NANO Nuclear Energy Inc. (NNE) Q3 FY2025 Earnings Call Transcript & Summary

Greetings, and welcome to the NANO Nuclear Energy Third Fiscal Quarter Financial Results and Business Update Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Matt Barry, Director of Investor Relations and Capital Markets. You may begin.

Thank you, and good afternoon, everyone. Joining me on the call today are Jay Yu NANO Nuclear's Founder, Chairman and President; our CEO, James Walker; and CFO, Jaisun Garcha. Please note that today's earnings release and slide presentation to accompany today's webcast are available on our website. Before moving ahead, I'll quickly address forward-looking statements made on this call. Listeners should note that today's presentation will contain certain forward-looking statements about NANO Nuclear's future plans and potential milestones that are made under the safe harbor provisions of the applicable federal securities laws. Words such as aim, may, could, should, seek, expects, intends, plans, believes, anticipates, hopes, estimates, goal, and variations of such words and similar expressions are intended to identify forward-looking statements. These statements are based upon many assumptions and estimates made by management, all of which are inherently subject to significant risks, uncertainties and contingencies, many of which are beyond NANO's control. Many of these are shown on the slide you see here. You are cautioned that actual results including, without limitation, the results of our microreactor development activities, strategies and other operational plans, including the results of our regulatory acquisition and research and development initiatives, as well as future potential results of operations or operating metrics and other matters about the future, which may be discussed may differ materially and adversely from those expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the risks factors and other disclosures contained in NANO's filings with the Securities and Exchange Commission, including the risk factors and other disclosures in our most recent Form 10-K and other filings with the SEC, including today's Form 10-Q filing, all of which are or will be accessible on the Investor Relations section of NANO's website as well as the SEC's website. You're encouraged to review these disclosures carefully except to the extent required by law. NANO assumes no obligation to update statements as circumstances change. 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. NANO Nuclear continues to benefit from the global nuclear renaissance driven by several long-term sustainable growth trends and significant regulatory tailwinds. These include growth in AI Data centers, industrial reshoring and the broader electrification driving a significant need for clean and reliable power. Energy sustainability, energy independence and climate mandates require reliable 0 emissions energy. Unprecedented bipartisan legislative and policy support, and most importantly, broad recognition that advanced reactors will be crucial to future clean energy infrastructure. As we look at our competitive position in the advanced nuclear space, our January 2025 acquisition of KRONOS MMR microreactor has accelerated our trajectory, positioning us as a North American leader in the race, the microreactor commercialization. Our team continued to build upon a strong start to 2025 by delivering another solid quarter of progress, highlighted by several strategic milestones in advancing our KRONOS MMR towards construction, demonstration, licensing and deployment in the U.S. and Canada. We're confident that KRONOS' proven high-temperature gas reactor design, significant R&D investment by its previous owner, and numerous patents validate its high technology readiness level, differentiating it from our competition. We also continue to advance our commercially focused, vertically integrated strategy to derisk microreactor development and deployment and enhance our competitive position. Before founding the company, our team spoke to key industry stakeholders at the DOE, NRC and National Labs, as well as leaders in various companies with exposure to the nuclear fuel cycle. Our conversations confirmed our belief that the next generation field will be significant bottleneck for advanced reactors, and having access to advanced fuel will be critical to successful development and deployment of our micro reactors. We've since entered in collaborations expanded our internal capabilities to address key bottlenecks, including enrichment and transportation of next-generation fuel, and continue to evaluate attractive opportunities to further derisk our fuel supply chain. Equally as important, more institutional investors are recognizing our long-term value proposition. As previously announced in late May, we closed on a private placement for net proceeds of $99 million, including primary participation for fundamental institutional investors. This private placement not only strengthen our balance sheet and expanded institutional ownership, but more importantly, it's enabling us to accelerate development of our KRONOS MMR and take advantage of attractive opportunities to derisk our nuclear fuel supply chain and deliver shareholder value. With a stronger balance sheet and growing support from long-term oriented institutional investors, we believe we're well positioned to capitalize on the broader macro trends driving demand for advanced nuclear solutions. I would like to now provide more color around the secular tailwinds we are experiencing that shaped our original vision, trends that are now increasingly recognized across both the industry and investment