Terra Innovatum Global (NKLR) risk factors, FY2025 10-K

Risks Related to Terra Innovatum’s Business

1. 01Throughout this section, unless otherwise noted, “Terra Innovatum,” “we,” “us” or “our” refers to Terra Innovatum Global N.V. and our consolidated subsidiaries, including Terra OpCo
2. 02We have incurred losses and have not generated any revenue since our inception. We anticipate that we will continue to incur losses, and expect that we will not generate revenue, for the foreseeable future
3. 03Our limited operating history makes it difficult to evaluate our future prospects and the risks and challenges we may encounter
4. 04We have not yet commercialized or sold the SOLO or any other micro-modular reactor (“MMR”), and there is no guarantee that we will be able to do so
5. 05If 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
6. 06We are dependent upon key officers
7. 07There is limited operating experience or regulatory precedent for reactors of this type, configuration and scale, which may result in greater than expected construction and material costs, maintenance requirements, operating expense or delivery timing
8. 08The market for MMRs generating electric power and high-temperature heat is not yet established and may not achieve the growth potential we expect or may grow more slowly than expected
9. 09We may not attract customers to our MMR technology as quickly as we expect, or at all, and acquiring customers may be more expensive than we currently anticipate
10. 10Our cost estimates are highly sensitive to broader economic factors, and our ability to control or manage our costs may be limited
11. 11Competition from existing or new companies could cause us to experience downward pressure on prices, fewer customer orders, reduced margins, the inability to take advantage of new business opportunities, and the loss of market share
12. 12Technological changes could render our technology and products uncompetitive or obsolete, which could prevent us from achieving market share and sales
13. 13Changes in the availability and cost of electricity, natural gas and other forms of energy are subject to volatile market conditions that could adversely affect our business
14. 14The cost of electricity generated from nuclear sources may not be cost competitive with other electricity generation sources in some markets, which could materially and adversely affect our business
15. 15We and our customers operate in a politically sensitive environment, and the public perception of nuclear energy can affect our customers and us
16. 16The 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 non-carbon based energy, could adversely affect our financial condition, operating results, and cash flows
17. 17Our operations involve the use, transportation and disposal of toxic, hazardous and/or radioactive materials and could result in liability without regard to fault or negligence
18. 18Unresolved spent nuclear fuel storage and disposal issues and associated costs could have a significant negative impact on Terra Innovatum’s business operations if potential SOLO customers view the risks associated with these issues and costs as unacceptably high
19. 19Unsatisfactory safety performance or security incidents at our 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 cybersecurity threats which could have adverse effects, including regulatory effects, on our business and results of operations
21. 21Our supply base may not be able to scale to the production levels necessary to meet sales projections
22. 22Certain materials, such as the graphite used for the moderator, are currently produced in limited quantities and are available predominantly from a small number of vendors inside and outside the United States (e.g., Italy, Germany, and Japan)
23. 23We depend on key executives and management to execute our business plan and conduct our operations. A departure of key personnel could have a material adverse effect on our business
24. 24Our business plan requires us to attract and retain qualified personnel including personnel with highly technical expertise. Were we not to be able to successfully recruit and retain experienced and qualified personnel, it could have a material adverse effect on our business
25. 25We currently enjoy only limited geographical protection with respect to certain issued patents and may not be able to protect our intellectual property rights throughout the world
26. 26We 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
27. 27We 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 MMRs
28. 28We may be subject to claims of ownership and other rights to our patents and other intellectual property by third parties
29. 29Our management has limited experience in operating a public company
30. 30We are subject to data privacy and protection laws in multiple jurisdictions, including the GDPR, and any failure to comply with these laws could result in significant penalties and harm to our business
31. 31The use of artificial intelligence technologies may present business, legal, and regulatory risks

Risks Relating to Terra Innovatum’s Capital Resources

1. 32Our corporate expenditures, including our corporate level expenses, are subject to numerous risks and uncertainties
2. 33We may experience a disproportionately higher impact from inflation and rising costs
3. 34If we incur indebtedness in the future, we could be exposed to risks that could adversely affect our business, financial condition and results of operations
4. 35Our actual operating results may differ significantly from our guidance
5. 36Our financial results may vary significantly from quarter to quarter
6. 37If we experience significant fluctuations in our operating results and rate of growth and fail to meet revenue and earnings expectations, our share price may fall rapidly and without advance notice
7. 38Changes in our accounting estimates and assumptions could negatively affect our financial position and results of operations
8. 39Our ability to pay dividends may be limited and the level of future dividends is subject to change
9. 40It may be difficult to enforce U.S. judgments against us
10. 41Fluctuations in Foreign Currency Exchange Rates and Withholding Taxes May Adversely Affect Our Results of Operations and Cash Flows

Risks Relating to Compliance with Law, Government Regulation and Litigation

1. 42Our business is subject to the policies, priorities, regulations, mandates of multiple governmental entities and may be negatively or positively impacted by any change thereto
2. 43Uncertain global macro-economic and political conditions could materially adversely affect our results of operations and financial condition
3. 44We are subject to stringent export and import control laws and regulations, and our failure to comply with these laws and regulations or to obtain necessary authorizations, could have a material adverse effect on our business, financial condition and results of operations
4. 45Changes in international trade policies, tariffs and treaties affecting imports and exports may have a material adverse effect on our performance or business prospects
5. 46Terrorist attacks, acts of war or natural disasters may adversely affect our operations
6. 47These key materials and components may also be particularly vulnerable to inflationary pressures and cost increases
7. 48The public has the ability to intervene in licensing proceedings before the NRC for a reactor
8. 49Terra Innovatum submitted its regulatory engagement plan to the NRC in January 2025. Notwithstanding these actions, the SOLO designs have not yet been licensed or approved by the NRC, and no currently operating NRC-regulated reactor uses technology we use in SOLO
9. 50Even if the SOLO is licensed in the United States, 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
10. 51Our customers could incur substantial costs as a result of violations of, or liabilities under, environmental laws
11. 52Our MMRs may not qualify as low-emissions or emissions-free pursuant to regulatory or incentive frameworks that consider emissions on a lifecycle basis or that otherwise account for fuel-cycle emissions or energy consumption
12. 53We may become involved in litigation that may materially adversely affect us

Risk Relating to Tax Matters Applicable to Terra Innovatum

1. 54Changes in tax, tariff or fiscal policies could adversely affect demand for our products
2. 55Changes to taxation or the interpretation or application of tax laws could have an adverse impact on our results of operations and financial condition
3. 56We are exposed to the risk that our overall tax burden may increase in the future
4. 57We intend to be treated exclusively as a resident of the Republic of Italy for tax purposes, but Dutch or other tax authorities may seek to treat us as a tax resident of another jurisdiction as a result of which we could be subject to increased and/or different taxes
5. 58However, the determination of our tax residency depends primarily upon our place of effective management, which is largely a question of fact, based on all relevant circumstances

Risks Related to Ownership of Terra Shares and Terra Operating as a Public Company

1. 59Our only significant asset is our ownership interest in Terra OpCo, and such ownership may not be sufficient to satisfy our financial obligations
2. 60If analysts do not publish research about Terra’s business or if they publish inaccurate or unfavorable research, our share price and trading volume could decline
3. 61The market price of our ordinary shares may be volatile and, in the past, companies that have experienced volatility in the market price of their share have been subject to securities class action litigation
4. 62Future resales of our Ordinary Shares may cause the market price of our securities to drop significantly, even if our business is doing well
5. 63The obligations associated with being a public company involve significant expenses and require significant resources and management attention, which may divert from Terra’s business operations