it is both. We were always very commercially focused as a company; even from inception we were looking at how we get reactors out there. It became very clear that this is a very specialized industry and the ability to move yellowcake to a conversion facility, uranium hexafluoride to enrichment, enriched uranium hexafluoride to deconversion, deconverted fuel to fabricators, and fabricated fuel to a reactor requires transportation capability at every step. When we realized there were very few players in the space and that, as advanced reactors move toward deployment, that capability would be squeezed substantially, we knew we had to build transportation capability in-house. So we didn't get stuck at that juncture. The advantage is that because this will be a big growth area, we can grow that business substantially. STS is an incredibly expert company, but they have more experience in the back end of the fuel cycle. We are looking at acquisitions at the front end of the fuel cycle to complement what they do and give us a more holistic business that can handle everything in the nuclear industry, both for our internal needs and to tap into the ability to grow the business significantly this decade before reactors are widely deployed. It did begin as a de-risking operation for reactor deployment, but we see massive potential for business as the industry grows.
Okay. That's helpful. And just a follow-up on M&A opportunities. Realizing you can't speak to specifics, but can you maybe just touch in broad strokes on some of the areas of the supply chain you're honing in on and seeing the most opportunity from a vertical integration standpoint?
Yes, absolutely. I think Jay and I, when building the company, realized early that the fuel supply chain would be a major issue because decades of underinvestment have left it underbuilt and more reactors coming online will squeeze it further. Because of that, we have made strategic investments, for example in Silex Technologies, a related company that specializes in enrichment. It used to be part of Cameco Tech with strong results in the 1990s but was mothballed when cheap Russian material was available. That partnership is a good call option if they succeed on the enrichment side. We are also pursuing both conversion and deconversion projects right now. One was mentioned earlier on this call, but we want to finalize those contracts and build in-house capability to control parts of the fuel supply chain, not just to derisk our reactors but because it will be a substantial growth area for our business in the coming years. Everyone will need fuel no matter what kind of reactor they deploy—fast reactors, molten salt, or high-temperature gas reactors—so it is crucial to have some level of control over the fuel supply chain to enable mass manufacturing of reactors. Many of our current acquisitions and investments are focused on these areas to derisk operations. We are less focused on mining because the yellowcake industry can supply material at the levels we need, but heavy industry and infrastructure will be necessary.
Our next question comes from Jeff Grampp with Northland Capital Markets.
In the prepared remarks, you mentioned some potential nondilutive funding opportunities to potentially help finance the UFI deployment. I was just hoping to get a little bit more detail on what kind of opportunities, if there's any kind of ranges of quantum of capital that could be out there to help fund this.
Jeff, I could just chime in really quick. So I think there's a couple of different opportunities we're evaluating, things like investment tax credit. I think the UI projects are pretty unique project and that we're building our first unit next to the Abbott Power Station there. So there is potential not only for a base 30% ITC for that project, but also potentially an extra 10%. Energy community bonus things that we're evaluating. So I think that's number one, also obviously evaluating DOE programs to potentially pay for portions of the fuel as well as opportunities, whether it's with our partner in the Endeavor, the UIUC project or the state of Illinois to potentially support us. Obviously, given that this is a research reactor, we are saving on the NRC licensing fees. So I think that's something we've been very proud of that we have been very mindful about capital allocation here. But yes, we're very excited about some of these other funding opportunities as well to potentially significantly reduce the capital cost of the project.
Got it. And for my follow-up with BaRupOn, can you guys update us on just the project a bit more? I know you can't speak to specifically for them, but you mentioned the potential licensing application. Any preliminary estimates of when that could be? And what are the main drivers there that dictate the timing of maturing that project a bit further?
I'm sorry, Jeff. Can you repeat that? I apologize. We got broke off.
Yes, sure. So the question was on BaRupOn and the potential licensing application that you guys referenced. Just wondering if there's any preliminary estimates of the timing of when that project could be in a position to submit a licensing application and what are the factors that dictate that timing?
Sure. So James actually just got cut off, so I can quickly answer this. We completed the feasibility study there and are excited about the opportunity with BaRupOn and continuing discussions with them. As we said in the prepared remarks, we are evaluating the start of the licensing process, assessing project timelines, and working toward early-stage product development activities. At this time, we don't want to put a definitive timeline on any of this because discussions are ongoing, but we are discussing initiation of the licensing process. Given where we are with the U of I project, we still have a few years and time is on our side, but we would look to move as quickly as possible. Hopefully, in the coming quarters we'll have additional updates.
Our next question comes from Adam Kelsey with Titan Partners.
Great. Plenty have asked and answered already, so just 2 quick ones for me. I know you already touched on the NRC process, but it's obviously a major near-term driver for the stock. I'm curious if there are any upcoming visible signals or checkpoints between the major milestones that would demonstrate the NRC process remains on schedule.
Adam, yes. I think there are a couple of different milestones we're evaluating. Per the NRC's public schedule, an environmental assessment is expected in February 2027 and a safety analysis is slated for September 2027. Those are two major milestones, but they are not the only ones. The review is an iterative process: we're currently working through audit questions, receiving questions from the NRC, and providing answers to address areas where they want more completeness and clarity. The two milestones I mentioned are important, but we'll continue engaging with the NRC throughout the process. Ultimately, the NRC's timeline aligns with our expectation to begin construction in the second half of this year, and based on other construction permit applications by public and private peers, there may be an opportunity to compress the licensing timeline relative to the NRC's public schedule.