community. Nuclear energy has emerged as the leading alternative clean source of baseload power, well positioned to deliver both reliable and 0 carbon emission output. Our team identified early on that achieving net zero targets in many countries will be virtually impossible without significant expansion of nuclear capabilities. Fossil fuels such as natural gas, oil and coal are capable of providing consistent base low power. They can at times to be constrained by geography due to the need for continuous refueling and are unable to meet the standards set by global climate mandates and decarbonization goals. Renewable sources like wind, solar and hydroelectric will play an important role in the global energy transition. However, each faces its own limitations. Their effectiveness is often geographically dependent on favorable natural conditions. And in this case of wind and solar, they struggle to provide stable and around the clock based low power. More and more countries and companies are placing a premium base load capable energy sources, which offer a high capacity factor and are not dependent on local climate or geography, leaving nuclear energy as a clear winner. As a result, there is a growing global commitment amongst countries, leading institutions and the world's largest energy users to triple nuclear capacity by 2050, solidifying growth in nuclear energy as a secular trend for the coming decades. Several of the world's largest tech leaders are rapidly expanding their nuclear energy capabilities to address their growing needs for scalability, clean and reliable baseload energy to enable projected growth in their AI data centers. Over the last 12 months, several major tech leaders and now substantial partnerships are planned to secure nuclear energy to support their data center projects, highlighting the importance of nuclear energy, empowering the future centered around AI. The combination of expected growth in AI data centers, the reshoring and industrial supply chains and the electrification of various industries is prompting analysts to raise their projections for U.S. electricity consumption through 2030. Goldman Sachs projected demand for power to rise at approximately 2.4% [ ABR between ] 2022 to 2030, a significant increase over the prior decade where U.S. power demand was essentially flat. Notably, more than 1/3 of the [ expected ] increase through 2030 was projected to be driven by data centers, estimated to comprise 8% of the U.S. power by 2030 versus 3% in 2022. The growing reliance on nuclear by major tech companies have reinforced the strategic importance, not just for clean energy, but for international competitiveness. Politicians at the highest level of the U.S. government has consistently agreed on the strategic importance of nuclear power in addressing national security, energy independence, climate goals and global leadership in AI. This has resulted in nuclear energy emerging as one of the [ few ] topics that has garnered broad bipartisan support in Washington and notable achievements in today's polarizing political environment. Over the past 7 years, nuclear energy has benefited from consistent legislative and executive support across both Republican and Democratic administrations, reflecting durable bipartisan recognition of the strategic importance. Legislative and executive actions have focused on streamlining regulatory processes, reducing licensing time lines and costs, establishing incentives for nuclear development and deployment, supporting the build-out of domestic fuel supply chain and accelerating commercialization of advanced reactors through targeted initiatives. In May 2025, Trump administration issued 4 executive orders representing an unprecedented level of federal support for nuclear energy, signaling a new phase of regulatory momentum. In addition to several actions aimed at accelerating the development and deployment of nuclear energy in the U.S., with a notable emphasis on the development of advanced nuclear technologies, the directives set a national [ adjective ] to quadruple nuclear energy capacity by 2050. In combination with the strong foundation of bipartisan legislative and prior regulatory actions over the past several years, we believe these policy shifts are highly supportive of our strategy, and it will help accelerate development and deployment about micro reactors and nuclear field capabilities. As we look ahead, we have never been more excited for the future of our company and more confident we have the right team to execute our vision. Before turning over the call to our CEO, I'd like to provide some insight into NANO Nuclear's corporate culture, which we believe is helping to drive our efforts and accomplishments. For years, nuclear energy has been dominated by big energy players, big bureaucracy and strong academic focus. We are now working to change this. We are now pursuing a commercially focused, vertically integrated strategy in a nimble and entrepreneurial way. We went public early to capture the industry's tailwinds. We saw and tap into the public market enthusiasm rather than relying on government grants. We're relentlessly driven, and we are laser focused on progressing our programs with a view to ultimately commercialize following regulatory licensing. Our team members who have joined us from government and academic roles find our approach motivating and very exciting. We believe this culture differentiates us from many of our competitors and is a competitive advantage in the micro reactors. With that, I'll hand the call over to James Walker, our CEO, who will provide an update of our business and additional color around our strategy.

