Item 1A. Risk Factors
We have identified the following risks and uncertainties that may have a material adverse effect on our business, financial condition, results of operations or reputation. The risks described below are not the only risks we face. Additional risks not presently known to us or that we currently believe are not material may also significantly affect our business, financial condition, results of operations or reputation. Our business could be harmed by any of these risks. In assessing these risks, you should also refer to the financial statements and related notes contained in this report.
Risks Related to Our Structure and Tax Matters
NuScale Corp is a holding company and its only material asset is its interest in NuScale LLC, and it is accordingly dependent upon distributions made by its subsidiaries to pay taxes, make payments under the Tax Receivable Agreement and pay dividends and fees associated with being a public company such as director retainers, NYSE and other regulatory filings.
NuScale Corp is a holding company with no material assets other than its ownership of NuScale LLC units. As a result, NuScale Corp has no independent means of generating revenue or cash flow. NuScale Corp’s ability to pay taxes, cause NuScale LLC to make payments under the Tax Receivable Agreement and pay dividends depends on the financial results and cash flows of NuScale LLC and the distributions it receives (directly or indirectly) from NuScale LLC. Deterioration in the financial condition, earnings or cash flow of NuScale LLC for any reason could limit or impair its ability to pay such distributions. Additionally, to the extent that NuScale Corp needs funds and NuScale LLC is restricted from making such distributions under applicable law or regulation, in order to satisfy certain obligations, under the terms of any financing arrangements, or is otherwise unable to provide such funds, it could materially adversely affect NuScale Corp’s liquidity and financial condition.
NuScale LLC is treated as a partnership for United States federal income tax purposes and, as such, generally will not be subject to any entity-level United States federal income tax. Instead, taxable income will be allocated to holders of NuScale LLC units. Accordingly, NuScale Corp will be required to pay income taxes on its allocable share of any net taxable income from NuScale LLC. Under the terms of the Sixth Amended and Restated Limited Liability Company Agreement of NuScale LLC (the “A&R NuScale LLC Agreement”), NuScale LLC is obligated to make tax distributions to holders of NuScale LLC units calculated at certain assumed tax rates. In addition to income taxes, NuScale Corp is also expected to incur expenses related to its operations, including payment obligations under the Tax Receivable Agreement, which could be significant, and some of which will be reimbursed by NuScale LLC (excluding payment obligations under the Tax Receivable Agreement). NuScale Corp intends to cause NuScale LLC to make ordinary distributions and tax distributions to holders of NuScale LLC units on a pro rata basis in amounts sufficient to cover all applicable taxes, relevant operating expenses, payments under the Tax Receivable Agreement and dividends, if any, declared by NuScale Corp. However, as discussed above, NuScale LLC’s ability to make such distributions may be subject to various limitations and restrictions. To the extent that NuScale Corp is unable to make payments under the Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest until paid; provided, however, that for a specified period may constitute a of a material obligation under the Tax Receivable Agreement and therefore accelerate payments under the Tax Receivable Agreement, which could be substantial.
Additionally, although NuScale LLC generally will not be subject to any entity-level United States federal income tax, it may be liable under recent United States federal tax legislation for adjustments to prior year tax returns, absent an election to the contrary. In the event NuScale LLC’s calculations of taxable income are incorrect, NuScale LLC and its members, including NuScale Corp, in later years may be subject to material liabilities pursuant to this legislation and its related guidance.
If NuScale LLC were treated as a corporation for United States federal income tax or state tax purposes, then the amount available for distribution by NuScale LLC could be substantially reduced and the value of NuScale Corp shares could be adversely affected.
An entity that would otherwise be classified as a partnership for United States federal income tax purposes (such as NuScale LLC) may nonetheless be treated as, and taxable as, a corporation if it is a “publicly traded partnership” unless an exception to such treatment applies. An entity will be treated as a “publicly traded partnership” if interests in such entity are traded on an established securities market or interests in such entity are readily tradable on a secondary market or the substantial equivalent thereof. If NuScale LLC were determined to be treated as a “publicly traded partnership” (and taxable as a corporation) for United States federal income tax purposes, it would be taxable on its income at the United States federal income tax rates applicable to corporations and distributions by NuScale LLC to its partners (including
NuScale Corp) could be taxable as dividends to such partners to the extent of the earnings and profits of NuScale LLC. In addition, NuScale Corp would no longer have the benefit of increases in the tax basis of NuScale LLC’s assets as a result of exchanges of NuScale LLC Class B units.
Pursuant to the A&R NuScale LLC Agreement, certain Legacy NuScale Equityholders may, from time to time, subject to the terms of the A&R NuScale LLC Agreement, exchange their interests in NuScale LLC and have such interests redeemed by NuScale LLC for cash or shares of Class A common stock. Although such exchanges could be treated as trading in the interests of NuScale LLC for purposes of testing “publicly traded partnership” status, the A&R NuScale LLC Agreement contains restrictions on redemptions and exchanges of interests in NuScale LLC, which are designed to comply with certain safe harbors provided for under applicable United States federal income tax law, and NuScale Corp may also impose additional restrictions on exchanges that it determines to be necessary or advisable so that NuScale LLC is not treated as a “publicly traded partnership” for United States federal income tax purposes. Accordingly, we believe NuScale LLC is operated such that it is not treated as a “publicly traded partnership” taxable as a corporation for United States federal income tax purposes. If NuScale LLC were treated as a “publicly traded partnership” taxable as a corporation for United States federal income tax purposes, it could have a material adverse impact on NuScale Corp’s liquidity and financial condition as a result of the additional corporate tax payable at the NuScale LLC level.
Pursuant to the Tax Receivable Agreement, NuScale Corp will be required to pay to certain Legacy NuScale Equityholders 85% of certain tax benefits, if any, that it realizes (or in certain cases is deemed to realize) as a result of any increases in tax basis and related tax benefits resulting from any exchange of NuScale LLC Class B units for shares of Class A common stock or cash in the future, and those payments may be substantial.
The Legacy NuScale Equityholders may in the future exchange their NuScale LLC Class B units for shares of Class A common stock (or, upon the election of NuScale Corp, cash in an amount equal to the net proceeds raised by selling such shares of Class A common stock in a contemporaneous underwritten offering), subject to certain restrictions. Such transactions are expected to result in increases in NuScale Corp’s share of the tax basis of the tangible and intangible assets of NuScale LLC. These increases in tax basis may result in increased tax depreciation and amortization deductions and therefore reduce the amount of income tax that NuScale Corp would otherwise be required to pay in the future had such sales and exchanges never occurred.
