Terrestrial Energy (IMSR) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01Our limited commercial operating history in a rapidly evolving industry makes it difficult for us to evaluate our future prospects and prepare for the risks and challenges we may encounter
2. 02If we fail to manage our growth effectively, we may be unable to execute our business plan, and our business, results of operations, and financial condition could be harmed
3. 03IMSR Plants may suffer significant construction delays or cost increases as a result of a variety of factors. Any such delays could cause the construction of a project to ultimately be unprofitable for the Company or otherwise adversely affect the Company’s business, financial condition and results of operations
4. 04Any failure to effectively update the design, construction, and operations of our planned IMSR Plants to ensure cost competitiveness could reduce the marketability of our designs and has the potential to impact deployment schedules
5. 05If demand for our IMSR Plants fails to develop sufficiently, our business and operations could suffer, and we would be unable to achieve or maintain profitability
6. 06Our IMSR Plant design may not attract customers as quickly as we expect, or at all
7. 07Customers may rescind or back out of non-binding agreements due to various reasons, which could adversely affect our revenue streams, project timelines, and overall financial performance
8. 08Our cost estimates are sensitive to broader economic factors, and our ability to control or manage our costs may be limited
9. 09Substantial governmental support for competing technologies or their fuel supply may reduce our competitive advantages
10. 10Changes in the availability and cost of electricity, natural gas, oil and other forms of energy are subject to volatile market conditions that could adversely affect our business prospects, financial condition, results of operations and cash flows
11. 11The potential disruption of uranium supply chains makes long-range planning uncertain
12. 12The cost of electricity and heat generated from nuclear sources may not be cost competitive with other electricity generation sources and/or heat generated from other sources in some markets, which could materially and adversely affect our business prospects, financial condition, results of operations and cash flow
13. 13The IMSR plants may not operate as planned
14. 14We and our customers operate in a politically sensitive environment, and the public perception of nuclear energy and radioactive materials could materially and adversely affect us, our customers, and the markets in which we operate
15. 15The direct and indirect impact on us and our customers from severe weather and other effects of climate change and the economic impacts of the transition to low-emissions energy, could adversely affect our financial condition, operating results, and cash flows
16. 16The occurrence of adverse events, cancellations of significant projects, delays in project timelines, adjustments in cost structures, and other negative developments announced by competitors could have an impact on our operations, financial performance, and future prospects
17. 17The IMSR Plant involves toxic, hazardous and/or radioactive materials and could result in liability without regard to fault or negligence
18. 18Nevertheless, IMSR Plant operations inherently involve the use, transportation, and disposal of toxic, hazardous and radioactive materials
19. 19Unsatisfactory safety performance or security incidents at our customers’ facilities — or any nuclear facility around the world — could have a material adverse effect on our business, financial condition and results of operations
20. 20We are subject to information technology and cyber security threats which could have adverse effects, including regulatory effects, on our business and results of operations
21. 21Our ability to protect our patents and other intellectual property rights may be challenged and is not guaranteed
22. 22We currently enjoy only limited geographical protection with respect to certain issued patents and trademarks and may not be able to protect our intellectual property rights throughout the world
23. 23We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial fees and costs
24. 24We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market our IMSR Plants
25. 25Customization and hybridization of the Thermal and Electric Facility may require additional research and development and/or reliance on external service providers
26. 26We may be subject to claims of ownership and other rights to our patents and other intellectual property by third parties
27. 27Some of our management team have limited experience in operating a public company
28. 28Compliance with the reporting obligations under the United States securities laws and Section 404 of Sarbanes-Oxley requires expenditures of capital and other resources and may divert management’s attention

Risks Related to Compliance with Law, Government Regulation and Litigation

1. 29Our business may be subject to the policies, priorities, regulations, mandates and funding levels of governmental entities and may be negatively or positively impacted by any change thereto
2. 30The U.S. government’s budget deficit and the national debt, as well as any inability of the U.S. government to complete its budget or appropriations process for any government fiscal year could have an adverse impact on our or our customers’ business, financial condition, results of operations and cash flows
3. 31We may pursue government awards involving cost-share related to our R&D work, which could be affected by our failure to comply with certain laws and regulations
4. 32Uncertain global macro-economic and political conditions could materially adversely affect our business prospects, financial condition, results of operations and cash flow
5. 33Changes in government agency budgets as well as staffing shortages at national laboratories and other government agencies may lengthen our estimated timelines for regulatory approval and construction
6. 34Even if the IMSR Plant is licensed in the United States or Canada, we must still obtain approvals on a country-by-country basis to deploy these reactor technologies, which approvals may be delayed or denied or which may require modification to our design
7. 35There is no assurance that nuclear regulators will accept the exclusion of the Thermal and Electric Facility from the operating license requirements for the IMSR Plant
8. 36Our customers could incur substantial costs as a result of violations of, or liabilities under, environmental laws
9. 37We are subject to laws and regulations governing the use, transportation, and disposal of toxic, hazardous and/or radioactive materials. Failure to comply with these laws and regulations could result in substantial fines and/or enforcement actions
10. 38Changes in tax laws could adversely affect our business prospects and financial results
11. 39We may become involved in litigation that may materially adversely affect our business, financial condition and results of operations

Risks Related to Capital Resources

1. 40Our corporate expenditures, including our corporate level outspend, are subject to numerous risks and uncertainties
2. 41We may experience an adverse impact from inflation and rising costs
3. 42We have a history of financial losses and may not achieve profitability in the future. We will need substantial additional capital to complete the design of the IMSR Plant and fund our operations
4. 43Future indebtedness could expose us to risks that could adversely affect our business, financial condition and results of operations
5. 44Our actual operating results may differ significantly from any guidance we may provide
6. 45Our financial results may vary significantly from quarter to quarter
7. 46Changes in our accounting estimates and assumptions could negatively affect the reporting of our financial position and results of operations

Risks Related to our Securities

1. 47We incur additional costs as a public company that reports to the SEC and our management is required to devote substantial time to meet compliance obligations
2. 48The market price of Terrestrial Energy’s securities may decline
3. 49There is no guarantee that our warrants will ever be in the money, and they may expire worthless
4. 50Our outstanding publicly traded warrants (Nasdaq
5. 51The Warrants may have an adverse effect on the market price of the Terrestrial Common Shares
6. 52A significant portion of our total outstanding shares of common stock are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly, even if our business is doing well
7. 53We are party to certain agreements that provide registration rights to the counterparties
8. 54As an “emerging growth company,” we cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies” will make our common stock less attractive to investors