Thank you, Jay. NANO delivered another strong quarter of progress, highlighted by several strategic milestones and collaborations during the quarter and in recent weeks. First, we advanced our patented KRONOS MMR energy system towards construction, demonstration and licensing with the U.S. Nuclear Regulatory [ Commission ] or NRC and deployment of our first reactor prototype at the University of Illinois Urbana-Champaign or UIUC. In April, we executed a strategic collaboration agreement to build out our first KRONOS MMR at the UIUC. We also received an approved fuel qualification methodology topical report from the U.S. NRC for the project. Following the quarter, we executed a master services agreement with AECOM, a global infrastructure leader to support site-specific engineering, environmental analysis and regulatory planning at UIUC. Each of these achievements are essential steps ahead of our planned construction permit application to the U.S. NRC. At the same time, we remain focused on resuming 4 more licensing activities of the KRONOS MMR in Canada, where KRONOS is the first microreactor to have completed a phase 1 review with the Canadian Nuclear Safety Commission. We're optimistic the progress we're making in licensing KRONOS with the NRC will streamline and support parallel advancement through Canada's licensing process. With the potential of being the first commercial micoreactor in the U.S. to successfully file for a construction permit application and the first licensed microreactor in Canada intended for commercial deployment, we believe KRONOS positions us as the leader in the North American microreactor race. Secondly, in terms of new collaborations, NANO signed an MOU with UrAmerica, a private exploration company in Argentina, to explore strategic development across Argentina's uranium fuel supply chain. We believe this collaboration supports our strategies to secure the necessary capabilities to derisk and decentralize our fuel supply chain. Third, as Jay mentioned, our successful capital raise during the quarter bolstered our balance sheet, positioned us well to accelerate development of KRONOS and take advantage of attractive opportunities to enhance our vertically integrated business model. In line with this plan, we acquired a 2.75 acre land and building package in Oak Brook, Illinois, to provide engineering, R&D and manufacturing support for KRONOS' development. Notably, we expect the facility to support our collaboration with UIUC, while also serving as a regional demonstration facility. Equally as important, we're actively pursuing commercial negotiations with several customers focused on AI Data Center projects while also evaluating exciting early-stage opportunities for remote projects or communities in the U.S., Canada and abroad that value reliable, clean nuclear energy. And fourth, recent personal additions, product development wins and broadening institutional ownership validate our strong competitive position. We continue to attract and appoint high-caliber talent to key leadership roles, highlighted by the appointment of former Texas Governor and U.S. Secretary of Energy, Rick Perry, as Chairman of our Executive Advisory Board; Seth Berl, PhD and Global Chief Technologist at Intel to our Board of Directors; Vice Admiral Charles Leidig as a distinguished 39-year Navy veteran as Chairman of our Executive Advisory Board for Naval Nuclear initiatives. We also hired over a dozen engineers to support the advancement of KRONOS through our licensing process. And we're planning on hiring up to 60 engineers, researchers and support staff at our new Illinois facility. In July, we successfully advanced our proprietary annular linear induction pump or ALIP technology with its assembly on a test loop and integration to a controllable test setup for variable design validation of our Westchester, New York demonstration facility. We believe our ALIP technology can enable the development of next-generation reactors utilizing molten salts or liquid metals, and advancing ALIP through SBIR phase 3 process allowed us to mature the system extensively, potentially opening the door to commercial sales activities later this year or in 2026. In addition, our recent inclusion in Solactive's Global Uranium and Nuclear Components Total Return Index and by extension, the Global X Uranium ETF marks another exciting achievement. Notably, NANO's inclusion increases our exposure to institutions, seek a broad participation in the growth of the uranium and the nuclear industries, while also validating our growing significance in the advanced nuclear industry. In combination, each of these key personnel additions and wins underscore the strength of our competitive positioning and long-term strategic vision. And at the center of that vision are microreactors, which we believe are the future of nuclear energy. Traditional large-scale reactors have been a key source of clean, reliable baseload power over the past several decades that have come with significant cost and [ siting ] challenges. They require substantial on-site construction, take many years to permit and don't benefit from modularity or factory-based manufacturing in a large scale, often leading to significant cost overruns. In addition, due to their size and safety risk profile, they're unable to co-locate with customer infrastructure, scale effectively or truly benefit from economies of scale. While smaller modular reactors or SMRs offer real promise and potential to address several of these challenges, several open questions remain, including how much of the design can truly be modular how far mass manufacturing can be applied and whether they can scale cost effectively or be deployed directly at customer sites with reduced safety terms. This is where our portfolio of microreactors led by KRONOS offer compelling solutions. They're designed to be fully modular, assembled easily on site and can scale alongside demand. We're also designed to benefit from economies of scale, driven by mass manufacturing and factory fabrication. And our designs beyond KRONOS have another substantial advantage of being portable. Microreactors significantly reduced safety risk by utilizing advanced fuels and substantially lower fuel volume and also feature inherently safe designs, which open the door to colocation at customer sites, whether that's a data center, a mining site or a military base. Most importantly enable clean, reliable baseload power with our complex on-site construction, [indiscernible] permitting time lines and provide the option to serve remote projects off the grid. One of the strongest examples of how we're turning that vision to reality is our lead project, the