NuScale Corp is party to the Tax Receivable Agreement with NuScale LLC, each of the TRA Holders (as defined in the Tax Receivable Agreement) party thereto and Fluor, in its capacity as TRA Representative (as defined in the Tax Receivable Agreement).
Pursuant to the Tax Receivable Agreement, NuScale Corp will be required to pay 85%, of the net cash tax savings from certain tax benefits, if any, that it realizes (or in certain cases is deemed to realize) as a result of any increases in tax basis and other tax benefits resulting from any exchange by the TRA Holders of NuScale LLC Class B units for shares of Class A common stock or cash in the future. On November 6, 2025, the Company and Fluor entered into a Tax Receivable Agreement Amendment agreement (the “TRA Amendment”) to reduce any tax payments due to Fluor from NuScale under the Tax Receivable Agreement by 50%. Following the TRA Amendment, NuScale Corp will only be required to pay 42.5% of such net cash tax savings resulting from the exchange of the Fluor Class B units for shares of Class A common stock.
Any such payments to TRA Holders will reduce the cash provided by the tax savings generated from future exchanges that would otherwise have been available to NuScale Corp for other uses, including reinvestment or dividends to Class A stockholders. Cash tax savings from the remaining 57.5% of the tax benefits arising from the exchange of Fluor Class B units and the remaining 15% of the tax benefits arising from the exchange of other TRA holders will be retained by NuScale Corp.
NuScale Corp’s obligations under the Tax Receivable Agreement accelerate upon a change in control and certain other termination events, as defined therein. These payments are the obligation of NuScale Corp and not of NuScale LLC. The actual increase in NuScale Corp’s allocable share of NuScale LLC’s tax basis in its assets, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the timing of exchanges, the market price of the shares of Class A common stock at the time of the exchange, the extent to which such exchanges are taxable and the amount and timing of the recognition of NuScale Corp’s income. While many of the factors that will determine the amount of payments that NuScale Corp will make under the Tax Receivable Agreement are outside of its control, NuScale Corp expects that the payments it will make under the Tax Receivable Agreement will be substantial and could have a material adverse effect on NuScale Corp’s financial condition. Any payments made by NuScale Corp under the Tax Receivable Agreement will generally reduce the amount of overall cash flow that might have otherwise been
available to NuScale Corp. To the extent that NuScale Corp is unable to make timely payments under the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid; however, nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore accelerate payments due under the Tax Receivable Agreement. Furthermore, NuScale Corp’s future obligation to make payments under the Tax Receivable Agreement could make it a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that may be deemed realized under the Tax Receivable Agreement.
Payments under the Tax Receivable Agreement may exceed the actual tax benefits NuScale Corp realizes.
Payments under the Tax Receivable Agreement will be based on the tax reporting positions that NuScale Corp determines, and the U.S. Internal Revenue Service (“IRS”) or another taxing authority may challenge all or any part of the tax basis increases, as well as other tax positions that NuScale Corp takes, and a court may sustain such a challenge. In the event that any tax benefits initially claimed by NuScale Corp are disallowed, the Legacy NuScale Equityholders will not be required to reimburse NuScale Corp for any excess payments that may previously have been made under the Tax Receivable Agreement, for example, due to adjustments resulting from examinations by taxing authorities. Rather, excess payments made to such holders will be netted against any future cash payments otherwise required to be made by NuScale Corp under the Tax Receivable Agreement, if any, after the determination of such excess. However, a challenge to any tax benefits initially claimed by NuScale Corp may not arise for a number of years following the initial time of such payment or, even if challenged early, such excess cash payment may be greater than the amount of future cash payments that NuScale Corp might otherwise be required to make under the terms of the Tax Receivable Agreement and, as a result, there might not be future cash payments which to net. As a result, in certain circumstances NuScale Corp could make payments under the Tax Receivable Agreement in excess of NuScale Corp’s actual income tax savings, which could materially NuScale Corp’s financial condition.
Moreover, the Tax Receivable Agreement provides that, in certain events, including a change of control, breach of a material obligation under the Tax Receivable Agreement, or NuScale Corp exercise of early termination rights, NuScale Corp’s obligations under the Tax Receivable Agreement will accelerate and NuScale Corp will be required to make a lump-sum cash payment to the Legacy NuScale Equityholders party to the Tax Receivable Agreement equal to the present value of all forecasted future payments that would have otherwise been made under the Tax Receivable Agreement, which lump-sum payment would be based on certain assumptions, including those relating to NuScale Corp future taxable income. The lump-sum payment could be substantial and could exceed the actual tax benefits that NuScale Corp realizes subsequent to such payment because such payment would be calculated assuming, among other things, that NuScale Corp would have certain tax benefits available to it and that NuScale Corp would be able to use the potential tax benefits in future years. As of December 31,2025, we have estimated that the accelerated payment that could be due to the TRA Holders in case of early termination would be approximately $365 million.
There may be a material negative effect on NuScale Corp’s liquidity if the payments required to be made by NuScale Corp under the Tax Receivable Agreement exceed the actual income or franchise tax savings that NuScale Corp realizes. Furthermore, NuScale Corp’s obligations to make payments under the Tax Receivable Agreement could also have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control.
Changes in tax laws or regulations may increase tax uncertainty and adversely affect results of our operations and our effective tax rate .
We are subject to taxes in the United States and certain foreign jurisdictions. Due to economic and political conditions, tax rates in and duties imposed by various jurisdictions, including the United States, may be subject to change. Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities and changes in tax laws or their interpretation. In addition, we may be subject to income tax audits by various tax jurisdictions. An adverse resolution by one or more taxing authorities could have a material impact on our finances. Further, we may be unable to utilize any net operating losses in the event a change in control is determined to have occurred.
Risks Related to NuScale’s Business and Industry
We have not yet entered into a binding contract with a customer to deliver NPMs, and there is no guarantee that we will be able to do so.
The planned initial deployment of our NPM is subject to (i) NuScale reaching a binding agreement for its scope of supply with RoPower Nuclear S.A. (“RoPower”) and NuScale reaching a binding engineering, procurement, and construction (“EPC”) contract with Fluor or (ii) ENTRA1 signing a purchase power agreement (“PPA”) with a third party and NuScale entering into an original equipment manufacturing (“OEM”) agreement. If neither of these scenarios are executed, initial deployment of our NPM, power plants, and ongoing services could be significantly delayed, which could have a material adverse effect on our business and financial condition. Discussions are under way with other potential NuScale customers, but NuScale has yet to secure an NPM order from them.
We face competition from other nuclear reactor technologies and from companies in China and Russia that currently operate commercial SMRs.
