Nano Nuclear Energy Inc

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations of the unaudited financial statements and related notes included elsewhere in this Report. Data as of and for the year ended September 30, 2023 has been derived from our audited consolidated financial statements. Data as of and for the three and six months ended March 31, 2024 and 2023 has been derived from our unaudited consolidated financial statements appearing in this Report. This following discussion contain forward-looking statements, such as those relating to our plans, objectives, expectations, intentions, and beliefs, which involve risks, uncertainties and assumptions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Cautionary Note Regarding Forward-Looking Statements” in this Report.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations of the unaudited financial statements and related notes included elsewhere in this Report. Data as of and for the year ended September 30, 2023 has been derived from our audited consolidated financial statements. Data as of and for the three and nine months ended June 30, 2024 and 2023 has been derived from our unaudited consolidated financial statements appearing in this Report. This following discussion contain forward-looking statements, such as those relating to our plans, objectives, expectations, intentions, and beliefs, which involve risks, uncertainties and assumptions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Cautionary Note Regarding Forward-Looking Statements” in this Report.

Previous wording

We are an early-stage nuclear energy company developing smaller, cheaper, and safer advanced portable clean energy solutions utilizing proprietary reactor designs, intellectual property and research methods, illuminating our path toward a sustainable future. Led by a world class scientific and management team, envisioned within our business plan is a comprehensive engagement across every sector of the nuclear power industry, traversing the path from sourcing raw nuclear material and fuel fabrication to the illumination of energy through our cutting edge and advanced small modular nuclear reactors (SMRs, also known as microreactors). Our dedication extends further to encompass commercial nuclear fuel fabrication and transportation as well as nuclear service support and consulting services.

Current wording

We are an early-stage nuclear energy company developing smaller, cheaper, and safer advanced portable clean energy solutions, utilizing proprietary reactor designs, intellectual property and research methods, to develop technology and products that work towards a sustainable future. Led by a world class scientific and management team, we envision a business with comprehensive engagement within almost every sector of the nuclear power industry, from sourcing raw nuclear material, to fuel processing and fuel fabrication, and finally the deployment of our cutting edge microreactors. Our dedication extends further, to also develop into areas such as fuel transportation and nuclear service support and consulting services.

Previous wording

Our mission is to become a commercially focused, diversified and vertically integrated technology-driven nuclear energy company that will capture market share in the very large and growing nuclear energy sector. To implement our plans, since our founding in 2022, our management has secured certain connections within key U.S. government agencies, including the Department of Energy (“DOE”), the Idaho National Laboratory (“INL”) and Oak Ridge National Laboratory (“ORNL”), each of which are a part of the DOE’s national nuclear laboratory system. Our company also maintains important collaborations with leading researchers from the Cambridge Nuclear Energy Centre and The University of California, Berkeley.

Current wording

Our mission is to become a commercially focused, diversified and vertically integrated technology-driven nuclear energy company that will capture market share in the very large and growing nuclear energy sector. To implement our plans, since our founding in 2022, our management has secured certain connections within key U.S. government agencies, including the DOE, the Idaho National Laboratory (“INL”) and Oak Ridge National Laboratory (“ORNL”), each of which are a part of the DOE’s national nuclear laboratory system. Our company also maintains important collaborations with leading researchers from the Cambridge Nuclear Energy Centre and The University of California, Berkeley.

Previous wording

Over the next twelve months, we will continue to progress our development of two advanced nuclear microreactors, which we callZEUSandODIN, with estimated expenditures to be approximately $4 million. This allocation comprises approximately $2 million dedicated to the research and development of products and technology, with a specific focus on the refinement of microreactor technology and the fuel fabrication process. The remaining $2 million is earmarked for miscellaneous costs essential to propelling the progress of our microreactors, encompassing the support of current personnel engaged in executive, finance, accounting, and other administrative functions. We estimate that our microreactor demonstration work will be conducted between 2024 and 2026, our microreactor licensing application will be processed between 2026 and 2031, and our microreactors will be launched between 2030 and 2031. We also plan on providing nuclear service support and consultation services for the expanding and resurgent nuclear energy industry, both domestically and internationally. If we are unable to acquire such a business by the end of 2024, we will then focus on building our own internal nuclear consultation business in coordination with certain outside academic institutions, which we anticipate would require approximately an additional $1 million over the next twelve months to recruit additional staff and build corresponding infrastructure to be capable of providing these services. Notwithstanding the foregoing, the outlined expenditures and the timelines are estimations only. These are inherently subject to change due to certain factors, including adjustments in the microreactor development plan and uncertainties associated with the licensing approval process. Given that these elements may exceed our initial expectations or lie beyond our control, we cannot guarantee the accuracy of the actual expenditures and timelines.