KRONOS MMR, a stationary modular system that combined a proven high-temperature gas reactors design with high [ technical readiness ] meet the growing demand for co-located resilient and scalable power. KRONOS is differentiated from the competition with its high technological readiness rooted in a proven high-temperature gas reactor design that's been successfully used around the world in both research and commercial settings. We believe this global track record gives us a meaningful advantage, particularly when it comes to licensing where substantial historical data and familiarity with the reactor type could support a more streamlined regulatory path in both the U.S. and Canada. KRONOS is currently advancing in both the U.S. and Canada's licensing process. In the U.S., our team is targeting submission of a construction permit application to the NRC for our first prototype at the UIUC toward the end of this year or early 2026, and could be the first commercial microreactor in the U.S. to reach this critical milestone. In Canada, KRONOS is the first microreactor to formally enter the Canadian Nuclear Safety Commission licensing process, validating the maturity of its technology and we're working to resume 4 more licensing activities that were previously underway. Prior to our acquisition of KRONOS and other technology out of bankruptcy for less than $10 million in January 2025, we believe more than $120 million was raised for the development of KRONOS by its previous owner. Moreover, KRONOS is supported by numerous issued pending or published patents. We believe each of these factors derisk our development time line will position us well to accelerate construction, licensing and deployment. With 15 megawatts electric and 45 megawatts thermal output, KRONOS is ideally suited for high-growth markets like data centers, where many units can be stacked, colocated and deployed modularly, allowing us to scale efficiently while offering customers the benefit of energy resilience, and the ability to site power directly where needed. Notably, KRONOS is as large as reactor can be while still remaining fully modular and has been specifically designed to fully leverage the benefits of economies of scale through modularity, mass production, factory fabrication and large-scale deployment. Ensuring the successful deployment of KRONOS requires more than just reacted design, which is why we have made it a strategic priority to focus on securing key stages of the nuclear fuel supply chain and is why vertical integration is a key pillar of our approach. Our team recognized from a very early stage that the largest bottlenecks to deploying advanced reactors isn't the reactive technology itself, but the fuel. As a result, we made the decision to gain exposure to areas like enrichment through our collaboration with the related parties called List Technologies or LIST. List owns the only U.S. origin and patented laser [ Richman ] technology, which we believe offers several major advantage over traditional methods such as gas [ diffusion ], centrifuges and traditional laser enrichment solutions. This was also selected as 1 of the 6 prime contractors under the U.S. DOE and EU acquisition program, which provides a total of $3.4 billion across all such contractors over a 10-year period to strengthen domestic nuclear fuel supply chains to support the deployment of advanced nuclear technologies. This selection underscores recognition that its patented laser-focused [indiscernible] technology could play a critical role in securing the nation's future fuel supply for next-generation reactors and we are pleased to contribute to this important initiative as a key subcontractor. We view nuclear fuel transportation as a more critical gap in the domestic supply chain, particularly for advanced nuclear fuels, where commercial scale capabilities don't exist today. To address this, we've hired former UPS executives to lead our subsidiary, Advanced Fuel Transportation, Inc. and we've exclusively licensed a patented high-capacity halo fuel transportation basket developed by 3 major U.S. National Nuclear Labs and previously funded by the DOE. To support advancement of this technology, NANO has hired GNS, a leader in nuclear waste management to manufacture and optimize [ halo ] transportation system solutions based on our fuel transportation basket design. As we look ahead, we're actively exploring additional opportunities, whether through collaborations or strategic M&A to further expand our vertically integrated capabilities. Expanding our exposure to additional stages of the nuclear fuel cycle will not only enhance our potential commercial capabilities and strengthen our internal supply chain. It also aligns closely with where the U.S. government and the DOE are focused in terms of funding, infrastructure and national energy security. We expect progress in the areas to offer potential for near-term revenue generation in parallel with our core microreactor development. We also believe this integrated approach gives us leverage to capture upside across multiple verticals as the broader advanced direct-to-market grows. Before turning the call over to our CFO to provide our financial highlights for the quarter, I'll quickly reiterate why we view NANO Nuclear Energy as a compelling investment opportunity. Our flagship reactor, the KRONOS MMR, has a high [indiscernible] readiness backed by a [ well-reactor ] with decades of operational precedent and is [ most ] leader in the North American microreactor race. With data center growth and climate mandates, accelerating demand for clean, reliable baseload power, the opportunity for advanced nuclear has never been stronger. We've taken a vertically integrated approach to derisk reactor development, strengthen our competitive position and provide additional exposure to growth in the advanced reactor industry. This includes a strategic related party collaboration that could provide access to a differentiated low-cost enrichment solution for advanced fuels. We're also benefiting from historic bipartisan support [ in Washington ] with growing federal support for nuclear innovation and fuel infrastructure as well as growing support globally, which we believe should benefit advancement of our microreactors. We have world-class technical and regulatory teams with a nimble commercial strategy who are laser-focused on execution. And with a strong balance sheet and a clear access to capital, we believe we're well positioned to execute, not just in deploying reactors, but in capturing value across the broader nuclear energy sector. I'll now turn the call over to our CFO, Jaisun Garcha, to discuss our Q3 financial highlights.