There are several reactor technologies that are in various stages of development, such as high temperature gas-cooled reactors, fast reactors, molten salt reactors, fusion technologies and others, and commercial SMRs are currently operating in China and Russia, and while to date no SMR or advanced reactor company other than NuScale has even applied to the NRC for SMR SDA, other technologies have different NRC applications under review and some have already received NRC approval for construction permits and are in construction phase.
Competitors in Russia and China, such as Rosatom and China National Nuclear Corporation, currently operate commercial SMRs in those countries. Although their SMR designs have not been approved by the NRC or in any jurisdiction outside of their respective countries, those competitors may have a competitive advantage if they are able to obtain approval comparable to the NRC’s SDA, or if they can otherwise demonstrate to potential customers the value and benefits of their SMRs, particularly in jurisdictions that have less stringent regulatory requirements. In addition, these competitors may have access to greater government or other funding to develop and commercialize their SMRs than we do.
Any issues or delays in the development and manufacture of NPMs and related technology may adversely impact our business and financial condition.
We have previously experienced, and may experience in the future, delays or other complications in the design, manufacture, production and delivery of NPMs and related technology that could prevent us from delivering NPMs in 2031 or beyond. If delays like this recur, if our remediation measures and process changes are not successful, if we fail to find a satisfactory manufacturer or if we experience issues with planned manufacturing activities or design and safety, we could experience further issues or delays in sustaining or further increasing production and sales of NPMs.
If we encounter difficulties in scaling our production and delivery capabilities, if we fail to develop and successfully commercialize our NPMs and related technologies, if we fail to develop such technologies before our competitors or if such technologies fail to perform as expected, are inferior to those of our competitors or are perceived as less safe than those of our competitors, our business and financial condition could be materially and adversely impacted.
Additionally, updating the design, construction, and operations of NuScale SMR-based plants will be necessary to their competitiveness and attractiveness in the market, particularly in the United States where the price of power is generally lower than in other countries. If we are not able to achieve and maintain cost-competitiveness in the United States or elsewhere, our deployment schedule, marketability and business could be materially and adversely affected
We have not yet delivered NPMs to customers, and any setbacks we may experience during our first commercial delivery and other demonstration and commercial missions could have a material adverse effect on our business, financial condition, results of operation, and reputation.
The success of our business depends on our ability to successfully deliver NPMs to customers on-time and on-budget at guaranteed performance levels. This means manufacturing all components to specification (satisfying quality inspection criteria) and delivering those components to the customer site, on schedule and without delay or incident. There is no guarantee that our planned NPM deployments will be successful. There can be no assurance that we will not experience operational or process failures and other problems during our first commercial deployment or any planned deployment thereafter. Any failures or setbacks, particularly on our first commercial deployments, could harm our reputation and have a material adverse effect on our business and financial condition.
Any actual or perceived safety or reliability issues may result in significant reputational harm to our businesses, in addition to legal liability and other costs that may arise. Such issues could result in delaying or cancelling planned deployments of NPMs, increased regulation, or other adverse systemic consequences. Our inability to meet our safety standards or adverse publicity affecting our reputation as a result of accidents or mechanical failures could have a material adverse effect on our business and financial condition.
We have incurred significant losses since inception, we expect to incur losses in the future, and we may not be able to achieve or maintain profitability.
We have incurred significant losses since our inception well beyond the support we have received through cost-sharing awards from the DOE. We have not yet delivered NPMs to customers and none of our flagship plants have been permitted or are under construction, and it is difficult for us to predict our future operating results. As a result, our losses may be larger than anticipated, and we may not achieve profitability when expected or at all and, even if we do, we may not be able to maintain or increase profitability.
We expect our operating expenses to increase over the next several years as we commence deployment of NPMs, continue to refine and streamline our design and manufacturing processes for our NPMs, make technical improvements, hire additional employees and continue research and development efforts relating to new products and technologies. These efforts may be more costly than we expect and may not result in increased revenue, profits or growth in our business. Any failure to increase our revenue sufficiently to keep pace with our expenses could prevent us from achieving or maintaining profitability or positive cash flow. Furthermore, if our future growth and operating performance fail to meet investor or analyst expectations, or if we have future negative cash flow or losses resulting from our investment in acquiring customers or expanding our operations, this could have a material adverse effect on our business and financial condition.
The cost of electricity generated from nuclear sources or our NPMs may not be cost competitive with future electricity generation sources in some markets, which could materially and adversely affect our business.
Some electricity markets experience very low power prices due to a combination of subsidized renewables and low-cost fuel sources, and NuScale may not be able to compete in these markets unless the benefits of the carbon-free, reliable and/or resilient energy generation provided by our NPMs are sufficiently valued in the market. Given the relatively lower electricity prices in the United States when compared to many international markets, the risk may be greater with respect to business in the United States. Inflation has also increased, and may in the future increase the cost of our NPMs to a point where the levelized cost of electricity generated from a NuScale SMR-based plant is not competitive with the alternatives.
Loss of government incentives to use nuclear power may have an adverse impact on the market for SMRs.
In the United States, the Inflation Reduction Act of 2022 provides production tax credits for advanced reactors and small modular reactors. The United States may decide to reduce or eliminate these economic incentives or curtail legislative programs supportive of nuclear energy technologies for political, financial or other reasons. Any reductions in, or eliminations of, government subsidies, economic incentives or favorable legislative programs could reduce demand for our products and adversely affect our business prospects and results of operations.
The market for SMRs generating nuclear power is not yet established and may not achieve the growth potential we expect or may grow more slowly than expected.
The market for SMRs has not yet been established. Our estimates for the total addressable market are based on a number of internal and third-party estimates, including our potential contracted revenue, the number of potential customers who have expressed interest in our NPMs, assumed prices and production costs for our NPMs, our ability to leverage our current logistical and operational processes, and general market conditions. However, our assumptions and the data underlying our estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors. As a result, our estimates of the annual total addressable market for our services, as well as the expected growth rate for the total addressable market for our services, may prove to be incorrect.
Our commercialization strategy relies heavily on our relationships with ENTRA1, Fluor and other strategic investors and partners, who may have interests that diverge from ours and who may not be easily replaced if our relationships terminate.