Current wording

We estimate that our microreactor demonstration work and prototype will be conducted and built between 2024 and 2027, and our microreactor licensing application will be made and processed between 2026 and 2031. We anticipate that our microreactors will be launched around 2031, unless the Advance Act succeeds to reduce the licensing time. Notwithstanding the foregoing, there is no assurance that we can meet successfully above-mentioned timelines. We also plan on providing nuclear service support and consultation services for the expanding and resurgent nuclear energy industry, both domestically and internationally. If we are unable to acquire such a business by the end of 2024, we will then focus on building our own internal nuclear consultation business in coordination with certain outside academic institutions, which we anticipate would require approximately an additional $1 million over the next twelve months to recruit additional staff and build corresponding infrastructure to be capable of providing these services.

Previous wording

As of the date of this Report, we have not generated any revenues. We have incurred accumulated net losses of $10,273,798 since inception through March 31, 2024.

Current wording

As of the date of this Report, we have not generated any revenues. We have incurred accumulated net losses of $14,942,045 since inception through June 30, 2024.

Previous wording

In 2022, we began designing our two next-generation advanced nuclear microreactors,ZEUSandODIN.ZEUS, is a solid core battery reactor, andODIN, is a low-pressure salt coolant reactor. We aim to complete the design and concept evaluation for these reactors in under a two-year timeframe, progress through demonstration and physical test work, and initiate the licensing, certification, and development processes required to build a licensed prototype. Our goal is to commercially launch one of these microreactorsby 2030. The success of this endeavor will be dependent on our ability to effectively utilize our relationship with INL to advance ourmicroreactor designs through demonstration work and take advantage of the large capabilities offered by the INL nuclear site. We have conducted and completed a design audit on theODIN reactor to provide assistance with design considerations. Additionally, the design audit for theZEUS reactor was conducted and completed by INL in February 2024, the report of which is currently being finalized by INL. The technical reactor audit provides external input and assistance to advance the concepts and provide validation for the microreactors’ direction and technology.

Current wording

In 2022, we began designing our two next-generation advanced nuclear microreactors, ZEUSand ODIN. ZEUS, is a solid core battery reactor, and ODIN, is a low-pressure salt coolant reactor. We aim to complete the design and concept evaluation for these reactors in under a two-year timeframe, progress through demonstration and physical test work, and initiate the licensing, certification, and development processes required to build a licensed prototype. Our goal is to commercially launch one of these microreactorsin the early 2030s. The success of this endeavor will be dependent on our ability to effectively utilize our relationship with thenational laboratories and DOE to advance ourmicroreactor designs through demonstration work and take advantage of the large capabilities offered by the existing national nuclear sites. We have conducted and completed a design audit on the ODIN reactor to provide assistance with design considerations. Additionally, the design audit for the ZEUS reactor was conducted and completed by INL in February 2024. The report was finalized and issued by INL, summarizing their findings for Nano to facilitate the development of the reactor. The technical reactor audit provides an external and neutral perspective to assist the advancement of the concepts and to validate the microreactors’ direction and technology.

Previous wording

We are utilizing our existing relationship with INL to collaborate on the design, construction and commission of our own commercial nuclear High-Assay Low-Enriched Uranium (“HALEU”) fuel fabrication facility to supply fabricated fuel to the next generation of advanced nuclear reactor companies, and to supply our own reactors currently under development to the U.S. nuclear industry, the U.S. National Laboratories, and the DOE’s nuclear fuel needs as necessary. We hope to have our fuel fabrication facility near INL in operation as soon as 2027. Our proposed fuel fabrication facility is intended to form part of an integrated system with the INL’s facilities, being sited directly outside the INL facilities to eliminate transport over civilian roads and making use of INL’s capabilities such as fuel characterization. Our submissions to the DOE to advance this fuel facility have been supported by INL, with our submission having been reviewed and edited by INL staff, and the facility site selection led and approved by INL personnel. We anticipate procuring raw HALEU from a domestic U.S. company and we have signed a memorandum of understanding with Centrus Energy Corp. (NYSE American: LEU) (“Centrus”) to begin HALEU fuel sourcing discussions.

Current wording

We have identified a land package that is suitable for the design, construction and commissioning of our own commercial nuclear High-Assay Low-Enriched Uranium (“HALEU”) fuel fabrication facility to supply fabricated fuel to the next generation of advanced nuclear reactor companies, to our own reactors currently under development, to the U.S. nuclear industry, the U.S. national laboratories, and to supply the DOE’s nuclear fuel needs if necessary. We hope to site our fuel fabrication facility near a national nuclear laboratory around 2028. We anticipate procuring unfabricated HALEU from a domestic U.S. company and we have signed a memorandum of understanding with Centrus Energy Corp. (NYSE American: LEU) (“Centrus”) to begin HALEU fuel sourcing discussions.