Thank you, James. I'll now provide a summary of our year-to-date financial performance. The takeaway message here is simple. We have a strong balance sheet and are prudently deploying investor capital to achieve key corporate milestones and drive value for our shareholders. Year-to-date loss from operations was $35.8 million, an increase of approximately $28 million from the comparable 9-month prior year period. The increase primarily driven by a $19 million rise in G&A expenses, reflecting higher equity-based compensation, professional fees and personnel costs to support advancements of KRONOS and our other microreactors. R&D expenses also increased by $8.5 million due to higher development costs, equity-based compensation and personnel costs for design and analysis of our microreactors. Year-to-date net loss totaled $32 million, up approximately $24 million from the prior year period, reflecting the increase in R&D and G&A expenses just mentioned, partially offset by an approximately $4 million increase in other income from higher interest income on a larger cash balance. Net cash used in operating activities increased by approximately $9 million to $14.7 million, driven by a higher net loss, partially offset by an approximate $17 million increase in equity-based compensation. Turning to the balance sheet. Our overall cash position substantially increased during the period, ending the period with cash and cash equivalents of $210.2 million, an approximate $92 million increase from the end of our second fiscal quarter. The sequential increase was primarily driven by $99 million in proceeds following a May 2025 private placement. We expect these proceeds to enable further advancement of KRONOS development and licensing in the U.S. and Canada while also supporting strategic M&A activities to enhance our vertical integration and provide initial revenue generation. As we continue to position NANO for long-term growth, we also took steps during the quarter to further strengthen our financial flexibility. Following our recent shelf ability, we filed our first 3-year universal shelf registration [indiscernible] which included an at-the-market or ATM facility. It's important to note that as of today, our registration is still not effective, and we are unable to comment on the timing in which it may become effective. Consistent with the rationale of our shelf, we established the ATM when it was procedurally efficient to do so while recognizing that the ATM program, which has a relatively low cost of equity capital, is designed to support any near-term capital needs while also supporting our long-term growth. These actions align with our disciplined capital management strategy to expedite our long-term growth and provide the flexibility to take advantage of favorable market conditions if they arise. As institutional interest in our company continues to grow, we believe it's important to have flexible and efficient capital tools in place to support advancement of KRONOS. We remain focused on expanding our institutional shareholder base and we're encouraged by the increasing interest we're seeing from long-term oriented institutional investors who recognize the strategic value of our business. We believe establishing the ATM facility is consistent with market practices for similar companies and reflects prudent capital planning as we seek to build long-term institutional support. With that, I'll now turn the call over to the operator to open up the call for Q&A.