We rely heavily upon our relationship with ENTRA1 to commercialize our NPMs and our other products and services, as well as our relationships with Fluor, our largest stockholder, and other investors and strategic partners. As our exclusive global strategic partner, ENTRA1 holds the exclusive rights for the worldwide commercialization, distribution, sales and development of our products, services and power plants pursuant to the amended and restated Strategic Alliance Agreement, effective May 7, 2025 (the “Strategic Alliance Agreement”), which also restricts our ability to directly or indirectly contact or enter into arrangements with anyone who has, or had, a relationship with ENTRA1. We granted Fluor
certain rights to provide engineering, procurement and construction services in connection with NuScale’s general plant design, project-specific designs and services typically performed by Fluor or its direct competitors. Similarly, we have entered into certain agreements with Doosan Heavy Industries and Construction Company, Ltd., IHI Corporation, and Sarens Nuclear & Industrial Services, LLC for certain planning, engineering, manufacturing and support activities; with JGC Holdings Corporation, an affiliate of Japan NuScale Innovation, LLC, related to the engineering, procurement and construction (“EPC”) and commissioning of the first NuScale SMR-based plant; with Samsung C&T Corporation related to certain EPC activities; and with GS Energy with respect to project development in certain markets.
Our strategic partners may have interests that diverge from our interests, and which may hinder our ability to negotiate sales to customers. If we lose our agreements with strategic partners, we may need to find new contractors who may have less experience designing and building nuclear plants, developing NuScale SMRs, or commercializing our products and services. In addition, in the event of a termination of the Strategic Alliance Agreement, there will be non-circumvention restrictions on our ability to pursue certain opportunities without ENTRA1 or to contact or enter into any arrangement with anyone that has, or had, a relationship with ENTRA1, and may subject the Company to significant damages in the event the Company causes a material breach. The termination of the Strategic Alliance Agreement or any of the agreements with our strategic partners described above could substantially hinder our ability to expand our production capacity and installation of NuScale power plants and could materially and affect our business, prospects, financial condition, results of operations and/or reputation.
The PMA with ENTRA1 may result in significant cash outlays in the near term without guaranteeing revenue generating activities.
Pursuant to the PMA, NuScale is named a key supplier to ENTRA1 with respect to the supply of SMR technology until the end of 2045. During this period, while ENTRA1 retains sole discretion to identify ENTRA1 Energy Projects and select, contract with, or purchase from NuScale or other suppliers or service providers, NuScale must make certain Milestone Contributions to ENTRA1 at varying stages in connection with any ENTRA1 Energy Project based on the number of NPMs that are anticipated to be included in the project. NuScale does not control the achievement of such funding Milestone Contributions. If an ENTRA1 Energy Project is not completed, Milestone Contributions are creditable against future ENTRA1 Energy Projects; however, ENTRA1 may not generate any future projects, in which case the Milestone Contributions would be unrecoverable.
During the year ended December 31, 2025, ENTRA1 entered into a non-binding agreement with TVA under which ENTRA1 and TVA will collaborate to develop plants to provide TVA with up to 6 gigawatts of new nuclear power generation. This agreement satisfied the criteria for NuScale’s payment of Milestone Contribution 1 for 72 NPMs for an approximate cost of $507 million. Under the PMA, the Company will be obligated to make Milestone Contribution 2 to ENTRA1, or its designated affiliate upon the execution by ENTRA1, or its designated affiliate, of a binding power purchase agreement, energy off-take agreement or document with a Third Party in connection with the development of an Energy Project or the deployment of one or more NPMs into a potential Energy Project, in the amount of approximately $16 million per NPM included in such binding agreement.
While the anticipated execution of such binding agreement by ENTRA1 would be considered a favorable development for NuScale, Milestone 2 Contributions, like Milestone 1 Contributions (each as defined in Note 9 of the Notes to the Consolidated Financial Statements, are not conditioned on the execution of a contract between ENTRA1 and NuScale. We cannot assure you that any ENTRA1 Energy Project that triggers Milestone 1 Contributions or Milestone 2 Contributions (including the TVA project) will result in any revenue generating contract between ENTRA1 and NuScale, as only Milestone 3 (as defined inNote 9 of the Notes to the Consolidated Financial Statements are conditioned on the execution of such a revenue generating contract.
In addition, while the number of NPMs in respect to which Milestone 1 Contributions and Milestone 2 Contributions are required at any one time is limited under the PMA, once an Energy Project advances from the Milestone 1 stage to the Milestone 2 stage (or from the Milestone 2 stage to the Milestone 3 stage), the limits for those Milestone Contributions will reset for the number of NPMs included such Energy Project. As a result, NuScale could be obligated to make additional Milestone Contribution 1 payments without any assurances that any revenue generating contract with ENTRA1 will be entered into with respect to either the original or the new project. Absent such revenue generating contracts, NuScale would be obligated to pay ENTRA1 the Milestone Contributions without receiving any revenue in return, which would materially adversely affect our financial condition and results of operations.
We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy.
If our operations grow as planned, we may need to expand our sales and marketing, research and development, and our supply and manufacturing functions, and there is no guarantee that we will be able to scale the business and the
manufacture of NPMs as planned, as there is no guarantee that we will be able to find suitable locations or partners for the expanded manufacture and operation of our NPMs or to broaden our internal capabilities.
If manufacturing and construction issues are not identified prior to design finalization, long-lead procurement, and/or module fabrication, then those issues will be realized during production, fabrication or construction and may impact plant deployment cost and schedule.
Our NPM design will be actively managed through design reviews, prototyping, involvement of external partners and application of industry lessons, but we could still fail to identify latent manufacturing and construction issues early enough to avoid negative effects on production, fabrication, construction or ultimate performance of our NPMs or plants. Where these issues arise at such later stages of deployment, plant deployment could be subject to greater costs or be significantly delayed, which could materially and adversely affect our business.
We and our customers operate in a politically sensitive environment, and the public perception of nuclear energy can affect our customers and us.
The risks associated with radioactive materials and the public perception of those risks can affect our business. Opposition by third parties can delay or prevent the construction of new nuclear power plants and can limit the operation of nuclear reactors. Adverse public reaction to developments in the use of nuclear power could directly affect our customers and indirectly affect our business. In the past, adverse public reaction, increased regulatory scrutiny and litigation have contributed to extended construction periods for new nuclear reactors, sometimes delaying construction schedules by decades or more or even shutting down operations. In addition, anti-nuclear groups in Germany successfully lobbied for the adoption of the Nuclear Exit Law in 2002, under which all remaining nuclear power plants in Germany were shut down in April 2023. Adverse public reaction could also lead to increased regulation or limitations on the activities of our customers, more operating requirements or other conditions that could have a material impact on our customers and our business.
Accidents involving nuclear power facilities, including but not limited to events similar to the Three Mile Island, Chernobyl and Fukushima Daiichi nuclear accidents, or terrorist acts or other high-profile events involving radioactive materials, could materially and adversely affect our customers and the markets in which we operate and increase regulatory requirements and costs that could materially and adversely affect our business.