Previous wording

We have identified this trend as an opportunity for more immediate revenue for our company, and to acquire more expertise to advance our businesses. We have already identified several nuclear business services and consultancy providers, which have been assessed as potentially suitable for acquisition by our company. We have concentrated on identifying small teams with expert personnel, with good portfolios of work and existing contracts, and good expansion potential, which would provide us with immediate revenue post-acquisition. We believe we are in a competitively advantageous position to expand these acquired businesses with the highly qualified teams it has built over the previous years. This expansion potential can be further complimented by the education programs we are assembling with the Cambridge Nuclear Energy Centre, part of the University of Cambridge, which will involve the sponsorship of MSc and PhD Nuclear programs to produce the next generation of qualified nuclear energy personnel. Part of our education sponsorship programs will involve providing work to the qualifying individuals after they have completed their programs, allowing for further expansion of the nuclear services we are able to offer clients. With an expanded team we plan to retain with a portion of the proceeds from our initial public offering, we will market our expertise and deploy consultants to both government and private industry nuclear projects. Consultants will be hired out for either hourly rates, or for contractual periods and weekly or monthly rates depending on the project type and scope. The acquisitions and their subsequent expansions will also provide in-house expertise, at greatly reduced costs, which we can utilize for our own research and development, streamlining our company while expanding our technical and human capital capacity.

Current wording

We have identified an opportunity for more immediate revenue for our company by acquiring more expertise to advance our businesses and deploying those personnel as part of a consulting and services business. We have already identified several nuclear business services and consultancy providers, which have been assessed as potentially suitable for acquisition by our company. We have concentrated on identifying small teams with expert personnel, with good portfolios of work and existing contracts, and good expansion potential, which would provide us with immediate revenue post-acquisition. We believe we are in a competitively advantageous position to expand these acquired businesses with the highly qualified teams it has built over the previous years. This expansion potential can be further complimented by the education programs we are assembling with the Cambridge Nuclear Energy Centre, part of the University of Cambridge, which will involve the sponsorship of MSc and PhD Nuclear programs to produce the next generation of qualified nuclear energy personnel. Part of our education sponsorship programs will involve providing work to the qualifying individuals after they have completed their programs, allowing for further expansion of the nuclear services we are able to offer clients. In furtherance of this effort, in early August 2024 we announced that we have joined the University of Cambridge Nuclear Industry Club to further our collaboration with Cambridge and our efforts to foster and recruit the next generation of nuclear researchers and engineers. With an expanded team we plan to retain with a portion of the proceeds from our 2024 public offerings, we will market our expertise and deploy consultants to both government and private industry nuclear projects. Consultants will be hired out for either hourly rates, or for contractual periods and weekly or monthly rates depending on the project type and scope. The acquisitions and their subsequent expansions will also provide in-house expertise, at greatly reduced costs, which we can utilize for our own research and development, streamlining our company while expanding our technical and human capital capacity.

Previous wording

R&D expenses decreased by $102,361, or 26%, to $290,539 for the three months ended March 31, 2024, compared to $392,900 for the comparative period ended March 31, 2023, primarily due to our decrease in R&D equity-based compensation during the three months ended March 31, 2024 compared to the three months ended March 31, 2023. R&D expenses primarily reflect the internal and external personnel costs corresponding to the design and analysis of our microreactors. During the three months ended March 31, 2024 and 2023, $nil and $125,450, respectively, of our R&D expenses corresponded to equity-based compensation.

Current wording

R&D expenses increased by $1,356,668, or 205%, to $2,019,812 for the three months ended June 30, 2024, compared to $663,144 for the comparative period ended June 30, 2023, primarily due to our acquisition of the ALIP technology which was expensed during the three months ended June 30, 2024 compared to the three months ended June 30, 2023. R&D expenses primarily reflect the internal and external personnel costs corresponding to the design and analysis of our microreactors as well as the costs to acquire technology and other assets from third parties. During the three months ended June 30, 2024 and 2023, $nil and $210,113, respectively, of our R&D expenses corresponded to equity-based compensation.

Previous wording

Our general and administrative (“G&A”) expenses consist of compensation costs for personnel in executive, finance, accounting, and other administrative functions. G&A expenses also include legal fees, professional fees paid for accounting, auditing, consulting services, advertising costs, and insurance costs. Following the IPO, we expect we will incur higher G&A expenses for public company costs such as compliance with the regulations of the SEC and Nasdaq.

Current wording

Our general and administrative (“G&A”) expenses consist of compensation costs for personnel in executive, finance, accounting, and other administrative functions. G&A expenses also include legal fees, professional fees paid for accounting, auditing, consulting services, advertising costs, and insurance costs.