We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of [ Jeff Grant ] with Northland Capital Markets.

Wanted to start first on the progress in Canada to license there. I think the press release referenced some potential, I guess, streamlining or parallel advancement through Canada's licensing process. So I was just hoping to get a little more color on what you guys view kind of reengagement there looking like and any potential time lines you'd like to put out.

Sure. I'm happy to pick up this question. So Canada is a major focus for us at the moment. When we picked up the reactor system, the MMR, it has already gone through the phase 1 in Canada. So the intention was to pick up the project exactly where it had left off. And what that's involved so far is taking the holding entity of that project out of bankruptcy and putting it into our possession. And we've almost completed that legal process now. But the benefit there is that, that enables us to move straight into the phase 2 of the licensing process with the [ CNSC ], the Canadian federal nuclear regulator. And so that's been 1 aspect to it. The other -- there's been 3 real aspects to the Canadian project [indiscernible] . The entity that we needed to take out of bankruptcy, so we could move into the phase 2, and the other part of it has also been the collaboration with the Canadian Nuclear Laboratory, CNL. So they have allocated us land at Chalk River. And they've already picked out the spot and it's been allocated by the province. Now we've been working with them in the past couple of months about putting together all of the legal paperwork, plans, financial demonstration that we're able to pull this project often. We're now moving into the final stages of final contractual negotiations with CNL for that land. And the final component to this as well is that the Canadian government has a significant interest in this project as well because they have a number of territories that have a lot of communities with that subset of remote diesel. This is the most advanced reactor system is going through the licensing process in Canada that could actually service these areas, I think, which number about 300. So the Canadian government is looking to involve their Strategic Innovation Fund, or SIF, in the investment of this project. So it would potentially be a collaboration with the Canadian laboratories, the Canadian government going through a regulatory process, which has already been started and progressed quite comprehensively. So all of these different assets we're putting it together. This hasn't been publicly announced yet because these negotiations and arrangements are still ongoing. But this is all the work that we've been doing over the past several months with CNL, Canadian government, SIF and CNSC.

Yes. This is Jay. Jeff, thank you for that question. This also positions NANO Nuclear as a North American provider of advance nuclear technologies to once we reestablish Canada. This also separates us from, I would say, other U.S. reactor company, microreactor companies.

Thanks, Jay. Yes. That's really helpful. Shifting gears for my follow-up on ALIP. You guys mentioned some potential commercial sales opportunities there that you might be pursuing. Can you just educate me on what the next steps to commercialize that? And what kind of market opportunities those might entail?

Sure. So at the moment, I think one of the focuses of the ALIP project is to complete the SBIR phase 3 process with the DOE. And what that will enable us to do then is become the default contractors for supplying this type of technology where needed by the government. And once that is completed and we've gone through that project essentially validating the commercialization of it and we were obviously in several discussions with potential customers to buy this. And where this could be potentially useful on both the [ vision ] and the fusion side of things. So on the vision side of things with advanced reactors, if you take any type of reactor that uses sort of an advanced columns like [ lead ] or salt, molten salt, that kind of thing, you need a fairly comprehensive pump system to be able to move that kind of heavy coolants around the system. If you can electromagnetize the coolant and then move it around [indiscernible] you can significantly reduce the size of the reactor and the complexity of it. So effectively saving quite a lot of cost savings, especially on some of these larger small modular reactors that utilize more heavy coolants. So certainly, the -- on the vision side of it, those are very much in our crosshairs with regard to sales. And there's already been some initial discussions with some of the larger manufacturers about this technology being utilized within their systems. And on the fusion side of things, they have a need to move around a lot of heavy materials around the fusion reactor. Again, the complexity involved in a pump system and moving this kind of thing is very exact. And to risk of fusion technology, it could benefit substantially from an electromagnetic system, which has a lot more control over it than pump system, which also because of the size of it, if it was to break in the same sort of thing in a conventional [ fission ] reactor, you effectively have a reactor that's rendered impotent or inoperable. So there's 2 sides of it. And there are other applications that are being looked at, at the moment. There are some discussions at the moment with space agencies about how AI could be utilized in space to reduce the size of components that are being actually delivered into space. I would say the -- these discussions might be a bit further out because the space industry is a bit more unpredictable in terms of development. But it's certainly something we're examining at the moment with a couple of space agencies.

Those are really helpful detail. I appreciate all the color. I'll turn it back. Thank you for the time.

Our next question comes from the line of Sameer Joshi from H.C. Wainwright.

I just had a question on cash usage during the remainder of 2025 to 2026. I know I think James mentioned the expansion and hiring around 60 personnel, engineering and rocketing personnel. Or should we see the operating expenses ramp from here over the next 18 months? Part of the reason is, I think, most of the GAAP numbers that you show are garbled by the stock comp and other noncash items. So just if you can get an idea of cash expenses over the next 18 months, that would be good.

It's Jaisun on the call for this question. Thanks for the question. We mentioned in our MD&A that we estimate our cash burn going into the next 12 months to be around $40 million. So it will be largely as James mentioned in his description, hiring staff and personnel as well as the other support costs to keep the operations going. We will also be updating that as things change. But currently, that's what our current projection is over the next 12 months.

Okay. And then you're targeting the construction application for KRONOS, I think later this year or early 2026. And given the executive order of 18 months or any reactor of any type, do you expect by 2027 kind of time frame to receive this approval? Or is this something different?