Our future prospects are dependent upon a certain level of public support for nuclear power. Nuclear power faces strong opposition from certain competitive energy sources, individuals and organizations. The accident that occurred at the Fukushima nuclear power plant in Japan in 2011 increased public opposition to nuclear power in some countries, resulting in a slowdown in, or, in some cases, a complete halt to new construction of nuclear power plants, an early shut down of existing power plants or a dampening of the favorable regulatory climate needed to introduce new nuclear technologies, all of which could negatively impact our business and prospects. If accidents similar to the Three Mile Island, Chernobyl, or Fukushima disasters or other events, such as terrorist attacks involving nuclear facilities, occur, public opposition to nuclear power may increase, regulatory requirements and costs could become more and customer demand for our NPMs could substantially, which could materially and affect our business and operations.
Our Supply Base is Constrained, and Until We Enter Into a Binding Contract to deliver NPMs, Our Ability to Secure Commitments from Our Suppliers may be Limited, which Introduces Risks Relating to Schedule, Cost and Quality as Competitors Place Orders from the Same Constrained Supply Base.
NuScale relies on third party suppliers to build our NPMs and associated equipment. Until we enter into a binding contract with a customer to deliver NPMs, our ability to secure commitments from all of our strategic suppliers may be limited, which introduces risks relating to schedule, cost and quality that will compound as competing nuclear and non-nuclear competitors place orders from the same constrained supplier base. If we are forced to delay in placing firm orders with our suppliers:
• we may lose access to manufacturing slots;
• they may de-prioritize NuScale and become less responsive;
• the suppliers may gain increasing pricing leverage, and we may be forced to accept less favorable terms;
• we may have to consider using less established suppliers, which could introduce quality and execution risk; and
• we may lose access altogether to some strategic suppliers.
Changes in U.S. trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations .
Recent changes in U.S. trade policy, including the imposition of new or increased tariffs in the U.S. on certain foreign goods or retaliatory tariffs in response to such tariffs could cause an increase in our cost and delay in delivery of goods related to our products. Such increased costs could require us to increase prices to our customers, or, if we are unable to increase prices, result in lowering our margin on products sold.
Our long-lead time components are manufactured overseas, and tariffs on such components would increase our costs to the extent those components are imported into the U.S. If there are retaliatory tariffs imposed by countries to which we are exporting, we may not be able to pass the cost through to our customers or our products could be less competitive as compared to competitors.
We cannot predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business. The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the U.S. economy, which in turn could adversely impact our business, financial condition and results of operations.
We are highly dependent on our senior management team and other highly skilled personnel, and if we are not successful in attracting or retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
Our success depends, in significant part, on the continued services of our senior management team and on our ability to attract, motivate, develop and retain a sufficient number of other highly skilled personnel, including engineers, manufacturing and quality assurance, finance, marketing and sales personnel. Our senior management team has extensive experience in the energy and manufacturing industries, and we believe that their depth of experience is instrumental to our continued success. The loss of any one or more members of our senior management team, for any reason, including resignation or retirement, could impair our ability to execute our business strategy and have a material adverse effect on our business and financial condition if we are unable to successfully attract and retain qualified and highly skilled replacement personnel.
We expect we will require additional future funding to fund operations and commercialization, and such financing may not be available on acceptable terms.
To date, we have not generated any material revenue, while we have substantial overhead expenses. We do not expect to generate meaningful revenue unless and until we are able to finalize development of and commercialize our SMR technology and related services, and we may not be able to do so on our anticipated timetable, if at all. We expect our expenses and capital expenditures to increase in connection with our ongoing activities, including developing and advancing our SMR and other products and services, obtaining further NRC design certifications of our SMR and completing our manufacturing preparation and trials. We also incur additional costs associated with operating as a public company. Certain costs are not reasonably estimable at this time, and our projections anticipate certain customer-sourced income that is not guaranteed.
We have in the past and will likely continue to seek to raise capital through private or public equity or debt financings or through other sources of financing. Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. If we raise additional funds by issuing equity securities, our stockholders will experience dilution. If we raise additional capital through debt financing, we may be subject to covenants that restrict our operations including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our securities, make certain investments, and engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our existing stockholders. If the needed financing is not available, or if the terms of financing are less desirable than we expect, we may be required to delay, scale back or terminate some or all of our research and development programs.
As part of our arrangements with the DOE, we granted the DOE a worldwide, nonexclusive, paid-up license to our intellectual property and to manufacture our SMR technology, and the right to sublicense those rights if specified conditions arise, including if the DOE terminates the award due to material failure to comply with the terms and conditions of the award, or if we fail to meet our cost-sharing obligations or cease developing our SMR.
Risks Related to NuScale’s Intellectual Property
Our ability to protect our patents and other proprietary rights may be challenged and is not guaranteed, exposing us to the possible loss of competitive advantage.
We rely upon a combination of patents, trademarks, copyrights, trade secrets and commercial agreements, such as confidentiality agreements, assignment agreements and license agreements, to protect the intellectual property associated with our NPMs and related technologies. These measures prevent third parties from using, practicing, selling, manufacturing or otherwise commercially exploiting our NPMs and related technologies, which would erode our competitive position in our market. Our success depends in large part on our ability to obtain and enforce patent protection for our NPMs, as well as our ability to operate without infringing on or violating the proprietary rights of others. We own and have licensed rights to patents and pending patent applications and will continue to file patent applications claiming new technologies directed to NPMs in the United States and in other jurisdictions based on factors such as commercial viability.
As with all industries, the patent position of power modules and nuclear energy companies generally is uncertain and is not a guaranteed right. During the patent procurement process, a patent office may require us or our licensors to narrow the scope of the claims of our or our licensors’ pending and future patent applications. This may limit the scope of patent protection and our or our licensors’ ability to claim patent infringement if the patent application is subsequently issued. In some cases, a patent application may not issue if we or our licensors are unable to overcome rejections from a patent office. If a patent application does not issue, we or our licensors may lose trade secrets that are disclosed and published in the patent application and third parties may be able to exploit such published information in our patent application. Additionally, maintaining and enforcing patent rights can involve complex legal and factual questions and may be subject to in some cases. For example, third parties may the validity of our or our licensors’ patents based on prior art at a tribunal such as the Patent Trial and Appeal Board at the United States Patent and Trademark Office and/or in a federal court. Because we cannot that all of the potentially relevant prior art relating to our patents and patent applications has been found, third parties may prevail in a patent or a patent application from being issued as a patent. If we or our licensors are to maintain valid patents or prevail in patent instituted by third parties, we or our licensors may still bear the risk of third parties “designing around” our technologies to avoid an intellectual property claim.
We enjoy only limited geographical protection with respect to certain patents and may not be able to protect our intellectual property rights throughout the world.