Previous wording

G&A expenses increased by $295,775, or 26%, to $1,423,309 for the three months ended March 31, 2024, compared to $1,127,534 for the comparative period ended March 31, 2023, primarily due to additional office and staff costs to support our R&D activities during the three months ended March 31, 2024 compared to the three months ended March 31, 2023. During the three months ended March 31, 2024, G&A expenses primarily consisted of $0.6 million in personnel costs. During the period ended March 31, 2023, G&A primarily consisted of $0.7 million in personnel costs. During the three months ended March 31, 2024 and 2023, $152,457 and $459,034, respectively, of our G&A expenses corresponded to equity-based compensation.

Current wording

G&A expenses increased by $263,048, or 13%, to $2,301,307 for the three months ended June 30, 2024, compared to $2,038,259 for the comparative period ended June 30, 2023, primarily due to additional office and staff costs to support our R&D activities during the three months ended June 30, 2024 compared to the three months ended June 30, 2023. During the three months ended June 30, 2024, G&A expenses primarily consisted of $0.7 million in personnel costs. During the period ended June 30, 2023, G&A primarily consisted of $1.6 million in personnel costs. During the three months ended June 30, 2024 and 2023, $nil and $1,234,417, respectively, of our G&A expenses corresponded to equity-based compensation.

Previous wording

During the three months ended March 31, 2024 and 2023, the Company earned interest income of $36,220 and $nil, respectively, on its cash held at a financial institution.

Current wording

During the three months ended June 30, 2024 and 2023, the Company earned interest income of $38,372 and $1,753, respectively, on its cash held at a financial institution.

Previous wording

R&D expenses increased by $289,949, or 56%, to $810,555 for the six months ended March 31, 2024, compared to $520,606 for the comparative period ended March 31, 2023, primarily due to our increase in R&D activities during the six months ended March 31, 2024 compared to the six months ended March 31, 2023. R&D expenses primarily reflect the internal and external personnel costs corresponding to the design and analysis of our microreactors. During the six months ended March 31, 2024 and 2023, $nil and $210,450, respectively, of our R&D expenses corresponded to equity-based compensation.

Current wording

R&D expenses increased by $1,646,617, or 139%, to $2,830,367 for the nine months ended June 30, 2024, compared to $1,183,750 for the comparative period ended June 30, 2023, primarily due to our acquisition of the ALIP technology which was expensed during the nine months ended June 30, 2024 compared to the nine months ended June 30, 2023. R&D expenses primarily reflect the internal and external personnel costs corresponding to the design and analysis of our microreactors as well as the costs to acquire technology and other assets from third parties. During the nine months ended June 30, 2024 and 2023, $0 and $420,563, respectively, of our R&D expenses corresponded to equity-based compensation.

Previous wording

Our G&A expenses consist of compensation costs for personnel in executive, finance, accounting, and other administrative functions. G&A expenses also include legal fees, professional fees paid for accounting, auditing, consulting services, advertising costs, and insurance costs. Following the IPO, we expect we will incur higher G&A expenses for public company costs such as compliance with the regulations of the SEC and Nasdaq.

Current wording

Our G&A expenses consist of compensation costs for personnel in executive, finance, accounting, and other administrative functions. G&A expenses also include legal fees, professional fees paid for accounting, auditing, consulting services, advertising costs, and insurance costs.

Previous wording

G&A expenses increased by $568,232, or 34%, to $2,252,205 for the six months ended March 31, 2024, compared to $1,683,973 for the comparative period ended March 31, 2023, primarily due to additional office and staff costs to support our R&D activities during the six months ended March 31, 2024 compared to the six months ended March 31, 2023. During the six months ended March 31, 2024, G&A expenses primarily consisted of $1.0 million in personnel costs. During the period ended March 31, 2023, G&A primarily consisted of $0.8 million in personnel costs. During the six months ended March 31, 2024 and 2023, $152,457 and $459,034, respectively, of our G&A expenses corresponded to equity-based compensation.

Current wording

G&A expenses increased by $831,280, or 22%, to $4,553,512 for the nine months ended June 30, 2024, compared to $3,722,232 for the comparative period ended June 30, 2023, primarily due to additional office and staff costs to support our R&D activities during the nine months ended June 30, 2024 compared to the nine months ended June 30, 2023. During the nine months ended June 30, 2024, G&A expenses primarily consisted of $1.7 million in personnel costs. During the period ended June 30, 2023, G&A primarily consisted of $2.4 million in personnel costs. During the nine months ended June 30, 2024 and 2023, $152,457 and $1,693,451, respectively, of our G&A expenses corresponded to equity-based compensation.

Previous wording

During the six months ended March 31, 2024 and 2023, the company earned interest income of $71,187 and $nil, respectively, on its cash held at a financial institution.

Current wording

During the nine months ended June 30, 2024 and 2023, the company earned interest income of $109,559 and $1,753, respectively, on its cash held at a financial institution.