It's actually a very good question. So we would love to aim for it to the construction permit application by the end of this year. At latest, it will be completed in Q1 next year for the construction permit. Typically, permits like the 18-month executive order mandates, that actually applies to all license applications no matter what they are. So whether it's formal licensing process for a reactor, site license or even a construction permit. But obviously, each of these carry different levels of work for the NRC and have different time lines that can be expected. We would typically expect some of the license application or sorry, construction permit application of this type to take around 12 months' time to be approved and issued. And at that point, obviously, we can start doing groundwork, concrete pouring, all of the above necessary initial steps that can go in towards the construction of a reactor system. Just to give an example, I think there's only other 1 company that's progressing at the moment, along with construction strategy, and that's [ Kairos reactor ]. And they had a much more novel reactor design, and there was approved within a 6-month time frame. I would expect that ours would be slightly less or at least commensurate with that. But the 18-month, I think that was more geared towards licensing times for new reactor systems than just construction [indiscernible] I would hope that it would be a bit lower, but we were obviously prudently estimating for between 12 and 18 months, 18 months of the complete reach, but I don't think it will take that long.

And then just your strategy of vertical integration. You already have the transportation part. You have sort of -- you are also participating in the fabric fuel side of things. So when you are saying that you will be targeting a further integration, are we talking about additional fuel processing, enrichment, fabrication, technologies or supply chain partners? What should we think about in terms of your targets?

So it's a good question actually. So when we were building up the company and we were advancing the reactor systems, we obviously realized that the big bottleneck of success for any reactor system is the fuel. And usually, that focuses everybody up on the enrichment part because the major components of the fuel cycle to get it to that point. And certainly, the biggest cost component of actually taking natural grade uranium ore and turning it into a user product that can go into a reactor system. But there's many other components that go along with it too. So mining, milling, conversion or all upstream of the enrichment process. Now NANO has obviously invested very heavily into this technologies. It is a related [ policy ] transaction. It is a separate company for legal purposes and proliferation reasons, really confident of that technology. Everything before that, NANO is actually examining how to involve itself in to derisk that upstream part of the supply chain. And that will include things like conversion, mining and milling. And the executive team at the moment is looking at all the different aspects of how NANO can be involved in that. So again, there's no been no public disclosures yet because nothing has been solidified by contractual arrangements yet. But I would expect in the future that NANO's vertically integrated strategy with regard to fuel supply chain will inevitably lead to greater involvement in that upstream process, so mining, milling and conversion, everything that precedes the enrichment. I think everything downstream of enrichment, deconversion is certainly possible. I don't believe we have any anticipation about being involved in the fabrication of [indiscernible] fuel because we do already have a partner that has substantially progressed in that department that we're relatively happy with. But I think it would be very much in NANO's interest to derisk itself with particularly involvement in things like conversion where even the enrichment issues get solved in the U.S., that will be a major significant bottleneck to even enrichment technology succeeding because it needs feed grade, whether it's centrifuge or lasers, it needs [ U.S. 6 feed. ]

Our final question comes from the line of Subash Chandra with Benchmark.

Just curious, did you apply for the DOE advanced reactor pilot program? And then secondly, can we read anything into [ Radiance ] acceptance into that program, I mean, as another sort of high temp gas [indiscernible] comp. And breeds like that program is meant to deploy these technologies quickly. Is that -- would that be a net benefit to KRONOS?

I was going to say we did not apply for that position of the DOE thing. We already have a license site that we're actually going to be building a reactor at. If we were to apply and be successful for the DOE program, that actually result in much higher costs to build a new reactor on DOE land, which would actually not even give us a commercial reactor. It's actually a bit when we actually really went through the opportunity in detail, it was only negatives for us, greater costs, no commercial benefit, it would slow us down. It would divert personal resources. And also, the time lines that were involved, we didn't really estimate that it was feasible for any reactor system to actually be critical by next year. And even if they were, that wouldn't even give them a commercial route. So I think you've probably noticed as well that a lot of the larger companies also did not put in applications very likely for the same reason. Now [ Radian ] is an interesting 1 that you brought up because I do believe they have a worthwhile technology, not just because it's a high-temperature gas [indiscernible]. But they have a very reasonable team and they have a proven out technology in the [indiscernible] us. Now we don't regard Radian as a competition because their reactor system is much smaller than us, whereas we're catering towards larger systems like industrial operations, AI centers, data centers. Their system, their high temperature gas reactor is a 1-megawatt system, much smaller catering towards much more remote locations that we're aiming for. So there's no market overlap there. The mystery will be why they actually [indiscernible] for this at all? Because obviously, even to source things like nuclear-grade graphites, fabricating reactor pressure vessel puts them outside of the DOE mandated time line to criticality already. So we'll see how it pans out. Our guess is as good as yours, but there was certainly nothing but disadvantages as applying to this program.