Even if we obtain patent registration in one country (e.g., the United States), we cannot guarantee that we will obtain a patent registration or protection for the same or related patent application in another country (e.g., China) as patent laws differ from jurisdiction to jurisdiction. Accordingly, we may not be able to protect our intellectual property rights in certain jurisdictions. Filing, prosecuting and defending patents on our NPMs internationally can pose several challenges. First, procuring patent rights in multiple jurisdictions could be cost prohibitive because individual patent offices in different jurisdictions will have to examine each patent application separately. Therefore, costs such as examination fees, translation fees and attorney fees are considered. Once a patent is registered, we or our licensors will also have the continued obligation of paying maintenance fees periodically to avoid patents from becoming abandoned or lapsed. Second, the breadth of claims in patents may vary from jurisdiction to jurisdiction. For instance, certain patent offices may require narrower claims, resulting in patent rights that are less extensive. Further, as noted above, we may not be to obtain patents in some jurisdictions even if we obtain patents in other jurisdictions. Accordingly, our competitors may operate in countries where we do not have patent protection and can freely use our technologies and discoveries in such countries to the extent such technologies and discoveries are publicly known or in countries where we do have patent protection or pending patent applications.
In addition, many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. Many countries also limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we or any of our licensors are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business and financial condition may be adversely affected.
We 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 NPMs.
We cannot guarantee that any of our patent searches or analyses, including the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete or thorough because there may be hundreds of thousands
of relevant patents worldwide. We also cannot be certain that we have identified every third-party patent and pending application in the United States and abroad that is relevant to or necessary for the commercialization of NPMs in any jurisdiction. The scope of a patent claim is generally determined by an interpretation of the law, the written disclosure in a patent, and the patent’s prosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect or not accepted by a court of competent jurisdiction. Our determination of the expiration date of any patent in the United States or abroad that we consider relevant may be incorrect or inaccurate. Our failure to identify and correctly interpret relevant patents may negatively impact our ability to develop and market NPMs.
In addition, there are several circumstances under which a patent application may not be published and accessible to us or our licensors. For example, patent applications in the United States and many foreign jurisdictions are typically not published until 18 months after filing, but some patent applications in the United States may be maintained in secrecy until the patents are issued. Publications in the scientific literature also often lag behind actual discoveries. Therefore, we cannot be certain that others have not filed patent applications for technology covered by our issued patents or our pending applications, or that we were the first to invent the technology. Our competitors may have filed, and may in the future file, patent applications covering NPMs or technology similar to ours without us knowing. Any such patent application may have priority over our patent applications or patents, which could require us to procure rights to issued patents covering such technologies in order to avoid infringement claims.
We may be subject to claims of ownership and other rights to our patents and other intellectual property by third parties.
Our confidentiality and intellectual property assignment agreements with our employees, consultants and contractors generally provide those inventions conceived by the party while rendering services to us will be our exclusive intellectual property. While we require our employees, consultants, and contractors to assign such intellectual property to us, if the intellectual property is not automatically assigned (e.g., as work made for hire), those agreements may not be honored and obligations to assign intellectual property may be challenged or breached. Moreover, there may be some circumstances where we are unable to negotiate for such ownership rights and/or others misappropriate those rights in the process.
We may be subject to claims that former employees, collaborators or other third parties have an interest in our patents or other intellectual property as an owner, a joint owner, a licensee, an inventor or a co-inventor. In the latter two cases, the failure to name the proper inventors on a patent application can result in the patents issuing thereon being unenforceable. Inventorship disputes may arise from conflicting views regarding the contributions of different individuals named as inventors, the effects of foreign laws where foreign nationals are involved in the development of the subject matter of the patent, conflicting obligations of third parties involved in developing our NPMs or as a result of questions regarding co-ownership of potential joint inventions. Litigation may be necessary to these and other inventorship and/or ownership. Alternatively, or additionally, we may enter into agreements to clarify the scope of our rights in such intellectual property. If we in any such , in addition to paying monetary , we may ownership of, or right to use or license intellectual property. Such an outcome could have a material effect on our business. Even if we are in such , could result in substantial costs and be a to management and other employees.
Risks Related to NuScale’s Regulatory Environment
Our design is only approved in the United States, and we must obtain approvals on a country-by-country basis before we can complete the sale of our products abroad, which approvals may be delayed or denied or which may require modification to our design.
Our SMR design has not received regulatory approval in any country except the United States. Each country has its own safety approval that we must obtain before we can sell or install our NPMs abroad. Foreign approval processes may differ materially from the NRC process, and approvals may be denied or delayed in foreign countries, or some countries may require that we alter our design before obtaining approval. Denial or delay in approvals abroad could materially and adversely affect our business.
Our customers must obtain additional regulatory approvals before they construct power plants using our NPMs, and approvals may be denied or delayed.
The lead time to build a nuclear power facility is long and requires site licensing and approvals from applicable regulatory agencies before a plant can be constructed. The regulatory framework to obtain approvals is complex and varies from country to country. Any delays experienced by our customers in siting a power plant using our products and services could materially and adversely affect our business.
We and our customers could incur substantial costs as a result of violations of, or liabilities under, environmental laws.
The operations and properties of our customers are subject to a variety of federal, state, local and foreign environmental, health and safety laws and regulations governing, among other things, air emissions, wastewater discharges, management and disposal of hazardous, non-hazardous and radioactive materials and waste and remediation of releases of hazardous materials. Although NuScale’s business is to design and sell technology rather than to construct and own or operate power plants, we must design our technology so it complies with such laws and regulations, which could require us to incur additional costs and expenses or redesign our technology in order to comply with such laws and regulations. Compliance with environmental requirements could require our customers to incur significant expenditures or result in significant restrictions on their operations, and the failure to comply with such laws and regulations, including failing to obtain any necessary permits, could result in substantial fines or enforcement actions, including regulatory or judicial orders enjoining or curtailing operations or requiring our customers to conduct or fund remedial or corrective measures, install pollution control equipment or perform other actions. Any such impacts could impact the market for our technology and reduce our customers’ ability to enter into agreements with us. More vigorous enforcement by regulatory agencies, the future enactment of more laws, regulations or permit requirements, including relating to climate change, or other events may arise in the future and impact the market for our products, which could materially and affect our business, financial condition and results of operations.
We are subject to stringent United States export and import control laws and regulations. Unfavorable changes in these laws and regulations or United States government licensing policies, our failure to secure timely United States government authorizations under these laws and regulations, or our failure to comply with these laws and regulations could have a material adverse effect on our business, financial condition and results of operations.