Great. And any additional insight on where you sit in terms of their staff bandwidth or prioritization?
Just based on conversations we've had internally with our NRC licensing team, I mean, we have not heard any issues with regarding staffing. I think we're continuing to engage with them quite frequently. And so I don't think we have yet to see any instances where staffing has prevented continued engagement with them. I mean we've been engaging with them pretty actively since June, as I mentioned earlier, answering some of their audit questions and things like that. And we've actually been having ongoing weekly meetings with them and supplementing that with additional interactions as necessary to close some of any gaps that are identified. So yes, I think it's been pretty constructive dialogue with them thus far.
Our next question comes from Sherif El Elmaghrabi with BTIG.
First question, STS gels pretty nicely with some of the work you're already doing in fuel, and you've touched on how you might look to grow your fuel footprint. But when it comes to M&A and Kronos, how are you thinking about strategic opportunities that might help get Kronos built and commercialized?
Sure. Sherif, when we think about commercializing Kronos, there are many aspects. The acquisition of STS adds several key capabilities. The STS team has decades of experience supporting the industry and includes people who have operated reactors. Having those capabilities in-house helps with projects such as building reduced-scale mockups of Kronos in our Oakbrook demonstration facility, where plans are advancing. That expertise supports both operations-related work and other development activities. Fuel is integral to deploying future commercial units and to our first-of-a-kind unit and DOE program evaluations. STS has strong relationships with national labs, the DOE, and the NNSA, which could benefit us. STS also has experience handling spent fuel and transporting fuel across the cycle. All of this experience can help not only with future commercial deployments but also with advancing Kronos development by enabling support across these areas.
And then... A process question that would be helpful for my understanding, which might make it to James' question. But if I start a Kronos reactor on conventional fuel and later switch to HALEU, is there any power plant retooling associated with that? Or is that just a matter of dropping in the new fuel?
So unfortunately, James got kicked off the call, but our understanding is based on conversations with the technical team that we really could just plug and play and remove the LEU+ fuel and replace it with HALEU fuel. And we would not need a redesign of the KRONOS MMR design. So I think that's really, really important is that we can do that without redesign and really provides us the flexibility to not only use fuel as commercially available today, but once HALEU is available and economically viable to use, we could basically plug and play.
Our next question comes from Christopher Souther with Truist.
Great to hear about the advanced discussions with the project developer and AI infrastructure company. Is that something you think we might get more clarity on this year? I just wanted to level set, I guess, on how intense the conversations are and where we see them evolving in the near term?
Yes. I appreciate the question, Chris. I think there are two elements to this. First, there's the opportunity with a potential strategic partner and a data center developer for their planned multi-gigawatt pipeline. We're excited about that potential and have been advancing discussions with them. Near term, the things to look out for would be a potential framework agreement that outlines the relationship we discussed. There is no way to guarantee timelines, but that framework could include milestone investment opportunities tied to key value-creating commercial milestones. Initially, I would look for a framework agreement, and from there we would aim to make much more progress toward definitive agreements, which could include joint development agreements for specific sites. We envision a number of development milestones that would come before potential milestones tied to firm commercial purchase orders. Those development milestones could include joint development agreements, securing sites, initiating the NRC licensing process, and site characterization and drilling. Those actions would demonstrate partnership and progress ahead of firm purchase commitments and definitive agreements. Separately, as we noted in our prepared remarks, we are evaluating potential opportunities with an AI infrastructure company and another nuclear project developer. We could be evaluating joint opportunities among the three parties, which is exciting given the credibility and unique experience each company brings. In the near term, look out for things like a letter of intent if we can continue to advance discussions.
Got it. That's super helpful. How should we think about you entering the NRC process and upcoming construction as catalysts for customers who are looking for proof of execution and derisking of future commercial developments? Are you seeing increased inbound interest or credibility around being able to enter that process with a real project that you will begin constructing in about a year?
Yes. I can tell you absolutely. The answer is absolutely. We've gotten direct feedback after we submitted the construction permit application and it was accepted for review. We've received direct feedback from several potential customers for opportunities we're working on, and they view NANO as very credible because we're the first, as we said earlier, microreactor developer advancing and building a full-scale commercial unit. It is technically a research reactor, but it will be a full-scale 15-megawatt electric unit. Just by that alone, given where we are in the licensing process, it is viewed very favorably. Complementary to that, we've also gotten direct feedback regarding the acquisition of STS and having the in-house capabilities not only to transport the fuel, but also to have a clear plan for spent fuel and people in-house who have those capabilities. So yes, it's something we're very excited about. We've already seen growing interest, whether from mining companies or even military-related opportunities. There has been specific mention that we are in formal NRC licensing and there appears to be a direct path to a commercial license, and that a commercial license will be very achievable once the U of I project receives its operating license. So yes, I think we're very excited about our progress and these opportunities.
Thank you. This now concludes our question-and-answer session. I would like to turn the floor back over to Jay for closing comments.
I want to thank everyone again for joining us on today's call. We are very grateful for your continued support, and we have never been more excited for NANO Nuclear's future. We look forward to additional progress and updates in the coming quarters. Have a great evening.
Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines, and have a wonderful day.