Yes. And I would like to add also, we're very supportive of these type of programs by the Department of Energy, but this wasn't right fit for us. It wasn't a lack of interest. It was just that it fit our business model because we currently have a site already. We're looking to commercialize rapidly. So that was the main reason. And we wish all these reactors luck, and we're looking out for them and we're cheering for them because in the end, if they win, NANO wins.

Yes. Great. Good color. And then a question, I guess, on the [ graphite ], James, you mentioned. So I guess is that part of your containment to? Would it be graphite, graphite [indiscernible] , something like that? And how would you sort of address maybe the supply chain there?

This is actually a very excellent question because as we're getting -- the technology is very much developed. It's a high [ TRL ] level. We don't really have any risks on that front with regard [ knowing this will work high-leverage ] gas reactors have worked for many decades. The issue is we've already touched upon the fuel. Other really important components that are vital to the success of the reactor involve things like new [indiscernible] graphite and things like the reacted pressure vessel. Now for nuclear [indiscernible] graphite, really, there are only 3 vendors that we can think of globally that could produce the necessary -- the graphite of a certain standard that can go into reactors. I think I believe 2 are in China or 1 in Japan. Now the capacity to actually produce enough graphite is there. What will need to be done as we progress here is that we've realized that we can build a core manufacturing facility in the U.S. to produce the vast majority of the components of the reactor system. But there are very specialist components which I don't think any reactor system or [indiscernible] company would be wise to undertake internally themselves, and that includes the graphite. Now we can obviously invest and put partnership agreements in place, and we're already in negotiations and discussions with suppliers for certain components. So we know we'll need to be sourced for the purposes of our reactor by experts with experience in these areas. The nuclear [indiscernible] graphite is obviously one of them. And the other component might be something like the reactor pressure vessel, which is a very exact fabrication technique that needs to be done by a very experienced steel manufacturer because it's an incredibly complex piece of material. I think those 2 components [indiscernible] would need to be outsourced to professionals and everything else, NANO intends to build a core manufacturing facility to assemble everything else we can internally, much more basic components that don't need as much experience or expertise can be outsourced to these other groups. But you can [ grade ] graphite, I think if you were to bring on a new capability anywhere else in the world, you would be looking at 7, 8, maybe 10 years' time to get up to a point where you're able to manufacture the graphite to a standard necessary to go into reactor systems. And it's probably not spoken about very much, but that is a very important aspect of any production strategy for reactor.

Yes. And James, to that point, so nuclear [indiscernible] graphite, which I imagine it's the suppliers have been going for the light water reactors for the most part. But does that need to be modified? And does that change the supply chain for high-temp gas reactor?

I wouldn't say it changed the supply chain [indiscernible] because already where graphite for reactor systems has already been sourced from those 3 vendors that we mentioned and they've tailored products beforehand. So it's essentially utilization of the same supply chain that the major differences will be the necessary capacity of those manufacturing operations. It will need to increase to meet the demand of manufacturing operations. But for things like high temperature gas reactors -- and look, I think there's already -- I think we can already view a sort of funneling of technologies within the reactor space. I mean, if I look at high-temperature gas reactors with [indiscernible] Energy, ourselves, [ Radiant ], just to mention 2 others, all of them are high-temperature gas reactor [ triton ] for a very specific reason, very proven our tech will know at work, and things like new scale water reactor systems, again, to navigate the complexity of reactors utilizing technology we need. I think more exotic reactor designs might stumble because the supply chains don't exist in a comprehensive way already. And that could be one of the factors that determines who gets to market -- or not even who gets to market first, but it's able to meet demand quickest. That could be an [indiscernible] factor into the success of certain reactor companies out there.

Great. I learn something new every time.

Thank you. This now concludes our question-and-answer session. I would like to turn the floor back over to Jay Yu for closing comments.

I want to thank everyone again for joining us on today's call. The interest and enthusiasm of our investors and the market participants is a big part of NANO story. And we're very grateful for the support we've received. We look forward to providing additional updates to you in the future. Have a great evening.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.