The inability to secure and maintain required export licenses or authorizations could negatively impact our ability to compete successfully or market our SMR technology for commercial applications outside the United States. For example, if we were unable to obtain or maintain our licenses to export certain nuclear hardware, we would be effectively prohibited from exporting our SMR technology in non-United States locations, which would limit our number of potential customers. In addition, if we were unable to obtain authorization to export our technology, hardware, code or technical assistance, we would experience a limited market for our technology, which would provide a competitive edge to international suppliers of SMRs. In both cases, these restrictions could lead to an adverse impact on our ability to sell our commercial technology. Similarly, if we were unable to secure export authorization, we may need to implement design changes to our NPM to address issues with our domestic supply chain, which may increase costs or result in delays in delivery of new plants and subsequent additional NPMs if and when ordered.
Failure to comply with export control laws and regulations could expose us to civil or criminal penalties, fines, investigations, more onerous compliance requirements, loss of export privileges, debarment from government contracts or limitations on our ability to enter into contracts with the United States government. In addition, any changes in export control regulations or United States government licensing policy, such as that necessary to implement United States government commitments to multilateral control regimes, may restrict our operations.
Our business is subject to a wide variety of extensive and evolving government laws and regulations. Changes in and/or failure to comply with such laws and regulations could have a material adverse effect on our business.
NuScale is subject to new or changing international, federal, state, and local regulations, including laws relating to the design, development, manufacturing, marketing, servicing, or sales of our nuclear-fuel related products. Such laws and regulations may, among other things;
• require NuScale to obtain additional applicable approvals, licenses or certifications from regulatory agencies, if required, and to maintain current approvals, licenses or certifications;
• require NuScale to pause sales or modify products;
• lead to regulatory delays as a result of regulatory inspections, and changing regulatory requirements, which may impact our ability to fulfill our existing or future orders, or cause planned plants to not be completed on anticipated timelines or at all;
• give rise to liability such as fines and penalties, property damage, bodily injury, and cleanup costs; and
• impact our ability to secure the necessary permissions to establish plant sites, which could delay our ability to achieve our target build rate and could adversely affect our business.
Additionally, administrative law cases decided by the U.S. Supreme Court in 2024 may create uncertainty with respect to actions taken by regulatory agencies to interpret, implement and enforce federal legislation. For example, in its June 2024
decision in Loper Bright Enterprises v. Raimondo (the “Loper”), the U.S. Supreme Court overturned the longstanding Chevron doctrine, under which courts were required to give deference to regulatory agencies’ reasonable interpretations of ambiguous federal statutes. The Loper decision could result in legal challenges to regulations and guidance issued by federal agencies that are currently applicable to or will be applicable to our business, including by the DOE. Further, the Loper decision may result in increased regulatory uncertainty, inconsistent judicial interpretations and delays in or other impacts to the agency rulemaking process, which could have a material adverse effect on our business, financial condition and results of operations.
Risks Related to Ownership of Our Shares of Class A Common Stock
The exclusive forum provisions in our Organizational Documents could limit our stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes with NuScale or its directors, officers or other employees .
Our Certificate of Incorporation, as amended and Amended Restated Bylaws (“Organizational Documents”) provide that unless NuScale otherwise consents in writing, the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, another state or federal court located within the State of Delaware, shall be the sole and exclusive forum for any complaint, including claims in the right of the Corporation, asserting (a) claims that are based upon a violation of a duty by a current or former director, officer, employee or stockholder in such capacity, or (b) as to which the Delaware General Corporation Law confers jurisdiction upon the Court of Chancery, to the fullest extent permitted by law, and subject to applicable jurisdictional requirements. Further, unless NuScale otherwise consents in writing, the federal district courts of the United States of America shall be the sole and exclusive forum for any complaint asserting a cause of action arising under the Securities Act of 1933, to the fullest extent permitted by law, America.
These exclusive forum provisions will not relieve NuScale of its duties to comply with the federal securities laws and the rules and regulations thereunder and, accordingly, actions by its stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal courts. Additionally, stockholders will not be deemed to have waived NuScale Corp’s compliance with the federal securities laws and the rules and regulations thereunder. These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with NuScale or any of its directors, officers or other employees, which may discourage lawsuits with respect to such claims. In addition, stockholders who do bring a claim in the Court of Chancery of the State of Delaware pursuant to the exclusive forum provision could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware.
The court in the designated forum under these exclusive forum provisions may also reach different judgments or results than would other courts, including courts where a stockholder would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders. Further, the enforceability of similar exclusive forum provisions in other companies’ organizational documents has been challenged in legal proceedings, and it is possible that a court could find any of our exclusive forum provisions to be inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings. If a court were to find these exclusive forum provisions to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition.
The price of shares of Class A common stock may be volatile.
The price of shares of Class A common stock may fluctuate due to a variety of factors, including:
• changes in the industries in which we and our customers operate;
• variations in our operating performance and the performance of our competitors in general;
• material and adverse impacts of pandemics on the markets and the broader global economy;
• actual or anticipated fluctuations in our quarterly or annual operating results;
• the public’s reaction to our press releases, other public announcements and filings with the SEC;
• our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market;
• additions and departures of key personnel;
• changes in laws and regulations affecting our business or industry;
• commencement of, or involvement in, litigation involving us;
• changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;
• publication of research reports by securities analysts about us, our competitors or our industry;
• sales of shares of Class A common stock by our stockholders, including those who purchased shares of Class A common stock in private placements in connection with the Merger, or sales by us under our “at the market” offering arrangement described below; and
• general economic and political conditions such as recessions, interest rates, fuel prices, foreign currency fluctuations, international tariffs, social, political and economic risks and acts of war or terrorism.
These market and industry factors may materially reduce the market price of shares of Class A common stock regardless of our operating performance.
A significant portion of our total outstanding shares may be sold into the market, which could cause the market price of shares of Class A common stock to drop and, if we issue new shares, result in dilution to stockholders.
Sales of a substantial number of shares of Class A common stock or securities convertible into our Class A common stock in the public market, or the perception that these sales could occur, could reduce the market price of shares of Class A common stock and could impair our ability to raise capital through equity offerings in the future. We have in the past and may continue to sell shares through “at-the-market” offerings and equity incentives plans and there are outstanding options that are or will become exercisable for an aggregate of 6,365,141 shares of Class A common stock in accordance with the terms of the Fourth Amended and Restated 2011 Equity Incentive Plan of NuScale LLC. We also have a shelf registration on a Form S-3 (Commission File No. 333-272342), which allows NuScale to offer Class A common stock, debt securities, warrants, and/or units consisting of some or all of the securities in any combination with an aggregate offering price of securities of $500 million. Additionally, Fluor, our largest stockholder, has publicly stated its intention to sell down its position and has begun to sell down its position.
The number of shares that are sold by a sales agent in our “at-the-market” offerings after we deliver a placement notice will fluctuate based on the market price of the Class A common stock during the sales period and limits we set. Additionally, the extent to which such equity awards are granted or such outstanding options are exercised is not possible to predict. Any such sales under our “at-the-market” offering programs, any future similar programs or other issuance by us of our Class A common stock, will result in dilution of existing stockholders and increase the number of shares available for resale.
Any such future sales, by NuScale or our stockholders, could decrease the market price of our Class A common stock.
Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the price and trading volume of our Class A common stock.
Securities research analysts may establish and publish their own periodic projections for NuScale. These projections may vary widely and may not accurately predict the results we actually achieve. Our share price may decline if our actual results do not match the projections of these securities research analysts. Similarly, if one or more of the analysts who write reports on us downgrades our stock or publishes inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, our share price or trading volume could also decline.
We have in the past and may in the future be subject to short selling strategies that could result in a reduction in the market price of our Class A common stock.
Short selling is the practice of selling securities that the seller has borrowed from a third party with the intention of buying identical securities at a later date, at a lower price, to return to the lender and the short seller profits. Accordingly, it is in the short seller’s best interests for the price of the stock to decline. At any time, short sellers may publish, or arrange for the dissemination of, opinions, or characterizations that are intended to create negative market momentum, including through the use of social media. In light of the recent proliferation of generative artificial intelligence tools and large language models, there is also a risk that the dissemination of such opinions, characterizations or disinformation may negatively impact the conclusions that these tools and models draw about our business and prospects.
Short selling reports may potentially lead to increased volatility in an issuer’s stock price and to regulatory and governmental inquiries. In December 2024, July 2024 and, October and November 2023, short sellers published reports that contained certain negative and false allegations regarding our business and financial prospects. Regardless of merit, allegations and false statements by short sellers may spread quickly and diminish confidence in our business, financial prospects, or reputation. As a result, maintaining or reinforcing our reputation may require us to devote significant resources to refute incorrect or misleading allegations, to pursue or defend related legal actions, or to engage in other activities that could be costly, time consuming or unsuccessful. Additionally, any potential inquiry or formal from a governmental organization or other regulatory body, including an from the SEC, arising from the presence of such could result in a material of our management’s time and may have a material effect on our business and results of operations.
We do not expect to pay any cash dividends in the foreseeable future.
We expect to retain our future earnings to fund the development and growth of our business. As a result, capital appreciation, if any, of our Class A common stock will be the sole source of gain, if any, for any stockholders for the foreseeable future.
General Risks Related to Our Company
A future widespread public health crises could negatively affect various aspects of our business, make it more difficult for us to meet our obligations to our customers, procure equipment and services from our supplier and result in reduced demand for our products and services.
Our business and operations, including but not limited to ongoing or planned research and development activities may be impacted by public health crises. Future public health crises, including any future pandemics or epidemics, could severely impact our operations and development activities, including, but not limited to, through: delays in necessary interactions with local regulators and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; delays in manufacturing of our SMRs due to increased competition for manufacturing capacity and other supply chain constraints; and limitations in employee resources that would otherwise be focused on the conduct of our business. Any of the foregoing factors, or other effects of any public health crisis, including any future pandemic or epidemic, could materially affect our business, possibly to a significant degree. The severity and duration of any such impacts cannot be predicted.
We are subject to cybersecurity risks.
Like other businesses, we face cybersecurity risks. Threat sources continue to seek to exploit potential vulnerabilities. These cyberattacks are becoming increasingly sophisticated and dynamic, including as a result of artificial intelligence and machine learning capabilities. We expect these cyberattacks to continue to occur in the future and we are constantly managing efforts to infiltrate and compromise our information technology systems and data. While we develop and maintain systems seeking to prevent security breaches from occurring, the development and maintenance of these systems is costly and requires ongoing monitoring and updating as techniques used in such attacks become more sophisticated and change frequently. We, and the third parties on which we rely, may be unable to anticipate these techniques or implement adequate preventive measures.
A cybersecurity breach, including physical or electronic break-ins, computer viruses, malware, attacks by hackers, ransomware attacks, phishing attacks, supply chain attacks, breaches due to employee error or misconduct and other similar breaches, of our physical assets or information systems, or those of our vendors, business partners and interconnected entities or regulators could impact our operations or result in the theft or inappropriate release of certain types of information, including critical infrastructure information, sensitive customer, vendor and employee data, trading or other confidential data. The risk of these system-related events and cybersecurity breaches occurring continues to intensify, and while we have not experienced a material breach cybersecurity incident or disruption to our network, information systems or operations to-date, such cyberattacks continue and we may be to prevent a material in the future.
If a significant breach were to occur, our reputation could be negatively affected, customer confidence in us could be diminished, or we could be subject to legal claims, loss of revenues, increased costs or operations shutdown. In addition, our network and information systems are vulnerable to damage or interruption from power outages, telecommunications failures, accidents, natural disasters (including extreme weather arising from short-term or any long-term changes in weather patterns), terrorist attacks and similar events. Our system redundancy may be ineffective or inadequate, and our disaster recovery planning may not be sufficient for all eventualities. Moreover, the amount and scope of insurance maintained resulting from any such events or security may not be sufficient to cover or otherwise compensate for any to business that could result. Furthermore, in the future, such insurance may not be available on commercially reasonable terms, or at all.
In addition, new or updated security regulations or unforeseen threat sources could require changes in current measures taken by us or our business operations and could adversely affect our consolidated financial statements.
We may become involved in litigation that may materially adversely affect us.
We are currently named in a purported class action lawsuit filed in the U.S. District Court for the District of Oregon that asserts claims under federal securities laws that the defendants made false and misleading statements, and failed to disclose material facts, relating to ENTRA1’s experience, qualifications and capabilities as a developer of nuclear power plants, and further asserts that Fluor Corporation and the individual defendants are controlling persons within the meaning of federal securities laws. See “Legal Proceedings”.
In addition to this lawsuit, from time to time, we may become involved in various legal proceedings relating to other matters, including intellectual property, commercial, product liability, employment, class action, whistleblower and other litigation and claims, and governmental and other regulatory investigations and proceedings. These lawsuits and other matters can be time-consuming, divert management’s attention and resources from the operation of our business and cause us to incur significant expenses or liability or require us to change our business practices.
While we disagree with the claims included in the purported class action lawsuit, the risk of loss if the plaintiff prevails would be material to the Company. Because of the potential risks, expenses and uncertainties of litigation, we may, from time to time, settle disputes, even where we believe that we have meritorious claims or defenses. Because litigation is inherently unpredictable, we cannot assure you that the results of any such action will not have a material adverse effect on our business.
